Annual Report 2019
Stock Code: 603899 Short Name: M&G Stationery
Shanghai M&G Stationery Inc.
Annual Report 2019
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Annual Report 2019
Important Notice
I. The Board of Directors, Supervisory Committee, directors, supervisors and senior
management of the Company warrant that the contents of this report are true,
accurate and complete, without any misrepresentation, misleading statements or
material omissions, and severally and jointly bear the legal responsibilities thereof.
II. All directors of the Company attended the Board meeting.
III. BDO China Shu Lun Pan Certified Public Accounts LLP has issued the audit report
with unqualified opinions to the Company.
IV. Chen Huwen, the chairman of the Company, Zhang Qing, the CFO of the Company
and Zhai Yu, the head of the accounting department (person in charge of accounting),
warrant the truthfulness, accuracy and completeness of the financial report in this
annual report.
V. Profit distribution plan or plan to convert surplus reserves into share capital approved
by the Board of Directors during the Reporting Period
The Company will distribute cash dividend of RMB4.00 (tax inclusive) per 10 shares based on
the Company’s total share capital registered as at the registration date for the implementation of
dividend distribution, with the distributed profit totaling RMB368,000,000. The remaining
distributable profits in 2019 will be carried forward to the following year.
VI. Risks statement of the forward-looking statements
"√ Applicable" "□ Not applicable"
Forward-looking statements including future plans and development strategies involved in this
annual report do not constitute the Company’s substantive commitments to investors. The
investors are advised to pay attention to investment risks.
VII. Is there any non-operating misappropriation of funds of the Company by any
controlling shareholders and their related parties
No
VIII. Has the Company provided any external guarantees in violation of the decision-
making procedures
No
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IX. Warning on significant risks
The Company has illustrated various risks and corresponding measures that the Company might
face in the production and operation. Please refer to the “Potential Challenges and Risks” set
out in the “Discussion and Analysis of Operation” under Section IV. Investors are advised to pay
attention to risk of investment.
X. Others
"□ Applicable" "√ Not applicable"
本报告分别以中、英文编制，在对中外文文本的理解上发生歧义时，以中文文本为准。
This English version is converted from the Chinese version.
In case of any discrepancy between the Chinese version and the English version,
the Chinese version shall prevail.
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Contents
Chapter I Definition .................................................................................................................................. 5
Chapter II Company Profile and Key Financial Indicators ................................................................. 6
Chapter III Business Overview ............................................................................................................. 14
Chapter IV Discussion and Analysis of Operation ............................................................................. 21
Chapter V Major Events ........................................................................................................................ 50
Chapter VI Changes in Ordinary Shares and Shareholders ............................................................ 71
Chapter VII Preference Shares ............................................................................................................ 78
Chapter VIII Directors, Supervisors, Senior Management and Employees .................................. 79
Chapter IX Corporate Governance ...................................................................................................... 87
Chapter X Corporate Bonds ................................................................................................................. 91
Chapter XI Financial Report ................................................................................................................. 92
Chapter XII References ....................................................................................................................... 308
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Chapter I Definition
I. Definition
In this report, unless the content requires otherwise, the following terms shall have the
following meanings:
Definition of common terms
The Report Annual Report 2019
Company, the Company, Shanghai M&G Stationery Inc.
M&G Stationery
M&G Group M&G Holdings (Group) Co., Ltd.
M&G Colipu Shanghai M&G Colipu Office Supplies Co., Ltd.
M&G Life M&G Living Studio Enterprise Management Co., Ltd.(晨光生活馆企业管
(晨光生活馆) 理有限公司)/Large retail store of the Company
M&G Technologies Shanghai M&G Information Technology Co., Ltd.(上海晨光信息科技有
限公司)
Jiekui Investment Shanghai Jiekui Investment Management Firm (L.P.)
Keying Investment Shanghai Keying Investment Management Office (L.P.)
Chenguang Venture Shanghai Chenguang Venture Capital Center (L.P.)
Capital Center
(晨光创投)
Chenguang Sanmei Shanghai Chenguang Sanmei Property Investment Co., Ltd.
(晨光三美)
Jiumu Store Jiumu M&G Store Enterprise Management Co., Ltd.(九木杂物社企业管
(九木杂物社) 理有限公司)/Large retail store of the Company
M&G Office Supplies Shanghai M&G Office Supplies Co., Ltd.
(晨光办公)
Office Depot Office Depot Network Technology Co., Ltd.
Axus Stationery Axus Stationery (Shanghai) Company Ltd.
KA Key Account, usually referring to large cross-regional retailers with large
operating space and dense customer flow, including RT-MART,
Walmart, Carrefour, Hualian Supermarket.
Reporting period Year 2019, from 1 January 2019 to 31 December 2019
Yuan, ten thousand RMB, RMB10,000, RMB100 million
Yuan, hundred million
Yuan
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Chapter II Company Profile and Key Financial Indicators
I. Company Information
Chinese name of the Company 上海晨光文具股份有限公司
Short name of the Company in Chinese 晨光文具
English name of the Company SHANGHAI M&G STATIONERY INC.
Abbreviation of English name of the M&G
Company
Legal representative of the Company Chen Huwen
II. Contact Information
Board Secretary Securities Affairs
Representative
Name Quan Qiang Bai Kai
Office address Building C, Hanqiao Culture Science Building C, Hanqiao Culture
& Technology Park, No. 455 Science & Technology Park,
Yanzhan Road, Songjiang District, No. 455 Yanzhan Road,
Shanghai Songjiang District, Shanghai
Telephone 021-57475621 021-57475621
Fax 021-57475621 021-57475621
E-mail ir@mg-pen.com ir@mg-pen.com
III. Introduction to General Information
Registered address Building 3, No. 3469 Jinqian Road, Fengxian District,
Shanghai
Postal code of registered address 201406
Office address Building C, Hanqiao Culture Science & Technology
Park, No. 455 Yanzhan Road, Songjiang District,
Shanghai
Postal code of office address 201612
Website of the Company http://www.mg-pen.com
E-mail ir@mg-pen.com
IV. Information Disclosure and Place for Obtaining the Report
Media for the Company’s information Shanghai Securities News, China Securities
disclosure Journal, Securities Daily, Securities Times
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CSRC's designated website for the www.sse.com.cn
Company’s Annual Report disclosure
The Company’s Annual Report may be Board of Director’s Office
obtained at
V. Stock Information
Stock Information
Share class Exchanges on which Stock short Stock code Stock short name
the stocks are listed name before change
A share Shanghai Stock M&G 603899 /
Exchange
VI. Other Relevant Information
Name BDO China Shu Lun Pan CPAs(Special
general partnership)
Auditor of the
Office address 4F No. 61 Nanjing East Road, Shanghai
Company (domestic)
Name of the signing Gu Xuefeng, Wang Aijia
accountant
VII. Major Accounting Data and Financial Indicators for the Past Three Years
(1) Major accounting data
Unit: Yuan Currency: RMB
Year-on-
Major accounting year
2019 2018 2017
data change
(%)
Revenue 11,141,101,364.44 8,534,988,597.55 30.53 6,357,102,964.25
Net profit 1,060,083,625.03 806,847,308.41 31.39 634,040,991.46
attributable to
shareholders of
the listed
companies
Net profit 1,005,187,834.38 749,412,457.07 34.13 544,514,731.94
attributable to
shareholders of
the listed
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companies, net of
non-recurring
gains and losses
Net cash flow 1,081,941,383.68 827,940,565.51 30.68 717,497,928.03
generated from
operating activities
Year-on-
year
End of 2019 End of 2018 End of 2017
change
(%)
Net assets 4,201,500,384.99 3,410,808,445.41 23.18 2,833,961,137.00
attributable to
shareholders of
the listed
companies
Total asset 7,565,115,311.74 5,677,500,049.71 33.25 4,388,278,915.63
(2) Key financial indicators
Year-on-year
increase or
Key financial indicators 2019 2018 2017
decrease in the
current period (%)
Basic earnings per share 1.1523 0.8770 31.39 0.6892
(Yuan/share)
Diluted earnings per share 1.1523 0.8770 31.39 0.6892
(Yuan/share)
Basic earnings per share, net 1.0926 0.8146 34.13 0.5919
of non-recurring gains and
losses (Yuan/share)
Weighted average ROE (%) 28.17 26.16 Increase of 2.01 24.45
percentage points
Weighted average ROE, net of 26.71 24.30 Increase of 2.41 20.99
non-recurring gains and losses percentage points
(%)
Explanation of major accounting data and financial indicators for the past three years by the
end of the Reporting Period
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"√ Applicable" "□ Not applicable"
Revenue increased by 30.53% or RMB2,606,112,800 over the same period of last year,
primarily due to: (1) the Company’s traditional core business grew a steadily 20% in 2019, as a
leading company in the stationery and office supplies industry, we benefited from our
competitive advantages of distribution channel, brand recognition, design and R&D, and supply
chains: (2) new business continued developing at a high speed in 2019, M&G Colipu and M&G
Life grew by 51% compared with last year.
VIII. Difference in the Accounting Information under the PRC Accounting Standards for
Business Enterprise (“PRC GAAP”) and Overseas Accounting Standards
(1) Difference in net profit and net asset attributable to shareholders of the listed
company in financial reports disclosed under International Accounting Standards
and PRC GAAP
"□ Applicable" "√ Not applicable"
(2) Differences in net profit and net assets attributable to shareholders of the listed
company in financial reports disclosed under overseas accounting standards and
PRC GAAP
"□ Applicable" "√ Not applicable"
(3) Explanation on the differences between PRC GAAP and Overseas Accounting
Standards:
"□ Applicable" "√ Not applicable"
IX. Key Financial Data for the Year of 2019 by Quarter
Unit: Yuan Currency: RMB
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(Jan-Mar) (Apr-Jun) (Jul-Sept) (Oct-Dec)
Revenue 2,355,613,820.98 2,483,009,195.91 3,108,721,445.78 3,193,756,901.77
Net profit 258,715,131.28 212,549,376.55 330,611,308.24 258,207,808.96
attributable to
shareholders of the
listed companies
Net profit 232,639,806.85 194,719,722.78 333,199,496.91 244,628,807.84
attributable to
shareholders of the
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listed company
after non-recurring
profit or loss
Net cash flow 99,550,085.40 147,529,761.88 430,910,767.84 403,950,768.56
generated from
operating activities
Explanation on difference between information by quarter and information disclosed in
periodical reports
"□ Applicable" "√ Not applicable"
X. Items and Amounts of Non-recurring Gains or Losses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Items of Non-recurring Amounts in Amounts in
Amounts in 2019 Notes (if applicable)
Gains or Losses 2018 2017
Gains or losses on 6,081,606.95 Mainly due to the -69,195.83 -621,092.66
disposal of non-current disposal of certain old
assets equipment by the
subsidiaries held by
the Company and the
winding up of certain
subsidiaries under the
subsidiaries held by
the Company, due to
business needs
Government grants 42,747,681.46 Mainly including 42,122,713.66 35,057,419.77
included in profits and government grants
losses for the current received during the
period, excluding those Reporting Period and
closely related to the government grants
normal business and of transferred from
fixed amount or fixed deferred income
quantity granted on an
on-going basis in
accordance with certain
standards and in
compliance with the
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State policies
Gains arising from 33,642,175.40
investment costs for
acquisition of
subsidiaries, associates
and joint ventures less
than the fair values of
attributable identifiable
net assets of the
invested entity at the
time of acquisition
Gains or losses on 35,517,479.65 38,184,246.05
entrusted investment or
asset management
Investment income / -340,881.23
arising from changes in
fair values held-for-
trading financial assets
and held-for-trading
financial liabilities, and
investment gains on the
disposal of held-for-
trading financial assets,
held-for-trading financial
liabilities and available-
for-sale financial assets,
except the Company
normal operations
related to effective
hedging business
Investment income 29,184,868.54 Revenue generated /
arising from changes in from purchase of
fair values held-for- wealth management
trading financial assets, products
derivative financial
assets, held-for-trading
financial liabilities and
derivative financial
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liabilities, and investment
gains on the disposal of
held-for-trading financial
assets, derivative
financial assets, held-for-
trading financial
liabilities, derivative
financial liabilities and
other debt investment,
except the Company
normal operations
related to effective
hedging business
Reversal of provision for 1,803,027.63 Mainly due to the 7,460,100.24
impairment of provision reversal of
receivables which are bad debts on
individually tested for individual receivables
impairment of the Company
Other net non-operating -5,743,388.02 Mainly the expense of -7,936,377.76 -5,409,684.43
income and expenses, public donations and
other than the above the losses arising
items from the winding up
of certain subsidiaries
controlled by the
subsidiaries of the
Company
Effect of minority equity -4,764,697.27 -2,192,444.11 -13,897,494.77
Effect of income tax -14,413,308.64 -10,007,324.27 -4,548,528.85
Total 54,895,790.65 57,434,851.34 89,526,259.52
XI. Items Measured at Fair Values
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing Changes in the Effect on profit
Items Opening balance
balance Period for the Period
Held-for-trading 1,027,265,300.00 661,878,587.24 -365,386,712.76 4,613,287.24
financial assets
Receivables 1,894,232.00 29,549,924.83 27,655,692.83
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financing
Derivative
financial assets
Other debt
investments
(including other
current assets)
Other non-
current financial
assets
Investments in 3,600,000.00 3,909,179.93 309,179.93
other equity
instruments
Held-for-trading
financial
liabilities
Derivative
financial
liabilities
Total 1,032,759,532.00 695,337,692.00 -337,421,840.00 4,613,287.24
XII. Others
"□ Applicable" "√ Not applicable"
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Chapter III Business Overview
I. Description of the Company’s principal business, operation model and industry
condition during the Reporting Period
(1) Principal business and operation model
1. Principal business
As a comprehensive stationery supplier, the Company integrates the value of creativity into its
products and service advantages, advocates fashionable stationery lifestyle, and provides
solutions for study and work. The traditional core businesses include designing, developing,
manufacturing and selling writing instruments, student stationery, office supplies and other
products under brands; new businesses mainly comprise of one-stop direct office
supplies service platform—M&G Colipu and retail stores—M&G Life and Jiumu Store, and online
platform of M&G Technologies. During the Reporting Period, there were no significant changes
in the Company's principal business and operation model.
(2) Main Operation Model
The Company has an independent and complete operation from design and development of
brands and products, procurement of raw materials and accessories, product manufacturing,
supply chain management and distribution network management, and warehouse and logistics.
The Company is capable of performing independent operation of business in the market. For
R&D and new products development model, the Company has an “entire design system”
covering the whole process starting from customer value proposal to product design, product
mold development to brand image design, incorporating trend-, theme and experience-oriented
development model to develop new products with a comprehensive categories approach based
on consumer insight. For manufacturing model, the Company uses the brand manufacturing
model that combines sales-driven production, in-house and OEM outsourcing, develops an
independent system from raw material procurement to manufacturing and selling, and has
established its brands in the market. We have the advantages from participating the whole value
chain from design, research and developing, manufacturing and selling stationery. For sales
model, based on features of stationery products and current situations of domestic stationery
consumption, the Company has developed its sales model that heavily relies on regional
distributors, complemented by direct sales to offices 2B customers, direct-sale store, KA sales,
online sales, as well as international distribution. We are the one of pioneering companies in
China’s stationery business that engage in large-scale brand sales management and franchise
management.
In the direct office supplies service business，M&G Colipu is mainly responsible for providing
governments, public institutions, Fortune Global 500 companies and other SMEs with cost-
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effective one-stop service in procurement of office supplies. M&G Colipu has around 15 core
categories of office supplies, ranging from office appliances, office equipment, IT digital products,
office furniture, personal protective equipment, food and beverage, and business gifts. M&G
Colipu ensures products are supplied by its factories directly, and provides customized value-
added services.
M&G Technologies mainly comprises of onlines businesses in Tmall and JD. Tmall business
refers to M&G Technologies’ Tmall flagship store where customers can place orders on the store.
For the business on JD platform, the system issues purchase order monthly based on inventory
and shelf sales ratio, and M&G Technologies replies the purchase order in the system according
to its actual inventory condition; after the order is confirmed, it will then be forwarded to our
warehouse system, and warehouse will deliver goods to JD according to the confirmed purchase
order.
M&G retail store businesses include two store formats: the M&G Life stores and Jiumu stores.
M&G Life stores mainly target students aged 8-15, selling stationery products complemented by
daily necessity and entertainment products. M&G Life stores mostly locate in Xinhua Bookstore
and compound boutique bookstores, representing the Company’s exploration to move beyond
the then-dominant traditional channels nearby schools. Jiumu Stores mainly target the consumer
group of young female consumers aged 15-35 and their families, and sells a more
comprehensive products including stationery, cultural and recreative products, educational and
entertainment products, and daily household and home products. Jiumu stores mostly locate in
prime business districts in cities, it is an upgraded version based on experience learned from
M&G Life stores and is an ongoing exploration in new retail model in lifestyle products with a
distinct cultural element. Jiumu Store started franchising in July 2018, franchisees pays
contract deposit and decoration fee according to the contract, and store rent, store staff salary,
utilities and other costs occurred in franchising stores are borne by franchisees.
For its traditional core businesses, the Company faces challenge with changing demands from
the more individualized population born after 1990 and 2000. With the changing demographics
of China particularly with the decreasing birth rate, unit volume growth contribution to revenue is
set to decline going forward, the sustained growth of the stationery industry will comes mostly
from consumption upgrade and product upgrade. Stationery consumption in China appears to
become more brand conscious, innovative, individualized and premium. There is a clear growth
in demand for better cultural and creative products, which promotes the industry moving from
merely stationery products towards stationery products with more cultural and creativity. M&G
Life stores and Jiumu stores both serve as the Company’s bridgehead in upgrading its products
and channels of its traditional core businesses, and they play important role in promoting the
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Company’s brands and upgrading products sales. M&G Colipu’s direct sales business to offices
satisfactorily meets demands for purchasing office supplies from large corporations and
institutions, which helps boosting the sales of writing instruments and office supplies in traditional
core business of the Company.
3. Main driving forces in revenue growth
(1) Social transformation and consumption upgrade; (2) Greater investment from the state in
education; (3) Favorable policy environment for development of culture industry; (4) Continued
growth in household income; (5) Second-child policy; (6) Fragmented industry with low
concentration.
(2) Situations and features of industry where the Company operates, and industry status
of the Company
1. Situations of industry where the Company operates
According to Guidelines for the Industry Classification of Listed Companies (revised in 2012)
issued by China Securities Regulatory Commission, and results of industry classification of listed
companies released by China Securities Regulatory Commission, the Company is classified to
manufacturing industry in products for stationery, arts, sports and entertainment. The Company
is a member of China Stationery & Sporting Goods Association, and China Writing Instrument
Association.
In 2019, China’s stationery and office supplies amounted to RMB152.2 billion, representing a
growth of 6.7% from the previous year, industry profit reached RMB9.7 billion, representing a
growth of 9.8%. In 2019, there are 1,027 enterprises above designated size in China’s stationery
and office supplies industry, and the number of those who suffered loss in 2019 increased
compared with previous year. (Source: China Stationery & Sporting Goods Association)
In 2019, member enterprises of China Writing Instrument Association recorded the revenue from
principal business of RMB16.4 billion, representing a decrease of 1% from the previous year,
and profit is RMB0.9 billion, representing a growth of 15% compared with previous year.
According to the comprehensive assessment made by China National Light Industry Council,
the prosperity index of writing instrument industry was in normal range overall. In 2019, writing
instrument industry export amounted to USD2.8 billion, decreased 0.5% from previous year. The
pricing advantage of China’s low-end rollerball pens and pencils was lessened. The writing
instrument industry imports amounted to USD0.8 billion, decreased 2.2% from previous year.
The import are mostly high-end pens. (Source: China Writing Instrument Association)
2. Features of the industry
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(1) Periodicity
Writing instruments, student stationery and office supplies are slightly affected by economic
fluctuations. With low unit price, writing instruments and student stationery are necessity goods
with relatively low income elasticity, and therefore are not much sensitive to economic
fluctuations.
(2) Seasonality
There is a seasonality in demand for student stationery. Period before a new semester begins
every year (summer and winter vacation) is what the stationery industry calls “schooling peak”
season, during which sales for companies in the student stationery industry usually peak.
3. Development trend of the industry
With the changing demographics of China particularly with the decreasing birth rate, stationery
industry revenue growth is less driven by unit volume growth, and more from consumption
upgrade and product upgrade. With the changes in the way of life and consumption habit of
consumers, retail industry started a new round of redevelopment and innovation. Stationery
industry faces challenges with uncertainty of external environment, diversification of retail
channels, and more individualized demands from the main customers group (post-90s and post-
00s). As domestic stationery market becomes more mature, demand for mid- to high-end
stationery products keeps increasing, breaking the past market structure dominated by low-end
products, this provides opportunities for mid- to high-end stationery products with good quality
and good price. Furthermore, China’s population of 1.4 billion accounts for about 18% of global
population, leading stationery companies in China have a big room for development in global
stationery market.
Traditional nearby school stationery retail channels are still the major retail format in China, and
the other retail channels have higher growth rate, making channels of retail sales more diversified.
New channels and forms of business are developed gradually, channel upgrade and competition
across different channels become more pronounced. Domestic consumption for stationery in
China becomes more brand conscious, innovative, individualized and high-end. There is a
growing demand for exquisite cultural and creative products, promoting stationery products
moving from those primarily focus on functionality towards those with more cultural and creative
elements that cater to customers. With continued development in the market, market
concentration of stationery industry becomes greater, leaving more room for industry
consolidation. Leading companies in the stationery industry with good brand recognition are in
a strong position where the strong ones may become stronger, and more market share are
gained by leading companies.
The market of the direct office supplies service business has been growing very fast in China.
According to industry research report from securities company, the scale of the market of broad
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office supplies (including office furniture, equipment and other office supplies) in China reached
more than RMB1 trillion. Regulation on the Implementation of the Government Procurement Law
of the People's Republic of China in 2015 explicitly requires that the state shall promote the
utilization of information networks for carrying out digital government procurement. In the same
year, General Office of the State Council issued the Notice of the General Office of the State
Council on Issuing the Work Plan for Integrating and Establishing a Uniform Public Resources
Trading Platform, requiring that a public resources trading platform with unified regulations,
openness and transparency, efficient service and standard supervision should be developed
across the country to achieve digital transaction of public resources in the whole process. With
such strong promotion and national policy supports, B2B office supplies procurement got the
historical opportunities for rapid development.
4. Company position in the industry
The Company is a leading company of “own brand + domestic demand” in China’s stationery
industry. The Company has a strong first-mover advantage and leading advantage with its wide
and deep coverage of its distribution network in stationery industry. As at the end of the Reporting
Period, the Company has a national distribution network covering over 85,000 retail stationery
shops across China, enabling the company to establish market leading position for its own brand
products amidst fierce competitions of domestic market. The Company ranked first in “Top Ten
Enterprises in China’s Light Industry and Writing Instrument” for eight consecutive years.
II. Explanation on substantial changes in major assets of the Company during the
Reporting Period
"√ Applicable" "□ Not applicable"
Please refer to 2 (3) Analysis on Assets and Liabilities set out in Discussion and Analysis of
Operation under Section IV for more details.
III. Analysis on core competitiveness during the Reporting Period
"√ Applicable" "□ Not applicable"
1. Brand advantage
As a leading company of “own brand + domestic demand” in China’s stationery industry, the
Company has established a leading position for its own brand products amidst fierce
competitions of domestic market. The Company ranked first in “Top Ten Enterprises in China’s
Light Industry and Writing Instrument” for eight consecutive years. M&G brand has sound brand
recognition among consumers, and served as the designated stationery brand for Boao Forum
for Asia for 12 consecutive years.
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2. Channel advantage
The Company has a strong first-mover advantage and leading advantage with its wide and deep
coverage of its distribution network in stationery industry, and the efficient management of the
distribution system. As at the end of the Reporting Period, the Company has 35 tier-one
distributor partners across China, and tier-two and tier-three distributor partners in about 1,200
cities, covering over 85,000 retail stationery shops across China.
3. Design and R&D advantage
The Company has the capability to respond timely to the market and strong R&D capacity for
new products.
The Company will do market research for new product development to constantly spot and grasp
the latest market trends. The Company launches about one thousand of new products each year,
to meet different consumer needs. The continued development of new products helps the
Company to accumulate resources in product design. In 2019, “Enjoy Writing” gel pen developed
by the Company won IF Design Award and Good Design Award (G-Mark), product design of the
Company received international recognition.
4. Technology advantage
The Company has learned core technologies of writing instrument including nib, ink and its
matching, as well as inhouse mold development technology, and has participated in preparation
of national industry standards. The Company undertook several research projects in the 13th
Five-Year National R&D Program. The Company won a second-grade prize in 2019 China
Innovation Award for industry-university-research collaborations. During the Reporting Period,
testing laboratory of the Company got CNAS accreditation certificate, which means that test
results of the Company’s laboratory are recognized by over 100 countries, testing capability
reached world level.
5. Manufacturing advantage
The Company benefits from experience of large-scale manufacturing accumulated throughout
the past years, independent mold development capability, stable supply chain, sound quality
control system and introduction of various information management systems. The Company has
the capability of large-scale manufacturing with high quality control standard. The good and
stable product quality has won general recognition and favorable comments from consumers.
China writing instrument industry base, China writing instrument center, national industry design
center and China key laboratory of light industry and writing instrument engineering technology
all have physical presence in the Company.
6. Supply chain advantage
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Using the idea of partnership to run business operation, the Company has been striving to build
a high standard supply chain ecosystem. The Company keeps iterating and upgrading its
scientific management for supply chain, and has obtained new practice achievements in
information collaboration across the value chain, inventory optimization, financial support for
supply chain, management informatization of quality and order, and optimization of supplier
performance to help business partners get stronger operation system, both loyalty and operation
capability of our business partners are improved simultaneously.
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Chapter IV Discussion and Analysis of Operation
I. Discussion and Analysis of Operation
In 2019, with the background of increased uncertainties both at home and abroad, and more
complication and changes in the market, the Company focused closely on development strategy
and annual operation objective set by the Board of Directors. With the great efforts from the
management and all employees, the Company maintained a healthy, stable and high-quality
development, achieved the annual operation target, operation performance continued to grow,
and the Company’s comprehensive strength was further improved.
The Board of Directors of the Company paid close attention to external industry development,
actively implemented company strategies, continued to focus on “adjusting product structure and
stimulating growth” as the theme for the year, continued to optimize retail channel, continued to
push the four segments of its traditional core businesses, continued to grow direct office supplies
business, accelerated growth of self-owned large retail stores, continued to expand online sales,
and continued to improve internal management. Operation of the Company in 2019 is
summarized and reported as follows:
1. Focus and Optimize Channels
During the Reporting Period, the Company focused on key retail stationery shops, built model
stores, continued to push optimization and upgrading of distribution network, and better channel
management: (1) improved single store quality with a focus on model stores; (2) facilitated the
upgrading of franchising; (3) pushed the continued upgrading of distribution centers and
optimizing operations; (4) strengthened categories promotion and dedicated retail spaces for key
products; (5) actively carried out exploration for new business, and improved market shares in
key business districts. As at the end of the Reporting Period, the Company has 35 tier-one
distributor partners across China, and tier-two and tier-three distributor partners in about 1,200
cities, covering over 85,000 retail stationery shops with “M&G” logo across China.
The Company made efforts to roll out M&G Alliance APP, so as to build a stronger connection
among the Company headquarters, multi-tier distribution partners and retail stationery shops,
and to improve digitization of business operations and information flow. Overall collaboration in
sales activities of the Company can will be improved as retail stationery shops adopt M&G
Alliance APP. On the one hand, information from the Company can flow to retail stationery shops
without geographical and time limitation, on the other hand, response time can be shortened and
order fulfillment rate improved. Headquarters can collect demand-side information as users’ pain
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points and product feedback in a more timely and effective way, helping accuracy in new product
development.
2. Push the Four Segments of Traditional Core Business
(1) Mass market stationery segment
Each category and product is reviewed with grid analysis tool to further identify high potential
products, collaborate and share resources across function departments including product,
design, marketing and sales. Manage the number of SKUs to reduce quantity and increase
quality, and develop a small number and high quality long-term products and hit products.
(2) Premium stationery segment
During the Reporting Period, the Company continued to expand the market for premium
stationery segment. Growth of product portfolio was driven by best-selling products, product
structure was upgraded, product mix became more balanced. Retail stationery shops suitable
for premium stationery segment was uplifted by model shops, and premium stationery products
sales in single store were improved by creating dedicated zone for such products. Suitable sales
channel for premium stationery products were expanded across the country. With an integrated
chain ranging from product development, business establishment, marketing, to brand promotion.
Exclusive window for season-limited M&G products were well received by the market. Market
share of the Company’s premium stationery products increased.
(3) Office stationery segment
During the Reporting Period, the Company continued development and promotion of office
stationery, shifted focus from product breadth towards depth, formed overall solutions for office
stationery products, put core products on shelves, developed potential customers, increased
store count for office stationery stores. Drive sales growth and increase market shares in office
supplies market through seeking new customers continuously and improving sales in a single
store with established customers.
(4) Arts and kids drawing segment
During the Reporting Period, the Company focused on key categories of arts and kids drawing
segment, continued to adjust product mix, emphasized on long-term products, and increased
contribution from key products. The Company seized opportunities to build standard store
shelves in dedicated zones, improved the capability to develop best-selling categories
significantly with such popular products as marker pen, food-grade watercolor pen, wood-free
erasable color pencil, and water-soluble oil pastel; and prepared MG-KIDS and MG-ARTS mid-
end product lines. During the Reporting Period, the Company acquired Axus Stationery, and
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established strategic cooperation with CARIOCA, a stationery brand in Italy which enriched mid-
to high-end arts products offering for children.
3. Continue to grow M&G Colipu
Unit: 0’000
M&G Colipu 2019 2018 2017 3-year average
Operating revenue 365,806.17 258,604.90 125,515.91 249,975.66
Net profit 7,580.35 3,213.52 2,104.34 4,299.40
During the Reporting Period, M&G Colipu improved service quality and customer satisfaction,
expanded product category, sought more customers, built national supply chain system, and
enhanced service capability of regional warehouses across the country. M&G Colipu maintained
rapid growth, recorded revenue of RMB3,658,061,700, representing a year-on-year increase of
41.45%, and furthered increased its market shares and brand influence in direct sales of office
supplies. More details are presented as follows:
(1) Customer Development
As for government customers, the Company succeeded in shortlisting for e-commerce projects
of the People’s Government of Shanxi Province, the People’s Government of Liaoning Province,
the People’s Government of Jilin Province, and Chongqing Municipal People’s Government; as
for central state-owned enterprises, the Company succeeded in shortlisting for procurement
projects of China Mobile, China Unicom, and China Post; as for customers of financial institutions,
the Company succeeded in shortlisting for the project of SPD Bank and CGB; as for customers
of companies listed on Global Fortune 500 and other enterprises, the Company won the bidding
for procurement projects of Xiaomi, Siemens, Dell, China Resources Land and Guangzhou
Metro.
During the Reporting Period, M&G Colipu launched convenient shopping service to expand the
market of SMEs through sound products with low price and low operation cost.
(2) Warehouse Distribution and Logistics
During the Reporting Period, M&G Colipu enhanced supervision on order, after-sale service,
logistics and distribution, improved quality of basic delivery, took measures to address wrong
delivery and damaged goods, and improved product packaging. The Company enhanced
delivery capability for “end-to-end”, and implemented supervision and operation management
for the entire order process, so delivery acceptance rate was increased. Optimizing available
areas and ranges of the four warehouses in East China, North China, South China and Central
China, the Company kept workload of different warehouses in good balance to improve overall
delivery effectiveness, and set up delivery team in nine cities including Shanghai, Beijing,
Guangzhou, Shenzhen and Tianjin, to improve customer experience.
4. Accelerate Growth of self-owned Large Retail Stores
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Unit: 0’000
M&G Life (consolidated) 2019 2018 2017 3-year average
Revenue 60,063.70 30,592.14 20,510.96 37,055.60
Net profit -804.67 -3,030.04 -4,114.99 -2,649.90
Of which, Jiumu Store 2019 2018 2017 Average in three years
Revenue 46,043.51 15,299.61 3,515.35 21,619.49
Net profit -693.11 -2,602.78 -989.07 -1,428.32
During the Reporting Period, M&G Life (including Jiumu Store) recorded a total operation
revenue of RMB600,637,000, increased 96.34% over the previous year. The Company actively
improved product portfolio and service model, fully developed Jiumu Store and tried some
remodeling for M&G Life stores, so as to better meet market demands from consumption
upgrading, and let people better enjoy writing and recording. As at the end of the Reporting
Period, the Company has 380 large retail stores in China, of which 119 are M&G Life, and 261
are Jiumu Stores (158 direct-sales stores and 103 franchising stores).
For M&G Life stores, the Company kept optimizing operation management, focused on adjusting
product mix and improving single store quality, continued to reduce loss and increase efficiency,
losses from M&G Life was reduced significantly during the Reporting Period. For Jiumu Store,
market expansion was accelerated, with new store opening in key cities, covering 55 cities in
China. The Company made continuous effort to improve and adjust product category, positioned
cultural and creative products more accurately and increased brand awareness of Jiumu Store.
WeChat mini program was launched, customer stickiness strengthened with membership
programs. These efforts are meant to better satisfy consumer demand for cultural and creative
products from consumption upgrading, increase market shares of the Company in premium
stationery segment, and upgrade brand image of the Company. With increasing brand influence
of Jiumu Store, brands of M&G benefited better exposure to the public.
5. Continue to expand M&G Technologies
Unit: 0’000
M&G Technologies 2019 2018 2017 3-year average
Operating revenue 29,668.20 23,434.15 18,530.70 23,877.68
Net profit -120.59 963.31 1,329.54 724.09
During the Reporting Period, M&G Technologies followed the omni-channel strategy, and
recorded revenue of RMB296,682,000, representing growth of 26.60% over the previous year.
M&G products ranked the first in online retail value for student writing instruments, learning
auxiliary, painting materials and paper book in Taobao system. M&G Technologies facilitated
the development and optimization of new products to penetrate the market and strengthen its
brand position. The number and quality of online stores of the brand were increased to ensure
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sustainable online development for M&G brand, while online products were improved and
promoted to explore online incremental categories.
6. Promote Design and R&D
As a national high- and new-tech enterprise, the Company has been striving to research and
develop core technologies and production, and keep continuous innovation to provide
consumers with good products using industry-leading technologies. During the Reporting Period,
the Company kept innovating in all its product segments, optimized product mix in different
categories, better linked products with supply chain, made some breakthroughs in certain key
categories, further improved the product portfolio. Progress in R&D and manufacturing of full
food-grade watercolor ink improved safety for arts and kids drawing segment. The successful
development of formulas for several new oil pastels improved applicability and cost
competitiveness of products. The needle nib with the smallest diameter was successfully
developed, and put into lot production smoothly to fill the gap in the category of writing
instruments. The Company developed Chinese lead-free material for nib manufacturing and
processing to address safety problems in the supply of core materials, helping environmental
protection in China. The third and fifth research projects on the 13th Five-Year National Key R&D
Program—New Environmentally Friendly Materials for Writing Instrument proceeded smoothly
with several sub-projects completed.
In October 2019, the Company again obtained High- and New-tech Enterprise Certificate jointly
issued by Shanghai Municipal Science and Technology Commission, Shanghai Finance Bureau
and Shanghai Municipal Tax Service, State Taxation Administration with another term of three
years.
7. Continue to Improve Internal Management
Production center focused its efforts on improving efficiency, eliminating bad practice, and
boosting morale. By implementing measures aimed at efficiency, quality, cost, delivery time,
safety, morale and environment, operation capacity was improved.
Various business team strengthened cross function coordination, for example, product and
design team worked on improving pain points in consumer survey, product planning,
technological R&D, product design, manufacturing, logistics, and customer complaints, so as to
improve product quality. Supply chain resources were further integrated to support development
of hit products and high-value products.
The Company’s lean production program of MPS (M&G Production System), which was
launched in 2015, was upgraded to a comprehensive program of MBS (M&G Business System)
in 2019. The Company continued to learn from advanced global management experience and
to improve management capability. For human resources, the Company improved its position
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and title system, promoted performance by performance management, continued building talent
training system and accelerated reserve of qualified managers.
8. Continue Digitization
During the Reporting Period, the Company continued to empower businesses with data, build
in-house data middle platform, integrated various existing information systems with data,
mobilizing resources to solve prioritized business pain points, and met the growing demand from
external businesses. For sales system, focus on rolling out M&G Alliance APP to push the
digitalization of channel; for production system, better data connection between quality
inspection and MES backoffice system; for financial system, updated group financial reporting
software and improved work efficiency.
II. Financial Performance during the Reporting Period
In 2019, the Company recorded revenue of RMB11,141,101,400, representing an increase of
30.53% as compared to the corresponding period of last year. The net profit attributable to
shareholders of the listed company amounted to RMB1,060,083,600, representing an increase
of 31.39% as compared to the corresponding period of last year, while net profit attributable to
shareholders of the listed company after deducting non-recurring profit and loss amounted to
RMB1,005,187,800, representing an increase of 34.13% as compared to the corresponding
period of last year. As at the end of 2019, total asset of the Company amounted to
RMB7,565,115,300, representing an increase of 33.25% as compared to the corresponding
period of last year. The net asset attributable to shareholders of the listed company amounted
to RMB4,201,500,400, representing an increase of 23.18% as compared to the corresponding
period of last year. The Company has maintained healthy and rapid growth, with sound operation
of its asset.
(1) Analysis of principal operation
1. Analysis of change in certain items in income statement and cash flow statement
Unit: Yuan Currency: RMB
Item Amount in the
Amount in the Change in the
same period last
current period proportion (%)
year
Revenue 11,141,101,364.44 8,534,988,597.55 30.53
Operation cost 8,229,837,268.86 6,330,446,740.16 30.00
Selling expenses 980,166,101.18 789,386,543.37 24.17
Administrative expenses 469,262,188.13 379,618,754.18 23.61
R&D expenses 160,403,362.97 114,388,916.75 40.23
Financial expenses -8,397,277.65 -7,959,449.65 -5.50
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Net cash flow generated from 1,081,941,383.68 827,940,565.51 30.68
operating activities
Net cash flow generated from -74,352,686.18 -295,966,108.35 74.88
investing activities
Net cash flow from financing -364,300,101.66 -225,100,000.00 61.84
activities
2. Analysis of revenue and cost
"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company recorded revenue of RMB11,141,100,000,
representing an increase of 30.53% as compared to the corresponding period of last year. The
increase is mainly attributable to:
(1) In 2019, the traditional core business achieved steady growth with a year-on-year
increase of 20%. As a leading company in the stationery and office supplies industry, we
benefited from our competitive advantages of distribution channel, brand recognition, design and
R&D, and supply chains. Given that the stationery and office supplies industry in China are still
quite fragmented, there is still room for the Company to increase its market share.
(2) In 2019, new businesses continued rapid growth: M&G Colipu and M&G Life grew by
51% compared with last year. Among this, M&G Colipu grew 41.45% from last year, mainly due
to the much larger scale of the market of direct office supplies service. According to industry
research report from securities company, the scale of the market of broad office supplies
(including office furniture, equipment and other office supplies) in China reached more than
RMB1 trillion. Regulation on the Implementation of the Government Procurement Law of the
People's Republic of China in 2015 explicitly requires that the state shall promote the utilization
of information networks for carrying out digital government procurement. In the same year,
General Office of the State Council issued the Notice of the General Office of the State Council
on Issuing the Work Plan for Integrating and Establishing a Uniform Public Resources Trading
Platform, requiring that a public resources trading platform with unified regulations, openness
and transparency, efficient service and standard supervision should be developed across the
country to achieve transaction of public resources by digital in the whole process. With such
strong promotion and national policy supports, B2B office supplies procurement got the historical
opportunities for rapid development.
Revenue from the principal business amounted to RMB11,139,921,600, accounting for 99.99%
of the operation revenue and representing an increase of 30.54% as compared to the
corresponding period of last year. Cost of the principal business amounted to
RMB8,229,332,400, representing an increase of 30.00% as compared to the corresponding
period of last year. The increase in cost is a main result of the growth in revenue.
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Annual Report 2019
With the development in business, direct sales of office supplies and large retail store business
of the Company gradually expanded. In order to better reflect product and business modules of
the Company, the Company made segment disclosure for direct sales of office supplies,
accordingly, principal business reporting format by industry and product was adjusted for the
Reporting Period.
(1). Result of principal business by industry, product and region
Unit: Yuan Currency: RMB
Result of principal business by industry
Change in
Change in Change in gross
Gross
revenue cost from profit
By industry Revenue Operation cost margin
from last last year margin
(%)
year (%) (%) from last
year (%)
Manufacturing and 7,085,012,384.59 4,856,789,638.83 31.45 21.62 19.75 Increase
sales of stationery by 1.07
and office supplies percentage
points
Retail industry 4,050,346,491.25 3,372,542,728.19 16.73 49.69 48.27 Increase
by 0.80
percentage
points
Service industry 4,562,765.09 / / /
Result of principal business by product
Change in
Change in Change in gross
Gross
revenue cost from profit
By product Revenue Operation cost margin
from last last year margin
(%)
year (%) (%) from last
year (%)
Writing 2,186,591,691.37 1,383,090,906.87 36.75 12.26 9.28 Increase
instruments by 1.72
percentage
points
Student stationery 2,645,275,497.55 1,781,278,080.67 32.66 42.35 44.14 Decrease
by 0.83
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Annual Report 2019
percentage
points
Office stationery 2,346,944,916.66 1,725,910,247.56 26.46 15.86 14.76 Increase
by 0.70
percentage
points
Other products 298,485,107.73 159,902,745.78 46.43 233.85 238.49 Decrease
by 0.73
percentage
points
Direct sales of 3,658,061,662.53 3,179,150,386.14 13.09 41.45 42.47 Decrease
office supplies by 0.62
percentage
points
Management fee 4,562,765.09 68.41
for franchising
Result of principal business by region
Change in
Change in Change in gross
Gross
revenue cost from profit
By Geography Revenue Operation cost margin
from last last year margin
(%)
year (%) (%) from last
year (%)
China 10,949,351,918.16 8,098,106,055.92 26.04 30.15 29.53 Increase
by 0.35
percentage
points
Other countries 190,569,722.77 131,226,311.10 31.14 57.79 66.68 Decrease
by 3.67
percentage
points
Explanation on result of principal business by industry, product and geography
1. Revenue from principal business of the Company includes revenue from manufacturing and
selling stationery and office supplies, revenue from retail industry and revenue from service
industry.
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2. Revenue from retail industry refers to revenue gained by M&G Colipu and M&G Life through
selling non-M&G products. During the Reporting Period, sales of the above categories grew
continuously.
3. Writing instruments refers to products of writing utensil sold by the Company (excluding M&G
Colipu).
4. Student stationery refers to products of student stationery sold by the Company (excluding
M&G Colipu). During the Reporting Period, revenue from student stationery increased by 40.53%
as compared to the corresponding period of last year, mainly because of sales increase and the
acquisition of Axus Stationery.
5. Office stationery refers to products of office supplies sold by the Company (excluding M&G
Colipu).
6. Other products refers to products sold by the Company (excluding M&G Colipu) apart from
writing instruments, student stationery and office supplies. During the Reporting Period, revenue
from other products increased by 233.85% as compared to the corresponding period of last year,
mainly because large retail store expanded business quickly and sales increased.
7. Direct sales of office supplies refer to products in all categories sold by M&G Colipu. During
the Reporting Period, business of M&G Colipu developed rapidly.
8. Revenue from other countries increased by 57.79%, mainly because of the increase of
overseas sales from Axus Stationery.
Unit: 0’000
Result of revenue by business
Businesses Revenue in Revenue in Change in Change
2019 2018 amount
Traditional core 665,068.98 551,090.85 113,978.13 21%
business
Colipu Office 365,806.17 258,604.90 107,201.27 41%
Supplies
business
Retail large 60,063.70 30,592.14 29,471.56 96%
store business
E-commerce 29,668.20 23,434.15 6,234.05 27%
business
Transactions -6,496.91 -10,223.18 3,726.27
offset
Total 1,114,110.14 853,498.86 260,611.28 31%
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(2). Analysis of production and sales volume
"√ Applicable" "□ Not applicable"
Change in Change in Change in
Major production sales from inventory
Unit Production Sales Inventory
products from last last year from last
year (%) (%) year (%)
Writing Piece 2,301,956,388 2,270,730,687 580,672,713 6.84 8.30 5.68
instruments
Student Piece 5,494,359,548 5,305,245,796 644,449,966 36.85 33.01 41.53
stationery
Office Piece 1,423,262,635 1,413,678,371 138,580,624 8.63 7.90 7.43
stationery
Other Piece 12,576,071 9,178,022 5,410,802 192.28 197.66 168.83
products
Direct Piece 290,473,435 288,518,320 21,113,972 12.83 13.73 10.20
sales of
office
supplies
Explanation on production and sales volume
Production volume increased with sales. The growth in the production and sales volume of
student stationery is helped by the acquisition of Axus Stationery. The growth in the production
and sales volume of other products is mainly because large retail store expanded business
quickly and sales increased.
(3). Analysis of cost
Unit: RMB Yuan
By industry
Percentage
change in
Percentage the amount
Percentage
of total for the Explanation
of total Amount in the
Amount in the costs for current on
By industry Cost item costs for same period
current period the same period as the
the current last year
period last compared situation
period (%)
year (%) to the
same
period last
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Annual Report 2019
year (%)
Manufacturing Cost of 4,856,789,638.83 59.02 4,055,859,578.58 64.07 19.75
and sales of principal
stationery and business
office supplies
Retail industry Cost of 3,372,542,728.19 40.98 2,274,564,994.95 35.93 48.27
principal
business
Service / / / / / / /
industry
By product
Percentage
change in
the amount
Percentage
Percentage for the
of total Explanation
of total Amount in the current
Amount in the costs for on
By product Cost item costs for same period period as
current period the same the
the current last year compared
period last situation
period (%) to the
year (%)
same
period last
year (%)
Writing Cost of 1,383,090,906.87 16.81 1,265,617,160.50 19.99 9.28
instruments principal
business
Student Cost of 1,781,278,080.67 21.65 1,235,797,751.80 19.52 44.14
stationery principal
business
Office Cost of 1,725,910,247.56 20.97 1,503,891,848.04 23.76 14.76
stationery principal
business
Other Cost of 159,902,745.78 1.94 47,239,918.50 0.75 238.49
products principal
business
Direct sales of Cost of 3,179,150,386.14 38.63 2,231,387,838.70 35.25 42.47
office supplies principal
business
Management Cost of / / / / / /
fee for principal
franchising business
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Annual Report 2019
Explanation on other situations of cost analysis
Cost increased simultaneously with sales. The growth in the costs of student stationery is mainly
because of sales increase and the acquisition of Axus Stationery. The growth in the costs of
other products is mainly because large retail store expanded business quickly and sales
increased.
(4). Major customers and suppliers
"√ Applicable" "□ Not applicable"
Sales of the top 5 customers amounted to RMB2,389,602,700, accounting for 21.45% of the
total annual sales. Of the sales of the top 5 customers, sales of related parties amounted to
RMB387,821,100, accounting for 3.48% of the total annual sales.
Unit: RMB Yuan
Rank Customer name Amount Related relationship
1 First 952,212,757.52 No
2 Second 477,565,530.73 No
3 Third 387,821,087.67 Yes
4 Fourth 288,003,073.21 No
5 Fifth 284,000,271.72 No
Total 2,389,602,720.85
Related relationship between the Company and top five customers in 2019: the third customer
is Nanjing Zhaochen Stationery Sales Co., Ltd, a sales company controlled by Guo Weilong who
is the younger brother of the spouse of Chen Huxiong, CEO of the Company. According to Article
VIII and X set out in Guidelines for the Affiliated Transactions of Listed Companies, Guo Weilong
is deemed as a related natural person of the Company, and the sales company controlled by
him is the related legal person of the Company.
Purchase amount of the top 5 suppliers amounted to RMB1,087,111,000, accounting for 13.52% of
the total annual purchase amount. Of the purchase amount of the top 5 suppliers, purchase amount
of related parties amounted to RMB0, accounting for 0% of the total annual purchase amount.
Unit: RMB Yuan
Rank Rank of supplier Amount Related relationship
1 First 380,013,748.41 No
2 Second 223,976,162.51 No
3 Third 180,407,188.66 No
4 Fourth 169,037,053.67 No
5 Fifth 133,676,870.68 No
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Annual Report 2019
Total 1,087,111,023.93
There was no related relationship between the Company and the top 5 suppliers in 2019.
Other explanation
No
3. Expense
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
Item in Amount in the Amount in the Change (%) Reason for
statement current period last period change
Selling 980,166,101.18 789,386,543.37 24.17
expenses
Administrative 469,262,188.13 379,618,754.18 23.61
expenses
R&D expenses 160,403,362.97 114,388,916.75 40.23 Please see
details below
Financial -8,397,277.65 -7,959,449.65 -5.50
expenses
Explanation on the reason for change in R&D expenses:
R&D expenses increased by RMB46,014,400, representing an increase of 40.23% as compared
to the corresponding period of last year. Reason for change: investment in R&D in traditional
business, investment in development of Colipu's new IT system, and increased R&D expenses
from the acquisition of Axus Stationery.
4. R&D investment
(1). Table of R&D investment
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
Expensed R&D investment in the 160,403,362.97
current period
Capitalized R&D investment in the 0.00
current period
Total R&D investment 160,403,362.97
Percentage of total R&D investment 1.44
to operation revenue (%)
Number of the Company’s R&D staff 459
Percentage of the number of R&D 8.12
staff to the Company’s total number
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Annual Report 2019
of employees (%)
Percentage of capitalized R&D 0.00
investment (%)
(2). Explanation on the result
"√ Applicable" "□ Not applicable"
The total R&D investment accounts for 4.08% of operation revenue of the parent company
5. Cash flow
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
Amount in the
Amount in the Reason for
Item same period last Change (%)
current period change
year
Mainly because
of growth in sales
Net cash flow and profit and
generated from benefit from
1,081,941,383.68 827,940,565.51 30.65
operating effective
activities management of
cash flow from
operating activity.
Mainly because
Net cash flow
of the net
generated from
-74,352,686.18 -295,966,108.35 74.88 redemption of
investing
bank financial
activities
product.
During the
Reporting Period,
growth achieved
in distributed
Net cash flow
dividends and
from financing -364,300,101.66 -225,100,000.00 61.84
interest
activities
payments as
compared to the
same period last
year, and
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Annual Report 2019
influence in
change of
borrowings
repaid by Axus
Stationery to
financial
institutions.
(2) Explanation on significant change of profit caused by non-core business
"□ Applicable" "√ Not applicable"
(3) Analysis of assets and liabilities
"√ Applicable" "□ Not applicable"
1. Assets and liabilities
Unit: RMB Yuan
Change in
Percentage Percentage
percentage
of total of total
Amount as at the for the
assets Amount as at the assets
Items end of the current Explanation
at the end end of last period at the end
current period period over
of current of last
the last
period (%) period (%)
period (%)
Cash and 1,935,600,694.35 25.59 1,046,668,874.97 18.44 84.93 Increase in cash and
equivalents equivalents brought by
the growth of income and
net profit
Held-for-trading 661,878,587.24 8.75 0.00 According to
financial assets requirements in New
Standards of Financial
Instruments, bank
financial product is
reclassified into financial
assets held for trading
Bills receivable 0.00 1,894,232.00 0.03 -100.00 According to
requirements in New
Standards of Financial
Instruments, bills
receivable are reclassified
into receivable financing
by nature
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Annual Report 2019
Receivables 29,549,924.83 0.39 0.00 According to
financing requirements in New
Standards of Financial
Instruments,
reclassification should be
performed based on the
nature of bills receivable
and factoring of the
accounts receivable
Prepayment 85,371,444.73 1.13 42,336,973.71 0.75 101.65 Payment settled in
advance for goods
because of the business
development of the
Company
Inventories 1,378,108,759.85 18.22 1,042,701,610.00 18.37 32.17 Inventories in the
acquisition of Axus
Stationery during the
Reporting Period, and
inventories prepared in
advance for primary
schooling peak
Other current 29,280,925.29 0.39 1,046,977,400.35 18.44 -97.20 According to New
assets Standards of Financial
Instruments, bank
financial product is
reclassified into financial
assets held for trading
Available-for-sale 0.00 3,600,000.00 0.06 -100.00 According to New
financial assets Standards of Financial
Instruments, available-for-
sale financial assets are
reclassified to investment
in other equity
instruments
Long-term 6,624,590.00 0.09 0.00 Mainly from
receivables compensation for the
Company made by
original shareholders of
Axus Stationery for audit
adjustment and related
losses during the period
according to the
agreement
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Annual Report 2019
Investments in 3,909,179.93 0.05 0.00 According to
other equity requirements in New
instruments Standards of Financial
Instruments, the item is
the investment for
Shanghai M&G Culture
and Creativity (上海晨光
文化创意) held by the
Company for non-
transaction purpose
Fixed assets 1,163,702,352.12 15.38 876,617,888.99 15.44 32.75 Mainly due to the fixed
assets in the acquisition
of Axus Stationery during
the Reporting Period
Construction in 260,469,728.76 3.44 24,506,469.59 0.43 962.86 Mainly due to investment
progress in the construction project
of new Qingcun
production base during
the Reporting Period
Intangible assets 331,005,762.09 4.38 187,987,875.67 3.31 76.08 Mainly due to intangible
assets of land use rights
in the acquisition of Axus
Stationery during the
Reporting Period
Goodwill 30,175,537.19 0.40 131,001.23 0.00 22,934.54 Consideration for the
acquisition of Axus
Stationery exceeded the
assessed net assets
during the Reporting
Period
Deferred income 36,623,535.59 0.48 25,525,520.98 0.45 43.48 Mainly due to deferred
tax assets income tax assets
recorded through
deductible temporary
differences arising from
increased asset
impairment provisions
and unrealized profits
from internal transactions
Short-term 182,979,528.81 2.42 0.00 Mainly due to short-term
borrowings borrowing of Axus
Stationery from the bank
and financial institutions
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Annual Report 2019
during the Reporting
Period
Accounts payable 1,861,072,467.87 24.60 1,319,407,048.21 23.24 41.05 Mainly due to accounts
payable for purchasing
goods at primary
schooling peak season
and the acquisition of
Axus Stationery as at the
end of the Reporting
Period
Accounts received 206,762,293.94 2.73 147,647,053.87 2.60 40.04 Mainly due to amounts
in advance received in advance from
customers for primary
schooling peak season
during the Reporting
Period
Other payables 331,653,211.40 4.38 240,665,881.17 4.24 37.81 Mainly due to the
collection of risk margin
and provision of due
unpaid marketing fees
during the Reporting
Period
Deferred income 36,576,744.55 0.48 564,909.50 0.01 6,374.80 Mainly due to the
tax liabilities acquisition of Axus
Stationery at a premium
during the Reporting
Period
Other 526,359.55 0.01 0.00 Mainly due to translation
comprehensive difference for Axus
income Stationery’s financial
statement with foreign
currency and changes in
fair value of investment in
other equity instruments
during the Reporting
Period
Minority equity 259,424,856.61 3.43 85,856,179.34 1.51 202.16 Mainly due to the new
minority equity for the
acquisition of Axus
Stationery during the
Reporting Period
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Annual Report 2019
Other explanation
No
2. Major restricted assets as at the end of the Reporting Period
"√ Applicable" "□ Not applicable"
(1) On 29 March 2017, Axus Stationery and Shanghai Pudong Development Bank Co., Ltd.
Songjiang Branch (hereinafter referred to as “SPD Bank”) entered into the Factoring Agreement
under the contract No. 98082013280133 to provide factoring service through the pledge of
accounts receivable (USD). As of 31 December 2019, Axus Stationery's unpaid factoring
borrowing was USD427,099.11 (equivalent to RMB2,979,528.81).
(2) On 29 October 2019, Axus Stationery and China Merchants Bank Co., Ltd. Shanghai Branch
entered into the Facility Agreement (No. 121XY2019028027) with facility amount of
RMB180,000,000.00 for 12 months from 30 October 2019 to 29 October 2020. Pursuant to the
agreement, Axus Stationery and China Merchants Bank entered into the Maximum Mortgage
Contract (No.121XY2019028027) with the mortgage term from the effective date of the mortgage
contract to the termination of litigation for facility credit. The collaterals for mortgage include:
Name of collateral Ownership Original value Accumulated Net value
No. depreciation
No. 111 Xuezi South HFDQ Zi 47,061,453.52 22,483,546.11 24,577,907.41
Road, Xianghuaqiao (2013) No.
Street, Qingpu 015437
District
No. 233 Xuezi South HFDQ Zi 32,156,238.78 11,248,094.31 20,908,144.47
Road, Xianghuaqiao (2013) No.
Street, Qingpu 013396
District
No. 333 Xuezi South HFDQ Zi 60,230,210.97 12,418,790.03 47,811,420.94
Road, Xianghuaqiao (2015) No.
Street, Qingpu 015718
District
Total 139,447,903.27 46,150,430.45 93,297,472.82
3. Other explanation
"□ Applicable" "√ Not applicable"
(4) Analysis on industry operating information
"√ Applicable" "□ Not applicable"
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Annual Report 2019
Please refer to “Description of the Company’s Principle Business, Operation Model and Industry
Condition During the Reporting Period” set out in “Business Overview of the Company”of Section
III.
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Annual Report 2019
(5) Analysis of investment
1. Overall analysis of external equity investment
"√ Applicable" "□ Not applicable"
During the Reporting Period, total external investment of the Company amounted to
RMB211,038,100, representing a decrease of 41.52% as compared to the total investment of
RMB360,875,700 in corresponding period of last year.
(1) Significant equity investment
"√ Applicable" "□ Not applicable"
1. In 2018, the Company increased capital by RMB322,000,000 for M&G Colipu in cash. The
amount pledged but not yet contributed is RMB322,000,000. For more details, please refer to
the Announcement on Increasing Capital for Controlled Subsidiary (announcement No.: 2018-
034) disclosed by the Company on 9 November 2018. As at the end of the Reporting Period, the
actual contribution of capital made by the Company amounted to RMB98,000,000, of which
premium is RMB28,000,000, and amount promised but not yet settled is RMB252,000,000;
2. On 22 March 2019, the Company entered into the Equity Transfer Agreement of Axus
Stationery (Shanghai) Company Ltd. with Axus Stationery (Shanghai) Company Ltd. and its
shareholder Yilin Investment (Shanghai) Co., Ltd.(懿琳投资(上海)有限公司), Mr. Xu Peifeng and
Mr. Andre FrancisViegas, the actual controllers of Beilin Investment (Shanghai) Co.,Ltd.(倍林投
资(上海)有限公司) and Highton Limited respectively, to acquire 56% equity of Axus Stationery
(Shanghai) Company Ltd. at the consideration of RMB177,038,100. As at the end of the
Reporting Period, the actual contribution of capital made by the Company amounted to
RMB170,006,000, and the amount promised but not yet settled is RMB7,032,100. For more
details, please refer to the Announcement on the Acquisition of 56% of Equity of Axus Stationery
(Shanghai) Company Ltd., Announcement on Update on the Acquisition of 56% of Equity of Axus
Stationery (Shanghai) Company Ltd., and Announcement on Update on the Acquisition of 56%
of Equity of Axus Stationery (Shanghai) Company Ltd. disclosed by the Company on 26 March
2019, 9 April 2019 and 30 July 2019 respectively under the announcement No.2019-009, 2019-
011 and 2019-022 respectively. Acquisition was completed at the end of April 2019, and started
to be included into the consolidated statement of the Company.
(2) Significant non-equity investment
"□ Applicable" "√ Not applicable"
(3) Financial assets measured at fair value
"□ Applicable" "√ Not applicable"
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Annual Report 2019
(6) Sale of significant assets and equity interests
"□ Applicable" "√ Not applicable"
(7) Analysis of major controlled companies and shareholding companies
"√ Applicable" "□ Not applicable"
Unit: 0’000 Currency: RMB
Company Name Nature of the Major Registered Total asset Net assets Net profit
business products capital
and
services
Shanghai M&G
Zhenmei Stationery
Wholesale and
Stationery Co., and office 1,000.00 3,214.99 -925.45 -426.55
retail
Ltd.(上海晨光珍 supplies
美文具有限公司)
Shanghai M&G
Wholesale and Office
Colipu Office 30,000.00 167,576.19 41,157.70 7,580.35
retail supplies
Supplies Co., Ltd.
Shanghai M&G
Stationery & Gift Stationery
Wholesale and
Co., Ltd.(上海晨 and office 19,941.94 100,954.21 38,718.02 4,987.75
retail
光文具礼品有限 supplies
公司)
M&G Living
Studio Enterprise
Stationery
Management Wholesale and
and office 10,000.00 37,086.02 -2,341.24 -804.67
Co., Ltd.(晨光生 retail
supplies
活馆企业管理有
限公司)
Shanghai M&G
Jiamei Stationery Manufacturing, Stationery
Co., Ltd.(上海晨 wholesale and and office 3,000.00 6,505.17 3,737.62 127.68
光佳美文具有限 retail supplies
公司)
Shanghai M&G
Wholesale and Office
Information 5,000.00 12,699.55 6,761.94 -120.59
retail supplies
Technology Co.,
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Annual Report 2019
Ltd.(上海晨光信
息科技有限公司)
Shenzhen Erya
Creative and Design,
Cultural office
Design and so
Development supplies 2,000.00 1,983.22 1,053.25 3.10
forth
Co., Ltd.(深圳尔 and so
雅文化创意发展 forth
有限公司)
Shanghai M&G
Wholesale and Office
Office Supplies 5,000.00 20,682.63 9,635.45 2,636.01
retail supplies
Co., Ltd.
Axus Stationery Production, Stationery
(Shanghai) sale and so and office 8,100.00 78,201.89 25,273.66 -993.49
Company Ltd. forth supplies
Note: Acquisition of 56% equity of Axus Stationery by the Company during the Reporting
Period was completed at the end of April 2019, and started to be included into the consolidated
statement of the Company.
(8) Structured entities controlled by the Company
"□ Applicable" "√ Not applicable"
III. Discussion and analysis on future development of the Company
(1) Industry pattern and trend
"√ Applicable" "□ Not applicable"
As the way of life and consumption habit of consumers change, retail industry started a new
round of redevelopment and innovation. Stationery industry faces the challenge that uncertainty
of the external environment, decentralized diversification of consumption channel, individual
demands of the target consumption group (post-90s and post-00s) stimulate the demand for new
products. As population structure changes in China and the birth rate declines, contributions of
growth in sales volume only to revenue weakens in stationery industry, so more revenue growth
will be contributed by consumption upgrading and product upgrading in the future. As domestic
consumption market becomes increasingly mature, demand for mid- to high-end pen products
in the Chinese market keeps increasing, helping enterprises to expand beyond the low-end pen
products market, and providing opportunities and challenges for mid- to high-end products with
high quality and high price.
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Annual Report 2019
Traditional business circles around the schools are still the leading ones, while other business
circles and form of sales increase rapidly, and sales terminal becomes diversified. New channels
and forms of business are developed gradually, with upgrading and competition in channels
becoming increasingly obvious. Stationery consumption tends to be more brand-oriented,
innovative, individualized and high-end in China, and there is a growing demand for exquisite
cultural and creative products, promoting stationery upgrading and transforming to cultural and
creative life. With the constant development in the market, stationery industry becomes gradually
centralized in market with the M&A accelerating in upstream and downstream continuously, and
integration space in the industry further opened. Excellent brand stationery enterprises are in a
strong position in the market, so the strong will get stronger, and market shares will be quickly
occupied by leading enterprises.
Market of direct sales to offices achieved prosperous development. According to industry
research report made by the securities company, the scale of large market for office supplies
(including office furniture, equipment and other office materials) in China reached more than
RMB1 trillion. Regulation on the Implementation of the Government Procurement Law of the
People's Republic of China implemented in 2015 expressly requires that the state shall promote
the utilization of information networks for carrying out government procurement activities in
electronic manners. In the same year, General Office of the State Council issued the Notice of
the General Office of the State Council on Issuing the Work Plan for Integrating and Establishing
a Uniform Public Resources Trading Platform, requiring that a public resources trading platform
with unified regulations, openness and transparency, efficient service and standard supervision
should be developed across the country to basically realize electronic transaction of public
resources in the whole process. Benefiting from the great promotion and support from national
policies, B2B office supplies procurement got the historical opportunities for rapid development.
The 1.4 billion population in China accounts for 18% of the total population in the world, and
excellent stationery enterprises in China have a vast space for greater development in global
market. During the Reporting Period, 98% revenue of the Company is contributed by domestic
market, and the international market share is expected to increase.
(2) Development strategy of the Company
"√ Applicable" "□ Not applicable"
To further the competitive advantage of the core traditional business by continued emphasis on
innovation of technology and products; to further develop new businesses of one-stop office
supplies service and direct retail; to actively expand international market; and to further integrate
high-quality resources in the industry chain. With continued efforts in those four areas, to reach
the goal of becoming the number one stationery brand(s) in China.
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Annual Report 2019
(3) Operation plan
"√ Applicable" "□ Not applicable"
In 2020, the Company plans to reach revenue of RMB12,812,266,600, an increase of 15%,
mainly through the following approaches:
1. Traditional core business
Businesses in domestic stationery industry are relatively decentralized. There are many
manufacturers with small average scale, so industrial concentration remains quite low.
Thousands of stationery manufacturers in China are currently divided into different subdivided
stationery categories. As there is no leading enterprise with relatively high market shares in most
of the subdivided stationery categories, the Company has much room for greater improvement.
Making good use of the existing advantages in channel, brand, design and R&D and supply
chain, the Company is expected to maintain fast and stable growth in traditional core business.
(1) Focus on and further develop channel
The Company will focus on key terminals, and build perfect stores to improve quality in a single
store, facilitate the optimization and upgrading of franchising stores and delivery centers, and
upgrade channel. Besides, the Company will also strengthen promotion for categories and
special zones for products to increase on-sale rate of the must-have products, and actively
explore new business models to create driving force for sale, increase proportion in business
circles and expand market share, making breakthroughs in both the existing stock market and
increment market.
(2) Promote four product sectors comprehensively
① Consumer products
The Company will continue to improve stronger product strategy, and set up the assurance
process for quality of newly developed products to achieve target development with less quantity
but higher quality, and increase contribution of individual product. Focus will be placed on
product management of key categories to develop long-term products and high-quality products.
Promotion for category will be carried out collaboratively with offline distribution channel to
increase on-sale rate, while coordination will be made with online channel to increase online
sales of consumer products.
② Exquisite cultural and creative products
The Company will optimize inventory of exquisite cultural and creative products, ameliorate
development and presentation plan for key categories based on terminal sale to develop
formations of exquisite cultural and creative products with strong function, and manage SKU to
increase the contribution of individual product. Besides, the Company will also optimize
marketing window and the timing of launching, and popularize key categories with breakthroughs
through seizing market opportunities and collaborating research, production and sale. Brand of
exquisite cultural and creative products will be popularized and customer stickiness will be
enhanced through summit of exquisite cultural and creative products.
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③ Office supplies
The Company will enhance development and promotion of office supplies to put core products
on sale, and expand M&G stores for office supplies and establish perfect stores for office
supplies on a continuous basis. Focus will be placed on key development and breakthrough of
“mega customer”, “extensive category” and “large platform” to facilitate development of large
office terminal customers. Moreover, the Company will focus on the development of online office
supplies in all categories and multiple channels, and stimulate sales growth and increase market
shares in office supplies market through seeking new customers continuously and improving
sales in the single store of established customers.
④ Arts products for children
The Company will optimize product structure and promote long-term products and new products.
The Company will also increase brand influence, optimize development of new products and
enhance contributions from individual product, and facilitate rapid growth in e-commerce to
develop new e-commerce categories and establish new e-commerce stores. CARIOCA products
will be promoted through online and offline channel, and Marco products of Axus Stationery will
be further developed and popularized.
2. New business
(1) Keep expanding operation of M&G Colipu
Business in direct sales of office supplies continues to achieve booming development since M&G
Colipu follows requirement on well-informed, open and transparent government procurement,
and meets requirements that enterprises desire to increase procurement efficiency and reduce
procurement cost for non-production office and administration supplies. Brand enterprise
continues to enhance competitiveness through improving service quality, enriching product
categories, seeking more customers and developing national supply chain system, so M&G
Colipu is expected to maintain relatively rapid growth, and become one of the main competitors
in the market of direct sales of office supplies.
M&G Colipu will redouble its efforts to develop sales teams in the south China, north China and
central China so that it can expand local market and increase coverage of large projects.
Furthermore, the Company will also further improve its capacity in supplying products to enhance
customer stickiness, get shortlisted in more new comprehensive e-commerce projects from
state-owned enterprises and win bidding for the Group's comprehensive promotion to expand its
existing shares. Efforts will be made to construct central warehouse in the northeast China, and
start and facilitate construction and establishment of central warehouse in the northwest China.
In addition, the Company will popularize Colipu's convenient shopping service(省心购) to expand
the market of small and micro businesses by providing sound products with low price and low
operation cost.
(2) Combine direct sale with franchise to further explore the business model of large retail store
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In terms of M&G Life, the Company will improve operation capacity of the stores and sales of
per employee, optimize human resource cost for stores, and increase orders from customers
and quality of existing single store so as to improve new product launch strategy, accelerate
iteration of products and increase efficiency of products. In terms of Jiumu Store, the Company
will speed up channel layout, enhance the development of operation team and explore
opportunity for new categories to strengthen development capacity for original products,
integrate high-quality supply chain resources, improve supply chain management, and upgrade
channel and product.
(3) Accelerate development of M&G Technologies
The Company will continue to focus on making breakthroughs in e-commerce channel, and
develop best-selling products of new categories to accelerate development for online distribution
channel and improve key stores. Moreover, the Company will cultivate its capacity to develop
online products, improve online product formations and promotion, and develop new scenes and
categories so as to continuously create incremental online categories, improve promotion
efficiency for categories and enhance brand exposure. Attention will be paid to management of
market order to enhance control on distribution system.
(4) Potential risks
"√ Applicable" "□ Not applicable"
1. Risks in operation management
With the great growth in the scale of assets and sale of the Company, the Company faces new
challenges in operation management system, internal control system and staff management.
Although the Company has developed operation management system and internal control
system that accord with features of its business and technology in its development, and hired
and cultivated stable core management team, operation of the Company will be adversely
affected if the aforesaid management system and management staff fail to promptly adapt to the
rapid expansion of the Company. Therefore, the Company will keep improving its management
system and internal control system, and adopt various measures to improve qualification of
management staff.
2. Market risks
With social transformation and consumption upgrading, stationery market presents opportunities
for structure-based development. If the Company is unable to anticipate market trends in time
and adapt to market changes from aspects of product upgrading, quality management to sale
strategy, the Company will encounter certain risks in market competition. Having been aware of
the problem, the Company enhanced product R&D under the guidance of the market, optimized
product structure, and developed a sounder quality management and control system. Market
strategies are formulated based on market survey, analysis of big data and management
discussion.
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3. Risks from fiscal and taxation
According to Article 28 of Enterprise Income Tax Law of the People's Republic of China, the
enterprise income tax on important high- and new-tech enterprises that are necessary to be
supported by the state shall be levied at the reduced tax rate of 15%. The Company was re-
recognized as a national high- and new-tech enterprise on 28 October 2019, and started to
implement the policy of reduced enterprise income tax rate of 15% on 1 January 2019 for 3 years.
If the state adjusts preferential income tax policy for high- and new-tech enterprises, or the
Company fails to pass the review after its qualification of high- and new-tech enterprise expires,
operation performance of the Company will be adversely affected. As such, the Company
performs strict control according to assessment standards for high- and new-tech enterprises to
ensure that it meets all indicators, and qualifies and passes the annual review and renewal for
high- and new-tech enterprises.
4. Risks from COVID-19
Since the outbreak of novel coronavirus (hereinafter referred to as “COVID-19”) at the beginning
of 2020, domestic economy growth and demand of foreign trade have slowed down significantly.
Although demand of stationery industry is relatively rigid, it has been affected by macro-economy
and delay in new semester, especially for primary and middle schools. The impact of COVID-19
on the macro-economy is uncertain, adding uncertainties to the Company’s operation in 2020.
The Company pays close attention to the development of COVID-19, and adopt active measures
to reduce risks and uncertainties brought by COVID-19.
(5) Others
"□ Applicable" "√ Not applicable"
IV. Explanation on the failure to disclose as per rules due to inapplicability or special
reasons such as state secrets and business secrets and the reasons thereof
"□ Applicable" "√ Not applicable"
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Annual Report 2019
Chapter V Major Events
I. Proposal for profit distribution of ordinary shares or capitalization of capital reserve
(1) Formulation, implementation or adjustment of the cash dividend policy
"√ Applicable" "□ Not applicable"
1. The existing profit distribution policy of the Company is implemented after it was passed at
the 16th meeting of the third Board meeting and 2016 annual general meeting.
2. Principle in profit distribution of the Company: The Company implements the dividend
distribution policy which entitles the shareholders to the same rights and same dividends, under
which shareholders are entitled to receive dividends and other kinds of distribution of interests
based on the number of shares held by them. The Company adopts active profit distribution
policy, which emphasizes investors’ reasonable investment returns while maintaining
sustainability and stability. The Company is allowed to distribute profit in cash or shares, but its
profit distribution shall not exceed the range of the accumulated distributable profits or affect the
Company’s ability to continue as a going concern.
3. Overall approaches to distribute profit of the Company: The Company distributes dividends in
cash or shares, or cash-and-shares, and if the Company satisfies the conditions for cash
dividends, priority should be given to profit distribution by means of cash dividends.
4. Specific conditions and proportion for cash dividends: The Company primarily adopts cash
dividend as its profit distribution policy. The Company may distribute cash dividend when it
makes a profit in the current year and the distributable profits are positive after making up losses,
contributing to the statutory reserves and surplus reserves, but the profit distribution shall not
exceed the range of the accumulated distributable profits. In general, if there are no material
investment plans or significant cash expenditure, the Company may distribute profit in cash for
a single year not less than 20% of the distributable profit realized in the current year.
In addition, as for the proportion of cash dividends to the total profit distribution, the Board of
Directors shall take into full account of various factors such as features of the industries where
the Company operates, the stage of development, its own business model, level of profitability,
and whether there is significant capital expenditure arrangement, to distinguish the following
situations and determine differentiated cash dividend proportion in accordance with the
procedures as required by the Articles of Association:
(1) If the Company is at a mature stage of development and has no significant capital expenditure
arrangement, the proportion of cash dividends in the profit distribution shall be at least 80% when
the profit distribution is made;
(2) If the Company is at a mature stage of development and has significant capital expenditure
arrangement, the proportion of cash dividends in the profit distribution shall be at least 40% when
the profit distribution is made;
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Annual Report 2019
(3) If the Company is at a growing stage of development and has no significant capital
expenditure arrangement, the proportion of cash dividends in the profit distribution shall be at
least 30% when the profit distribution is made;
(4) If the Company is at a growing stage of development and has significant capital expenditure
arrangement, the proportion of cash dividends in the profit distribution shall be at least 20% when
the profit distribution is made.
The aforesaid “significant investment plans” or “significant cash expenditure” refers to one of the
following:
(1) The proposed external investment, acquisition of assets or purchase of equipment by the
Company in the coming twelve months with accumulated expenses amounting to or exceeding
50% of the latest audited net assets of the Company and exceeding RMB50,000,000;
(2) The proposed external investment, acquisition of assets or purchase of equipment by the
Company in the coming twelve months with accumulated expenses amounting to or exceeding
30% of the latest audited total assets of the Company.
Significant investment plans or significant cash expenditure that meets the above conditions
shall be reviewed and approved at the general meeting after being reviewed by the Board
meeting.
5. During the Reporting Period, the formulation and implementation of the cash dividend policy
has complied with the Articles of Association and the resolutions of the general meetings. The
dividend distribution standards and proportions are clearly stated, and relevant decision making
procedures and systems are complete. Independent directors have diligently served their
obligations, and played their roles. As minority shareholders have opportunities to fully express
their opinions and appeals, their legitimate interests have been fully protected.
(2) Plan or proposal for dividend distribution of ordinary shares or transfer of capital
reserve fund to share capital of the Company for the latest three years (including the
reporting period)
Unit: Yuan Currency: RMB
Net profit Percentage of
Amount of attributable to the the net profit
Number dividends Number of ordinary attributable to
of bonus distributed shares shareholders of the ordinary
Amount of cash
Year of shares per 10 transferred the listed shareholders of
dividends
distribution per 10 shares per 10 company in the the listed
(inclusive of tax)
shares (Yuan) shares consolidated company in the
(shares) (inclusive (shares) financial consolidated
of tax) statements for the financial
distribution year statements (%)
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Annual Report 2019
2019 0 4 0 368,000,000.00 1,060,083,625.03 34.71
2018 0 3 0 276,000,000.00 806,847,308.41 34.21
2017 0 2.5 0 230,000,000.00 634,040,991.46 36.28
(3) The inclusion of shares repurchased through cash offer in cash dividend
"□ Applicable" "√ Not applicable"
(4) If the Company records profit distributable to ordinary shareholders of the Company
during the Reporting Period is positive but there is no proposal for cash dividend,
the Company shall disclose the reasons, the usage and the utilization plan of the
undistributed profits in detail
"□ Applicable" "√ Not applicable"
II. Performance of undertakings
(1) Undertakings by the Company’s beneficial controllers, shareholders, related parties,
acquirers, the Company and other related parties during or subsisted in the
Reporting Period
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Annual Report 2019
"√ Applicable" "□ Not applicable"
Time and term of the undertaking
If not performed in time, describe
If not performed in time, describe
Whether strictly performed in a
Whether there is deadline for
Background of undertakings
Type of undertakings Types
the specific reasons
plans in next steps
Undertaking party
timely manner
performance
Type of undertakings
Contents of the undertaking
Undertaking for restriction on sale of shares and voluntary lockup 36 months Yes Yes
M&G Group, Chen Huwen, Chen Huxiong, and Chen Xueling
Undertakings related to initial public offering
Restriction on sale of shares
undertaking by the controlling shareholder—M&G Group, and
beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling
(1) Within 36 months from initial public offering and listing of the
Company, the shares of the Company issued prior to the offering or
listing shall neither be transferred or entrusted to other person for
management, nor be repurchased by the Company as required.
(2) If the closing price of the shares has been lower than the issue
price for 20 consecutive trading days within 6 months after shares of
Company are issued in the initial public offering, or the closing price is
lower than the issue price as at the end of the six-month period upon
the listing, the lockup period for shares of the Company held before the
offering or listing shall be automatically extended by 6 months based
on the 36 months of original undertaking period, in other words, the
lockup period is 42 months from the date when shares of the Company
are listed. If there are any ex-rights or ex-dividends events, such as the
declaration of dividends, bonus issue, and capitalization from capital
reserve to share capital, the above closing price refers to price after
corresponding adjustment of price of shares of the Company;
(3) Within 24 months after the termination of lockup period, if any
attempt is made to reduce the shares of the Company that it had held
prior to the offering and listing by any means, the price of the
shareholding reduction shall not be lower than the offering price of the
Company's initial public offering shares at the time of the offering and
the listing. If there are any ex-rights or ex-dividends events, such as the
declaration of dividends, bonus issue, and capitalization from capital
reserve to share capital before the reduction of the aforesaid shares,
the price of the shareholding reduction should not be lower than the
adjusted offering price of the Company's initial public offering shares at
the time of the offering and the listing.
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Undertaking for restriction on sale of shares and voluntary lockup 36 months Yes Yes
Restriction on sale of shares
Keying Investment and Jiekui Investment
undertaking by Keying Investment and Jiekui Investment, shareholders
holding more than 5% of the equity
(1) Within 36 months from initial public offering and listing of the
Company, the shares of the Company issued prior to the offering or
listing shall neither be transferred or entrusted to other person for
management, nor be repurchased by the Company as required.
(2) If the closing price of the shares has been lower than the issue
price for 20 consecutive trading days within 6 months after shares of
Company are issued in the initial public offering, or the closing price is
lower than the issue price as at the end of the six-month period upon
the listing, the lockup period for shares of the Company held before the
offering or listing shall be automatically extended by 6 months based
on the 36 months of original undertaking period, in other words, the
lockup period is 42 months from the date when shares of the Company
are listed. If there are any ex-rights or ex-dividends events, such as the
declaration of dividends, bonus issue, and capitalization from capital
reserve to share capital, the above closing price refers to price after
corresponding adjustment of price of shares of the Company;
(3) After the aforesaid undertaking period expires, the proportion of
shares unlocked every year shall not exceed 25% of the total shares of
the Company held;
(4) Within 24 months after the termination of lockup period, if any
attempt is made to reduce the shares of the Company that it had held
prior to the offering and listing by any means, the price of the
shareholding reduction shall not be lower than the offering price of the
Company's initial public offering shares at the time of the offering and
the listing. If there are any ex-rights or ex-dividends events, such as the
declaration of dividends, bonus issue, and capitalization from capital
reserve to share capital before the reduction of the aforesaid shares,
the price of the shareholding reduction should not be lower than the
adjusted offering price of the Company's initial public offering shares at
the time of the offering and the listing;
(5) Notwithstanding any change in the position of some of the partners
in the joint venture or their departure from the joint venture, the joint
venture will strictly perform the above undertakings.
Others M&G Shareholding and intention to reduce shareholding of the controlling Not No Yes
Group shareholder—M&G Group applicable
(1) M&G Group advocates that shares of the Company should be held
in the long term to ensure that M&G Group shares operation
achievements of the Company on a continuous basis. Therefore, M&G
Group has the intention to hold shares of the Company for a long term.
(2) After the lockup period of the Company’s shares held by M&G
Group expires, it is possible that M&G Group might reduce
shareholding of the Company appropriately for the development
requirement of M&G Group. In this situation, M&G Group is expected
to reduce its shareholdings by no more than 5% of the total shares of
the Company held by M&G Group within the first year after the lockup
period expires with the price of the shareholding reduction not lower
than the offering price of the Company's initial public offering. The
shareholding reduction shall not exceed 10% of the total shares of the
Company held by M&G Group within the second year after the lockup
period expires with the price of the shareholding reduction not lower
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than the offering price of the Company's initial public offering. If there
are any ex-rights or ex-dividends events, such as the declaration of
dividends, bonus issue, and capitalization from capital reserve to share
capital in the Company before M&G Group reduces its holding of the
aforesaid shares, the price of the shareholding reduction for M&G
Group should not be lower than the adjusted offering price of the
Company's initial public offering shares at the time of the offering and
the listing.
(3) If M&G Group intends to reduce shareholding of the Company, it
will announce its reduction plan 3 transaction days before reducing the
shareholding. Furthermore, the reduction will be performed legally
according to rules of Shanghai Stock Exchange in the form of block
trade, auction transaction as well as other methods recognized by
China Securities Regulatory Commission.
Others Shareholding and intention to reduce shareholding of Keying Not No Yes
Keying Investment and Jiekui Investment
Investment and Jiekui Investment, shareholders holding more than 5% applicable
of the equity
(1) The joint venture, which is an employee-owned enterprise
established by officials and important business professionals of the
Company, advocates that shares of the Company should be held in the
long term to ensure that operation achievements of the Company are
shared on a continuous basis. Therefore, the joint venture has the
intention to hold shares of the Company for a long term.
(2) After the lockup period of the Company’s shares held by joint
venture expires, it is possible that the joint venture might reduce
shareholding of the Company appropriately for the development
requirement of the joint venture. In this situation, the joint venture is
expected to reduce its shareholdings by no more than 25% of the total
shares of the Company held by the joint venture within the first year
after the lockup period expires with the price of the shareholding
reduction not lower than the offering price of the Company's initial
public offering. The shareholding reduction shall not exceed 25% of the
total shares of the Company held by joint venture within the second
year after the lockup period expires with the price of the shareholding
reduction not lower than the offering price of the Company's initial
public offering. If there are any ex-rights or ex-dividends events, such
as the declaration of dividends, bonus issue, and capitalization from
capital reserve to share capital before the Company reduces its holding
of the aforesaid shares, the price of the shareholding reduction for the
Company should not be lower than theadjusted offering price of the
Company's initial public offering shares at the time of the offering and
the listing; (3) If the joint venture intends to reduce shareholding of the
Company, it will announce its reduction plan 3 transaction days before
reducing the shareholding. Furthermore, the reduction will be
performed legally according to rules of Shanghai Stock Exchange in
the form of block trade, auction transaction as well as other methods
recognized by China Securities Regulatory Commission.
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Undertaking in relation to non-competition by M&G Group, Keying Not No Yes
Address competition between counterparts
M&G Group, Keying Investment and Jiekui Investment
Investment and Jiekui Investment applicable
(1) The enterprise and other enterprises (except the Company and
enterprises controlled by it) controlled and (or) invested by it currently
have not engaged in any form of business or activity that constitutes or
may constitute a direct or indirect competition relationship with principal
businesses of the Company and enterprises controlled by it.
(2) After the initial public offering and listing of the Company, the
enterprise and other enterprises (except the Company and enterprises
controlled by it) controlled and (or) invested by it will not:
① engage in any form of business or activity that constitutes or may
constitute a direct or indirect competition relationship with current or
future principal businesses that the Company and enterprises
controlled by it specialize in;
② support other enterprises other than the Company and enterprises
controlled by it in any form of business or activity that constitutes or
may constitute a direct or indirect competition relationship with current
or future principal businesses that the Company and enterprises
controlled by it specialize in;
③ interfere in any form of business or activity that constitutes or may
constitute a direct or indirect competition relationship with current or
future principal businesses that the Company and enterprises
controlled by it specialize in.
Apart from the aforesaid undertaking, the enterprise further guarantees
that it will
① ensure its independence in assets, businesses, employees, finance
and institution according to relevant rules of laws and regulations;
② adopt legal and effective measures to stop companies, enterprises
and other economic organizations that the Company has control right
from engaging directly or indirectly in the same or similar businesses
with the Company;
③ not take advantage of its position as the controlling shareholder of
the Company to carry out any other activities that may harm the rights
of the Company and other shareholders.
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Undertaking in relation to non-competition by beneficial controllers— Not No Yes
Chen Huwen, Chen Huxiong, and Chen Xueling applicable
(1) I currently hold no position in other companies or economic
organizations that have the same or similar business with the Company
or enterprises controlled by it.
(2) Other enterprises (except the Company and enterprises controlled
by it) which are controlled by me independently and/ or in which I am
one of the beneficial shareholders currently have not engaged in any
form of business or activity that constitutes or may constitute a direct or
indirect competition relationship with principal businesses of the
Company and enterprises controlled by it.
(3) After the initial public offering and listing of the Company, other
enterprises (except the Company and enterprises controlled by it)
which are controlled by me independently and/ or in which I am one of
the beneficial shareholders will not:
① engage in any form of business or activity that constitutes or may
constitute a direct or indirect competition relationship with current or
future principal businesses that the Company and enterprises
controlled by it specialize in;
② support other enterprises other than the Company and enterprises
controlled by it in any form of business or activity that constitutes or
may constitute a direct or indirect competition relationship with current
or future principal businesses that the Company and enterprises
controlled by it specialize in;
③ interfere in any form of business or activity that constitutes or may
constitute a direct or indirect competition relationship with current or
Chen Huwen, Chen Huxiong, and Chen Xueling
future principal businesses that the Company and enterprises
Address competition between counterparts
controlled by it specialize in.
Apart from the aforesaid undertaking, I further guarantee that I will:
① ensure its independence in assets, businesses, employees, finance
and institution according to relevant rules of laws and regulations;
② adopt legal and effective measures to stop companies, enterprises
and other economic organizations that I have control right from
engaging directly or indirectly in the same or similar businesses with
the Company;
③ not take advantage of the position as the beneficial controller of the
Company to carry out any other activities that may harm the rights of
the Company and other shareholders.
Others M&G Undertaking on the binding measures in case of the failure to fulfill the Not No Yes
undertaking by M&G Stationery applicable
(1) Our company will strictly perform various obligations and
responsibilities set out in all public undertaking issues (hereinafter
referred to as “Undertaking Issues”) in the initial public offering and
listing.
(2) If our company fails to perform various obligations and
responsibilities set out in the undertaking issues, our company
undertakes to take the following measures for restrictions:
① Compensate public investors for direct losses suffered by relying on
relevant undertakings to implement transactions through self-owned
capital with the amount of compensation being determined according to
negotiation between our Company and investors, or the method or
amount determined by the securities supervision and administration
department and the judicial authority;
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Annual Report 2019
② Within 12 months after the date when our Company fully eliminates
the adverse effect due to failure on related undertaking issues, our
Company shall not issue securities, including but not limited to shares,
corporate bonds, convertible corporate bonds and other types of
securities approved by securities regulatory authorities;
③ Our Company shall not increase the salary or allowance of our
directors, supervisors and senior management in any form until our
Company has fully eliminated the adverse effect due to failure on
related undertaking issues.
Others M&G Undertaking on the binding measures in case of the failure to fulfill the Not No Yes
Group undertaking by the controlling shareholder—M&G Group applicable
(1) M&G Group will strictly perform various obligations and
responsibilities set out in all public undertaking issues (hereinafter
referred to as “Undertaking Issues”) in the initial public offering and
listing of M&G Stationery.
(2) If M&G Group fails to perform various obligations and
responsibilities set out in the aforesaid undertaking issues, M&G Group
undertakes to take the following measures for restrictions:
① Compensate public investors for direct losses suffered by relying on
relevant undertakings to implement transactions through self-owned
capital with the amount of compensation being determined according to
negotiation between M&G Group and investors, or the method or
amount determined by the securities regulatory authorities and the
judicial authority;
② The lockup period of M&G Stationery’s shares held by M&G Group
will be automatically extended to the date when M&G Group fully
eliminates the adverse effect due to failure on related undertaking
issues.
Undertaking on the binding measures in case of the failure to fulfill the Not No Yes
Others
Chen Huwen, Chen Huxiong, and Chen Xueling
undertaking by beneficial controllers—Chen Huwen, Chen Huxiong, applicable
and Chen Xueling
(1) I will strictly perform various obligations and responsibilities set out
in all public undertaking issues (hereinafter referred to as “Undertaking
Issues”) in the initial public offering and listing of M&G Stationery.
(2) If I fail to perform various obligations and responsibilities set out in
the aforesaid undertaking issues, I undertake to take the following
measures for restrictions:
① Compensate public investors for direct losses suffered by relying on
relevant undertakings to implement transactions through self-owned
capital with the amount of compensation being determined according to
negotiation between investors and me, or the method or amount
determined by the securities regulatory authorities and the judicial
authority;
② The lockup period of M&G Stationery’s shares held by me directly
or indirectly will be automatically extended to the date when I fully
eliminate the adverse effect due to failure on related undertaking
issues.
③ I shall not require M&G Stationery to increase my salary or
allowance in any form, nor shall I accept the increase of salary or
allowance by M&G Stationery in any form until I have fully eliminated
the adverse effect due to failure on related undertaking issues.
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Annual Report 2019
Undertaking on the binding measures in case of the failure to fulfill the Not No Yes
Others
Keying Investment and Jiekui Investment
undertaking by Keying Investment and Jiekui Investment, shareholders applicable
holding more than 5% of the equity
(1) The joint venture will strictly perform various obligations and
responsibilities set out in all public undertaking issues (hereinafter
referred to as “Undertaking Issues”) in the initial public offering and
listing of M&G Stationery.
(2) If the joint venture fails to perform various obligations and
responsibilities set out in the aforesaid undertaking issues, the joint
venture undertakes to take the following measures for restrictions:
① Compensate public investors for direct losses suffered by relying on
relevant undertakings to implement transactions through self-owned
capital with the amount of compensation being determined according to
negotiation between the joint venture and investors, or the method or
amount determined by the securities regulatory authorities and the
judicial authority;
② The lockup period of M&G Stationery’s shares held by the joint
venture will be automatically extended to the date when the joint
venture fully eliminates the adverse effect due to failure on related
undertaking issues.
(2) 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 therefor
"□ Fulfilled" "□ Unfulfilled" "√ Not applicable"
(3) Execution of the performance undertakings and its impact on the goodwill
impairment testing
"□ Applicable" "√ Not applicable"
III. Occupation of funds and repayment of debts during the Reporting Period
"□ Applicable" "√ Not applicable"
IV. Explanation of the Company on the “non-standard opinions audit report” from
accounting firm
"□ Applicable" "√ Not applicable"
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Annual Report 2019
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
(1) Analysis and explanation from the Company on the reasons and impact of the change of
accounting policies or accounting estimates
"√ Applicable" "□ Not applicable"
1. Implement Notice of Modification and Issuance of the Financial Statement Format for General
Business Enterprises in 2019(《关于修订印发 2019 年度一般企业财务报表格式的通知》) and
Notice of Modification and Issuance of the Format of Consolidated Financial Statements (2019)
(《关于修订印发合并财务报表格式(2019 版)的通知》) released by the Ministry of Finance.
The Ministry of Finance issued the Notice of Modification and Issuance of the Financial
Statement Format for General Business Enterprises in 2019 (Cai Kuai (2019) No. 6) and Notice
of Modification and Issuance of the Format of Consolidated Financial Statements (2019) (Cai
Kuai (2019) No.16) on 30 April 2019 and 19 September 2019 respectively to revise financial
statement format for general business enterprises. The main impact of the Company's
implementation of the above regulations is shown as follows:
Contents and reasons Review and Item and amount in statement influenced
of changes in approval
Consolidation Parent company
accounting policies procedure
The “bills receivable and
The “bills receivable and accounts
accounts receivable” is
receivable” is divided into “bills
(1) The “bills receivable divided into “bills
receivable” and “accounts
and accounts receivable” and “accounts
receivable”. Balance of “bills
receivable” in the receivable”. Balance of
receivable” at the end of last year
balance sheet is “bills receivable” at the
is RMB1,894,232.00, and balance
divided into “bills end of last year is
The 18th of “accounts receivable” at the end
receivable” and RMB0.00, and balance of
meeting of of last year is
“accounts receivable”; “accounts receivable” at
the fourth RMB808,772,112.91;
the “bills payable and the end of last year is
Board The “bills payable and accounts
accounts payable” is RMB93,324,765.86;
meeting payable” is divided into “bills
divided into “bills The “bills payable and
payable” and “accounts payable”.
payable” and “accounts accounts payable” is
Balance of “bills payable” at the
payable”; the divided into “bills payable”
end of last year is RMB0.00, and
comparison data is and “accounts payable”.
balance of “accounts payable” at
adjusted accordingly. Balance of “bills payable”
the end of last year is
at the end of last year is
RMB1,319,407,048.21.
RMB0.00, and balance of
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Annual Report 2019
“accounts payable” at the
end of last year is
RMB240,475,062.99.
(2) The item of
“Including:
derecognition of
The amount of
income from financial The 18th
The amount of “derecognition of “derecognition of income
assets at amortized meeting of
income from financial assets at from financial assets at
cost” is added to the the fourth
amortized cost” in the current amortized cost” in the
item of investment Board
period is RMB0.00. current period is
income in the income meeting
RMB0.00.
statement. The
comparison data is not
adjusted.
2. Implement the Accounting Standard for Business Enterprises No. 22—Recognition and
Measurement of Financial Instruments, the Accounting Standard for Business Enterprises No.
23—Transfer of Financial Assets, the Accounting Standard for Business Enterprises No. 24—
Hedge Accounting and the Accounting Standard for Business Enterprises No. 37—Presentation
of Financial Instruments (revised in 2017) issued by the Ministry of Finance
The Ministry of Finance revised the Accounting Standard for Business Enterprises No. 22—
Recognition and Measurement of Financial Instruments, the Accounting Standard for Business
Enterprises No. 23—Transfer of Financial Assets, the Accounting Standard for Business
Enterprises No. 24—Hedge Accounting and the Accounting Standard for Business Enterprises
No. 37—Presentation of Financial Instruments in 2017. It is stipulated in the revised standards
that for financial instruments that have not been derecognized on the date of first implementation,
if the previous recognition and measurement are inconsistent with the revised standards, they
shall be retrospectively adjusted. If the comparative figures in financial statements for the prior
period are inconsistent with the revised standards, no adjustment is required. The Company
adjusted the retained earnings and other comprehensive income at the beginning of the year
due to the cumulative impact of retrospective adjustment.
Based on the adjusted balance at the end of last year according to Cai Kuai (2019) No. 6 and
Cai Kuai (2019) No. 16, the main impacts of implementing the above new financial instrument
standards are as follows:
Contents and reasons Review and Item and amount in statement influenced
of changes in approval
Consolidation Parent company
accounting policies procedure
(1) Non-tradable The 18th Available-for-sale financial assets: Available-for-sale financial assets:
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Annual Report 2019
available-for-sale meeting of the decreased by RMB3,600,000.00; decreased by RMB3,600,000.00;
equity instrument fourth Board Other equity instrument investments: Other equity instrument investments:
investments are meeting increased by RMB3,600,000.000 increased by RMB3,600,000.00
designated as
“financial assets
measured at fair value
through other
comprehensive
income”.
Retained earnings: decreased by RMB0.00 Retained earnings: decreased by RMB0.00
(2) Provision of
Bills receivable: decreased by RMB0.00 Bills receivable: decreased by RMB0.00
expected credit loss
Accounts receivable: decreased by Accounts receivable: decreased by
was made for “financial
The 18th RMB0.00 RMB0.00
assets at amortized
meeting of the Other receivables: decreased by RMB0.00 Other receivables: decreased by RMB0.00
cost” and “financial
fourth Board Debt investment: decreased by RMB0.00 Debt investment: decreased by RMB0.00
assets measured at fair
meeting Other comprehensive income: increased by Other comprehensive income: increased by
value through other
RMB0.00 RMB0.00
comprehensive income
Deferred income tax assets: increased by Deferred income tax assets: increased by
(debt instrument)”.
RMB0.00 RMB0.00
Retained earnings: increased by Retained earnings: increased by
RMB6,081,955.00 RMB5,380,330.00
(3) Bank financial
The 18th Other current assets: decreased by Other current assets: decreased by
product is reclassified
meeting of the RMB1,020,000,000.00 RMB820,000,000.00
into financial assets
fourth Board Deferred income tax liabilities: increased by Deferred income tax liabilities: increased by
held for trading and
meeting RMB1,183,345.00 RMB949,470.00
measured at fair value
Financial assets held for trading: increased Financial assets held for trading: increased
by RMB1,027,265,300.00 by RMB826,329,800.00
(2) Analysis and explanation from the Company on the reasons and impact of the
correction on significant accounting errors
"□ Applicable" "√ Not applicable"
(3) Communication with the previous accounting firm
"□ Applicable" "√ Not applicable"
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Annual Report 2019
(4) Other explanation
"□ Applicable" "√ Not applicable"
VI. Appointment and dismissal of the accounting firm
Unit: 0’000 Currency: RMB
Current accounting firm
Name of domestic accounting firm BDO China Shu Lun Pan Certified Public
Accounts LLP
Remuneration of domestic accounting firm 130
Term of office of domestic accounting firm 10
Name Remuneration
Internal control audit BDO China Shu Lun Pan 50
accounting firm CPAs(Special general partnership)
Explanation on appointment and dismissal of the accounting firm
"√ Applicable" "□ Not applicable"
During the Reporting Period, the BDO China Shu Lun Pan Certified Public Accounts LLP was
re-appointed as the audit institution.
Explanation on the change of accounting firm during the auditing period
"□ Applicable" "√ Not applicable"
VII. Risk of suspension of listing
(1) Causes of suspension of listing
"□ Applicable" "√ Not applicable"
(2) Measures to be taken by the Company
"□ Applicable" "√ Not applicable"
VIII. Situation and causes for termination of listing
"□ Applicable" "√ Not applicable"
IX. Matters related to bankruptcy and reorganisation
"□ Applicable" "√ Not applicable"
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Annual Report 2019
X. Material litigation and arbitration
"□ The Company had material litigation and arbitration during the year"
"√ The Company did not have material litigation and arbitration during the year"
XI. Punishment and rectification to the listed Company, its directors, supervisors, senior
management, controlling shareholders, beneficial controllers and acquirers
"□ Applicable" "√ Not applicable"
XII. Explanation on credibility status of the Company, its controlling shareholders and
beneficial controllers during the Reporting Period
"√ Applicable" "□ Not applicable"
During the Reporting Period, since the Company, its controlling shareholders and beneficial
controllers maintained sound credibility, there had been no refusal to implement effective
judgments of a court or default of any material overdue debt.
XIII. Equity incentive plan, employee shareholding plan or other employee incentive
measures of the Company and their impacts
(1) Incentive matters disclosed in temporary announcements and without further
progress or change in subsequent implementation
"□ Applicable" "√ Not applicable"
(2) Incentive matters which have not been disclosed in temporary announcements or
with further progress
Equity incentive
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
Employee shareholding plan
"□ Applicable" "√ Not applicable"
Other incentive measures
"□ Applicable" "√ Not applicable"
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Annual Report 2019
XIV. Major related transactions
(3) Related transactions in relation to daily operation
1. Events disclosed in temporary announcements and without further progress or
change in subsequent implementation
"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change
in subsequent implementation
"√ Applicable" "□ Not applicable"
The 15th meeting of the fourth Board meeting and 2018 annual general meeting of the Company
reviewed and passed Resolution for the Implementation of Daily Related Transactions in 2018
and Expected Daily Related Transactions in 2019, and released Announcement for the
Implementation of Daily Related Transactions in 2018 and Expected Daily Related Transactions
in 2019 (announcement No.: 2019-003) on 26 March 2019. In 2019, sales to the sales company
controlled by Guo Weilong were estimated to be RMB380,000,000.00. It was estimated that fees
for the lease of self-owned houses (including office buildings, workshops, parking space,
warehouses and dormitories) paid to M&G Group will amounted to RMB3,622,857.14; fees for
the lease of self-owned office buildings and parking space amounted to RMB3,848,991.90;
utilities amounted to RMB6,000,000.00. M&G Colipu is expected to pay M&G Group
RMB14,834,912.14 for the lease of self-owned office building and parking space; M&G
Technologies is expected to pay M&G Group RMB1,675,847.14 for the lease of self-owned office
building and parking space; M&G Life is expected to pay M&G Group RMB11,428.57 for the
lease of parking space.
In 2019, the actual sales to the sales company controlled by Guo Weilong amounted to
RMB387,821,087.67; actual fees for the lease of self-owned houses (including office buildings,
workshops, parking space, warehouses and dormitories) paid to M&G Group amounted to
RMB3,622,857.14; actual fees for the lease of self-owned office buildings and parking space
paid to M&G Group amounted to RMB3,846,134.78; actual utilities paid to M&G Group
amounted to RMB5,283,878.50; M&G Colipu actually paid M&G Group RMB14,839,388.35 for
the lease of self-owned office building and parking space; M&G Technologies actually paid M&G
Group RMB1,677,275.74 for the lease of self-owned office building and parking space; M&G Life
actually paid M&G Group RMB5,952.39 for the lease of self-owned parking space.
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
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Annual Report 2019
(4) Related transactions as a result of acquisition and disposal of assets or equity
1. Events disclosed in temporary announcements and without further progress or
change in subsequent implementation
"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change
in subsequent implementation
"□ Applicable" "√ Not applicable"
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
4. Disclosable performance achievements during the Reporting Period when involved
with agreed-upon performance
"□ Applicable" "√ Not applicable"
(5) Major related transactions in joint external investment
1. Events disclosed in temporary announcements and without further progress or
change in subsequent implementation
"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change
in subsequent implementation
"□ Applicable" "√ Not applicable"
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
(6) Creditor’s rights and debts with related parties
1. Events disclosed in temporary announcements and without further progress or
change in subsequent implementation
"□ Applicable" "√ Not applicable"
2. Events disclosed in temporary announcements and with further progress or change
in subsequent implementation
"□ Applicable" "√ Not applicable"
3. Events not disclosed in temporary announcements
"□ Applicable" "√ Not applicable"
(7) Others
"□ Applicable" "√ Not applicable"
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XV. Material contracts and their performance
(1) Trusteeship, contracting and leasing matters
1. Trusteeship
"□ Applicable" "√ Not applicable"
2. Contracting
"□ Applicable" "√ Not applicable"
3. Leasing
"□ Applicable" "√ Not applicable"
(2) Guarantees
"□ Applicable" "√ Not applicable"
(3) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
"√ Applicable" "□ Not applicable"
Unit: 0’000 Currency: RMB
Amount Undue Overdue uncollected
Types Source of fund
incurred balance amount
Entrusted wealth Raised capital 2,000 0
management of banks
Entrusted wealth Self-owned 104,000 65,000 0
management of banks capital
Others
"□ Applicable" "√ Not applicable"
(2) Individual entrusted wealth management
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Whether Whether Amount of
Beginning Termination it has there is a provision
Type of Amount of Source
date of date of Method to Annual Expected Actual gone future for the
entrusted entrusted Source of of Actual
Trustee entrusted entrusted determine rate of return gains through a entrusted impairment
wealth wealth fund Usage recovery
wealth wealth return return (if any) or loss legal wealth (if any)
management management of fund
management management procedure management
or not plan or not
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ABC Shanghai Non-principal 10,000 2019/7/4 Self-owned Unrecovered Yes Yes
Fengxian Guangming guaranteed capital
Branch with floating
returns
SPD Bank Fengxian Non-principal 20,000 2019/7/4 2019/10/8 Self-owned 4.16% 218.84 Recovered Yes Yes
Branch guaranteed capital
with floating
returns
SPD Bank Fengxian Non-principal 40,000 2019/7/4 Self-owned Unrecovered Yes Yes
Branch guaranteed capital
with floating
returns
China Merchants Principal and 20,000 2019/7/9 2019/9/25 Self-owned 4.20% 179.51 Recovered Yes Yes
Bank Shanghai income capital
Wuzhong Road guaranteed
Branch
Industrial and Fixed returns 12,000 2019/6/20 Self-owned Unrecovered Yes Yes
Commercial Bank of and non- capital
China Limited Gumei principal
Road Branch guaranteed
with floating
returns
Industrial and Fixed returns 2,000 2019/7/31 Self-owned Unrecovered Yes Yes
Commercial Bank of and non- capital
China Limited Gumei principal
Road Branch guaranteed
with floating
returns
Industrial and Fixed returns 1,000 2019/8/30 Self-owned Unrecovered Yes Yes
Commercial Bank of and non- capital
China Limited Gumei principal
Road Branch guaranteed
with floating
returns
Industrial and Fixed returns 1,000 2019/9/29 Self-owned Unrecovered Yes Yes
Commercial Bank of and non- capital
China Limited Gumei principal
Road Branch guaranteed
with floating
returns
Others
"□ Applicable" "√ Not applicable"
(3) Provision for the impairment of entrusted wealth management
"□ Applicable" "√ Not applicable"
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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) Provision for the impairment of entrusted loans
"□ Applicable" "√ Not applicable"
3. Others
"□ Applicable" "√ Not applicable"
(4) Other material contracts
"□ Applicable" "√ Not applicable"
XVI. Explanation on other material matters
"□ Applicable" "√ Not applicable"
XVII. Active fulfillment of social responsibilities
(1) Poverty alleviation of the listed companies
"□ Applicable" "√ Not applicable"
(2) Overview of social responsibility
"√ Applicable" "□ Not applicable"
For more details, please refer to 2019 Annual Report on Social Responsibilities disclosed by
the Company on the website of the Shanghai Stock Exchange on 14 April 2020.
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(3) Environmental information
1. Explanation on environmental protection of the company and its major subsidiaries
falling into the category of key pollutant discharging units designated by the
environmental protection authorities
"□ Applicable" "√ Not applicable"
2. Explanation on environmental protection of companies other than key pollutant
discharging units
"√ Applicable" "□ Not applicable"
The Company does not belong to the key pollutant discharging units published by national
environmental protection authorities. As the Company pays great attention to environmental
protection, the greening rate of its sites is high. During the production process, the plastic raw
granular edges did not produce solid waste or environmental pollution after going through
smashing, re-granulating and recycling process; paperboard edges for package was recycled
and sold by classification to local recycle stations for recycled paper. The Company has not
admixed any harmful recycling waste in its production, so no volatile gas that is harmful to the
health of human beings was produced. Besides, domestic wastewater was disposed in
accordance with sewage treatment regulations set by the local government.
3. Explanation on reasons for not disclosing the environmental information of
companies other than key pollutant discharging units
"□ Applicable" "√ Not applicable"
4. Explanation on further progress or changes of environmental information disclosed
during the Reporting Period
"□ Applicable" "√ Not applicable"
(4) Other explanation
"□ Applicable" "√ Not applicable"
XVIII. Convertible corporate bonds
"□ Applicable" "√ Not applicable"
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Chapter VI Changes in Ordinary Shares and Shareholders
I. Changes in share capital of ordinary shares
(1) Changes in ordinary shares
1. Changes in ordinary shares
During the Reporting Period, there is no change in the total number and structure of share capital
of ordinary shares of the Company.
2. Explanation on changes in ordinary shares
"□ Applicable" "√ Not applicable"
3. Impact of changes in ordinary 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"
4. Other contents that the Company deems necessary and the securities regulatory
authorities require disclosing
"□ Applicable" "√ Not applicable"
(2) Changes in restricted shares
"□ Applicable" "√ Not applicable"
II. Issuance and listing of securities
(1) Issuance of securities as at the Reporting Period
"□ Applicable" "√ Not applicable"
Explanation on issuance of securities as at the Reporting Period (please provide separate
explanation on the bonds with different interest rates during their duration):
"□ Applicable" "√ Not applicable"
(2) Changes in the total number of ordinary shares and shareholder structure of the
Company and changes in the structure of assets and liabilities of the Company
"□ Applicable" "√ Not applicable"
(3) Existing internal employee shares
"□ Applicable" "√ Not applicable"
III. Shareholder and beneficial controller
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(1) Total number of shareholders
Total number of shareholders of ordinary 15,196
shares as at the end of the Reporting Period
Total number of shareholders of ordinary 14,271
shares at the end of last month prior to the
disclosure date of this annual report
Total number of shareholders of preferred 0
shares whose voting rights have been
restored as at the end of the Reporting
Period
Total number of shareholders of preferred 0
shares whose voting rights have been
restored at the end of last month prior to the
disclosure date of this annual report
(2) Table of shareholdings of the top ten shareholders and the top ten shareholders of
shares in circulation (or shareholders not subject to selling restrictions) as at the end
of the Reporting Period
Unit: share
Shareholdings of the top ten shareholders
Number of Pledged or
Change Number of
shares held frozen
Name of shareholder during the shares held Percentage Nature of
subject to
(full name) Reporting as at the end (%) Share shareholder
selling Number
Period of the period status
restrictions
M&G Holdings (Group) 0 536,000,000 58.26 0 0 Domestic
Co., Ltd. No nonstate-owned
legal person
Hong Kong Securities 30,760,849 33,489,521 3.64 0 0 Unknown
Clearing Company No
Limited
Shanghai Keying -7,800,000 23,400,000 2.54 0 0 Others
Investment
No
Management Office
(L.P.)
Shanghai Jiekui -7,700,000 23,100,000 2.51 0 0 Others
Investment
No
Management Firm
(L.P.)
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Chen Huxiong -7,600,000 22,800,000 2.48 0 0 Domestic
No
natural person
Chen Huwen -7,600,000 22,800,000 2.48 0 0 Domestic
No
natural person
Chen Xueling -4,800,000 14,400,000 1.57 0 0 Domestic
No
natural person
Industrial and 1,691,966 11,999,854 1.30 0 0 Unknown
Commercial Bank of
China Limited-Invesco
Great Wall Emerging
Mature and Hybrid
No
Equity Investment
Funds(中国工商银行股
份有限公司－景顺长城
新兴成长混合型证券投
资基金)
NSSF 406 portfolio 6,608,798 9,561,401 1.04 0 No 0 Unknown
Bank of China Limited- 375,396 9,260,000 1.01 0 0 Unknown
Invesco Great Wall
Ding Yi Hybrid Security
Investment Fund No
(LOF)(中国银行股份有
限公司－景顺长城鼎益
混合型证券投资基金)
Shareholdings of the top ten shareholders of non-restricted circulating shares
Number of non-restricted circulating Type and number of shares
Name of shareholder
shares held Type Number
M&G Holdings (Group) Co., Ltd. 536,000,000 Ordinary 536,000,000
RMB Shares
Hong Kong Securities Clearing 33,489,521 Ordinary 33,489,521
Company Limited RMB Shares
Shanghai Keying Investment 23,400,000 Ordinary 23,400,000
Management Office (L.P.) RMB Shares
Shanghai Jiekui Investment 23,100,000 Ordinary 23,100,000
Management Firm (L.P.) RMB Shares
Chen Huxiong 22,800,000 Ordinary 22,800,000
RMB Shares
Chen Huwen 22,800,000 Ordinary 22,800,000
RMB Shares
Chen Xueling 14,400,000 Ordinary 14,400,000
RMB Shares
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Annual Report 2019
Industrial and Commercial Bank of 11,999,854 11,999,854
China Limited-Invesco Great Wall
Emerging Mature and Hybrid Equity Ordinary
Investment Funds(中国工商银行股份 RMB Shares
有限公司－景顺长城新兴成长混合型
证券投资基金)
NSSF 406 portfolio 9,561,401 Ordinary 9,561,401
RMB Shares
Bank of China Limited-Invesco Great 9,260,000 9,260,000
Wall Ding Yi Hybrid Security
Ordinary
Investment Fund (LOF)(中国银行股份
RMB Shares
有限公司－景顺长城鼎益混合型证券
投资基金)
Explanation on the related There is related relationship among the shareholders—M&G Group, Keying
relationship or parties acting in Investment, Jiekui Investment, Chen Huwen, Chen Huxiong, and Chen Xueling.
concert among the above Chen Huwen, Chen Huxiong, and Chen Xueling are parties acting in concert. Save
shareholders as the above, the Company is not aware of any related relationship or parties acting
in concert as set out in Measures for the Administration of the Takeover of Listed
Companies among the aforesaid shareholders.
Explanation on the preference No
shareholders with voting rights
restored and their shareholdings
Shareholdings of the top ten shareholders subject to trading moratorium and the condition of
trading moratorium
"□ Applicable" "√ Not applicable"
(3) Strategic investors or general legal persons becoming the top ten shareholders
because of placing of new shares
"□ Applicable" "√ Not applicable"
IV. Controlling shareholder and beneficial controllers
(1) Controlling shareholder
1 Legal person
"√ Applicable" "□ Not applicable"
Name M&G Holdings (Group) Co., Ltd.
Person in charge of the Company Chen Huxiong
or legal representative
Establishment date 2007-05-10
Main operation businesses Industrial investment, infrastructure investment,
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Annual Report 2019
consultation for investment information (excluding
broker), consultation for enterprise
management and relevant businesses, domestic trade
(excluding projects with national special approval)
(For the above items subject to licensing or permit,
relevant approval must be obtained prior to operation)
Equity interests of other No
domestic and overseas listed
companies controlled or invested
during the Reporting Period
Other explanations No
2 Natural person
"□ Applicable" "√ Not applicable"
3 Special explanation on the Company not having controlling shareholders
"□ Applicable" "√ Not applicable"
4 Index and date of changes in controlling shareholders during the Reporting Period
"□ Applicable" "√ Not applicable"
5 Diagram of the ownership and controlling relationship between the Company and its
controlling shareholders
"√ Applicable" "□ Not applicable"
M&G Group
M&G
(2) Beneficial controllers
1 Legal person
"□ Applicable" "√ Not applicable"
2 Natural person
"√ Applicable" "□ Not applicable"
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Annual Report 2019
Name Chen Huwen
Nationality China
Acquire right of residence in other No
countries or regions or not
Main job and title Chairman of the Board of Shanghai M&G
Stationery Inc.
Shareholdings in other domestic or No
overseas listed companies over the past
10 years
Name Chen Huxiong
Nationality China
Acquire right of residence in other Yes
countries or regions or not
Main job and title Vice-chairman of the Board and CEO of
Shanghai M&G Stationery Inc.
Shareholdings in other domestic or No
overseas listed companies over the past
10 years
Name Chen Xueling
Nationality China
Acquire right of residence in other No
countries or regions or not
Main job and title Chairman of the Board and vice president of
Shanghai M&G Stationery Inc.
Shareholdings in other domestic or No
overseas listed companies over the past
10 years
3 Special explanation on the Company not having beneficial controllers
"□ Applicable" "√ Not applicable"
4 Index and date of changes in beneficial controllers 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 2019
Chen Xueling Chen Huwen Chen Huxiong
Keying Jiekui
M&G Group
Investment Investment
M&G
6 Control of the Company by beneficial controllers by way of trust or other means of
asset management
"□ Applicable" "√ Not applicable"
(3) Other explanation regarding the controlling shareholders and the beneficial
controllers
"□ Applicable" "√ Not applicable"
V. Other legal person shareholders with more than 10% shareholdings
"□ Applicable" "√ Not applicable"
VI. Explanation on limitation on reduction of shareholding
"□ Applicable" "√ Not applicable"
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Annual Report 2019
Chapter VII Preference Shares
"□ Applicable" "√ Not applicable"
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Annual Report 2019
Chapter VIII Directors, Supervisors, Senior Management and Employees
I. Shareholding change and remuneration
(1) Shareholding change and remuneration of directors, supervisors and senior management currently employed and retired during the
Reporting Period
"√ Applicable" "□ Not applicable"
Unit: 0’000 shares
Total pre-tax Whether to get
remuneration remuneration
Number of
Number of from the from related
shares held Change in
shares held Reasons for Company parties of the
Name Position (note) Gender Age From To at the share of the
at the end of change during the Company
beginning of year
the year Reporting
the year
Period (RMB
0’000)
Chen Chairman Male 50 2014-6-12 2020-5-10 3,040 2,280 -760 Personal 164.04 No
Huwen capital needs
Chen Vice Chairman Male 50 2014-6-12 2020-5-10 3,040 2,280 -760 Personal 164.04 No
Huxiong and President capital needs
Chen Director and Female 53 2014-6-12 2020-5-10 1,920 1,440 -480 Personal 92.61 No
Xueling Vice President capital needs
Fu Chang Director and Male 50 2018-3-23 2020-5-10 0 0 0 111.52 No
Vice President
Zhang Independent Male 57 2017-5-11 2020-5-10 0 0 0 12.00 No
Jingzhong Director
Chen Independent Male 52 2017-5-11 2020-5-10 0 0 0 12.00 No
Jingfeng Director
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Annual Report 2019
Cheng Bo Independent Male 45 2016-4-19 2020-5-10 0 0 0 12.00 No
Director
Zhu Yiping Chairman of Female 61 2014-6-12 2020-5-10 0 0 0 0 Yes
the Board of
Supervisors
Xu Jingjin Employee Male 41 2014-6-12 2020-5-10 0 0 0 51.31 No
Supervisor
Han Supervisor Female 42 2014-6-12 2020-5-10 0 0 0 0 Yes
Lianhua
Yao Chief Engineer Male 64 2014-6-12 2020-5-10 0 0 0 68.16 No
Hezhong
Zhang Chief Financial Male 45 2018-4-4 2020-5-10 0 0 0 146.70 No
Qing Officer
Quan Board Male 47 2017-3-31 2020-5-10 0 0 0 96.18 No
Qiang Secretary
Total / / / / / 8,000 6,000 -2,000 / 930.56 /
Name Main working experience
Chen Huwen Has been involved in the stationery manufacturing industry since 1997 and is one of the founders of M&G Group. Once worked as General Manager of Shanghai
Sino-Korean M&G Stationery Manufacturing Co., Ltd. Now works as Chairman of the Company.
Chen Huxiong Has been involved in the stationery manufacturing industry since 1995. Worked as General Manager of Shanghai Sino-Korean M&G Stationery Manufacturing
Co., Ltd. from 2001 to 2004, and Chairman of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. from 2004 to 2009. Now works as Vice Chairman
and President of the Company, and is also Vice Chairman of China Writing Instrument Association, Deputy Director of Ballpoint Pen Professional Committee of
China Writing Instrument Association, and Chairman of China Writing Instrument Industry Technology Innovation Alliance.
Chen Xueling Has been involved in the stationery manufacturing industry since 1997 and is one of the founders of M&G Group. Once worked as Deputy General Manager of
the Company's Production Center, and now works as a director and Vice President of the Company.
Fu Chang Joined M&G Stationery in May 2006 and successively served as Deputy Director of Marketing Center and Director of Production Center. Now works as a director
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Annual Report 2019
and Vice President of the Company.
Zhang Worked in the Research Office of the Politics and Law Committee under the Zhejiang Provincial Party Committee from August 1984 to September 1988; and
Jingzhong has been the Director at Zhejiang T & C Law Firm from October 1988 to present. Has been Vice President of the All China Lawyers Association from April 2016
to present.
Chen Jingfeng Once worked as Deputy General Manager and General Manager of Shanghai Dazhong Public Utilities (Group) Co., Ltd. and President of CMC Holdings, and
is currently the Chairman of Zhongyun Capital.
Cheng Bo Professor of accounting, doctor of accounting, senior accountant, senior member of the Accounting Society of China, the third-level talent of the New Century
151 Talent Project in Zhejiang Province. Started to work in a college or university in 2008 and is currently a teacher of economics and accounting specialty at
Zhejiang Agriculture and Forestry University. Has long been engaged in scientific research and teaching in auditing and internal control, corporate governance
and financial management. Has chaired more than 20 projects such as the National Social Science Fund of China and the Humanities and Social Science Fund
under the Ministry of Education, and published more than 100 academic papers in various authoritative accounting journals and 4 academic monographs.
Zhu Yiping Once worked as Deputy General Manager of Jiangsu Life Group Co., Ltd. and Deputy General Manager of Shanghai Yuhui Industrial Co., Ltd. Joined M&G
Stationery in May 2003 and served successively as Chief Financial Officer of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Deputy Director
of the Company's Financial Center, and Chief Financial Officer of M&G Group. Now works as the person in charge of internal control of M&G Group.
Xu Jingjin Once worked as Sales Manager of Beijing International Hotel, Marketing Director and Sales Manager of Jianguo Garden Hotel Beijing, Sales Manager of Noble
Club, and Restaurant Manager of Thai Chili Catering Service Company. Joined M&G Stationery in 2007. Now works as Director of the Company's Public Affairs
Department.
Han Lianhua Once worked as Cashier of Shanghai Fengxian Qianqiao Grain Management Office, Chief Accountant of Shanghai Rongjian Chemical Plant, and Financial
Director of Shanghai Office of Fengxian Modern Agricultural Park. Joined M&G Stationery in June 2006. Successively served as Financial Supervisor of
Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Shanghai M&G Zhenmei Stationery Co., Ltd., and Shanghai M&G Stationery & Gift Chain
Management Co., Ltd., and Financial Manager of M&G Group. Now works as Chief Financial Officer of M&G Group.
Yao Hezhong Joined M&G Stationery in 1999 and successively served as Deputy General Manager and Deputy President of the Company’s R & D Center. Now works as
Chief Engineer of the Company.
Zhang Qing Once worked as Chief Financial & Operating Officer at Danone Premium Brands (Shanghai) Trading Co., Ltd. and Asia-Pacific Chief Financial Officer at Moen
Shanghai Kitchen & Bath Products Co., Ltd. Now works as Chief Financial Officer of the Company.
Quan Qiang Once worked as Chief Financial Officer of Fenglin Wood Industry Group Co., Ltd. and Executive Director for Chinese Business of the Royal Bank of Scotland.
Now works as Secretary of the Board of Directors of the Company.
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Annual Report 2019
Particulars on other information
"□ Applicable" "√ Not applicable"
(2) Equity incentives granted to directors and senior management during the Reporting Period
"□ Applicable" "√ Not applicable"
II. Employment of directors, supervisors and senior management currently employed and retired during the Reporting Period
(1) Employment in shareholders’ companies
"√ Applicable" "□ Not applicable"
Position held in
Name of person employed Name of shareholder’s company From To
shareholder’s company
Chen Huwen M&G Group President 2007-05-10
Keying Investment General Partner 2011-02-18
Chen Huxiong M&G Group Chairman 2007-05-10
Jiekui Investment General Partner 2011-02-18
Chen Xueling M&G Group Director 2007-05-10
Zhu Yiping M&G Group Chief Financial Officer 2011-03-01
Han Lianhua M&G Group Financial Manager 2011-03-01
Particulars on employment Save for the personnel disclosed above, none of other directors, supervisors and senior management of the Company
in shareholders’ were employed by the shareholders’ companies.
companies
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Annual Report 2019
(2) Employment in other companies
"√ Applicable" "□ Not applicable"
Position held in other
Name of person employed Name of other companies From To
companies
Chen Huwen Chenguang Venture Capital Center(晨光创投) General Partner 12 May 2011
Chenguang Sanmei(晨光三美) General Manager 26 May 2008
Chen Huxiong Chenguang Venture Capital Center(晨光创投) Limited Partner 12 May 2011
Chenguang Sanmei(晨光三美) Chairman 26 May 2008
Chen Xueling Chenguang Venture Capital Center Limited Partner 12 May 2011
(晨光创投)
Chenguang Sanmei(晨光三美) Director 26 May 2008
Zhang Jingzhong Zhejiang T & C Law Firm Director October 1988
Zhejiang Jinggong Science & Technology Co., Independent Director January 2018
Ltd.
Kweichow Moutai Co., Ltd. Independent Director August 2016
Lily Group Co., Ltd. Independent Director September 2018
Chen Jingfeng Zhongyun Capital Chairman October 2017
Cheng Bo Zhejiang Agriculture and Forestry University Full-time Teacher June 2014
Shanghai Serum Bio-technology Co., Ltd. Independent Director January 2018
Hangzhou Silan Microelectronics Co., Ltd. Independent Director June 2019
Particulars on employment Save for the personnel disclosed above, none of other directors, supervisors and senior management of the Company were
in other companies employed by other related companies.
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Annual Report 2019
III. Remuneration of directors, supervisors and senior management
"√ Applicable" "□ Not applicable"
Decision-making procedures for the According to the Articles of Association, the remuneration of directors and supervisors is determined by
remuneration of directors, supervisors and the general shareholders' meeting; and the remuneration of senior management is determined by the
senior management board of directors.
Determination basis for the remuneration of The annual remuneration of independent directors of the Company is considered and approved by the
directors, supervisors and senior general shareholders' meeting. Other directors, supervisors and senior managers who receive
management remuneration from the Company
are subject to the operation performance appraisal on an annual basis and the pre-paid base salary on a
monthly basis, and the annual remuneration is settled after the Company’s annual operation target is
completed.
Actual payment of the remuneration of directors, RMB9,305,600
supervisors and senior management
Total remuneration actually received by all RMB9,305,600
directors, supervisors and senior management
at the end of the Reporting Period
IV. Changes in directors, supervisors and senior management of the Company
"□ Applicable" "√ Not applicable"
V. Particulars on punishments by securities regulatory authorities in the past three years
"□ Applicable" "√ Not applicable"
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Annual Report 2019
VI. Employees of the parent company and major subsidiaries
(1) Employees
Number of employees in the parent company 2,109
Number of employees in major subsidiaries 3,543
Number of employees 5,652
Number of retirees of whom the parent
company and major subsidiaries are
responsible for the expenses
Professional structure
Category Number
Production personnel 1,978
Sales personnel 1,241
Technical personnel 459
Finance personnel 191
Administration personnel 269
Management personnel 1,040
Others 474
Total 5,652
Education background
Category Number (person)
University (including college) and above 2,827
High school, technical secondary school 1,312
Others 1,513
Total 5,652
(2) Remuneration policy
"√ Applicable" "□ Not applicable"
A competitive compensation strategy was implemented: The Company adopted different
appraisal methods for personnel in different positions and at different levels, and by establishing
and improving competitive remunerations and benefits, performance appraisal systems and
incentive systems, actively promoted equity incentives and employee shareholding plans,
attracted all kinds of professional talents and formed a benign internal competition to stimulate
the potential of employees, enhance the enthusiasm and initiative of employees, build a
professional team with stable development, and ensure the continuous improvement of the
Company’s performance.
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Annual Report 2019
(3) Training program
"√ Applicable" "□ Not applicable"
The Company highlighted the construction of talent echelon and promoted the development of
talents in the organization. It carried out the cultivation of talent quality through the leadership
training program, potential talent development plan, rotation learning, personal development
path design, etc. The training of the manufacturing system focused on the ability enhancement
of grassroots management personnel and the cultivation of reserve talents in core technical
positions, and actively promoted the establishment and application of the apprentice base to
create a first-class stationery manufacturing technician team in the industry.
(4) Labor outsourcing
"√ Applicable" "□ Not applicable"
Total working hours of labor outsourcing 20,686,562 hours
Total remuneration paid for labor outsourcing RMB566,831,518
VII. Others
"□ Applicable" "√ Not applicable"
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Annual Report 2019
Chapter IX Corporate Governance
I. Particulars on corporate governance
"√ Applicable" "□ Not applicable"
1. Shareholders and general shareholders’ meetings: The Company could hold general
shareholders’ meetings in accordance with the requirements of the Company Law, the Articles
of Association, and the Rules of Procedure of the General Shareholders’ Meeting. Proposals,
procedures, and voting at the general shareholders’ meetings were strictly implemented in
accordance with the relevant provisions. When considering proposals related to related-party
transactions, related shareholders avoided voting to ensure fair and reasonable related-party
transactions. Resolutions adopted at general shareholders’ meetings met the requirements of
laws and regulations, and complied with the lawful rights and interests of all shareholders,
especially small and medium-sized shareholders.
2. Directors and board of directors: All the Directors of the Company could, based on the Rules
of Procedure of the Meetings of the Board of Directors and other rules, attend the board meetings
earnestly and all independent directors strictly complied with the above rules and performed their
respective functions and duties in good faith and with diligence. The board of directors set up
four special committees, namely the Audit Committee, the Strategic Committee, the Nomination
Committee, and the Remuneration and Appraisal Committee, which could give full play to their
professional roles in the Company's operation management.
3. Supervisors and the board of supervisors: The Company’s board of supervisors strictly
complied with the relevant provisions of the Company Law and the Articles of Association, met
the requirements of laws and rules in terms of number and composition of members, and could,
according to the Rules of Procedure of the Board of Supervisors, etc., seriously perform their
own functions and duties, and supervise the compliance with laws and regulations of the
Company's finance personnel, directors and senior management in performing their functions
and duties.
4. Controlling shareholder and listed company: The Company and its controlling shareholders
were independent of each other in personnel, assets, finance, organization and operating
business. The Company's board of directors, board of supervisors and internal institutions could
operate independently. The Company's major decisions were made by the general shareholders'
meeting in accordance with the law. The controlling shareholders exercised the rights of
shareholders in accordance with the law, and had no behaviors that directly or indirectly
interfered with the Company's decisions and business activities by circumventing the Company's
general shareholders' meeting.
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Whether there are significant differences between corporate governance and the requirements
of the relevant regulations of the China Securities Regulatory Commission; if there are
significant differences, the reasons should be explained
"□ Applicable" "√ Not applicable"
II. Brief introduction to general shareholders’ meetings
Query index of the
Disclosure date
designated website on
Session number Convening date when the resolution
which the resolution is
is published
published
2018 annual general 18 April 2019 www.sse.com.cn 19 April 2019
shareholders’
meeting
2019 1st 20 June 2019 www.sse.com.cn 21 June 2019
extraordinary general
shareholders’
meeting
Particulars on general shareholders’ meetings
"√ Applicable" "□ Not applicable"
The proposals considered at 2018 annual general shareholders’ meeting and 2019 1st
extraordinary general shareholders’ meeting were adopted.
III. Performance of functions and duties by directors
(1) Attendance of directors at board meetings and general shareholders’ meetings
Attendance at
general
Attendance at board meetings
shareholders’
meetings
Director Independent
Number of
Name director Two
Number of Number of Number of Number of Number attendance at
consecutive
attendance attendance attendance by attendance of general
absences in
required in person communication by proxy absence shareholders’
person
meetings
Chen No 5 5 3 0 0 No 2
Huwen
Chen No 5 5 5 0 0 No 1
Huxiong
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Chen No 5 5 3 0 0 No 1
Xueling
Fu Chang No 5 5 4 0 0 No 1
Zhang Yes 5 5 4 0 0 No 0
Jingzhong
Chen Yes 5 5 4 0 0 No 0
Jingfeng
Cheng Bo Yes 5 5 3 0 0 No 1
Particulars on two consecutive absences in person from board meetings
"□ Applicable" "√ Not applicable"
Number of board meetings held during the 5
year
Including: on site 2
by communication 3
on site and by communication 2
(2) Independent directors' objections to the Company's related matters
"□ Applicable" "√ Not applicable"
(3) Others
"□ Applicable" "√ Not applicable"
IV. If there is any objection to important opinions and suggestions put forward by the
special committees under the board of directors in performing its functions and
duties during the Reporting Period, the specific situation should be disclosed
"□ Applicable" "√ Not applicable"
V. Particulars on risks in the Company identified by the board of supervisors
"□ Applicable" "√ Not applicable"
VI. Particulars on the situations that the Company and its controlling shareholders
cannot guarantee independence and cannot maintain self-operation ability in the
aspects of business, personnel, assets, organization and finance
"□ Applicable" "√ Not applicable"
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The corresponding solutions, work progress and follow-up work plan of the Company in case
of horizontal competition
"□ Applicable" "√ Not applicable"
VII. Establishment and implementation of appraisal mechanism and the incentive
mechanism for senior management during the Reporting Period
"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company established a comprehensive appraisal mechanism
for senior management. Quarterly and annual appraisals were conducted based on the
completion of KPI and daily routine work by the departments for which senior management were
responsible. Through the appraisal, not only the Company's overall operation and main
economic indicators were achieved, but also the development of the senior management
personnel was realized, so as to fully mobilize the work enthusiasm and operation potential of
the senior management.
VIII. Whether to disclose the self-appraisal report on internal control
"√ Applicable" "□ Not applicable"
2019 Appraisal Report on Internal Control was considered and approved at the 20th meeting of
the 4th board of directors of the Company. For the full text of the report, please
see 2019 Appraisal Report on Internal Control disclosed on the website of the Shanghai Stock
Exchange (www.sse.com.cn) on 14 April 2020.
Particulars on major defects in the internal control during the Reporting Period
"□ Applicable" "√ Not applicable"
IX. Particulars on the audit report on internal control
"√ Applicable" "□ Not applicable"
The Company engaged BDO China Shu Lun Pan Certified Public Accounts LLP to audit the
implementation of internal control in its 2019 financial statements and the Audit Report on
Internal Control was issued. For the full text of the report, please see 2019 Audit Report on
Internal Control disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn)
on 14 April 2020.
Whether to disclose the audit report on internal control: yes
X. Others
"□ Applicable" "√ Not applicable"
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Annual Report 2019
Chapter X Corporate Bonds
"□ Applicable" "√ Not applicable"
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Annual Report 2019
Chapter XI Financial Report
I. Auditor’s report
"√ Applicable" "□ Not applicable"
Xin Kuai Shi Bao Zi [2020] No. ZA10693
To the shareholders of Shanghai M&G Stationery Inc.:
I. Audits’ opinion
We have audited the accompanying financial statements of Shanghai M&G Stationery Inc.
(hereinafter referred to as “M&G Stationery”), which comprise the consolidated and parent
company’s balance sheets as at 31 December 2019, 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 2019, 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 M&G Stationery as at 31
December 2019 and of its consolidated and parent company’s operating results and cash flows
for the year of 2019.
II. Basis of auditors’ opinion
We have conducted our audit in accordance with the Chinese Auditing Standards for Certified
Public Accountants. The “Responsibilities of Certified Public Accountants for Auditing of
Financial Statements” in the auditor’s 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 M&G Stationery 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 those matters that, in our professional judgment, were of most significance
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. The followings are the key audit matters
that we have determined to communicate in the auditor’s report.
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Key audit matters How our audit addressed the key audit
matter
(I) Recognition of the revenue
Please refer to notes to financial statements 1. We understood and evaluated
for accounting policies set out in “III Significant design of the key internal control
Accounting Policies and Accounting designed by management and we tested
Estimates” (XXII) and “V Notes to the effectiveness of implementing key
Consolidated Financial Statements” (XXXIV). controls;
M&G Stationery mainly specializes in selling 2. We inspected customer contracts,
stationery and office supplies. on a sample basis, to identify terms and
(1) Timing of revenue recognition for regional conditions of transfer of risks and
sales and overseas sale (export agent): rewards related to the ownership of
Shanghai: sales revenue is recognized after goods, and assessed the timing of
goods are delivered; regions other than revenue recognition with reference to the
Shanghai: sales revenue is recognized after requirements of prevailing accounting
goods are delivered and delivery documents standards;
are confirmed with signature from the logistic 3. We selected samples for revenue
companies; transactions recorded during the current
(2) Timing of revenue recognition for KA sales: year, with invoices, sales contracts,
sales revenue is recognized after goods are goods delivery notes or transport
delivered and delivery documents are documents to assess whether the related
confirmed with signature from the logistic revenue was recognized in accordance
companies; with M&G Stationery’s revenue
(3) Timing of revenue recognition for self- recognition accounting policies;
managing and export business: revenue is 4. We performed analytical procedures
recognized when the goods pass the ship’s rail on revenue and cost, including analysis
in the port of shipment under the term of FOB; of revenue, cost, gross profit margin
(4) Timing of revenue recognition for direct fluctuations in each month of the current
sales of office supplies: sales revenue is period, and performed analysis on sales
recognized after goods are delivered and model to observe whether there is any
confirmed by customers; abnormal transaction;
(5) Timing of revenue recognition for direct 5. We took samples from revenue
sales large flagship store: sales revenue is transactions that took place shortly
recognized after goods are delivered and before and after the balance sheet date,
confirmed by customers. by checking delivery orders and other
In 2019, M&G Stationery’s revenue from supportive documents to assess whether
principal business in sales recognition
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Annual Report 2019
amounted to RMB11,139,921,600. revenue was recognized in the correct
Since revenue is one of the key performance accounting period.
indicators of M&G Stationery, there is possibly 6. We evaluated the accuracy and
inherent risk of inappropriately recognizing authenticity of the revenue amount by
revenue to reach specific purpose in revenue implementing the income letter
recognition made based on the sales group of verification procedure and checking
distributor; there is possibly potential risk of goods return after the period.
material misstatement in revenue recognition
made based on the sales group of end
customer because it involves many
transactions with small amount for each
transaction, so we recognized revenue
recognition as a key audit matter.
(II) Anticipated credit loss of accounts receivable
1. We understood and evaluated
Please refer to notes to financial statements design of the key internal control
for accounting policies set out in “III Significant regarding impairment of financial assets
Accounting Policies and Accounting (including accounts receivable) designed
Estimates” (IX) and “V Notes to Consolidated by management and we tested the
Financial Statements” (IV). effectiveness of implementing key
As at 31 December 2019, balance of accounts controls;
receivable amounted to RMB1,059,038,000, 2. We evaluated rationality of the
and provision made for credit impairment loss estimation on anticipated credit loss of
of accounts receivable amounted to accounts receivable, including judgment
RMB32,943,200. of forward-looking information; basis of
M&G Stationery measured provision for loss of estimation on anticipated credit loss
accounts receivable in accordance with made on a single item, and basis of
amount of anticipated credit loss in the entire estimation on anticipated credit loss
lifetime. The anticipated credit loss requires made on portfolio, including rationality of
the management to take into consideration of the division for portfolio;
forward-looking information apart from 3. We reviewed credit risk assessment
combining historical experience and current performed by the management on
situations, involving lots of estimation and internal and external environment of
judgment, so we recognized anticipated credit M&G Stationery’s operation, integrity of
loss of accounts receivable as a key audit different customers, repayment history,
matter. repayment capacity, and historical
experience in credit loss;
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Annual Report 2019
4. We recalculated to check whether
measurement of provision for loss made
by the management on single and
portfolio accounts receivable is
consistent with the amount of anticipated
credit loss in the entire existing period.
IV. Other information
The management of M&G Stationery (hereinafter referred to as the “management”) is
responsible for the other information which comprises all the information covered in M&G
Stationery 2019 Annual Report other than the financial statements and this auditor’s report.
Our audit opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In conjunction with our audit to the financial statements, our responsibility is to read the other
information. During the process, we considered whether there is material inconsistency or there
is 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 governing bodies for the financial
statements
The management shall be 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 M&G
Stationery’s continuous operating capacity, disclosing matters relating to continuous operations
(if applicable), and applying the continuing operating assumptions unless the management plans
to perform liquidation, cease operation or otherwise has no realistic choice.
The governing bodies are responsible for overseeing the financial reporting process of M&G
Stationery.
VI. Responsibilities of CPA for the audit of the financial statements
Our objective is to obtain reasonable assurance of the financial statements as a whole whether
there is a material misstatement due to fraud or error and to issue an auditor’s report containing
audit opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with China Standards on Auditing will always detect a material
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Annual Report 2019
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) to identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error; design and perform audit procedures responsive to those risks; and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
(2) to understand the internal control related to the audit to design the appropriate audit
procedures.
(3) to evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) to draw a conclusion on the appropriateness of the management’s use of the going concern
basis of accounting. and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the ability of M&G
Stationery 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 M&G Stationery to cease to continue as a going concern.
(5) to evaluate the overall presentation, structure and content (including disclosure) of the
financial statements, and to assess whether the financial statements reflect the related
transactions and events fairly.
(6) to obtain sufficient and appropriate audit evidence of the financial information of the entity or
business activity of the M&G Stationery 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).
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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.
BDO China Shu Lun Pan CPAs Certified Public Accountant: Gu Xuefeng (Project Partner)
(Special general partnership)
Certified Public Accountant: Wang Aijia
Shanghai, China 10 April 2020
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Annual Report 2019
II. Financial Statements
Combined Balance Sheet
31 December 2019
Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: Yuan Currency: RMB
Item Notes 31 December 2019 31 December 2018
Current assets:
Cash and equivalents VII. 1 1,935,600,694.35 1,046,668,874.97
Transaction settlement
funds
Lending funds
Held-for-trading financial
VII. 2 661,878,587.24
assets
Financial assets at fair value
through current profit or loss
Derivative financial assets
Bills receivable VII. 4 1,894,232.00
Accounts receivable VII. 5 1,026,094,724.15 808,772,112.91
Receivables financing VII. 6 29,549,924.83
Prepayment VII. 7 85,371,444.73 42,336,973.71
Premium receivable
Reinsurance premium
receivable
Reserves for reinsurance
contract receivable
Other receivables VII. 8 117,647,039.93 110,280,059.38
Including: Interest
receivable
Dividend receivable
Financial assets purchased
under agreements to resell
Inventories VII. 9 1,378,108,759.85 1,042,701,610.00
Held for sale assets
Non-current assets due
within one year
Other current assets VII. 12 29,280,925.29 1,046,977,400.35
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Annual Report 2019
Total current assets 5,263,532,100.37 4,099,631,263.32
Non-current assets:
Loans and advances to
customers
Debt investment
Available-for-sale financial
3,600,000.00
assets
Other debt investment
Held-to-maturity investment
Long-term receivables VII. 15 6,624,590.00
Long-term equity VII. 16
35,582,783.47 30,175,665.26
investments
Investments in other equity VII. 17
3,909,179.93
instruments
Other non-current financial
assets
Investment real estate
Fixed assets VII. 20 1,163,702,352.12 876,617,888.99
Construction in progress VII. 21 260,469,728.76 24,506,469.59
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets VII. 25 331,005,762.09 187,987,875.67
Development expenses
Goodwill VII. 27 30,175,537.19 131,001.23
Long-term prepaid VII. 28
118,336,333.95 118,024,364.67
expenses
Deferred income tax assets VII. 29 36,623,535.59 25,525,520.98
Other non-current assets VII. 30 315,153,408.27 311,300,000.00
Total non-current assets 2,301,583,211.37 1,577,868,786.39
Total assets 7,565,115,311.74 5,677,500,049.71
Current liabilities:
Short-term borrowings VII. 31 183,193,763.86
Borrowings from central
bank
Placements from banks and
other financial institutions
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Annual Report 2019
Held-for-trading financial
liabilities
Financial liabilities at fair
value through current profit
or loss
Derivative financial liabilities
Bills payable
Accounts payable VII. 35 1,861,072,467.87 1,319,407,048.21
Accounts received in VII. 36
206,762,293.94 147,647,053.87
advance
Financial assets sold under
repurchase agreements
Deposits from customers
and other banks
Brokerage for trading
securities
Brokerage for underwriting
securities
Employee benefits payable VII. 37 154,119,492.32 120,786,076.52
Taxes payable VII. 38 258,583,118.14 279,377,546.18
Other payables VII. 39 331,438,976.35 240,665,881.17
Including: Interest payable
Dividend payable
Fees and commissions
payable
Reinsured accounts payable
Held-for-sale liabilities
Non-current liabilities due
within one year
Other current liabilities
Total current liabilities 2,995,170,112.48 2,107,883,605.95
Non-current liabilities:
Reserves for insurance
contracts
Long-term borrowings
Bonds payable
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Annual Report 2019
Including: Preference
shares
Perpetual bonds
Lease liabilities
Long-term payable VII. 46 6,620,000.00 5,109,800.00
Long-term employee
benefits payable
Estimated liabilities
Deferred income VII. 49 65,823,213.11 67,277,109.51
Deferred income tax VII. 29
36,576,744.55 564,909.50
liabilities
Other non-current liabilities
Total non-current liabilities 109,019,957.66 72,951,819.01
Total liabilities 3,104,190,070.14 2,180,835,424.96
Owner’s equity (or
shareholders’ equity):
Share capital VII. 51 920,000,000.00 920,000,000.00
Other equity instruments
Including: Preference
shares
Perpetual bonds
Capital reserve VII. 53 272,347,764.53 272,347,764.53
Less: Treasury shares
Other comprehensive
526,359.55
income
Special reserve
Surplus reserve VII. 57 440,260,399.59 343,733,386.35
General risk provision
Undistributed profit VII. 58 2,568,365,861.32 1,874,727,294.53
Total equity attributable to
the owners of the parent 4,201,500,384.99 3,410,808,445.41
company
Minority equity 259,424,856.61 85,856,179.34
Total owners’ equity (or
4,460,925,241.60 3,496,664,624.75
shareholders’ equity)
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Annual Report 2019
Total liabilities and owner's
equity (or shareholders’ 7,565,115,311.74 5,677,500,049.71
equity)
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of
Accounting Department: Zhai Yu
Parent Company’s Balance Sheet
31 December 2019
Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: Yuan Currency: RMB
Item Notes 31 December 2019 31 December 2018
Current assets:
Cash and equivalents 1,358,805,872.56 552,507,774.24
Held-for-trading financial
509,467,061.37
assets
Financial assets at fair value
through current profit or loss
Derivative financial assets
Bills receivable
Accounts receivable XVII. 1 82,949,224.65 93,324,765.86
Receivables financing
Prepayment 9,630,209.45 9,002,289.37
Other receivables XVII. 2 285,036,794.54 227,644,350.97
Including: Interest
192,500.00
receivable
Dividend receivable
Inventories 448,245,658.48 433,945,665.76
Held for sale assets
Non-current assets due
within one year
Other current assets 150,047,540.99 820,679,150.20
Total current assets 2,844,182,362.04 2,137,103,996.40
Non-current assets:
Debt investment
Available-for-sale financial 3,600,000.00
assets
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Annual Report 2019
Other debt investment
Held-to-maturity investment
Long-term receivables 6,624,590.00
Long-term equity XVII. 3
1,089,168,192.56 878,722,964.35
investments
Investments in other equity
3,909,179.93
instruments
Other non-current financial
assets
Investment real estate
Fixed assets 749,415,024.84 792,636,398.34
Construction in progress 258,864,834.00 23,686,726.44
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 182,268,368.82 184,634,388.95
Development expenses
Goodwill
Long-term prepaid
10,106,589.01 15,345,487.19
expenses
Deferred income tax assets 5,469,359.66 5,277,303.99
Other non-current assets 311,929,028.24 311,300,000.00
Total non-current assets 2,617,755,167.06 2,215,203,269.26
Total assets 5,461,937,529.10 4,352,307,265.66
Current liabilities:
Short-term borrowings
Held-for-trading financial
liabilities
Financial liabilities at fair
value through current profit
or loss
Derivative financial liabilities
Bills payable
Accounts payable 225,831,712.59 240,475,062.99
Accounts received in
116,720,284.19 80,736,039.60
advance
Employee benefits payable 87,609,891.62 76,794,379.93
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Annual Report 2019
Taxes payable 160,129,252.33 187,418,365.45
Other payables 513,035,659.92 29,240,729.97
Including: Interest payable
Dividend payable
Held-for-sale liabilities
Non-current liabilities due
140,000,000.00
within one year
Other current liabilities
Total current liabilities 1,103,326,800.65 754,664,577.94
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference
shares
Perpetual bonds
Lease liabilities
Long-term payable 258,620,000.00 187,109,800.00
Long-term employee
benefits payable
Estimated liabilities
Deferred income 28,453,779.37 29,979,024.38
Deferred income tax
1,420,059.21
liabilities
Other non-current liabilities
Total non-current liabilities 288,493,838.58 217,088,824.38
Total liabilities 1,391,820,639.23 971,753,402.32
Owner’s equity (or
shareholders’ equity):
Share capital 920,000,000.00 920,000,000.00
Other equity instruments
Including: Preference
shares
Perpetual bonds
Capital reserve 274,008,599.09 274,008,599.09
Less: Treasury shares
Other comprehensive
292,894.11
income
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Annual Report 2019
Special reserve
Surplus reserve 439,931,539.68 343,404,526.44
Undistributed profit 2,435,883,856.99 1,843,140,737.81
Total owners’ equity (or
4,070,116,889.87 3,380,553,863.34
shareholders’ equity)
Total liabilities and owner's
equity (or shareholders’ 5,461,937,529.10 4,352,307,265.66
equity)
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of
Accounting Department: Zhai Yu
Consolidated Income Statement
January - December 2019
Unit: Yuan Currency: RMB
Item Notes 2019 2018
I. Total operating income 11,141,101,364.44 8,534,988,597.55
Including: Operating income VII. 59 11,141,101,364.44 8,534,988,597.55
Interest income
Premium received
Handling fee and commission
income
II. Total operating costs 9,873,266,701.55 7,640,602,184.07
Including: Operating cost VII. 59 8,229,837,268.86 6,330,446,740.16
Interest expenses
Handling fee and commission
expenses
Payment on surrenders
Net compensation expenses
Net provision drawn for insurance
contract
Policy dividend expenses
Reinsurance expenses
Taxes and surcharges VII. 60 41,995,058.06 34,720,679.26
Selling expenses VII. 61 980,166,101.18 789,386,543.37
Administrative expenses VII. 62 469,262,188.13 379,618,754.18
R&D expenses VII. 63 160,403,362.97 114,388,916.75
Financial expenses VII. 64 -8,397,277.65 -7,959,449.65
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Annual Report 2019
Including: Interest expenses 8,386,182.80
Interest income 20,872,167.57 5,997,422.97
Add: Other gains VII. 65 26,504,881.46 8,716,713.66
Income from investment (“-” refers to VII. 66
23,994,985.32 35,123,869.91
loss)
Including: Investment income from
-576,595.97 -393,609.74
associates and joint ventures
Derecognition of income from
financial assets at amortized cost
Exchange gains (“-” refers to loss)
Net gain on exposure hedging
(“-” refers to loss)
Gain on change in fair value (“-” VII. 68
4,613,287.24
refers to loss)
Losses on credit impairment VII. 69
-28,006,009.88
(“-” refers to loss)
Losses on assets impairment VII. 70
-17,843,081.89 -3,412,585.70
(“-” refers to loss)
Gains from asset disposal (“-” refers VII. 71
6,081,606.95 -69,195.83
to loss)
III. Operating profits (“-” refers to
1,283,180,332.09 934,745,215.52
loss)
Add: Non-operating profits VII. 72 29,358,655.04 46,009,012.19
Less: Non-operating expenses VII. 73 18,859,243.06 20,539,389.95
IV. Total profits (“-” refers to total
1,293,679,744.07 960,214,837.76
loss)
Less: Income tax expenses VII. 74 217,602,900.41 152,378,423.75
V. Net profits (“-” refers to net loss) 1,076,076,843.66 807,836,414.01
(I) Classified by operation continuity
1. Net profits from continuing
1,076,076,843.66 807,836,414.01
activities (“-” refers to net loss)
2. Net profits from discontinuing
activities (“-” refers to net loss)
(II) Classified by ownership
1. Net profits attributable to
shareholders of the parent company 1,060,083,625.03 806,847,308.41
(“-” refers to net loss)
106 / 308
Annual Report 2019
2. Profit or loss attributable to
minority shareholders (“-” refers to 15,993,218.63 989,105.60
net loss)
VI. Net amount of other
709,796.69
comprehensive income after tax
(I) Net amount of other
comprehensive income after tax
526,359.55
attributable to owners of the parent
company
1. Other comprehensive income not
309,179.93
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 309,179.93
instruments
(4) Change in fair value of
enterprise's own credit risk
2. Other comprehensive income to
217,179.62
be reclassified into profit or loss
(1) Other comprehensive income
that may be reclassified to profit or -16,285.82
loss under equity method
(2) Change in fair value of other debt
investments
(3) Profit or loss from the change of
fair value of available-for-sale
financial assets
(4) Amount included in other
comprehensive income on
reclassification of financial assets
(5) Profit or loss from held-to-
maturity investment reclassified as
available-for-sale financial assets
107 / 308
Annual Report 2019
(6) Credit impairment provisions of
other debt investments
(7) Cash flow hedging reserve
(Effective portion of cash flow
hedging profit or loss)
(8) Exchange differences from
233,465.44
translation of financial statements
(9) Others
(II) Net amount of other
comprehensive income after tax 183,437.14
attributable to minority shareholders
VII. Total comprehensive income 1,076,786,640.35 807,836,414.01
(I) Total comprehensive income
attributable to owners of the parent 1,060,609,984.58 806,847,308.41
company
(II) Total comprehensive income
16,176,655.77 989,105.60
attributable to minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share
1.1523 0.8770
(Yuan/share)
(II) Diluted earnings per share
1.1523 0.8770
(Yuan/share)
In case of business combination under common control, net profit realized by the combined
before the combination in the period was nil; net profit realized by the combined in the previous
period was nil. RMB0.
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of
Accounting Department: Zhai Yu
Income Statement of the Parent Company
January - December 2019
Unit: Yuan Currency: RMB
Item Notes 2019 2018
I. Operating income XVII. 4 3,933,991,943.14 3,402,622,358.54
Less: Operating cost XVII. 4 2,183,782,074.37 2,034,456,319.11
Taxes and surcharges 17,610,206.96 15,169,890.00
Selling expenses 186,518,505.25 164,230,651.64
Administrative expenses 338,338,989.17 260,215,672.87
108 / 308
Annual Report 2019
R&D expenses 129,731,243.16 114,388,916.75
Financial expenses -12,660,392.50 -5,324,409.58
Including: Interest expenses 948,654.26
Interest income 12,582,570.87 2,721,099.71
Add: Other gains 5,782,081.23 4,618,424.45
Income from investment (“-” refers XVII. 5
21,470,373.55 32,190,116.49
to loss)
Including: Investment income from
-576,595.97 -393,609.74
associates and joint ventures
Derecognition of income from
financial assets at amortized cost
Net gain on exposure hedging
(“-” refers to loss)
Gain on change in fair value
3,137,261.37
(“-” refers to loss)
Losses on credit impairment
-651,502.57
(“-” refers to loss)
Losses on assets impairment
-2,154,113.62 -1,191,669.73
(“-” refers to loss)
Gains from asset disposal
190,467.53 -332,568.10
(“-” refers to loss)
II. Operating profits (“-” refers to
1,118,445,884.22 854,769,620.86
loss)
Add: Non-operating profits 17,311,132.84 35,648,932.27
Less: Non-operating expenses 2,001,519.26 13,794,616.24
III. Total profits (“-” refers to total
1,133,755,497.80 876,623,936.89
loss)
Less: Income tax expenses 173,865,695.38 131,832,461.42
IV. Net profits (“-” refers to net
959,889,802.42 744,791,475.47
loss)
(I) Net profits from continuing
959,889,802.42 744,791,475.47
activities (“-” refers to net loss)
(II) Net profits from discontinuing
activities (“-” refers to net loss)
V. Net amount of other
292,894.11
comprehensive income after tax
109 / 308
Annual Report 2019
(I) Other comprehensive income
not to be reclassified into profit or 309,179.93
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 309,179.93
instruments
4. Change in fair value of
enterprise's own credit risk
(II) Other comprehensive income
-16,285.82
to be reclassified into profit or loss
1. Other comprehensive income
that may be reclassified to profit -16,285.82
or loss under equity method
2. Change in fair value of other
debt investments
3. Profit or loss from the change
of fair value of available-for-sale
financial assets
4. Amount included in other
comprehensive income on
reclassification of financial assets
5. Profit or loss from held-to-
maturity investment reclassified
as available-for-sale financial
assets
6. Credit impairment provisions of
other debt investments
7. Cash flow hedging reserve
(Effective portion of cash flow
hedging profit or loss)
8. Exchange differences from
translation of financial statements
9. Others
110 / 308
Annual Report 2019
VI. Total comprehensive income 960,182,696.53 744,791,475.47
VII. Earnings per share:
(I) Basic earnings per share
(Yuan/share)
(II) Diluted earnings per share
(Yuan/share)
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of
Accounting Department: Zhai Yu
Consolidated Cash Flow Statement
January - December 2019
Unit: Yuan Currency: RMB
Item Notes 2019 2018
I. Cash flow from operating
activities:
Cash received from sales of
12,659,206,706.73 9,713,854,726.05
goods or rendering 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
111 / 308
Annual Report 2019
Net cash received from
securities trading agency
services
Tax rebates 10,615,726.68
Other cash received from VII. 76
278,708,570.57 107,722,867.77
operating activities
Sub-total of cash inflows from
12,948,531,003.98 9,821,577,593.82
operating activities
Cash paid for goods and
9,111,402,404.98 7,005,237,744.44
services
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
727,849,843.52 578,387,066.44
employees
Taxes and fees paid 676,394,326.12 467,902,661.41
Cash paid for other operating VII. 76
1,350,943,045.68 942,109,556.02
activities
Sub-total of cash outflows
11,866,589,620.30 8,993,637,028.31
from operating activities
Net cash flow generated from
1,081,941,383.68 827,940,565.51
operating activities
II. Cash flow from investing
activities:
Cash received from disposal
1,250,355,226.95 3,065,000,000.00
of investments
112 / 308
Annual Report 2019
Cash received from returns on
24,216,354.35 35,517,479.65
investments
Net cash received from
disposal of fixed assets,
5,463,204.22 912,028.22
intangible assets and other
long-term assets
Net cash received from
disposal of subsidiaries and
other operating entities
Other cash received relating
to investing activities
Sub-total of cash inflows from
1,280,034,785.52 3,101,429,507.87
investing activities
Cash paid for purchase and
construction of fixed assets,
377,738,579.26 318,226,341.22
intangible assets and other
long-term assets
Cash paid for investment 866,000,000.00 3,079,169,275.00
Net increase in pledged loans
Net cash paid for acquiring
subsidiaries and other 110,648,892.44
operating entities
Other cash paid relating to
investing activities
Sub-total of cash outflows
1,354,387,471.70 3,397,395,616.22
from investing activities
Net cash flow generated from
-74,352,686.18 -295,966,108.35
investing activities
III. Cash flow generated
from financing activities:
Proceeds received from
42,000,000.00 4,900,000.00
financing activities
Including: Proceeds received
by subsidiaries from minority 42,000,000.00 4,900,000.00
shareholders’ investment
Cash received from
346,892,780.31
borrowings
113 / 308
Annual Report 2019
Other cash received from
financing-related activities
Sub-total of cash inflows from
388,892,780.31 4,900,000.00
financing activities
Cash repayments of
458,363,649.10
borrowings
Dividends paid, profit
286,141,698.09 230,000,000.00
distributed or interest paid
Including: Dividend and profit
paid by subsidiaries to
minority shareholders
Other cash paid for financing- VII. 76
8,687,534.78
related activities
Sub-total of cash outflows
753,192,881.97 230,000,000.00
from financing activities
Net cash flow from financing
-364,300,101.66 -225,100,000.00
activities
IV. Effects of exchange rate
fluctuations on cash and -7,343,606.05 2,580,870.25
cash equivalents
V. Net increase in cash and
635,944,989.79 309,455,327.41
cash equivalents
Add: Cash and cash
equivalents at the beginning of 741,501,446.10 432,046,118.69
the period
VI. Cash and cash
equivalents at the end of the 1,377,446,435.89 741,501,446.10
period
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of
Accounting Department: Zhai Yu
Cash Flow Statement of the Company
January - December 2019
Unit: Yuan Currency: RMB
Item Notes 2019 2018
114 / 308
Annual Report 2019
I. Cash flow from operating
activities:
Cash received from sales of
4,481,220,462.21 3,889,934,554.26
goods or rendering of services
Tax rebates
Other cash received from
869,793,478.23 65,606,561.94
operating activities
Sub-total of cash inflows from
5,351,013,940.44 3,955,541,116.20
operating activities
Cash paid for goods and
2,424,224,396.02 2,227,188,178.82
services
Cash paid to and on behalf of
366,624,770.76 328,475,870.29
employees
Taxes and fees paid 445,473,384.86 289,957,488.72
Cash paid for other operating
894,987,272.24 557,320,507.69
activities
Sub-total of cash outflows
4,131,309,823.88 3,402,942,045.52
from operating activities
Net cash flow generated from
1,219,704,116.56 552,599,070.68
operating activities
II. Cash flow from investing
activities:
Cash received from disposal
1,020,000,000.00 2,610,000,000.00
of investments
Cash received from returns on
22,046,969.52 32,583,726.23
investments
Net cash received from
disposal of fixed assets,
1,564,005.35 611,830.73
intangible assets and other
long-term assets
Net cash received from
disposal of subsidiaries and
other operating entities
Other cash received relating
to investing activities
Sub-total of cash inflows from
1,043,610,974.87 2,643,195,556.96
investing activities
115 / 308
Annual Report 2019
Cash paid for purchase and
construction of fixed assets,
301,156,480.55 246,840,159.56
intangible assets and other
long-term assets
Cash paid for investment 954,000,000.00 2,589,269,275.00
Net cash paid for acquiring
subsidiaries and other 170,005,997.67
operating entities
Other cash paid relating to
investing activities
Sub-total of cash outflows
1,425,162,478.22 2,836,109,434.56
from investing activities
Net cash flow generated from
-381,551,503.35 -192,913,877.60
investing activities
III. Cash flow generated
from financing activities:
Proceeds received from
financing activities
Cash received from
borrowings
Other cash received from
financing-related activities
Sub-total of cash inflows from
financing activities
Cash repayments of
borrowings
Dividends paid, profit
276,948,654.26 230,000,000.00
distributed or interest paid
Other cash paid for financing-
related activities
Sub-total of cash outflows
276,948,654.26 230,000,000.00
from financing activities
Net cash flow from financing
-276,948,654.26 -230,000,000.00
activities
IV. Effects of exchange rate
fluctuations on cash and -2,444,756.42 2,580,870.25
cash equivalents
116 / 308
Annual Report 2019
V. Net increase in cash and
558,759,202.53 132,266,063.33
cash equivalents
Add: Cash and cash
equivalents at the beginning of 247,580,827.87 115,314,764.54
the period
VI. Cash and cash
equivalents at the end of the 806,340,030.40 247,580,827.87
period
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of
Accounting Department: Zhai Yu
117 / 308
Annual Report 2019
Consolidated Statements of Changes in Owners’ Equity
January - December 2019
Unit: Yuan Currency: RMB
2019
Equity attributable to owners of the parent company
Total equity
Item
Paid-up capital Other equity instruments Less: Other General Minority equity attributable to
Special Surplus Undistributed
(or share Preference Perpetual Capital reserve Treasury comprehensive risk Others Sub-total owners
Others reserve reserve profit
capital) shares bonds shares income provision
I. Balance at the
920,000,000.00 272,347,764.53 343,733,386.35 1,874,727,294.53 3,410,808,445.41 85,856,179.34 3,496,664,624.75
end of last year
Add: Changes in
accounting 538,033.00 5,543,922.00 6,081,955.00 6,081,955.00
policies
Correction for
previous errors
Enterprise merger
under the same
control
Others
II. Balance at the
beginning of the 920,000,000.00 272,347,764.53 344,271,419.35 1,880,271,216.53 3,416,890,400.41 85,856,179.34 3,502,746,579.75
year
III. Increase and
decrease for the
526,359.55 95,988,980.24 688,094,644.79 784,609,984.58 173,568,677.27 958,178,661.85
period (“-” for
decrease)
118 / 308
Annual Report 2019
(I) Total
comprehensive 526,359.55 1,060,083,625.03 1,060,609,984.58 16,176,655.77 1,076,786,640.35
income
(II) Owner’s
contribution and 157,392,021.50 157,392,021.50
capital reduction
1. Ordinary
shares
42,000,000.00 42,000,000.00
contributed by the
owners
2. Capital
contributions by
other equity
instrument
holders
3. Amount of
share-based
payments
credited to
owners’ equity
4. Others 115,392,021.50 115,392,021.50
(III) Profit
95,988,980.24 -371,988,980.24 -276,000,000.00 -276,000,000.00
distribution
1. Withdrawal of
95,988,980.24 -95,988,980.24
surplus reserve
2. Withdrawal of
general risk
provision
3. Distribution to
owners (or -276,000,000.00 -276,000,000.00 -276,000,000.00
shareholders)
119 / 308
Annual Report 2019
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
120 / 308
Annual Report 2019
(VI) Others
IV. Balance at the
920,000,000.00 272,347,764.53 526,359.55 440,260,399.59 2,568,365,861.32 4,201,500,384.99 259,424,856.61 4,460,925,241.60
end of the period
2018
Equity attributable to owners of the parent company
Total equity
Item Minority
Paid-up capital Other equity instruments Less: Other General attributable to
Special Surplus Undistributed equity
(or share Preference Perpetual Capital reserve Treasury comprehensive risk Others Sub-total owners
Others reserve reserve profit
capital) shares bonds shares income provision
I. Balance at the
920,000,000.00 272,347,764.53 269,254,238.80 1,372,359,133.67 2,833,961,137.00 79,967,073.74 2,913,928,210.74
end of last year
Add: Changes in
accounting policies
Correction for
previous errors
Enterprise merger
under the same
control
Others
II. Balance at the
beginning of the 920,000,000.00 272,347,764.53 269,254,238.80 1,372,359,133.67 2,833,961,137.00 79,967,073.74 2,913,928,210.74
year
III. Increase and
decrease for the
74,479,147.55 502,368,160.86 576,847,308.41 5,889,105.60 582,736,414.01
period (“-” for
decrease)
121 / 308
Annual Report 2019
(I) Total
comprehensive 806,847,308.41 806,847,308.41 989,105.60 807,836,414.01
income
(II) Owner’s
contribution and 4,900,000.00 4,900,000.00
capital reduction
1. Ordinary shares
contributed by the 4,900,000.00 4,900,000.00
owners
2. Capital
contributions by
other equity
instrument holders
3. Amount of
share-based
payments credited
to owners’ equity
4. Others
(III) Profit
74,479,147.55 -304,479,147.55 -230,000,000.00 -230,000,000.00
distribution
1. Withdrawal of
74,479,147.55 -74,479,147.55
surplus reserve
2. Withdrawal of
general risk
provision
3. Distribution to
owners (or -230,000,000.00 -230,000,000.00 -230,000,000.00
shareholders)
4. Others
122 / 308
Annual Report 2019
(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
123 / 308
Annual Report 2019
IV. Balance at the
920,000,000.00 272,347,764.53 343,733,386.35 1,874,727,294.53 3,410,808,445.41 85,856,179.34 3,496,664,624.75
end of the period
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of Accounting Department: Zhai Yu
Statements of Changes in Equity of Owners of Parent Company
January - December 2019
Unit: Yuan Currency: RMB
2019
Paid-up capital Other equity instruments Less: Other Total equity
Item Special Surplus Undistributed
(or share Preference Capital reserve Treasury comprehensive attributable to
Perpetual bonds Others reserve reserve profit
capital) shares shares income owners
I. Balance at the end of last year 920,000,000.00 274,008,599.09 343,404,526.44 1,843,140,737.81 3,380,553,863.34
Add: Changes in accounting policies 538,033.00 4,842,297.00 5,380,330.00
Correction for previous errors
Others
II. Balance at the beginning of the
920,000,000.00 274,008,599.09 343,942,559.44 1,847,983,034.81 3,385,934,193.34
year
III. Increase and decrease for the
292,894.11 95,988,980.24 587,900,822.18 684,182,696.53
period (“-” for decrease)
(I) Total comprehensive income 292,894.11 959,889,802.42 960,182,696.53
(II) Owner’s contribution and capital
reduction
1. Ordinary shares contributed by the
owners
2. Capital contributions by other equity
instrument holders
3. Amount of share-based payments
credited to owners’ equity
4. Others
124 / 308
Annual Report 2019
(III) Profit distribution 95,988,980.24 -371,988,980.24 -276,000,000.00
1. Withdrawal of surplus reserve 95,988,980.24 -95,988,980.24
2. Distribution to owners (or
-276,000,000.00 -276,000,000.00
shareholders)
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
IV. Balance at the end of the period 920,000,000.00 274,008,599.09 292,894.11 439,931,539.68 2,435,883,856.99 4,070,116,889.87
2018
Paid-up capital Other equity instruments Less: Other Total equity
Item Special Surplus Undistributed
(or share Preference Capital reserve Treasury comprehensive attributable to
Perpetual bonds Others reserve reserve profit
capital) shares shares income owners
I. Balance at the end of last year 920,000,000.00 274,008,599.09 268,925,378.89 1,402,828,409.89 2,865,762,387.87
Add: Changes in accounting policies
125 / 308
Annual Report 2019
Correction for previous errors
Others
II. Balance at the beginning of the
920,000,000.00 274,008,599.09 268,925,378.89 1,402,828,409.89 2,865,762,387.87
year
III. Increase and decrease for the
74,479,147.55 440,312,327.92 514,791,475.47
period (“-” for decrease)
(I) Total comprehensive income 744,791,475.47 744,791,475.47
(II) Owner’s contribution and capital
reduction
1. Ordinary shares contributed by the
owners
2. Capital contributions by other
equity instrument holders
3. Amount of share-based payments
credited to owners’ equity
4. Others
(III) Profit distribution 74,479,147.55 -304,479,147.55 -230,000,000.00
1. Withdrawal of surplus reserve 74,479,147.55 -74,479,147.55
2. Distribution to owners (or
-230,000,000.00 -230,000,000.00
shareholders)
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
126 / 308
Annual Report 2019
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
IV. Balance at the end of the period 920,000,000.00 274,008,599.09 343,404,526.44 1,843,140,737.81 3,380,553,863.34
Legal Representative: Chen Huwen Accountant in charge: Zhang Qing Person in charge of Accounting Department: Zhai Yu
127 / 308
Annual Report 2019
III. General Information about the Company
1. Company profile
"√ Applicable" "□ Not applicable"
Shanghai M&G Stationery Inc. (hereinafter referred to as “Company” or the “Company”) is a
limited company that was approved by the Approval for the Initial Public Offering of Shanghai
M&G Stationery Inc. in [2015] No. 15 securities regulatory license of China Securities Regulatory
Commission in January 2015. The Company’s business license No.: 91310000677833266F. In
January 2015, the Company was listed on Shanghai Stock Exchange. The industry where the
Company operates is manufacturing industry in products for stationery, arts, sports and
entertainment.
As of 31 December 2019, the Company issued a total of 920,000,000 shares accumulatively,
and its registered capital amounted to RMB920,000,000. The registered address of the
Company is Building 3, No. 3469 Jinqian Road, Fengxian District,Shanghai. The principal
operations of the Company include: stationery manufacturing and sales, digital products, security
equipment, instruments and apparatus, protective equipment in work, furniture, decorations,
cosmetics, accessories, office supplies, craft gifts (except ivory and its products), rubber and
plastic products, electronic products, household appliances, toys, molds, hardware and electric
material, communication equipment, computer software and auxiliary equipment, wholesale and
retail of daily necessities, engagement in the import and export business of goods and
technology, food sales, e-commerce, publication operation, printing for other prints, packaging
and printing services, and consultation for business management. [For those businesses that
require permission, business activities are conducted after getting the approval from relevant
departments].
The parent company of the Company is M&G Holdings (Group) Co., Ltd., and the beneficial
controllers are Chen Huwen, Chen Huxiong, and Chen Xueling.
The financial statements were approved for submission by the Board of Directors on 10 April
2020.
2. Scope of consolidated financial statements
"√ Applicable" "□ Not applicable"
As of 31 December 2019, subsidiaries in the scope of the Company’s consolidated financial
statements are presented as follows:
Name of subsidiaries
Shanghai M&G Zhenmei Stationery Co., Ltd.(上海晨光珍美文具有限公司)
Shanghai M&G Colipu Office Supplies Co., Ltd.
Lianyungang Colipu Office Supplies Co., Ltd.(连云港市科力普办公用品有限公司)
Shenyang M&G Colipu Office Supplies Co., Ltd.(沈阳晨光科力普办公用品有限公司)
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Shanghai M&G Stationery & Gift Co., Ltd.(上海晨光文具礼品有限公司)
Shanghai M&G Stationery Sales Co., Ltd.(上海晨光文具销售有限公司)
Guangzhou M&G Stationery&Gifts Sales Co., Ltd.(广州晨光文具礼品销售有限公司)
Yiwu Chenxing Stationery Co., Ltd.(义乌市晨兴文具用品有限公司)
Harbin M&G Sanmei Stationery Co., Ltd.(哈尔滨晨光三美文具有限公司)
Zhengzhou M&G Stationery&Gifts Co., Ltd.(郑州晨光文具礼品有限责任公司)
M&G Living Studio Enterprise Management Co., Ltd.(晨光生活馆企业管理有限公司)
M&G Living Studio Enterprise Management (Shanghai) Co., Ltd.(晨光生活馆企业管理(上海)
有限公司)
Shanghai M&G Jiamei Stationery Co., Ltd.(上海晨光佳美文具有限公司)
Jiangsu M&G Living Studio Enterprise Management Co., Ltd.(江苏晨光生活馆企业管理有限
公司)
Zhejiang New M&G Living Studio Enterprise Management Co., Ltd.(浙江新晨光生活馆企业管
理有限公司)
Jiumu M&G Store Enterprise Management Co., Ltd.(九木杂物社企业管理有限公司)
Shanghai M&G Information Technology Co., Ltd.(上海晨光信息科技有限公司)
Shenzhen Erya Creative and Cultural Development Co., Ltd.(深圳尔雅文化创意发展有限
公司)
Shanghai M&G Office Supplies Co., Ltd.
Office Depot Network Technology Co., Ltd.
Luoyang M&G Stationery Sales Co., Ltd.(洛阳晨光文具销售有限公司)
Hangzhou Sanmei M&G Stationery Co., Ltd.(杭州三美晨光文具有限公司)
Axus Stationery (Shanghai) Company Ltd.
Jiangsu Marco Pen Co., Ltd.(江苏马可笔业有限公司)
Changchun Macro Stationery Co., Ltd.(长春马可文教用品有限公司)
Yili Senlai Wood Co., Ltd.(伊犁森徕木业有限公司)
Axus Stationery (Hong Kong) Company Ltd.
International stationery company
Details of the scope of the consolidated financial statements for the current period and its
changes are set out in “VI Changes in the Consolidation Scope” and “VII Equity in Other Entities”
of the notes.
IV. Preparation basis of financial statements
1. Preparation basis
Based on a going concern and actual transactions and events, the Company prepared financial
statements in accordance with the Accounting Standards for Business Enterprises-Basic
Standards, as well as various specific account standards, application guidance for accounting
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standards for business enterprises, interpretations of the accounting standards for business
enterprises and other relevant regulations (hereinafter collectively referred to as “CAS”) issued
by the Ministry of Finance, and the disclosure requirements in the Preparation Convention of
Information Disclosure by Companies Offering Securities to the Public No.15—General
Provisions on Financial Report issued by China Securities Regulatory Commission.
2. Going concern
"√ Applicable" "□ Not applicable"
The Company has the ability to continue as a going concern within the 12 months after the end
of the Reporting Period and there are no material events that may affect its ability to continue as
a going concern.
V. Significant accounting policies and accounting estimates
Notes to specific accounting policies and accounting estimates:
"√ Applicable" "□ Not applicable"
The following disclosures cover the specific accounting policies and accounting estimates
formulated by the Company according to the characteristics of its production and operation. For
more details, please refer to “III (IX) Financial instrument”, “III (XIII) Fixed assets”, “III (XVI)
Intangible assets”, “III (XVIII) Long-term prepaid expenses”, “III (XXII) Revenue” and “III (XXIII)
Government grant”.
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 and cash flow
and other related information.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
"√ Applicable" "□ Not applicable"
The Company’s operating cycle is 12 months.
4. Reporting currency
The reporting currency of the Company is RMB.
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5. Accounting treatments for enterprise merger under or not under joint control
"√ Applicable" "□ Not applicable"
Enterprise merger under joint control: the assets and liabilities acquired by the Company in
enterprise merger shall be measured at the carrying amount of the assets and liabilities of the
acquiree (including goodwill incurred in the acquisition of the acquiree by ultimate controlling
party) in the consolidated financial statements of the ultimate controlling party at the date of
merger. The difference between the carrying amount of the net assets obtained and the carrying
amount of the consideration paid for the merger (or total nominal value of the issued shares) is
adjusted to capital premium in capital reserve. If the capital premium in capital reserve is not
sufficient to offset the difference, the remaining balance is adjusted against retained earnings.
Enterprise merger not under joint control: the assets paid and liabilities incurred or committed as
a consideration of enterprise merger by the Company are measured at fair value on the date of
acquisition and the difference between the fair value and its carrying amount shall be included
in the current profit or loss. Where the cost of merger is higher than the fair value of the
identifiable net assets acquired from the acquiree in enterprise merger, the Company shall
recognize such difference as goodwill; where the cost of merger is less than the fair value of the
identifiable net assets acquired from the acquiree in enterprise merger, such difference shall be
included in the current profit or loss.
The direct expenses incurred in enterprise merger shall be included the current profit or loss;
transaction costs associated with the issue of equity or debt securities for the enterprise merger
shall be included in the initially recognized amounts of the equity or debt securities.
6. Preparation of consolidated financial statements
"√ Applicable" "□ Not applicable"
(1) Scope of consolidation
The consolidation scope of consolidated financial statements is determined on the basis of
control, including the Company and all of its subsidiaries.
(2) Consolidation procedure
The consolidated financial statements are prepared by the Company based on the financial
statements of the Company and its subsidiaries and in accordance with the other relevant
information. In preparation of the Company’s consolidated financial statements, the Company
will regard the enterprise group as a single accounting entity. The Group’s overall financial
condition, operating results and cash flow are reflected based on the relevant accounting
standards, measurement and presentation requirements and in accordance with the unified
accounting policy.
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The subsidiaries that are within the scope of the consolidation shall have the same accounting
policies and the accounting periods with those of the Company. In preparing the consolidated
financial statements, where the accounting policies and the accounting periods are inconsistent
between the Company and its subsidiaries, the financial statements of subsidiaries are adjusted
in accordance with the accounting policies and accounting period of the Company. For
subsidiaries acquired from an enterprise merger not under joint control, the financial statements
of the subsidiaries are adjusted based on the fair value of the identifiable net assets on the date
of acquisition. For subsidiaries acquired from an enterprise merger under joint control, the
financial statements of the subsidiaries are adjusted based on the carrying amount of their assets,
liabilities (including goodwill incurred in the acquisition by ultimate controlling party) in the
financial statements of the ultimate controlling party.
The owners’ equity, the net profit or loss and the comprehensive income attributable to minority
shareholders of a subsidiary of the current period are presented separately under the owners’
equity in the consolidated balance sheet, the net profit and the total comprehensive income in
the consolidated income statement respectively. Where losses attributable to the minority
shareholders of a subsidiary exceed the minority shareholders’ interest entitled in the
shareholders’ equity of the subsidiary at the beginning of the period, the excess is allocated
against the minority equity.
① Addition of subsidiary or business
During the Reporting Period, if there is an addition of subsidiary or business due to business
combination under common control, the amount at the beginning of the period in the consolidated
balance sheet will be adjusted; the income, expenses and profit of the subsidiary or business
combination from the beginning of the period to the end of the reporting period will be included
in the consolidated income statement; the cash flows of the subsidiary or business combination
from the beginning of the period to the end of the reporting period will be included in the
consolidated statement of cash flows, and relevant items in the comparative statements will also
be adjusted as if the reporting entity after combination had been existing since the control of the
ultimate controlling party started.
Where control over the investee under common control is obtained due to reasons such as
increase in investments, adjustment is made as if the parties involved in the combination had
been existing in the current condition since the control of the ultimate controlling party started.
For equity investment held before the control over the acquiree is obtained, profit or loss, other
comprehensive income and other changes in net assets recognized from the later of the
acquisition of the original equity interest and the date when the acquirer and the acquiree were
placed under common control until the date of combination are offset against retained profit at
the beginning of the period of the comparative statements or profit or loss of the period
respectively.
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During the Reporting Period, if there is an addition of subsidiary or business due to business
combination not under common control, the amount at the beginning of the period in the
consolidated balance sheet will not be adjusted; the income, expenses and profit of the
subsidiary or business from the date of purchase to the end of the reporting period will be
included in the consolidated income statement; the cash flows of the subsidiary or business from
the date of purchase to the end of the reporting period will be included in the consolidated
statement of cash flows.
Where control over the investee not under common control is obtained due to reasons such as
increase in investments, for the equity interest of the acquiree held before the date of purchase,
the Company remeasures the equity interest at its fair value as at the date of purchase, and any
difference between the fair value and its book value will be accounted for as investment gains of
the period. Where equity interest of the acquiree held before the date of purchase is related to
other comprehensive income under equity accounting and other changes in owners’ equity other
than net profit or loss, other comprehensive income and profit distribution, other comprehensive
income and other changes in owners’ equity related thereto are transferred to investment gains
of the period to which the date of purchase belongs, except for other comprehensive income
arising from the changes in net liabilities or net assets due to the re-measurement of defined
beneficiary plans by the acquiree.
② Disposal of subsidiaries or business
A. General treatment for disposal
During the reporting period, for the disposal of a subsidiary or business, the income, expenses
and profit of the subsidiary or business from the beginning of the period to the date of disposal
are included in the consolidated income statement; the cash flows of the subsidiary or business
from the beginning of the period to the date of disposal are included in the consolidated
statement of cash flows.
When control over the investee is lost due to the disposal of part of the equity investment or
other reasons, the Company remeasures the remaining equity investment at fair value as at the
date on which control is lost. The difference between the sum of the consideration received from
equity disposal and the fair value of the remaining equity interest and the sum of the net assets
of the subsidiary proportionate to the original shareholding accumulated from the date of
purchase or combination and goodwill is included in investment gains of the period during which
the control is lost. Other comprehensive income related to the equity investment in the original
subsidiary or other changes in owners’ equity other than net profit or loss, other comprehensive
income and profit distribution are transferred to investment gains of the period during which the
control is lost, except for other comprehensive income arising from the changes in net liabilities
or net assets due to the re-measurement of defined beneficiary plans by the investee.
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Where loss of control is due to the decrease in the Company’s shareholding as a result of the
increase in capital contribution to the subsidiary by other investing parties, the accounting
principle described above will be applied.
B. Stepwise disposal of subsidiary
In respect of stepwise disposal of equity investment in a subsidiary through multiple transactions
until control is lost, if the terms, conditions and economic effects of the transactions of equity
investment in the subsidiary satisfy one or more of the following conditions, the transactions are
normally accounted for as a basket of transactions:
i. these transactions were entered into simultaneously or after considering the effects of each
other;
ii. these transactions constituted a complete commercial result as a whole;
iii. one transaction was conditional upon at least one of the other transaction;
iv. one transaction was not economical on its own but was economical when considering together
with other transactions.
Where the transactions of disposal of equity investment in a subsidiary until control is lost
constitute a basket of transactions, the Company accounts for the transactions as a transaction
of disposal of a subsidiary until control is lost; however, the difference between the amount
received each time for disposal before control is lost and the net assets of such subsidiary
corresponding to the disposal of investment is recognized as other comprehensive income in the
consolidated financial statements, and is transferred to profit or loss of the period during which
control is lost upon loss of control.
Where the transactions of disposal of equity investment in a subsidiary until control is lost do not
constitute a basket of transactions, before the loss of control, the transactions are accounted for
using the policies related to partial disposal of equity investment in a subsidiary where no control
is lost; when control is lost, they are accounted for using the general method for disposal of
subsidiaries.
③ Purchase of minority interests in subsidiary
For the difference between the long-term equity investment newly acquired due to the purchase
of minority interests by the Company and the share of net assets of the subsidiary calculated
according to the new shareholding accumulated from the date of purchase (or date of
combination), share premium of the capital reserve in the consolidated balance sheet will be
adjusted; where share premium of the capital reserve is insufficient for the write-down, retained
profit will be adjusted.
④ Partial disposal of equity investment in subsidiaries without losing control
For the difference between the consideration received from partial disposal of long-term equity
investment in a subsidiary without loss of control and the net assets of the subsidiary
corresponding to the disposal of long-term equity investment accumulated from the date of
purchase or date of combination, share premium of the capital reserve in the consolidated
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balance sheet will be adjusted; where share premium of the capital reserve is insufficient for the
write-down, retained profit will be adjusted.
7. Classification of joint arrangements and accounting of associate
"□ Applicable" "√ Not applicable"
8. Determination of cash and cash equivalents
In preparing the cash flow statement, the cash on hand and deposits that are available for
payment at any time of the Company are recognized as cash. The short-term (due within 3
months of the date of purchase) and highly liquid investments that are readily convertible to
known amounts of cash and subject to an insignificant risk of change in value are recognized as
cash equivalents.
9. Foreign currency transactions and translation of foreign currency financial
statements
"√ Applicable" "□ Not applicable"
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day
when the transactions occur.
Balance of monetary items in foreign currency as at the balance sheet date is translated at the
spot rates prevailing at the balance sheet date, and any translation difference arising therefrom
is included in profit or loss of the period except for the translation difference arising from
dedicated borrowings in foreign currency related to the construction of assets qualified for
capitalisation which is accounted for under the principle of capitalisation of borrowing expenses.
(2) Translation of foreign currency financial statements
Asset and liability 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 dates when they are incurred. Income and expense items in the income
statement are translated at the spot rates prevailing at the transaction dates.
On disposal of a foreign operation, the exchange differences in the financial statements in foreign
currency relating to that foreign operation are transferred from owners’ equity to profit or loss of
the period during which the disposal occurs.
10. Financial instruments
"√ Applicable" "□ Not applicable"
Financial instruments include financial assets, financial liabilities and equity instruments.
(1) Classification of the financial instruments
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Applicable accounting policies from 1 January 2019
According to the business model of the Company’s management of financial assets and the
contractual cash flow characteristics of financial assets, financial assets are classified at the
initial recognition as: financial assets at amortized cost, financial assets (debt instruments) at fair
value through profit or loss, and other financial assets at fair value through current profit or loss.
If the business model aims at collecting contractual cash flows that are only the payment made
based on the principal and the interest of the outstanding principal amount, financial assets shall
be classified as financial assets at amortized cost; if the business model aims at both collecting
contractual cash flows and selling the financial assets, and contractual cash flows are only the
payment made based on the principal and the interest of the outstanding principal amount,
financial assets shall be classified as financial assets at fair value through other comprehensive
income. Save for the above, other financial assets shall be classified as financial assets at fair
value through current profit or loss.
For non-trading equity instrument investments, the Company determines at the initial recognition
whether it is designated as financial asset (equity instruments) at fair value through other
comprehensive income.
Financial liabilities at the initial recognition are classified into financial liabilities at fair value
through current profit or loss, and financial liabilities at amortized cost.
Financial liabilities at the initial recognition can be designated as financial liabilities at fair value
through current profit or loss if one of the following conditions can be met:
① Such designation can eliminate or significantly reduce accounting mismatches.
② According to the enterprise risk management or investment strategy stated in the official
written document, management and evaluation of the financial liabilities portfolio or financial
assets and financial liabilities portfolio are based on fair value which will be used as the basis for
reporting to the key management personnel.
③ The financial liabilities include embedded derivatives that need to be split separately.
Applicable accounting policies before 1 January 2019
The financial assets and financial liabilities are classified at the initial recognition as: financial
assets or financial liabilities at fair value through current profit or loss, including financial assets
or liabilities for trading and financial assets or financial liabilities that are directly designated for
measurement at fair value through current profit or loss; held-to-maturity investments; accounts
receivable; available-for-sale financial assets and other financial liabilities.
(2) Recognition and measurement of financial instruments
Applicable accounting policies from 1 January 2019
① Financial assets at amortized cost
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Financial assets at amortized cost include notes receivable and accounts receivable, other
receivables, long-term receivables and debt investment, which are initially measured at fair value,
and related transaction costs are included in the initial recognition amount. The accounts
receivable of major financing components and the accounts receivable of the Company’s
decision not to consider the financing component with the term less than one year are initially
measured at the contract transaction price.
Interest calculated by the effective interest method during the period of holding is included in the
current profit or loss.
Upon recovery or disposal, the difference between the acquisition price and the carrying amount
of the financial asset shall be included in the current profit or loss.
② Financial assets at fair value through other comprehensive income (debt instruments)
Financial assets (debt instruments) at fair value through other comprehensive income, including
receivables financing and other debt investments, are initially measured at fair value, and related
transaction costs are included in the initial recognition amount. The financial assets are
subsequently measured at fair value. Changes in fair value are included in other comprehensive
income, except for interest, impairment losses or gains and exchange gain or loss calculated
using the effective interest method.
When the recognition is terminated, the accumulated gain or loss previously included in other
comprehensive income is transferred from other comprehensive income and included in the
current profit or loss.
③ Financial assets (equity instruments) at fair value through other comprehensive income
Financial assets (equity instruments) at fair value through other comprehensive income,
including other equity instruments, are initially measured at fair value, and related transaction
costs are included in the initial recognition amount. The financial assets are subsequently
measured at fair value, and changes in fair value are included in other comprehensive income.
The dividends obtained are included in the current profit and loss.
When the recognition is terminated, the accumulated gain or loss previously included in other
comprehensive income is transferred from other comprehensive income and included in retained
earnings.
④ Financial assets at fair value through the current profit or loss
Financial assets at fair value through the current profit or loss, including held-for-trading financial
assets, derivative financial assets and other non-current financial assets, are initially measured
at fair value, and related transaction costs are included in the current profit or loss. The financial
assets are subsequently measured at fair value, and changes in fair value are included in the
current profit or loss.
⑤ Financial liabilities at fair value through current profit or loss
Financial liabilities at fair value through current profit or loss, including held-for-trading financial
liabilities, and derivative financial liabilities, are initially measured at fair value, and related
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transaction costs are included in the current profit or loss. The financial liabilities are
subsequently measured at fair value, and changes in fair value are included in the current profit
or loss.
When the recognition is terminated, the difference between the carrying amount and
consideration paid is included in the current profit and loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost, including short-term borrowings, bills payable and accounts
payable, other payables, long-term borrowings, bonds payable, long-term payables, are initially
measured at fair value, and related transaction costs are included in the initial recognition amount.
Interest calculated by the effective interest method during the period of holding is included in the
current profit or loss.
When the recognition is terminated, the difference between consideration paid and the carrying
amount of the financial liabilities is included in the current profit and loss.
Applicable accounting policies before 1 January 2019
① Financial assets (financial liabilities) at fair value through current profit or loss
When acquired, the financial assets (financial liabilities) shall be initially recognized at their fair
value (except for cash dividends which are declared but not distributed or interests on bonds of
which the maturity interest is not collected), and related transaction costs are included in the
current profit or loss.
The interest or cash dividend which was gained in the holding period is recognized as investment
income. At the end of the period, the change in the fair value of the financial asset (financial
liabilities) shall be included in the current profit or loss.
When disposed, the difference between the fair value and the amount of initial recognition shall
be recognized as investment income; meanwhile, the gain or loss on changes in fair value is
adjusted.
② Held-to-maturity investment
When acquired, the held-to-maturity investment is initially recognized at the sum of the fair value
(except for interests on bonds of which the maturity interest is not collected) and relevant
transaction costs.
Interest income is calculated according to the amortized cost and effective interest rate, and
included in investment income during the holding period. The effective interest rate is determined
when acquired, and shall remain unchanged within the predicted term of existence or within a
shorter applicable term.
When disposed, the difference between the consideration obtained and the carrying amount of
the investment shall be included in investment income.
③ Accounts receivable
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The receivables that are formed in selling goods or rendering labor services to external parties,
and the debts (excluding debt instruments that are quoted in an active market) of other
enterprises held by the Company, including accounts receivable and other receivables, are
initially recognized at the consideration of the contract or agreement to be received from the
buyers. Accounts receivable that are of a financing nature are initially recognized at their present
value.
Upon recovery or disposal of accounts receivable, the difference between the consideration
obtained and the carrying amount of accounts receivable is included in the current profit or loss.
④ Available-for-sale financial assets
When acquired, available-for-sale financial assets are initially recognized at the sum of the fair
value (except for cash dividends which are declared but not distributed or interests on bonds of
which the maturity interest is not collected) and relevant transaction costs.
The interests or cash dividends to be obtained during the holding period are recognized in
investment income. At the end of the period, financial assets are measured at fair value, and its
change in fair value is included in other comprehensive income. However, the equity instrument
investment that is not quoted in an active market and whose fair value cannot be reliably
measured, and derivative financial assets that are linked to the equity instrument and that must
be settled through the delivery of the equity instrument, are measured at cost.
When disposed, the difference between the consideration obtained and the carrying amount of
the financial assets shall be included into the current profit or loss; meanwhile, the corresponding
disposal portion of accumulated change in fair value previously included into other
comprehensive income shall be transferred to the current profit or loss.
⑤ Other financial liabilities
Other financial liabilities are initially recognized based on the sum of its fair value and relevant
transaction costs, and subsequently measured at amortized cost.
(3) Recognition and measurement of transfer of financial assets
A financial asset shall be derecognized when the Company has transferred nearly all the risks
and rewards related to the ownership of the financial asset to the transferee, and it shall not be
derecognized if the Company has retained nearly all the risks and rewards related to the
ownerships of the financial asset.
The substance-over-form principle shall be adopted while making a judgment on whether the
transfer of financial assets satisfies the above conditions for derecognition.
The transfer of financial assets could be classified into entire transfer and partial transfer. If the
transfer of an entire financial asset satisfies the conditions for derecognition, the difference
between the two amounts below shall be included in the current profit or loss:
① The carrying amount of the financial assets transferred;
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② The consideration received as a result of the transfer, plus the accumulative amount of the
change in fair value previously included into the owners’ equity (in cases where the transferred
financial assets are financial assets (debt instruments) at fair value through other comprehensive
income, and available-for-sale financial assets).
If the partial transfer of financial assets satisfies the conditions for derecognition, the overall
carrying amount of the transferred financial assets shall be apportioned according to their
respective relative fair value between the portion of derecognized part and the remaining part,
and the difference between the two amounts below shall be included in the current profit or loss:
① The carrying amount of the derecognized portion;
② The sum of consideration of the derecognized portion, plus the corresponding derecognized
portion of accumulated change in fair value previously included in owners’ equity (in cases where
the transferred financial assets are financial assets (debt instruments) at fair value through other
comprehensive income, and available-for-sale financial assets).
If the transfer of financial assets does not meet the conditions for derecognition, the financial
assets continue to be recognized and the consideration received is recognized as a financial
liability.
(4) Conditions for derecognition of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the
whole or relevant portion of the liability is derecognized; if an agreement is entered into between
the Company and a creditor to replace the original financial liabilities with new financial liabilities
with substantially different terms, the original financial liabilities will be derecognized and the new
financial liabilities will be recognized.
If the contract terms of the original financial liabilities are substantially amended in part or in full,
the original financial liabilities will be derecognized in full or in part, and the financial liabilities
whose terms have been amended will be recognized as a new financial liability.
When financial liabilities are derecognized in full or in part, the difference between the carrying
amount of the financial liabilities derecognized and the consideration paid (including transferred
non-cash assets or new financial liability) will be included in the current profit or loss.
Where the Company repurchases part of its financial liabilities, the carrying amount of such
financial liabilities will be allocated according to the relative fair value between the continuously
recognized part and derecognized part on the repurchase date. The difference between the
carrying amount of the derecognized portion of financial liabilities and the consideration paid
(including transferred non-cash assets or new financial liability) will be included in the current
profit or loss.
(5) Method of determining the fair values of financial assets and liabilities
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A financial instrument with an active market determines its fair value by quoted prices in an active
market. Financial instruments that do not exist in an active market shall use valuation techniques
to determine their fair value. During the valuation process, the Company uses valuation
techniques appropriate to the prevailing circumstances with the support of sufficient data and
other information available, selects inputs consistent with the characteristics of the assets or
liabilities considered in the transactions of relevant assets or liabilities by market participants,
and gives priority to relevant observable inputs. Unobservable inputs are used only when the
relevant observable inputs are not accessible or the access to which is impracticable.
(6) Impairment test method and accounting treatment for impairment of financial assets
Applicable accounting policies from 1 January 2019
The Company takes into consideration all reasonable and evidence-based information, including
forward-looking information, and estimates the anticipated credit loss on a single or combination
of financial assets measured at amortized cost and financial assets (debt instruments) at fair
value through other comprehensive income. The measurement of anticipated credit loss
depends on whether the credit risk of the financial assets has increased significantly since the
initial recognition.
If the credit risk of the financial instruments has increased significantly since the initial recognition,
the Company will measure its loss provision based on the amount of anticipated credit loss for
the lifetime of the financial instruments; if the credit risk of the financial instruments has not
significantly increased since the initial recognition, the Company will measure its loss provision
based on the amount of anticipated credit loss for the financial instruments in the next 12 months.
The increase or reversal of the loss provision resulting therefrom is included in the current profit
and loss as an impairment loss or gain.
Usually, after an overdue for more than 30 days, the Company believes that the credit risk of the
financial instrument has increased significantly unless there is conclusive evidence that the credit
risk of the financial instrument has not increased significantly since the initial recognition.
If the credit risk of financial instrument at the balance sheet date is low, the Company will believe
that the credit risk of the financial instrument has not increased significantly since the initial
recognition.
If there is any objective evidence indicating that some financial assets have incurred credit
impairment, the Company will make provision for impairment for the financial asset in a single
financial asset manner.
For accounts receivable, whether it contains significant financing components or not, the
Company always measures its loss reserves in accordance with the amount of anticipated credit
losses for the entire lifetime.
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For lease receivable and long-term receivables obtained by the Company through selling goods
and rendering services, the Company always measures its loss reserves in accordance with the
amount of anticipated credit loss for the entire lifetime.
Applicable accounting policies before 1 January 2019
The Company shall assess the carrying amount of financial assets other than those measured
at fair value with change included in the current profit or loss at the balance sheet date. If there
is objective evidence indicating that the financial asset is impaired, impairment provision shall
be made.
① Impairment provision for available-for-sale financial assets:
If the fair value of available-for-sale financial assets falls significantly, or judged by the Company
that descending trend is not temporary after taking into account various relevant factors
comprehensively at the end of the period, impairment will be recognized, and the cumulative
loss arising from decline in fair value that had been recognized directly in the shareholders’ equity
shall be transferred from the shareholders’ equity and recognized as impairment loss.
As for the available-for-sale debt instruments whose impairment losses have been recognized,
if, within the accounting period thereafter, an increase in fair value is objectively related to a
subsequent event that occurs after the original impairment losses were recognized, the originally
recognized impairment losses shall be reversed and be recorded into the profits and losses of
the current period.
Impairment loss incurred during an investment period on an available-for-sale equity instrument
shall not be reversed through profit or loss.
② Impairment provision for held-to-maturity investment:
The measurement of the impairment loss for held-to-maturity investments shall be treated with
reference to that for the accounts receivable.
11. Bills receivable
Determination and accounting treatment of the anticipated credit loss of notes receivable
"√ Applicable" "□ Not applicable"
Please refer to Note V (X) Financial instruments
12. Accounts receivable
Determination and accounting treatment of the anticipated credit loss of accounts
receivable
"√ Applicable" "□ Not applicable"
Please refer to Note V (X) Financial instruments
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13. Receivables financing
"√ Applicable" "□ Not applicable"
Please refer to Note V (X) Financial instruments
14. Other receivables
Determination and accounting treatment of the anticipated credit loss of other receivables
"√ Applicable" "□ Not applicable"
Please refer to Note V (X) Financial instruments
15. Inventories
"√ Applicable" "□ Not applicable"
(1) Classification of inventories
Inventories include raw materials, materials in transit, turnover materials, goods-in-stock,
expendable biological assets, goods in production, goods in transit, commissioned processing
materials and so forth.
(2) Determination of cost
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value for different types of inventories
Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock,
and held-for-sale raw materials, during the normal course of production and operation, shall be
determined by their estimated selling price less the related selling expenses and taxes; the net
realizable value of material inventories, which need to be processed, during the normal course
of production and operation, shall be determined by the amount after deducting the estimated
cost of completion, estimated selling expenses and relevant taxes from the estimated selling
price of finished goods; the net realizable value of inventories held for execution of sales
contracts or labor contracts shall be calculated on the ground of the contracted price. If an
enterprise holds more inventories than the quantity stipulated in the sales contract, the net
realizable value of the exceeding part shall be calculated on the ground of general selling price.
Provision for decline in value of inventories is made on an item-by-item basis at the end of the
period. For large quantity and low value items of inventories, provision for decline in value may
be made based on categories of inventories; for items of inventories relating to a product line
that is produced and marketed in the same geographical area with the same or similar end uses
or purposes, which are impossible to be evaluated separately from other items in that product
line, provision for decline in value of inventories may be determined on an aggregate basis.
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Unless there is clear evidence indicating that abnormality in market price exists as of the balance
sheet date, the net realizable value of inventories is determined based on the market price as of
the balance sheet date.
The net realizable value of inventories at the end of current period is determined based on the
market price of the balance sheet date.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method;
② Packaging materials are amortized using the immediate write-off method.
16. Held for sale assets
"√ Applicable" "□ Not applicable"
The Company classifies the non-current assets or disposal groups which meet the following
conditions as held-for-sale categories:
(1) According to the general practice for selling such kind of asset or disposal group in the similar
transaction, it can be immediately sold in the prevailing circumstance;
(2) The sale of the asset or group is very likely to happen, which means that the Company has
made a resolution for one selling plan and had acquired decided purchase commitment, and it
is estimated that the sale will be completed within one year. Where the sale can be done only
upon the approval of relevant authorities or regulatory authorities of the Company as required
by relevant provisions, the approval has been obtained.
17. Debt investment
(1). Determination and accounting treatment of the anticipated credit loss of debt
investments
"□ Applicable" "√ Not applicable"
18. Other debt investment
(1). Determination and accounting treatment of the anticipated credit loss of other debt
investments
"□ Applicable" "√ Not applicable"
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19. Long-term receivables
(1) Determination and accounting treatment of the anticipated credit loss of long-term
receivables
"√ Applicable" "□ Not applicable"
Please refer to Note V (X) Financial instruments
20. 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, and exists only
when decisions about the relevant activities of the arrangement require the unanimous consent
of the parties sharing control. The Company together with the other joint venture parties can
jointly control over the investee, and are entitled to the right of the net assets of the investee who
is joint venture of the Company.
Significant influence refers to the power to participate in making decisions on the financial and
operating policies of an enterprise, but not power to control or jointly control the formulation of
such policies with other parties. Where the investor can exercise significant influence over the
investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entities
For business combinations involving entities under common control: where the Company pays
cash, transfers non-cash assets, bears debts or issues equity securities as consideration of
combinations, the initial investment cost of long-term equity investments are the share with
reference to the book value of the shareholders’ equity of the acquiree in the consolidated
financial statements of the ultimate controlling party on the date of combinations. In connection
with imposing control over the investee under joint control as a result of additional investment
and other reasons, the initial investment cost of long-term equity investments shall be
determined based on share of carrying amount in the consolidated financial statements of the
ultimate controlling party by net assets of acquiree after the merger on the date of merger. The
difference between initial investment cost and the carrying amount of long term equity investment
before merger and the sum of carrying amount of newly paid consideration for additional shares
acquired on the date of merger is to adjust share premium. If the balance of share premium is
insufficient, any excess is adjusted to retained earnings.
For business combinations involving entities not under common control: the cost of the
combinations ascertained on the date of acquisition shall be taken as the initial investment cost
of the long-term equity investments. In connection with imposing control over the investee not
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under joint control as a result of additional investment and other reasons, the initial investment
cost when changing to the cost method shall be the sum of the carrying amount of the equity
investment originally held and the newly increased initial investment cost.
② Long-term equity investments acquired by other means
The initial investment cost of a long-term equity investment obtained by the Company by cash
payment shall be the purchase cost paid actually.
The initial investment cost of a long-term equity investment obtained by the Company by means
of issuance of equity securities shall be the fair value of the equity securities issued.
If the non-monetary assets transaction is commercial in nature and the fair value of the assets
received or surrendered can be reliably measured, fair value shall be taken as the measurement
basis. If the assets received or surrendered can be reliably measured, for long-term equity
investments received, the fair value of the assets surrendered and related taxes payable are
recognized as the initial investment cost of long-term equity investments received, unless there
is clear evidence indicating that the fair value of the assets received is more reliable. If neither
the non-monetary assets transaction is commercial in nature, nor can the fair value of the assets
received and surrendered be reliably measured, for long-term equity investments received, the
carrying amount of the assets surrendered and related taxes payable are recognized as the
initial investment cost of long-term equity investments received.
For the long-term equity investments acquired through debt restructuring, its carrying amount is
determined based on the fair value of the creditor’s rights waived, the taxes that can be directly
attributable to the assets and other costs, and the balance between the fair value and carrying
amount of the creditor’s rights waived is included in the current profit or loss.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment accounted for by cost method
Long-term equity investment in subsidiaries of the Company is accounted for by cost method,
except for the actual consideration paid for the acquisition of investment or the declared but not
yet distributed cash dividends or profits which are included in the consideration, investment gains
are recognized as the Company’s shares of cash dividends or profits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and joint ventures are accounted for by equity
method. Where the initial investment cost of a long-term equity investment exceeds the
investor’s interest in the fair value of the investee’s identifiable net assets at the date of
acquisition, no adjustment shall be made to the initial investment cost of long-term equity
investments; where the initial investment cost is less than the investor’s interest in the fair value
of the investee’s identifiable net assets at the date of acquisition, the difference shall be included
in the current profit or loss.
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The Company recognizes the investment income and other comprehensive income according
to the shares of net profit or loss and other comprehensive income realized by the investee which
it shall be entitled or shared respectively, and simultaneously makes adjustment to the carrying
amount of long-term equity investments; the carrying amount of long-term equity investments
shall be reduced by attributable share of the profit or cash dividends for distribution declared by
the investee. In relation to other changes of owners’ equity except for net profit and loss, other
comprehensive income and profit distributions of the investee, the carrying amount of long-term
equity investments shall be adjusted and included in the owners’ equity.
When determining the amount of proportion of net profit or loss in the investee which it entitles,
fair value of each identifiable assets of the investee at the time when the investment is obtained
shall be used as the basis, and adjustment shall be made to the net profit of the investee
according to the accounting policies and accounting period of the Company. During the period
of holding investments, when the investee prepares consolidated financial statements, the
accounting shall be based on the amounts attributable to the investee in the net profit, other
comprehensive income and other changes of the owners’ equity in the consolidated financial
statements.
The unrealized profit or loss resulting from transactions between the Company and its associates
or joint ventures shall be offset in proportion to the investor’s equity interest of investee, based
on which investment income or loss shall be recognized. Any losses resulting from internal
transactions, which are attributable to impairment of assets, shall be fully recognized.
Transactions of the assets casted and sold that are able to constitute an agreement between the
Company and associates and joint ventures shall be dealt with in accordance with Note “III (V)
Accounting treatments for enterprise merger under and not under joint control” and Note III (VI)”
Preparation of consolidated financial statements”.
In recognition of share of losses in the investee, the Company treats it in the following order:
firstly, the Company will write off the carrying amount of long-term equity investments. Secondly,
in the event the aforesaid carrying amount is insufficient for write-off, it shall continue to
recognize investment loss and write off carrying amount of long-term receivables to the extent
of the carrying amount of the long-term equity which substantively constitutes the net investment
in the investee. Finally, after the above treatment, for the additional obligations which shall be
still assumed by entities according to investment contract or agreement, the estimated liabilities
shall be recognized based on the obligations which are expected to assume, and included in the
current investment loss.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the carrying amount and the
consideration actually received shall be included in the current profit or loss.
For the long-term equity investment under the equity method, when such investment is disposed,
part of amounts that shall be originally included in other comprehensive income shall be
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accounted for in proportion by using the same basis as the investee used for direct disposal of
relevant assets or liabilities. The owners’ equity which is recognized due to other changes of
owners’ equity except for net profit and loss, other comprehensive income and profit distributions
shall be transferred in proportion into the current profit or loss, excluding the other
comprehensive income derived from changes of net liabilities or net assets due to re-
measurement on defined benefit plan by the investee.
When the control or material influence over the investee is lost due to partial disposal of equity
investment and other reasons, the remaining equities shall be accounted for in accordance with
the standards on recognition and measurement of financial instruments, and the difference
between the fair value and the carrying amount at the date when control or material influence is
lost shall be included in the current profit or loss. For other comprehensive income recognized
in the original equity investment due to the equity method is adopted, it shall be treated with the
same accounting basis as the investee used for direct disposal of relevant assets or liabilities
when ceasing to use the equity method. All owners’ equities which are recognized due to other
changes of owners’ equity except for net profit and loss, other comprehensive income and profit
distributions shall be transferred into the current profit or loss when ceasing to use the equity
method.
When the control over the investee is lost due to partial disposal of equity investment and other
reasons, the remaining equities after disposal shall be accounted for by equity method in
preparing individual financial statements provided that joint control or material influence over the
investee can be imposed, and shall be adjusted as if such remaining equities has been
accounted for by the equity method since they are obtained. Where the remaining equities after
disposal cannot impose joint control or material influence over the investee, it shall be accounted
for according to relevant provisions of the standards on recognition and measurement of financial
instruments, and the difference between fair value and the carrying amount on the date when
control is lost shall be included in the current profit or loss.
If the disposed equity interest is acquired in an enterprise merger as a result of making additional
investment or other reasons, the remaining equity interest after disposal will be accounted for by
cost method or equity method when preparing the separate financial statements. Other
comprehensive income and other owners’ equity recognized when the equity interests held on
the date of acquisition is accounted for by equity method and shall be transferred on pro rata
basis; for the remaining equity interest after disposal accounted for by the recognition and
measurement standard of financial instruments, other comprehensive income and other owners’
equity shall be fully transferred.
21. Investment real estate
Not applicable
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22. 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 they meet the following conditions:
① It is probable that the economic benefits associated with the fixed assets will flow to the
enterprise;
② The cost of fixed assets can be reliably measured.
(2) Method for depreciation
"√ Applicable" "□ Not applicable"
Method for Useful lives of Residual Annual
Category
depreciation depreciation (year) value depreciation rate
Property and Straight-line 4.75
20 5
buildings method
Machinery and Straight-line 9.5-9
10 5-10
equipment method
Transportation Straight-line 25-9
4-10 0-10
vehicles method
Other Straight-line 47.5-9.5
2-10 0-10
equipment method
Fixed assets are depreciated by categories using the straight-line method, and the depreciation
rates are determined by categories based upon their estimated useful lives and their estimated
residual value. Where the parts of a fixed asset have different useful lives or cause economic
benefits for the enterprise in different ways, different depreciation rates or depreciation methods
shall be applied, and each part shall be depreciated separately.
For fixed assets leased under finance lease, if it can be reasonably determined that the
ownership of the leased asset can be acquired upon the expiry of the lease term, depreciation
will be prepared during the remaining useful life of the leased asset. If it cannot be reasonably
determined that the ownership of the leased asset can be acquired upon the expiry of the lease
term, depreciation will be prepared during the lease term or the remaining useful life of the leased
asset, whichever is shorter.
Note: physical assets newly acquired through the increase of capital by M&G Holdings (Group)
Co., Ltd. to the Company in 2010 are stated at valuation, and depreciated at the remaining useful
life.
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(3) Recognition basis and measurement method of fixed assets under finance lease
"√ Applicable" "□ Not applicable"
Where any one of the following conditions is provided in the lease agreement between the
Company and the lesser, assets under finance lease will be recognized:
① the ownership of the leased asset is transferred to the Company upon the expiry of lease;
② the Company has the option to purchase the leased asset, and the purchase consideration
entered into is expected to be far less than the fair value of the leased asset upon the exercise
of the option;
③ the lease term accounts for the majority of the useful life of the leased asset;
④ the present value of the minimum lease payment upon the commencement of the lease is
substantially the same as the fair value of the leased asset.
On the commencement of the lease, the leased asset shall be stated at an amount equal to the
fair value of the leased asset or the present value of the minimum lease payments (whichever is
lower), and the minimum lease payments shall be stated as the carrying amount of long-term
payables. The difference between the stated amount of the leased asset and the minimum lease
payments shall be accounted for as unrecognized finance charge.
23. Construction in progress
"√ Applicable" "□ Not applicable"
Construction in progress is measured and recognized as fixed assets at all the expenses
incurred to bring the fixed assets ready for their intended use. If the construction in progress of
fixed assets constructed are ready for their intended use but the final account of completed
project has not been issued, it should be transferred to fixed assets at an estimated cost
according to the construction budget, construction price or actual cost, and depreciation should
be provided according to the Company’s deprecation policy for fixed assets from the date when
the assets are ready for their intended use. When the final account of completed project is issued,
the estimated cost will be adjusted according to the actual cost, but the original depreciation
charge will not be adjusted.
24. Borrowing costs
"√ Applicable" "□ Not applicable"
(1) Criteria for recognition of capitalized borrowing costs
Borrowing costs refer to the borrowing interests, amortization of discounts or premiums, ancillary
costs and exchange differences arising from foreign currency borrowings.
For borrowing costs incurred by the Company that are directly attributable to the acquisition,
construction or production of assets qualified for capitalization, the costs will be capitalized and
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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.
Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.)
that necessarily take a substantial period of time for acquisition, construction or production to get
ready for their intended use or sale.
Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or
expenditure for holding debt liability for the acquisition, construction or production of assets
qualified for capitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its
intended usable or saleable condition have commenced.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation
of capitalization of borrowing costs, excluding the period in which capitalization of borrowing
costs is temporarily suspended.
Capitalization of borrowing costs shall be suspended during periods in which the qualifying asset
under acquisition and construction or production ready for the intended use or sale.
If part of an asset being acquired, constructed or produced has been completed respectively and
put into use individually, capitalization of its relevant borrowing costs should be suspended.
If different parts of the assets acquired, constructed or produced are completed separately, but
such asset will not be ready for the intended use or sale until all parts have been completed,
then the borrowing costs will be capitalized until the completion of all parts of the said asset.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition,
construction or production of a qualifying asset is interrupted abnormally, when the interruption
is for a continuous period of more than 3 months; if the interruption is a necessary step for making
the qualifying asset under acquisition and construction or production ready for the intended use
or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred
during such suspension period shall be recognized as the current profit or loss. When the
acquisition and construction or production of the asset resumes, the capitalization of borrowing
costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
For specific borrowings for the acquisition, construction or production of assets qualified for
capitalization, the amount of borrowing costs for capitalization is determined through borrowing
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costs of the specific borrowings actually incurred in the current period minus the interest income
earned on the unused borrowing loans as a deposit in the bank or as investment income earned
from temporary investment.
For general borrowings for the acquisition, construction or production of assets qualified for
capitalization, the to-be-capitalized amount of interests on the general borrowings shall be
calculated and determined by multiplying the weighted average asset disbursement of the part
of the accumulative asset disbursements minus the specifically borrowed loans by the
capitalization rate of the general borrowings used. The capitalization rate shall be calculated and
determined according to the weighted average interest rate of the general borrowings.
25. Biological assets
"□ Applicable" "√ Not applicable"
26. Oil and gas assets
"□ Applicable" "√ Not applicable"
27. Right-of-use assets
"□ Applicable" "√ Not applicable"
28. Intangible assets
(1) Valuation method, useful life and impairment test
"√ Applicable" "□ Not applicable"
① Valuation method of intangible assets
A. Intangible assets are initially measured at cost upon acquisition by the Company;
The costs of externally purchased intangible assets include the purchase price, relevant taxes
and expenses paid, and other expenditures directly attributable to putting the asset into condition
for its intended use. If the payment for the intangible assets is delayed beyond the normal credit
conditions and it is of financing nature in effect, the cost of the intangible assets shall be
ascertained based on the present value of the purchase price.
For the intangible assets obtained through debt restructuring for offsetting the debt of the debtor,
its stated value is determined by the fair value of the creditor’s rights waived, the taxes that can
be directly attributable to putting the asset into condition for its intended use and other costs,
and the balance between the fair value and carrying amount of the creditor’s rights waived is
included in the current profit or loss.
If the non-monetary assets transaction is commercial in nature and the fair value of the assets
received or surrendered can be reliably measured, fair value shall be taken as the measurement
basis. If the assets received or surrendered can be reliably measured, for intangible assets
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received, the fair value of the assets surrendered and related taxes payable are recognized as
the initial investment cost of intangible assets received, unless there is clear evidence indicating
that the fair value of the assets received is more reliable. If neither the non-monetary assets
transaction is commercial in nature, nor can the fair value of the assets received and surrendered
be reliably measured, for intangible assets received, the carrying amount of the assets
surrendered and related taxes payable are recognized as the initial investment cost of intangible
assets received.
B. Subsequent measurement
The useful life of intangible assets shall be analyze and judged upon acquisition.
As for intangible assets with finite useful life, they are amortized using the straight-line method
over the term in which economic benefits are brought to the enterprise; if the term in which
economic benefits are brought to the enterprise by intangible assets cannot be estimated, the
intangible assets shall be regarded as intangible assets with indefinite useful life, and shall not
be amortized.
② Estimated useful lives for the intangible assets with finite useful life
Item Estimated useful lives Basis
Land use rights 50 Certificate of land use rights
Image identification rights 12 months to 64 months License contract
Software 3 to 10 years Expected years of benefit
Patent right 10 Patent right certificate
Others 19 months to 120 months Expected years of benefit
Note: land use rights newly acquired through the increase of capital by M&G Holdings (Group)
Co., Ltd. to the Company in 2010 are stated at valuation, and amortized at the remaining
useful life.
(2) Accounting policy regarding the expenditure on the internal research and
development
"√ Applicable" "□ Not applicable"
① Specific criteria for the division of research phase and development phase
The expenses for internal research and development projects of the Company are divided into
expenses in the research phase and expenses in the development phase.
Research phase: scheduled, innovative investigations and research activities to obtain and
understand scientific or technological knowledge.
Development phase: apply the research outcomes or other knowledge to a plan or design prior
to a commercial production or use in order to produce new or essentially-improved materials,
devices, products, etc.
② Specific criteria for capitalization at development phase
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Expenses in the development phase are recognized as an intangible asset when all of the
following conditions are satisfied:
A. it is technically feasible to complete the intangible asset so that it will be available for use or
sale;
B. there is an intention to complete the intangible asset for use or sale;
C. the intangible asset can produce economic benefits, including there is evidence that the
products produced using the intangible asset has a market or the intangible asset itself has a
market; if the intangible asset is for internal use, there is evidence that there exists usage for the
intangible asset;
D. 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;
E. the expenses attributable to the development stage of the intangible asset can be measured
reliably.
Expenses incurred during the development stage which do not meet the above conditions, are
included in the current profit or loss. Expenses incurred during the research phase are included
in the current profit or loss.
29. Impairment of long-term assets
"√ Applicable" "□ Not applicable"
Long-term assets, such as long-term equity investment, fixed assets, construction in progress,
intangible assets with finite useful life, are tested for impairment if there is any indication that an
asset may be impaired at the balance sheet date. If the result of the impairment test indicates
that the recoverable amount of the asset is less than its carrying amount, the difference shall be
used to make impairment provision and an impairment loss are recognized. The recoverable
amount is the higher of the net amount of asset’s fair value less costs to sell and the present
value of the future cash flows expected to be derived from the asset. Provision for asset
impairment is determined and recognized on the individual asset basis. If it is not possible to
estimate the recoverable amount of an individual asset, the recoverable amount of a group of
assets to which the asset belongs to is determined. An assets group is the smallest group of
assets that is able to generate cash inflow independently.
Impairment test to goodwill, intangible assets with indefinite useful life and intangible assets not
ready to use shall be carried out at least at the end of each year.
When the Company carries out impairment test to goodwill, the Company shall, as of the
purchasing day, allocate on a reasonable basis the carrying amount of the goodwill formed by
enterprise merger to the relevant asset groups, or if there is a difficulty in allocation, the Company
shall allocate it to the portfolio of asset groups. When apportioning the carrying amount of
goodwill, the Company shall carry out impairment test to goodwill after conducting apportionment
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in accordance with relative benefit that the assets group or portfolio of asset groups can obtain
from the synergistic effect of enterprise merger.
For the purpose of impairment test to the relevant asset groups or portfolio of asset groups
containing goodwill, if any evidence shows that the impairment of asset groups or portfolio of
asset groups related to goodwill exists, an impairment test will be made firstly on the asset
groups or portfolio of asset groups not containing goodwill, thus calculating the recoverable
amount and comparing it with the relevant carrying amount so as to recognize the corresponding
impairment loss. Then the Company will make an impairment test to the asset groups or portfolio
of asset groups containing goodwill, and compare the carrying amount of these asset groups or
portfolio of asset groups (including the carrying amount of the goodwill apportioned thereto) with
the recoverable amount. Where the recoverable amount of the relevant assets or portfolio of the
asset groups is lower than the carrying amount thereof, the impairment loss of the goodwill shall
be recognized.
Once the above asset impairment loss is recognized, it will not be reversed in the subsequent
accounting periods.
30. Long-term prepaid expenses
"√ Applicable" "□ Not applicable"
Long-term prepaid expenses are expenses which have occurred with amortization period over
1 year and shall be borne by the current period and subsequent periods. Long-term prepaid
expenses of the Company include decoration fee and so forth.
(1) Amortization method
Long-term prepaid expenses are amortized averagely in the expected benefit period.
(2) Amortization period
Item Estimated useful lives Basis
Decoration fee 3 to 5 years Expected years of benefit
Others 2 Expected years of benefit
31. Employee remuneration
(1) Method of accounting treatment for short-term remuneration
"√ Applicable" "□ Not applicable"
During the accounting period when employees provide service, the Company will recognize the
short-term remuneration actually incurred as liabilities, and the liabilities will be included in the
current profit or loss or relevant costs of assets.
The Company will pay social insurance and housing funds for the employees, and will make
provision of trade union funds and employee education costs in accordance with the
requirements. During the accounting period when employees provide service, the Company will
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determine relevant amount of employee remuneration in accordance with the required provision
basis and provision ratios.
Non-currency employee benefits will be measured in accordance with their fair value if they can
be measured reliably.
(2) Method of accounting treatment for post-employment benefits
"√ Applicable" "□ Not applicable"
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance
with the relevant provisions of the local government for the employees. During the accounting
period when employees provide service, the Company will calculate the amount payable which
will be recognized as liabilities in accordance with the local stipulated basis and proportions, and
the liabilities will be included in the current profit or loss or costs of related assets.
In addition to basic pension insurance, the Company also established the enterprise annuity
payment system (supplementary pension insurance)/enterprise annuity scheme according to
relevant policy of national enterprise annuity system. The Company makes payment to local
social insurance agencies/annuity scheme based on a certain proportion of total employee
remuneration. Corresponding expense is included in the current profit or loss or costs of related
assets.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula
determined by projected unit credit method will be vested to the service period of employees and
included into the current profit or costs of related assets.
The deficit or surplus generated from the present value of obligations of the defined benefit
scheme minus the fair value of the assets of defined benefit scheme is recognized as net
liabilities or net assets. When the defined benefit scheme has surplus, the Company will measure
the net assets of the defined benefit scheme at the lower of the surplus of defined benefit scheme
and the upper limit of the assets.
All obligations of the defined benefit plan, including the expected duty of payment within 12
months after the end of annual reporting period during which employees provide service, shall
be discounted based on the bond market yield of sovereign bond matching the term of
obligations of the defined benefit plan and currency or corporate bonds of high quality in the
active market on the balance sheet date.
The service cost incurred by defined benefit scheme and the net interest of the net liabilities and
net assets of the defined benefit scheme will be included in the current profit or loss or costs of
relevant assets. The changes as a result of re-measurement of the net defined benefit liabilities
or assets shall be recognized in other comprehensive income and shall not be reversed to profit
or loss at subsequent accounting period. When the original defined benefit plan is terminated,
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amount originally included in other comprehensive income shall be transferred to undistributed
profit in the scope of equity.
When the defined benefit scheme is settled, the gain or loss is confirmed based on the difference
between the present value of obligations and the settlement price of the defined benefit scheme
as at the balance sheet date.
(3) Accounting method for termination benefits
"√ Applicable" "□ Not applicable"
The Company will pay termination benefits when the Company can no longer withdraw the offer
of termination plan or layoff proposal or when the Company recognizes costs for restructuring
which involving the payment of termination benefits (whichever is earlier). The remuneration
incurred by the termination benefits will be recognized as liabilities that will be included in the
current profit or loss.
(4) Accounting treatment of other long-term employees’ benefits
"□ Applicable" "√ Not applicable"
32. Lease liabilities
"□ Applicable" "√ Not applicable"
33. Estimated liabilities
"√ Applicable" "□ Not applicable"
(1) Recognition criteria for estimated liabilities
The Company shall recognize the obligations related to contingencies involving litigation,
guarantee provided to debt, loss-making contract, restructuring as estimated liabilities, when all
of the following conditions are satisfied:
① the obligation is a present obligation of the group;
② it is probable that an outflow of economic benefits will be required to settle the obligation;
③ the amount of the obligation can be measured reliably.
(2) Method of measuring the various estimated liabilities
Estimated liabilities shall be initially measured at the best estimate of the expenses required to
settle the related present obligation.
Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be
taken into account as a whole in getting the best estimate. Where the effect of the time value of
money is material, the best estimate shall be determined by discounting the related future cash
outflow.
The best estimate will be dealt with separately in the following circumstances:
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The expenses required have a successive range (or band), in which the possibilities of
occurrence of each result are the same, and the best estimate should be determined as the
middle value for the range, i.e. the average of the upper and lower limit.
The expenses required does not have a successive range (or band), or although there is a
successive range (or band), the possibilities of occurrence of each result are not the same, and
if the contingency is related to individual item, the best estimate should be determined as the
most likely amount; if the contingency is related to several items, the best estimate should be
calculated and determined according to the possible results and the relevant possibilities.
Where some or all of the expenses required to settle an estimated liability are expected to be
reimbursed by a third party, the reimbursement is separately recognized as an asset when it is
virtually certain that the reimbursement will be received. The amount recognized for the
reimbursement is limited to the carrying amount of the liability recognized.
34. Share-based payments
"√ Applicable" "□ Not applicable"
Share-based payments are transactions that grant equity instruments or assume equity-
instrument based liabilities for receiving services rendered by employees or other parties. The
Company’s share-based payments included equity-settled share-based payments and cash-
settled share-based payments.
Equity-settled share-based payments
Equity-settled share-based payments made in exchange for services rendered by employees
are measured at the fair value of equity instruments granted to employees. If the Company
makes the share-based payments by restricted shares, employees will subscribe shares, but the
shares shall not be listed on the market or transferred before it fulfills the unlocking condition to
be unlocked. If the unlocking conditions stipulated in the equity incentive scheme cannot be
fulfilled eventually, the Company will repurchase those shares based on the predetermined price.
Upon obtaining the payment for subscribing restricted shares made by the employees, the
Company will recognize the share capital and capital reserve (share capital premium) according
to the payment it receives, while fully recognizing a liability for its repurchasing obligation as well
as its treasury shares. On each balance sheet date within the vesting period, the Company will
make the best estimation of the number of vested equity instruments based on the subsequent
information such as [the updated changes in the number of executives] and [the achievement of
performance standard]. Based on the above results, the services received in the current period
will be included in the relevant cost or expense based on the fair value on the date of grant, and
the capital reserve will be increased accordingly. The recognized cost or expense and owners’
interest will not be adjusted after the vesting date. However, equity instruments vested
immediately after the date of grant will be included in the relevant cost or expense based on its
fair value on the date of grant, and the capital reserve will be increased accordingly.
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For the share-based payments that are not vested eventually, no cost or expense will be
recognized, unless the vesting condition is market condition or non-exercisable condition. Under
such circumstances, no matter whether the market condition or non-exercisable condition can
be fulfilled, the share-based payments will be deemed as vested as long as all the non-market
conditions in the vesting condition are fulfilled.
If the terms of the equity-settled share-based payments are amended, the Company shall
recognize the services received at least based on the situation before the amendment is made.
In addition, any amendment resulting in the increase of the fair value of the equity instrument
granted or changes that are beneficial to employees on the amendment date, will be recognized
as an increase in the service received.
If the equity-settled share-based payments are canceled, they will be accounted for as
accelerated exercise on the date of cancellation, and the unrecognized amount will be
recognized immediately. If employees and other parties are able to satisfy the non-vesting
conditions, but the conditions are not fulfilled during the vesting period, the equity settled share-
based payments will be deemed as canceled. However, if new equity instruments are vested
and they are verified at the vesting date of new equity instrument as alternatives vested to
canceled equity instruments, the treatment on the new equity instrument is in conformity with the
modified treatment on disposal of equity instrument.
35. Preference shares, perpetual bonds and other financial instruments
"□ Applicable" "√ Not applicable"
36. Revenue
"√ Applicable" "□ Not applicable"
(1) General principle of recognition of revenue from sales of goods
① All the significant risks and rewards of ownership of the goods have been transferred to the
buyer;
② The Company does not retain either continuing managerial involvement to the degree usually
associated with ownership or effective control over the goods sold;
③ The amount of revenue can be reliably measured;
④ It is probable that relevant economic benefits will flow to the Company;
⑤ The relevant amount of costs incurred or to be incurred can be measured reliably.
(2) Specific principles
① Timing of revenue recognition for regional sales and overseas sale (export agent): Shanghai:
sales revenue is recognized after goods are delivered; regions other than Shanghai: sales
revenue is recognized after goods are delivered and delivery documents are confirmed with
signature from the logistic companies;
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② Timing of revenue recognition for KA sales: sales revenue is recognized after goods are
delivered and delivery documents are confirmed with signature from the logistic companies;
③ Timing of revenue recognition for self-managing and export business: revenue is recognized
when the goods pass the ship’s rail in the port of shipment under the term of FOB;
④ Timing of revenue recognition for direct sales of office supplies: sales revenue is recognized
after goods are delivered and confirmed by customers;
⑤ Timing of revenue recognition for direct sales large flagship store: sales revenue is
recognized after goods are delivered and confirmed by customers.
37. Government grant
"√ Applicable" "□ Not applicable"
(1) Types
Government grants are transfer of monetary assets or non-monetary assets from the
government to the Company at no consideration, and are classified into government grants
related to assets and government grants related to income.
Government grant related to assets refers to government grant obtained by the Company that
are used to purchase or construct or otherwise form long-term assets. Government grants
related to income refer to the government grants other than government grants related to assets.
The standard for the Company to classify the government grant as assets related: If obtained
grant is used to purchase, construct or otherwise form fixed assets, intangible assets and other
long-term assets as expressly stipulated in government documents, then such grant is deemed
as assets related.
The standard for the Company to classify the government grant as income related: If the
government grant (excluding grant related to assets) is used to compensate relevant costs or
losses of the Company that are already incurred or to be incurred in subsequent periods, then
such grant is deemed as income related.
Where there is no express regulation on the grant object in government documents, then the
Company will classify a government grant as assets related or as income related depending on
the specific purpose that the grant is used for.
(2) Timing of recognition
Government grants are recognized when the grants are received actually or when the rights to
get government grants are obtained and it is basically certain that the grants can be received.
(3) Accounting treatment
Government grants related to assets shall offset the carrying amount of relevant assets or be
recognized as deferred income. If it is recognized as deferred income, it shall be included in the
current profit and loss in a reasonable and systematic way within the useful life of the relevant
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assets (if it is related to the daily activities of the Company, it shall be included in other income;
otherwise, it shall be included in the non-operating income);
Government grants related to income that are used for compensation for the relevant costs or
losses of the Company in subsequent periods are recognized as deferred income and are
included in the current profit or loss in the period in which the relevant costs, expenses or losses
are recognized (if it is related to the daily activities of the Company, it shall be included in other
income; otherwise, it shall be included in the non-operating income) or offset the relevant costs
or losses; government grants related to income that are used for compensation for the relevant
costs or losses that the Company has already incurred shall be directly included in the current
profit or loss (if it is related to the daily activities of the Company, it shall be included in other
income; otherwise, it shall be included in the non-operating income) or offset the relevant costs
or losses.
The Company's policy-based concessional loans are classified into the following two conditions
and are accounted for respectively:
① If the lending bank provides loans to the Company at a policy-based preferential interest rate
after the Ministry of Finance allocates the interest-grant funds to the lending bank, the actual
borrowing amount received is recognized as the entry value of the borrowing and the relevant
borrowing expenses are measured in accordance with the principal amount of the borrowing and
policy-based preferential interest rate.
② When the government directly distributes the interest-grant funds to the Company, the
corresponding discount will offset the relevant borrowing costs.
38. Deferred income tax assets and liabilities
"√ Applicable" "□ Not applicable"
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will
be available against which deductible temporary differences can be offset. For deductible losses
and tax credits that can be reversed in the future period, deferred tax assets shall be recognized
to the extent that it is probable that taxable profit will be available in the future to offset the
deductible losses and tax credits.
Save as the exceptions, deferred tax liabilities shall be recognized for the taxable temporary
difference.
The exceptions for not recognizing deferred tax assets and liabilities include: the initial
recognition of the goodwill; other transactions or matters other than enterprise merger in which
neither profit nor taxable income (or deductible loss) will be affected when transactions occur.
When the Group has a legal right to settle on a net basis and intends either to settle on a net
basis or to realize the assets and settle the liabilities simultaneously, current tax assets and
current tax liabilities are offset and presented on a net basis.
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When the Group has a legal right to settle current tax assets and liabilities on a net basis, and
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle
current tax assets and liabilities on a net basis or to realize the assets and liabilities
simultaneously, in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset
and presented on a net basis.
39. Lease
(1) Accounting treatment method of operating lease
"√ Applicable" "□ Not applicable"
① The Company's rental expenses paid for leased assets shall be amortized at straight-line
method over the whole lease period (including rent-free period) and will be included in the current
expenses. Initial direct expenses related to lease transactions paid by the Company shall be
included in current expenses.
When the lessor of assets bears expenses related to the lease which shall be borne by the
Company, the Company shall deduct the part of expenses from the total rents and amortize the
rents after deduction over the lease term and include them in current expenses.
② The Company's rental expenses collected for leased assets shall be amortized at straight-
line method over the whole lease period (including rent-free period) and recognized as the
relevant rental income. Initial direct costs related to lease transactions and paid by the Company
are included in current expenses; in case of a large amount, such costs shall be capitalized and
then included in the current revenue by stages at the same base as the recognition of rental
income over the whole lease term.
When the Company bears expenses related to the lease which shall be borne by the lessee, the
Company shall deduct the part of expenses from the total rental income and amortize the rents
after deduction over the lease term.
(2) Accounting treatment method of financing lease
"√ Applicable" "□ Not applicable"
① Assets acquired under financing leases: At the commencement of the lease term, assets
acquired under financing leases shall be recorded at the lower of their fair values and the present
values of the minimum lease payments, and the Company shall recognize the long-term
payables at amounts equal to the minimum lease payments，and shall record the differences
between book value of the leased assets and the long-term payables as unrecognized financing
expenses. The Company adopts the effective interest rate method for unrecognized financing
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expenses, which shall be amortized over the lease terms and included in financial expenses.
Initial direct expenses incurred to the Company shall be included in the value of the leased assets.
② Assets leased out under financing leases: On the lease beginning date, the Company
recognizes the difference between the sum of financing lease receivable and the unguaranteed
residual value, and the present value thereof as unrealized financing income, and recognizes
them as rental income over the periods when the rents are received in the future. Initial direct
expenses related to the rental transactions incurred to the Company shall be included in the
initial measurement of the financing lease receivables and the amount of income recognized in
the lease term will be reduced.
(3) Determination method and accounting treatment method of lease under new lease
standards
"□ Applicable" "√ Not applicable"
40. Other significant accounting policies and accounting estimates
"√ Applicable" "□ Not applicable"
Discontinued operation is a component that satisfies one of the following conditions and is
separately identifiable, and has been disposed of by the Company or is classified by the
Company as held for sale:
(1) It represents a separate major line of business or geographical area of operations;
(2) It is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operations; or
(3) It is a subsidiary acquired exclusively with a view to resale.
41. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
"√ Applicable" "□ Not applicable"
Contents and reasons of Remarks (name and amount
Review and approval
changes in accounting of report items affected
procedure
policies materially)
The Notice of the Ministry of The 18th meeting of the See other descriptions l
Finance on Revising and fourth Board meeting
Issuing the Format of
Financial Statements of
General Enterprises for
2019 and the Notice on
Revising and Issuing the
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Annual Report 2019
Format of Consolidated
Financial Statements (2019
Version) were implemented
The Accounting Standards The 18th meeting of the See other descriptions 2
for Business Enterprises No. fourth Board meeting
22 - Recognition and
Measurement of Financial
Instruments, the Accounting
Standards for Business
Enterprises No. 23 -
Transfer of Financial Assets,
the Accounting Standards
for Business Enterprises No.
24 - Hedging Accounting
and the Accounting
Standards for Business
Enterprises No. 37 -
Presentation of Financial
Instruments (revised in
2017) were implemented
Other explanation
1. The Ministry of Finance released the Notice of the Ministry of Finance on Revising and Issuing
the Format of Financial Statements of General Enterprises for 2019 (Cai Kuai (2019) No.6) and
the Notice on Revising and Issuing the Format of Consolidated Financial Statements (2019
Version) ((Cai Kuai (2019) No.16)) on 30 April 2019 and 19 September 2019 respectively,
revising the format of financial statements of general enterprises. The main impact of the
Company's implementation of the above regulations is shown as follows:
Contents and reasons Review and Item and amount in statement influenced
of changes in approval
Consolidation Parent company
accounting policies procedure
(1) The “bills receivable The “bills receivable and The “bills receivable
The 18th
and accounts accounts receivable” is and accounts
meeting of
receivable” in the divided into “bills receivable” is divided
the fourth
balance sheet is receivable” and into “bills receivable”
Board
divided into “bills “accounts receivable”. and “accounts
meeting
receivable” and Balance of “bills receivable”. Balance of
“accounts receivable”; receivable” at the end of “bills receivable” at the
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Annual Report 2019
the “bills payable and last year is end of last year is
accounts payable” is RMB1,894,232.00, and RMB0.00, and balance
divided into “bills balance of “accounts of “accounts
payable” and “accounts receivable” at the end of receivable” at the end
payable”; the last year is of last year is
comparison data is RMB808,772,112.91; RMB93,324,765.86;
adjusted accordingly. The “bills payable and The “bills payable and
accounts payable” is accounts payable” is
divided into “bills divided into “bills
payable” and “accounts payable” and
payable”. Balance of “accounts payable”.
“bills payable” at the end Balance of “bills
of last year is RMB0.00, payable” at the end of
and balance of “accounts last year is RMB0.00,
payable” at the end of and balance of
last year is “accounts payable” at
RMB1,319,407,048.21. the end of last year is
RMB240,475,062.99.
(2) The item of
“Including:
derecognition of
The amount of The amount of
income from financial The 18th
“derecognition of income “derecognition of
assets at amortized meeting of
from financial assets at income from financial
cost” is added to the the fourth
amortized cost” in the assets at amortized
item of investment Board
current period is cost” in the current
income in the income meeting
RMB0.00. period is RMB0.00.
statement. The
comparison data is not
adjusted.
2. In 2017 the Ministry of Finance revised the Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments, the Accounting Standards for
Business Enterprises No. 23 - Transfer of Financial Assets, the Accounting Standards for
Business Enterprises No. 24 - Hedging Accounting and the Accounting Standards for Business
Enterprises No. 37 - Presentation of Financial Instruments. It is stipulated in the revised
standards that for financial instruments that have not been derecognized on the date of first
implementation, if the previous recognition and measurement are inconsistent with the revised
standards, they shall be retrospectively adjusted. If the comparative figures in financial
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Annual Report 2019
statements for the prior period are inconsistent with the revised standards, no adjustment is
required. The Company adjusted the retained earnings and other comprehensive income at the
beginning of the year due to the cumulative impact of retrospective adjustment. Based on the
adjusted balance at the end of last year according to Cai Kuai (2019) No. 6 and Cai Kuai (2019)
No. 16, the main impacts of implementing the above new financial instrument standards are as
follows:
Contents and reasons Review and Item and amount in statement influenced
of changes in approval
Consolidation Parent company
accounting policies procedure
(1) Non-tradable
Available-for-sale
available-for-sale
Available-for-sale financial assets:
equity instrument
The 18th financial assets: decreased by
investments are
meeting of decreased by RMB3,600,000.00
designated as
the fourth RMB3,600,000.00 Other equity
“financial assets
Board Other equity instrument instrument
measured at fair value
meeting investments: increased investments:
through other
by RMB3,600,000.000 increased by
comprehensive
RMB3,600,000.00
income”.
Retained earnings:
Retained earnings: decreased by
decreased by RMB0.00 RMB0.00
Bills receivable: Bills receivable:
decreased by RMB0.00 decreased by
(2) Provision of
Accounts receivable: RMB0.00
expected credit loss
decreased by RMB0.00 Accounts receivable:
was made for “financial The 18th
Other receivables: decreased by
assets at amortized meeting of
decreased by RMB0.00 RMB0.00
cost” and “financial the fourth
Debt investment: Other receivables:
assets measured at fair Board
decreased by RMB0.00 decreased by
value through other meeting
Other comprehensive RMB0.00
comprehensive income
income: increased by Debt investment:
(debt instrument)”.
RMB0.00 decreased by
Deferred income tax RMB0.00
assets: increased by Other comprehensive
RMB0.00 income: increased by
RMB0.00
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Annual Report 2019
Deferred income tax
assets: increased by
RMB0.00
Retained earnings:
Retained earnings:
increased by
increased by
RMB5,380,330.00
RMB6,081,955.00
Other current assets:
Other current assets:
(3) Bank financial The 18th decreased by
decreased by
product is reclassified meeting of RMB820,000,000.00
RMB1,020,000,000.00
into financial assets the fourth Deferred income tax
Deferred income tax
held for trading and Board liabilities: increased by
liabilities: increased by
measured at fair value meeting RMB949,470.00
RMB1,183,345.00
Financial assets held
Financial assets held for
for trading: increased
trading: increased by
by
RMB1,027,265,300.00
RMB826,329,800.00
(2) Changes in significant accounting estimates
"□ Applicable" "√ Not applicable"
(3) Particulars on adjustment to relevant items of the financial statements for the year
due to implementation of new standards for financial instruments, new standards for
revenues or new standards for lease from 2019
"√ Applicable" "□ Not applicable"
Combined Balance Sheet
Unit: Yuan Currency: RMB
Adjustment
Item 31 December 2018 1 January 2019
amount
Current assets:
Cash and equivalents 1,046,668,874.97 1,046,668,874.97
Transaction settlement
funds
Lending funds
Held-for-trading financial Not applicable 1,027,265,300.00 1,027,265,300.00
assets
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Annual Report 2019
Financial assets at fair Not applicable
value through current profit
or loss
Derivative financial assets
Bills receivable 1,894,232.00 -1,894,232.00
Accounts receivable 808,772,112.91 808,772,112.91
Receivables financing Not applicable 1,894,232.00 1,894,232.00
Prepayment 42,336,973.71 42,336,973.71
Premium receivable
Reinsurance premium
receivable
Reserves for reinsurance
contract receivable
Other receivables 110,280,059.38 110,280,059.38
Including: Interest
receivable
Dividend receivable
Financial assets purchased
under agreements to resell
Inventories 1,042,701,610.00 1,042,701,610.00
Held for sale assets
Non-current assets due
within one year
Other current assets 1,046,977,400.35 26,977,400.35 -1,020,000,000.00
Total current assets 4,099,631,263.32 4,106,896,563.32 7,265,300.00
Non-current assets:
Loans and advances to
customers
Debt investment Not applicable
Available-for-sale financial 3,600,000.00 Not applicable -3,600,000.00
assets
Other debt investment Not applicable
Held-to-maturity investment Not applicable
Long-term receivables
Long-term equity 30,175,665.26 30,175,665.26
investments
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Annual Report 2019
Investments in other equity Not applicable 3,600,000.00 3,600,000.00
instruments
Other non-current financial Not applicable
assets
Investment real estate
Fixed assets 876,617,888.99 876,617,888.99
Construction in progress 24,506,469.59 24,506,469.59
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 187,987,875.67 187,987,875.67
Development expenses
Goodwill 131,001.23 131,001.23
Long-term prepaid 118,024,364.67 118,024,364.67
expenses
Deferred income tax assets 25,525,520.98 25,525,520.98
Other non-current assets 311,300,000.00 311,300,000.00
Total non-current assets 1,577,868,786.39 1,577,868,786.39
Total assets 5,677,500,049.71 5,684,765,349.71 7,265,300.00
Current liabilities:
Short-term borrowings
Borrowings from central
bank
Placements from banks and
other financial institutions
Held-for-trading financial
Not applicable
liabilities
Financial liabilities at fair
value through current profit Not applicable
or loss
Derivative financial
liabilities
Bills payable
Accounts payable 1,319,407,048.21 1,319,407,048.21
Accounts received in
147,647,053.87 147,647,053.87
advance
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Annual Report 2019
Financial assets sold under
repurchase agreements
Deposits from customers
and other banks
Brokerage for trading
securities
Brokerage for underwriting
securities
Employee benefits payable 120,786,076.52 120,786,076.52
Taxes payable 279,377,546.18 279,377,546.18
Other payables 240,665,881.17 240,665,881.17
Including: Interest payable
Dividend payable
Fees and commissions
payable
Reinsured accounts
payable
Held-for-sale liabilities
Non-current liabilities due
within one year
Other current liabilities
Total current liabilities 2,107,883,605.95 2,107,883,605.95
Non-current liabilities:
Reserves for insurance
contracts
Long-term borrowings
Bonds payable
Including: Preference
shares
Perpetual bonds
Lease liabilities
Long-term payable 5,109,800.00 5,109,800.00
Long-term employee
benefits payable
Estimated liabilities
Deferred income 67,277,109.51 67,277,109.51
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Annual Report 2019
Deferred income tax
564,909.50 1,748,254.50 1,183,345.00
liabilities
Other non-current liabilities
Total non-current liabilities 72,951,819.01 74,135,164.01 1,183,345.00
Total liabilities 2,180,835,424.96 2,182,018,769.96 1,183,345.00
Owner’s equity (or shareholders’ equity):
Share capital 920,000,000.00 920,000,000.00
Other equity instruments
Including: Preference
shares
Perpetual bonds
Capital reserve 272,347,764.53 272,347,764.53
Less: Treasury shares
Other comprehensive
income
Special reserve
Surplus reserve 343,733,386.35 344,271,419.35 538,033.00
General risk provision
Undistributed profit 1,874,727,294.53 1,880,271,216.53 5,543,922.00
Total equity attributable to
the owners of the parent 3,410,808,445.41 3,416,890,400.41 6,081,955.00
company
Minority equity 85,856,179.34 85,856,179.34
Total owners’ equity (or
3,496,664,624.75 3,502,746,579.75 6,081,955.00
shareholders’ equity)
Total liabilities and owner's
equity (or shareholders’ 5,677,500,049.71 5,684,765,349.71 7,265,300.00
equity)
Description on adjustment to relevant items:
"√ Applicable" "□ Not applicable"
See Note V (41). (4) Description on retrospective adjustment to previous comparative data due
to implementation of new standards for financial instruments and new standards for leases for
details.
Parent Company’s Balance Sheet
Unit: Yuan Currency: RMB
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Adjustment
Item 31 December 2018 1 January 2019
amount
Current assets:
Cash and equivalents 552,507,774.24 552,507,774.24
Held-for-trading financial 826,329,800.00
Not applicable 826,329,800.00
assets
Financial assets at fair value
Not applicable
through current profit or loss
Derivative financial assets
Bills receivable
Accounts receivable 93,324,765.86 93,324,765.86
Receivables financing Not applicable
Prepayment 9,002,289.37 9,002,289.37
Other receivables 227,644,350.97 227,644,350.97
Including: Interest receivable
Dividend receivable
Inventories 433,945,665.76 433,945,665.76
Held for sale assets
Non-current assets due within
one year
-
Other current assets 820,679,150.20 679,150.20
820,000,000.00
Total current assets 2,137,103,996.40 2,143,433,796.40 6,329,800.00
Non-current assets:
Debt investment Not applicable
Available-for-sale financial
3,600,000.00 Not applicable -3,600,000.00
assets
Other debt investment Not applicable
Held-to-maturity investment Not applicable
Long-term receivables
Long-term equity investments 878,722,964.35 878,722,964.35
Investments in other equity
Not applicable 3,600,000.00 3,600,000.00
instruments
Other non-current financial
Not applicable
assets
Investment real estate
Fixed assets 792,636,398.34 792,636,398.34
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Construction in progress 23,686,726.44 23,686,726.44
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 184,634,388.95 184,634,388.95
Development expenses
Goodwill
Long-term prepaid expenses 15,345,487.19 15,345,487.19
Deferred income tax assets 5,277,303.99 5,277,303.99
Other non-current assets 311,300,000.00 311,300,000.00
Total non-current assets 2,215,203,269.26 2,215,203,269.26
Total assets 4,352,307,265.66 4,358,637,065.66 6,329,800.00
Current liabilities:
Short-term borrowings
Held-for-trading financial
Not applicable
liabilities
Financial liabilities at fair
value through current profit or Not applicable
loss
Derivative financial liabilities
Bills payable
Accounts payable 240,475,062.99 240,475,062.99
Accounts received in
80,736,039.60 80,736,039.60
advance
Employee benefits payable 76,794,379.93 76,794,379.93
Taxes payable 187,418,365.45 187,418,365.45
Other payables 29,240,729.97 29,240,729.97
Including: Interest payable
Dividend payable
Held-for-sale liabilities
Non-current liabilities due
140,000,000.00 140,000,000.00
within one year
Other current liabilities
Total current liabilities 754,664,577.94 754,664,577.94
非流动负债：
Long-term borrowings
Bonds payable
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Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payable 187,109,800.00 187,109,800.00
Long-term employee benefits
payable
Estimated liabilities
Deferred income 29,979,024.38 29,979,024.38
Deferred income tax liabilities 949,470.00 949,470.00
Other non-current liabilities
Total non-current liabilities 217,088,824.38 218,038,294.38 949,470.00
Total liabilities 971,753,402.32 972,702,872.32 949,470.00
Owner’s equity (or shareholders’ equity):
Share capital 920,000,000.00 920,000,000.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 274,008,599.09 274,008,599.09
Less: Treasury shares
Other comprehensive income
Special reserve
Surplus reserve 343,404,526.44 343,942,559.44 538,033.00
Undistributed profit 1,843,140,737.81 1,847,983,034.81 4,842,297.00
Total owners’ equity (or
3,380,553,863.34 3,385,934,193.34 5,380,330.00
shareholders’ equity)
Total liabilities and owner's
equity (or shareholders’ 4,352,307,265.66 4,358,637,065.66 6,329,800.00
equity)
Description on adjustment to relevant items:
"√ Applicable" "□ Not applicable"
See Note V (41). (4) Description on retrospective adjustment to previous comparative data due
to implementation of new standards for financial instruments and new standards for leases for
details.
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(4) Description on retrospective adjustment to previous comparative data due to
implementation of new standards for financial instruments and new standards for
leases from 2019
"√ Applicable" "□ Not applicable"
Based on the balance at the end of the previous year adjusted according to Cai Kuai (2019) No.6
and Cai Kuai (2019) No.16, various financial assets and financial liabilities were classified in
accordance with the provisions of the standards for recognition and measurement of financial
instruments before and after the revision and the measurement results were compared as
follows:
Consolidation
Old standards for financial instruments New standards for financial instruments
Measurement Presentation Measurement
Presentation item Carrying value Carrying value
category item category
Cash and Cash and
Amortized cost 1,046,668,874.97 Amortized cost 1,046,668,874.97
equivalents equivalents
Financial assets at
at fair value at fair value
fair value through Held-for-trading
through profit or through profit or
current profit or financial assets
loss loss
loss
at fair value at fair value
Derivative financial Derivative
through profit or through profit or
assets financial assets
loss loss
Bills receivable Amortized cost
at fair value
Bills receivable Amortized cost 1,894,232.00 Receivables through other
1,894,232.00
financing comprehensive
income
Accounts
Amortized cost 808,772,112.91
receivable
Accounts at fair value
Amortized cost 808,772,112.91
receivable Receivables through other
financing comprehensive
income
Other
Other receivables Amortized cost 110,280,059.38 Amortized cost 110,280,059.38
receivables
Held-to-maturity
Debt investment
investment
Amortized cost (Including other Amortized cost
(Including other
current assets)
current assets)
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Available-for-sale Debt investment
financial assets at fair value (Including other Amortized cost
(Including other through other current assets)
current assets) comprehensive Other debt at fair value
income (debt investment through other
instruments) (Including other comprehensive
current assets) income
Held-for-trading
financial assets at fair value
at fair value through profit or
Other non-
through other loss
current financial
comprehensive
assets
income (equity
at fair value
instruments) Investments in
through other
other equity
comprehensive
instruments
income
Held-for-trading
financial assets at fair value
Other non- through profit or
current financial loss
at cost (equity
3,600,000.00 assets
instruments)
at fair value
Investments in
through other
other equity 3,600,000.00
comprehensive
instruments
income
at fair value
Other current Held-for-trading
Amortized cost 1,020,000,000.00 through profit or 1,027,265,300.00
assets financial assets
loss
Long-term Long-term
Amortized cost Amortized cost
receivables receivables
Financial liabilities
at fair value Held-for-trading at fair value
at fair value
through profit or financial through profit or
through current
loss liabilities loss
profit or loss
at fair value Derivative at fair value
Derivative financial
through profit or financial through profit or
liabilities
loss liabilities loss
Parent company
Old standards for financial instruments New standards for financial instruments
Presentation item Measurement Carrying value Presentation Measurement Carrying value
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category item category
Cash and Cash and
Amortized cost 552,507,774.24 Amortized cost 552,507,774.24
equivalents equivalents
Financial assets at
at fair value at fair value
fair value through Held-for-trading
through profit or through profit or
current profit or financial assets
loss loss
loss
at fair value at fair value
Derivative financial Derivative
through profit or through profit or
assets financial assets
loss loss
Bills receivable Amortized cost
at fair value
Bills receivable Amortized cost Receivables through other
financing comprehensive
income
Accounts
Amortized cost 93,324,765.86
receivable
Accounts at fair value
Amortized cost 93,324,765.86
receivable Receivables through other
financing comprehensive
income
Other
Other receivables Amortized cost 227,644,350.97 Amortized cost 227,644,350.97
receivables
Held-to-maturity
Debt investment
investment
Amortized cost (Including other Amortized cost
(Including other
current assets)
current assets)
Available-for-sale Debt investment
financial assets at fair value (Including other Amortized cost
(Including other through other current assets)
current assets) comprehensive Other debt at fair value
income (debt investment through other
instruments) (Including other comprehensive
current assets) income
at fair value Held-for-trading at fair value
through other financial assets through profit or
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comprehensive Other non- loss
income (equity current financial
instruments) assets
at fair value
Investments in
through other
other equity
comprehensive
instruments
income
Held-for-trading
financial assets at fair value
Other non- through profit or
current financial loss
at cost (equity
3,600,000.00 assets
instruments)
at fair value
Investments in
through other
other equity 3,600,000.00
comprehensive
instruments
income
at fair value
Other current Held-for-trading
Amortized cost 820,000,000.00 through profit or 826,329,800.00
assets financial assets
loss
Long-term Long-term
Amortized cost Amortized cost
receivables receivables
Financial liabilities
at fair value Held-for-trading at fair value
at fair value
through profit or financial through profit or
through current
loss liabilities loss
profit or loss
at fair value Derivative at fair value
Derivative financial
through profit or financial through profit or
liabilities
loss liabilities loss
42. Others
"√ Applicable" "□ Not applicable"
Hedge accounting
(1) Classification of hedging
① Fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset
or liability or an unrecognized firm commitment (except for foreign exchange risk).
② Cash flow hedge is a hedge of the exposure to changes in cash flows. Such changes in cash
flows mainly come from a specific type of risk related to a recognized asset or liability or an
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expected transaction that is likely to occur, or the foreign exchange risk included in an
unrecognized firm commitment.
② Hedge of net investment in an overseas operation is a hedge of the foreign exchange
exposure arising from net investment in an overseas operation. Net investment in an overseas
operation refers to an enterprise's equity proportion in the net assets in an overseas operation.
(2) Designation of hedging relationship and confirmation of hedging effectiveness
Applicable accounting policies from 1 January 2019
At the commencement of the hedging relationship, the Company shall specify the hedging
relationship formally and prepare a formal written document on the hedging relationship, risk
management objectives and the strategies of hedging. This document shall at least specify the
contents and number of the hedging instruments, the nature and number of the hedged items,
the nature of the hedged risk, the type of hedge and the evaluation of the Company on the
effectiveness of the hedging instruments. Hedging effectiveness refers to the extent that the
changes in the fair value or cash flow of a hedging instrument may offset the changes resulted
from the hedging risks in the fair value or cash flow of a hedged item.
The Company shall continuously evaluate the hedging effectiveness to determine whether the
hedging meets the requirements on effectiveness for using hedging accounting within the
accounting period when the hedging relationship is specified. If the hedging fails to meet the
requirements, the use of hedging relationship shall be terminated.
The use of hedge accounting shall meet the following requirements for the hedging effectiveness:
① There is an economic relationship between the hedged item and the hedging instrument.
② In the value change caused by the economic relationship between the hedged item and the
hedging instrument, the influence of credit risk is not dominant.
③ An appropriate hedging ratio is adopted, and this ratio will not form an imbalance in the
relative weight of the hedged item and the hedging instrument, thereby generating accounting
results that are inconsistent with the hedge accounting objectives. If the hedging ratio is no longer
appropriate, but the hedging risk management objectives have not changed, the number of
hedged items or hedging instruments shall be adjusted so that the hedging ratio meets the
requirements on effectiveness again.
Applicable accounting policies before 1 January 2019
At the commencement of the hedging relationship, the Company shall specify the hedging
relationship formally and prepare a formal written document on the hedging relationship, risk
management objectives and the strategies of hedging. This document shall state the nature of
the hedging instruments, the hedged items or transactions, and the hedged risk, and the method
of the Company for the evaluation on the effectiveness of the hedging instruments.
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Hedging effectiveness refers to the extent that the changes in the fair value or cash flow of a
hedging instrument may offset the changes resulted from the hedging risks in the fair value or
cash flow of a hedged item. The Company shall continuously evaluate the hedging effectiveness
to judge whether the hedging is highly effective within the accounting period when the hedging
relationship is specified. If a hedging satisfies the following conditions simultaneously, the
Company shall recognize it as being highly efficient:
① At the commencement and in subsequent periods of a hedging, the hedging is expected to
be highly effective in offsetting the changes in the fair value or cash flows caused by the hedged
risk during the period in which the hedging is specified; and
② The actual offset result of the hedging is within a range of 80% to 125%.
(3) Accounting treatment method of hedge
① Fair value hedge
Changes in the fair value of hedging derivatives are included in the current profit and loss.
Changes in the fair value of a hedged item due to hedging risk are included in the current profit
and loss, while adjusting the book value of the hedged item.
For fair value hedges related to financial instruments measured at amortized cost, adjustments
to the carrying value of the hedged item are amortized in the remaining period between the
adjustment date and the maturity date and are included in the current profit and loss.
Amortization carried out in accordance with the effective interest rate method can begin
immediately after the adjustment of the carrying value, and shall not be later than the adjustment
made due to the changes in the fair values caused by the hedging risk after the hedged item is
terminated.
If the hedged item is derecognized, the un-amortized fair value is recognized as current profit or
loss.
If the hedged item is a unrecognized firm commitment, the accumulated changes in the fair value
of the firm commitment caused due to the hedged risk is recognized as an asset or liability, and
the related gains or losses are included in the current profit and loss. Changes in the fair value
of hedging instruments are also included in the current profit and loss.
② Cash flow hedge
The portion of the gains or losses from hedging instruments, which belongs to the effective hedge,
shall be directly recognized as other comprehensive income, and the portion which belongs to
the ineffective hedge shall be included in the current profit and loss.
If the hedged transaction affects the current profit or loss, for example, when the hedged financial
income or financial expense is confirmed or the expected sale occurs, the amount recognized in
other comprehensive income will be transferred to the current profit and loss. If the hedged item
is the cost of a non-financial asset or liability, the amount originally recognized in other
comprehensive income is transferred out and included in the initial recognition amount of the
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non-financial asset or liability (or the amount originally recognized in other comprehensive
income is transferred out in the same period in which the non-financial asset or liability affects
the profit and loss, and included in the current profit and loss).
If the expected transaction or firm commitment is not expected to occur, the cumulative gains or
losses of hedging instruments previously included in shareholders’ equity are transferred out and
included in the current profit and loss. If the hedging instrument expires, is sold, terminated or
exercised (but has not been replaced or extended), or the designation of the hedging relationship
is revoked, the amount previously included in other comprehensive income will not be transferred
out until the expected transaction or firm commitment affects the current profit and loss.
③ Hedge of net investment in an overseas operation
Hedge of net investment in an overseas operation, including hedge of monetary items as part of
net investment, is handled similarly to cash flow hedge. The portion of the gains or losses from
hedging instruments, which is recognized as effective hedge, shall be recorded in other
comprehensive income, and the portion which is recognized as ineffective hedge shall be
included in the current profit and loss. When disposing of overseas operations, any accumulated
gains or losses included in shareholders’ equity are transferred out and included in the current
profit and loss.
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 basis of the income from
sales of products and taxable
income from rendering of
services calculated according
16%, 13% (Note), 10%, 9%,
to the provisions of the tax
6%, 5%
law. The difference between
the output tax and the input
tax which is allowed to be
deductible in the current
period is the payable VAT.
Urban maintenance and Calculated and paid according
construction tax to the actually-paid VAT and 7%、1%
consumption tax
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Enterprise income tax Calculated and paid according
15%、20%、25%
to the taxable income
Note: According to the Notice on Adjusting the VAT Rate of the Ministry of Finance and the State
Administration of Taxation (Cai Shui [2019] No. 39), the original 16% and 10% VAT rates are
respectively adjusted to 13% and 9% for taxable sale behaviors and imported goods of the
taxpayers from 1 April 2019. The income from sales of products of the Company and its
subsidiaries is subject to VAT at the rate of 16% from January to March 2019 and at the rate of
13% from 1 April 2019.
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 (%)
Shanghai M&G Zhenmei Stationery Co., 25
Ltd.(上海晨光珍美文具有限公司)
Shanghai M&G Colipu Office Supplies Co., 25
Ltd.
Lianyungang Colipu Office Supplies Co., 20
Ltd.(连云港市科力普办公用品有限公司)
Shenyang M&G Colipu Office Supplies Co., 25
Ltd.(沈阳晨光科力普办公用品有限公司)
Shanghai M&G Stationery & Gift Co., Ltd.(上 25
海晨光文具礼品有限公司)
Shanghai M&G Stationery Sales Co., Ltd.(上 25
海晨光文具销售有限公司)
Guangzhou M&G Stationery&Gifts Sales Co., 25
Ltd.(广州晨光文具礼品销售有限公司)
Yiwu Chenxing Stationery Co., Ltd.(义乌市晨 25
兴文具用品有限公司)
Harbin M&G Sanmei Stationery Co., Ltd.(哈 25
尔滨晨光三美文具有限公司)
Zhengzhou M&G Stationery&Gifts Co., 25
Ltd.(郑州晨光文具礼品有限责任公司)
M&G Life Enterprise Management Co., 25
Ltd.(晨光生活馆企业管理有限公司)
M&G Life Enterprise Management (Shanghai) 25
Co., Ltd.(晨光生活馆企业管理(上海)有限公司)
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Annual Report 2019
Shanghai M&G Jiamei Stationery Co., Ltd.(上 25
海晨光佳美文具有限公司)
Jiangsu M&G Life Enterprise Management 25
Co., Ltd.(江苏晨光生活馆企业管理有限公司)
Zhejiang New M&G Life Enterprise 25
Management Co., Ltd.(浙江新晨光生活馆企业
管理有限公司)
Jiumu M&G Store Enterprise Management 25
Co., Ltd.(九木杂物社企业管理有限公司)
Shanghai M&G Information Technology Co., 25
Ltd.(上海晨光信息科技有限公司)
Shenzhen Erya Creative and Cultural 25
Development Co., Ltd.(深圳尔雅文化创意发展
有限公司)
Shanghai M&G Office Supplies Co., Ltd. 25
Office Depot Network Technology Co., Ltd. 25
Luoyang M&G Stationery Sales Co., Ltd.(洛 20
阳晨光文具销售有限公司)
Hangzhou Sanmei M&G Stationery Co., 25
Ltd.(杭州三美晨光文具有限公司)
Jiangsu Marco Pen Co., Ltd.(江苏马可笔业有 25
限公司)
Changchun Macro Stationery Co., Ltd.(长春 25
马可文教用品有限公司)
Yili Senlai Wood Co., Ltd.(伊犁森徕木业有限 25
公司)
Axus Stationery (Hong Kong) Company Ltd. 16.5
International stationery company 20
2. Tax preference
"√ Applicable" "□ Not applicable"
On 28 October 2019, the Company obtained High- and New-tech Enterprise Certificate
(certificate number GR201931001046, valid for 3 years) issued jointly by Shanghai Municipal
Science and Technology Commission, Shanghai Finance Bureau and Shanghai Municipal Tax
Service, State Taxation Administration.
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Annual Report 2019
On 2 November 2018, the subsidiary Axus Stationery (Shanghai) Company Ltd. (“Axus
Stationery”) obtained High- and New-tech Enterprise Certificate (certificate number
GR201831003575, valid for 3 years) issued jointly by Shanghai Municipal Science and
Technology Commission, Shanghai Finance Bureau and Shanghai Municipal Tax Service, State
Taxation Administration.
The Company and the subsidiary Axus Stationery paid the enterprise income tax at the rate of
15% this year.
The subsidiaries Luoyang M&G Stationery Sales Co., Ltd. and Lianyungang Colipu Office
Supplies Co., Ltd. paid the enterprise income tax according to the Enterprise Income Tax Law
of the People's Republic of China and the Notice of the Ministry of Finance and the State
Administration of Taxation on the Implementation of Inclusive Tax Relief Policy for Small and
Micro Enterprises (Cai Shui [2019] No. 13), namely, starting from 1 January 2019 to 31
December 2021, for SMEs with annual taxable income not exceeding RMB 1 million, the
enterprise income tax at 20% shall apply based on 25% of the taxable income; for SMEs with
annual taxable income between RMB 1 million and RMB 3 million, the enterprise income tax at
20% shall apply based on 50% of the taxable income.
3. Others
"□ Applicable" "√ Not applicable"
VII. Notes to the Items in Consolidated Financial Statements
1. Cash and equivalents
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Cash on hand 503,222.44 816,463.47
Cash at bank 1,922,791,232.44 736,640,850.12
Other cash and
12,306,239.47 309,211,561.38
equivalents
Total 1,935,600,694.35 1,046,668,874.97
Including: Total cash
3,541,107.84
deposited outside China
Other explanation
Details of the Cash and equivalents that are restricted for use due to mortgage, pledge or
freeze and which are deposited overseas and of which the remittance is restricted were as
follows:
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Annual Report 2019
Item Closing balance Balance at the end of the year
Letter of credit (“L/C”)
5,079,343.94 4,926,946.37
deposit
Performance bond 230,000.00 240,482.50
Structured deposit 300,000,000.00
Fund of restricted use 2,844,914.52
Time deposits over three
550,000,000.00
months
Total 558,154,258.46 305,167,428.87
2. Held-for-trading financial assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Financial assets at fair value 661,878,587.24 1,027,265,300.00
through current profit or loss
Including:
Debt instrument investment
Equity instrument investment
Derivative financial assets
Others 661,878,587.24 1,027,265,300.00
Financial asset designated as at
fair value through profit or loss
Including:
Total 661,878,587.24 1,027,265,300.00
Other descriptions:
"√ Applicable" "□ Not applicable"
Other bank wealth management products purchased for the Company.
3. Derivative financial assets
"□ Applicable" "√ Not applicable"
4. Bills receivable
(1). Notes receivable presented by category
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
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Annual Report 2019
Item Closing balance Opening balance
Bank acceptance bills 0
Commercial acceptance bills 0
Total 0
(2). Notes receivable pledged by the Company at the end of the period
"□ Applicable" "√ Not applicable"
(3). Notes receivable endorsed or discounted by the Company at the end of the period but
not due yet at the balance sheet date
"□ Applicable" "√ Not applicable"
(4). Notes transferred by the Company into accounts receivable at the end of the period
due to the note issuer’s failure of performance
"□ Applicable" "√ Not applicable"
(5). Disclosure by accruing method for bad debt provisions
"□ Applicable" "√ Not applicable"
Bad debt provisions accrued separately:
"□ Applicable" "√ Not applicable"
Bad debt provisions accrued according to the combination:
"□ Applicable" "√ Not applicable"
If bad debt provisions are accrued according to the general model of expected credit losses,
please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
(6). Particulars on bad debt provisions
"□ Applicable" "√ Not applicable"
(7). Particulars on notes receivable actually written-off in the current period
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
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Annual Report 2019
5. Accounts receivable
(1). Disclosure by account age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Carrying balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 1,022,427,308.95
1 to 2 years 30,982,477.00
2 to 3 years 3,510,597.38
Above 3 years 2,117,572.04
3 to 4 years
4 to 5 years
Above 5 years
Less: Bad debt provisions -32,943,231.22
Total 1,026,094,724.15
(2). Disclosure by accruing method for bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance
Carrying balance Bad debt provisions Carrying balance Bad debt provisions
Category Accruing Carrying Accruing Carrying
Percentage Percentage
Amount Amount percentage value Amount Amount percentage value
(%) (%)
(%) (%)
Bad debt
provisions
23,438,444.19 2.21 13,612,009.12 58.08 9,826,435.07 2,713,628.91 0.33 2,713,628.91 100.00
accrued
separately
Including:
Bad debt
provisions
accrued 1,035,599,511.18 97.79 19,331,222.10 1.87 1,016,268,289.08 821,997,824.94 99.67 13,225,712.03 1.61 808,772,112.91
according to the
combination
Including:
Combination 1:
1,035,599,511.18 97.79 19,331,222.10 1.87 1,016,268,289.08 821,997,824.94 99.67 13,225,712.03 1.61 808,772,112.91
Account age
Total 1,059,037,955.37 / 32,943,231.22 / 1,026,094,724.15 824,711,453.85 / 15,939,340.94 / 808,772,112.91
Bad debt provisions accrued separately:
187 / 308
Annual Report 2019
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance
Name Accruing
Carrying balance Bad debt provisions Accruing reason
percentage (%)
Xiangshan Haowenke Stationery & Sports Goods 68,304.73 68,304.73 100.00 Not expected to be
Co., Ltd. recovered
Changxing Shengxing Stationery Co., Ltd. 264,790.33 264,790.33 100.00 Not expected to be
recovered
Hangzhou Yunman Department Store Co., Ltd. 227,671.00 227,671.00 100.00 Not expected to be
recovered
Zhejiang C&U Supermarket Co., Ltd. 11,756.54 11,756.54 100.00 Not expected to be
recovered
Zebra Higo (Beijing) Commercial Chain 1,539,651.03 1,539,651.03 100.00 Not expected to be
Management Co., Ltd. recovered
Kiddy Children’s Products (Shanghai) Co., Ltd. 8,636.16 8,636.16 100.00 Not expected to be
recovered
Shanghai Kingwing General Aviation Co., Ltd. 183,045.93 183,045.93 100.00 Not expected to be
recovered
Shanghai Eastone Automotive Technology Co., 17,033.08 17,033.08 100.00 Not expected to be
Ltd. recovered
Shanghai Zhouji Restaurant Management Co., 22,978.71 22,978.71 100.00 Not expected to be
Ltd. recovered
Shenzhen TFS Investment Development Co., Ltd. 11,859.64 11,859.64 100.00 Not expected to be
recovered
Danone (China) Food & Beverage Co., Ltd. 79,476.80 79,476.80 100.00 Not expected to be
recovered
Shanghai Chuangzhi Computer Technology Co., 4,082.47 4,082.47 100.00 Not expected to be
Ltd. recovered
Shanghai Yiguo E-commerce Co., Ltd. 210,937.67 210,937.67 100.00 Not expected to be
recovered
Shanghai Lantern Network Technology Co., Ltd. 585,865.00 585,865.00 100.00 Not expected to be
recovered
Ping An Bank Co., Ltd. Shanghai Branch 51,623.74 51,623.74 100.00 Not expected to be
recovered
Huzhou Yuanhui Real Estate Development Co., 83,636.84 83,636.84 100.00 Not expected to be
Ltd. recovered
Shanghai Renjian Investment Co., Ltd. 64,389.16 64,389.16 100.00 Not expected to be
recovered
HNA Import and Export Co., Ltd. 19,652,870.14 9,826,435.07 50.00 As the liquidity risk of
the group company is
high, whether it can be
recovered is uncertain
Shanghai Donghao Oil Products Co., Ltd. 126,732.39 126,732.39 100.00 Not expected to be
recovered
Ningbo Jiangdong Benyuan Stationery Co., Ltd. 62,788.05 62,788.05 100.00 Not expected to be
recovered
188 / 308
Annual Report 2019
Guangdong ONE PLUS ONE Commercial Chain 43,451.16 43,451.16 100.00 Not expected to be
Stores Co., Ltd. recovered
Shenyang Yong Modern Trading Company 36,202.46 36,202.46 100.00 Not expected to be
recovered
Changsha Kaifu Huida Stationery Supermarket 21,799.03 21,799.03 100.00 Not expected to be
recovered
Dongguan Tangxia Yikang Stationery and Sports 16,399.07 16,399.07 100.00 Not expected to be
Goods Mall recovered
Wuhan Bowen Stationery Business Department 11,089.41 11,089.41 100.00 Not expected to be
recovered
Shaoxing Datong Commercial Trading Co., Ltd. 10,838.99 10,838.99 100.00 Not expected to be
recovered
Beijing Guoyu Rongfeng Co., Ltd. 9,036.16 9,036.16 100.00 Not expected to be
recovered
Huai'an Famous Brand Culture and Education 3,261.97 3,261.97 100.00 Not expected to be
Office Supplies Co., Ltd. recovered
Shenzhen Luohu Jinhonghui Stationery Store 3,093.39 3,093.39 100.00 Not expected to be
recovered
Shanghai Golden Times Commercial Trading Co., 2,038.64 2,038.64 100.00 Not expected to be
Ltd. recovered
Hefei Yizheng Stationery Co., Ltd. 1,795.12 1,795.12 100.00 Not expected to be
recovered
Yunnan Timely Rain Commercial Trading Co., 1,038.51 1,038.51 100.00 Not expected to be
Ltd. recovered
Nanning Feida Zhishang Stationery Company 270.87 270.87 100.00 Not expected to be
recovered
Total 23,438,444.19 13,612,009.12 58.08 /
Description on bad debt provisions accrued separately:
"□ Applicable" "√ Not applicable"
No
Bad debt provisions accrued according to the combination:
"□ Applicable" "√ Not applicable"
If bad debt provisions are accrued according to the general model of expected credit losses,
please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
(3). Particulars on bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Category Opening Change of the current period Closing balance
189 / 308
Annual Report 2019
balance Recovered or Resold or Other
Accrued
reversed written-off changes
Accrued 2,713,628.91 13,612,009.12
12,701,407.84 1,803,027.63
separately
Combination 1: 13,225,712.03 19,331,222.10
7,138,040.23 1,032,530.16
Account age
Total 15,939,340.94 19,839,448.07 1,803,027.63 1,032,530.16 32,943,231.22
Other descriptions:
Combination 1: The accruing of the account age change of the current period included an
increase of RMB4,861,462.60 for business combination. The actual amounts accrued separately
and according to the combination were: RMB14,977,985.47.
Significant bad debt provision amounts recovered or reversed in the current period:
"□ Applicable" "√ Not applicable"
(4). Particulars on accounts receivable actually written-off in the current period
"□ Applicable" "√ Not applicable"
(5). Particulars on top 5 accounts receivable in terms of the balance at the end of the
period based on debtors
"√ Applicable" "□ Not applicable"
Closing balance
Percentage (%) of
Company name
Accounts receivable the total accounts Bad debt provisions
receivable
State Grid Materials
231,601,047.00 21.87 1,725,419.13
Co., Ltd.
China Southern
Power Grid Materials 77,503,551.38 7.32 393,433.13
Co., Ltd.
China Post Group
75,578,464.82 7.14 600,085.53
Company
China Petroleum &
Chemical
Corporation Material 43,627,058.44 4.12 326,105.44
Assembly
Department
190 / 308
Annual Report 2019
China National
Water Resources &
Electric Power 32,672,838.56 3.09 164,099.08
Materials &
Equipment (Beijing)
Total 460,982,960.20 43.54 3,209,142.31
(6). Accounts receivable derecognizd due to the transfer of financial assets
"□ Applicable" "√ Not applicable"
(7). Assets and liabilities formed due to the transfer and continuous involvement of
accounts receivable
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
6. Receivables financing
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Bills receivable 24,262,204.08 1,894,232.00
Factoring of accounts 5,287,720.75
receivable
Total 29,549,924.83 1,894,232.00
Changes in receivables financing during the current period and changes in fair value:
"√ Applicable" "□ Not applicable"
See the table below for details
Accumulated loss
Balance at the Derecognition provisions
Increase of the Other Closing
Item beginning of of the current recognized in other
current period changes balance
the year period comprehensive
income
Bills
1,894,232.00 52,633,199.44 30,265,227.36 24,262,204.08
receivable
191 / 308
Annual Report 2019
Factoring of
accounts 105,362,252.36 106,817,205.35 6,742,673.74 5,287,720.75
receivable
Total 1,894,232.00 157,995,451.80 137,082,432.71 6,742,673.74 29,549,924.83
Other descriptions: Other changes were caused by the increase in business combinations this
year.
If bad debt provisions are accrued according to the general model of expected credit losses,
please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
Other descriptions:
"√ Applicable" "□ Not applicable"
Notes receivable endorsed or discounted by the Company at the end of the period but not due
yet at the balance sheet date
Unit: Yuan Currency: RMB
Item Amount derecognized at the Amount not derecognized at
end of the period the end of the period
Bank acceptance bills 12,030,000.00
7. Prepayment
(1) Advance payment presented by account age
"√ Applicable" "□ Not applicable"
192 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Closing balance Opening balance
Account age
Amount Percentage (%) Amount Percentage (%)
Within 1 year 84,880,944.13 99.43 41,922,742.37 99.02
1 to 2 years 490,500.60 0.57 392,024.18 0.93
2 to 3 years 1,876.10
Above 3 years 20,331.06 0.05
Total 85,371,444.73 100.00 42,336,973.71 100.00
Description on the reasons for failure to settle the advance payment with an account age over
one year and a significant amount:
No
(2) Particulars on top 5 advance payments in terms of the balance at the end of the period
according to the concentration of parties to which the advance payments are made
"√ Applicable" "□ Not applicable"
Percentage (%) in the total
Parties to which the advance
Closing balance balance at the end of the
payments are made
period of advance payment
CNBM Technology Corporation
33,075,300.00 38.74
Limited
M&G Holdings (Group) Co., Ltd. 3,419,063.44 4.00
Suzhou Double Elephant Optical
2,215,051.32 2.59
Materials Co., Ltd.
A. O. Smith (China) Environmental
1,994,936.63 2.34
Products Co., Ltd.
Shijiazhuang Guoda Logistics Co.,
1,766,136.44 2.07
Ltd. Yuanshi Branch
Total 42,470,487.83 49.74
Other explanation
"□ Applicable" "√ Not applicable"
8. Other receivables
Presented by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
193 / 308
Annual Report 2019
Interest receivable
Dividend receivable
Other receivables 117,647,039.93 110,280,059.38
Total 117,647,039.93 110,280,059.38
Other descriptions:
"□ Applicable" "√ Not applicable"
Interest receivable
(1) Classification of interest receivable
"□ Applicable" "√ Not applicable"
(2) Important overdue interest
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of bad debt provisions
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
Dividend receivable
(1) Dividend receivable
"□ Applicable" "√ Not applicable"
(2) Important dividend receivable with the account age over one year
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of bad debt provisions
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
Other receivables
(1) Disclosure by account age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Carrying balance at the end of the period
194 / 308
Annual Report 2019
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 99,752,417.89
1 to 2 years 25,715,031.11
2 to 3 years 13,588,611.30
Above 3 years 4,645,114.88
3 to 4 years
4 to 5 years
Above 5 years
Less: Bad debt provisions -26,054,135.25
Total 117,647,039.93
(2) Particulars on classification by amount nature
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency:
RMB
Carrying balance at the Carrying balance at the
Amount nature
end of the period beginning of the period
Personal loans and petty cash 8,848,583.44 8,467,628.64
Amount paid for materials 34,532,789.63 13,688,452.79
Consolidated balance of 20,205,179.36
related-parties current accounts 17,406,678.21
- provisional input tax
Margin and deposit 66,283,403.63 50,835,514.15
Royalties collected on behalf 39,000.00
Bank wealth management 20,000,000.00
products with guaranteed
principal and guaranteed
income
E-commerce platform amount 781.00
Others 16,629,720.27 11,404,419.62
Total 143,701,175.18 124,640,975.56
(3) Particulars on accruing of bad debt provisions
"√ Applicable" "□ Not applicable"
195 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Phase 1 Phase 2 Phase 3
Expected credit Expected credit
Expected
Bad debt loss for the entire loss for the entire
credit losses Total
provisions duration (no credit duration (credit
in the next 12
impairment impairment
months
occurred) occurred)
Balance as at 1
14,360,916.18 14,360,916.18
January 2019
Balance as at 1
January 2019 in
-651,031.11 651,031.11
the current
period
-- Transferred
into Phase 2
-- Transferred
-651,031.11 651,031.11
into Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Accrued in the
9,819,847.25 3,208,177.16 13,028,024.41
current period
Reserved in the
current period
Resold in the
current period
Written-off in
the current 705,861.68 2,359,820.28 3,065,681.96
period
Other changes 1,730,876.62 1,730,876.62
Balance as at
31 December 24,554,747.26 1,499,387.99 26,054,135.25
2019
Other descriptions:
196 / 308
Annual Report 2019
Other changes included the increase of RMB1,719,516.14 for the Company’s business
combination and the translation difference of RMB11,360.48 of foreign currency statements of
overseas subsidiaries at the end of the year.
Particulars on the significant changes in the carrying balance of other receivables in which
changes in loss provisions occurred in the current period:
"√ Applicable" "□ Not applicable"
Phase 1 Phase 2 Phase 3
Expected credit Expected credit
loss for the loss for the
Bad debt Expected credit
entire duration entire duration Total
provisions losses in the next
(no credit (credit
12 months
impairment impairment
occurred) occurred)
Balance as at 1
124,640,975.55 124,640,975.55
January 2019
Balance as at 1
January 2019
-797,789.51 797,789.51
in the current
period
-- Transferred
into Phase 2
-- Transferred
-797,789.51 797,789.51
into Phase 3
-- Reversed
into Phase 2
-- Reversed
into Phase 1
Increase of the
1,096,121,348.25 1,499,387.99 1,097,620,736.24
current period
Direct
reduction of the
current period
Derecognition
of the current 1,086,784,428.54 797,789.51 1,087,582,218.05
period
Other changes 9,021,681.43 9,021,681.43
197 / 308
Annual Report 2019
Balance as at
31 December 142,201,787.19 1,499,387.99 143,701,175.18
2019
Other descriptions:
Other changes were caused by the increase for the Company’s business combinations.
The basis for adopting the amount of bad debt provisions accrued for the current period and the
assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
(4) Particulars on bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Change of the current period
Opening Closing
Category Recovered Resold or Other
balance Accrued balance
or reversed written-off changes
Bad debt
provisions
3,208,177.16 1,708,789.17 1,499,387.99
accrued
separately
Combination 1:
14,360,916.18 11,550,723.87 1,356,892.79 24,554,747.26
Account age
Total 14,360,916.18 14,758,901.03 3,065,681.96 26,054,135.25
Other descriptions:
Combination 1: The accruing of the account age change of the current period included an
increase of RMB1,719,516.14 for business combination. The actual amounts accrued separately
and according to the combination were RMB13,028,024.41. The amount affected by foreign
exchange rate changes was RMB11,360.48.
Significant bad debt provision amounts reversed or recovered in the current period:
"□ Applicable" "√ Not applicable"
(5) Particulars on other receivables actually written-off in the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Written-off amount
Other receivables actually written-off 3,065,681.96
198 / 308
Annual Report 2019
Significant writing-off of other receivables:
"□ Applicable" "√ Not applicable"
Description on writing-off of other receivables:
"□ Applicable" "√ Not applicable"
(6) Particulars on top 5 other receivables in terms of the balance at the end of the period
based on debtors
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Percentage (%)
in the total
Bad debt
Company Amount Closing Account balance at the
provisions
name nature balance age end of the period
Closing balance
of other
receivables
Provisional Consolidated
input tax balance of
related-
parties Within 1
17,406,678.21 12.11
current year
accounts -
provisional
input tax
Shanghai
Xiqia Amount paid Within 1
12,713,462.64 8.85 635,673.13
Stationery for materials year
Factory
Shanghai
Linsong Real Margin and
3,279,861.00 2-3 years 2.28 1,967,916.60
Estate Co., deposit
Ltd.
State Grid
Margin and Within 1
Materials Co., 2,400,000.00 1.67 120,000.00
deposit year
Ltd.
199 / 308
Annual Report 2019
Shenzhen
Shuncheng
Margin and Within 1
Supply Chain 1,627,000.00 1.13 81,350.00
deposit year
Service Co.,
Ltd.
Total / 37,427,001.85 26.04 2,804,939.73
(7) Receivables involving government subsidies
"□ Applicable" "√ Not applicable"
(8) Other receivables derecognized due to the transfer of financial assets
"□ Applicable" "√ Not applicable"
(9) Assets and liabilities formed due to the transfer and continuous involvement of other
receivables
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
9. Inventories
(1) Classification of inventories
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance
Item Devaluation Devaluation
Carrying balance Carrying value Carrying balance Carrying value
provisions provisions
Raw materials 230,583,859.11 1,418,134.61 229,165,724.50 179,668,368.02 179,668,368.02
Work-in-process 55,336,578.58 91,431.46 55,245,147.12 25,245,351.77 25,245,351.77
Finished products 1,070,802,359.90 35,434,374.53 1,035,367,985.37 835,427,474.28 16,909,196.39 818,518,277.89
Revolving materials 17,933,897.04 1,035,002.57 16,898,894.47 402,083.23 402,083.23
Expendable
14,937,710.39 14,937,710.39
biological assets
Completed unsettled
assets formed by
construction
contracts
Materials in transit 4,258,709.42 4,258,709.42
200 / 308
Annual Report 2019
Consigned 14,249,868.76 14,249,868.76 16,215,146.47 16,215,146.47
processing materials
Shipped goods 7,984,719.82 7,984,719.82 2,652,382.62 2,652,382.62
Total 1,416,087,703.02 37,978,943.17 1,378,108,759.85 1,059,610,806.39 16,909,196.39 1,042,701,610.00
(2) Devaluation provisions of inventories
"√ Applicable" "□ Not applicable"
201 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Increase amount of the current Decrease amount of the
Opening period current period
Item Closing balance
balance Reversed or
Accrued Others Others
resold
Raw materials 739,072.04 670,188.37 -8,874.20 1,418,134.61
Work-in-process -580,268.16 671,699.62 91,431.46
Finished products 16,909,196.39 16,660,777.49 1,862,261.83 -2,138.82 35,434,374.53
Revolving materials 892,499.29 141,489.51 -1,013.77 1,035,002.57
Expendable
biological assets
Completed unsettled
assets formed by
construction
contracts
Materials in transit
Consigned
processing materials
Shipped goods
Total 16,909,196.39 17,712,080.66 3,345,639.33 -12,026.79 37,978,943.17
Other descriptions:
Increase amount of the current period - others were caused by the business combination, while
decrease amount of the current period - others were caused by the translation difference of
foreign currency statements of overseas subsidiaries at the end of the year.
(3) Description on the capitalization amount of the borrowing expenses included in the
balance of inventories at the end of the period
"□ Applicable" "√ Not applicable"
(4) Particulars on completed but unsettled assets formed by construction contract at the
end of the period
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
10. Held for sale assets
"□ Applicable" "√ Not applicable"
202 / 308
Annual Report 2019
11. Non-current assets due within one year
"□ Applicable" "√ Not applicable"
Important debt investment and other debt investment at the end of the period:
"□ Applicable" "√ Not applicable"
Other explanation
No
12. Other current assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Bank wealth management products 0
VAT input tax to be certified 20,104,638.98 12,930,815.35
Pre-paid enterprise income tax 1,104,950.25 154,827.95
Carbon quota 35,824.00
VAT retention amount 8,035,512.06 13,891,757.05
Total 29,280,925.29 26,977,400.35
Other explanation
No
13. Debt investment
(1) Particulars on debt investment
"□ Applicable" "√ Not applicable"
(2) Important debt investment at the end of the period
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of impairment provisions
"□ Applicable" "√ Not applicable"
The basis for adopting the amount of impairment provisions accrued for the current period and
the assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
203 / 308
Annual Report 2019
14. Other debt investment
(1) Particulars on other debt investments
"□ Applicable" "√ Not applicable"
(2) Important other debt investments at the end of the period
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of impairment provisions
"□ Applicable" "√ Not applicable"
The basis for adopting the amount of impairment provisions accrued for the current period and
the assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
15. Long-term receivables
(1) Long-term receivables
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance Discount
Item Carrying Bad debt Carrying Carrying Bad debt Carrying rate
balance provisions value balance provisions value range
Financing lease
receivables
Including:
Unrealized
financing
income
Installment sales
of goods
Installment
rendering of
services
Others 6,624,590.00 6,624,590.00
Total 6,624,590.00 6,624,590.00 /
Other descriptions:
204 / 308
Annual Report 2019
On 29 July 2019, the Company and Axus Stationery’s original actual controllers (Mr. Xu Peifeng
and Mr. Andre Francis Viegas) and original shareholders (Yilin Investment (Shanghai) Co., Ltd.
(“Yilin Investment”), Higton Limited and Beilin Investment (Shanghai) Co., Ltd. (“Beilin
Investment”) signed the Supplementary Agreement to the Equity Transfer Agreement (2).
According to the Agreement, Yilin Investment, Higton Limited and Beilin Investment agreed to
provide company compensation for audit adjustments and losses during the period, and the
compensation would be implemented in two years from 1 July 2019, namely RMB3,312,295
would be returned before 30 June 2020 and RMB3,312,295 before 30 June 2021; Mr. Xu Peifeng
agreed to assume personal guarantee of joint and several liability for the company for all the
above compensation obligations, and the guarantee period started from the effective date of the
Agreement to the date when the creditor's right was fully performed; the scope of guarantee
included but was not limited to the creditor's right, damage compensation (if any), and the
company's cost for realizing the creditor's right; Mr. Xu Peifeng's assets involved in the
assumption of guarantee responsibility were including but not limited to his indirectly-held shares
of Axus Stationery.
(2) Particulars on accruing of bad debt provisions
"□ Applicable" "√ Not applicable"
The basis for adopting the amount of bad debt provisions accrued for the current period and the
assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
(3) Long receivables derecognizd due to the transfer of financial assets
"□ Applicable" "√ Not applicable"
(4) Assets and liabilities formed due to the transfer and continuous involvement of long
receivables
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
16. Long-term equity investments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Change of the current period
205 / 308
Annual Report 2019
Invested At the beginning Declaration on Balance of
Investment gains Adjustment to
company of the period Other distribution of Accruing of At the end of the impairment
Additional Withdrawn and losses other
Balance equity cash impairment Others period provisions at the
investment investment recognized under comprehensive
changes dividends or provisions Balance end of the
the equity method income
profits period
I. Joint venture
Sub-total
II. Associate
Ningbo
Zhongchen
Equity
Investment 30,175,665.26 -313,145.25 -16,285.82 29,846,234.19
Partnership
(Limited
Partnership)
Shanghai
Pen-making
Technology 6,000,000.00 -263,450.72 5,736,549.28
Services Co.,
Ltd.
Sub-total 30,175,665.26 6,000,000.00 -576,595.97 -16,285.82 35,582,783.47
Total 30,175,665.26 6,000,000.00 -576,595.97 -16,285.82 35,582,783.47
Other explanation
No
17. Investments in other equity instruments
(1) Particulars on other equity instrument investments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Shanghai M&G Culture and 3,909,179.93 3,600,000.00
Creativity Co., Ltd.
Total 3,909,179.93 3,600,000.00
(2) Particulars on non-trading equity instrument investment
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Reason for Reason for
Dividend Amount transferred designation as transfer from
income from other at fair value other
Accumulated Accumulated
Item recognized in comprehensive through other comprehensive
gains losses
the current income into comprehensive income into
period retained earnings income retained
earnings
206 / 308
Annual Report 2019
Shanghai 309,179.93 The Company
M&G held the
Culture investment for
and non-trading
Creativity purposes
Co., Ltd.
Other descriptions:
"□ Applicable" "√ Not applicable"
18. Other non-current financial assets
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
19. Investment real estate
Measurement model of investment real estate
Not applicable
20. Fixed assets
Presented by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Fixed assets 1,163,702,352.12 876,617,888.99
Disposal of fixed assets
Total 1,163,702,352.12 876,617,888.99
Other descriptions:
"□ Applicable" "√ Not applicable"
Fixed assets
(1) Particulars on fixed assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Property and Machinery and Means of Other
Item Total
buildings equipment transportation equipment
207 / 308
Annual Report 2019
I. Original
carrying
value:
1. Balance at
the
634,058,338.98 508,257,905.74 51,896,534.68 247,138,600.17 1,441,351,379.57
beginning of
the period
2. Increase
amount of
307,887,708.81 228,594,626.61 7,103,818.01 65,925,711.32 609,511,864.75
the current
period
(1)
1,124,312.14 2,243,162.75 2,718,213.62 8,683,132.13 14,768,820.64
Acquisition
(2) Transfer-
in from
344,573.67 44,870,318.20 43,644,778.63 88,859,670.50
construction
in progress
(3) Increase
for business 306,418,823.00 181,481,145.66 4,385,604.39 13,597,800.56 505,883,373.61
combination
3. Decrease
amount of
-34,853.14 10,671,810.89 1,609,309.01 8,464,792.35 20,711,059.11
the current
period
(1) Disposal
344,908.44 11,288,741.19 1,619,341.63 8,648,782.88 21,901,774.14
or scraping
(2)
Translation
difference of
-379,761.58 -616,930.30 -10,032.62 -183,990.53 -1,190,715.03
foreign-
currency
statements
4. Balance at
the end of 941,980,900.93 726,180,721.46 57,391,043.68 304,599,519.14 2,030,152,185.21
the period
208 / 308
Annual Report 2019
II.
Accumulative
depreciation
1. Balance at
the
154,272,296.01 195,023,643.78 39,846,494.48 175,591,056.31 564,733,490.58
beginning of
the period
2. Increase
amount of
100,482,179.17 150,350,773.86 6,746,608.71 59,581,720.59 317,161,282.33
the current
period
(1) Accruing 44,858,253.67 60,679,850.29 3,421,246.71 51,540,231.67 160,499,582.34
(2) Increase 55,623,925.50 89,670,923.57 3,325,362.00 8,041,488.92 156,661,699.99
for business
combination
3. Decrease
amount of
647,425.55 5,883,989.75 877,379.09 8,270,294.13 15,679,088.52
the current
period
(1) Disposal
660,455.03 6,242,258.00 889,987.33 8,342,204.06 16,134,904.42
or scraping
(2) -13,029.48 -358,268.25 -12,608.24 -71,909.93 -455,815.90
Translation
difference of
foreign-
currency
statements
4. Balance at
the end of 254,107,049.63 339,490,427.89 45,715,724.10 226,902,482.77 866,215,684.39
the period
III.
Impairment (0.00)
provisions
1. Balance at
the
209 / 308
Annual Report 2019
beginning of
the period
2. Increase
amount of
234,148.70 234,148.70
the current
period
(1) Accruing
(2) Increase 234,148.70 234,148.70
for business
combination
3. Decrease
amount of
the current
period
(1) Disposal
or scraping
4. Balance at
the end of 234,148.70 234,148.70
the period
IV. Carrying
value
1. Carrying
value at the
687,873,851.30 386,456,144.87 11,675,319.58 77,697,036.37 1,163,702,352.12
end of the
period
2. Carrying
value at the
479,786,042.97 313,234,261.96 12,050,040.20 71,547,543.86 876,617,888.99
beginning of
the period
Other descriptions:
For the restricted situation of fixed assets, please refer to Note XIV. Commitments and
Contingencies.
(2) Particulars on temporary idle fixed assets
"□ Applicable" "√ Not applicable"
210 / 308
Annual Report 2019
(3) Particulars on fixed assets leased in under financing leases
"□ Applicable" "√ Not applicable"
(4) Fixed assets leased out under operating leases
"□ Applicable" "√ Not applicable"
(5) Particulars on fixed assets of which the property ownership certificates have not
been obtained
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
Disposal of fixed assets
"□ Applicable" "√ Not applicable"
21. Construction in progress
Presented by item
"√ Applicable" "□ Not applicable"
211 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Construction in progress 260,469,728.76 24,506,469.59
Engineering materials
Total 260,469,728.76 24,506,469.59
Other descriptions:
"□ Applicable" "√ Not applicable"
Construction in progress
(1) Particulars on construction in progress
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance
Item Carrying Impairment Carrying Impairment
Carrying value Carrying value
balance provisions balance provisions
Qingcun
Production
Base 158,942,138.30 158,942,138.30 2,300,484.22 2,300,484.22
Construction
Project
Internet E-
Commerce
82,259,438.98 82,259,438.98
Industrial
Park Project
Fixed assets
not yet
installed 8,824,754.04 8,824,754.04 20,922,274.63 20,922,274.63
and put into
use
Others 10,443,397.44 10,443,397.44 1,283,710.74 1,283,710.74
Total 260,469,728.76 260,469,728.76 24,506,469.59 24,506,469.59
Changes in important construction in progress projects in the current period
"√ Applicable" "□ Not applicable"
212 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Including:
Amount of Other Proportion of Interest
At the Accumulated Amount of
Increase fixed assets decrease At the end of the cumulative capitalizatio
beginning of Progress amount of interest Source of
Items Budget amount of the transferred in amounts in period investment in n rate (%) in
the period of works interest capitalization fund
current period the current the current Balance the project to the current
Balance capitalization in the current
period period the budget (%) period
period
Qingcun Self-raised
Production funds,
Base 733,910,100.00 2,300,484.22 156,792,972.06 151,317.98 158,942,138.30 91.22 91.22 borrowings
Construction from financial
Project institutions
Internet E-
Commerce
82,259,438.98 82,259,438.98
Industrial Park
Project
Fixed assets
not yet
20,922,274.63 73,095,059.90 85,192,580.49 8,824,754.04
installed and
put into use
Others 1,283,710.74 15,396,762.86 3,515,772.03 2,721,304.13 10,443,397.44
Total 733,910,100.00 24,506,469.59 327,544,233.80 88,859,670.50 2,721,304.13 260,469,728.76 / / / /
The amount of other increases transferred into intangible assets was RMB2,461,673.93, and the
amount transferred into long-term deferred expenses was RMB259,630.20.
(2) Particulars on impairment provisions accrued for construction in progress in the
current period
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
Engineering materials
(1) Particulars on engineering materials
"□ Applicable" "√ Not applicable"
22. Productive biological assets
(1) Productive biological assets using cost measurement model
"□ Applicable" "√ Not applicable"
(2) Productive biological assets using fair value measurement model
"□ Applicable" "√ Not applicable"
213 / 308
Annual Report 2019
Other explanation
"□ Applicable" "√ Not applicable"
23. Oil and gas assets
"□ Applicable" "√ Not applicable"
24. Right-of-use assets
"□ Applicable" "√ Not applicable"
25. Intangible assets
(1) Particulars on intangible assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Image
Unpatented
Item Land use rights Patent right identification Software Others Total
technology
rights
I. Original
carrying value
1. Balance at
the beginning 187,858,988.00 6,175,637.85 14,754,928.91 24,618,010.88 1,650,000.00 235,057,565.64
of the period
2. Increase 151,557,936.87 6,470,027.94 93,989.00 8,633,605.89
amount of the 32,622.64 166,788,182.34
current period
(1) Acquisition 741,339.43 3,590,815.98 4,332,155.41
(2) R&D
(3) Increase for 151,557,936.87 5,728,688.51 93,989.00 2,581,115.98 32,622.64 159,994,353.00
business
combination
(4) Transfer-in 2,461,673.93 2,461,673.93
from
construction in
progress
3. Decrease -600,414.23 14,754,928.91 14,154,514.68
amount of the
current period
(1) Disposal
(2) Translation -600,414.23 -600,414.23
difference of
foreign-
214 / 308
Annual Report 2019
currency
statements
(3) Invalid and 14,754,928.91 14,754,928.91
derecognized
use rights
4. Balance at 340,017,339.10 12,645,665.79 93,989.00 33,251,616.77 1,682,622.64 387,691,233.30
the end of the
period
2. Cumulative
amortization
1. Balance at 19,524,715.50 2,023,538.20 14,335,071.58 10,286,364.69 900,000.00 47,069,689.97
the beginning
of the period
2. Increase 15,562,298.97 1,278,556.24 513,846.33 6,806,933.57 182,622.48 24,344,257.59
amount of the
current period
(1) Accruing 6,253,494.22 1,047,818.95 419,857.33 4,373,675.91 150,000.00 12,244,846.41
(2) Increase for 9,308,804.75 230,737.29 93,989.00 2,433,257.66 32,622.48 12,099,411.18
business
combination
3. Decrease -26,452.56 14,754,928.91 14,728,476.35
amount of the
current period
(1) Disposal
(2) Invalid and 14,754,928.91 14,754,928.91
derecognized
use rights
(3) Translation -26,452.56 -26,452.56
difference of
foreign-
currency
statements
4. Balance at 35,113,467.03 3,302,094.44 93,989.00 17,093,298.26 1,082,622.48 56,685,471.21
the end of the
period
III. Impairment
provisions
1. Balance at
the beginning
of the period
2. Increase
amount of the
current period
(1) Accruing
(2) Increase for
business
combination
215 / 308
Annual Report 2019
3. Decrease
amount of the
current period
(1) Disposal
4. Balance at
the end of the
period
IV. Carrying
value
1. Carrying 304,903,872.07 9,343,571.35 16,158,318.51 600,000.16 331,005,762.09
value at the
end of the
period
2. Carrying 168,334,272.50 4,152,099.65 419,857.33 14,331,646.19 750,000.00 187,987,875.67
value at the
beginning of
the period
The proportion of intangible assets formed by the Company's internal R&D at the end of the
current period in the balance of intangible assets was 0
(2) Particulars on use rights of land of which the property ownership certificates have
not been obtained
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
26. Development expenses
"□ Applicable" "√ Not applicable"
27. Goodwill
(1) Original carrying value of goodwill
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase of the current Decrease of the
Name of invested period current period
Opening Closing
company or event Formed due
balance balance
forming goodwill to business Others Disposal Others
combination
216 / 308
Annual Report 2019
Shenzhen Erya 131,001.23 131,001.23
Creative and
Cultural
Development Co.,
Ltd.(深圳尔雅文化创
意发展有限公司)
Axus Stationery 30,175,537.1 30,175,537.19
(Shanghai) 9
Company Ltd.
131,001.23 30,175,537.1 30,306,538.42
Total
9
(2) Impairment provisions of goodwill
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Name of Increase of the current Decrease of the
invested period current period
Opening Closing
company or
balance balance
event forming Accrued Others Disposal Others
goodwill
Shenzhen Erya 131,001.23 131,001.23
Creative and
Cultural
Development
Co., Ltd.(深圳尔
雅文化创意发展
有限公司)
Total 131,001.23 131,001.23
(3) Information regarding the asset group or the combination of asset groups to which
goodwill belongs
"√ Applicable" "□ Not applicable"
Name of Carrying value Carrying value Carrying value Carrying value Whether
asset group of goodwill of goodwill Total carrying of other assets of the asset the
attributable to attributable to value of in the asset group or the asset
shareholders minority goodwill group or the combination of group
of the parent shareholders combination of asset groups has
217 / 308
Annual Report 2019
company asset groups including changed
goodwill
Shenzhen
Erya
Creative and
Cultural
Development 131,001.23 125,863.93 256,865.16 1,347,489.93 1,604,355.09 No
Co., Ltd.( 深
圳尔雅文化
创意发展有
限公司)
Axus
Stationery
(Shanghai) 30,175,537.19 23,709,350.65 53,884,887.84 438,838,223.62 492,723,111.46 No
Company
Ltd.
(4) Describe the goodwill impairment test process, key parameters (such as growth rate
in the forecast period, growth rate in the stable period, profit margin, discount rate,
forecast period, etc. when estimating the present value of the estimated future cash
flow, if applicable) and the recognition method for impairment losses of goodwill
"√ Applicable" "□ Not applicable"
Key parameter
Amount of
Growth Discount rate Present value
Name of asset goodwill
Forecast Expected rate in the (weighted of estimated
group Profit margin impairment
period growth rate steady average cost of future cash flow
provisions
period capital WACC)
Calculated
Axus Stationery according to
(Shanghai) 2020-2024 [Note] Flat predicted 15.43% 519,000,000.00
Company Ltd. income, costs,
expenses, etc.
Note: According to the comprehensive analysis of the contracts and agreements signed by
Axus Stationery, and development plans, operating trends over the years, market competition
and other factors, the main business income and related costs, expenses and profits in the
next five years starting from the evaluation base date were estimated.
(5) Effect of goodwill impairment test
"√ Applicable" "□ Not applicable"
218 / 308
Annual Report 2019
The Company's acquisition of Axus Stationery was based on the performance promise that the
agreed gross profit margin needs to be achieved in 2019 and the income from sales outside
China needs to reach the corresponding amount, but because the Company failed to achieve
such goals, according to the relevant provisions of the Accounting Standards for Business
Enterprises, should any new or further evidence arises within 12 months after the acquisition
date and makes it necessary to adjust the contingent consideration on the acquisition date, it
shall be recognized and the amount originally included into consolidated goodwill shall be
adjusted; the Company determined the carrying value of goodwill according to the adjusted
corresponding consideration.
For the current year, the Company hired Shanghai Lixin Appraisal Co., Ltd. to issue the Asset
Appraisal Report on the Recoverable Amount of Relevant Asset Groups of Axus Stationery
(Shanghai) Company Ltd. involved in the Goodwill Impairment Test Carried out by Shanghai
M&G Stationery Inc. for the Purpose of Financial Reporting with the report number of Xin Zi Ping
Bao Zi [2020] No.40043 on 10 April 2020. According to the appraisal results, as of 31 December
2019, the carrying value of the asst group or the combination of asset groups including goodwill
of Axus Stationery acquired by the Company was RMB492,723,100, and the recoverable
amount was RMB519,000,000; after the test, there was no impairment of the goodwill formed by
the Company's acquisition of Axus Stationery.
Other explanation
"□ Applicable" "√ Not applicable"
28. Long-term prepaid expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Opening Increase Amortization Other Closing
balance amount of the amount of the decrease balance
current period current period amounts
Decoration
117,412,655.81 58,969,490.95 56,178,649.63 3,936,583.49 116,266,913.64
fee
Others 611,708.86 12,770,468.84 2,144,251.34 9,168,506.05 2,069,420.31
Total 118,024,364.67 71,739,959.79 58,322,900.97 13,105,089.54 118,336,333.95
Other descriptions:
The increase amount of the current period included the original value of RMB12,538,099.65 of
long-term deferred expenses increased for business combinations.
Other decrease amounts included the accumulated amortization amount of RMB12,279,319.47
of long-term deferred expenses increased for business combinations.
219 / 308
Annual Report 2019
29. Deferred income tax assets/Deferred income tax liabilities
(1) Unoffset deferred income tax assets
"√ Applicable" "□ Not applicable"
Unit: RMB Currency: RMB
Closing balance Opening balance
Deductible Deferred Deductible Deferred
Item
temporary income tax temporary income tax
differences Assets differences Assets
Impairment
59,901,405.29 14,183,474.28 28,661,424.71 6,791,290.35
provisions of assets
Unrealized profits
from internal 105,422,678.59 17,734,494.35 82,691,090.00 14,122,763.53
transactions
Deductible losses 1,394,984.07 348,746.02
Deferred income 28,808,795.45 4,356,820.94 30,437,478.08 4,611,467.10
Total 195,527,863.40 36,623,535.59 141,789,992.79 25,525,520.98
(2) Unoffset deferred income tax liabilities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance
Taxable Deferred Taxable Deferred
Item
temporary income tax temporary income tax
differences Liabilities differences Liabilities
Assets appreciation
for business
190,554,505.02 34,553,803.87 2,259,638.02 564,909.50
combination not under
the common control
Changes in fair value
of other debt
investments
Changes in fair value
of other equity
instrument
investments
220 / 308
Annual Report 2019
Changes in fair value
of trading financial 11,878,587.24 2,022,940.68
assets
Total 202,433,092.26 36,576,744.55 2,259,638.02 564,909.50
(3) Deferred income tax assets or liabilities presented on a net basis after offsetting
"□ Applicable" "√ Not applicable"
(4) Details of unrecognized deferred income tax assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Deductible temporary
80,145,537.46 55,387,660.23
differences
Deductible losses 319,004,132.22 222,133,153.97
Total 399,149,669.68 277,520,814.20
(5) The deductible losses of unrecognized deferred income tax assets will expire in the
following years
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount at the
Amount at the end of
Year beginning of the Note
the period
period
2024 51,157,003.13
2023 128,291,769.66 58,495,645.77
2022 35,217,084.45 52,048,124.68
2021 81,175,636.36 86,639,439.53
2020 20,866,933.92 15,739,983.66
2019 2,295,704.70 9,209,960.33
Total 319,004,132.22 222,133,153.97 /
Other descriptions:
"□ Applicable" "√ Not applicable"
30. Other non-current assets
"√ Applicable" "□ Not applicable"
221 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Prepayments for real estate, 315,153,408.27 311,300,000.00
engineering, equipment, etc.
Total 315,153,408.27 311,300,000.00
Other descriptions:
No
31. Short-term borrowings
(1) Classification of short-term borrowings
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Pledged borrowings
Mortgaged borrowings 182,979,528.81
Guaranteed borrowings
Credit borrowings
Interest payable 214,235.05
Total 183,193,763.86
Other descriptions:
For the relevant mortgage information, please refer to Note XIV. Commitments and
Contingencies.
(2) Particulars on overdue but yet unrepaid short-term borrowings
"□ Applicable" "√ Not applicable"
Particulars of important overdue but yet unrepaid short-term borrowings:
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
32. Held-for-trading financial liabilities
"□ Applicable" "√ Not applicable"
33. Derivative financial liabilities
"□ Applicable" "√ Not applicable"
222 / 308
Annual Report 2019
34. Bills payable
(1) Presentation of notes payable
"□ Applicable" "√ Not applicable"
35. Accounts payable
(1) Presentation of accounts payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Within 1 year 1,857,292,820.26 1,316,235,807.23
1 to 2 years 2,179,464.37 1,992,272.43
2 to 3 years 1,103,433.79 731,795.95
Above 3 years 496,749.45 447,172.60
Total 1,861,072,467.87 1,319,407,048.21
(2) Accounts payable with the account age over one year
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
36. Accounts received in advance
(1) Presentation of advance received from customers
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Within 1 year 205,407,801.97 144,643,662.55
1 to 2 years 824,974.39 2,713,712.64
2 to 3 years 316,841.78 179,943.98
Above 3 years 212,675.80 109,734.70
Total 206,762,293.94 147,647,053.87
(2) Significant advance received from customers with the account age over one year
"□ Applicable" "√ Not applicable"
223 / 308
Annual Report 2019
(3) Particulars of settled but uncompleted projects formed by construction contract at
the end of the period
"□ Applicable" "√ Not applicable"
Other explanation
"□ Applicable" "√ Not applicable"
37. Employee benefits payable
(1) Presentation of employee benefits payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Decrease of
Opening Increase of the Closing
Item the current
balance current period balance
period
I. Short-term benefits 684,508,436.9 651,801,356.3 146,780,321.6
114,073,241.17
0 8 9
II. Post-employment
benefits - Defined 6,712,835.35 77,590,743.51 76,964,408.23 7,339,170.63
contribution plans
III. Dismissal benefits 417,251.98 417,251.98
IV. Other benefits due
within one year
762,516,432.3 729,183,016.5 154,119,492.3
Total 120,786,076.52
9 9 2
(2) Presentation of short-term benefits
"√ Applicable" "□ Not applicable"
Unit: RMB Currency: RMB
Opening Increase of the Decrease of the
Item Closing balance
balance current period current period
I. Salary, bonus, allowance 136,748,768.51
109,048,913.79 599,982,363.54 572,282,508.82
and subsidy
II. Employee benefits 1,248,410.48 1,248,017.15 393.33
III. Social insurance 2,599,960.27 48,360,502.97 47,133,344.02 3,827,119.22
Including: Medical 3,337,870.76
2,298,876.31 40,569,713.86 39,530,719.41
insurance
Work-related injury 145,404.67
66,036.09 3,242,652.28 3,163,283.70
insurance
224 / 308
Annual Report 2019
Maternity insurance 235,047.87 4,548,136.83 4,439,340.91 343,843.79
IV. Housing provident fund 2,196,410.89 19,535,462.44 19,132,641.66 2,599,231.67
V. Labor union and
38,055.30 6,169,123.07 2,884,748.42 3,322,429.95
employee education funds
VI. Short-term 279,975.38
189,900.92 8,439,402.26 8,349,327.80
compensated absences
VII. Short-term profit
sharing plan
VIII. Other short-term 773,172.14 770,768.51 2,403.63
benefits
Total 114,073,241.17 684,508,436.90 651,801,356.38 146,780,321.69
(3) Presentation of defined contribution plans
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Opening Increase of the Decrease of the Closing
Item
balance current period current period balance
1. Basic pension 6,589,734.69 75,307,562.28 74,741,520.09 7,155,776.88
2. Unemployment
123,100.66 2,283,181.23 2,222,888.14 183,393.75
insurance
3. Enterprise
annuity payment
Total 6,712,835.35 77,590,743.51 76,964,408.23 7,339,170.63
Other descriptions:
"□ Applicable" "√ Not applicable"
38. Taxes payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Value added tax (“VAT”) 104,412,244.02 141,466,661.91
Consumption tax
Business tax
Enterprise income tax 130,486,171.57 120,221,282.24
Personnel income tax 8,228,966.18 6,628,590.90
225 / 308
Annual Report 2019
Urban maintenance and
3,975,132.04 5,216,961.88
construction tax
Property tax 476,707.70
Education surcharge 5,857,154.52 5,740,453.51
Land use tax 1,492,046.98
Stamp duty 3,439,030.61 103,401.74
Others 215,664.52 194.00
Total 258,583,118.14 279,377,546.18
Other descriptions:
No
39. Other payables
Presented by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Interest payable
Dividend payable
Other payables 331,438,976.35 240,665,881.17
Total 331,438,976.35 240,665,881.17
Other descriptions:
"□ Applicable" "√ Not applicable"
Interest payable
(1) Presentation by category
"□ Applicable" "√ Not applicable"
Dividend payable
(1) Presentation by category
"□ Applicable" "√ Not applicable"
Other payables
(1) Other payables presented by amount nature
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
226 / 308
Annual Report 2019
Margin and deposit 153,783,801.10 120,859,921.25
Product license fee 1,051,890.00 1,539,546.31
Estimated fees 126,261,415.65 78,855,783.50
Engineering and decoration 26,019,961.51
28,482,632.65
fund
Others 21,859,236.95 13,390,668.60
Total 331,438,976.35 240,665,881.17
(2) Other payables with the account age over one year
"□ Applicable" "√ Not applicable"
Other particulars:
"□ Applicable" "√ Not applicable"
40. Held-for-sale liabilities
"□ Applicable" "√ Not applicable"
41. Non-current liabilities due within one year
"□ Applicable" "√ Not applicable"
42. Other current liabilities
Particulars on other current liabilities
"□ Applicable" "√ Not applicable"
Changes in short-term bonds payable:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
43. Long-term borrowings
(1) Classification of long-term borrowings
"□ Applicable" "√ Not applicable"
Other particulars, including interest rate ranges:
"□ Applicable" "√ Not applicable"
227 / 308
Annual Report 2019
44. Bonds payable
(1) Bonds payable
"□ Applicable" "√ Not applicable"
(2) Changes in bonds payable: (excluding other financial instruments such as preferred
shares classified as financial liabilities and perpetual bonds)
"□ Applicable" "√ Not applicable"
(3) Description on the conversion conditions and conversion time of convertible
corporate bonds
"□ Applicable" "√ Not applicable"
(4) Description on other financial instruments classified as financial liabilities
Basic information on other financial instruments such as outstanding preferred shares and
perpetual bonds at the end of the period
"□ Applicable" "√ Not applicable"
Form of changes in financial instruments such as outstanding preferred shares and perpetual
bonds at the end of the period
"□ Applicable" "√ Not applicable"
Description of the basis for other financial instruments classified as financial liabilities:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
45. Lease liabilities
"□ Applicable" "√ Not applicable"
46. Long-term payables
Presented by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Long-term payable
Special payables 6,620,000.00 5,109,800.00
Total 6,620,000.00 5,109,800.00
228 / 308
Annual Report 2019
Other descriptions:
"□ Applicable" "√ Not applicable"
Long-term payable
(1) Long-term payables presented by amount nature
"□ Applicable" "√ Not applicable"
Special payables
(1) Special payables presented by amount nature
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase of Decrease of Cause of
Opening Closing
Item the current the current formation
balance balance
period period
New environment-friendly
pen-making material
project belonging to key
special projects for
5,109,800.00 8,710,200.00 7,200,000.00 6,620,000.00
improvement and
industrialization of key
basic materials under the
national key R&D plan
Total 5,109,800.00 8,710,200.00 7,200,000.00 6,620,000.00 /
Other descriptions:
No
47. Long-term employee benefits payable
"□ Applicable" "√ Not applicable"
48. Estimated liabilities
"□ Applicable" "√ Not applicable"
49. Deferred income
Particulars on deferred income
"√ Applicable" "□ Not applicable"
229 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Increase of Decrease of
Opening Closing Cause of
Item the current the current
balance balance formation
period period
Government
30,215,315.26 5,543,095.62 4,291,731.80 31,466,679.08
grant
Reward on
customer 2,904,973.75 148,497.62 2,853,757.84 199,713.53
points
Brand
34,156,820.50 34,156,820.50
maintenance
Total 67,277,109.51 5,691,593.24 7,145,489.64 65,823,213.11 /
Items involving government subsidies:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Subsidy Amount
Amount included
amount included in
Opening in non-operating Other Pertinent to
Liability items increased in other income of Closing balance
balance income of the changes assets/income
the current the current
current period
period period
Special Fund for
Shanghai Modern
Pertinent to
Service Industry - 10,080,267.27 672,017.88 9,408,249.39
assets
Three-dimensional
Warehouse
Shanghai's second
batch special fund for
encouraging
Pertinent to
enterprises to 783,000.00 174,000.00 609,000.00
assets
purchase
international R&D
equipment in 2014
R&D and
industrialization of
key materials and Pertinent to
966,610.33 244,646.88 721,963.45
preparation assets
technologies in the
pen-making industry
Subsidies for the
Pertinent to
second batch of key 2,783,993.79 586,104.12 2,197,889.67
assets
technological
230 / 308
Annual Report 2019
transformation
projects in 2013
Subsidies for
absorption and Pertinent to
620,217.51 90,443.52 529,773.99
innovation projects in assets
2014
Service industry
Pertinent to
guidance funds in 2,123,531.21 328,891.68 1,794,639.53
assets
2014
Key technological
transformation Pertinent to
4,260,910.89 561,878.28 3,699,032.61
projects of Shanghai assets
in 2015
Inbound Marketing -
Pertinent to
Internet + product 687,029.12 107,310.24 579,718.88
assets
development project
Special fund for
Shanghai Pertinent to
1,340,000.00 580,000.00 325,087.60 1,594,912.40
informatization assets
development
Special funds for
Pertinent to
technology R&D 266,167.65 134,548.27 131,619.38
assets
projects
Special funds for
industrial
transformation and Pertinent to
1,100,000.00 120,879.10 979,120.90
upgrade assets
development of
Shanghai in 2016
High-value-added
Pertinent to
product creative 197,296.61 29,437.44 167,859.17
assets
development project
Industrial foundation
Pertinent to
consolidation project 3,770,000.00 3,770,000.00
assets
in 2016
Special funds for
development of Pertinent to
236,290.88 80,988.33 155,302.55
SMEs in Shanghai in assets
2016
Funds for
improvement of
capacities of
Pertinent to
Shanghai 1,000,000.00 1,000,000.00
assets
Engineering
Research Center in
2017
Cultural and creative Pertinent to
700,000.00 700,000.00
project in 2019 assets
231 / 308
Annual Report 2019
Subsidies for
injection molding Pertinent to
570,000.00 570,000.00
machine intelligent assets
equipment
Zhangjiang Special
Development Fund in
2017 - Achievement
Transformation of Pertinent to
1,542,320.00 709,085.34 529,461.95 1,362,696.61
“Green Design - assets
Innovative R&D” by
Marco Colorful
Painting Pen C1085
Special fund plan for
key technological
Pertinent to
renovation projects in 77,333.36 473,666.66 396,333.30
assets
Qingpu District in
2012
Construction Project
of "Marco-Color- Pertinent to
362,370.95 362,370.95
Source" Creative assets
Experience Center
Special funds for
central foreign Pertinent to
49,079.76 785,276.06 736,196.30
economic and trade assets
development
Total 30,215,315.26 3,754,690.95 4,291,731.80 1,788,404.67 31,466,679.08
Other descriptions:
"√ Applicable" "□ Not applicable"
Other changes were caused by the increase for business combinations.
50. Other non-current liabilities
"□ Applicable" "√ Not applicable"
51. Share capital
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase or decrease (+ or -) due to this change
Provident
Opening Issue Closing
Bonus funds
balance New Others Sub-total balance
shares Transferred
shares
shares
232 / 308
Annual Report 2019
Total 920,000,000.00 920,000,000.00
shares
Other descriptions:
No
52. Other equity instruments
(1) Basic information on other financial instruments such as outstanding preferred
shares and perpetual bonds at the end of the period
"□ Applicable" "√ Not applicable"
(2) Form of changes in financial instruments such as outstanding preferred shares and
perpetual bonds at the end of the period
"□ Applicable" "√ Not applicable"
Changes in other equity instruments of the current period, reasons for changes, and basis for
relevant accounting treatment:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
53. Capital reserve
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Opening Increase of the Decrease of the
Item Closing balance
balance current period current period
Capital premium
272,347,764.53 272,347,764.53
(Share premium)
Other capital
reserve
Total 272,347,764.53 272,347,764.53
Other descriptions, including descriptions on changes of the current period and reasons for
changes:
No
54. Treasury shares
"□ Applicable" "√ Not applicable"
233 / 308
Annual Report 2019
55. Other comprehensive income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in the current period
Less: Included Less: Included
in other in other
Amount
At the comprehensive comprehensive
incurred
beginning income in the income in the Less: Attributable to Attributable At the end of
before
Item of the previous previous Income the parent to minority the period
income tax
period period and period and tax company after shareholders Balance
for the
Balance transferred to transferred to expenses the tax after the tax
current
profit or loss in retained
period
the current earnings in the
period current period
I. Other
comprehensive
income not to
309,179.93 309,179.93 309,179.93
be reclassified
into profit or
loss
Including:
Change in re-
measurement
of defined
benefit plans
Other
comprehensive
income that
may not be
reclassified to
profit or loss
under equity
method
Changes in fair
value of other
equity 309,179.93 309,179.93 309,179.93
instrument
investments
Change in fair
value of
enterprise's
own credit risk
234 / 308
Annual Report 2019
II. Other
comprehensive
income to be
400,616.76 217,179.62 183,437.14 217,179.62
reclassified
into profit or
loss
Including:
Other
comprehensive
income that
may be -16,285.82 -16,285.82 -16,285.82
reclassified to
profit or loss
under equity
method
Changes in fair
value of other
debt
investments
Amount
included in
other
comprehensive
income on
reclassification
of financial
assets
Credit
impairment
provisions of
other debt
investments
Effective
portion of cash
flow hedging
profit or loss
Exchange
differences
from
416,902.58 233,465.44 183,437.14 233,465.44
translation of
financial
statements
Total other
comprehensive 709,796.69 526,359.55 183,437.14 526,359.55
income
235 / 308
Annual Report 2019
Other descriptions, including the adjustment of the effective portion of cash flow hedging profit
or loss transferred to the initial recognition amount of the hedged item:
No
56. Special reserve
"□ Applicable" "√ Not applicable"
57. Surplus reserve
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Opening balance Increase of the Decrease of the Closing balance
current period current period
Statutory surplus
344,271,419.35 95,988,980.24 440,260,399.59
reserve
Arbitrary surplus
reserve
Reserve fund
Enterprise
development
fund
Others
Total 344,271,419.35 95,988,980.24 440,260,399.59
Descriptions on surplus reserve, including descriptions on changes of the current period and
reasons for changes:
The statutory surplus reserve is accrued at 10% of the parent company’s net profits.
58. Undistributed profit
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Current period Previous period
Pre-adjustment undistributed
profits at the end of the previous 1,874,727,294.53 1,372,359,133.67
period
236 / 308
Annual Report 2019
Total adjustment amount of
undistributed profits at the
beginning of the period (“+” refers 5,543,922.00
to increase by adjustment and “-”
refers to decrease by adjustment)
Post-adjustment amount of
undistributed profits at the 1,880,271,216.53 1,372,359,133.67
beginning of the period
Add: Net profit attributable to
shareholders of the parent 1,060,083,625.03 806,847,308.41
company in the current period
Less: Statutory surplus reserve
95,988,980.24 74,479,147.55
accrued
Arbitrary surplus reserve accrued
Withdrawal of general risk
provision
Dividends on common shares
276,000,000.00 230,000,000.00
payable
Dividends on common shares
converted to stock capital
Undistributed profit at the end of
2,568,365,861.32 1,874,727,294.53
the period
Details on adjustment of undistributed profits at the beginning of the period:
1. Due to the retrospective adjustment based on the Accounting Standards for Business
Enterprises and their related new regulations, the affected undistributed profit at the beginning
of the period was RMB5,543,922.00.
2. Due to changes in accounting policies, the affected undistributed profit at the beginning of the
period was RMB0.
3. Due to correction of major accounting errors, the affected undistributed profit at the beginning
of the period was RMB0.
4. Due to changes in the scope of the consolidated financial statements caused by the business
combination under common control, the affected undistributed profit at the beginning of the
period was RMB0.
5. Due to other adjustments, the affected undistributed profit at the beginning of the period was
RMB0.
237 / 308
Annual Report 2019
59. Operating income and operating costs
(1) Operating income and operating costs
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in the current Amount accounted for in the previous
Item period period
Revenue Costs Revenue Costs
Main
11,139,921,640.93 8,229,332,367.02 8,533,924,778.69 6,330,424,573.53
operations
Other
1,179,723.51 504,901.84 1,063,818.86 22,166.63
operations
Total 11,141,101,364.44 8,229,837,268.86 8,534,988,597.55 6,330,446,740.16
Other descriptions:
Details on operating income:
Item Amount in the current period Amount in the last period
Income from main operations 11,139,921,640.93 8,533,924,778.69
Including: Sales of goods 11,128,504,198.10 8,530,618,597.18
Management fee for
4,562,765.09 2,709,394.05
franchising
Hardware and software 6,854,677.74 596,787.47
Income from other
1,179,723.51 1,063,818.86
operations
Including: Material income 996,698.40
Rental income 63,875.37 955,179.69
Others 119,149.74 108,639.17
Total 11,141,101,364.44 8,534,988,597.55
60. Taxes and surcharges
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
Consumption tax
Business tax
238 / 308
Annual Report 2019
Urban maintenance and
11,196,254.01 12,512,019.05
construction tax
Education surcharge 17,562,369.49 18,171,704.35
Resource tax
Property tax 1,348,318.75
Land use tax 683,113.09 754,343.70
Vehicle usage tax
Stamp duty 11,052,982.62 3,211,910.43
Others 152,020.10 70,701.73
Total 41,995,058.06 34,720,679.26
Other descriptions:
No
61. Selling expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in Amount accounted for in
Item
the current period the previous period
Total 980,166,101.18 789,386,543.37
Items with relatively large
amount:
Salaries and benefits 282,098,540.51 264,361,912.83
Channel construction fee 52,031,005.95 46,590,825.26
Brand promotion fee 49,109,586.72 26,183,591.17
Transportation and handling
86,718,004.33 81,667,789.42
charge
Business promotion fee 77,878,656.77 67,602,773.25
Rental fee 149,176,463.15 108,921,114.59
Others 283,153,843.75 194,058,536.85
Other descriptions:
No
62. Administrative expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
239 / 308
Annual Report 2019
Item Amount accounted for in Amount accounted for
the current period in the previous period
Total 469,262,188.13 379,618,754.18
Items with relatively large amount:
Salaries and benefits 226,532,654.57 187,276,647.20
Depreciation and amortization 57,040,455.35 46,069,652.50
Rental fee 34,022,959.81 30,456,723.78
Office expense 23,030,837.14 11,263,997.46
Others 128,635,281.26 104,551,733.24
Other descriptions:
No
63. R&D expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for
the current period in the previous period
Total 160,403,362.97 114,388,916.75
Items with relatively large amount:
Salaries and benefits 74,850,775.54 31,648,292.56
Inventory consumption 56,560,157.03 66,844,278.08
Others 28,992,430.40 15,896,346.11
Other descriptions:
No
64. Financial expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for
the current period in the previous period
Interest expense 8,386,182.80
Less: Interest income -20,872,167.57 -5,997,422.97
Exchange gains and losses 566,099.52 -2,768,222.32
Others 3,522,607.60 806,195.64
Total -8,397,277.65 -7,959,449.65
Other descriptions:
No
240 / 308
Annual Report 2019
65. Other income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in the Amount accounted for in the
current period previous period
Government grant 26,355,003.29 8,716,713.66
Accrual and deduction of
input tax
Handling charge on
withholding personnel 149,878.17
income tax
Total 26,504,881.46 8,716,713.66
Other descriptions:
Government subsidies included in other income
Amount in the Amount in the last Pertinent to
Subsidy projects
current period period assets/income
Special Fund for
Shanghai Modern
Service Industry - 672,017.88 672,017.88 Pertinent to assets
Three-dimensional
Warehouse
Shanghai's second
batch special fund
for encouraging
enterprises to 174,000.00 174,000.00 Pertinent to assets
purchase
international R&D
equipment in 2014
R&D and
industrialization of
key materials and
244,646.88 244,646.88 Pertinent to assets
preparation
technologies in the
pen-making industry
Subsidies for the
second batch of key 586,104.12 586,104.12 Pertinent to assets
technological
241 / 308
Annual Report 2019
transformation
projects in 2013
Subsidies for
absorption and
90,443.52 90,443.52 Pertinent to assets
innovation projects in
2014
Service industry
guidance funds in 328,891.68 328,891.68 Pertinent to assets
2014
Key technological
transformation
561,878.28 619,089.11 Pertinent to assets
projects of Shanghai
in 2015
Inbound Marketing -
Internet + product 107,310.24 107,310.24 Pertinent to assets
development project
Special fund for
Shanghai
325,087.60 Pertinent to assets
informatization
development
Special funds for
technology R&D 134,548.27 134,548.32 Pertinent to assets
projects
Special funds for
industrial
transformation and
120,879.10 Pertinent to assets
upgrade
development of
Shanghai in 2016
High-value-added
product creative 29,437.44 272,402.74 Pertinent to assets
development project
Special funds for
development of
80,988.33 228,817.89 Pertinent to assets
SMEs in Shanghai in
2016
Zhangjiang Special
709,085.34 Pertinent to assets
Development Fund
242 / 308
Annual Report 2019
in 2017 -
Achievement
Transformation of
“Green Design -
Innovative R&D” by
Marco Colorful
Painting Pen C1085
Special fund plan for
key technological
renovation projects 77,333.36 Pertinent to assets
in Qingpu District in
2012:
Special funds for
central foreign
49,079.76 Pertinent to assets
economic and trade
development
Zhangjiang Special
Development Fund
in 2017 -
Achievement
Transformation of 1,217,680.00 Pertinent to income
“Green Design -
Innovative R&D” by
Marco Colorful
Painting Pen C1085
Zero Balance
Special Account of
Shanghai Qingpu
District Finance
Bureau - Enterprise
Support Fund of 10,100.00 Pertinent to income
Shanghai Municipal
Administration for
Market Regulation
Qingpu District
Branch
Construction Project
12,629.05 Pertinent to income
of "Marco-Color-
243 / 308
Annual Report 2019
Source" Creative
Experience Center
Subsidies for coal-
36,864.00 Pertinent to income
fired boilers
Government
742,900.00 Pertinent to income
subsidies
Industry
development 153,400.00 Pertinent to income
guidance funds
Post stability
428,526.10 218,788.32 Pertinent to income
subsidies
Support funds for
export credit 4,451.92 202,358.65 Pertinent to income
insurance premium
Disability benefit
68,181.83 Pertinent to income
awards
IP related rewards 489,463.00 203,334.50 Pertinent to income
Cultural festival
4,000.00 Pertinent to income
bonuses
Special development
3,440,000.00 Pertinent to income
funds for SMEs
Training fee
1,795,663.80 914,733.81 Pertinent to income
subsidies
Funds for investment
promotion in 69,226.00 Pertinent to income
Fengxian District
Rewards from
Hangzhou Qiantang
210,000.00 Pertinent to income
Smart City Industrial
Construction Center
Support funds for
1,780,000.00 Pertinent to income
physical industries
Appropriation of
bonuses for
5,000.00 Pertinent to income
recognition of
enterprises
Unemployment
418,811.79 Pertinent to income
insurance from Yiwu
244 / 308
Annual Report 2019
Employment
Management &
Service Bureau
Government
subsidies for
15,600.00 Pertinent to income
automobile
scrapping
Special funds for
development of 14,600,000.00 Pertinent to income
enterprises
Amount returned by
financial department 280,000.00 Pertinent to income
in 2018
Total 26,355,003.29 8,716,713.66
66. Investment income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in Amount accounted for in
Item
the current period the previous period
Long-term equity investment
income accounted for under the -576,595.97 -393,609.74
equity method
Investment income from disposal of
long-term equity investment
Investment income from financial
asset designated as at fair value
through profit or loss during the
holding period
Investment income from disposal of
financial asset designated as at fair
value through profit or loss
Investment income from held-to-
maturity investments during the
holding period
Investment income from disposal of
held-to-maturity investments
245 / 308
Annual Report 2019
Investment income from available-
for-sale financial assets during the
holding period
Investment income from disposal of
available-for-sale financial assets
Investment income from held-for-
trading financial assets during the
holding period
Dividend income from other equity
instrument investments during the
holding period
Interest income from debt
investment during the holding
period
Interest income from other debt
investments during the holding
period
Investment income from disposal of 24,571,581.29
held-for-trading financial assets
Investment income from disposal of
other equity instrument investments
Investment income from disposal of
debt investment
Investment income from disposal of
other debt investments
Income from bank wealth 35,517,479.65
management products
Total 23,994,985.32 35,123,869.91
Other descriptions:
No
67. Net gain on exposure hedging
"□ Applicable" "√ Not applicable"
68. Gain on change in fair value
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
246 / 308
Annual Report 2019
Sources of income from changes Amount accounted for in Amount accounted for in
in fair value the current period the previous period
Held-for-trading financial assets 4,613,287.24
Including: Income from changes
in fair value of derivative financial
instruments
Held-for-trading financial
liabilities
Investment real estate measured
at fair value
Total 4,613,287.24
Other descriptions:
No
69. Credit impairment losses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in Amount accounted for in
Item
the current period the previous period
Bad debt losses of accounts 14,977,985.47
receivable
Bad debt losses of other 13,028,024.41
receivables
Impairment losses of debt
investment
Impairment losses of other debt
investments
Bad debt losses of long-term
receivables
Total 28,006,009.88
Other descriptions:
No
70. Asset impairment losses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
247 / 308
Annual Report 2019
Amount accounted for Amount accounted for in the
Item
in the current period previous period
1. Bad debt losses -4,070,164.66
2. Inventory devaluation losses 17,712,080.66 7,482,750.36
3. Impairment losses of available-
for-sale financial assets
4. Impairment losses of held-to-
maturity investment
5. Impairment losses of long-term
equity investment
6. Impairment losses on
investment real estate
7. Impairment losses of fixed
assets
8. Impairment losses of
engineering materials
9. Impairment losses of
construction in progress
10. Impairment losses of
productive biological assets
11. Impairment losses of oil and
gas assets
12. Impairment losses of
intangible assets
13. Impairment losses of goodwill 131,001.23
14. Others
Total 17,843,081.89 3,412,585.70
Other descriptions:
No
71. Gains from asset disposal
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in the Amount accounted for in the
current period previous period
Gaines or losses from 6,081,606.95 -69,195.83
disposal of fixed assets
248 / 308
Annual Report 2019
Total 6,081,606.95 -69,195.83
Other descriptions:
No
72. Non-operating profits
Non-operating profits
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount included in
Amount accounted Amount accounted
the current non-
Item for in the current for in the previous
recurring gains and
period period
losses
Total gains from
disposal of non-
current assets
Including: Gains
from disposal of
fixed assets
Gains from
disposal of
intangible assets
Gains from
restructuring of
debts
Gains from
exchange of non-
currency assets
Acceptance of
donations
Government grant 16,242,800.00 33,406,000.00 16,242,800.00
Brand maintenance 7,843,179.50
Liquidated 922,677.94
damages and fine 922,677.94 2,814,531.50
income
Others 12,193,177.10 1,945,301.19 12,193,177.10
Total 29,358,655.04 46,009,012.19 29,358,655.04
249 / 308
Annual Report 2019
Government subsidies included in current profit and loss
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted Amount accounted
Pertinent to
Subsidy projects for in the current for in the previous
assets/income
period period
Financial support 16,242,800.00 33,406,000.00 Pertinent to income
Total 16,242,800.00 33,406,000.00
Other descriptions:
"□ Applicable" "√ Not applicable"
73. Non-operating expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount included in
Amount accounted for Amount accounted for the current non-
Item
in the current period in the previous period recurring gains and
losses
Total losses from 3,153,550.20 7,769,418.99 3,153,550.20
disposal of non-
current assets
Including: Losses
from disposal of
fixed assets
Losses from
disposal of
intangible assets
Losses from
restructuring of
debts
Losses from
exchange of non-
currency assets
Offering of
4,456,387.80 5,211,500.00 4,456,387.80
donations
Abnormal loss 11,579.27 11,579.27
Fine late payment 19,532.73 113,965.06 19,532.73
250 / 308
Annual Report 2019
Compensation 657,935.89
657,935.89 831,477.90
expenses
Inventory losses 25,692.24 13,243.48 25,692.24
Others 10,534,564.93 6,599,784.52 10,534,564.93
Total 18,859,243.06 20,539,389.95 18,859,243.06
Other descriptions:
No
74. Income tax expenses
(1) Table of income tax expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in Amount accounted for in
Item
the current period the previous period
Current income tax expenses 229,869,239.88 159,360,651.89
Deferred income tax expenses -12,266,339.47 -6,982,228.14
Total 217,602,900.41 152,378,423.75
(2) Adjustment process of accounting profits and income tax expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in the current period
Total profits 1,293,679,744.07
Income tax expenses calculated at
194,051,961.61
statutory/applicable tax rate
Effect of applying different tax rates to
18,551,460.39
subsidiaries
Effect of adjusting income taxes of the
-1,593,706.87
previous periods
Effect of non-taxable income -28,090,838.02
Effect of non-deductible costs, expenses
26,010,897.30
and losses
Effect of deductible losses of deferred
income tax assets not recognized in the -18,128,238.44
previous period
251 / 308
Annual Report 2019
Effect of deductible temporary differences
or deductible losses of deferred income tax 26,801,364.44
assets not recognized in the current period
Income tax expenses 217,602,900.41
Other descriptions:
"□ Applicable" "√ Not applicable"
75. Other comprehensive income
"□ Applicable" "√ Not applicable"
76. Items of the cash flow statement
(1) Other cash received from operating activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for in
the current period the previous period
Recovery of current amount and 58,188,219.81
212,985,779.50
advances
Special allowances and 41,020,341.28
43,659,627.09
subsidies
Rental income
Interest income 20,872,167.57 5,997,422.97
Non-operating profits 1,190,996.41 2,516,883.71
Total 278,708,570.57 107,722,867.77
Descriptions on other cash received from operating activities:
No
(2) Cash paid for other operating activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for in
the current period the previous period
Inter-company business 453,378,164.39 340,401,634.22
Sales expenses 670,248,889.99 452,856,547.19
Administration expenses 191,012,799.95 126,951,476.82
Financial expenses 3,522,607.60 1,351,716.08
252 / 308
Annual Report 2019
Non-operating expenses 5,881,790.24 6,364,330.49
R&D expenses 26,898,793.51 14,183,851.22
Total 1,350,943,045.68 942,109,556.02
Descriptions on cash paid for other operating activities:
No
(3) Other cash received relating to investing activities
"□ Applicable" "√ Not applicable"
(4) Other cash paid relating to investing activities
"□ Applicable" "√ Not applicable"
(5) Other cash received from financing-related activities
"□ Applicable" "√ Not applicable"
(6) Other cash paid for financing-related activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for in
the current period the previous period
Cash paid for financing lease 8,687,534.78
Total 8,687,534.78
Descriptions on other cash paid for financing-related activities:
No
77. Supplementary information for the cash flow statement
(1) Supplementary information for the cash flow statement
"√ Applicable" "□ Not applicable"
253 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Amount in the current
Supplementary information Amount in the last period
period
1. Reconciliation of net profit to
cash flow from operating
activities:
Net profit 1,076,076,843.66 807,836,414.01
Add: Impairment provisions of
28,006,009.88 3,412,585.70
assets
Depreciation of fixed assets, oil
and gas assets, and productive 17,843,081.89
biological assets
Amortization of right-of-use
160,499,582.34 137,811,934.54
assets
Amortization of intangible assets 12,244,846.41 9,858,077.23
Amortization of long-term prepaid
58,322,900.97 50,404,368.15
expenses
Losses from disposal of fixed
assets, intangible assets and
-6,081,606.95 69,195.83
other long-term assets (“-” refers
to gains)
Losses from retirement of fixed
3,153,550.20 7,769,418.99
assets (“-” refers to gains)
Losses from changes in fair value
-4,613,287.24
(“-” refers to gains)
Financial expenses (“-” refers to
15,729,788.85 -2,580,870.25
income)
Investment losses (“-” refers to
-23,994,985.32 -35,123,869.91
gains)
Decrease in deferred income tax
-11,098,014.61 -6,866,481.94
assets (“-” refers to increase)
Increase in deferred income tax
-1,168,324.86 -115,746.20
liabilities (“-” refers to decrease)
Decrease in inventories (“-” refers
-168,780,666.90 -178,327,653.13
to increase)
Decrease in operating receivables
-393,772,873.21 -667,687,434.76
(“-” refers to increase)
254 / 308
Annual Report 2019
Increase in operating payables
319,574,538.57 701,480,627.25
(“-” refers to decrease)
Others
Net cash flow generated from
1,081,941,383.68 827,940,565.51
operating activities
2. Major investing and
financing activities not
involving cash payment and
receipts:
Debts converted to capital
Convertible company bonds due
within one year
Fixed assets acquired under
financing leases
3. Net changes in cash and
cash equivalents:
Closing balance of cash 1,377,446,435.89 741,501,446.10
Less: Opening balance of cash 741,501,446.10 432,046,118.69
Add: Closing balance of cash
equivalents
Less: Opening balance of cash
equivalents
Net increase in cash and cash
635,944,989.79 309,455,327.41
equivalents
(2) Net cash amount paid for the acquisition of subsidiaries in the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount
Cash or cash equivalents paid for the business combination 170,005,997.67
of the current period in the current period
Including: Axus Stationery (Shanghai) Company Ltd. 170,005,997.67
Less: Cash and cash equivalents held by subsidiaries on 59,357,105.23
the acquisition date
Including: Axus Stationery (Shanghai) Company Ltd. 59,357,105.23
255 / 308
Annual Report 2019
Add: Cash or cash equivalents paid for the business
combination of the prior periods in the current period
Net cash paid for acquiring subsidiaries 110,648,892.44
Other descriptions:
No
(3) Net cash amount received from the disposal of subsidiaries in the current period
"□ Applicable" "√ Not applicable"
(4) Composition of cash and cash equivalents
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
I. Cash 1,377,446,435.89 741,501,446.10
Including: Cash on hand 503,222.44 816,463.47
Bank deposits readily available
1,372,791,232.44 736,400,367.62
for payment
Other Cash and equivalents
readily available for payment at 4,151,981.01 4,284,615.01
any time
Due from central bank available
for payment
Due from placements with banks
and other financial institutions
Call loan to banks and other
financial institutions
II. Cash equivalents
Including: Bond investments due
within three months
III. Closing balance of cash and
1,377,446,435.89 741,501,446.10
cash equivalents
Including: Cash and cash
equivalents of which the use is
restricted for the parent company
or subsidiaries within the group
256 / 308
Annual Report 2019
Other descriptions:
"□ Applicable" "√ Not applicable"
78. Notes to items of the statement of changes in owners’ equity
Description on “other” item name and adjustment amount adjusted for balance at the end of
the previous year:
"□ Applicable" "√ Not applicable"
79. Assets with restricted ownership or use rights
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Carrying value at the end of Reason for restriction
the period
Cash and equivalents Letter of credit deposit
and performance bond
558,154,258.46
and fixed deposit over
three months, etc.
Bills receivable
Inventories
Fixed assets 93,297,472.82 Mortgaged borrowings
Intangible assets
Receivables financing 5,287,720.75 Factoring of accounts
receivable
Total 656,739,452.03 /
Other descriptions:
For details of accounts receivable factoring and fixed asset mortgage borrowing, please refer to
Note XIV. Commitments and Contingencies.
80. Foreign currency monetary items
(1) Foreign currency monetary items
"√ Applicable" "□ Not applicable"
Unit: RMB Yuan
RMB translated at
Foreign currency
Translation foreign the end of the
Item balance at the end
exchange rate period
of the period
Balance
257 / 308
Annual Report 2019
Cash and equivalents - - 122,488,302.78
Including: USD 17,048,608.25 6.9762 118,934,500.87
EURO 90.76 7.8155 709.33
JPY 1,121.00 0.0641 71.84
HKD 22,127.12 0.8958 19,821.03
GBP 1,175.00 9.1501 10,751.37
VND 11,736,445,624.57 0.0003 3,522,448.34
Accounts receivable - - 24,143,538.52
Including: USD 453,301.38 6.9762 3,162,321.09
VND 69,900,471,814.68 0.0003 20,979,162.58
HKD 2,293.92 0.8958 2,054.85
Prepayments - - 462,263.86
Including: VND 1,540,216,961.20 0.0003 462,263.86
Accounts payable - - 76,022,447.65
Including: USD 375,614.18 6.9762 2,620,359.64
VND 244,279,581,853.16 0.0003 73,315,400.18
HKD 96,773.57 0.8958 86,687.83
Accounts received in - - 5,344,175.70
advance
Including: USD 746,196.83 6.9762 5,205,618.33
VND 461,659,311.36 0.0003 138,557.37
Other receivables - - 497,820.40
Including: VND 1,620,977,408.45 0.0003 486,502.42
HKD 12,634.78 0.8958 11,317.98
Other payables - - 1,091,367.20
Including: VND 3,502,005,373.20 0.0003 1,051,053.56
HKD 45,003.95 0.8958 40,313.64
Long-term borrowings - -
Including: USD
Short-term borrowings - - 2,979,528.81
Including: USD 427,099.11 6.9762 2,979,528.81
Other descriptions:
No
258 / 308
Annual Report 2019
(2) Descriptions on overseas operating entities, including: for important overseas
business entities, their main overseas business locations, bookkeeping currency and
selection basis shall be disclosed; in case of any change in the bookkeeping currency,
the reasons for such change shall be also disclosed
"□ Applicable" "√ Not applicable"
81. Hedging
"□ Applicable" "√ Not applicable"
82. Government grant
(1) Basic information on government grant
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount included in
Type Amount Presentation item current profit and
loss
Special Fund for Shanghai
Modern Service Industry -
13,131,632.13 Deferred income 672,017.88
Three-dimensional
Warehouse
Shanghai's second batch
special fund for
encouraging enterprises to 1,740,000.00 Deferred income 174,000.00
purchase international
R&D equipment in 2014
R&D and industrialization
of key materials and
2,446,471.05 Deferred income 244,646.88
preparation technologies
in the pen-making industry
Subsidies for the second
batch of key technological
5,328,614.61 Deferred income 586,104.12
transformation projects in
2013
Subsidies for absorption
and innovation projects in 951,743.46 Deferred income 90,443.52
2014
Service industry guidance 3,450,000.00 Deferred income 328,891.68
259 / 308
Annual Report 2019
funds in 2014
Key technological
transformation projects of 4,880,000.00 Deferred income 561,878.28
Shanghai in 2015
Inbound Marketing -
Internet + product 1,000,000.00 Deferred income 107,310.24
development project
Special fund for Shanghai
325,087.60
informatization 1,340,000.00 Deferred income
development
Special funds for
786,219.51 Deferred income 134,548.27
technology R&D projects
Special funds for industrial
transformation and
1,100,000.00 Deferred income 120,879.10
upgrade development of
Shanghai in 2016
High-value-added product
creative development 1,300,000.00 Deferred income 29,437.44
project
Industrial foundation
consolidation project in 3,770,000.00 Deferred income
2016
Special funds for
development of SMEs in 465,108.77 Deferred income 80,988.33
Shanghai in 2016
Funds for improvement of
capacities of Shanghai
1,000,000.00 Deferred income
Engineering Research
Center in 2017
Cultural and creative
700,000.00 Deferred income
project in 2019
Subsidies for injection
molding machine 570,000.00 Deferred income
intelligent equipment
Zhangjiang Special
Development Fund in
4,600,000.00 Deferred income 709,085.34
2017 - Achievement
Transformation of “Green
260 / 308
Annual Report 2019
Design - Innovative R&D”
by Marco Colorful Painting
Pen C1085
Special fund plan for key
technological renovation
1,160,000.00 Deferred income 77,333.36
projects in Qingpu District
in 2012:
Special funds for central
foreign economic and 1,000,000.00 Deferred income 49,079.76
trade development
Construction Project of
"Marco-Color-Source"
2,500,000.00 Deferred income
Creative Experience
Center
Financial support 16,242,800.00 Non-operating profits 16,242,800.00
Special development
Other income
funds for SMEs
Support funds for export
4,451.92 Other income 4,451.92
credit insurance premium
Training fee subsidies 1,795,663.80 Other income 1,795,663.80
Post stability subsidies 428,526.10 Other income 428,526.10
Knowledge products and
489,463.00 Other income 489,463.00
patent subsidies
Funds for investment
promotion in Fengxian Other income
District
Rewards from Hangzhou
Qiantang Smart City
Other income
Industrial Construction
Center
Zhangjiang Special
Development Fund in
2017 - Achievement
Transformation of “Green 1,217,680.00 Other income 1,217,680.00
Design - Innovative R&D”
by Marco Colorful Painting
Pen C1085
Zero Balance Special 10,100.00 Other income 10,100.00
261 / 308
Annual Report 2019
Account of Shanghai
Qingpu District Finance
Bureau - Enterprise
Support Fund of Shanghai
Municipal Administration
for Market Regulation
Qingpu District Branch
Construction Project of
"Marco-Color-Source"
12,629.05 Other income 12,629.05
Creative Experience
Center
Subsidies for coal-fired
36,864.00 Other income 36,864.00
boilers
Government subsidies 742,900.00 Other income 742,900.00
Industry development
153,400.00 Other income 153,400.00
guidance funds
Disability benefit awards 68,181.83 Other income 68,181.83
Cultural festival bonuses 4,000.00 Other income 4,000.00
Support funds for physical
1,780,000.00 Other income 1,780,000.00
industries
Appropriation of bonuses
for recognition of 5,000.00 Other income 5,000.00
enterprises
Unemployment insurance
from Yiwu Employment
418,811.79 Other income 418,811.79
Management & Service
Bureau
Government subsidies for
15,600.00 Other income 15,600.00
automobile scrapping
Special funds for
development of 14,600,000.00 Other income 14,600,000.00
enterprises
Amount returned by
financial department in 280,000.00 Other income 280,000.00
2018
262 / 308
Annual Report 2019
(2) Return of government grant
"□ Applicable" "√ Not applicable"
Other descriptions:
No
83. Others
"□ Applicable" "√ Not applicable"
VIII. Change in consolidation scope
1. Business combinations not under common control
"√ Applicable" "□ Not applicable"
(1) Business combinations not under common control occurring during the current
period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Net profit of
Basis for Income of
Equity acquiree from
Equity Equity determining acquiree from the
Name of Equity acquisition acquisition Date of the acquisition
acquisition acquisition the acquisition date
acquiree cost percentage acquisition date to the
time type acquisition to the end of the
(%) end of the
date period
period
Axus 30 April 177,038,110.00 56.00 Acquisition 2019-4-30 Acquisition 364,743,402.42 -9,934,923.15
Stationery 2019 agreement
(Shanghai)
Company
Ltd.
Other descriptions:
No
(2) Business combination cost and goodwill
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Combination cost XX Company
--Cash 170,005,997.67
--Fair value of non-cash assets
--Fair value of the debts issued or assumed 13,656,702.33
--Fair value of the equity securities issued
--Fair value of contingent consideration
263 / 308
Annual Report 2019
--Acquisition-date fair value of the equity held
before the acquisition date
--Others -6,624,590.00
Total combination cost 177,038,110.00
Less: Fair value share of the identifiable net
146,862,572.81
assets acquired
Goodwill/Amount of the combination cost
below fair value share of the identifiable net 30,175,537.19
assets acquired
Description on determination method for fair value of combination cost, contingent consideration
and its change:
No
Main reason for the formation of large-amount goodwill:
No
Other descriptions:
According to the equity transfer agreement signed between the Company and the original
shareholder and ultimate controller of Axus Stationery, the consideration for 56% equity of Axus
Stationery was RMB177,038,110.00, of which RMB13,656,702.33 was not paid; the amount in
arrear of Axus Stationery’s original shareholder was RMB6,624,590.00, of which
RMB170,005,997.67 has been paid in cash.
(3) Identifiable assets and liabilities of acquiree on the acquisition date
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Axus Stationery (Shanghai) Company Ltd.
Fair value on the Carrying value on the acquisition
acquisition date date
Assets: 815,983,742.56 617,929,441.79
Cash and equivalents 63,033,979.82 63,033,979.82
Receivables 60,954,759.68 60,954,759.68
Inventories 186,767,547.77 174,919,855.43
Fixed assets 348,987,524.92 271,750,108.32
Intangible assets 147,781,660.13 38,812,468.30
264 / 308
Annual Report 2019
Construction in 2,025,571.50 2,025,571.50
progress
Long-term prepaid 258,780.18 258,780.18
expenses
Other current assets 6,078,498.05 6,078,498.05
Other non-current 95,420.51 95,420.51
assets
Liabilities: 553,729,148.25 517,829,203.29
Borrowings 293,443,925.46 293,443,925.46
Payables 216,213,376.08 216,213,376.08
Deferred income tax
35,899,944.96
liabilities
Long-term payable 6,383,497.08 6,383,497.08
Deferred income 1,788,404.67 1,788,404.67
Net assets 262,254,594.31 100,100,238.50
Less: Minority equity 115,392,021.50 44,044,104.94
Net assets acquired 146,862,572.81 56,056,133.56
Determination method for fair value of identifiable assets and liabilities:
No
Contingent liabilities of acquiree assumed in the business combination:
No
Other descriptions:
No
(4) Gains or losses arising from the re-measurement of the equity held before the
acquisition date at fair value
Whether there is a transaction where a business combination is achieved stepwise through
multiple transactions and the control is obtained within the Reporting Period
"□ Applicable" "√ Not applicable"
(5) Descriptions on the situation that it is unable to reasonably determine the
combination consideration or the fair value of identifiable assets and liabilities of the
acquiree at the combination date or the end of the combination period
"□ Applicable" "√ Not applicable"
265 / 308
Annual Report 2019
(6) Other explanation
"□ Applicable" "√ Not applicable"
2. Enterprise merger under the same control
"□ Applicable" "√ Not applicable"
3. Reverse acquisition
"□ Applicable" "√ Not applicable"
266 / 308
Annual Report 2019
4. Disposal of subsidiaries
Whether there is a loss of control upon a single disposal of investment to subsidiaries
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
Whether there is a loss of control in the current period upon a stepwise disposal of investment to subsidiaries through multiple transactions
"□ Applicable" "√ Not applicable"
5. Changes in scope of consolidated financial statements for other reasons
Descriptions on changes in the scope of consolidated financial statements for other reasons (e.g, establishing subsidiaries, clearing subsidiaries,
etc.) and their related circumstances:
"√ Applicable" "□ Not applicable"
(1) This year the Company deregisters two subsidiaries M&G Life Jiangxi Enterprise Management Co., Ltd. and Beijing Asia Business Online
Information Technology Co., Ltd.
(2) This year the subsidiary Shenyang M&G Colipu Office Supplies Co., Ltd. was incorporated into the scope of consolidated financial statements
through establishment. The registered capital is RMB500,000, and the investment ratio is 100%.
6. Others
"□ Applicable" "√ Not applicable"
267 / 308
Annual Report 2019
IX. Equity in Other Entities
1. Equity in subsidiaries
(1) Composition of the corporate group
"√ Applicable" "□ Not applicable"
Nature of Shareholding ratio (%)
Subsidiary name Main place Registered Acquisition
the
Name of business address Direct Indirect way
business
Shanghai M&G Colipu Retail, Establishment
Office Supplies Co., Shanghai Shanghai wholesale, 70.00
Ltd. etc.
Shanghai M&G Establishment
Production,
Stationery & Gift Co.,
Shanghai Shanghai sale and 100.00
Ltd.(上海晨光文具礼品
so forth
有限公司)
Shanghai M&G Establishment
Retail,
Stationery Sales Co.,
Shanghai Shanghai wholesale, 100.00
Ltd.(上海晨光文具销售
etc.
有限公司)
Guangzhou M&G Establishment
Retail,
Stationery&Gifts Sales
Guangzhou Guangzhou wholesale, 100.00
Co., Ltd.(广州晨光文
etc.
具礼品销售有限公司)
Yiwu Chenxing Establishment
Retail,
Stationery Co., Ltd.(义
Yiwu Yiwu wholesale, 100.00
乌市晨兴文具用品有限
etc.
公司)
M&G Life Enterprise Establishment
Retail,
Management Co.,
Shanghai Shanghai wholesale, 60.00
Ltd.(晨光生活馆企业管
etc.
理有限公司)
M&G Life Enterprise Establishment
Management Retail,
(Shanghai) Co., Ltd. Shanghai Shanghai wholesale, 100.00
(晨光生活馆企业管理 etc.
(上海)有限公司)
268 / 308
Annual Report 2019
Shanghai M&G Jiamei Establishment
Production,
Stationery Co., Ltd.(上
Shanghai Shanghai sale and 100.00
海晨光佳美文具有限公
so forth
司)
Shanghai M&G Establishment
E-
Information
commerce
Technology Co., Shanghai Shanghai 55.00
business,
Ltd.(上海晨光信息科技
etc.
有限公司)
Jiangsu M&G Life Establishment
Enterprise Retail,
Management Co., Nanjing Nanjing wholesale, 70.00
Ltd.(江苏晨光生活馆企 etc.
业管理有限公司)
Zhejiang New M&G Establishment
Life Enterprise Retail,
Management Co., Hangzhou Hangzhou wholesale, 100.00
Ltd.(浙江新晨光生活馆 etc.
企业管理有限公司)
Jiumu M&G Store Establishment
Enterprise Retail,
Management Co., Shanghai Shanghai wholesale, 100.00
Ltd.(九木杂物社企业管 etc.
理有限公司)
Shanghai M&G Acquired by
Zhenmei Stationery business
Retail,
Co., Ltd.(上海晨光珍 combination
Shanghai Shanghai wholesale, 100.00
美文具有限公司) under
etc.
common
control
Harbin M&G Sanmei Acquired by
Stationery Co., Ltd.(哈 business
Retail,
尔滨晨光三美文具有限 combination
Harbin Harbin wholesale, 100.00
公司) under
etc.
common
control
269 / 308
Annual Report 2019
Zhengzhou M&G Acquired by
Stationery&Gifts Co., business
Retail,
Ltd.(郑州晨光文具礼品 combination
Zhengzhou Zhengzhou wholesale, 100.00
有限责任公司) under
etc.
common
control
Shenzhen Erya Acquired by
Creative and Cultural business
Development Co., Design and combination
Shenzhen Shenzhen 51.00
Ltd.(深圳尔雅文化创意 so forth under
发展有限公司) common
control
Shanghai M&G Office Retail, Establishment
Supplies Co., Ltd. Shanghai Shanghai wholesale, 100.00
etc.
Office Depot Network Acquired by
Technology Co., Ltd. business
Retail,
combination
Beijing Beijing wholesale, 100.00
under
etc.
common
control
Lianyungang Colipu Establishment
Retail,
Office Supplies Co.,
Lianyungang Lianyungang wholesale, 100.00
Ltd.(连云港市科力普办
etc.
公用品有限公司)
Shenyang M&G Establishment
Colipu Office Supplies Retail,
Co., Ltd.(沈阳晨光科 Shenyang Shenyang wholesale, 100.00
力普办公用品有限公 etc.
司)
Hangzhou Sanmei Establishment
Retail,
M&G Stationery Co.,
Hangzhou Hangzhou wholesale, 100.00
Ltd.(杭州三美晨光文具
etc.
有限公司)
Luoyang M&G Establishment
Retail,
Stationery Sales Co.,
Luoyang Luoyang wholesale, 100.00
Ltd.(洛阳晨光文具销售
etc.
有限公司)
270 / 308
Annual Report 2019
Axus Stationery Acquired by
(Shanghai) Company business
Production,
Ltd. combination
Shanghai Shanghai sale and 56.00
not under
so forth
common
control
Jiangsu Marco Pen Acquired by
Co., Ltd.(江苏马可笔 business
Production,
业有限公司) combination
Jiangsu Jiangsu sale and 100.00
not under
so forth
common
control
Changchun Macro Acquired by
Stationery Co., Ltd. business
Production,
(长春马可文教用品有 combination
Jilin Jilin sale and 100.00
限公司) not under
so forth
common
control
Yili Senlai Wood Co., Acquired by
Ltd.(伊犁森徕木业有限 business
Production,
公司) combination
Xinjiang Xinjiang sale and 100.00
not under
so forth
common
control
Axus Stationery (Hong Acquired by
Kong) Company Ltd. business
Retail,
combination
Hong Kong Hong Kong wholesale, 100.00
not under
etc.
common
control
International Acquired by
stationery company business
Production,
combination
Vietnam Vietnam sale and 100.00
not under
so forth
common
control
271 / 308
Annual Report 2019
Descriptions on the situation that the shareholding ratio in the subsidiary is different from the
share of the voting rights:
No
Basis for holding half or less of the voting rights of the investee but still controlling the investee
and holding more than half of the voting rights but not controlling the investee:
No
Basis for controlling important structured entities included in the scope of consolidated financial
statements:
No
Basis for determining whether the Company is an agent or a principal:
No
Other descriptions:
No
(2) Important non-wholly owned subsidiaries
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Dividends
Profits and losses
declared and Minority equity
Minority attributable to
Name of distributed to balance at the
shareholding minority
subsidiaries minority end of the
ratio shareholders in
shareholders in period
the current period
the current period
Shanghai M&G
Colipu Office 30.00% 22,741,063.01 123,473,104.09
Supplies Co., Ltd.
Descriptions on the situation that the shareholding ratio of minority shareholders in the subsidiary
is different from that of the voting rights:
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
272 / 308
Annual Report 2019
(3) Major financial information of important non-wholly owned subsidiaries
"√ Applicable" "□ Not applicable"
Unit: 0’000 Currency: RMB
Closing balance Opening balance
Name of Non-
Current Total Current Non-current Total Current Non-current Total Current Non-current Total
subsidiaries current
assets assets liabilities liabilities liabilities assets assets assets liabilities liabilities liabilities
assets
Shanghai M&G
Colipu Office 163,996.71 3,579.48 167,576.19 122,907.02 3,511.47 126,418.49 112,789.59 3,253.11 116,042.70 93,003.83 3,461.53 96,465.36
Supplies Co., Ltd.
Amount accounted for in the current period Amount accounted for in the previous period
Cash flow Cash flow
Name of Total Total
Operating from Operating from
subsidiaries Net profit comprehensive Net profit comprehensive
revenue operating revenue operating
income income
activities activities
Shanghai M&G
Colipu Office
365,806.17 7,580.35 14,880.10 258,604.90 3,213.52 14,280.02
Supplies Co.,
Ltd.
Other descriptions:
No
(4) Significant restrictions on the use of corporate group assets and the liquidation of
corporate 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 descriptions:
"□ Applicable" "√ Not applicable"
2. Transactions which result in a change in the share of owners’ equity in the subsidiary
but the Company still controls the subsidiary
"□ Applicable" "√ Not applicable"
273 / 308
Annual Report 2019
3. Equity in joint ventures or associates
"√ Applicable" "□ Not applicable"
(1) Important joint ventures or associates
"□ Applicable" "√ Not applicable"
(2) Major financial information of important joint ventures
"□ Applicable" "√ Not applicable"
(3) Major financial information of important associates
"□ Applicable" "√ Not applicable"
(4) Summary financial information of unimportant joint ventures and associates
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Balance at the end of the Balance at the beginning of
period/Amount accounted for the period/Amount accounted
in the current period for in the previous period
Joint ventures:
Total carrying value of
investments
Total of the following items
calculated according to the
shareholding ratio
--Net profits
--Other comprehensive
income
--Total comprehensive
income
Associates:
Total carrying value of
35,582,783.47 30,175,665.26
investments
274 / 308
Annual Report 2019
Total of the following items
calculated according to the
shareholding ratio
--Net profits -576,595.97 -393,609.74
--Other comprehensive
-16,285.82
income
--Total comprehensive -592,881.79 -393,609.74
income
Other explanation
No
(5) Descriptions on significant limitation of the ability of a joint venture or associate to
transfer funds to the Company
"□ Applicable" "√ Not applicable"
(6) Excess losses incurred by a joint venture or associate
"□ Applicable" "√ Not applicable"
(7) Unrecognized commitments related to joint venture investment
"□ Applicable" "√ Not applicable"
(8) Contingent liabilities related to joint venture or associate investment
"□ Applicable" "√ Not applicable"
4. Important joint operations
"□ Applicable" "√ Not applicable"
5. Equity in structured entities not included in the consolidated financial statements
Descriptions on structured entities not included in the consolidated financial statements:
"□ Applicable" "√ Not applicable"
6. Others
"□ Applicable" "√ Not applicable"
275 / 308
Annual Report 2019
X. Risks associated with financial instruments
"√ Applicable" "□ Not applicable"
The Company faces various financial risks in its business operations: credit risk, market risk and
liquidity risk. The Company's Board of Directors is fully responsible for the determination of risk
management objectives and policies and bears the ultimate responsibility for risk management
objectives and policies. The Company's overall objective of risk management is to develop a risk
management policy that minimizes risks without unduly affecting the Company's
competitiveness and resilience.
(I) Credit risk
Credit risk is the risk that a party to a financial instrument fails to perform its obligations, causing
financial losses to the other party. The Company mainly faces customer credit risk caused by
credit sales. Before signing a new contract, the Company assesses the credit risk of new
customers. The Company has set a credit limit for each customer, which is the maximum amount
that does not require additional approval. The Company ensures that the overall credit risk of
the Company is within a controllable range through the annual monitoring of existing customer
credit ratings and the monthly review of aging analysis of accounts receivable.
(II) Market risk
Market risk of financial instruments is the risk that the fair value or future cash flows of financial
instruments will fluctuate due to changes in market prices, including exchange rate risk and other
price risks.
Exchange rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate due to changes in foreign exchange rates. The Company matches foreign currency
income with foreign currency expenditure as far as possible to reduce exchange rate risk. In
addition, the Company may also sign forward foreign exchange contracts or currency swap
contracts to avoid exchange rate risk. During the current period and the previous period, the
Company did not sign any forward foreign exchange contracts or currency swap contracts.
Foreign exchange risk faced by the Company mainly comes from financial assets and liabilities
denominated in USD, and the amounts of foreign currency financial assets and liabilities
converted into RMB are shown below:
Closing balance Opening balance
Item Other foreign Other foreign
USD Total USD Total
currencies currencies
Cash and
118,934,500.87 3,553,801.91 122,488,302.78 51,086,558.15 79,156.03 51,165,714.18
equivalents
Accounts
3,162,321.09 20,981,217.43 24,143,538.52 4,107,704.54 4,107,704.54
receivable
Prepayment 462,263.86 462,263.86 4,002,319.29 4,002,319.29
Other 497,820.40 497,820.40
276 / 308
Annual Report 2019
receivables
Total foreign
currency 122,096,821.96 25,495,103.60 147,591,925.56 55,194,262.69 4,081,475.32 59,275,738.01
financial assets
Short-term
427,099.11 427,099.11
borrowings
Accounts
2,620,359.64 73,402,088.01 76,022,447.65 4,242,195.19 4,242,195.19
payable
Accounts
received in 5,205,618.33 138,557.37 5,344,175.70 7,912,504.08 7,912,504.08
advance
Other payables 1,091,367.20 1,091,367.20
Total foreign
currency
8,253,077.08 74,632,012.58 82,885,089.66 12,154,699.27 12,154,699.27
financial
liabilities
(III) Liquidity risk
Liquidity risk is the risk of a shortage of funds of the Company when the Company is performing
its obligation to settle in the form of delivery of cash or other financial assets. The Company's
policy is to ensure that there is sufficient cash to pay off the debts due. Liquidity risk is centrally
controlled by the Company's Finance Department. Finance Department ensures that the
Company has sufficient funds to repay debts under all reasonable forecasts by monitoring cash
balances, marketable securities at any time, and rolling forecasts of the cash flows in the coming
12 months.
Financial liabilities of the Company are presented as unrealized contractual cash flows on the
maturity date as follows:
Closing balance
Item Within 1 3 months - 1 1-5 Above 5
1-3 months Total
month year years years
Short-term 214,235.05
2,979,528.81 180,000,000.00 183,193,763.86
borrowings
XI. Disclosure of fair value
1. Closing fair value of assets and liabilities measured at fair value
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing fair value
277 / 308
Annual Report 2019
Level-1 fair Level-2 fair
Level-3 fair value
value value Total
measurement
measurement measurement
I. Continuous fair
value measurement
(I) Held-for-trading
financial assets
1. Financial assets at
fair value through profit
or loss
(1) Debt instrument
investment
(2) Equity instrument
investment
(3) Derivative financial
assets
(4) Others 661,878,587.24 661,878,587.24
2. Financial assets
designated as at fair
value through profit or
loss
(1) Debt instrument
investment
(2) Equity instrument
investment
(II) Other debt
investments
(III) Other equity
3,909,179.93 3,909,179.93
instrument investments
(IV) Investment real
estate
1. Land use rights used
for rent
2. Rental buildings
3. Land use rights held
and ready to be
transferred after
appreciation
278 / 308
Annual Report 2019
(V) Biological assets
1. Consumable
biological assets
2. Productive biological
assets
Receivables financing 29,549,924.83 29,549,924.83
Total assets 661,878,587.24 33,459,104.76 695,337,692.00
continuously
measured at fair value
(VI) Held-for-trading
financial liabilities
1. Financial liabilities at
fair value through profit
or loss
Including: Trading
bonds issued
Derivative financial
liabilities
Others
2. Financial liabilities
designated as at fair
value through profit or
loss
Total liabilities
continuously
measured at fair value
II. Non-continuous fair
value measurement
(I) Assets held for sale
Total assets not
continuously
measured at fair value
279 / 308
Annual Report 2019
Total liabilities not
continuously
measured at fair value
Other descriptions:
The level to which the fair value measurement result belongs is determined by the lowest level
to which the input value that is important to the fair value measurement as a whole belongs.
2. Basis for determining market prices of items continuously and not continuously
measured at the first-level fair value
"√ Applicable" "□ Not applicable"
The input value of the first level is the unadjusted quotation of the same asset or liability that can
be obtained on the measurement date in the active market.
3. Qualitative and quantitative information on valuation techniques and important
parameters adopted by items continuously and not continuously measured at the
second-level fair value
"√ Applicable" "□ Not applicable"
The input value of the second level is the directly or indirectly observable input value of related
assets or liabilities except the input value of the first level.
4. Qualitative and quantitative information on valuation techniques and important
parameters adopted by items continuously and not continuously measured at the
third-level fair value
"√ Applicable" "□ Not applicable"
The input value of the third level is the unobservable input value of the related asset or liability.
5. Information on adjustment between the beginning carrying value and the closing
carrying value of items continuously measured at the third-level fair value and
sensitivity analysis on unobservable parameters
"□ Applicable" "√ Not applicable"
6. For items continuously measured at fair value, in case of any conversion between
various levels during the period, reasons for the conversion and policies to determine
the conversion time should be provided
"□ Applicable" "√ Not applicable"
280 / 308
Annual Report 2019
7. Changes in valuation techniques and reasons for changes during the period
"□ Applicable" "√ Not applicable"
8. Particulars on fair value of financial assets and liabilities which are not measured at
fair value
"□ Applicable" "√ Not applicable"
9. Others
"□ Applicable" "√ Not applicable"
XII. Related Parties and Related-Party Transactions
1. Particulars on the parent company of the Company
"√ Applicable" "□ Not applicable"
Unit: 0’000 Currency: RMB
The parent
The parent
Nature of company's
Name of the Registered Registered company's voting
the shareholding
parent company address capital right ratio in the
business ratio in the
Company (%)
Company (%)
M&G Holdings
Industrial
(Group) Co., Shanghai 30,000 58.26 58.26
Investment
Ltd.
Descriptions on the parent company of the Company
No
The ultimate controlling party of the Company is Chen Huwen, Chen Huxiong and Chen Xueling
Other descriptions:
No
2. Particulars on subsidiaries of the Company
Particulars on subsidiaries of the Company are shown in the relevant notes
"√ Applicable" "□ Not applicable"
For particulars on subsidiaries of the Company, see Note VII. “Equity in Other Entities” for details.
3. Particulars on joint ventures and associates of the Company
For important joint ventures and associates of the Company, see the Notes for details
"√ Applicable" "□ Not applicable"
281 / 308
Annual Report 2019
For important joint ventures and associates of the Company, see the Note VII. “Equity in Other
Entities” for details.
Particulars on other joint ventures and associates which have related-party transactions with the
Company in the current period or had related-party transactions with the Company in the
previous period and form balances are as follows
"√ Applicable" "□ Not applicable"
Name of joint venture and associate Relationship with the Company
Ningbo Zhongchen Equity Investment Associates
Partnership (Limited Partnership)
Shanghai Pen-making Technology Associates
Services Co., Ltd.
Other explanation
"□ Applicable" "√ Not applicable"
4. Particulars on other related parties
"√ Applicable" "□ Not applicable"
Name of other related parties Relationship between other related parties
and the Company
Shanghai Jiekui Investment Management Share-participation shareholders
Firm (L.P.)
Shanghai Keying Investment Management Share-participation shareholders
Office (L.P.)
Guo Weilong Others
Wuxi Creative M&G Trading Co., Ltd. Others
Nanjing Zhaochen Stationery Sales Co., Ltd. Others
Nanjing Youchen Stationery Sales Co., Ltd. Others
Nanjing Chenri Stationery Sales Co., Ltd. Others
Other explanation
No
5. Particulars on related-party transactions
(1) Related-party transactions for the purchase and sales of goods and the rendering
and receipt of services
Table of information on the purchase of goods/the receipt of services
"□ Applicable" "√ Not applicable"
282 / 308
Annual Report 2019
Table of information on the sale of goods/the rendering of services
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Related-party Amount accounted for Amount accounted for
Related party
transaction content in the current period in the previous period
Sales entities controlled Sale of goods 387,821,087.67 332,427,736.80
by Guo Weilong
M&G Holdings (Group) Sale of goods 26,730.34
Co., Ltd.
M&G Holdings (Group) Fixed assets 5,882.90
Co., Ltd.
Particulars on related-party transactions for the purchase and sales of goods and the rendering
and receipt of services
"□ Applicable" "√ Not applicable"
(2) Particulars on related-party entrusted management/contracting and entrusting
management/outsourcing
Table of information on the Company's entrusted management/contracting:
"□ Applicable" "√ Not applicable"
Particulars on related-party entrusting/contracting
"□ Applicable" "√ Not applicable"
Table of information on the Company's entrusting management/outsourcing
"□ Applicable" "√ Not applicable"
Particulars on related-party management/outsourcing
"□ Applicable" "√ Not applicable"
(3) Particulars on related-party leases
The Company as the lessor:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Rental income Rental income
Types of leased
Name of lessee recognized in the recognized in the
assets
current period previous period
283 / 308
Annual Report 2019
Shanghai Jiekui Self-owned office
Investment Management building
Firm (L.P.)
Shanghai Keying Self-owned office
Investment Management building
Office (L.P.)
The Company as the lessee:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Rental fee recognized Rental fee recognized in
Name of lessor Types of leased assets
in the current period the previous period
M&G Holdings Self-owned houses 3,622,857.14 2,818,095.24
(Group) Co., Ltd. (including office
buildings, workshops,
parking spaces,
warehouses, dormitory
buildings, etc.)
M&G Holdings Self-owned office 20,368,751.26 19,032,828.26
(Group) Co., Ltd. buildings and parking
spaces
M&G Holdings 5,283,878.50 5,602,223.96
Utilities
(Group) Co., Ltd.
Descriptions on related-party leases
"□ Applicable" "√ Not applicable"
(4) Particulars on related-party guarantees
The Company as a guarantor
"□ Applicable" "√ Not applicable"
The Company as a guaranteed party
"□ Applicable" "√ Not applicable"
Descriptions on related-party guarantees
"□ Applicable" "√ Not applicable"
(5) Related-party fund lending
"□ Applicable" "√ Not applicable"
284 / 308
Annual Report 2019
(6) Related-party asset transfer and debt restructuring
"□ Applicable" "√ Not applicable"
(7) Compensation of key management personnel
"□ Applicable" "√ Not applicable"
(8) Other related-party transactions
"□ Applicable" "√ Not applicable"
6. Receivables from and payables to related parties
(1) Receivables
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance
Items Related party Carrying Bad debt Carrying Bad debt
balance provisions balance provisions
Accounts M&G Holdings
25,003.50 156.21
receivable (Group) Co., Ltd.
M&G Holdings
Prepayments 3,419,063.44 3,906,164.44
(Group) Co., Ltd.
Sales entities
Other
controlled by Guo 12.93 0.65
receivables
Weilong
(2) Payables
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Items Related party Carrying balance at Carrying balance at the
the end of the period beginning of the period
Sales entities 9,576.58
Accounts payable controlled by Guo
Weilong
Sales entities 1,310,000.00 961,000.00
Other payables controlled by Guo
Weilong
285 / 308
Annual Report 2019
M&G Holdings (Group) 6,234,878.32 521,547.01
Co., Ltd.
Sales entities 38,198,477.81 12,367,997.96
Advance receipts controlled by Guo
Weilong
7. Related-party commitments
"□ Applicable" "√ Not applicable"
8. Others
"□ Applicable" "√ Not applicable"
XIII. Share-based payments
1. Overall situation of share-based payment
"□ Applicable" "√ Not applicable"
2. Particulars on equity-settled share-based payment
"□ Applicable" "√ Not applicable"
3. Particulars on cash-settled share-based payment
"□ Applicable" "√ Not applicable"
4. Particulars on modification and termination of share-based payment
"□ Applicable" "√ Not applicable"
5. Others
"□ Applicable" "√ Not applicable"
XIV. Commitments and Contingencies
1. Important commitments
"√ Applicable" "□ Not applicable"
Important external commitments, nature, and amount existing on the balance sheet date
(1) Mortgage, pledge and guarantee matters in which Shanghai Pudong Development Bank Co.,
Ltd. Songjiang Sub-branch (“SPD Songjiang Sub-branch”) is involved
286 / 308
Annual Report 2019
① On 24 March 2016, the subsidiary Jiangsu Marco Pen Co., Ltd. and SPD Songjiang Sub-
branch signed the Cap Guarantee Contract numbered ZB9808201600000004, pursuant to which,
SPD Songjiang Sub-branch provides a guarantee with a maximum amount not exceeding the
equivalent of USD12,000,000.00 to the debts incurred by Jiangsu Marco Pen Co., Ltd. in
handling various financing businesses during the period from 24 March 2016 to 23 March 2022;
② On 24 March 2016, Xu Peifeng and Yang Min, as the ultimate controllers of Axus Stationery,
and SPD Songjiang Sub-branch signed the Cap Guarantee Contract numbered
ZB9808201600000005, pursuant to which, SPD Songjiang Sub-branch provides a guarantee
with a maximum amount not exceeding the equivalent of USD12,000,000.00 to the debts
incurred by Axus Stationery in handling various financing businesses during the period from 24
March 2016 to 23 March 2022;
③ On 29 March 2017,Axus Stationery and SPD Songjiang Sub-branch signed the Factoring
Agreement numbered 98082013280133, which stipulated that Axus Stationery transfers the
receivables to SPD Songjiang Sub-branch through the way as agreed in the Agreement, and
SPD Songjiang Sub-branch agrees to assign related accounts receivable and provide related
factoring services in accordance with the conditions and methods stipulated in the Agreement.
As of 31 December 2019, the outstanding factoring borrowing from Axus Stationery was
USD427,099.11, equivalent to RMB2,979,528.81.
(2) Mortgage matters in which China Merchants Bank Co., Ltd. Shanghai Branch is involved
On 29 October 2019, the subsidiary Axus Stationery and China Merchants Bank Co., Ltd.
Shanghai Branch (“CMB Shanghai Branch”) signed the Credit Agreement numbered
121XY2019028027; the credit line is RMB180,000,000.00, and the credit period is 12 months,
from 30 October 2019 to 29 October 2020; the types of credit business under the credit line
include but are not limited to loans\order loans, trade financing, bill discounting, commercial bill
acceptance, commercial acceptance bill confirmation\discount, international\domestic letter of
guarantee, customs duty payment guarantee, corporate account overdraft, derivative transaction
and gold leasing. CMB Shanghai Branch has the right to adjust the floating ratio and/or basic
point of current asset loans regularly or irregularly in accordance with changes in relevant
national policies, changes in domestic credit market prices or changes in Axus Stationery’s own
credit policies. As of 31 December 2019, the outstanding loan of Axus Stationery was
RMB180,000,000.00.
At the same time, Axus Stationery and the bank signed the Maximum Mortgage Contract
numbered 121XY2019028027 based on the above credit agreement, the mortgage period is
from the effective date of the mortgage contract to the expiration of the period of the creditor's
rights claims under the Credit Agreement; the collaterals used for mortgage include:
Name of Ownership No. Original value Accumulated Net value
collateral depreciation
No. 111 Xuezi HFDQ Zi (2013) 47,061,453.52 22,483,546.11 24,577,907.41
287 / 308
Annual Report 2019
South Road, No. 015437
Xianghuaqiao
Street, Qingpu
District
No. 233 Xuezi HFDQ Zi (2013)
South Road, No. 013396
Xianghuaqiao 32,156,238.78 11,248,094.31 20,908,144.47
Street, Qingpu
District
No. 333 Xuezi HFDQ Zi (2015)
South Road, No. 015718
Xianghuaqiao 60,230,210.97 12,418,790.03 47,811,420.94
Street, Qingpu
District
Total 139,447,903.27 46,150,430.45 93,297,472.82
2. Contingencies
(1) Important contingencies on the balance sheet date
"□ Applicable" "√ Not applicable"
(2) If the Company has no important contingent issues that need to be disclosed, it
should also be explained:
"√ Applicable" "□ Not applicable"
There were no important contingent issues that need to be disclosed during the Reporting
Period
3. Others
"□ Applicable" "√ Not applicable"
XV. Post-balance sheet date events
1. Important non-adjustment matters
"□ Applicable" "√ Not applicable"
2. Profit distribution
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
288 / 308
Annual Report 2019
Profits or dividends proposed to be 368,000,000
distributed
Profits or dividends reviewed and
approved to be declared for distribution
According to the Profit Distribution Plan for 2019 reviewed and approved by the 20th meeting of
the 4th session of Board of Directors of the Company on 10 April 2020, based on the total sock
capital registered on the registration date for the implementation of the equity distribution, the
Company intends to distribute the dividend in cash at RMB4 every 10 shares (tax inclusive) and
the total profit distributed this time is RMB368,000,000.00. The remaining distributable profits in
2019 will be carried forward to the following year.
3. Sales return
"□ Applicable" "√ Not applicable"
4. Explanations on other post-balance-sheet-date events
"√ Applicable" "□ Not applicable"
According to the 2020 Restricted Stock Incentive Plan of Shanghai M&G Stationery Inc. (Draft)
considered and approved at the 20th meeting of the fourth Board of Directors of the Company
on 10 April 2020, the form of incentives to be adopted is restricted stock. The source of the stock
is RMB A-share common stock issued by the Company to the incentive target. Incentive target
includes directors, senior management personnel and key management, technical, and business
personnel who serve in the company (including holding subsidiaries, the same below) when the
Company announces this incentive plan. It does not include independent directors, supervisors,
shareholders or actual controllers who hold more than 5% of shares individually or in total, and
their spouses, parents and children. The validity period of this incentive plan is from the date
when the registration of the first grant of restricted stocks is completed to the date when all the
restricted stocks granted to the incentive objects are exempt from restricted sales or the
repurchase is canceled, and the maximum period is 48 months.
XVI. Other Important Issues
1. Correction of previous-period accounting errors
(1) Retrospective restatement method
"□ Applicable" "√ Not applicable"
(2) Future application method
"□ Applicable" "√ Not applicable"
289 / 308
Annual Report 2019
2. Debt restructuring
"□ Applicable" "√ Not applicable"
3. Asset replacement
(1) Non-monetary asset exchange
"□ Applicable" "√ Not applicable"
(2) Other asset replacement
"□ Applicable" "√ Not applicable"
4. Annuity plan
"□ Applicable" "√ Not applicable"
5. Discontinued operations
"□ Applicable" "√ Not applicable"
6. Segment information
(1) Basis for determining reporting segments and accounting policies
"√ Applicable" "□ Not applicable"
According to the Company's internal organizational structure, management requirements and
internal reporting system, two reporting segments are identified, namely: office direct-selling
business and traditional core business. The Company's reporting segments provide different
services. Since each segment requires different technical or marketing strategies, the
management of the Company separately manages the operating activities of each reporting
segment and regularly evaluates the operating results of these reporting segments to determine
the allocation of resources to them and the evaluation of their performance.
The transfer price between segments is determined on the basis of the actual transaction price,
and the expenses indirectly attributable to each segment are grouped according to the actual
share of each segment. Assets are allocated according to the operation of the segment and the
location of the asset. Segment liabilities include liabilities that can be attributed to the segment
formed by the segment's operating activities. If the expenses associated with liabilities shared
by multiple operating segments are allocated to these operating segments, the jointly assumed
liabilities are also allocated to these operating segments.
290 / 308
Annual Report 2019
(2) Financial information of reporting segments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Office direct- Traditional core Inter-segment Total
selling business business elimination
I. Revenue
from foreign 3,635,092,992.22 7,570,977,486.20 64,969,113.98 11,141,101,364.44
transactions
II. Revenue
from inter-
22,968,670.31 42,000,443.67 64,969,113.98
segment
transactions
III. Income
from
investments in
-576,595.97 -576,595.97
associates
and joint
ventures
IV. Credit
impairment -18,750,413.26 -9,255,596.62 -28,006,009.88
losses
V. Asset
impairment -66,174.84 -17,776,907.05 -17,843,081.89
losses
VI.
Depreciation
and 9,128,652.71 221,938,677.01 231,067,329.72
amortization
charges
VII. Total
profits (total 100,778,132.68 1,192,792,039.85 -109,571.54 1,293,679,744.07
losses)
VIII. Income
24,974,589.33 192,600,918.20 -27,392.88 217,602,900.41
tax expenses
IX. Net profits
75,803,543.35 1,000,191,121.65 -82,178.66 1,076,076,843.66
(net losses)
X. Total
1,675,761,928.19 5,904,802,289.55 15,448,906.00 7,565,115,311.74
assets
291 / 308
Annual Report 2019
XI. Total
1,264,184,914.55 1,855,536,240.25 15,531,084.66 3,104,190,070.14
Liabilities
(3) If the Company does not have a reporting segment, or if it cannot disclose the total
assets and total liabilities of each reporting segment, the reason should be explained
"□ Applicable" "√ Not applicable"
(4) Other explanation
"□ Applicable" "√ Not applicable"
7. Other important transactions and matters that have an impact on investors’ decisions
"□ Applicable" "√ Not applicable"
8. Others
"□ Applicable" "√ Not applicable"
XVII. Notes on the main items of the parent company's financial statements
1. Accounts receivable
(1) Disclosure by account age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Carrying balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 83,650,659.61
1 to 2 years 61,547.48
2 to 3 years 16,481.17
Above 3 years 34,618.97
3 to 4 years
4 to 5 years
Above 5 years
Less: Bad debt provisions -814,082.58
Total 82,949,224.65
292 / 308
Annual Report 2019
(2) Disclosure by accruing method for bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Closing balance Opening balance
Carrying balance Bad debt provisions Carrying balance Bad debt provisions
Category Accruing Carrying Accruing Carrying
Percentage Percentage
Amount Amount percentage value Amount Amount percentage value
(%) (%)
(%) (%)
Bad debt
provisions
accrued
separately
Including:
Bad debt
provisions
accrued 83,763,307.23 100.00 814,082.58 0.97 82,949,224.65 94,543,811.55 100.00 1,219,045.69 1.29 93,324,765.86
according to the
combination
Including:
Combination 1:
16,281,651.67 19.44 814,082.58 5.00 15,467,569.09 21,821,635.34 23.08 1,219,045.69 5.59 20,602,589.65
Account age
Combination II:
Consolidated
balance of
related-parties
current accounts -
provisional input
tax
Combination III:
Related parties in
the scope of the
67,481,655.56 80.56 67,481,655.56 72,722,176.21 76.92 72,722,176.21
consolidated
financial
statements
Total 83,763,307.23 / 814,082.58 / 82,949,224.65 94,543,811.55 / 1,219,045.69 / 93,324,765.86
Bad debt provisions accrued separately:
"□ Applicable" "√ Not applicable"
Bad debt provisions accrued according to the combination:
"□ Applicable" "√ Not applicable"
293 / 308
Annual Report 2019
If bad debt provisions are accrued according to the general model of expected credit losses,
please refer to the disclosure on other receivables:
"□ Applicable" "√ Not applicable"
(3) Particulars on bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Change of the current period
Resold
Opening Recovered Closing
Category or Other
balance Accrued or balance
written- changes
reversed
off
Combination 1,219,045.69 - 814,082.58
1: Account 404,963.11
age
Total 1,219,045.69 - 814,082.58
404,963.11
Significant bad debt provision amounts recovered or reversed in the current period:
"□ Applicable" "√ Not applicable"
(4) Particulars on accounts receivable actually written-off in the current period
"□ Applicable" "√ Not applicable"
Writing-off of significant accounts receivable
"□ Applicable" "√ Not applicable"
(5) Particulars on top 5 accounts receivable in terms of the balance at the end of the
period based on debtors
"√ Applicable" "□ Not applicable"
Closing balance
Percentage (%) of
Company name Accounts
the total accounts Bad debt provisions
receivable
receivable
Shanghai M&G
47,760,091.18 57.02
Stationery & Gift Co.,
294 / 308
Annual Report 2019
Ltd.(上海晨光文具礼品
有限公司)
Shanghai M&G
Zhenmei Stationery
6,004,105.02 7.17
Co., Ltd.(上海晨光珍
美文具有限公司)
Shanghai M&G Office
3,371,128.25 4.02
Supplies Co., Ltd.
Shanghai M&G Colipu
Office Supplies Co., 2,529,948.28 3.02
Ltd.
Hangzhou Sanmei
M&G Stationery Co.,
2,368,106.90 2.83
Ltd.(杭州三美晨光文具
有限公司)
Total 62,033,379.63 74.06
(6) Accounts receivable derecognizd due to the transfer of financial assets
"□ Applicable" "√ Not applicable"
(7) Assets and liabilities formed due to the transfer and continuous involvement of
accounts receivable
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
2. Other receivables
Presented by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Interest receivable 192,500.00
Dividend receivable
Other receivables 284,844,294.54 227,644,350.97
Total 285,036,794.54 227,644,350.97
295 / 308
Annual Report 2019
Other descriptions:
"□ Applicable" "√ Not applicable"
Interest receivable
(1) Classification of interest receivable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Time deposits
Entrusted loans 192,500.00
Bond investment
Total 192,500.00
(2) Important overdue interest
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of bad debt provisions
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
Dividend receivable
(1) Dividend receivable
"□ Applicable" "√ Not applicable"
(2) Important dividend receivable with the account age over one year
"□ Applicable" "√ Not applicable"
(3) Particulars on accruing of bad debt provisions
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
Other receivables
(1) Disclosure by account age
"√ Applicable" "□ Not applicable"
296 / 308
Annual Report 2019
Unit: Yuan Currency: RMB
Account age Carrying balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 106,166,103.04
1 to 2 years 55,612,983.59
2 to 3 years 48,436,923.11
Above 3 years 78,488,187.99
3 to 4 years
4 to 5 years
Above 5 years
Less: Bad debt provisions -3,859,903.19
Total 284,844,294.54
(2) Particulars on classification by amount nature
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount nature Carrying balance at the end Carrying balance at the
of the period beginning of the period
Personal loans and petty cash 2,564,837.10 3,433,742.17
Consolidated balance of 277,015,264.79 213,679,783.79
related-parties current
accounts
Amount paid for materials 100,145.85 2,133,099.15
Consolidated balance of 1,500,098.94 2,191,731.16
related-parties current
accounts - provisional input
tax
Margin and deposit 4,865,737.79 6,372,345.19
Others 2,658,113.26 2,637,087.02
Total 288,704,197.73 230,447,788.48
(3) Particulars on accruing of bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
297 / 308
Annual Report 2019
Phase 1 Phase 2 Phase 3
Expected credit Expected credit
Expected
Bad debt loss for the entire loss for the entire Total
credit losses
provisions duration (no credit duration (credit
in the next 12
impairment impairment
months
occurred) occurred)
Balance as at 1 2,803,437.51 2,803,437.51
January 2019
Balance as at 1
January 2019 in
the current
period
-- Transferred
into Phase 2
-- Transferred
into Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Accrued in the 1,056,465.68 1,056,465.68
current period
Reserved in the
current period
Resold in the
current period
Written-off in the
current period
Other changes
Balance as at 3,859,903.19 3,859,903.19
31 December
2019
Particulars on the significant changes in the carrying balance of other receivables in which
changes in loss provisions occurred in the current period:
"√ Applicable" "□ Not applicable"
298 / 308
Annual Report 2019
Phase 1 Phase 2 Phase 3
Expected credit Expected credit
Bad debt Expected credit loss for the entire loss for the entire Total
provisions losses in the duration (no duration (credit
next 12 months credit impairment impairment
occurred) occurred)
Balance as at 1
230,447,788.48 230,447,788.48
January 2019
Balance as at 1
January 2019
in the current
period
-- Transferred
into Phase 2
-- Transferred
into Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Increase of the
270,055,776.41 270,055,776.41
current period
Direct reduction
of the current
period
Derecognition
of the current 211,799,367.16 211,799,367.16
period
Other changes
Balance as at
31 December 288,704,197.73 288,704,197.73
2019
The basis for adopting the amount of bad debt provisions accrued for the current period and
the assessment on whether the credit risk of financial instruments increased significantly:
"□ Applicable" "√ Not applicable"
299 / 308
Annual Report 2019
(4) Particulars on bad debt provisions
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Change of the current period
Opening Recovered Closing
Category Resold or Other
balance Accrued or balance
written-off changes
reversed
Combination 2,803,437.51 1,056,465.68 3,859,903.19
1: Account
age
Total 2,803,437.51 1,056,465.68 3,859,903.19
Significant bad debt provision amounts reversed or recovered in the current period:
"□ Applicable" "√ Not applicable"
(5) Particulars on other receivables actually written-off in the current period
"□ Applicable" "√ Not applicable"
(6) Particulars on top 5 other receivables in terms of the balance at the end of the period
based on debtors
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Percentage (%)
in the total
Bad debt
Amount Closing balance at the
Company name Account age provisions
nature balance end of the
Closing balance
period of other
receivables
Jiumu M&G Store Consolidated
Within 1 year:
Enterprise balance of
RMB70,274,700
Management Co., related-parties 110,420,206.25 38.25
1-2 years:
Ltd.(九木杂物社企 current
RMB40,145,500
业管理有限公司) accounts
300 / 308
Annual Report 2019
Shanghai M&G Consolidated
Information balance of
Technology Co., related-parties 23,521,310.33 Within 1 year 8.15
Ltd.(上海晨光信息 current
科技有限公司) accounts
Shanghai M&G Consolidated
1-2 years:
Zhenmei balance of
RMB13,750,000
Stationery Co., related-parties 21,750,000.00 7.53
Above 3 years:
Ltd.(上海晨光珍美 current
RMB8,000,000
文具有限公司) accounts
Shanghai Linsong 1,967,916.60
Margin and
Real Estate Co., 3,279,861.00 2-3 years 1.14
deposit
Ltd.
Shanghai M&G Consolidated
Stationery & Gift balance of
Co., Ltd.(上海晨光 related-parties 2,548,081.03 Within 1 year 0.88
文具礼品有限公司) current
accounts
Total / 161,519,458.61 / 55.95 1,967,916.60
(7) Receivables involving government subsidies
"□ Applicable" "√ Not applicable"
(8) Other receivables derecognized due to the transfer of financial assets
"□ Applicable" "√ Not applicable"
(9) Assets and liabilities formed due to the transfer and continuous involvement of other
receivables
"□ Applicable" "√ Not applicable"
Other descriptions:
"□ Applicable" "√ Not applicable"
3. Long-term equity investments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
301 / 308
Annual Report 2019
Closing balance Opening balance
Item Impairment Carrying Impairment
Carrying balance Carrying value Carrying value
provisions balance provisions
Investment to
1,053,585,409.09 1,053,585,409.09 848,547,299.09 848,547,299.09
subsidiaries
Investments to
associates and 35,582,783.47 35,582,783.47 30,175,665.26 30,175,665.26
joint ventures
Total 1,089,168,192.56 1,089,168,192.56 878,722,964.35 878,722,964.35
(1) Investment to subsidiaries
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Impairmen Balance of
t impairment
Decrease of
Invested Opening Increase of the provisions provisions
the current Closing balance
company balance current period accrued in at the end
period
the current of the
period period
Shanghai M&G
Colipu Office
462,000,000.00 28,000,000.00 490,000,000.00
Supplies Co.,
Ltd.
Shanghai M&G
Zhenmei
Stationery Co., 13,288,599.09 13,288,599.09
Ltd.(上海晨光珍
美文具有限公司)
Shanghai M&G
Stationery & Gift
Co., Ltd.(上海晨 199,419,400.00 199,419,400.00
光文具礼品有限
公司)
M&G Life
Enterprise
Management
60,000,000.00 60,000,000.00
Co., Ltd.(晨光生
活馆企业管理有
限公司)
Shanghai M&G
Jiamei 30,000,000.00 30,000,000.00
Stationery Co.,
302 / 308
Annual Report 2019
Ltd.(上海晨光佳
美文具有限公司)
Shanghai M&G
Information
Technology Co., 27,500,000.00 27,500,000.00
Ltd.(上海晨光信
息科技有限公司)
Shenzhen Erya
Creative and
Cultural
Development 6,339,300.00 6,339,300.00
Co., Ltd.(深圳尔
雅文化创意发展
有限公司)
Shanghai M&G
Information
Technology Co., 50,000,000.00 50,000,000.00
Ltd.(上海晨光信
息科技有限公司)
Axus Stationery
(Shanghai) 177,038,110.00 177,038,110.00
Company Ltd.
Total 848,547,299.09 205,038,110.00 1,053,585,409.09
(2) Investments to associates and joint ventures
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Change of the current period
Balance of
Investment
At the impairment
gains and Adjustment Declaration on At the end of
Investment beginning of the Accruing of provisions
Additional Withdrawn losses to other Other equity distribution of the period
Unit period impairment Others at the end
investment investment recognized comprehen changes cash dividends Balance
Balance provisions of the
under the sive income or profits
period
equity method
I. Joint venture
Sub-total
II. Associate
Ningbo Zhongchen Equity -16,285.82
Investment Partnership 30,175,665.26 -313,145.25 29,846,234.19
(Limited Partnership)
Shanghai Pen-making
6,000,000.00 -263,450.72 5,736,549.28
Technology Services Co., Ltd.
Sub-total 30,175,665.26 6,000,000.00 -576,595.97 -16,285.82 35,582,783.47
Total 30,175,665.26 6,000,000.00 -576,595.97 -16,285.82 35,582,783.47
Other descriptions:
303 / 308
Annual Report 2019
No
4. Operating income and operating costs
(1) Operating income and operating costs
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for in the current Amount accounted for in the previous
Item period period
Revenue Costs Revenue Costs
Main operations 3,888,768,953.18 2,183,782,074.37 3,397,296,920.86 2,034,456,319.11
Other operations 45,222,989.96 5,325,437.68
Total 3,933,991,943.14 2,183,782,074.37 3,402,622,358.54 2,034,456,319.11
Other descriptions:
Details on operating income:
Item Amount in the current period Amount in the last period
Income from main operations 3,888,768,953.18 3,397,296,920.86
Including: Sales of goods 3,888,768,953.18 3,397,296,920.86
Income from other
45,222,989.96 5,325,437.68
operations
Including: Rental income 4,628,381.90 5,325,437.68
Interest income from
1,983,333.33
entrusted loans
Jiku TP freight income 38,611,274.73
Total 3,933,991,943.14 3,402,622,358.54
5. Investment income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount accounted for Amount accounted for in
Item
in the current period the previous period
Long-term equity investment income
calculated by cost method
Long-term equity investment income
accounted for under the equity -576,595.97 -393,609.74
method
304 / 308
Annual Report 2019
Investment income from disposal of
long-term equity investment
Investment income from financial
asset designated as at fair value
through profit or loss during the
holding period
Investment income from disposal of
financial asset designated as at fair
value through profit or loss
Investment income from held-to-
maturity investments during the
holding period
Investment income from disposal of
held-to-maturity investments
Investment income from available-for-
sale financial assets during the
holding period
Investment income from disposal of
available-for-sale financial assets
Investment income from held-for-
trading financial assets during the
holding period
Dividend income from other equity
instrument investments during the
holding period
Interest income from debt investment
during the holding period
Interest income from other debt
investments during the holding period
Investment income from disposal of 22,046,969.52
held-for-trading financial assets
Investment income from disposal of
other equity instrument investments
Investment income from disposal of
debt investment
Investment income from disposal of
other debt investments
Bank wealth management products 32,583,726.23
305 / 308
Annual Report 2019
Total 21,470,373.55 32,190,116.49
Other descriptions:
No
6. Others
"□ Applicable" "√ Not applicable"
XVIII. Supplementary information
1. Table on details of non-recurring gains and losses of the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount the situation
6,081,606.95 Mainly due to the
disposal of certain old
equipment by the
subsidiaries held by the
Company and the
Gains or losses on disposal of non-
winding up of certain
current assets
subsidiaries under the
subsidiaries held by the
Company, which is in
view of the business
demands
Government subsidies included in the 42,747,681.46 Mainly including
profits and losses of the current period government grants
(except those closely related to the received during the
Company's business and of fixed Reporting Period and
amount or fixed quantity granted in government grants
accordance with national uniform transferred from
standards) deferred income
Investment income arising from 29,184,868.54 Revenue generated
changes in fair values held-for-trading from purchase of
financial assets, derivative financial wealth management
assets, held-for-trading financial products
liabilities and derivative financial
liabilities, and investment gains on the
disposal of held-for-trading financial
306 / 308
Annual Report 2019
assets, derivative financial assets, held-
for-trading financial liabilities, derivative
financial liabilities and other debt
investment, except the Company
normal operations related to effective
hedging business
1,803,027.63 Mainly due to the
Reversal of provision for impairment of provision reversal of
receivables which are individually tested bad debts on individual
for impairment receivables of the
Company
-5,743,388.02 Mainly the expense of
public donations and
the losses arising from
Other net non-operating income and the winding up of
expenses, other than the above items certain subsidiaries
controlled by the
subsidiaries of the
Company
Effect of income tax -14,413,308.64
Effect of minority equity -4,764,697.27
Total 54,895,790.65
For non-recurring profit and loss items defined by the Company according to the Explanatory
Announcement of Information Disclosure by Companies Offering Securities to the Public No. 1
- Non-recurring Gains and Losses, and non-recurring profit and loss items listed in the
Explanatory Announcement of Information Disclosure by Companies Offering Securities to the
Public No. 1 - Non-recurring Gains and Losses defined as recurring profit and loss items，the
reasons shall be explained.
"□ Applicable" "√ Not applicable"
2. Return on net assets and earnings per share
"√ Applicable" "□ Not applicable"
Weighted Earnings per share
Profits during the Reporting average return
Basic earnings per Diluted earnings
Period on net assets
share per share
(%)
307 / 308
Annual Report 2019
Net profit attributable to
ordinary shareholders of the 28.17 1.1523 1.1523
company
Net profit attributable to
ordinary shareholders of the
company after deducting 26.71 1.0926 1.0926
non-recurring gains and
losses
3. Difference in the Accounting Information under the PRC Accounting Standards for
Business Enterprise (“PRC GAAP”) and Overseas Accounting Standards
"□ Applicable" "√ Not applicable"
4. Others
"□ Applicable" "√ Not applicable"
Chapter XII References
Financial statements signed and sealed by the legal representative,
References the person in charge of accounting work, and the person in charge of
the accounting agency.
Original of the auditor’s report with the seal of the accounting firm and
References
the signature and seal of the certified public accountant.
Originals of all company documents and announcements publicly
References disclosed on the designated information disclosure media by CSRC
during the Reporting Period.
Chairman: Chen Huwen
Date of report and submission approved by the Board of Directors: 10 April 2020
Revision information
"□ Applicable" "√ Not applicable"
308 / 308
