Annual Report 2021
Stock Code: 603899 Short Name: M&G Corporation
SHANGHAI M&G STATIONERY INC.Annual Report 2021
1 / 237Annual Report 2021
Starting Afresh
2021 was a year full of challenges and opportunities for M&G and also was a year when
M&G started afresh once again. Affected by COVID-19 resurgence "Double Reduction"
and weakening domestic expectations the year 2021 was tough for all of us. Our colleagues
and upstream and downstream partners demonstrated strong resilience and tackled the
difficulties head on. The Company’s "One main body and two wings" businesses maintained
steady development and solid growth core competitiveness of the Company continued to
improve. In the past year every person was remarkable and it was not easy for everyone. We
pushed the boundaries of our self-perception and limits of performance. As we all kow life
goes on and business needs to develop. We salute every remarkable M&G colleague!
In 2021 the Company recorded revenue of RMB17.6 billion an increase of 34% and a net
profit attributable to the parent company of RMB1.52 billion an increase of 21%. The year
2021 is the beginning of China's 14th Five-Year Plan and also the first year of M&G's new
five-year strategy. The Company applied new development philosophy to guide high-quality
development and steadily executed Company's strategy. One important reason underlying
the Company’s solid and high-quality development is that we have a strong sense of mission
and responsibility and we have been insist on doing the tough but right things for more than
3 decades.
In 2022 the international situation is complicated and the COVID-19 pendamic still has a
long way to go. Some investors are concerned that demographic trends and "Double
Reduction" negatively impact the realization of the Company's new five-year strategy. We
believe that if you desire something strong enough you can always work out a way there
are always new demands in market which need to be satisfied with innovative products and
new capabilities. The key question is not whether you can or can not but whether you want
it or not. If you truly aspire to something you can make the seemingly impossible come true.We see more opportunities in product categories channel improvement new business
development and international markets. We believe that difficulties and challenges are the
touchstones of a good company those with stronger management capability and better
business models can excel. We also believe that in the face of difficulties a strong internal
2 / 237Annual Report 2021
drive can better unleash our potentials. In addition to having a good "energy will and spirit"
we also keep pace with the times strive for innovation and embrace change keep an eye on
macro trends carbon neutrality learn from outstanding industry leaders take initiative to
embrace new technologies such as artificial intelligence and metaverse and continue to
optimize our business eco-chain. This year we also formulated our sustainable development
strategy with the mission of "Writing a Sustainable Business Future" with sustainable
products response to climate change sustainable supply chain and empowering employees
and communities as key pillars in a bid to achieve high-quality and sustainable development.M&G has made its jouney for more than three decades. To realize our vision to become a
"world-class M&G" we need passion and dreams sharing and focus mission and
responsibility to provide better products and services for China and the world. We would
like to express our heartfelt thanks to our employees to our customers and partners and to
our shareholders for your support and trust. M&G is willing to work together with all of you
remain true to our original aspiration and forge ahead to promote a sustainable sound and
high-quality development and create better value for all shareholders. Strive towards a
"world-class M&G". We look forward to working with you towards a bright future!
Board of Directors of Shanghai M&G Stationery Inc.
29 March 2022
3 / 237Annual Report 2021
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 CPAs (LLP) has issued the audit report with unqualified opinions to
the Company.IV. Chen Huwen the chairman of the Company Quan Qiang 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 proposes to distribute cash dividend of RMB6.00 (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. The profit distribution plan is subject to being submitted to the Company's 2021
annual general meeting of shareholders for deliberation.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
IX. Are there more than half of the directors who cannot warrant the truthfulness accuracy and
completeness of the annual report disclosed by the Company
No
X. 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 "Section
III Management Discussion and Analysis". Investors are advised to pay attention to risk of investment.
4 / 237Annual Report 2021
XI. 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.
5 / 237Annual Report 2021
Contents
Section I Definition ................................ 7
Section II Company Profile and Key Financial Indic... 8
Section III Management Discussion and Analysis ..... 12
Section IV Corporate Governance .................... 38
Section V Environmental and Social Responsibility .. 52
Section VI Major Events ............................ 54
Section VII Changes in Shares and Shareholders ..... 71
Section VIII Preferred Shares ...................... 79
Section IX Bonds ................................... 80
Section X Financial Report ......................... 81
Financial statements signed and sealed by the legal representative 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 the
References
signature and seal of the certified public accountant.Originals of all company documents and announcements publicly disclosed
on the designated information disclosure media by CSRC during the
Reporting Period.
6 / 237Annual Report 2021
Section 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 Refers to Annual Report 2021
Company the Company M&G Refers to SHANGHAI M&G STATIONERY INC.Stationery M&G Corporation
M&G Group Refers to M&G Holdings (Group) Co. Ltd.M&G Colipu Refers to Shanghai M&G Colipu Office Supplies Co. Ltd.M&G Life（晨光生活馆） Refers to M&G Life Enterprise Management Co. Ltd.（晨光生活馆企业管理有限公司）/Large retail store of the
CompanyColipu Information Technology Refers to Shanghai Colipu Information Technology Co. Ltd.（上海科力普信息科技有限公司）M&G Technologies Refers to Shanghai M&G Information Technology Co. Ltd.（上海晨光信息科技有限公司）
Jiekui Investment Refers to Shanghai Jiekui Investment Management Firm (L.P.)
Keying Investment Refers to Shanghai Keying Investment Management Office (L.P.)
Jiumu Store（九木杂物社） Refers to Jiumu M&G Store Enterprise Management Co. Ltd.
（九木杂物社企业管理有限公司）/Large retail store
of the CompanyM&G Office Stationery（晨光办 Refers to Shanghai M&G Office Stationery Co. Ltd.公）
Axus Stationery Refers to Axus Stationery (Shanghai) Company Ltd.Beckmann Refers to Back to School Holding AS
KA Refers to Key Account usually referring to large cross-regional
retailers with large operating space and dense customer
flow including RT-MART Walmart Carrefour and
Hualian Supermarket.Core traditional business Refers to The designing developing manufacturing and selling
writing instruments student stationery office supplies
and other products under M&G brands and also the e-
commerce business M&G Technologies
New business Refers to Large retail store business and direct office supplies
business
Reporting period Refers to Year 2021 from 1 January 2021 to 31 December 2021
Yuan ten thousand Yuan hundred Refers to RMB RMB10000 RMB100 million
million Yuan
7 / 237Annual Report 2021
Section 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 晨光股份
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 No.5 Lane 288 Qianfan Road Xinqiao No.5 Lane 288 Qianfan Road Xinqiao
Town Songjiang District Shanghai Town 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
Historical change of the Company's No
registered address
Office address No.5 Lane 288 Qianfan Road Xinqiao Town 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 disclosure Shanghai Securities News China Securities Journal
Securities Daily Securities Times
CSRC's designated website for the Company's www.sse.com.cn
Annual Report disclosure
The Company's Annual Report may be obtained at Board of Director's Office
V. Stock Information
Stock Information
Share class Exchanges on which Stock short name Stock code Stock short name
the stocks are listed before change
A share Shanghai Stock M&G Corporation 603899 M&G Stationery
Exchange
VI. Other Relevant Information
Name BDO China Shu Lun Pan CPAs (LLP)
Auditor of the Company Office address 4F No. 61 Nanjing East Road Shanghai
(domestic) Name of the signing Chen Luying Wang Aijia
accountant
8 / 237Annual Report 2021
VII. Major Accounting Data and Financial Indicators for the Past Three Years
(1) Major accounting data
Unit: Yuan Currency: RMB
Year-on-year
Major accounting data 2021 2020 2019
change (%)
Revenue 17607403250.12 13137745727.18 34.02 11141101364.44
Net profit attributable 1517866131.16 1255426655.27 20.90 1060083625.03
to shareholders of the
listed companies
Net profit attributable 1349538372.72 1102712281.50 22.38 1005187834.38
to shareholders of the
listed companies net of
non-recurring gains and
losses
Net cash flow 1561196420.77 1271697892.28 22.76 1081941383.68
generated from
operating activities
Year-on-year
End of 2021 End of 2020 End of 2019
change (%)
Net assets attributable 6194891978.00 5193568712.05 19.28 4201500384.99
to shareholders of the
listed companies
Total assets 11424387930.33 9709908436.32 17.66 7565115311.74
(2) Key financial indicators
Year-on-year
Key financial indicators 2021 2020 2019
change (%)
Basic earnings per share (Yuan/share) 1.6450 1.3558 21.33 1.1523
Diluted earnings per share (Yuan/share) 1.6425 1.3558 21.15 1.1523
Basic earnings per share net of non- 1.4623 1.1908 22.80 1.0926
recurring gains and losses (Yuan/share)
Weighted average ROE (%) 26.82 26.91 Decrease by 0.09 28.17
percentage points
Weighted average ROE net of non- 23.84 23.63 Increase by 0.21 26.71
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
√ Applicable □ Not applicable
Revenue increased by 34% over the same period of last year mainly due to the steady growth of core
traditional businesses and the rapid growth of new businesses such as direct office supplies M&G Colipu
and large retail store Jiumu Store.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 International Accounting Standards and PRC GAAP
□ Applicable √ Not applicable
9 / 237Annual Report 2021
(3) Explanation on the differences between PRC GAAP and Overseas Accounting Standards:
□ Applicable √ Not applicable
IX. Key Financial Data for the Year of 2021 by Quarter
Unit: Yuan Currency: RMB
th
1st Quarter 2nd Quarter 3rd
4 Quarter
Quarter
(October -
(January - March) (April - June) (July - September)
December)
Revenue 3812032207.40 3874205885.94 4465378769.43 5455786387.35
Net profit attributable to
shareholders of the listed 328287641.63 337933717.24 450980712.92 400664059.37
companies
Net profit attributable to
shareholders of the listed
294898619.82317991294.61379204649.17357443809.12
company after non-
recurring profit or loss
Net cash flow generated
164242625.68195854913.73624933296.07576165585.29
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: RMB Currency: RMB
Notes (if Amounts in
Items of Non-recurring Gains or Losses Amounts in 2021 Amounts in 2020
applicable) 2019
Gains or losses on disposal of non-current 6098090.22 Compensation 169704.92 6081606.95
assets for land
expropriation by
the Government
Government subsidies included in profits 163887877.43 Mainly including 135222930.01 42747681.46
and losses for the current period government
excluding those closely related to the subsidies
normal business and of fixed amount or received during
fixed quantity granted on an on-going the Reporting
basis in accordance with certain standards Period and
and in compliance with the State policies government
subsidies
transferred from
deferred income
Investment income arising from changes 43557663.15 Revenue 37743018.95 29184868.54
in fair values held-for-trading financial generated from
assets derivative financial assets held- purchase of
for-trading financial liabilities and wealth
derivative financial liabilities and management
investment gains on the disposal of held- products
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
10 / 237Annual Report 2021
Reversal of provision for impairment of 20000000.00 Mainly due to the 8958818.94 1803027.63
receivables and contractual assets which provision
are individually tested for impairment. reversal of bad
debts on
individual
receivables of
M&G Colipu
Other net non-operating income and -11127909.82 Mainly including 18746671.42 -5743388.02
expenses other than the above items the expenditure
of charity
donations and the
loss generated by
scrapping part of
the old
equipment
Minus: Effect of income tax 33537580.85 29169213.11 14413308.64
Effect of minority equity (after tax) 20550381.69 18957557.36 4764697.27
Total 168327758.44 152714373.77 54895790.65
Non-recurring profit and loss items listed in the Explanatory Announcement on Information Disclosure
by Companies Offering Securities to the Public No. 1: Non-Recurring Profits and Losses are defined as
recurring profits and losses
□ Applicable √ Not applicable
XI. Items Measured at Fair Values
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Changes in the Effect on profit for
Items Opening balance Closing balance
Period the Period
Held-for-trading 1428277848.33 1609123552.86 180845704.53 38636606.71
financial assets
Receivables financing 61412976.46 22824707.62 -38588268.84
Derivative financial
assets
Other debt investments
(including other
current assets)
Other non-current
financial assets
Investments in other 5476577.42 6745402.14 1268824.72
equity instruments
Held-for-trading
financial liabilities
Derivative financial 147570.52 147570.52
liabilities
Total 1495167402.21 1638841233.14 143673830.93 38636606.71
XII. Others
□ Applicable √ Not applicable
11 / 237Annual Report 2021
Section III Management Discussion and Analysis
I. Discussion and Analysis of Operation
The year 2021 is the beginning of China's 14th Five-Year Plan also the first year of M&G's new
five-year strategy. The year was full of opportunities and challenges. In face of the challenges posed by
repeated COVID-19 outbreaks "Double Reduction" policy and competition the Company implemented
the new development philosophy to build a new development pattern and focused on consumers to
improve the quality and efficiency of development. Core traditional business was steadily deveoloping
while new businesses was fast expanding. In 2021 revenue reached RMB17.6 billion an increase of 34%
and a net profit attributable to shareholders of listed companies was RMB1.52 billion an increase of 21%.Under the leadership of the Board of Directors the management and all employees achieved annual targets
laying a solid foundation for the new five-year strategy established the Company's sustainable
development strategy and striding forward towards the vision of "world-class M&G".Operation of the Company in 2021 is reported as follows:
1. Core traditional core businesses continued product optimization
During the Reporting Period we adjusted the structure to promote growth and reduced the quantity
and improved the quality of product development. The Company developed products with the idea of best-
selling products and controlled number of SKUs. Achieved good results in reducing quantity and
improving quality. The number of new products dropped significantly while the contribution of a single
product increased significantly. The Company optimized the quality control process enhanced the
efficiency of supply chain and improved new product development process. The growth performance of
categories developed through IPD method was much better than average level. The Company adjusted the
structure to promote growth by continuing to exert more efforts on high-end product development and
optimize the product mix. We introduced a number of popular IPs enriching our product category and
further improving our product identity.Mass market stationery segment. With "exploitation of potential collaboration product capability"
as the key words continued the strong product strategy and developed less and better products. This
segment continued to optimize product structure and increase contribution of individual products. It
established a mechanism to unleash the potential of long life cycle products and has achieved initial results.Promotion for category was carried out collaboratively with offline distribution channel to increase on
shelf ratio coordination was made with online channel to identify potential products and form individual
best-selling products for distribution. Online product management and ordering procedures were
formulated to meet customer ordering needs and increase online sales of consumer products.Premium stationery segment. With the direction of "structural adjustment and high growth" we
carried out product upgrading and best-selling products development and M&G Youpin series saw a
continuous upgrade. The contribution of individual products increased. The Company focused on the
development of high-end products to satisfy high-end consumer demand and optimize the existing product
offering of premium stationery segment. We focused on Tiers 2 and 3 distribution centers and key
stationery retail shops promoted structural adjustment of partners and terminals through better category
positions and improved the proportion of premium stationery segment in traditional stationery shops.Arts and kids drawing segment. The Company optimized the product structure and new product
development process focused on the promotion of long life cycle products and essential products
continued to promote the building of arts and kids drawing area in key stationery shops in various channels
developed national art stores exerted more efforts on the leading stores and incremental stores and
improved the marketing rate of arts and kids drawing at stationery shops. We accelerated the expansion
of online product lines and opportunity categories and created online best-selling products seeing
significant increase in the online share. We also actively seek to expand professional art and educational
products.Office stationery segment. The Company strengthened the development and promotion of office
products focused on the development of innovative products solving pain points of end users and created
online product offering. The Company expanded M&G stores for office supplies and developed model
stores for office supplies and developed large office stationery customers across the country.
2. Core traditional businesses continued omni-channel and improved retail service capabilities
12 / 237Annual Report 2021
During the Reporting Period core traditional businesses continued omni-channel following
changing trend of consumption demand and habits continued to optimize retail operation towards a
channel structure where multi-level distribution as the main body with more online more direct to
customer omni-channle and multiple contact point. Further the change from a wholeseller toward a brand
retail service provider.Develop traditional channels with a focus on improving individual store quality. The Company
improved single store quality with a focus on model stores; strengthened categories promotion and
dedicated retail spaces for key products and increased on shelf ratio; promoted the upgrading of channel
structure and expanded leading stores and community business districts in the industry; empowered
stationery shops and helped stationery shops improve retail capacities. As of the end of the Reporting
Period the Company had 36 Tier 1 distributor partners across China and Tiers 2 and 3 distributor partners
in about 1200 cities covering over 80000 retail stationery shops using the store sign "M&G Stationery"
across China.Empowers stationery shops with digital tools. M&G Alliance APP covered more than 100000
stationery shops with a unified merchadize pool built automated inventory replenishment mechanism.Based on users' behavioral and order data continuously tested and iterated product offering empowering
channel partners to manage merchandize and improved order satisfaction rate. Therefore helped "the right
match between right shops and right productss" practiced our idea of partnership in business operation.Actively explore direct model. Continued to promote direct supply business from the headquarters
to partners of the Company. The office direct supply model has effectively developed forming a building
plan and combination strategy for the best-selling products of leading office stationery stores. Premium
stationery segment continued to expand coverage of ideal domestic retail stationery shops (physical
bookstores variety retail shops and stationery retail terminals) and explored other new models.Increase online channels. Actively promoted online businesses collaborated with the various
segments to improve schedule and criterion for online product development; continued to optimize the
structure of direct sales and explored ways to optimize the creation of best-selling products; developed
new channel businesses continued to promote Pinduoduo and Tiktok Kuaishou and other new channel
businesses; improved membership program management. M&G Tmall Flagship Store has more than one
million members and growing well. During the Reporting Period M&G Technologies revenue was
RMB52701 million representing an increase of 11% from the previous year.
3. Continue to improve brand image
During the Reporting Period the Company made progress in corporate brand brand communication
and public relations launched a number of season-themed events such as cherry blossom season children
season and exam season communicated unique selling points of products and improved media efficiency
and input-output ratio. Focusing on the concept of "good Chinese stationery with warmth" we enhanced
brand recognition of M&G in stationery shops and consumers. The company won the title of 2021 "China
Annual No.1 Stationery Brand Award" and "China's 500 Most Valuable Brands".
4. Increase R&D investment promote digitalization and form new organizational capabilities
Promote design and R&D. During the Reporting Period the Company actively performed forward-
looking research and design focused on core technology of products accelerated the speed of
technological progress and results transformation improved quality based on the application performance
indicators and actual usage scenarios that consumers can directly perceive. The Company has developed
original products such as the cutting technology of "arc surface" of pen tip the development of quick-dry
and smooth gel pen and the industry's first food-grade kids art products (oil painting stick and color mud).Besides the Company exerted efforts on quality improvement and control and applied machine vision
intelligent detection technology. During the Reporting Period the Company led and participated in the
compilation of a number of national standards industry standards and group standards enhancing the
Company's influence in the pen-making industry and the cultural and sports industry.Improve production management. During the Reporting Period the Company vigorously
promoted lean management implemented cost reduction and efficiency enhancement continued to
promote MBS (M&G Business System) management and integrated the MBS process improvement
principle-standard with the Company's business model to continuously improve management capabilities.For the best-selling products we established a rapid response mechanism among product development
sales and production shortened production lead time and improved order fulfillment rate.
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Coordinate supply chain. During the Reporting Period the Company promoted the integrated
product development model from series to parallel model. The Company applied digitalization
technologies to improve the accuracy of order forecasting; continued to make innovation with consumers
as the center; continued to expand high-quality supply chain resources at home and abroad to provide
guarantee for the development of high-end products.Logistics support. During the Reporting Period the Company worked on building a logistics service
that can support multiple business models. According to requirements of different business and diverse
scenarios to provide differentiated refined and efficient logistics service support for each business
segment strengthened logistics service support capability.Digitalization development. During the Reporting Period following the blueprint for digital
transformation the Company focused on such key areas as membership operations and channel operations
strengthened data application and analysis capabilities as well as scalable system architecture capabilities
promoted the gradual integration of production sales and supply chain links improved order response
speed and strengthened the management and internal control standardization and risk management.Construction of organization and talent. Organization and talents are important basis for realizing
our strategy. During the Reporting Period based on the Company's new five-year strategy the Human
Resources Center formulated targeted human resources plans based on business needs continued to
optimize organizational efficiency incentive talent management and corporate culture system. Focusing
on the selection use training and retention of talents we strived to build an efficient team that can support
the realization of our five-year strategy plan. We exerted intensified efforts on the MT program improved
long- and short-term incentive plan ensure that employees pay attention to the achievement of the
Company's performance in the current year and realize the long-term synchronous development of core
employees and the Company. M&G keeps in mind the social responsibility of national enterprises and
encourages employees to actively participate in various public welfare programs of the Company. During
the Reporting Period M&G was awarded the best social responsibility award in HRflag Employer
Branding Creativity Competition.
5. Large retail store business steadily developed
Jiumu Store has a clear positioning in the Company’s new five-year strategy which is to become the
bridgehead for M&G brand and product upgrading and also to become a national leading premium
recreation and creativity retail brand. Through more exposure of M&G brand and products more product
development of M&G's premium strationery products sharing retail capabilities and providing timely
consumer insights.During the Reporting Period Jiumu Store improved merchandize capacity and efficiency; established
a dynamic analysis platform to improve merchandize operation; devleped omni-channel marketing and
promotion better thematic seasonal marketing and rollout schedule improved the accuracy of sales
forecast strengthened the accuracy of inventory replenishment and allocation optimized in-store
inventory. Jiumu Store improved operation quality of individual stores through better store display
marketing & promotion staff training; analyzed and followed up on the implementation of key retail
indicators; continued to improve membership programs. It has more than one million registered members
which improved outreach to and interaction with consumers.During the Reporting Period facing the repeated outbreaks of the pandemic M&G Life (including
Jiumu Store) revenue was RMB1.05 billion an increase of 60% among which Jiumu Store revenue was
RMB950 million an increase of 70%. As of the end of the Reporting Period the Company had 523 large
retail stores in China of which 60 are M&G Life stores and 463 are Jiumu Stores (319 own stores and
144 franchise stores). During the Reporting Period losses of the large retail stores reduced.
Unit: RMB 0'000
M&G Life (Jiumu Store) 2021 2020 2019 3-year average
Revenue 105406.13 65484.36 60063.70 76984.73
Net profit -2108.65 -5022.93 -804.67 -2645.42
Of which Jiumu Store 2021 2020 2019 3-year average
Revenue 94949.81 55849.09 46043.51 65614.14
Net profit -2255.78 -4207.86 -693.11 -2385.58
6. Rapid growth of direct office supplies business
Direct office supplies business M&G Colipu saw continuous development. After nearly a decade
since its start it has been built competitive capabilities needed as an industry-leader. Focusing on in-depth
14 / 237Annual Report 2021
exploration of existing customers and sales from new customers Colipu expanded opportunities for new
categories and new businesses such as MRO and marketing gifts further enhancing brand influence in the
direct office supplies market and being selected as the 2020 Shanghai "specialized refined special and
new" SME.Customer development. As for central SOEs customers we were shortlisted for projects of CHN
Energy and China General Technology (Group) Holding Co. Ltd.; as for government customers we were
shortlisted for Jiangsu Provincial Government Procurement Online Mall; as for financial customers we
were shortlisted for the projects of Agricultural Bank and China Development Bank; as for MRO we won
the projects of PowerChina and China National Nuclear Corporation.Warehouse distribution logistics. The East China Intelligent New Warehouse (Phase I) was put into
use starting a new generation of e-commerce intelligent warehousing system and advanced automatic
storage & retrieval system was adopted becoming more intelligent warehousing logistics.Technology platform construction. We upgraded and transformed the rule engine realized process
automation through RPA robots and build a big data system and data center improving Colipu’s overall
work efficiency and enhanced rapid response to provide customers with high-quality services.During the Reporting Period M&G Colipu’s revenue was RMB7.76 billion an increase of 55% net
profit was RMB240 million an increase of 68%.Unit: RMB 0'000
M&G Colipu 2021 2020 2019 3-year average
Revenue 776565.05 500027.59 365806.17 547466.27
Net profit 24198.53 14382.86 7580.35 15387.25
7. Deepen long-term incentives and protect shareholders' rights and interests
During the Reporting Period the Company continued to better align Company's core management
team and the Company's long-term value creation. Completed the additional stock grant under the 2020
restricted stock incentive plan. The initial grant of the 2020 restricted stock incentive plan was exempted
from restricted sales strengthened alignment mechanism of the Company's senior management key staff
and shareholders. During the Reporting Period the Company's share-based payment expenses for was
RMB77.65 million. last year such expenses was RMB 82.19 million.The Company safeguards shareholders' rights and interests and adopts a sustainable and stable
dividend policy. Since the Company went public in 2015 including profit distribution plan for 2021
cumulative cash distribution has reached around RMB2.4 billion sharing the Company's growth with all
shareholders.During the Reporting Period due to confidence in the Company's future development prospects the
Company's controlling shareholders acted in concert Keying Investment and Jiekui Investment launched
a shareholding increase plan to increase their holdings by 3 million shares from December 2021 to March
2022 with a total amount of RMB176 million.
8. Actively explore overseas markets
The Company's products are exported to more than 50 countries and regions with distribution and
procurement networks in Thailand Vietnam Malaysia and other countries. During the Reporting Period
the COVID-19 pandemic situation in overseas markets varied greatly and the Company actively
communicated with foreign customers to control business risks; used better marketing modes and online
channels for product promotion and sales to adapt to market changes; promoted overseas markets and
capability improvement promoted M&G's products and business models in Africa according to local
conditions sorted out product offerings suitable for the local market and carried out targeted product
development. With the mission of "providing affordable stationery for local students" we explored
channels suitable for local conditions laying a foundation for steadily enhancing global competitiveness.
9. M&A progress
Working on Axus Stationery turnaround
Export business accounts for more than 70% of the sales revenue of Axus Stationery and the overseas
market has not fully recovered. During the Reporting Period Axus Stationery focused on sales growth
cost reduction and organizational downsizing and determined the positioning of "specialized full-scene
and mid-range". We increased revenue and reduced expenditure while reducing costs and increasing
efficiency improved quality and reduced cost and properly adjusted the capacity and resource allocation
of production bases.
15 / 237Annual Report 2021
Acquire Beckmann a Norwegian brand
During the Reporting Period the Company acquired the Norwegian high-end schoolbag brand
Beckmann which specializes in functional spin protection backpacks an industry leader and national
brand in Norway. We look forward to ushering in a new chapter of development by combining M&G's
channel and supply chain advantages. During the Reporting Period revenue of Beckmann was RMB120
million among which RMB21 million was incorporated since acquision closing.II. Industry Situation of the Company during the Reporting Period
1. Industry situation of the Company
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 stationery arts sports
and entertainment products industry. The Company is a member of China Stationery & Sporting Goods
Association and China Writing Instrument Association.During January-November 2021 revenue of China's stationery and office supplies industry amounted
to RMB147.1 billion an increase of 11%. There were 1082 enterprises above designated size in China's
stationery and office supplies industry (source: China Stationery & Sporting Goods Association).In 2021 217 enterprises above designated size in writing instrument industry recorded the revenue
of RMB15 billion from principal business an increase of 1%. In 2021 writing instrument industry exports
amounted to USD2.8 billion an increase of 21% from previous year and the imports amounted to USD900
million an increase of 13% from previous year. China's writing instrument industry imports have grown
at an average annual rate of 3% over the past decade. (Source: China Writing Instrument Association)
The demand for stationery and office supplies were affected due to the joint release of Opinions on
Further Reducing the Burden of Homework and Off-Campus Training in Compulsory Education by the
General Office of the Central Committee of the CPC and the General Office of the State Council in July
2021 ("Double Reduction") and the repeated outbreaks of the pandemic. At the same time some new
category opportunities arose such as kids art and educational products ushering in new development space.The market of the direct office supplies has been growing very fast in China. In 2020 the Ministry
of Finance and the State Council further promoted centralized government procurement. At the same time
the standardization of centralized procurement by state-owned enterprises was further improved and the
concept of supply chain innovation and supplier credit investigation mechanism were introduced.According to relevant estimates the market size of office supplies in China exceeds RMB2 trillion (source:
www.chyxx.com).
2. Industry features
(1) Periodicity
Writing instruments student stationery and office supplies are less affected by economic fluctuations.With low unit price writing instruments and student stationery are more of necessity goods with relatively
low income elasticity relatively less sensitive to economic fluctuations.
(2) Seasonality
There is seasonality in the demand for student stationery. Months before a new semester (summer
and winter vacation) is what the stationery industry calls "schooling peak season" during which sales of
student stationery usually peaks. Students and their parents will buy a lot of stationery in advance and
stationery manufacturers promote their products.There is less seasonality in the demand for student stationery. However the demand for office
stationery in the second half of the year might be slightly higher than that in the first half as some
companies bought stationery at the end of the year.Under the COVID-19 pandemic the delay in school return date may affect the seasonal peak.
3. Development trend of the industry
With the changes in the way of life and consumption habit of consumers China’s retail industry
entered a new stage of redevelopment and innovation. Stationery industry faces challenges with
uncertainty of external environment diversification of retail channels and more individualized demands
from main customers group (now being the post-90s and post-00s). With the changing demographics of
China in particular the decreasing birth rate stationery industry revenue growth comes less from by unit
16 / 237Annual Report 2021
volume growth and more from consumption upgrade and product upgrade. Domestic market demand for
mid- to high-end stationery products keeps increasing reshaping market structure dominated by low-end
products. This provides opportunities for mid- to high-end stationery products with better quality and
higher price. China's population of 1.4 billion accounts for about 18% of global population while leading
stationery companies in China can continue to mostly rely on the huge domestic market they also have
room for international expansion in international markets which could reinforce each other under
favorable conditions.Leading enterprises focused on building omni-channel operation capabilities and realized refined
management over the offline channels. With the popularity of the Internet smart phones and online
transactions people's consumption habits and consumption scenarios have changed. Consumers' access to
information is becoming more fragmented and new-generation marketing means are becoming more
diversified including online media platforms (such as Weibo WeChat Xiaohongshu Tiktok) and IP topic
creation which further tests enterprises' ability to make quick response to industry trends. Compared with
small- and medium-sized enterprises leading enterprises boast stronger and richer whole network
marketing and operation capabilities. They formulate refined marketing strategies by city to reach
consumers and capture fragmented traffic to achieve traffic attraction and conversion for online and offline
businesses. To improve the stores' initiative marketing and traffic operation capabilities in addition to
online traffic offline channels are also required to realize refined management by empowering channels
through organizational reform and information system. According to the National Bureau of Statistics
online retail sales across the country recorded RMB13 trillion in 2021 an increase of 14%. Outstanding
companies in the consumer industry seized the development opportunities of online consumption and
achieved continuous sales growth through online and offline integration.Traditional retail stationery shops nearby school are still the dominant channel for China’s stationery
industry and shares of other retail formats are increasing faster. Sales terminals and channels of the
industry are becoming more diversified upgrading and competition in channels becomes more obvious.Domestic consumption for stationery in China becomes more brand conscious innovative individualized
and more premium. There is a growing demand for premium cultural and creative products stationery
products are moving from those primarily focus on functionality towards those with more cultural and
creative elements catering to customers. There are around thousands of stationery manufacturers in China's
domestic stationery industry and the industry is quite decentralized. There are a few leading companies
for most sub-category stationery products with continued development in the stationery industry there
could be higher industry consolidation and leading companies could gain larger market shares.In recent years in the context of the digital economy thanks to favorable factors such as policy
driving the rapid advancement of centralized procurement by large- and medium-sized enterprises and
the competition among various digital procurement service providers great progress has been made in the
digitalization e-commerce and centralization of public procurement in China which have become the
main form of public resource transactions from central to local governments. Facing the shock of economic
situation at home and abroad digital e-commerce and centralized procurement exhibits advantageous
coordination and quick response ability.According to the China Public Procurement Development Report (2020) compiled and released by
China Federation of Logistics & Purchasing the scale of public procurement transactions in China in 2019
exceeded RMB20 trillion accounting for more than 20% of China's total GDP. In terms of the procurement
scale of the government State-owned Key Enterprises and local state-owned enterprises the annual
procurement scale of government and enterprises in China is also quite large. According to relevant
estimates the market size of office supplies in China exceeds RMB2 trillion (data source:
www.chyxx.com). In addition the market size of employee benefits and other categories is also quite large.With the further development and application of information technology. Traditional industries have
gained growth momentum in the digital age. Industrial digitization is becoming the main pillar of the
digital economy and traditional industries are actively gaining new development momentum through
digital empowerment. The investment in the manufacturing industry has shifted from the investment in
equipment and assembly lines to the transformation of digital processes and digital transformation of
products in a bid to apply digital technology to reduce channel costs and management costs and become
a digital-driven modern enterprise.With smart technology and products upgrade promotion of national education informatization and
the development of the online education market smart stationery products have developed rapidly in the
past few years. Technology-empowered smart pens and smart books are widely adopted in online
17 / 237Annual Report 2021
education providing an increasingly better user experience. Technology-empowered smart pens and smart
books are widely adopted in online education providing a better user experience.
4. Company position in the industry
As a leader of "own brand + domestic demand" in China's stationery industry the Company has a
strong first-mover and leading advantage with a wide and deep distribution network coverage in China's
stationery market. At the end of the Reporting Period the Company has a national distribution network
covering over 80000 retail stationery shops using the store sign "M&G Stationery" across China enabling
the Company to establish market leading position for its own brand products amidst competitions. The
Company ranked first in "Top Ten Enterprises in China's Light Industry and Writing Instrument" for nine
consecutive years.M&G Colipu is a leader in the field of B2B office supplies in China. After nearly ten years since its
start thanks to its electronic transaction system intelligent warehousing logistics management system
high-quality supply chain management and customized service M&G Colipu has become one of the
industry leaders of digital enterprise procurement service provider. For many years M&G Colipu has won
many awards such as the Outstanding E-commerce Platform in China's Stationery and Office Supplies
Industry the Outstanding Supplier of Government Procurement and the Most Influential E-commerce
Platform in Financial Procurement.III.The Company's Businesses during the Reporting Period
1. Principal business
M&G Stationery is a comprehensive stationery supplier and an office servicer. The Company
integrates the value of creativity into its products and service advantages advocates fashionable stationery
lifestyle and provides solutions for study and work. Its core traditional businesses include designing
developing manufacturing and selling writing instruments student stationery office supplies and other
products under brands and also the e-commerce business M&G Technologies; its new
businesses mainly comprise of large retail store business - Jiumu Store and M&G Life and direct office
supplies business - M&G Colipu. During the Reporting Period there were no significant changes in the
Company's principal business and operation model.
2. Principal 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 warehouse and logistics to distribution network management. 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 proposition to product design product mold 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 features sales-driven production in-house and OEM outsourcing. The Company
has 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 in 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 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 leading companies in China’s stationery business that engage in large-scale brand sales
management and franchise management. The business of M&G Technologies is mainly divided into
platform business such as Tmall JD and Pinduoduo and live streaming business such as Tiktok and
Kuaishou. M&G Technologies is also responsible for online full platform marketing and management of
authorized online stores.M&G large retail store businesses include two store types: Jiumu stores and M&G Life stores.Targeting female consumers aged 15-29 Jiumu Stores primarily sell stationery cultural and recreative
products educational and entertainment products and daily household and home products. Jiumu stores
are mostly located in high-quality shopping malls in prime urban districts. Jiumu stores represent the
Company's ongoing exploration in new retail model in lifestyle products with a distinct cultural element.
18 / 237Annual Report 2021
Jiumu Store started franchising in July 2018 where franchisees pay contract deposit and decoration fee
according to contracts and store rent store staff salary utilities and other costs incurred in franchising
stores. M&G Life stores mainly target students aged 8-15 primarily selling stationery products. M&G
Life stores mostly locate in Xinhua Bookstore and compound bookstores M&G Life stores represent the
Company's efforts to move beyond the dominant traditional channels of retail stationery shops nearby
schools.In the direct office supplies business M&G Colipu provides governments public institutions
Fortune Global 500 companies and other SMEs with cost-effective one-stop office supplies procurement
service. M&G Colipu has a rich product offering covering office supplies MRO industrial products
marketing gifts employee benefits and corporate services more than one million products including office
paper office stationery office supplies office equipment computers and accessories digital and
communications office appliances daily necessities labor protection industrial supplies food and
beverages business gifts and office furniture. By shortening the supply chain M&G Colipu provides
customers with cost-effective procurement and customized value-added services.With changing demographics of China in particular the decreasing birth rate it becomes increasingly
difficult to achieve revenue growth from unit volume growth in the future and stationery industry growth
is increasingly driven by consumption upgrade and product upgrade. The Company’s core traditional
businesses are challenged with changing demands from more individualized population born after 1990
and 2000. Stationery consumption in China is becoming more brand conscious innovative individualized
and more premium. There is a clear growth in demand for better cultural and creative products which
accelerates industry transformation towards one with more cultural and creative elements. M&G
Technologies reflects channel diversification trend and helps the Company's omni-channel strategy by
expansion of online business. Jiumu stores and M&G Life stores both serve as the Company's bridgehead
to continue products and channels upgrading of its core traditional businesses and they play an important
role in promoting the Company's brands and products upgrade. M&G Colipu's direct office supplies
business meets demands for purchasing office supplies from large corporations and institutions which
helps boosting the sales of writing instruments and office stationery of the Company's core traditional
business.
3. Major driver for revenue growth
Driven by market force
With the changes in the way of life and consumption habit of consumers the mix of "people product
and place" in retail industry has been reconstructed sales channels have become more diversified and
channel upgrades and channel competition have become increasingly fierce. The per capita income of
residents has continued to grow and consumption and products have been upgraded. As the domestic
market demand for mid- to high-end stationery products keeps increasing this provides opportunities for
mid- to high-end stationery products. China's population accounts for about 18% of global population
while leading stationery companies in China can continue to mostly rely on the huge domestic market
they also have room for international expansion in international markets which could reinforce each other
under favorable conditions.Driven by innovation
Innovation as one of driving forces for continuous development with a focusing on consumers. The
Company continued to promote technological innovation product innovation channel innovation and
business model innovation. Through product innovation and business model innovation the Company has
formed a pattern of coordinated development high-quality development and sustainable development of
multi-business model.Driven by the Company's competitive advantages
With professional teams market insights unique brand advantages channel advantages supply chain
advantages R&D and design advantages the Company continued to promote technological innovation
and product innovation and maintained a strong forward driving force through high-end omni-channel
digital empowerment lean production and dynamic organization.Driven by policy
The continuous investment of the state in education the three-child policy and a favorable policy
context for the development of the cultural industry encourage and promote the integrated development
of the cultural industry and upstream and downstream industries invigorate economic transformation and
social development and drive the steady development of the stationery industry. A series of national
policies on the centralized procurement industry have been promulgated rapid progress was made in
19 / 237Annual Report 2021
centralized procurement of large- and medium-sized enterprises various digital procurement service
providers competed with each other the transparency of procurement information and the competitive
mechanism of centralized procurement promoted the concentration of office supplies industry and
promoted the vigorous development of direct office supplies industry.Driven by industry integration
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 and more market share are gained by leading companies.Through mergers and acquisitions of high-quality targets at home and abroad the Company further
enhanced its competitiveness and brand power in segmented categories.IV. Analysis on Core Competitiveness during the Reporting Period
√ Applicable □ Not applicable
As one of the largest stationery manufacturers in the world the Company has formed a unique
competitive advantage in terms of brand channel supply chain design and R&D. During the Reporting
Period the Company withstood the test of COVID-19 pandemic greatly improving the product strength
channel strength and brand strength and the Company's core competitiveness.
1. Corporate culture and team
M&G is a company with a strong sense of mission and social responsibility. With the mission of
"make study and work more joyful and effective" it is committed to providing Chinese students with
affordable good domestic stationery and continues to devote itself to various social welfare undertakings
thereby promoting its continuous development. At the same time the Company has cultivated a team that
highly recognizes the Company's values has passion and technology is competitive in the industry is
united and enterprising and keeps unremitting struggle.
2. Brand advantage
As a leader of "own brand + domestic demand" in China's stationery industry the Company has
established a leading position for its own brand products amidst competitions of domestic market. The
Company ranked the first in "Top Ten Enterprises in China's Light Industry and Writing Instrument" for
ten consecutive years. M&G brand has sound brand recognition among consumers and served as the
designated stationery brand for Boao Forum for Asia for many years. During the Reporting Period the
Company won the title of 2021 "China Annual No.1 Stationery Brand Award" and "China's 500 Most
Valuable Brands" winning international praise with excellent quality and brand reputation and showing
the brand value of Chinese stationery to the world.
3. Channel advantage
The Company has a strong first-mover and leading advantage with a wide and deep coverage of
distribution network across China. The Company has established an efficient distribution management
system and a domestic terminal network with deep penetration. During the Reporting Period the Company
continued to broaden and deepen the national network and perfected online and offline channels forming
an omni-channel multi-level and multi-contact marketing network. At the end of the Reporting Period
the Company has 36 tier-one distributor partners and about 1200 tier-two and tier-three distributor
partners across China covering over 80000 retail stationery shops with "M&G Stationery" logo across
China 523 direct large retail stores and thousands of authorized stores in Taobao system JD.com
Pinduoduo and other e-commerce channels.
4. Supply chain 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. The Company promotes the application of
intelligent manufacturing technology in the production and inspection links of the stationery industry and
applies machine vision technology in various key links to greatly improve the efficiency of production
20 / 237Annual Report 2021
and inspection thus serving as a benchmark and demonstration role for transforming the extensive
industrial mode into an intensive one.With the idea of partnership in its business operation the Company has strived 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 and simultaneously improve both loyalty and operation capability of our business partners.
5. Design and R&D advantage
The Company has the capability to respond timely to market and strong R&D capacity for new
products. The Company conducts market research for new product development and identifies market
trends. The Company launches about one thousand new products each year to meet consumer needs. The
Company has been awarded with such four major international industrial design awards as German iF
Award Red Dot Design Award G-mark and IDEA for its product design. The Company has a design
studio in Israel highlighting the world-class design capabilities of M&G Stationery. During the Reporting
Period through structural innovation and technological innovation the Company has developed a variety
of products such as quick-dry gel pens super durable writing pencils and food-grade art painting materials.The magnetic levitation gel pen Magneter won German iF Award again the automatic compass won G-
mark Award again and TIKITAKA press marker won the Silver Award for Innovation in Culture and
Education - Technological Innovation in 2021. At the end of the Reporting Period the company has gotten
841 patents.
The Company has broken through the foreign technical barriers and got hold of the raw material
formula and production technology with domestic independent intellectual property rights greatly
enhancing the percentage of home-made raw materials and finished products. The Company has been
recognized as a national high-tech enterprise since 2010 and has built a number of national or provincial
level technology platforms such as National Industrial Design Center China Key Laboratory of Light
Industry and Writing Instrument Engineering Technology Shanghai Writing Instrument Engineering
Technology Research Center. The testing laboratory of the Company had CNAS certification qualification
and its testing capabilities have reached world-class level. During the Reporting Period the Company won
the "13th Five-Year Plan" China Light Industry Science and Technology Innovation Advanced Group
Award. The "development and industrialization of water-based ballpoint pen with regulator" won the First
Prize for Science and Technology Progress Award of China National Light Industry Council. The
"material and key manufacturing technology and industrialization of gel ballpoint pens" won the second
prize of Shanghai Science and Technology Award.
6. M&G Colipu's competitive advantages
As a B2B comprehensive e-commerce platform built by M&G Group M&G Colipu is committed to
providing customers with smart office and MRO (Maintenance Repair and Operations) solutions and has
become one of the industry leaders.After nearly ten years of development M&G Colipu has accumulated rich experience in key accounts
and large project services and has boasted the leading advantage as a professional office and MRO service
provider in the industry. Through the customer service network covering 31 provinces and cities across
China it is now serving more than 60000 customers in 5 categories including government finance State-
owned Key Enterprises and state-owned enterprises intermediate market and MA (Fortune Global 500)
providing customers with one-stop procurement service solutions. Nowadays more and more customers
take M&G Colipu as their preferred comprehensive e-commerce service platform.M&G Colipu is committed to providing high-quality low-price and professional procurement
services for customers. Relying on its own advantages in the global procurement supply chain platform
M&G Group's strong brand influence strong financial strength and rich product strength M&G Colipu
strictly selects authorized manufacturers and genuine licensed products directly cooperates with
manufacturers and brand owners forms strategic alliances and conducts large-scale procurement fully
enjoying the market price advantage. At the same time M&G Colipu not only owns nearly one million
square meters of super-large commodity storage space but also has a 5-level warehousing system network
that effectively covers the whole country responds to orders efficiently and quickly and maximizes
customer demand for delivery timeliness. It uses intelligent warehousing and distribution systems such as
AGV (Automated Guided Vehicle) WMS (Warehousing Management System) TMS (Transportation
21 / 237Annual Report 2021
Management System) G7 (Vehicle Management System) and built 7 regional distribution centers across
the country. Its logistics network covers 100% of the counties in Chinese mainland providing timely and
accurate service to customers.Meanwhile M&G Colipu is also a pioneer and industry leader in procurement digitalization and has
won the titles of National E-commerce Demonstration Enterprise and Shanghai E-commerce
Demonstration Enterprise. M&G Colipu has invested a professional technical development team
consisting of more than 200 people in digitalization for a long time. Through independent research and
development of core digital transaction system and rapid and professional system integration development
technology by virtue of AI and big data analysis it provides a variety of personalized system integration
and value-added services for different customers to offer flexible ordering modes thereby rendering one-
stop office procurement service for different types of customers. The realization of process automation
through RPA robots and the establishment of big data systems and a data middleground effectively
guarantee M&G Colipu's ability to provide high-quality services and rapid response to major enterprises
and public institutions.M&G Colipu has a professional team of nearly 2000 people with enterprising spirit profession years
of industry experience and lofty ideals end-to-end service teams from pre-sales to after-sales covering 31
provinces municipalities and autonomous regions across China. Through the flattening of the supply chain
M&G Colipu continues to provide customers with one-stop service procurement solutions that reduce cost
and enhance efficiency. Relying on M&G Group's strong brand influence strong financial strength and
rich product strength M&G Colipu adheres to the information-based construction of an integrated
transparent and efficient procurement system. With the application of software and hardware intelligent
technology and strong system integration technical support such procurement system meets the
diversified complex and digital procurement needs of customers creates a new enterprise service
ecological chain and continues to create value for customers.V. Financial Performance during the Reporting Period
In 2021 the Company revenue was RMB17607403300 representing a year-on-year increase of
34.02%. The net profit attributable to shareholders of the listed company amounted to RMB1517866100
representing a year-on-year increase of 20.90% while net profit attributable to shareholders of the listed
company after deducting non-recurring profit and loss amounted to RMB1349538400 representing a
year-on-year increase of 22.38%. As at the end of 2021 the total asset of the Company amounted to
RMB11424387900 representing a year-on-year increase of 17.66%. The net asset attributable to
shareholders of the listed company amounted to RMB6194892000 representing a year-on-year increase
of 19.28%. The Company has maintained health growth and sound asset condition.
(1) Analysis of principal operation
1. Analysis of change in certain items in income statement and cash flow statement
Unit: Yuan Currency: RMB
Amount in the current Amount in the same Change in the
Item
period period last year proportion (%)
Revenue 17607403250.12 13137745727.18 34.02
Operation cost 13520841753.26 9806609999.48 37.87
Selling expenses 1397645460.82 1103184023.51 26.69
Administrative expenses 745024738.28 602627135.41 23.63
Financial expenses 6904764.52 9060176.35 -23.79
R&D expenses 188758215.50 160178941.89 17.84
Net cash flow generated from 1561196420.77 1271697892.28 22.76
operating activities
Net cash flow generated from -662837857.46 -1065448932.04 Not applicable
investing activities
Net cash flow from financing -729259846.78 -200057726.09 Not applicable
activities
Taxes and surcharges 66507958.32 50694964.71 31.19
Other income 72747727.93 45665409.77 59.31
Investment income 6293164.04 3851154.70 63.41
22 / 237Annual Report 2021
Credit impairment losses -7013714.54 -38225902.12 Not applicable
Asset impairment loss -17091366.45 -40287483.83 Not applicable
Gains from asset disposal 6098090.22 169704.92 3493.35
Explanation on the reason for change in revenue: During the Reporting Period sales continued to grow
with 17% growth in core traditional business and 56% growth in new business.Explanation on the reason for change in operating cost: The increase in sales results in the increase in
operating cost.Explanation on the reason for change in net cash flow from investing activities: During the reporting
period the net outflow decreased compared with the same period last year mainly due to the decrease in
the net outflow of bank financial products compared with the same period last year.Explanation on the reason for change in net cash flow from financing activities: The increase in net outflow
during the Reporting Period compared with the same period last year is mainly due to: 1. minority
shareholders paying cash in equity for the acquisition of M&G Life during the Reporting Period; 2.implementing new lease criteria and reclassifying the rent paid from operating activities to financing
activities; 3. increase in cash dividend distribution from the same period last year.Reason for the change in taxes and surcharges: The increase in sales results in the increase in taxes.Explanation on the reason for change in other income: M&G Colipu received more government subsidies
related to its operations compared with the same period last year.Explanation on the reason for change in investment income: The income from wealth management
products received during the Reporting Period increased compared with the same period last year.Explanation on the reason for change in credit impairment losses: M&G Colipu accrued the bad debt
provision for prepaid accounts in the same period last year.Explanation on the reason for change in asset impairment losses: The provision for goodwill impairment
loss was accrued in the same period last year.Explanation on the reason for change in income from asset disposal: The income from disposal of some
assets during the Reporting Period increased compared with the same period last year.A detailed description of the major changes in the Company's business type profit composition or profit
source in the current period
□ Applicable √ Not applicable
2. Analysis of revenue and cost
√ Applicable □ Not applicable
During the Reporting Period the Company's core traditional business increased by 17% as compared to
the corresponding period of last year and new business increased by 56% as compared to the
corresponding period of last year.
(1). Result of principal business by industry product region and sales model
Unit: Yuan Currency: RMB
Result of principal business by industry
Change in Change in
Gross Change in gross
revenue cost from
By industry Revenue Operation cost margin profit margin from
from last last year
(%) last year (%)
year (%) (%)
Manufacturing 9164013924.44 6154383727.87 32.84 18.31 19.15 Decrease by 0.47
and sales of percentage points
stationery and
office supplies
Retail industry 8436809332.25 7362168406.68 12.74 56.66 58.63 Decrease by 1.08
percentage points
Service industry 1261896.79 / / -46.71 / /
Result of principal business by product
Change in Change in
Gross Change in gross
revenue cost from
By product Revenue Operation cost margin profit margin from
from last last year
(%) last year (%)
year (%) (%)
Writing 2819668310.67 1675601917.98 40.57 23.65 24.18 Decrease by 0.25
23 / 237Annual Report 2021
instruments percentage points
Student 3128136090.69 2092845598.55 33.10 15.61 16.18 Decrease by 0.33
stationery percentage points
Office stationery 3338458451.38 2406762021.35 27.91 18.32 18.88 Decrease by 0.34
percentage points
Other products 548909924.21 303216598.14 44.76 69.81 68.34 Increase by 0.48
percentage points
Direct office 7765650479.74 7038125998.53 9.37 55.30 58.12 Decrease by 1.61
supplies percentage points
Management fee 1261896.79 / / -46.71 / /
for franchising
Result of principal business by region
Change in Change in
Gross Change in gross
revenue cost from
By geography Revenue Operation cost margin profit margin from
from last last year
(%) last year (%)
year (%) (%)
China 17183757602.59 13183280401.69 23.28 34.56 38.65 Decrease by 2.26
percentage points
Other countries 418327550.89 333271732.86 20.33 15.26 11.91 Increase by 2.39
percentage points
Principal business by industry product region and sales model
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.
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. Revenue from service industry refers to management fee for franchising. The reason for the decrease
during the Reporting Period was that the management fee for franchising in the same period last year
consisted of traditional channels and Jiumu Store. The franchise stores of traditional channels stopped
charging franchise management fees since 2017. The management fees that have been collected are
recognized in the benefit year and have been fully recognized by the end of 2020. During the Reporting
Period the management fee for franchising is only the part charged by Jiumu Store.
4. Writing instruments refer to products of writing utensil sold by the Company (excluding M&G Colipu).
5. Student stationery refers to products of student stationery sold by the Company (excluding M&G
Colipu).
6. Office stationery refers to products of office supplies sold by the Company (excluding M&G Colipu).
7. Other products refer to products sold by the Company (excluding M&G Colipu) apart from writing
instruments student stationery and office supplies. During the Reporting Period the business of Jiumu
Store developed rapidly.
8. Direct office supplies refer to products in all categories sold by M&G Colipu. During the Reporting
Period business of M&G Colipu developed rapidly.Unit: RMB 0'000
Result of revenue by business
Business Revenue in 2021 Revenue in 2020 Change in amount Change
Core traditional business 888041.44 757611.01 130430.43 17%
Colipu Office Supplies 776565.05 500027.59 276537.46 55%
business
Large retail store business 105406.13 65484.36 39921.77 61%
Transactions offset -9272.29 -9348.39 76.10 Notapplicable
Total 1760740.33 1313774.57 446965.76 34%
(2). Analysis of production and sales volume
√ Applicable □ Not applicable
Change in Change in Change in
Major products Unit Production Sales Inventory production from sales from inventory from
last year (%) last year (%) last year (%)
Writing instruments Piece 2725504078 2722066365 598473624 17.09 17.67 0.58
24 / 237Annual Report 2021
Student stationery Piece 5740014834 5738966028 665367649 7.17 7.55 0.16
Office stationery Piece 1901462010 1893466329 163035860 17.26 17.96 5.16
Other products Piece 17478919 16031840 7540044 70.78 67.82 23.75
Direct office supplies Numbers 462390344 462875797 21797693 23.20 23.71 -2.18
Explanation on production and sales volume
The simultaneous increase in the production volume and sales volume of other products was mainly
attributable to the growth of the business of Jiumu Store.
(3). Performance of major procurement contracts and major sales contracts
□ Applicable √ Not applicable
(4). Analysis of cost
Unit: RMB Yuan
By industry
Percentage
Percentage of change in the
Percentage of
total costs for amount for the
Amount in the total costs for Amount in the same Explanation on
By industry Cost item the same current period as
current period the current period last year the situation
period last compared to the
period (%)
year (%) same period last
year (%)
Manufacturing Cost of 6154383727.87 45.53 5165288162.73 52.67 19.15
and sales of principal
stationery and business
office supplies
Retail industry Cost of 7362168406.68 54.47 4641066357.09 47.33 58.63
principal
business
Service industry / / / / / /
By product
Percentage
Percentage of change in the
Percentage of
total costs for amount for the
Amount in the total costs for Amount in the same Explanation on
By product Cost item the same current period as
current period the current period last year the situation
period last compared to the
period (%)
year (%) same period last
year (%)
Writing Cost of 1675601917.98 12.40 1349337371.37 13.76 24.18
instruments principal
business
Student Cost of 2092845598.55 15.48 1801327917.08 18.37 16.18
stationery principal
business
Office stationery Cost of 2406762021.35 17.81 2024465110.41 20.64 18.88
principal
business
Other products Cost of 303216598.14 2.24 180119757.57 1.84 68.34
principal
business
Direct office Cost of 7038125998.53 52.07 4451104363.39 45.39 58.12
supplies principal
business
Management fee / / / / / /
for franchising
Explanation on other situations of cost analysis
Cost increased simultaneously with sales. The growth in the costs of other products and direct office
supplies business is mainly due to the rapid development of the businesses of Jiumu Store and M&G
Colipu as well as the increase in sales volume.
(5). Change in the scope of consolidation due to change in the equity of major subsidiaries during
the Reporting Period
□ Applicable √ Not applicable
25 / 237Annual Report 2021
(6). Major change in or adjustment to the Company's business products or services during the
Reporting Period
□ Applicable √ Not applicable
(7). Major customers and suppliers
A. Major customers of the Company
Sales of the top 5 customers amounted to RMB3428820000 accounting for 19.47% of the total annual
sales. Of the sales of the top 5 customers sales of related parties amounted to RMB0 accounting for 0%
of the total annual sales.Unit: RMB Yuan
Rank Customer name Amount Related relationship
1 First 955989559.24 No
2 Second 951207384.99 No
3 Third 573513431.36 No
4 Fourth 485163509.56 No
5 Fifth 462949866.20 No
Total 3428823751.35
During the Reporting Period the sales attributable to a single customer exceeded 50% of the total sales
there are new customers among the top 5 customers or a small number of customers were heavily
depended on.□ Applicable √ Not applicable
B. Major suppliers of the Company
Purchase amount of the top 5 suppliers amounted to RMB1542210000 accounting for 11.57% 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 suppliers Amount Related relationship
1 First 469791220.48 No
2 Second 374546120.03 No
3 Third 323688344.90 No
4 Fourth 254466232.55 No
5 Fifth 119720153.14 No
Total 1542212071.10
During the Reporting Period the procurement from a single supplier exceeded 50% of the total amount
and there were new suppliers among the top 5 suppliers or a small number of suppliers were heavily
depended on.□ Applicable √ Not applicable
Other descriptions
No
3. Expenses
√ Applicable □ Not applicable
Unit: RMB Yuan
Item in statement Amount in the Amount in the last Change in the Reason for
current period period proportion (%) change
Selling expenses 1397645460.82 1103184023.51 26.69
Administrative expenses 745024738.28 602627135.41 23.63
R&D expenses 188758215.50 160178941.89 17.84
Financial expenses 6904764.52 9060176.35 -23.79
26 / 237Annual Report 2021
4. R&D investment
(1). Table of R&D investment
√ Applicable □ Not applicable
Unit: RMB Yuan
Expensed R&D investment in the current period 188758215.50
Capitalized R&D investment in the current period 0.00
Total R&D investment 188758215.50
Proportion of total R&D investment in revenue (%) 1.07
Percentage of capitalized R&D investment (%) 0.00
(2). Details of R&D personnel
√ Applicable □ Not applicable
Number of the Company's R&D staff 450
Percentage of the number of R&D staff to the Company's total number of
8.14
employees (%)
Educational background structure of R&D personnel
Category Number of people
Doctor's degree 1
Master's degree 36
Bachelor 251
College degree 91
High school and below 71
Age structure of R&D personnel
Category Number of people
< 30 years old (exclusive) 232
30 - 40 years old (including 30 years old excluding 40 years old) 162
40 - 50 years old (including 40 years old excluding 50 years old) 48
50 - 60 years old (including 50 years old excluding 60 years old) 8
> 60 years old 0
(3). Explanation
√ Applicable □ Not applicable
The total R&D investment of the parent company accounted for 3.42% of the parent company's revenue.
(4). Reasons for the major changes in the composition of R&D personnel and the impact on the
future development of the Company
□ Applicable √ Not applicable
5. Cash flow
√ Applicable □ Not applicable
Unit: RMB Yuan
Amount in the Amount in the same Change in the
Item Reason for change
current period period last year proportion (%)
Net cash flow
generated from 1561196420.77 1271697892.28 22.76
operating activities
During the Reporting Period the net outflow
Net cash flow decreased compared with the same period last
generated from -662837857.46 -1065448932.04 Not applicable year mainly due to the decrease in the net
investing activities outflow of bank financial products compared
with the same period last year.Net cash flow from -729259846.78 -200057726.09 Not applicable The increase in net outflow during the Reporting
27 / 237Annual Report 2021
financing activities Period compared with the same period last year
is mainly due to: 1. minority shareholders paying
cash in equity for the acquisition of M&G Life
during the Reporting Period; 2. implementing
new lease criteria and reclassifying the rent paid
from operating activities to financing activities;
3. increase in cash dividend distribution from the
same period last year.
(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
Percentage
Percentage of Change in
Amount as at the of total
total assets at the Amount as at the percentage for the
Items end of the current assets at the Explanation
end of current end of last period current period over
period end of last
period (%) the last period (%)
period (%)
Bills 39712146.72 0.35 / / Not applicable During the Reporting
receivable Period the commercial
acceptance bills of
M&G Colipu increased
compared with the
beginning of the year.Receivables 22824707.62 0.20 61412976.46 0.63 -62.83 During the Reporting
financing Period the bank
acceptance bills of
M&G Colipu decreased
compared with the
beginning of the year.Prepayment 90826293.94 0.80 131596384.76 1.36 -30.98 The advance payment by
M&G Colipu decreased
compared with the
beginning of the year.Other current 85797733.53 0.75 27286607.30 0.28 214.43 The Company's
assets receivable return cost
and VAT credit refund
increased compared
with the beginning of the
year.Right-of-use 357540113.34 3.13 / / Not applicable During the Reporting
assets Period the new lease
criteria were
implemented to increase
the lease-related right-
of-use assets.Intangible 434848138.70 3.81 320746328.60 3.30 35.57 The intangible asset of
assets trademark right of Back
to School Holding AS in
Norway was acquired
during the Reporting
Period.Goodwill 63529740.20 0.56 / / Not applicable Consideration for the
acquisition of Back to
School Holding AS in
Norway exceeded the
assessed net assets
during the Reporting
Period
Long-term 162206827.46 1.42 99035852.78 1.02 63.79 The decoration costs for
28 / 237Annual Report 2021
prepaid office buildings in
expenses Songjiang were
increased.Deferred 153856300.50 1.35 99939414.58 1.03 53.95 The deferred income tax
income tax assets formed increased
assets due to the
implementation of new
lease criteria to
recognize the lease
liabilities during the
Reporting Period the
difference in the asset
amortization between
the parent and subsidiary
companies of M&G
Colipu and the time
difference in the
recognition of estimated
return income.Other non- 8543306.18 0.07 6258468.47 0.06 36.51 The prepayment for
current assets equipment increased
during the Reporting
Period.Derivative 147570.52 0.00 / / Not applicable The derivative financial
financial liabilities of Back to
liabilities School Holding AS in
Norway were acquired
during the Reporting
Period.Bills payable 172167.42 0.00 / / Not applicable Commercial bill issued
by M&G Colipu for
procuring commodities
during the Reporting
Period.Non-current 178611602.65 1.56 / / Not applicable During the Reporting
liabilities due Period the new lease
within one criteria were
year implemented to increase
the lease-related lease
liabilities due within one
year.Other current 90875521.97 0.80 13746089.97 0.14 561.10 The possible return
liabilities liabilities estimated by
M&G Colipu increased.Lease 172924166.21 1.51 / / Not applicable During the Reporting
liabilities Period the new lease
criteria were
implemented to increase
the lease-related lease
liabilities for more than
one year.Estimated 35311258.55 0.31 12211357.80 0.13 189.17 The repurchase
liabilities obligations of the
minority shareholders of
Back to School Holding
AS in Norway were
acquired during the
Reporting Period.Deferred 92665937.38 0.81 36781069.25 0.38 151.94 The deferred income
income tax liabilities formed
liabilities increased due to the
premium acquisition of
Back to School Holding
AS in Norway the
implementation of the
new lease criteria to
29 / 237Annual Report 2021
recognize the right-of-
use assets and the time
difference in the
recognition of estimated
return costs.Other descriptions
No
2. Overseas assets
√ Applicable □ Not applicable
(1) Asset size
Including: overseas assets of 270595910.87 (unit: Yuan currency: RMB) accounting for 2.37% of the
total assets.
(2) Explanation for the high proportion of overseas assets
□ Applicable √ Not applicable
3. Major restricted assets as at the end of the Reporting Period
√ Applicable □ Not applicable
(1) On 16 September 2021 Axus Stationery and China Merchants Bank Shanghai Branch entered
into the Line Credit Agreement numbered 121XY2021031380 with the credit line of RMB180000000.00
for 36 months from 16 September 2021 to 15 September 2024. The specific types of line business include
but are not limited to working capital loans bank notes and letters of credit.On 16 September 2021 Axus Stationery and China Merchants Bank Shanghai Branch entered into
the Maximum Mortgage Contract numbered 121XY2021031380 which is a sub-contract of the Line
Credit Agreement. The maximum principal limit of the mortgage under this contract is
RMB180000000.00 and the mortgage limit is valid from 16 September 2021 to 15 September 2024.The mortgage term runs 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 for mortgage include:
Name of collateral Ownership No. Original value Accumulated depreciation Net value
No. 111 Xuezi South
HFDQ Zi (2013)
Road Xianghuaqiao 47061453.52 27468676.83 19592776.69
No. 015437
Street Qingpu District
No. 233 Xuezi South
HFDQ Zi (2013)
Road Xianghuaqiao 32156238.78 14464816.47 17691422.31
No. 013396
Street Qingpu District
No. 333 Xuezi South
HFDQ Zi (2015)
Road Xianghuaqiao 60230210.97 18199423.55 42030787.42
No. 015718
Street Qingpu District
Total 139447903.27 60132916.85 79314986.42
As of 31 December 2021 the outstanding loan of Axus Stationery was RMB156500000.00 and
USD1500000.00.
(2) On 7 August 2017 the subsidiary Back to School Holding AS borrowed a long-term loan from
a local bank in Norway with all the shares held by the Group's subsidiary Beckmann AS as pledge. As
of 31 December 2021 the balance of the loan was NOK14 million and was presented in the non-current
liabilities due within one year in the statements.
(3) As of the end of the Reporting Period the Company had restricted monetary funds of
RMB1471167575.95 mainly including letter of credit deposit performance bond and fixed deposit
over 3 months.
4. Other descriptions
□ Applicable √ Not applicable
30 / 237Annual Report 2021
(4) Analysis on industry operating information
√ Applicable □ Not applicable
For details see "II. Description of the Company's industry conditions during Reporting Period" in
"Section III Management Discussion and Analysis" of this report.
31 / 237Annual Report 2021
(5) Analysis of investment
Overall analysis of external equity investment
√ Applicable □ Not applicable
During the Reporting Period the Company made foreign investments.
(1) In June 2021 the Company signed the Equity Transfer Agreement with Shanghai Tianwan
International Logistics Co. Ltd. to transfer 40% of the equity of M&G Life held by it at the transfer price
of RMB180 million. The equity change registration and equity delivery have been completed on 25 June
2021.
In July 2021 M&G Life and Shanghai Youherui Enterprise Management Consulting Partnership
signed the Equity Transfer Agreement to transfer its 15% equity in Jiumu Store at the transfer price of
RMB67.5 million. The equity change registration and equity delivery have been completed on 29 July
2021.
(2) In August 2021 the Company held a cloud signing ceremony with Back to School Holding AS
a Norwegian schoolbag brand. The Company invested RMB186 million to acquire 91.4% of Back to
School Holding AS's equity and the equity delivery has been completed on 1 September 2021. The
acquisition of Back to School Holding AS is an important milestone in M&G's world-class vision and a
new round of five-year strategy plan. In the future the Company will provide more diversified purchasing
options and professional quality assurance for global consumers.
1. Significant equity investment
□ Applicable √ Not applicable
2. Significant non-equity investment
□ Applicable √ Not applicable
3. Financial assets measured at fair value
□ Applicable √ Not applicable
4. Progress of major asset restructuring and integration during the Reporting Period
□ Applicable √ Not applicable
(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
Nature of the Major products and Registered
Company Name Total asset Net assets Net profit
business services capital
Shanghai M&G
Zhenmei Stationery Wholesale and Stationery and office
1000.003710.41-40.45562.94Co. Ltd.（上海晨光珍 retail supplies美文具有限公司）
Shanghai M&G Colipu
Wholesale and
Office Supplies Co. Office supplies 66000.00 309536.21 82018.44 24198.53
retail
Ltd.Shanghai M&G
Stationery & Gift Co. Wholesale and Stationery and office
19941.94132902.2557615.4610859.99Ltd.（上海晨光文具礼 retail supplies品有限公司）
M&G Life Enterprise
Management Co. Ltd. Wholesale and Stationery and office
10000.0088764.87-2827.83-2108.65
（晨光生活馆企业管 retail supplies理有限公司）
32 / 237Annual Report 2021
Shanghai M&G Jiamei
Stationery Co. Ltd. Manufacturing Stationery and office
wholesale and 3000.00 4357.70 3952.32 110.01
（上海晨光佳美文具 suppliesretail有限公司）
Shanghai M&G
Information
Technology Co. Ltd. Wholesale and Office supplies 5000.00 18042.15 3069.15 -2529.62
retail
（上海晨光信息科技有限公司）
Shenzhen Erya Creative
and Cultural
Development Co. Ltd. Design and so Design office supplies 2000.00 1948.30 1189.83 -26.36
forth and so forth
（深圳尔雅文化创意发展有限公司）
Shanghai M&G Office Wholesale and
Office supplies 5000.00 49808.34 23724.15 10672.06
Stationery Co. Ltd. retail
Axus Stationery
Production sale Stationery and office
(Shanghai) Company 8100.00 66266.56 9561.57 -7727.66
and so forth supplies
Ltd.Shanghai Chenxun
Enterprise Management Information
Service 22000.00 28948.55 22081.14 -827.92Co. Ltd.（上海晨讯企 Consultation业管理有限公司）
Shanghai Qizhihaowan
Culture and CreativityCo. Ltd.（上海奇只好 Service Creative service 10000.00 4944.44 4494.75 -505.25玩文化创意有限公
司）
(8) Structured entities controlled by the Company
□ Applicable √ Not applicable
VI.Discussion and Analysis on Future Development of the Company
(1) Industry pattern and trend
√ Applicable □ Not applicable
With the changes in the way of life and consumption habit of consumers China’s retail industry
entered a new stage of redevelopment and innovation. Stationery industry faces challenges with
uncertainty of external environment diversification of retail channels and more individualized demands
from main customers group (now being the post-90s and post-00s). With the changing demographics of
China in particular the decreasing birth rate stationery industry revenue growth comes less from by unit
volume growth and more from consumption upgrade and product upgrade. Domestic market demand for
mid- to high-end stationery products keeps increasing reshaping market structure dominated by low-end
products. This provides opportunities for mid- to high-end stationery products with better quality and
higher price. China's population of 1.4 billion accounts for about 18% of global population while leading
stationery companies in China can continue to mostly rely on the huge domestic market they also have
room for international expansion in international markets which could reinforce each other under
favorable conditions.Leading enterprises focused on building omni-channel operation capabilities and realized refined
management over the offline channels. With the popularity of the Internet smart phones and online
transactions people's consumption habits and consumption scenarios have changed. Consumers' access to
information is becoming more fragmented and new-generation marketing means are becoming more
diversified including online media platforms (such as Weibo WeChat Xiaohongshu Tiktok) and IP topic
creation which further tests enterprises' ability to make quick response to industry trends. Compared with
small- and medium-sized enterprises leading enterprises boast stronger and richer whole network
marketing and operation capabilities. They formulate refined marketing strategies by city to reach
consumers and capture fragmented traffic to achieve traffic attraction and conversion for online and offline
businesses. To improve the stores' initiative marketing and traffic operation capabilities in addition to
33 / 237Annual Report 2021
online traffic offline channels are also required to realize refined management by empowering channels
through organizational reform and information system. According to the National Bureau of Statistics
online retail sales across the country recorded RMB13 trillion in 2021 an increase of 14%. Outstanding
companies in the consumer industry seized the development opportunities of online consumption and
achieved continuous sales growth through online and offline integration.Traditional retail stationery shops nearby school are still the dominant channel for China’s stationery
industry and shares of other retail formats are increasing faster. Sales terminals and channels of the
industry are becoming more diversified upgrading and competition in channels becomes more obvious.Domestic consumption for stationery in China becomes more brand conscious innovative individualized
and more premium. There is a growing demand for premium cultural and creative products stationery
products are moving from those primarily focus on functionality towards those with more cultural and
creative elements catering to customers. There are around thousands of stationery manufacturers in China's
domestic stationery industry and the industry is quite decentralized. There are a few leading companies
for most sub-category stationery products with continued development in the stationery industry there
could be higher industry consolidation and leading companies could gain larger market shares.In recent years in the context of the digital economy thanks to favorable factors such as policy
driving the rapid advancement of centralized procurement by large- and medium-sized enterprises and
the competition among various digital procurement service providers great progress has been made in the
digitalization e-commerce and centralization of public procurement in China which have become the
main form of public resource transactions from central to local governments. Facing the shock of economic
situation at home and abroad digital e-commerce and centralized procurement exhibits advantageous
coordination and quick response ability.According to the China Public Procurement Development Report (2020) compiled and released by
China Federation of Logistics & Purchasing the scale of public procurement transactions in China in 2019
exceeded RMB20 trillion accounting for more than 20% of China's total GDP. In terms of the procurement
scale of the government State-owned Key Enterprises and local state-owned enterprises the annual
procurement scale of government and enterprises in China is also quite large. According to relevant
estimates the market size of office supplies in China exceeds RMB2 trillion (data source:
www.chyxx.com). In addition the market size of employee benefits and other categories is also quite large.With the further development and application of information technology traditional industries have
gained growth momentum in the digital age. Industrial digitization is becoming the main pillar of the
digital economy and traditional industries are actively gaining new development momentum through
digital empowerment. The investment in the manufacturing industry has shifted from the investment in
equipment and assembly lines to the transformation of digital processes and digital transformation of
products in a bid to apply digital technology to reduce channel costs and management costs and become
a digital-driven modern enterprise.With smart technology and products upgrade promotion of national education informatization and
the development of the online education market smart stationery products have developed rapidly in the
past few years. Technology-empowered smart pens and smart books are widely adopted in online
education providing an increasingly better user experience. Technology-empowered smart pens and smart
books are widely adopted in online education providing a better user experience.
(2)Development strategy of the Company
√ Applicable □ Not applicable
1. Development strategy of the Company
To consolidate competitive advantages of core businesses by adhering to the mission of "make study
and work more joyful and effective" being consumer centric and emphasizing on innovation of
technology and products; to further expand new businesses of one-stop office supplies service and direct
retail; to actively expand international market; and to promote digitalization organization development
and talents and investment and mergers and acquisitions with synergy. With continued efforts in those
four areas the Company will realize the vision of becoming a "world-class M&G".
2. Sustainable development strategy
In order to realize the vision of “World-class M&G” M&G Stationery has developed a sustainabledevelopment strategy together with its business strategy. With its vision of “Writing a SustainableBusiness Future” M&G Stationery aims to lead the sustainable development of the industry by focusing
34 / 237Annual Report 2021
on four pillars: sustainable products response to climate change sustainable supply chain and empowering
employees and communities.
(3)Operation plan
√ Applicable □ Not applicable
In 2022 the Company plans revenue of RMB20900000000 a year-on-year increase of 19% mainly
through the following:
Making good use of the advantages in channel brand design and R&D and supply chain the
Company is expected to maintain fast and stable growth in core traditional business improve the quality
of development implement high-end strategy and enhance quality of online products.Push the four segments comprehensively
* Mass market stationery segment
The Company will continue to focus on medium and long life cycle products exert more efforts in
the development of long-term products that are available with new functions new technologies and at
higher prices distribute the price range reasonably and focus on breaking through key categories. The
Company continuously optimizes the new product development process to reduce the lead time of product
development and sorts out high-quality sub new products. Coordination will be made with online channel
to output integrated promotion program so as to enhance the sales of mass market segment products.* Premium stationery segment
The Company will continue to optimize the existing product mix of premium stationery segment
achieve quality upgrade and category breakthroughs increase the contribution of single products create a
series of best-selling products increase the on-shelf rate of best-selling products at key stationery shops
and increase the proportion of premium stationery segment in traditional channels; develop tailored
premium stationery products for Jiumu Store direct supply channels nationwide E-commerce and APPs
to better meet demand of high-end consumers; focus on online leading stores and achieve breakthroughs
in core best-selling products.* Office supplies segment
The Company will strengthen the development and promotion of office products continue to promote
the development of M&G office stores and the development of model office stores and realize the rollout
of core products; strengthen service empowerment through direct supply from the headquarters focus on
the exploitation of potential key accounts through the direct supply from partners highlight the
development of online product offerings and drive the overall growth of the office segment.* Arts and kids drawing segment
The Company will improve the management mechanism of new and old products sort out the
category structure in grid focus on the continuous promotion of best-selling products and long life cycle
products and expand the educational products; offer all categories of products in various online platforms
35 / 237Annual Report 2021
to continue to increase online share; put more efforts on key stores in key cities build dedicated zones and
promote the launch of key products.Promote omni-channel offerings
The Company will focus on key stationery shops improve single store quality facilitate the
optimization and upgrade of franchise stores and distribution centers and upgrade channels. Besides the
Company will also strengthen promotion for categories and dedicated zones for products to increase on
shelf ratio of the must-have products increase presence in major business districts increase the sales
volume and expand market share; promote direct supply of office products and premium stationery
products both at headquarters and partners level to create incremental sales; continue to improve the order
fulfillment rate and the number of active stationery shops of M&G Alliance APP.M&G Technologies will join in hands with product segments to launch online products and build a
standard process for online product development and use multi-store + flagship store for refined
operations to improve efficiency; accelerate the development of new channel business quickly achieve
market ranking and build promotion matrix of celebrity live broadcast and video to promote new channel
business; promote a more refined membership operations
Promote digital construction
In line with corporate strategy the Company plans to build the foundation for M&G's data
governance initiate quick-win projects for members and channels and improve products and core
business processes of the supply chain. The Company will establish a unified data standard to improve
M&G's data analysis capabilities further strengthen the construction of data middleground enhance data
governance and better drive business improvement by virtue of data; sort out and upgrade the existing
dealer information system to improve the ability to "select the right stores and deliver the right goods";
use member operations as a key handle to grow online business.Reasonably plan capacity layout
The Company will plan the national layout of logistics and capacity to lay a stronger foundation for
future development; realize the transportation of products from the production base to the logistics base
through the trunk line quickly respond to market demand and optimize the efficiency of the overall supply
chain; consider setting up new logistics and production bases in South China and other regions in a bid to
support existing business development improve supply chain and logistics efficiency and achieve
sustainable development.Continue to develop retail large store business
The Company will continue to exert efforts on the optimization of membership operation and store
operation standards maintain the high-quality and rapid growth of offline channels and the higher growth
of online business and increase the repurchase rate and customer unit price. As M&G's bridgehead in
upgrading its products and channels Jiumu Store will work with the Company to increase the sales ratio
of high-end products in this channel. M&G Life will sort out the product category structure establish a
management mechanism for regular products increase the sales proportion of M&G improve store
operation capabilities enhance the sales per employee improve the quality of existing single store and
explore together with the premium stationery segment to explore new business model.Continue to grow M&G Colipu
Business in direct 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 office supplies. M&G Colipu will focus on the
execution of the awarded projects and the promotion and expansion of the newly awarded large-scale
projects; put forth effort into expanding the development of marketing gifts and MRO supply chain;
continue to strengthen the construction of digitalization and information systems with the digital
construction based on "four online": online organization online communication online business and
online management so as to improve efficiency by providing information tools instead of manual labor;
36 / 237Annual Report 2021
attract high-end leadership talents consolidate the management team improve the leadership ability of
the management and strengthen the construction of talent team.
(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 has recruited 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.
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
At present COVID-19 pandemic in China has been effectively controlled but the impact of virus
mutation and repeated epidemics on the macro–economy is uncertain adding uncertainties to the
Company's operation in 2022. The Company pays close attention to the development of COVID-19 and
adopts active measures to reduce risks and uncertainties brought by COVID-19.
5. Risks from macro policy
In July 2021 the release of the Opinions on Further Reducing the Burden of Homework and Off-
Campus Training in Compulsory Education ("Double Reduction" policy) has a great impact on the K12
education and training industry. In the stationery and office supplies industry the release of the "Double
Reduction" policy and the online teaching driven by the epidemic control policy may affect the demand
for writing instruments and paper products. The Company will continue to pay attention to the impact of
the "Double Reduction" policy and actively take countermeasures.
(5) Others
□ Applicable √ Not applicable
VII. 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
37 / 237Annual Report 2021
Section IV Corporate Governance
I. Particulars on Corporate Governance
√ Applicable □ Not applicable
During the Reporting Period the Company in strict compliance with the Company Law the
Securities Law the Code of Corporate Governance for Listed Companies and other relevant laws and
regulations promulgated by the China Securities Regulatory Commission and the Shanghai Stock
Exchange continuously optimized the corporate governance structure of the Company and improved the
operational level of the Company strengthened the management of insider information and enhanced the
awareness of information disclosure responsibility to ensure continuous and stable development and
effectively protect the legitimate rights and interests of investors and relevant stakeholders. The specific
governance situation was as follows:
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. For the convenience of the Company's shareholders general
shareholders' meetings allow its shareholders to vote on site or online. This ensures the minority
shareholders have the right to stay informed about and vote on major issues of the Company and participate
in the operation of the company and this also helps protect the interests of minority shareholders.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 minority shareholders.
2. Controlling shareholders and the listed companies: the Company and the controlling shareholders
achieved "five independences" in finance personnel assets business and organization and the
Company's Board of Directors Board of Supervisors and internal control institutions operated
independently; the Company's related transaction procedures were legal and the price was fair and the
obligation of information disclosure was fulfilled; the controlling shareholders had a normative behavior
and did not directly or indirectly interfere with the Company's decision-making and business activities by
manipulating the general shareholders' meetings.
3. Directors and the Board of Directors: All directors of the Company could in accordance with the
Rules of Procedure of the Board of Directors and other systems earnestly perform their duties as directors
and make prudent and scientific decisions. The convening of each meeting met the requirements of
relevant regulations. The Company's Board of Directors had four special committees namely the Strategy
Committee the Audit Committee the Remuneration and Appraisal Committee and the Nomination
Committee. Each special committee carried out work in accordance with the relevant provisions of the
implementation rules gave full play to the professional role of each special committee strengthened the
democratic and scientific decision-making of the Board of Directors and ensured the sound development
of the Company.
4. Supervisors and the Board of Supervisors: The Board of Supervisors of the Company was
responsible for the Company and its shareholders strictly implemented the relevant provisions of the
Company Law the Articles of Association and the Rules of Procedure of the Board of Supervisors
earnestly fulfilled its duties attended the general meeting of shareholders and the meetings of the Board
of Directors convened the meetings of the Board of Supervisors and exercised supervisory functions and
powers in accordance with the law supervising corporate governance major issues financial conditions
and the compliance with rights and regulations of the Company's directors and senior management in
performing their duties and promoting the legal and standardized operations of the Company.
5. Information disclosure and transparency: The Company adhered to the principle of "truth accuracy
completeness timeliness and fairness" and strictly followed the requirements of temporary
announcement and periodic report format guidelines for information disclosure. To help investors get
familiar with the situation of the Company the content to be disclosed must be concise clear and easy to
understand and must truly and duly reflect the operating status of the Company.Whether there are significant differences between corporate governance and laws administrative
regulations and the requirements of the relevant regulations of the China Securities Regulatory
38 / 237Annual Report 2021
Commission on the governance of listed company; if there are significant differences the reasons should
be explained
□ Applicable √ Not applicable
II. Measures taken by the controlling shareholders and actual controllers of the Company to
ensure the independence of the Company's assets personnel finance organization and
business as well as the solutions taken to address the impact on the Company's independence
work progress and follow-up work plans
√ Applicable □ Not applicable
The Company was completely separated from the controlling shareholders in assets personnel
finance organization and business possessing independent and complete business and the ability to
operate independently.
1. Asset independence
The Company had business premises that are independent from the controlling shareholders and had
an independent and complete asset structure. The Company had complete control over all assets and no
asset or fund was occupied by controlling shareholders to damage the interests of the Company.
2. Personnel independence
The personnel and remuneration management of the Company were completely independent. The
directors supervisors and senior management of the Company were elected and appointed in strict
accordance with the relevant provisions of the Company Law and the Articles of Association. The president
vice president chief financial officer and secretary of the Board of Directors of the Company did not
receive remuneration from the controlling shareholders and their affiliated enterprises and held any
positions other than directors and supervisors.
3. Financial independence
The Company had an independent financial and accounting department has established an
independent accounting system and financial management system and made financial decisions
independently. The Company's chief financial officer and financial accounting personnel are all full-time
staff and do not hold part-time jobs in the controlling shareholder or their affiliated enterprises. The
Company opened a basic deposit account independently and paid taxes independently.
4. Organizational independence
The Company has established a sound organizational system which operates independently and has
no affiliation with the controlling shareholders or their functional departments.
5. Business independence
The Company's business is independent from the controlling shareholders and their affiliated
enterprises. The Company has an independent and complete design R&D manufacturing and sales system
conducts business independently and does not rely on shareholders or any other related parties.Engagement of controlling shareholders actual controllers and other organizations under their control in
the same or similar business as the Company as well as the impact of horizontal competition or major
changes in horizontal competition on the Company measures taken progress of the resolution and the
follow-up resolution
□ Applicable √ Not applicable
III. Brief Introduction to General Shareholders' Meetings
Query index of the Disclosure date
designated website on when the
Session number Convening date Resolution of meeting
which the resolution resolution is
is published published
2020 annual 20 April 2021 www.sse.com.cn 21 April 2021 Considered and approved 9 proposals including the
general 2020 Work Report of the Board of Directors the 2020
shareholders' Work Report of the Board of Supervisors the 2020
meeting Financial Settlement Report the 2020 Profit
Distribution Plan the 2020 Annual Report and
Summary and the Proposal on the Expected Daily
Related Transactions in 2021 the 2021 Annual
Financial Budget Report the Proposal on the
Remuneration Criteria of the Company's Directors in
2021 and the Proposal on the Appointment of the
39 / 237Annual Report 2021
Company's 2021 Financial Report Audit Organization
and Internal Control Audit Organization.Holders of the preferred shares with restored voting power request for convening extraordinary general
shareholders' meetings
□ Applicable √ Not applicable
Particulars on general shareholders' meetings
□ Applicable √ Not applicable
40 / 237Annual Report 2021
IV. Information on Directors Supervisors and Senior Management
(1) Shareholding change and remuneration of directors supervisors and senior management currently employed and retired during the Reporting Period
√ Applicable □ Not applicable
Unit: share
Total pre-tax Whether to get
Number of Number of remuneration from remuneration
shares held at shares held at Change in share Reasons for
Name Position (note) Gender Age From To the Company during from related
the beginning of the end of the of the year change the Reporting Period parties of the
the year year (RMB 0'000) Company
Chen Chairman Male 52 2014-6-12 2023-5-07 17100000 13609300 -3490700 Personal 180.00 No
Huwen capital
needs
Chen Vice Chairman Male 52 2014-6-12 2023-5-07 17100000 13609300 -3490700 Personal 180.00 No
Huxiong and President capital
needs
Chen Director and Female 55 2014-6-12 2023-5-07 10800000 8100000 -2700000 Personal 100.00 No
Xueling Vice President capital
needs
Fu Chang Director and Male 52 2018-3-23 2023-5-07 109200 108016 -1.184 Equity 99.09 No
Vice President incentive
(Note 1)
Zhang Independent Male 59 2017-5-11 2023-5-07 0 0 0 15.00 No
Jingzhong director
Chen Independent Male 54 2017-5-11 2023-5-07 0 0 0 15.00 No
Jingfeng director
Cheng Bo Independent Male 47 2016-4-19 2022-4-19 0 0 0 15.00 No
director
Zhu Yiping Chairman of the Female 63 2014-6-12 2023-5-07 0 0 0 0 Yes
Board of
Supervisors
Han Supervisor Female 44 2014-6-12 2023-5-07 0 0 0 0 Yes
Lianhua
Zhang Employee Female 43 2020-5-08 2023-5-07 0 0 0 25.43 No
Chaohua Supervisor
Zhou Vice President Male 47 2020-5-08 2023-5-07 102400 102928 528 Equity 75.41 No
Yonggan incentive
(Note 2)
Quan Qiang Board Secretary Male 49 2017-3-31 2023-5-07 71700 69549 -2151 Equity 98.63 No
incentive
(Note 3)
Total / / / / / 45283300 35599093 -9684207 / 803.56 /
Note 1: During the Reporting Period the 1184 restricted shares of Fu Chang that had been granted but had not been lifted from the restriction were repurchased and
cancelled due to the failure of personal performance assessment.
41 / 237Annual Report 2021
Note 2: During the Reporting Period 3600 restricted shares were granted to Zhou Yonggan. The 3072 restricted shares of Zhou Yonggan that had been granted but
had not been lifted from the restriction were repurchased and cancelled due to the failure of personal performance assessment.Note 3: During the Reporting Period the 2151 restricted shares of Liu Quanqiang that had been granted but had not been lifted from the restriction were repurchased
and cancelled due to the failure of personal performance assessment.Name Main working experience
Chen Huwen Tsinghua University - Carlson School of Management University of Minnesota - Doctor's degree Has been involved in the stationery and office manufacturing industry since 1997 PE equity
investment since 2007 and stock and bond financial investment since 2015 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 the chairman of the Company and the chairman of M&G Colipu. Has won honors such as the Model Worker in China Light Industry and the "Top Ten
Brand Leaders" in Shanghai in 2013.Chen Huxiong Executive MBA Cheung Kong Graduate School of Business. 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. Won the "Nominated Award of Outstanding Entrepreneur of Shanghai in 2019-2020".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 and Vice President of the
Company.Zhang Jingzhong Worked in the Research Office of the Politics and Law Committee under the Zhejiang Provincial Party Committee from August 1984 to September 1988; and has been the Director at Zhejiang T
& C Law Firm from October 1988 to present; served as a member of the Party Committee of the National Lawyer Industry since October 2017.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 Nanjing Audit 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 130 academic papers in various authoritative accounting journals and 5 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.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.Zhang Chaohua Once worked as Business Commissioner of Shanghai Sino-Korean M&G Stationery Manufacturing Co. Ltd. Manager of Shanghai Apollo Machinery Co. Ltd. and Deputy Manager of M&G
Group. Now works as Deputy Manager of the Company.Zhou Yonggan Joined M&G Stationery in August 2005 and successively served as Assistant to the Chairman Deputy Director Director of the Marketing Center and General Manager of the Office Business
Department. Now works as Vice President of the Company.Quan Qiang Senior manager of BNP Paribas Peregrine Brokerage executive director of RBS China and chief representative of Beijing office chief financial officer BOD secretary and director of Guangxi
Fenglin Wood Industry Group general manager of Capital Market Department of China Wanda. Now works as the secretary of the BOD and acting as the chief financial officer of the Company.Particulars on other information
□ Applicable √ Not applicable
42 / 237Annual Report 2021
(2) Employment of directors supervisors and senior management currently employed and retired
during the Reporting Period
1. Employment in shareholders’ companies
√ Applicable □ Not applicable
Name of shareholder's Position held in
Name of person employed From To
company shareholder's company
Chen Huwen M&G Group President 2007-5-10
Chen Huwen Keying Investment General partner 2011-2-18
Chen Huxiong M&G Group Chairman 2007-5-10
Chen Huxiong Jiekui Investment General partner 2011-2-18
Chen Xueling M&G Group Director 2007-5-10
Zhu Yiping M&G Group Person in charge of internal 2020-1-01
control
Han Lianhua M&G Group Chief Financial Officer 2020-1-01
Particulars on employment Save for the personnel disclosed above none of other directors supervisors and senior
in shareholders' companies management of the Company were employed by the shareholders' companies.
2. Employment in other companies
√ Applicable □ Not applicable
Name of person Position held in other
Name of other companies From To
employed companies
Chen Huwen Shanghai Chenguang Venture Capital General partner 12 May 2011
Center (L.P.)
Chen Huwen Shanghai Chenguang Sanmei Property General Manager 26 May 2008
Investment Co. Ltd.Chen Huxiong Shanghai Chenguang Venture Capital Limited Partner 12 May 2011
Center (L.P.)
Chen Huxiong Shanghai Chenguang Sanmei Property Chairman 26 May 2008
Investment Co. Ltd.Chen Xueling Shanghai Chenguang Venture Capital Limited Partner 12 May 2011
Center (L.P.)
Chen Xueling Shanghai Chenguang Sanmei Property Director 26 May 2008
Investment Co. Ltd.Zhang Jingzhong Zhejiang T & C Law Firm Director October 1988
Zhang Jingzhong Kweichow Moutai Co. Ltd. Independent director August 2016
Zhang Jingzhong Gansu Huangtai Wine-Marketing Independent director October 2020
Industry Co. Ltd.Zhang Jingzhong Sundy Service Group Co. Ltd. Independent non- January 2021
executive director
Chen Jingfeng Zhongyun Capital Chairman October 2017
Cheng Bo Nanjing Audit University Full-time Teacher July 2021
Cheng Bo Hangzhou Silan Microelectronics Co. Independent director June 2019
Ltd.Cheng Bo Shanghai Xinpeng Industry Co. Ltd. Independent director June 2020
Cheng Bo Shanghai Construction Building Independent director June 2020
Materials Technology Group Co. Ltd.Particulars on Save for the personnel disclosed above none of other directors supervisors and senior management of the
employment in other Company were employed by other related companies.companies
(3) Remuneration of directors supervisors and senior management
√ Applicable □ Not applicable
Decision-making procedures for the remuneration According to the Articles of Association the remuneration of
of directors supervisors and senior management directors and supervisors is determined by the general shareholders'
meeting; and the remuneration of senior management is determined
by the Board of Directors.Determination basis for the remuneration of The annual remuneration of independent directors of the Company
directors supervisors and senior management is considered and approved by the general shareholders' meeting.Other directors supervisors and senior management who receive
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
43 / 237Annual Report 2021
after the Company's annual operation target is completed.Actual payment of the remuneration of directors RMB8035600
supervisors and senior management
Total remuneration actually received by all RMB8035600
directors supervisors and senior management at the
end of the Reporting Period
(4) Changes in directors supervisors and senior management of the Company
□ Applicable √ Not applicable
(5) Particulars on punishments by securities regulatory authorities in the past three years
□ Applicable √ Not applicable
(6) Others
□ Applicable √ Not applicable
V. Meetings of the Board of Directors held during the Reporting Period
Session number Convening date Resolution of meeting
The 5th meeting of the 26 March 2021 1. Considered and approved the 2020 Work Report of the Board of Directors
5th session of Board 2. Considered and approved the 2020 Work Report of the President
of Directors 3. Considered and approved the 2020 Financial Settlement Report
4. Considered and approved the 2020 Profit Distribution Plan
5. Considered and approved the Proposal on Changes in Accounting Policies
6. Considered and approved the 2020 Auditor’s Report
7. Considered and approved the 2020 Annual Report and Summary
8. Considered and approved the 2020 Work Report of Independent Directors
9. Considered and approved the 2020 Performance Report of the Audit Committee
under the Board of Directors
10. Considered and approved the 2020 Internal Control Evaluation Report
11. Considered and approved the 2020 Social Responsibility Report
12. Considered and approved the Proposal on Determining the Annual Audit
Remuneration in 2020
13. Considered and approved the Proposal on the Expected Daily Related
Transactions in 2021
14. Considered and approved the 2021 Annual Financial Budget Report
15. Considered and approved the Proposal on the Remuneration Criteria of the
Company's Directors in 2021
16. Considered and approved the Proposal on the Remuneration Criteria of the
Company's Senior Management in 2021
17. Considered and approved the Proposal on the Appointment of the Company'
2021 Financial Report Audit Organization and Internal Control Audit Organization
18. Considered and approved the Proposal on Using Some Owned Funds for
Investment and Financial Management
19. Considered and approved the Proposal on Repurchase and Cancellation of Some
Restricted Shares
20. Considered and approved the Proposal to Hold the Company's 2020 Annual
Shareholders' Meeting
The 6th meeting of the 28 April 2021 1. Considered and approved the main body and full text of the Report for the First
5th session of Board Quarter of 2021
of Directors 2. Considered and approved the Proposal on Adjusting the Repurchase Price of
Restricted Shares
7th meeting of the 5th 29 April 2021 Considered and approved the Proposal on Granting Reserved Restricted Shares to
session of Board of Incentive Objects under the 2020 Restricted Share Incentive Plan
Directors
The 8th meeting of the 28 May 2021 Considered and approved the Proposal on Establishment of Conditions for Lifting
5th session of Board Restricted Sales in Phase 1 of Initial Grant in 2020 Restricted Share Incentive Plan
of Directors
The 9th meeting of the 26 August Considered and approved the 2021 Semi-annual Report and Summary
5th session of Board 2021
of Directors
44 / 237Annual Report 2021
The 10th meeting of 28 October Considered and approved the Report for the Third Quarter of 2021
the 5th session of 2021
Board of Directors
VI. 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 attendance at
Number of consecutive
attendance attendance in attendance by attendance general
absence absences in
required person communication by proxy shareholders'
person
meetings
Chen Huwen No 6 6 4 0 0 No 1
Chen Huxiong No 6 6 4 0 0 No 0
Chen Xueling No 6 6 4 0 0 No 1
Fu Chang No 6 6 4 0 0 No 0
Zhang Jingzhong Yes 6 6 5 0 0 No 0
Chen Jingfeng Yes 6 6 4 0 0 No 0
Cheng Bo Yes 6 6 5 0 0 No 1
Particulars on two consecutive absences in person from board meetings
□ Applicable √ Not applicable
Number of board meetings held during the year 6
Including: on site 2
by communication 4
on site and by communication 1
(2) Directors' objections to the Company's related matters
□ Applicable √ Not applicable
(3) Others
□ Applicable √ Not applicable
VII. Special Committees under the Board of Directors
√ Applicable □ Not applicable
(1). Members of special committees under the Board of Directors
Type Name of member
Audit Committee Cheng Bo Chen Huwen Zhang Jingzhong
Nomination Committee Chen Jingfeng Chen Huxiong Zhang Jingzhong
Remuneration and Appraisal
Zhang Jingzhong Chen Huxiong Cheng Bo
Committee
Strategy Committee Chen Huwen Chen Jingfeng Cheng Bo
(2). During the Reporting Period the Audit Committee held 5 meetings
Convening
Contents of meetings Important comments and recommendations Other performance of duties
date
19 March First meeting of the 1. Considered and approved the Work Debriefed and reviewed the
2021 Audit Committee in Summary of the Audit Department in 2020 work summary for this year
2021 2. Considered and approved the Work Plan and the next year's work plan
of the Audit Department in 2021 of the Company's Internal
Audit Department and
guided the operation of the
Internal Audit Department.
45 / 237Annual Report 2021
26 March Second meeting of the 1. Considered and approved the 2020 During the preparation of the
2021 Audit Committee in Performance Report of the Audit Committee annual report the Audit
2021 under the Board of Directors Committee under the Board
2. Considered and approved the Proposal on of Directors communicated
Changes in Accounting Policies with BDO China Shu Lun
3. Considered and approved the 2020 Pan CPAs (LLP) which was
Auditor's Report responsible for the
4. Considered and approved the 2020 Company's annual audit on
Internal Control Evaluation Report the composition of the
5. Considered and approved the Proposal on annual audit working group
Determining the Annual Audit Remuneration audit plan risk judgment and
in 2020 audit priorities and
6. Considered and approved the Proposal on continued to pay attention to
the Expected Daily Related Transactions in the preparation of the
2021 Company's annual financial
7. Considered and approved the Proposal on report. Debriefed and
the Appointment of the Company’ 2021 reviewed the work summary
Financial Report Audit Organization and for this year and the next
Internal Control Audit Organization year's work plan of the
Company's Internal Audit
Department and guided the
operation of the Internal
Audit Department.
27 April 2021 Third meeting of the Considered and approved the full text and No
Audit Committee in main body of the Report for the First
2021 Quarter of 2021
26 August Fourth meeting of the Considered and approved the 2021 Semi- No
2021 Audit Committee in annual Report and Summary
2021
27 October Fifth meeting of the Considered and approved the full text and No
2021 Audit Committee in main body of the Report for the Third
2021 Quarter of 2021
(3). During the Reporting Period the Remuneration and Appraisal Committee held 3 meetings
Other performance of
Convening date Contents of meetings Important comments and recommendations
duties
26 March 2021 First meeting of the 1. Considered and approved the Proposal on the No
Remuneration and Remuneration Criteria of the Company's
Appraisal Committee Directors in 2021
in 2021 2. Considered and approved the Proposal on the
Remuneration Criteria of the Company's Senior
Management in 2021
3. Considered and approved the Proposal on
Repurchase and Cancellation of Some Restricted
Shares
27 April 2021 Second meeting of Considered and approved the Proposal on No
the Remuneration and Granting Reserved Restricted Shares to Incentive
Appraisal Committee Objects under the 2020 Restricted Share Incentive
in 2021 Plan
23 May 2021 Third meeting of the Considered and approved the Proposal on No
Remuneration and Establishment of Conditions for Lifting Restricted
Appraisal Committee Sales in Phase 1 of Initial Grant in 2020
in 2021 Restricted Share Incentive Plan
(4). During the Reporting Period the Strategy Committee held 1 meeting
Other performance of
Convening date Contents of meetings Important comments and recommendations
duties
26 March 2021 First meeting of the Considered and approved the Proposal on the No
Strategy Committee Company's 2021 Business Plan
in 2021
(5). Details of the matter in question
□ Applicable √ Not applicable
46 / 237Annual Report 2021
VIII. Particulars on Risks in the Company Identified by the Board of Supervisors
□ Applicable √ Not applicable
The Board of Supervisors has no objection to the supervision matters during the Reporting Period.IX. Employee of Parent Company and the Principal Subsidiaries of the Company at the End of the
Reporting Period
(1) Employees
Number of employees in the parent company 2407
Number of employees in major subsidiaries 3120
Number of employees 5527
Number of retirees of whom the parent company and major
subsidiaries are responsible for the expenses
Professional structure
Category Number
Production personnel 1770
Sales personnel 1238
Technical personnel 450
Finance personnel 198
Administration personnel 295
Management personnel 1072
Others 504
Total 5527
Education background
Category Number (person)
University (including college) and above 3210
High school technical secondary school 1094
Others 1223
Total 5527
(2) Remuneration policy
√ Applicable □ Not applicable
To conform to the Company's organizational strategy the Company implements a competitive
remuneration policy where the employees' remuneration is determined considering the job value person-
job fit and performance. By establishing and improving competitive remunerations and benefits
performance appraisal systems and incentive systems the Company actively promoted equity incentive
plans attracted all kinds of professional talents and formed healthy competitive work environment to
stimulate the vitality and potential of employees build a stable professional team and ensure the growth
of the Company's performance.
(3) Training program
√ Applicable □ Not applicable
The Company attached great importance to the development of talents in the organization especially
the establishment of leadership talent echelon and the cultivation of managers at all levels and personnel
for strategic key positions. Through development methods such as the leadership curriculum system and
internal trainer team construction high-potential training projects mentor guidance job rotation learning
personal development path design etc. talent training and ability enhancement were carried out. 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 attention was paid to the
cultivation of branch managers.
(4) Labor outsourcing
√ Applicable □ Not applicable
Total working hours of labor outsourcing 20967240 hours
47 / 237Annual Report 2021
Total remuneration paid for labor outsourcing RMB740459091
X. Profit Distribution or Capital Accumulation Plan
(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
5th meeting of the 5th session of the Board of Directors and 2020 annual shareholders' 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;
(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 million;
(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.
48 / 237Annual Report 2021
As minority shareholders have opportunities to fully express their opinions and appeals their legitimate
interests have been fully protected.
(2) Special description of the cash dividend policy
√ Applicable □ Not applicable
Does it meet the requirements of the Company's Articles of Association or the √Yes □No
resolutions adopted at the Annual General Meeting of Shareholders:
Are the dividend criteria and ratio definite and clear: √Yes □No
Are the relevant decision-making procedures and mechanisms complete √Yes □No
Do the independent directors perform their duties and play their due role √Yes □No
Do the minority shareholders have the opportunity to fully express their opinions √Yes □No
and requests and whether their legitimate rights and interests get fully protection
(3) If the Company records profit distributable to 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
XI. 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
Item Query index
On 26 March 2021 the Company held the 5th meeting of the Announcement on Resolutions of the 5th Meeting of the
5th session of Board of Directors and the 4th meeting of the 5th Session of Board of Directors numbered 2021-005
5th session of Board of Supervisors and considered and Announcement on Resolutions of the 4th Meeting of the
approved the Proposal on Repurchase and Cancellation of 5th Session of Board of Supervisors numbered 2021-006
Some Restricted Shares. Announcement on Repurchase and Cancellation of Some
Restricted Shares numbered 2021-012
Announcement on Notifying Creditors of Repurchase
and Cancellation of Some Restricted Shares numbered
On 28 April 2021 the Company held the 6th meeting of the Announcement on Resolutions of the 6th Meeting of the
5th session of Board of Directors and the 5th meeting of the 5th Session of Board of Directors numbered 2021-019
5th session of Board of Supervisors and considered and Announcement on Resolutions of the 5th Meeting of the
approved the Proposal on Adjusting the Repurchase Price of 5th Session of Board of Supervisors numbered 2021-020
Restricted Shares. Announcement on Adjusting the Repurchase Price of
Restricted Shares numbered 2021-021
On 29 April 2021 the Company held the 7th meeting of the Announcement on Resolutions of the 6th Meeting of the
5th session of Board of Directors and the 6th meeting of the 5th Session of Board of Supervisors numbered 2021-022
5th session of Board of Supervisors and considered and Announcement on Granting Reserved Restricted Shares
approved the Proposal on Granting Reserved Restricted to Incentive Objects under the 2020 Restricted Share
Shares to Incentive Objects under the 2020 Restricted Share Incentive Plan numbered 2021-023
Incentive Plan.On 27 May 2021 the Company completed the cancellation Announcement on the Implementation of Repurchase
of some restricted stocks that have been granted but have not and Cancellation of Restricted Share for Equity
yet been lifted with China Securities Depository and Incentive numbered 2021-025
Clearing Corporation Limited Shanghai Branch.On 28 May 2021 the Company held the 8th meeting of the Announcement on Resolutions of the 7th Meeting of the
5th session of the Board of Directors and the 7th meeting of 5th Session of Board of Supervisors numbered 2021-026
the 5th session of the Board of Supervisors and considered Announcement on the Unlocking and Listing of Phase 1
and approved the Proposal on Establishment of Conditions of the Initial Grant of 2020 Restricted Share Incentive
for Lifting Restricted Sales in Phase 1 of Initial Grant in Plan numbered 2021-027
2020 Restricted Share Incentive Plan.
On 3 June 2021 the Company completed the registration of Announcement on the Results of the Reserved Grant of
reserved restricted shares with China Securities Depository 2020 Restricted Share Incentive Plan numbered 2021-
and Clearing Corporation Limited Shanghai Branch. 028
49 / 237Annual Report 2021
(2) Incentive matters which have not been disclosed in temporary announcements or with further
progress
Equity incentive
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Employee shareholding plan
□ Applicable √ Not applicable
Other incentive measures
□ Applicable √ Not applicable
(3) Equity incentives granted to directors and senior management during the Reporting Period
□ Applicable √ Not applicable
√ Applicable □ Not applicable
Unit: share
Number of Number of Market
Number of Granted
restricted the price at the
new restricted price of the
shares at Locked Unlocked restricted end of the
Name Position shares during restricted
the shares shares shares at Reporting
the Reporting shares
beginning the end of Period
Period (Yuan)
of the year the period (Yuan)
Zhou Senior 102400 3600 45.03 27648 75280 75280 64.51
Yonggan management
Total / 102400 3600 / 27648 75280 75280 /
Note: During the Reporting Period the 3072 restricted shares of Zhou Yonggan that had been granted
but had not been lifted from the restriction were repurchased and cancelled due to the failure of personal
performance assessment.
(4) Establishment and implementation of appraisal mechanism and the incentive mechanism for
senior management during the Reporting Period
√ Applicable □ Not applicable
The Company has established a relatively perfect performance evaluation and incentive system.Based on the principle that the income of senior management is linked to the business performance of the
enterprise the Company followed an open fair and impartial process to appoint senior management and
continuously and timely improved the assessment mechanism. The Company has established a
compensation system in line with the development needs of the Company and the actual situation of the
industry to ensure the enthusiasm of senior management.The Company implemented the 2020 Restricted Share Incentive Plan to provide long-term incentives
for senior management and core technicians and formulated corresponding assessment methods to carry
out scientific standardized and institutionalized assessment management for senior management and core
technicians included in restricted share incentive plan. The Company has guaranteed the stability of the
core team and key employees and mobilizing their enthusiasm by virtue of a reasonable sound flexible
and effective remuneration and welfare system and a long-term benefit mechanism based on the
supporting equity incentive plan.XII. Construction and implementation of internal control system during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period the Company has established a strict internal control management
system in strict accordance with the requirements of the China Securities Regulatory Commission the
Shanghai Stock Exchange the Company Law the Articles of Association and other laws and regulations.The Company has set up an Audit Committee under the Board of Directors to review the internal control
of the Company supervise the effective implementation of internal control and self-evaluation of internal
50 / 237Annual Report 2021
control and guide and coordinate internal audit and other related matters. The Company has set up an
Audit Department to independently carry out audit under the guidance of the Audit Committee under the
Board of Directors. The Audit Department is accountable to the Audit Committee. The Audit Department
evaluates the efficiency and effect of the design and implementation of internal control through the design
and implementation of internal control audits business management audits special audits and economic
responsibility audits supervises and inspects the effectiveness of the Company’s internal control design
and operation and promotes the Company's continuous improvement and enhancement of the quality of
internal control. The Audit Department reports the internal control defects found in the audit to the Board
of Supervisors the Audit Committee or the management according to the seriousness of the problems and
urges the relevant departments to take active measures to rectify them. According to the identification of
major defects in the Company's internal control in 2021 the Company had no significant defects and
important defects in the internal control of financial reporting and non-financial reporting. The Company
has continuously improved the internal control system. Therefore the internal control operation
mechanism is effective which has achieved the expected internal control objectives and protected the
interests of the Company and all shareholders.Particulars on major defects in the internal control during the Reporting Period
□ Applicable √ Not applicable
XIII. Management and Control over the Subsidiaries during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period the Company has implemented the Management System for Holding
Subsidiaries stipulating the control measures and the responsibilities and authority of the parent company
and the subsidiaries in the subsidiary's articles of association personnel appointment and removal
financial management operation decision information management inspection and assessment so as to
ensure that the various businesses of the subsidiaries meet the requirements of the Company's overall
development strategy ensure that the financial position of the subsidiaries is effectively monitored by the
Company prevent significant operating risks of the subsidiaries and protect the security and integrity of
assets.Problems
Company Measures Resolution
Integration plan Integration progress encountered in Follow-up resolution plan
Name taken progress
integration
Subsequently according to the
Integration of The integration of
Company's business complete
organization organizational structure
Back to No significant the relevant integration in a
management management system Marketing
School problems occurred Completed timely manner to ensure the
system operation operation mode and management
Holding AS yet normal operation and
mode and business has been
management control of
business completed.subsidiaries
XIV. Particulars on the Auditor's Report on Internal Control
√ Applicable □ Not applicable
The Company engaged BDO China Shu Lun Pan CPAs (LLP) to audit the implementation of internal
control in its 2021 financial statements and the Audit Report on Internal Control was issued. For the full
text of the report see 2021 Audit Report on Internal Control disclosed on the website of the Shanghai
Stock Exchange (www.sse.com.cn) on 29 March 2022.Whether to disclose the audit report on internal control: yes
Opinion type of the audit report on internal control: With unqualified opinion
XV. Self-inspection and Rectification of Problems in the Special Action on Governance of Listed
Companies
Not applicable
XVI. Others
□ Applicable √ Not applicable
51 / 237Annual Report 2021
Section V Environmental and Social Responsibility
I. Environmental Information
(1) Explanation on environmental protection of the companies and their major subsidiaries falling
into the category of key pollutant discharging organizations 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. In routine management the Company strengthens
the monitoring and handling of "three wastes" and ensures that they are discharged as per the requirements to
reduce the impact on the environment.
1. Administrative penalties for environmental issues
□ Applicable √ Not applicable
2. Disclosing other environmental information with reference to key pollutant discharging units
□ Applicable √ Not applicable
3. Reason for not disclosing other environmental information
□ Applicable √ Not applicable
(3) Information that is conducive to ecological protection pollution prevention and control and
fulfillment of environmental responsibility
√ Applicable □ Not applicable
During the Reporting Period M&G Public Welfare Foundation cooperated with the Red Cross
Society of Gansu Province and the Qingsuo Public Welfare Development Center to establish a Haloxylon
ammodendron forest in Minqin County the source of the four major deserts in China which has been
expanded to 900 mu (600000 m2) and joined hands with M&G Colipu in environmental protection
projects. M&G employees also voluntarily went to inspect the conditions of the Haloxylon ammodendron
forest. While controlling the desert it can also increase the subsidized living income for the local villagers
and establish a public welfare model of ecological poverty alleviation and rural revitalization.
(4) Measures taken to reduce carbon emissions during the Reporting Period and their effects
√ Applicable □ Not applicable
The Company attached great importance to the efficient management of energy and the improvement
of energy use efficiency. Each department took corresponding measures according to their respective
functions to gradually reduce energy consumption and carbon emissions during production and operation.In terms of clean energy use photovoltaic power generation projects have been constructed in Guangming
Park and Qingcun Park which have been fully connected to the grid and put into use for energy supply
reducing carbon emissions by more than 4300 ton per year.For more details see 2021 Environment Society and Governance Report disclosed by the Company
on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 March 2022.
52 / 237Annual Report 2021
II. Overview of Social Responsibility
√ Applicable □ Not applicable
For more details see 2021 Environment Society and Governance Report disclosed by the Company
on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 March 2022.III. Consolidation and Expansion of the Achievements of Poverty Alleviation and Rural
Revitalization
√ Applicable □ Not applicable
M&G Charity Foundation continued to focus on rural education rural revitalization and poverty
alleviation boosted various projects in an orderly manner unleashed the Company's advantages
coordinated the social development promoted the concern of the public and stakeholders on rural
education and advanced such programs as creative classroom and gold seed in a bid to reach a consensus
with more consumers on this social issue through public welfare activities and enrich the brand
connotation and influence of the Company.For more details see 2021 Environment Society and Governance Report disclosed by the Company on
the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 March 2022.
53 / 237Annual Report 2021
Section VI Major Events
I. 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
√ Applicable □ Not applicable
If not
If not
Whether performed
Time and Whether there performed in
Background of Type of Undertaking Contents of the undertaking strictly in time
term of the is deadline for time describe
undertakings undertakings party performed in a describe
undertaking performance the specific
timely manner plans in
reasons
next steps
Undertaking for restriction on sale of shares and voluntary lockup undertaking by
Keying Investment and Jiekui Investment shareholders holding more than 5% of the
Keying equity
Undertakings
Restriction on Investment (1) The proportion of shares unlocked every year shall not exceed 25% of the total
related to initial Permanent No Yes
sale of shares Jiekui shares held by the Company;
public offering
Investment (2) 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.Shareholding and intention to reduce shareholding of the controlling shareholder—
M&G Group
(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
Undertakings
shareholding reduction not lower than the offering price of the Company's initial public
related to initial Others M&G Group Permanent No Yes
offering. The shareholding reduction shall not exceed 10% of the total shares of the
public offering
Company held by M&G Group 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 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 in the Company before the reduction 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
54 / 237Annual Report 2021
form of block trade auction transaction as well as other methods recognized by China
Securities Regulatory Commission.Shareholding and intention to reduce shareholding of Keying Investment and Jiekui
Investment shareholders holding more than 5% 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
Keying Company held by the joint venture within the first year after the lockup period expires
Undertakings Investment with the price of the shareholding reduction not lower than the offering price of the
related to initial Others and Company's initial public offering. The shareholding reduction shall not exceed 25% of the Permanent No Yes
public offering Jiekui total shares of the Company held by joint venture within the second year after the lockup
Investment 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 the adjusted
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.Undertaking in relation to non-competition by M&G Group Keying Investment and
Jiekui Investment
(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.M&G Group (2) After the initial public offering and listing of the Company the enterprise and
Address Keying other enterprises (except the Company and enterprises controlled by it) controlled and (or)
Undertakings
competition Investment invested by it will not: * engage in any form of business or activity that constitutes or
related to initial Permanent No Yes
between and may constitute a direct or indirect competition relationship with current or future principal
public offering
counterparts Jiekui businesses that the Company and enterprises controlled by it specialize in; * support
Investment 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; * 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
55 / 237Annual Report 2021
* ensure its independence in assets businesses employees finance and institution
according to relevant rules of laws and regulations;
* 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;
* 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.Undertaking in relation to non-competition by beneficial controllers—Chen Huwen
Chen Huxiong and Chen Xueling
(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: * engage
in any form of business or activity that constitutes or may constitute a direct or indirect
Address Chen Huwen competition relationship with current or future principal businesses that the Company and
Undertakings
competition Chen enterprises controlled by it specialize in; * support other enterprises other than the
related to initial
between Huxiong and Company and enterprises controlled by it in any form of business or activity that
Permanent No Yes
public offering
counterparts Chen Xueling 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;
* 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 I further guarantee that I will:
* ensure its independence in assets businesses employees finance and institution
according to relevant rules of laws and regulations;
* 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;
* 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.Undertaking on the binding measures in case of the failure to fulfill the undertaking
by M&G Stationery
(1) The Company will strictly perform various obligations and responsibilities set out
Undertakings
M&G in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the
related to initial Others Permanent No Yes
Stationery initial public offering and listing.public offering
(2) If the Company fails to perform various obligations and responsibilities set out in
the undertaking issues the Company undertakes to take the following measures for
restrictions:
56 / 237Annual Report 2021
* 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 Company and
investors or the method or amount determined by the securities supervision and
administration department and the judicial authority;
* Within 12 months after the date when the Company fully eliminates the adverse
effect due to failure on related undertaking issues the 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;
* The Company shall not increase the salary or allowance of our directors
supervisors and senior management in any form until the Company has fully eliminated
the adverse effect due to failure on related undertaking issues.Undertaking on the binding measures in case of the failure to fulfill the undertaking
by the controlling shareholder—M&G Group
(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
Undertakings for restrictions:
related to initial Others M&G Group Permanent No Yes
* Compensate public investors for direct losses suffered by relying on relevant
public offering
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;
* 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 undertaking
by beneficial controllers—Chen Huwen Chen Huxiong 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:
Chen Huwen
Undertakings * Compensate public investors for direct losses suffered by relying on relevant
Chen
related to initial Others undertakings to implement transactions through self-owned capital with the amount of Permanent No Yes
Huxiong and
public offering compensation being determined according to negotiation between investors and me or the
Chen Xueling
method or amount determined by the securities regulatory authorities and the judicial
authority;
* 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.* 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
57 / 237Annual Report 2021
form until I have fully eliminated the adverse effect due to failure on related undertaking
issues.Undertaking on the binding measures in case of the failure to fulfill the undertaking
by Keying Investment and Jiekui Investment shareholders 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.Keying (2) If the joint venture fails to perform various obligations and responsibilities set out
Undertakings Investment in the aforesaid undertaking issues the joint venture undertakes to take the following
related to initial Others and measures for restrictions: Permanent No Yes
public offering Jiekui * Compensate public investors for direct losses suffered by relying on relevant
Investment 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;
* 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.Undertaking The Company undertakes not to provide loans and any other financial assistance in
M&G Not
related to equity Others respect of restricted shares in accordance with the Incentive Plan for the incentive object No Yes
Stationery applicable
incentive including the provision of guarantees for its loans.Keying
Investment
Other During the implementation period of the increase in holdings and the statutory period Not
Others and Yes Yes
undertaking the shares held by the Company will not be reduced. applicable
Jiekui
Investment
58 / 237Annual Report 2021
(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 thereof
Whether the original profit forecast is reached and the description of reasons
□Fulfilled □Unfulfilled √ Not applicable
(3) Execution of the performance undertakings and its impact on the goodwill impairment testing
□ Applicable √ Not applicable
59 / 237Annual Report 2021
II. Non-operating Misappropriation of Funds of the Company by any Controlling Shareholders and Their Related Parties during the Reporting Period
□ Applicable √ Not applicable
III. Illegal Guarantee
□ Applicable √ Not applicable
60 / 237Annual Report 2021
IV. Explanation of the Company's Board of Directors on the "Auditor's Report with Modified
Audit Opinions" Issued by the CPA
□ Applicable √ Not applicable
V. Analysis and Explanation from the Company on the Reasons and Impact of the Change of
Accounting Policies Accounting Estimates or Correction on Significant Accounting Errors
(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. Implementation of the Accounting Standards for Business Enterprises No. 21 - Leases (revised in
2018)
The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 21 - Leases
(hereinafter referred to as "New Lease Standards") in 2018. The Company implements the new lease
standards from 1 January 2021. In accordance with the revised standards the Company has chosen not to
reassess whether a contract executed prior to the first implementation date is a lease contract or contains
a lease at the first implementation date.
(1) The Company as the lessee
According to the cumulative effects of first implementation of the New Lease Standards the
Company chose to adjust the current retained earnings at the beginning of the period for first
implementation of the New Lease Standards as well as the amount of other related items in the financial
statements without adjustment to the information for the comparable period.For operating leases prior to the first implementation date the Company measured the lease liability
at the date of initial implementation based on the present value of the remaining lease payments discounted
at the Company's incremental borrowing rate on the date of initial implementation and chose one of the
following two methods to measure the right-of-use assets by each lease:
-Assuming that the carrying amount under the New Lease Standards prevails from the
commencement date of the lease term the Company's incremental borrowing rate as of the first
implementation date is deemed as the discount rate.-A necessary adjustment is made to an amount equal to the lease liability according to prepaid rents.By each lease a company may choose to measure the right-of-use assets with either of the above two
methods.For operating leases prior to the first implementation date the Company conducted one or more of
the following simplified treatments by each lease option while applying the above method:
* Leases that are completed within 12 months after the first implementation date are deemed as
short-term leases;
* The same discount rate is used for leases with similar characteristics when measuring the lease
liability;
* The measurement of right-to-use assets does not include initial direct costs;
* Where a renewal option or terminal option exists the lease term is determined based on the actual
exercise of the option prior to the first implementation date and other recent circumstances;
* As an alternative for impairment test on right-of-use assets the Company assessed whether the
contract containing the lease is an onerous contract prior to the first implementation date at estimated
liabilities and adjusted the right-of-use asset by the amount of the provision for losses recorded in the
balance sheet prior to the first implementation date.* Lease changes before the first implementation are not retroactively adjusted and are accounted for
in accordance with final arrangements for lease changes and New Lease Standards.In measuring the lease liability the Company discounted the lease payments at the lessee's
incremental borrowing rate (weighted mean: 4.75%) as of 1 January 2021.Outstanding minimum lease payments for significant operating leases
disclosed in the consolidated financial statements as of 31 December 2020
Discounted present value at the Company's incremental borrowing rate as of
307325185.80
1 January 2021
Lease liabilities under the New Lease Standards as of 1 January 2021 176620358.65
61 / 237Annual Report 2021
Non-current liabilities due within one year under the New Lease Standards as
130704827.15
of 1 January 2021
Difference between the above discounted present value and the lease liability
(2) The Company as the lessor
For subleases classified as operating leases prior to the first implementation date and still in existence
after the first implementation date the Company reassessed these leases based on the remaining
contractual term and conditions of the original lease and sublease on the first implementation date and
classifies them in accordance with the provisions of the new lease standards. If reclassified as a finance
lease the Company will treat it as a new financial lease.Except for subleases the Company is not required to adjust leases as the lessor in accordance with
the New Lease Standards. The Company accounted for leases in accordance with the New Lease Standards
from the first implementation date.
(3) The major impact of the Company's implementation of the New Lease Standards on the financial
statements is as follows:
Review Effect on balance on 1 January 2021
Contents and reasons of
and Affected item in
changes in accounting
approval statement Consolidation Parent company
policies
procedure
The 5th Right-of-use assets 327386662.94 7470972.21
(1) Adjustments made by
meeting of Lease liabilities 176620358.65 1264270.31
the Company as a lessee to
the 5th Non-current
the existing operating
session of liabilities due within 130704827.15 3648655.35
leases before the date of
Board of one year
initial implementation
Directors Prepayments -20061477.14 -2558046.55
2. Implementation of the Interpretation of Accounting Standards for Business Enterprises No. 14
The Ministry of Finance issued the Interpretation of Accounting Standards for Business Enterprises
No. 14 (CK [2021] No. 1 hereinafter referred to as "Interpretation No. 14") on 2 February 2021 which
comes into force as of the date of promulgation. The relevant businesses increased from 1 January 2021
to the implementation date were adjusted as required by Interpretation No. 14.* Public-Private Partnership (PPP) project contract
Interpretation No. 14 is applicable to PPP project contracts that meet both the "dual characteristics"
and "dual control" described in such Interpretation. Retrospective adjustments should be made to relevant
PPP project contracts that were implemented before 31 December 2020 and have not been completed by
the implementation date. In the event that retrospective adjustment is not feasible such Interpretation shall
be applied from the beginning of the initial stage at which the retrospective adjustment is feasible. The
retained earnings at the beginning of the current year and other relevant items in the financial statements
on the effective date of the adjustment of cumulative impact other than those in the comparable periods
shall be adjusted. The Company's implementation of this Provision has no impact.* Reform of benchmark interest rate
Interpretation No. 14 provides a simplified accounting treatment for cases where the benchmark rate
reform results in a change in the basis for determining cash flows related to financial instrument contracts
and lease contracts.According to the provisions of such Interpretation the business pertaining to the benchmark interest
rate reform before 31 December 2020 should be adjusted retrospectively except where retrospective
adjustment is not feasible and there is no need to adjust the data in the comparative financial statements
of the previous period. On the implementation date of such Interpretation the difference between the
original carrying amount and the new carrying amount of financial assets and financial liabilities shall be
included in the beginning retained earnings or other comprehensive income of the Reporting Period in
which such Interpretation is implemented. The implementation of this provision has not had a material
impact on the financial position and operating results of the Company.
3. Implementation of the Circular on Adjusting the Scope of Application of the Provisions on the
Accounting Treatment of COVID-19-related Rent Concessions
62 / 237Annual Report 2021
On 19 June 2020 the Ministry of Finance issued the Provisions on the Accounting Treatment of
COVID-19-related Rent Concessions (CK (2020) No. 10) allowing companies to resort to a simplified
method for accounting treatment for rental reductions deferred rent payment and other rental concessions
related to COVID-19 pandemic that meet the stipulations of the Provisions.On 26 May 2021 the Ministry of Finance issued the Circular on Adjusting the Scope of Application
of the Provisions on the Accounting Treatment of COVID-19-related Rent Concessions (CK [2021] No.
9) which was implemented on 26 May 2021. According to such Circular the scope of application of
"using simplified method for rental reductions related to COVID-19 pandemic" is changed from
"concession is only applicable to lease payments payable before 30 June 2021" to "concession is only
applicable to lease payments payable before 30 June 2022" with other applicable conditions unchanged.The Company has adopted simplified accounting methods for all lease contracts that meet the
requirements before the adjustment of scope of application and also adopted the simplified method for
accounting treatment of all similar lease contracts that meet the requirements after the adjustment of the
scope of application. Retrospective adjustments have been made to the relevant lease contracts which have
been subjected to accounting treatment by lease change before the issuance of the Circular but the
comparative financial statements of the previous period have not been adjusted; the relevant rental
concessions that occurred between 1 January 2021 and the effective date of the Circular and were not
subjected to accounting treatment as required by such provisions shall be adjusted according to the
Circular.
4. Implementation of presentation of the centralized management of funds set forth in Interpretation
No. 15 of the Accounting Standards for Business Enterprises
On 30 December 2021 the Ministry of Finance issued the Interpretation No. 15 of Accounting
Standards for Business Enterprises (CK [2021] No. 35 hereinafter referred to as "Interpretation No. 15").The "presentation of centralized management of funds" was implemented as of the date of publication and
the financial statements in comparable periods were adjusted accordingly.Interpretation No. 15 clearly stipulates how the balance involved in the centralized and unified
management of the funds of the parent company and members through internal settlement centers and
financial companies should be presented and disclosed in the balance sheet. The implementation of this
provision has not had a material impact on the financial position and operating results of the Company.
(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
(4) Other descriptions
□ 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 CPAs (LLP)
Remuneration of domestic accounting firm 160
Term of office of domestic accounting firm 12
Name Remuneration
Internal control audit accounting firm BDO China Shu Lun Pan CPAs (LLP) 70
Explanation on appointment and dismissal of the accounting firm
√ Applicable □ Not applicable
63 / 237Annual Report 2021
During the Reporting Period the BDO China Shu Lun Pan CPAs (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
(3) Situation and causes for termination of listing
□ Applicable √ Not applicable
VIII. Matters Related to Bankruptcy and Reorganization
□ Applicable √ Not applicable
IX. 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
X. Suspected Violation of Laws and Regulations Punishment and Rectification to the Listed
Company Its Directors Supervisors Senior Management Controlling Shareholders and
Actual Controllers
□ Applicable √ Not applicable
XI. 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.XII. Major Related Transactions
(1) 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 5th meeting of the 5th session of Board of Directors and 2020 annual general meeting of the
Company considered and approved the Proposal on the Expected Daily Related Transactions in 2021 and
issued the Announcement on the Implementation of Expected Daily Related Transactions in 2021 (number:
2021-009) on 30 March 2021.
In 2021 the estimated income from selling goods to the sales entities controlled by Guo Weilong
amounted to RMB520000000.00. It was estimated that fees for leasing the houses of M&G Group
(including office buildings workshops parking space warehouses and dormitories) amounted to
RMB4620952.38; fees for leasing the office buildings and parking space of M&G Group amounted to
64 / 237Annual Report 2021
RMB3861563.33; utilities amounted to RMB6000000.00. It was estimated that the expenses incurred
by M&G Colipu Colipu Information Technology M&G Technologies and Jiumu Store in leasing M&G
Group's office building and parking space amounted to RMB11775442.14 RMB3125755.71
RMB1675847.14 and RMB493795.59 respectively and the expenses incurred by M&G Life in leasing
M&G Group's parking space amounted to RMB20571.43.In 2021 the actual income from selling goods to the sales entities controlled by Guo Weilong
amounted to RMB421648593.59. The actual fees for leasing the houses of M&G Group (including office
buildings workshops parking space warehouses and dormitories) amounted to RMB4620952.60; fees
for leasing the office buildings and parking space of M&G Group amounted to RMB3055612.47; utilities
amounted to RMB5819952.08. The actual expenses incurred by M&G Colipu Colipu Information
Technology M&G Technologies and Jiumu Store in leasing M&G Group's office building and parking
space amounted to RMB11206556.28 RMB2969468.08 RMB1252961.62 and RMB729409.82
respectively and the actual expenses incurred by M&G Life in leasing M&G Group's parking space
amounted to RMB8682.02.
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(2) 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
(3) 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
(4) 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
65 / 237Annual Report 2021
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
(5) Financial business between the Company and the affiliated financial companies the Company's
holding financial company and the related party
□ Applicable √ Not applicable
(6) Others
□ Applicable √ Not applicable
XIII. 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
66 / 237Annual Report 2021
(2) Guarantees
□ Applicable √ Not applicable
67 / 237Annual Report 2021
(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
Overdue uncollected
Types Source of fund Amount incurred Undue balance
amount
Entrusted wealth Raised capital 0 0 0
management of
banks
Entrusted wealth Self-owned 160000 160000 0
management of capital
banks
Others
□ Applicable √ Not applicable
(2) Individual entrusted wealth management
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
Whether Whether
Beginning Termination Method it has there is a Amount of
Amount of
date of date of Source Usage to Annual Expected Actual gone future provision
Type of entrusted entrusted Actual
Trustee entrusted entrusted of of determine rate of return gains or through a entrusted for the
wealth management wealth recovery
wealth wealth fund fund return return (if any) loss legal wealth impairment
management
management management way procedure management (if any)
or not plan or not
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 10000 2019/7/4 2021/9/22 owned 3.57% 788.66 Recovered Yes Yes
Guangming Sub-branch floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 40000 2019/7/4 2021/2/26 owned 3.41% 1732.16 Recovered Yes Yes
Fengxian Sub-branch
floating returns capital
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 30000 2020/8/5 2021/9/22 owned 3.30% 1108.29 Recovered Yes Yes
Guangming Sub-branch floating returns capital
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 40000 2020/12/31 2021/4/6 owned 2.82% 300.16 Recovered Yes Yes
Guangming Sub-branch floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 20000 2020/12/31 2021/3/31 owned 3.50% 172.60 Recovered Yes Yes
Fengxian Sub-branch
floating returns capital
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 34000 2021/4/7 2021/9/22 owned 3.30% 503.69 Recovered Yes Yes
Guangming Sub-branch floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 30000 2021/4/7 2021/10/9 owned 2.88% 438.45 Recovered Yes Yes
Fengxian Sub-branch
floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 40000 2021/4/7 2021/7/6 owned 3.50% 345.21 Recovered Yes Yes
Fengxian Sub-branch
floating returns capital
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 25000 2021/9/30 owned Unrecovered Yes Yes
Guangming Sub-branch floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 50000 2021/9/30 2021/12/29 owned 3.60% 443.84 Recovered Yes Yes
Fengxian Sub-branch
floating returns capital
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 10000 2021/10/8 owned Unrecovered Yes Yes
Guangming Sub-branch floating returns capital
Agricultural Bank of China Non-principal Self-
Limited Shanghai guaranteed with 45000 2021/10/13 owned Unrecovered Yes Yes
Guangming Sub-branch floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 10000 2021/10/13 owned Unrecovered Yes Yes
Fengxian Sub-branch
floating returns capital
Non-principal Self-
SPD Bank Co. Ltd.guaranteed with 50000 2021/12/30 owned Unrecovered Yes Yes
Fengxian Sub-branch
floating returns capital
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 12000 2019/6/20 2021/5/8 owned 3.07% 365.16 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
68 / 237Annual Report 2021
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 2000 2019/7/31 2021/3/15 owned 2.89% 94.04 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 1000 2019/8/30 2021/3/15 owned 2.87% 44.30 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 1000 2019/9/29 2021/3/25 owned 2.86% 42.58 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 3550 2020/6/3 2021/5/8 owned 2.75% 90.70 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Non-principal Self-
Bank of Shanghai Co. Ltd.guaranteed with 2000 2020/6/22 2021/5/20 owned 2.73% 49.72 Recovered Yes Yes
Puxi Sub-branch
floating returns capital
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 3000 2020/7/8 2021/4/19 owned 2.76% 64.59 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 3000 2021/4/28 2021/5/13 owned 3.28% 4.04 Recovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 7000 2021/9/14 owned Unrecovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
Industrial and Commercial
Non-principal Self-
Bank of China Limited
guaranteed with 3000 2021/10/9 owned Unrecovered Yes Yes
Shanghai Gumei Road Sub-
floating returns capital
branch
China Merchants Bank Co. Non-principal Self-
Ltd. Shanghai Branch guaranteed with 5000 2021/10/9 owned Unrecovered Yes Yes
Wujiaochang Sub-branch floating returns capital
China Merchants Bank Co. Non-principal Self-
Ltd. Shanghai Branch guaranteed with 5000 2021/10/13 owned Unrecovered Yes Yes
Wujiaochang Sub-branch floating returns capital
Others
□ Applicable √ Not applicable
(3) Provision for the impairment of entrusted wealth management
□ Applicable √ Not applicable
2. Entrusted loans
(1) Overall condition of entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(2) Individual entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(3) Provision for the impairment of entrusted loans
□ Applicable √ Not applicable
3. Others
□ Applicable √ Not applicable
69 / 237Annual Report 2021
(4) Other material contracts
□ Applicable √ Not applicable
XIV. Explanation of Other Major Events that Have a Material Impact on Investors' Value
Judgments and Investment Decisions
□ Applicable √ Not applicable
70 / 237Annual Report 2021
Section VII Changes in Shares and Shareholders
I. Changes in Share Capital
(1) Statement of changes in shares
1. Statement of changes in shares
Unit: share
Before the change Increase/decrease of the change (+ -) After the change
Capital
Issue of
Percentage Bonus reserve- Percentage
Quantity new Others Subtotal Quantity
(%) shares converted (%)
shares
shares
I. Restricted 7427600 0.80 689400 -2381790 -1692390 5735210 0.62
shares
1. State-owned
shares
2. Shares held
by state-owned
legal person
3. Other 7427600 0.80 689400 -2381790 -1692390 5735210 0.62
domestic shares
Including:
Shares held by
domestic non-
state-owned
legal person
Shares held by 7427600 0.80 689400 -2381790 -1692390 5735210 0.62
domestic natural
person
4. Overseas
shares
Including:
Shares held by
foreign legal
person
Shares held by
overseas natural
person
II. Non- 920000000 99.20 2010380 2010380 922010380 99.38
restricted
circulating
shares
1. Ordinary 920000000 99.20 2010380 2010380 922010380 99.38
RMB shares
2. Domestically
listed foreign
shares
3. Overseas
listed foreign
shares
4. Others
III. Total 927427600 100.00 689400 -371410 317990 927745590 100.00
number of
shares
2. Explanation of changes in shares
√ Applicable □ Not applicable
According to the Company's 2020 Restricted Stock Incentive Plan and the authorization of the 2019
Annual General Meeting of Shareholders and upon consideration and approval at the 5th meeting of the
5th session of Board of Directors and the 4th meeting of the 5th session of Board of Supervisors the
71 / 237Annual Report 2021
Company completed the cancellation of part of the restricted shares under such Incentive Plan with China
Securities Depository and Clearing Corporation Limited Shanghai Branch on 27 May 2021 repurchasing
and canceling 371410 restricted shares of 111 incentive objects.After the completion of the repurchase and cancellation the total shares of the Company decreased
from 927427600 shares to 927056190 shares.Upon consideration and approval at the 8th meeting of the 5th session of the Board of Directors and
the 7th meeting of the 5th session of the Board of Supervisors the conditions for lifting the selling
restrictions for the initial grant as required by the Company's 2020 Restricted Stock Incentive Plan have
been established and the 2010380 restricted shares held by 324 incentive objects have been unlocked
and outstanding on 3 June 2021 and have been converted from restricted shares to unrestricted negotiable
shares.Upon consideration and approval at the 7th meeting of the 5th session of Board of Directors and the
6th meeting of the 5th session of Board of Supervisors the Company completed the registration of
restricted stock granted under this Incentive Plan with China Securities Depository and Clearing
Corporation Limited Shanghai Branch on 3 June 2021 granting 689400 restricted shares to 119 incentive
objects. After the registration of this grant the Company's total shares increased from 927056190 shares
to 927745590 shares.
3. Impact of changes in shares on the earnings per share net asset value per share and other
financial indicators in the last year and period (if any)
√ Applicable □ Not applicable
(1) Basic earnings per share
Basic earnings per share are based on the combined net profit attributable to the ordinary shareholders
of the parent company divided by the weighted mean of the Company's outstanding ordinary shares:
Item Amount in the Amount in the last
current period period
Combined net profit attributable to ordinary 1515343226.16 1247295968.55
shareholders of the parent company
Weighted mean of the Company's outstanding 921172721.67 920000000.00
ordinary shares
Basic earnings per share 1.6450 1.3558
Including: Basic earnings per share from 1.6450 1.3558
continuing as a going concern
Basic earnings per share from not continuing
as a going concern
(2) Diluted earnings per share
Diluted earnings per share are based on the combined net profit (diluted) attributable to the ordinary
shareholders of the parent company divided by the weighted mean (diluted) of the Company's outstanding
ordinary shares:
Item Amount in the Amount in the last
current period period
Combined net profit (diluted) attributable to 1517866131.16 1255426655.27
ordinary shareholders of the parent company
Weighted mean of the Company's outstanding 921172721.67 925997158.63
ordinary shares
(diluted)
72 / 237Annual Report 2021
Diluted earnings per share 1.6425 1.3558
Including: Diluted earnings per share from 1.6425 1.3558
continuing as a going concern
Diluted earnings per share from not continuing as
a going concern
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
Unit: share
Number of Number of
Number of Increase in
restricted restricted Reason for Date of lifting
Name of restricted shares number of
shares at the shares at the selling of selling
shareholder removed during restricted shares
beginning of end of the restrictions restrictions
the year during the year
the year year
Incentive 7427600 2381790 689400 5735210 Equity 3 June 2021
objects of incentive
restricted selling
shares in 2020 restrictions
Total 7427600 2381790 689400 5735210 / /
Note: "Number of shares lifted from sales restrictions this year" in the above table includes
2010380 shares lifted from sales restrictions and 371410 shares repurchased and cancelled. The
cancellation date is 27 May 2021.II. Issuance and Listing of Securities
(1) Issuance of securities as at the Reporting Period
√ Applicable □ Not applicable
Unit: Share Currency: RMB
Type of stock and
Number of Number of
its derivative Issue price (or Listing Transactio
Issuing date the issued shares approved
securities interest rate) date n end date
shares for listing
Ordinary shares
Restricted shares 3 June 2021 RMB45.03/share 689400 689400
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
According to the Company's 2020 Restricted Stock Incentive Plan 689400 reserved restricted shares
were issued during the Reporting Period.
73 / 237Annual Report 2021
(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
According to 2020 Restricted Stock Incentive Plan 689400 shares were reserved and granted to 119
incentive objects and the Company's shares increased by 689400 shares all of which were restricted
shares. Thereafter the Company's total shares were 927745590 shares.As of 31 December 2021 the total assets of the Company were RMB11424387900 an increase of
17.66% over RMB9709908400 at the end of last year; the liabilities were RMB4901235300 an
increase of 14.81% over RMB4268921600 at the end of last year; the asset-liability ratio dropped to
42.90% from 43.96% at the end of last year.
(3) Existing internal employee shares
□ Applicable √ Not applicable
III. Shareholder and Beneficial Controller
(1) Total number of shareholders
Total number of shareholders of ordinary shares as at the end of the Reporting 31902
Period
Total number of shareholders of ordinary shares at the end of last month prior to the 35247
disclosure date of this annual report
Total number of shareholders of preferred shares whose voting rights have been 0
restored as at the end of the Reporting Period
Total number of shareholders of preferred shares whose voting rights have been 0
restored at the end of last month prior to the disclosure date of 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 marked or frozen
Number of
Change during shares held
Name of shareholder shares held as at Percentage Nature of
the Reporting subject to Status of
(full name) the end of the (%) Quantity shareholder
Period selling share
period
restrictions
Domestic
nonstate-
M&G Holdings (Group) Co. Ltd. 0 536000000 57.77 0 No 0
owned legal
person
Hong Kong Securities Clearing
14647807 47609233 5.13 0 No 0 Others
Company Limited
Industrial and Commercial Bank
of China Limited-Invesco Great
Wall Emerging Mature and
Hybrid Equity Investment Funds 6499945 27999893 3.02 0 No 0 Others
（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）
Shanghai Keying Investment
-3677442 13872558 1.50 0 No 0 Others
Management Office (L.P.)
Shanghai Jiekui Investment
-3611100 13713900 1.48 0 No 0 Others
Management Firm (L.P.)
Domestic
Chen Huxiong -3490700 13609300 1.47 0 No 0
natural person
74 / 237Annual Report 2021
Domestic
Chen Huwen -3490700 13609300 1.47 0 No 0
natural person
Bank of China Limited-Invesco
Great Wall Ding Yi Hybrid
Security Investment Fund (LOF)
（中国银行股份有限公司－景 3299876 11999876 1.29 0 No 0 Others顺长城鼎益混合型证券投资基
金）
Aberdeen Standard Investments
(Asia) Limited - Aberdeen 1402912 9685935 1.04 0 No 0 Others
Standard - China A Share Fund
Domestic
Chen Xueling -2700000 8100000 0.87 0 No 0
natural person
Shareholdings of the top ten shareholders of non-restricted circulating shares
Type and number of shares
Name of shareholder Number of non-restricted circulating shares held
Type Quantity
Ordinary RMB
M&G Holdings (Group) Co. Ltd. 536000000 536000000
Shares
Ordinary RMB
Hong Kong Securities Clearing Company Limited 47609233 47609233
Shares
Industrial and Commercial Bank of China Limited-
Invesco Great Wall Emerging Mature and Hybrid Ordinary RMB
2799989327999893Equity Investment Funds（中国工商银行股份有限 Shares公司－景顺长城新兴成长混合型证券投资基金）
Shanghai Keying Investment Management Office Ordinary RMB
1387255813872558
(L.P.) Shares
Ordinary RMB
Shanghai Jiekui Investment Management Firm (L.P.) 13713900 13713900
Shares
Ordinary RMB
Chen Huxiong 13609300 13609300
Shares
Ordinary RMB
Chen Huwen 13609300 13609300
Shares
Bank of China Limited-Invesco Great Wall Ding YiHybrid Security Investment Fund (LOF)（中国银行 Ordinary RMB
1199987611999876
股份有限公司－景顺长城鼎益混合型证券投资基 Shares
金）
Aberdeen Standard Investments (Asia) Limited - Ordinary RMB
96859359685935
Aberdeen Standard - China A Share Fund Shares
Ordinary RMB
Chen Xueling 8100000 8100000
Shares
Special repurchase account of the top ten
Not applicable
shareholders
Explanation on the above-mentioned shareholders'
entrusting voting rights accepting voting rights Not applicable
entrusted and waiver of voting rights
There is related relationship among the shareholders—M&G Group Keying Investment Jiekui
Investment Chen Huwen Chen Huxiong and Chen Xueling. Chen Huwen Chen Huxiong and
Explanation on the related relationship or parties
Chen Xueling are parties acting in concert. Save as the above the Company is not aware of any
acting in concert among the above shareholders
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 shareholders with
Not applicable
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
Unit: share
Available-for-listing-and-trading
conditions of shares held subject to
Number of shares held selling restriction
Name of shareholder subject to selling Selling
No. subject to selling Number of new
restrictions Available-for- restrictions
restrictions available-for-
listing-and-
listing-and-trading
trading time
shares
1 Incentive objects of restricted shares in 5735210 Equity
2020 incentive
selling
restrictions
75 / 237Annual Report 2021
Explanation on the related relationship or parties Not applicable
acting in concert among the above shareholders
Note: The restricted stocks granted by the equity incentive plan implemented in 2020 must be
unlocked in batches in accordance with the Company's 2020 Restricted Stock Incentive Plan.
(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 or legal Chen Huxiong
representative
Establishment date 2007-5-10
Main operation businesses Industrial investment infrastructure investment consultation for investment
information (except 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 domestic and No
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 Explanation of the change 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
76 / 237Annual Report 2021
M&G Group
M&G Stationery
(2) Beneficial controllers
1 Legal person
□ Applicable √ Not applicable
2 Natural person
√ Applicable □ Not applicable
Name Chen Huwen
Nationality China
Acquire right of residence in other countries No
or regions or not
Main job and title Chairman of the Board of Shanghai M&G Stationery Inc.Shareholdings in other domestic or overseas No
listed companies over the past 10 years
Name Chen Huxiong
Nationality China
Acquire right of residence in other countries Yes
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 overseas No
listed companies over the past 10 years
Name Chen Xueling
Nationality China
Acquire right of residence in other countries No
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 overseas No
listed companies over the past 10 years
3 Special explanation on the Company not having beneficial controllers
□ Applicable √ Not applicable
4 Explanation of the change of the Company's control during the Reporting Period
□ Applicable √ Not applicable
77 / 237Annual Report 2021
5 Diagram of the ownership and controlling relationship between the Company and its beneficial
controllers
√ Applicable □ Not applicable
Chen Chen Chen
Xueling Huwen Huxiong
M&G Keying Jiekui
Group Investment Investment
M&G
Stationery
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. The Total Shares Pledged by the Controlling Shareholder or the First Majority Shareholder
and the Person Acting in Concert Account for More Than 80% of the Company’s Shares Held
by Them
□ Applicable √ Not applicable
VI. Other Legal Person Shareholders with More Than 10% Shareholdings
□ Applicable √ Not applicable
VII. Explanation on Limitation on Reduction of Shareholding
□ Applicable √ Not applicable
VIII. Implementation of Share Repurchase during the Reporting Period
□ Applicable √ Not applicable
78 / 237Annual Report 2021
Section VIII Preferred Shares
□ Applicable √ Not applicable
79 / 237Annual Report 2021
Section IX Bonds
I. Enterprise Bonds Corporate Bonds and Non-financial Enterprise Debt Financing Instruments
□ Applicable √ Not applicable
II. Convertible Corporate Bonds
□ Applicable √ Not applicable
80 / 237Annual Report 2021
Section X Financial Report
I. Auditor’s Report
√ Applicable □ Not applicable
Xin Kuai Shi Bao Zi [2022] No. ZA10458
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 2021 the consolidated and parent company's income statements the
consolidated and parent company's cash flow statements and the consolidated and parent company's
statements of changes in shareholders' equity for the year of 2021 as well as notes to financial statements.In our opinion the accompanying financial statements were prepared in accordance with the
Accounting Standards for Business Enterprises in all material aspects and give a true and fair view of the
consolidated and parent company's financial position of M&G Stationery as at 31 December 2021 and of
its consolidated and parent company's operating results and cash flows for the year of 2021.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 key audit matters identified in our audit are summarized as follows:
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 design of the key
for accounting policies set out in "III internal control designed by management and we tested the
Significant Accounting Policies and effectiveness of implementing key controls;
Accounting Estimates" (XXIII) and "V 2. We inspected customer contracts on a sample basis
Notes to Consolidated Financial Statements" to identify terms and conditions related to the transfer of
(XXXVII). control over the goods and assessed the timing of revenue
M&G Stationery mainly specializes in recognition with reference to the requirements of
selling stationery and office supplies. prevailing accounting standards;
In 2021 M&G Stationery's revenue from 3. We selected samples for revenue transactions
principal business in sales recognition recorded during the current year with invoices sales
amounted to RMB17602085200. contracts goods delivery notes or transport documents to
M&G Stationery recognized revenue based assess whether the related revenue was recognized in
on the expected amount of consideration that accordance with M&G Stationery's revenue recognition
it is entitled to receive when the customer accounting policies;
81 / 237Annual Report 2021
obtains control of the relevant products. 4. We performed analytical procedures on revenue and
Since revenue is one of the key performance cost including analysis of revenue cost gross profit
indicators of M&G Stationery there is margin fluctuations in each month of the current period
possibly inherent risk of inappropriately and performed analysis on sales model to observe whether
recognizing revenue to reach specific there is any abnormal transaction;
purpose in revenue recognition made based 5. We took samples from revenue transactions that took
on the sales group of distributor; there is place shortly before and after the balance sheet date by
possibly potential risk of material checking delivery orders and other supportive documents
misstatement in revenue recognition made to assess whether revenue was recognized in the correct
based on the sales group of end customer accounting period.because it involves many transactions with 6. We evaluated the accuracy and authenticity of the
small amount for each transaction so we revenue amount by implementing the income letter
recognized revenue recognition as a key verification procedure and checking goods return after the
audit matter. period.(II) Anticipated credit loss of accounts receivable
Please refer to notes to financial statements
1. We understood and evaluated design of the key
for accounting policies set out in "III
internal control regarding impairment of financial assets
Significant Accounting Policies and
(including accounts receivable) designed by management
Accounting Estimates" (IX) and "V Notes to
and we tested the effectiveness of implementing key
Consolidated Financial Statements" (IV).controls;
As at 31 December 2021 balance of
2. We evaluated rationality of the estimation on
accounts receivable amounted to
anticipated credit loss of accounts receivable including
RMB1761134300 and provision made for
judgment of forward-looking information; basis of
credit impairment loss of accounts
estimation on anticipated credit loss made on a single item
receivable amounted to RMB40265900.and basis of estimation on anticipated credit loss made on
M&G Stationery measured provision for
portfolio including rationality of the division for portfolio;
loss of accounts receivable in accordance
3. We reviewed credit risk assessment performed by the
with amount of anticipated credit loss in the
management on internal and external environment of
entire lifetime. The anticipated credit loss
M&G Stationery's operation integrity of different
requires the management to take into
customers repayment history repayment capacity and
consideration of forward-looking
historical experience in credit loss;
information apart from combining historical
4. We recalculated to check whether measurement of
experience and current situations involving
provision for loss made by the management on single and
lots of estimation and judgment so we
portfolio accounts receivable is consistent with the amount
recognized anticipated credit loss of
of anticipated credit loss in the entire existing period.accounts receivable as a key audit matter.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 2021 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.
82 / 237Annual Report 2021
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 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 consolidated 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.
83 / 237Annual Report 2021
We also provided a statement to management on compliance with ethical requirements related to
independence and communicated with governing bodies about all relationships and other matters that
may be reasonably considered to affect our independence as well as related precautions (if applicable).From the matters we had discussed with the governing bodies we confirmed which matters were
most important to the audit of the financial statements for the current period and thus constituted the key
audit matters. We set out these matters in the auditor's report. Unless the disclosure of these matters are
forbidden by the laws and regulations or in rare cases if it is reasonably expected that the negative
impacts caused by discussing certain matters in the auditor's report would be larger than the benefits for
public interest we shall not disclose the matters in the auditor's report under such circumstances.BDO China Shu Lun Pan CPAs Chinese Certified Public Accountant: Chen Luying
(LLP) (Project Partner)
Chinese Certified Public Accountant: Wang Aijia
Shanghai* China 25 March 2022
84 / 237Annual Report 2021
II. Financial Statements
Consolidated Balance Sheet
31 December 2021
Prepared by: Shanghai M&G Stationery Inc.Unit: RMB Currency: RMB
Item Notes 31 December 2021 31 December 2020
Current assets:
Cash and equivalents VII. 1 3010652190.64 2562158926.11
Transaction settlement funds
Lending funds
Held-for-trading financial assets VII. 2 1609123552.86 1428277848.33
Derivative financial assets
Bills receivable VII. 4 39712146.72
Accounts receivable VII. 5 1720868415.43 1561211468.90
Receivables financing VII. 6 22824707.62 61412976.46
Prepayment VII. 7 90826293.94 131596384.76
Premium receivable
Reinsurance premium receivable
Reserves for reinsurance contract
receivable
Other receivables VII. 8 163987201.97 141753102.00
Including: Interest receivable
Dividend receivable
Financial assets purchased under
agreements to resell
Inventories VII. 9 1546653299.30 1322812846.83
Contract assets
Held for sale assets
Non-current assets due within one year VII. 12 3312295.00 4637213.00
Other current assets VII. 13 85797733.53 27286607.30
Total current assets 8293757837.01 7241147373.69
Non-current assets:
Loans and advances to customers
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments VII. 17 36512701.80 34722395.67
Investments in other equity instruments VII. 18 6745402.14 5476577.42
Other non-current financial assets
Investment real estate
Fixed assets VII. 21 1840104394.34 1847635724.45
Construction in progress VII. 22 66743168.66 54946300.66
Productive biological assets
Oil and gas assets
Right-of-use assets VII. 25 357540113.34
Intangible assets VII. 26 434848138.70 320746328.60
Development expenses
Goodwill VII. 28 63529740.20
Long-term prepaid expenses VII. 29 162206827.46 99035852.78
Deferred income tax assets VII. 30 153856300.50 99939414.58
Other non-current assets VII. 31 8543306.18 6258468.47
Total non-current assets 3130630093.32 2468761062.63
Total assets 11424387930.33 9709908436.32
Current liabilities:
Short-term borrowings VII. 32 179925570.29 180176000.00
Borrowings from central bank
85 / 237Annual Report 2021
Placements from banks and other financial
institutions
Held-for-trading financial liabilities
Derivative financial liabilities VII. 34 147570.52
Bills payable VII. 35 172167.42
Accounts payable VII. 36 2809593441.42 2602020507.99
Accounts received in advance
Contract liabilities VII. 38 146585240.81 114100035.35
Financial assets sold under repurchase
agreements
Deposits from customers and other banks
Brokerage for trading securities
Brokerage for underwriting securities
Employee benefits payable VII. 39 191303383.26 152625106.89
Taxes payable VII. 40 353228927.57 477240219.10
Other payables VII. 41 593242385.96 625468675.97
Including: Interest payable
Dividend payable
Fees and commissions payable
Reinsured accounts payable
Held-for-sale liabilities
Non-current liabilities due within one year VII. 43 178611602.65
Other current liabilities VII. 44 90875521.97 13746089.97
Total current liabilities 4543685811.87 4165376635.27
Non-current liabilities:
Reserves for insurance contracts
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities VII. 47 172924166.21
Long-term payable VII. 48 8420000.00 8420000.00
Long-term employee benefits payable
Estimated liabilities VII. 50 35311258.55 12211357.80
Deferred income VII. 51 48089564.76 46132513.40
Deferred income tax liabilities VII. 30 92665937.38 36781069.25
Other non-current liabilities
Total non-current liabilities 357410926.90 103544940.45
Total liabilities 4901096738.77 4268921575.72
Owner's equity (or shareholders' equity):
Share capital VII. 53 927745590.00 927427600.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve VII. 55 454186790.79 533384131.66
Less: Treasury shares VII. 56 148106474.00 176034120.00
Other comprehensive income VII. 57 264042.14 2141402.48
Special reserve
Surplus reserve VII. 59 464201654.91 464042659.91
General risk provision
Undistributed profit VII. 60 4496600374.16 3442607038.00
Total equity attributable to the owners of 6194891978.00 5193568712.05
the parent company
Minority equity 328399213.56 247418148.55
Total owners' equity (or shareholders' 6523291191.56 5440986860.60
equity)
Total liabilities and owner's equity (or 11424387930.33 9709908436.32
shareholders' equity)
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of
Accounting Department: Zhai Yu
86 / 237Annual Report 2021
Parent Company's Balance Sheet
31 December 2021
Prepared by: SHANGHAI M&G STATIONERY INC.Unit: RMB Currency: RMB
Item Notes 31 December 2021 31 December 2020
Current assets:
Cash and equivalents 1745979385.16 1887003379.89
Held-for-trading financial assets 1408461028.23 1272219811.46
Derivative financial assets
Bills receivable
Accounts receivable XVII. 1 127794215.77 177648799.65
Receivables financing
Prepayment 30780762.76 36987935.22
Other receivables XVII. 2 600504253.91 399678347.22
Including: Interest receivable 35000.00
Dividend receivable
Inventories 442836008.14 332755309.92
Contract assets
Held for sale assets
Non-current assets due within one year 3312295.00 4637213.00
Other current assets 154197220.48 150000000.00
Total current assets 4513865169.45 4260930796.36
Non-current assets:
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments XVII. 3 1538161599.01 1098535037.00
Investments in other equity instruments 6745402.14 5476577.42
Other non-current financial assets
Investment real estate
Fixed assets 1495059787.67 1471196714.32
Construction in progress 61619438.17 50603926.95
Productive biological assets
Oil and gas assets
Right-of-use assets 7418455.85
Intangible assets 171561670.92 177722510.27
Development expenses
Goodwill
Long-term prepaid expenses 67556926.66 5417965.45
Deferred income tax assets 26498132.15 29239636.35
Other non-current assets 7295018.30 5829768.47
Total non-current assets 3381916430.87 2844022136.23
Total assets 7895781600.32 7104952932.59
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable 252733729.26 320744916.72
Accounts received in advance
Contract liabilities 71836265.91 76291447.04
Employee benefits payable 112456576.65 84898291.78
Taxes payable 113254643.17 263690993.11
Other payables 1177159560.69 1089678737.94
Including: Interest payable
Dividend payable
Held-for-sale liabilities
Non-current liabilities due within one year 5950751.45
Other current liabilities 9338714.57 9917888.11
Total current liabilities 1742730241.70 1845222274.70
87 / 237Annual Report 2021
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities 496319.19
Long-term payable 260420000.00 260420000.00
Long-term employee benefits payable
Estimated liabilities
Deferred income 26576868.80 23417137.82
Deferred income tax liabilities 2853732.94 3614458.33
Other non-current liabilities
Total non-current liabilities 290346920.93 287451596.15
Total liabilities 2033077162.63 2132673870.85
Owner's equity (or shareholders' equity):
Share capital 927745590.00 927427600.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 638242426.13 538163670.62
Less: Treasury shares 148106474.00 176034120.00
Other comprehensive income 3825730.75 2329031.21
Special reserve
Surplus reserve 463872795.00 463713800.00
Undistributed profit 3977124369.81 3216679079.91
Total owners' equity (or shareholders' 5862704437.69 4972279061.74
equity)
Total liabilities and owner's equity (or 7895781600.32 7104952932.59
shareholders' equity)
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of
Accounting Department: Zhai Yu
88 / 237Annual Report 2021
Consolidated Income Statement
January - December 2021
Unit: RMB Currency: RMB
Item Notes 2021 2020
I. Total revenue 17607403250.12 13137745727.18
Including: Revenue VII. 61 17607403250.12 13137745727.18
Interest income
Premium received
Handling fee and commission income
II. Total operating costs 15925682890.70 11732355241.35
Including: Operating cost VII. 61 13520841753.26 9806609999.48
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. 62 66507958.32 50694964.71
Selling expenses VII. 63 1397645460.82 1103184023.51
Administrative expenses VII. 64 745024738.28 602627135.41
R&D expenses VII. 65 188758215.50 160178941.89
Financial expenses VII. 66 6904764.52 9060176.35
Including: Interest expenses 22849307.31 6948206.51
Interest income 31800258.52 13415173.15
Add: Other gains VII. 67 72747727.93 45665409.77
Income from investment ("-" refers to VII. 68 6293164.04 3851154.70
loss)
Including: Investment income from 1372107.60 -1610614.02
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 ("-" refers to VII. 70 38636606.71 32281250.23
loss)
Losses on credit impairment ("-" refers to VII. 71 -7013714.54 -38225902.12
loss)
Losses on assets impairment ("-" refers to VII. 72 -17091366.45 -40287483.83
loss)
Gains from asset disposal ("-" refers to VII. 73 6098090.22 169704.92
loss)
III. Operating profits ("-" refers to loss) 1781390867.33 1408844619.50
Add: Non-operating profits VII. 74 98159047.88 128775498.09
Less: Non-operating expenses VII. 75 18146808.20 20471306.43
IV. Total profits ("-" refers to total loss) 1861403107.01 1517148811.16
Less: Income tax expenses VII. 76 327807441.64 278775085.16
V. Net profits ("-" refers to net loss) 1533595665.37 1238373726.00
(I) Classified by operation continuity
1. Net profits from continuing activities ("-" refers 1533595665.37 1238373726.00
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 1517866131.16 1255426655.27
parent company ("-" refers to net loss)
2. Profit or loss attributable to minority 15729534.21 -17052929.27
shareholders ("-" refers to net loss)
89 / 237Annual Report 2021
VI. Net amount of other comprehensive income -2290233.39 1284183.22
after tax
(I) Net amount of other comprehensive income -1877360.34 1615042.93
after tax attributable to owners of the parent
company
1. Other comprehensive income not to be 1496321.29 2024062.42
reclassified into profit or loss
(1) Change in re-measurement of defined benefit
plans
(2) Other comprehensive income that may not be 417820.28 738151.54
reclassified to profit or loss under equity method
(3) Change in fair value of investments in other 1078501.01 1285910.88
equity instruments
(4) Change in fair value of enterprise's own credit
risk
2. Other comprehensive income to be reclassified -3373681.63 -409019.49
into profit or loss
(1) Other comprehensive income that may be 378.25 12074.68
reclassified to profit or loss under equity method
(2) Change in fair value of other debt investments
(3) Amount included in other comprehensive
income on reclassification of financial assets
(4) Credit impairment provisions of other debt
investments
(5) Cash flow hedging reserve 108696.70
(6) Exchange differences from translation of -3482756.58 -421094.17
financial statements
(7) Others
(II) Net amount of other comprehensive income -412873.05 -330859.71
after tax attributable to minority shareholders
VII. Total comprehensive income 1531305431.98 1239657909.22
(I) Total comprehensive income attributable to 1515988770.82 1257041698.20
owners of the parent company
(II) Total comprehensive income attributable to 15316661.16 -17383788.98
minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share (Yuan/share) 1.6450 1.3558
(II) Diluted earnings per share (Yuan/share) 1.6425 1.3558
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.The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of
Accounting Department: Zhai Yu
90 / 237Annual Report 2021
Income Statement of the Parent Company
January - December 2021
Unit: RMB Currency: RMB
Item Notes 2021 2020
I. Revenue XVII. 4 4775891830.59 4195911462.19
Less: Operating cost XVII. 4 2568184822.14 2164311904.18
Taxes and surcharges 18798817.87 18164236.07
Selling expenses 251254499.88 205919659.54
Administrative expenses 522541509.33 425917972.99
R&D expenses 163122840.94 135381593.07
Financial expenses -32451619.70 -7024536.16
Including: Interest expenses 2525853.91 1517396.53
Interest income 38922886.92 18306911.40
Add: Other gains 10189418.97 10610663.43
Income from investment ("-" refers to XVII. 5 5439519.84 3153311.04
loss)
Including: Investment income from 1372107.60 -1610614.02
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 ("-" 36977984.23 28634739.23
refers to loss)
Losses on credit impairment ("-" 2127911.75 -3408970.51
refers to loss)
Losses on assets impairment ("-" -968847.45 872454.58
refers to loss)
Gains from asset disposal ("-" refers 3907817.69 25621.30
to loss)
II. Operating profits ("-" refers to loss) 1342114765.16 1293128451.57
Add: Non-operating profits 92512492.98 90245541.69
Less: Non-operating expenses 5626551.17 5632154.87
III. Total profits ("-" refers to total loss) 1429000706.97 1377741838.39
Less: Income tax expenses 204682622.07 205164355.15
IV. Net profits ("-" refers to net loss) 1224318084.90 1172577483.24
(I) Net profits from continuing activities ("-" 1224318084.90 1172577483.24
refers to net loss)
(II) Net profits from discontinuing activities
("-" refers to net loss)
V. Net amount of other comprehensive 1496699.54 2036137.10
income after tax
(I) Other comprehensive income not to be 1496321.29 2024062.42
reclassified into profit or loss
1. Change in re-measurement of defined
benefit plans
2. Other comprehensive income that may not 417820.28 738151.54
be reclassified to profit or loss under equity
method
3. Change in fair value of investments in 1078501.01 1285910.88
other equity instruments
4. Change in fair value of enterprise's own
credit risk
(II) Other comprehensive income to be 378.25 12074.68
reclassified into profit or loss
1. Other comprehensive income that may be 378.25 12074.68
reclassified to profit or loss under equity
method
2. Change in fair value of other debt
investments
3. Amount included in other comprehensive
income on reclassification of financial assets
91 / 237Annual Report 2021
4. Credit impairment provisions of other debt
investments
5. Cash flow hedging reserve
6. Exchange differences from translation of
financial statements
7. Others
VI. Total comprehensive income 1225814784.44 1174613620.34
VII. Earnings per share:
(I) Basic earnings per share (Yuan/share)
(II) Diluted earnings per share (Yuan/share)
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of
Accounting Department: Zhai Yu
92 / 237Annual Report 2021
Consolidated Cash Flow Statement
January - December 2021
Unit: Yuan Currency: RMB
Item Notes 2021 2020
I. Cash flow from operating activities:
Cash received from sales of goods or 18775664300.30 14375933624.40
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
Net cash received from securities
trading agency services
Tax rebates 10369246.97 11398390.80
Other cash received from operating VII. 78 1329822604.24 744295214.21
activities
Sub-total of cash inflows from 20115856151.51 15131627229.41
operating activities
Cash paid for goods and services 13782147395.98 10196223261.78
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 964853485.39 820264591.39
employees
Taxes and fees paid 1061608286.98 663182452.66
Cash paid for other operating VII. 78 2746050562.39 2180259031.30
activities
Sub-total of cash outflows from 18554659730.74 13859929337.13
operating activities
Net cash flow generated from 1561196420.77 1271697892.28
operating activities
II. Cash flow from investing activities:
Cash received from disposal of 2970000000.00 2291000000.00
investments
Cash received from returns on 62458333.69 21189324.39
investments
Net cash received from disposal of 11181134.17 16631.67
fixed assets intangible assets and
other long-term assets
Net cash received from disposal of
subsidiaries and other operating
entities
93 / 237Annual Report 2021
Other cash received relating to VII. 78 1324918.00 1987377.00
investing activities
Sub-total of cash inflows from 3044964385.86 2314193333.06
investing activities
Cash paid for purchase and 381903887.13 323935562.77
construction of fixed assets
intangible assets and other long-term
assets
Cash paid for investment 3170000000.00 3042050000.00
Net increase in pledged loans
Net cash paid for acquiring 155898356.19 13656702.33
subsidiaries and other operating
entities
Other cash paid relating to investing
activities
Sub-total of cash outflows from 3707802243.32 3379642265.10
investing activities
Net cash flow generated from -662837857.46 -1065448932.04
investing activities
III. Cash flow generated from financing activities:
Proceeds received from financing 52543682.00 176034120.00
activities
Including: Proceeds received by 21500000.00
subsidiaries from minority
shareholders' investment
Cash received from borrowings 211087200.00 180000000.00
Other cash received from financing- VII. 78 67500000.00
related activities
Sub-total of cash inflows from 331130882.00 356034120.00
financing activities
Cash repayments of borrowings 224956154.64 180000000.00
Dividends paid profit distributed or 478576740.11 374506316.09
interest paid
Including: Dividend and profit paid
by subsidiaries to minority
shareholders
Other cash paid for financing-related VII. 78 356857834.03 1585530.00
activities
Sub-total of cash outflows from 1060390728.78 556091846.09
financing activities
Net cash flow from financing -729259846.78 -200057726.09
activities
IV. Effects of exchange rate -6960237.09 -6291534.79
fluctuations on cash and cash
equivalents
V. Net increase in cash and cash 162138479.44 -100300.64
equivalents
Add: Cash and cash equivalents at the 1377346135.25 1377446435.89
beginning of the period
VI. Cash and cash equivalents at the 1539484614.69 1377346135.25
end of the period
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of
Accounting Department: Zhai Yu
94 / 237Annual Report 2021
Cash Flow Statement of the Company
January - December 2021
Unit: RMB Currency: RMB
Item Notes 2021 2020
I. Cash flow from operating activities:
Cash received from sales of goods or 5385576848.34 4597258430.48
rendering of services
Tax rebates 3189697.74
Other cash received from operating 1403304335.52 1051218859.99
activities
Sub-total of cash inflows from 6792070881.60 5648477290.47
operating activities
Cash paid for goods and services 2779458377.10 2109943577.01
Cash paid to and on behalf of 477407103.64 403578239.43
employees
Taxes and fees paid 586015675.64 398632878.68
Cash paid for other operating 1592162349.00 1641002312.95
activities
Sub-total of cash outflows from 5435043505.38 4553157008.07
operating activities
Net cash flow generated from 1357027376.22 1095320282.40
operating activities
II. Cash flow from investing activities:
Cash received from disposal of 2790000000.00 2150000000.00
investments
Cash received from returns on 54804179.70 20645914.20
investments
Net cash received from disposal of 8508833.33 604365.44
fixed assets intangible assets and
other long-term assets
Net cash received from disposal of
subsidiaries and other operating
entities
Other cash received relating to 1324918.00 1987377.00
investing activities
Sub-total of cash inflows from 2854637931.03 2173237656.64
investing activities
Cash paid for purchase and 306645976.60 254982539.91
construction of fixed assets
intangible assets and other long-term
assets
Cash paid for investment 3368500000.00 2900000000.00
Net cash paid for acquiring 13656702.33
subsidiaries and other operating
entities
Other cash paid relating to investing
activities
Sub-total of cash outflows from 3675145976.60 3168639242.24
investing activities
Net cash flow generated from -820508045.57 -995401585.60
investing activities
III. Cash flow generated from financing activities:
Proceeds received from financing 31043682.00 176034120.00
activities
Cash received from borrowings
Other cash received from financing-
related activities
Sub-total of cash inflows from 31043682.00 176034120.00
financing activities
Cash repayments of borrowings
Dividends paid profit distributed or 465698100.00 369517396.53
interest paid
95 / 237Annual Report 2021
Other cash paid for financing-related 19004886.14 1585530.00
activities
Sub-total of cash outflows from 484702986.14 371102926.53
financing activities
Net cash flow from financing -453659304.14 -195068806.53
activities
IV. Effects of exchange rate -4202451.81 -5972061.74
fluctuations on cash and cash
equivalents
V. Net increase in cash and cash 78657574.70 -101122171.47
equivalents
Add: Cash and cash equivalents at the 705217858.93 806340030.40
beginning of the period
VI. Cash and cash equivalents at the 783875433.63 705217858.93
end of the period
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of
Accounting Department: Zhai Yu
96 / 237Annual Report 2021
Consolidated Statements of Changes in Owners' Equity
January - December 2021
Unit: RMB Currency: RMB
2021
Total equity
Equity attributable to owners of the parent company Minority equity attributable to
owners
Item
Other equity instruments Other General
Paid-up capital Less: Treasury Special
Capital reserve comprehensive Surplus reserve risk Undistributed profit Others Subtotal
(or share capital) Preference Perpetual shares reserve
Others income provision
shares bonds
I. Balance at the 927427600.00 533384131.66 176034120.00 2141402.48 464042659.91 3442607038.00 5193568712.05 247418148.55 5440986860.60
end of last year
Add: Changes in
accounting
policies
Correction for
previous errors
Business
combination under
common control
Others
II. Balance at the 927427600.00 533384131.66 176034120.00 2141402.48 464042659.91 3442607038.00 5193568712.05 247418148.55 5440986860.60
beginning of the
year
III. Increase and 317990.00 -79197340.87 -27927646.00 -1877360.34 158995.00 1053993336.16 1001323265.95 80981065.01 1082304330.96
decrease for the
period ("-" for
decrease)
(I) Total -1877360.34 1517866131.16 1515988770.82 15316661.16 1531305431.98
comprehensive
income
(II) Owner's 317990.00 -43886082.32 -27927646.00 -15640446.32 65573846.26 49933399.94
contribution and
capital reduction
1. Ordinary shares 317990.00 22075530.00 -27927646.00 50321166.00 33078168.15 83399334.15
contributed by the
owners
2. Capital
contributions by
other equity
instrument holders
3. Amount of 68319695.36 68319695.36 68319695.36
share-based
payments credited
to owners' equity
4. Others -134281307.68 -134281307.68 32495678.11 -101785629.57
(III) Profit 158995.00 -463872795.00 -463713800.00 -463713800.00
distribution
1. Withdrawal of 158995.00 -158995.00
surplus reserve
2. Withdrawal of
general risk
provision
97 / 237Annual Report 2021
3. Distribution to -463713800.00 -463713800.00 -463713800.00
owners (or
shareholders)
4. Others
(IV) Internal
carry-forward of
owners' equity
1. Transfer of
capital reserve to
capital (or share
capital)
2. Transfer of
surplus reserve to
capital (or share
capital)
3. Surplus reserve
to cover loss
4. Changes in
defined benefit
scheme carried
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 -35311258.55 -35311258.55 90557.59 -35220700.96
IV. Balance at the 927745590.00 454186790.79 148106474.00 264042.14 464201654.91 4496600374.16 6194891978.00 328399213.56 6523291191.56
end of the period
2020
Equity attributable to owners of the parent company
Total equity
Item
Minority equity attributable to
Other equity instruments Other General
Paid-up capital Less: Treasury Special owners
Capital reserve comprehensive Surplus reserve risk Undistributed profit Others Subtotal
(or share capital) shares reserve
Preference Perpetual income provision
Others
shares bonds
I. Balance at the 920000000.00 272347764.53 526359.55 440260399.59 2568365861.32 4201500384.99 259424856.61 4460925241.60
end of last year
Add: Changes in 10596781.73 10596781.73 146751.13 10743532.86
accounting
policies
Correction for
previous errors
Business
combination
under common
control
Others
98 / 237Annual Report 2021
II. Balance at the 920000000.00 272347764.53 526359.55 440260399.59 2578962643.05 4212097166.72 259571607.74 4471668774.46
beginning of the
year
III. Increase and 7427600.00 261036367.13 176034120.00 1615042.93 23782260.32 863644394.95 981471545.33 -12153459.19 969318086.14
decrease for the
period ("-" for
decrease)
(I) Total 1615042.93 1255426655.27 1257041698.20 -17383788.98 1239657909.22
comprehensive
income
(II) Owner's 7427600.00 261036367.13 176034120.00 92429847.13 5230329.79 97660176.92
contribution and
capital reduction
1. Ordinary shares 7427600.00 168606520.00 176034120.00 -1050000.00 -1050000.00
contributed by the
owners
2. Capital
contributions by
other equity
instrument
holders
3. Amount of 71971792.64 71971792.64 71971792.64
share-based
payments credited
to owners' equity
4. Others 20458054.49 20458054.49 6280329.79 26738384.28
(III) Profit 23782260.32 -391782260.32 -368000000.00 -368000000.00
distribution
1. Withdrawal of 23782260.32 -23782260.32
surplus reserve
2. Withdrawal of
general risk
provision
3. Distribution to -368000000.00 -368000000.00 -368000000.00
owners (or
shareholders)
4. Others
(IV) Internal
carry-forward of
owners' equity
1. Transfer of
capital reserve to
capital (or share
capital)
2. Transfer of
surplus reserve to
capital (or share
capital)
3. Surplus reserve
to cover loss
4. Changes in
defined benefit
scheme carried
forward to
retained earnings
5. Carry-forward
of other
comprehensive
income to
retained earnings
6. Others
99 / 237Annual Report 2021
(V) Special
reserve
1. Withdrawal for
the period
2. Utilization for
the period
(VI) Others
IV. Balance at the 927427600.00 533384131.66 176034120.00 2141402.48 464042659.91 3442607038.00 5193568712.05 247418148.55 5440986860.60
end of the period
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of Accounting Department: Zhai Yu
100 / 237Annual Report 2021
Parent Company's Statement of Changes in Owners' Equity
January - December 2021
Unit: RMB Currency: RMB
2021
Other equity instruments Other
Item Paid-up capital (or Special Total equity attributable
Capital reserve Less: Treasury shares comprehensive Surplus reserve Undistributed profit
share capital) Preference Perpetual reserve to owners
Others income
shares bonds
I. Balance at the end of last year 927427600.00 538163670.62 176034120.00 2329031.21 463713800.00 3216679079.91 4972279061.74
Add: Changes in accounting
policies
Correction for previous errors
Others
II. Balance at the beginning of the 927427600.00 538163670.62 176034120.00 2329031.21 463713800.00 3216679079.91 4972279061.74
year
III. Increase and decrease for the 317990.00 100078755.51 -27927646.00 1496699.54 158995.00 760445289.90 890425375.95
period ("-" for decrease)
(I) Total comprehensive income 1496699.54 1224318084.90 1225814784.44
(II) Owner's contribution and 317990.00 100078755.51 -27927646.00 128324391.51
capital reduction
1. Ordinary shares contributed by 317990.00 22075530.00 -27927646.00 50321166.00
the owners
2. Capital contributions by other
equity instrument holders
3. Amount of share-based payments 68319695.36 68319695.36
credited to owners' equity
4. Others 9683530.15 9683530.15
(III) Profit distribution 158995.00 -463872795.00 -463713800.00
1. Withdrawal of surplus reserve 158995.00 -158995.00
2. Distribution to owners (or -463713800.00 -463713800.00
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 927745590.00 638242426.13 148106474.00 3825730.75 463872795.00 3977124369.81 5862704437.69
2020
Item Paid-up capital (or Special Total equity attributable
Other equity instruments Capital reserve Less: Treasury shares Surplus reserve Undistributed profit
share capital) reserve to owners
101 / 237Annual Report 2021
Other
Preference Perpetual
Others comprehensive
shares bonds
income
I. Balance at the end of last year 920000000.00 274008599.09 292894.11 439931539.68 2435883856.99 4070116889.87
Add: Changes in accounting
policies
Correction for previous errors
Others
II. Balance at the beginning of the 920000000.00 274008599.09 292894.11 439931539.68 2435883856.99 4070116889.87
year
III. Increase and decrease for the 7427600.00 264155071.53 176034120.00 2036137.10 23782260.32 780795222.92 902162171.87
period ("-" for decrease)
(I) Total comprehensive income 2036137.10 1172577483.24 1174613620.34
(II) Owner's contribution and 7427600.00 264155071.53 176034120.00 95548551.53
capital reduction
1. Ordinary shares contributed by 7427600.00 168606520.00 176034120.00
the owners
2. Capital contributions by other
equity instrument holders
3. Amount of share-based payments 82199024.88 82199024.88
credited to owners' equity
4. Others 13349526.65 13349526.65
(III) Profit distribution 23782260.32 -391782260.32 -368000000.00
1. Withdrawal of surplus reserve 23782260.32 -23782260.32
2. Distribution to owners (or -368000000.00 -368000000.00
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 927427600.00 538163670.62 176034120.00 2329031.21 463713800.00 3216679079.91 4972279061.74
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of Accounting Department: Zhai Yu
102 / 237Annual Report 2021
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 2021 the Company issued a total of 927455590 shares accumulatively
including 5735210 restricted shares and its registered capital amounted to RMB927455590. The
registered address of the Company is Building 3 No. 3469 Jinqian Road Fengxian District Shanghai.The principal operations of the Company include:
Permitted items: Food operation; printing of packaging and decoration printing products; printing of
documents materials and other printing products; publication operation. (For items subject to approval
operation activities are conducted after getting the approval from relevant departments. For specific
operation items the approval documents or permits of relevant departments shall prevail)
General items: Manufacturing and sales of stationery products; wholesale and retail of 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 daily necessities textiles
clothing and footwear household goods sporting goods and equipment disinfectants (excluding
hazardous chemicals) kitchen utensils sanitary ware and daily sundries daily chemical products first-
class medical equipment second-class medical equipment machinery equipment office equipment and
consumables photographic equipment audio equipment decorative materials fire-fighting equipment
hotel supplies glass products power and electronic components lubricants plumbing pipes and
accessories ceramic pipes and accessories automotive supplies sanitary products and mother and baby
supplies; import and export of goods and technology; e-commerce and enterprise management consulting.
(Except for items subject to approval according to law operation activities are carried out independently
with business license according to law)
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 25 March 2022.
2. Scope of consolidated financial statements
√ Applicable □ Not applicable
Details of the scope of the consolidated financial statements for the current period and its changes
are set out in Notes "VIII. Changes in the Consolidation Scope" and "IX. Equity in Other Entities".
103 / 237Annual Report 2021
IV. Preparation Basis of Financial Statements
1. Preparation basis
The Company prepared financial statements in accordance with the Accounting Standards for
Business Enterprises - Basic Standards and various specific account standards application guidance for
accounting standards for business enterprises interpretations of the accounting standards for business
enterprises and other relevant regulations (hereinafter collectively referred to as "Accounting Standards
for Business Enterprises") promulgated 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 details please refer
to Notes "V (10) Financial Instruments" "V (23) Fixed Assets" "V (29) Intangible Assets" "V (31) Long-
term Deferred Expenses" "V (38) Income" and "V (40) Government Subsidies".
1. Statement of compliance of accounting standards for business enterprises
The financial statements are in compliance with the Accounting Standards for Business Enterprises
promulgated by the Ministry of Finance and truly and completely present the consolidated and parent
company's financial position of the Company as at 31 December 2021 as well as the consolidated and
parent company's operating results and cash flows for the year then ended.
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
RMB is adopted by the Company as the bookkeeping currency.
5. Accounting treatments for business combination under or not under common control
√ Applicable □ Not applicable
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Business combination under common control: the assets and liabilities acquired by the Company in
business combination (including goodwill incurred in the acquisition of the acquiree by ultimate
controlling party) shall be measured at the carrying amount of the assets and liabilities of the acquiree in
the consolidated financial statements of the ultimate controlling party at the date of combination. 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.Business combination not under common control: the cost of business combination is the fair value
of the assets paid by the acquirer to obtain the control right of the acquiree the liabilities incurred or
assumed and the equity securities issued at the date of purchase. Where the cost of business combination
is higher than the fair value of the identifiable net assets acquired from the acquiree in business
combination the Company shall recognize such difference as goodwill; where the cost of business
combination is less than the fair value of the identifiable net assets acquired from the acquiree in business
combination such difference shall be included in the current profit or loss. The identifiable assets
liabilities and contingent liabilities of the acquiree obtained in the business combination that meet the
recognition conditions are measured at their fair values at the date of purchase.The direct expenses incurred in business combination shall be included the current profit or loss;
transaction costs associated with the issue of equity or debt securities for the business combination 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. The term "control" refers to the power held by the
Company over the invested enterprise through which the Company is capable of enjoying variable return
by participating in relevant activities of the invested enterprise and having the ability to influence the
amount of return via such control.
(2) Consolidation procedure
The Company regards the entire enterprise group as an accounting entity and prepares the
consolidated financial statements in accordance with unified accounting policies to reflect the overall
financial status operating results and cash flow of the enterprise group. The influence of internal
transactions between the Company and its subsidiaries and among the subsidiaries shall be offset. If
internal transactions indicate that the relevant assets have suffered impairment losses the losses shall be
fully recognized. 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
the subsidiaries are adjusted in accordance with the accounting policies and accounting period of the
Company.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
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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.* 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 operating results and cash flows of the subsidiary or business
combination from the beginning of the current period to the end of the Reporting Period are included into
the consolidated financial statements and at the same time the amount at the end of the period of the
consolidated financial statements and the relevant items in the comparative statements are 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 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 the retained profit at the beginning of the period of
the comparative statements or the profit or loss of the current period respectively.During the Reporting Period if there is an addition of subsidiary or business due to business
combination not under common control it shall be included in the consolidated financial statements on
the basis of the fair value of the identifiable assets liabilities and contingent liabilities determined at the
date of purchase.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 current period. Where equity
interest of the acquiree held before the date of purchase is related to other comprehensive income that can
be reclassified into profit and loss in the future and other changes in owners’ equity under the equity
method such equity interest is transferred to investment gains of the period to which the date of purchase
belongs.* Disposal of subsidiaries
A. General treatment for disposal
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 that is
related to the equity investment in the original subsidiary and can be reclassified into profit and loss in the
future and other changes in owners’ equity under the equity method are transferred to investment gains
of the period during which the control is lost.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:
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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 constitute a basket of transactions the Company accounts for the transactions
as a transaction of disposal of a subsidiary until control is lost; 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 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.* 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.* Partial disposal of equity investment in subsidiaries without losing control
For the difference between the disposal consideration 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 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 treatment of joint operations
□ Applicable √ Not applicable
8. Determination of cash and cash equivalents
Cash refers to the cash on hand and deposits that are available for payment of the Company. Cash
equivalents refer to investments held by the Company that are short-term highly liquid readily convertible
to known amounts of cash and subject to an insignificant risk of changes in value.
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
107 / 237Annual Report 2021
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
(1) Classification of the financial instruments
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 at fair value through profit or loss and
other financial assets at fair value through current profit or loss.The Company classifies financial assets that simultaneously meet the following conditions and are
not designated as financial assets at fair value through current profit or loss as financial assets measured
at amortized cost:
- the business model aims at collecting contractual cash flows; and
- contractual cash flows are only the payment made based on the principal and the interest of the
outstanding principal amount.The Company classifies financial assets that simultaneously meet the following conditions and are
not designated as financial assets at fair value through current profit or loss as financial assets (debt
instruments) at fair value through other comprehensive income:
- 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.For non-trading equity instrument investments the Company irrevocably designates them as
financial assets (equity instruments) at fair value through other comprehensive income at the time of initial
recognition. The designation is made on the basis of a single investment and the related investment meets
the definition of an equity instrument from the issuer's perspective.Except for the above-mentioned financial assets measured at amortized cost and at fair value through
other comprehensive income the Company classifies all other financial assets as financial assets at fair
value through current profit or loss. At the time of initial recognition if accounting mismatches can be
eliminated or significantly reduced the Company can irrevocably designate financial assets that should
be classified as financial assets measured at amortized cost or at fair value through other comprehensive
income as financial assets at fair value through current profit or loss.
108 / 237Annual Report 2021
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:
* Such designation can eliminate or significantly reduce accounting mismatches.* 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.* The financial liabilities include embedded derivatives that need to be split separately.
(2) Recognition and measurement of financial instruments
* Financial assets at amortized cost
Financial assets at amortized cost include notes receivable 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.* 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.* 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.* 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
109 / 237Annual Report 2021
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.* 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 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.* 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.
(3) Derecognition of financial assets and transfer of financial assets
The Company derecognizes financial assets when one of the following conditions is met:
- the contractual rights to collect the cash flows from the financial assets expire;
- the financial assets have been transferred and nearly all the risks and rewards related to the
ownership of the financial assets have been transferred to the transferee; or
- the financial assets have been transferred and the Company have neither transferred nor retained
almost all risks and rewards related to the ownership of the financial assets but did not retain control over
the financial assets.Where a financial asset is transferred 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:
* The carrying amount of the financial assets transferred;
* 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).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:
* The carrying amount of the derecognized portion;
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* The 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).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) 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
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
The Company estimates the anticipated credit loss on a single or combination of financial assets
measured at amortized cost financial assets (debt instruments) at fair value through other comprehensive
income and financial guarantee contracts.The Company considers reasonable and evidence-based information about past events current
conditions and forecasts of future economic conditions and uses the risk of default as the weight to
calculate the probability-weighted amount of the present value of the difference between the contractual
cash flow receivable and the expected cash flow and recognizes the expected credit loss.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
111 / 237Annual Report 2021
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.The Company compares the risk of default on the balance sheet date of a financial instrument with
the risk of default on the date of initial recognition to determine the relative change in the risk of default
during the expected life of the financial instrument so as to assess whether the credit risk of the financial
instrument has increased significantly since the initial recognition. 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.Regarding the receivables and contract assets formed from transactions regulated by the Accounting
Standards for Business Enterprises No. 14 - Revenue (2017) regardless of whether they contain significant
financing components or not the Company always measures their loss reserves in accordance with the
amount of anticipated credit losses for the entire lifetime.For lease receivables the Company always measures their loss reserves in accordance with the
amount of anticipated credit losses for the entire lifetime.If the Company no longer reasonably expects that the contractual cash flow of a financial asset can
be recovered in whole or in part it will directly write down the book balance of the financial asset.
11. Bills receivable
Determination and accounting treatment of the anticipated credit loss of notes receivable
√ Applicable □ Not applicable
For details please refer to Note V (10) Financial Instruments.
12. Accounts receivable
Determination and accounting treatment of the anticipated credit loss of accounts receivable
√ Applicable □ Not applicable
For details please refer to Note V (10) Financial Instruments.
13. Receivables financing
√ Applicable □ Not applicable
For details please refer to Note V (10) Financial Instruments.
14. Other receivables
Determination and accounting treatment of the anticipated credit loss of other receivables
√ Applicable □ Not applicable
112 / 237Annual Report 2021
For details please refer to Note V (10) Financial Instruments.
15. Inventories
√ Applicable □ Not applicable
(1) Classification and cost of inventories
Inventories are classified into materials in transit raw materials turnover materials goods-in-stock
goods in production goods in transit commissioned processing materials and so forth.Inventories are initially measured at cost. The cost of inventories includes purchase cost processing
cost and other expenditures incurred to bring inventory to its current location and state.
(2) Valuation of inventory COGS
Inventory COGS is valued using the weighted average method.
(3) Basis for determining net realizable value for different types of inventories
At the balance sheet date the inventories are measured according to the cost or the net realizable
value whichever is lower. If the cost of inventories is higher than the net realizable value the provision
for decline in value of inventories is made. The net realizable value refers in the ordinary course of
business to the amount after deducting the estimated cost of completion estimated sale expense and
relevant taxes from the estimated sale price 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.If the factors which cause any value write-down of the inventories have disappeared thus causing
the inventories’ net realizable value to be higher than their carrying amount the amount of write-down is
reversed from the provision for the loss on decline in value of inventories which has been made. The
reversed amount is included in the profits and losses of the current period.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
* Low-value consumables are amortized using the immediate write-off method
* Packaging materials are amortized using the immediate write-off method
16. Contract assets
(1). Recognition methods and standards of contract assets
√ Applicable □ Not applicable
The Company presents contract assets or contract liabilities in the balance sheet based on the
relationship between performance obligations and customer payments. The Company presents the right to
receive consideration for the transfer of goods or services rendered to customers (and the right depends on
other factors other than the passage of time) as contract assets. Contract assets and contract liabilities under
113 / 237Annual Report 2021
the same contract are presented in net amounts. The Company's unconditional (only depending on the
passage of time) right to collect consideration from customers is separately presented as receivables.
(2). Determination and accounting treatment of the anticipated credit loss of contract assets
√ Applicable □ Not applicable
Details of determination and accounting treatment of the anticipated credit loss of contract assets are
set out in Note "10. (6) Impairment test method and accounting treatment for impairment of financial
assets".
17. Held for sale assets
□ Applicable √ Not applicable
18. Debt investment
(1). Determination and accounting treatment of the anticipated credit loss of debt investments
□ Applicable √ Not applicable
19. Other debt investment
(1). Determination and accounting treatment of the anticipated credit loss of other debt investments
□ Applicable √ Not applicable
20. Long-term receivables
(1). Determination and accounting treatment of the anticipated credit loss of long-term receivables
√ Applicable □ Not applicable
For details please refer to Note V (10) Financial Instruments.
21. Long-term equity investments
√ Applicable □ Not applicable
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement 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.The term "significant influences" refers to the power to participate in making decisions on the
financial and operating policies of the invested enterprise but not to control or do joint control together
with other parties over the formulation of these policies. Where the investor can exercise significant
influence over the investee the investee is an associate of the Company.
(2) Determination of initial investment cost
* Long-term equity investments formed through business combination of entities
For long-term equity investments in subsidiaries formed by business combination under common
control the initial investment cost of long-term equity investments shall be determined based on share of
the book value of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate
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controlling party at the date of combination. The difference between the initial investment cost of the long-
term equity investment and the carrying value of the consideration paid is adjusted to the equity premium
in the capital reserve. If the capital premium in capital reserve is not sufficient to offset the difference the
remaining balance is adjusted against retained earnings. In connection with imposing control over the
investee under joint control as a result of additional investment and other reasons the difference between
the initial investment cost of the long-term equity investment recognized in accordance with the above
principles and the carrying amount of the long term equity investment before the combination and the sum
of carrying amount of newly paid consideration for additional shares acquired on the date of combination
is adjusted to equity premium. If the capital premium in capital reserve is not sufficient to offset the
difference the remaining balance is adjusted against retained earnings.For long-term equity investment in subsidiaries formed by business combination not under common
control the cost of the combination 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 under joint control as a result of additional investment and other reasons the initial investment cost is
the sum of the carrying amount of the equity investment originally held and the newly increased initial
investment cost.* Long-term equity investments acquired by means other than business combination
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.
(3) Subsequent measurement and recognition of profit or loss
* Long-term equity investment accounted for by cost method
Long-term equity investment in subsidiaries of the Company is accounted for by cost method unless
the investment meets the conditions for holding for sale. 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.* 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 is 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 is included in the profits or losses of the current period and the cost of the long-term equity
investment is adjusted simultaneously.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
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the investee (hereinafter referred to as "other changes in owners’ equity") 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 other comprehensive income and
other changes in owners’ equity 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 and other comprehensive income of the investee according to the accounting
policies and accounting period of the Company.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. However the situation that the assets invested or sold
constitute business is excluded. Any losses resulting from internal transactions which are attributable to
impairment of assets shall be fully recognized.The Company shall recognize the net losses of the joint ventures or associates until the book value
of the long-term equity investment and other long-term rights and interests which substantially form the
net investment made to the invested entity are reduced to zero unless the joint ventures or associates have
the obligation to undertake extra losses. If the joint ventures or associates realize net profits in the future
the Company resumes recognizing its share of profits after the share of profits makes up for the share of
unrecognized losses.* 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 partial disposal of long-term equity investments accounted for by the equity method if the
remaining equity is still accounted for by the equity method the other comprehensive income calculated
and recognized by the original equity method shall be carried forward in corresponding proportion by
using the same basis as the investee used for direct disposal of relevant assets or liabilities. Other changes
in owners’ equity shall be carried forward to the profits or losses of the current period on a pro rata basis.When the joint control or material influence over the investee is lost due to disposal of equity
investment and other reasons other comprehensive income recognized in the original equity investment
due to the use of the equity method shall when it is no longer calculated by the equity method be subject
to the accounting treatment on the same basis as the investee used for direct disposal of relevant assets or
liabilities. Other changes in owners’ equity shall be all transferred into the profits or losses of the current
period when they are no longer calculated by 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. The other comprehensive income recognized before the control over the investee
is obtained shall be carried forward in proportion by using the same basis as the investee used for direct
disposal of relevant assets or liabilities and the other changes in owners’ equity calculated and recognized
using the equity method shall be carried forward to the profits or losses of the current period on a pro rata
basis. Where the remaining equities after disposal cannot impose joint control or material influence over
the investee they shall be recognized as financial assets and the difference between fair value and the
carrying amount on the date when control is lost shall be included in the profits or losses of the current
116 / 237Annual Report 2021
period. All other comprehensive income and other changes in owners’ equity recognized before the control
over the investee is obtained shall be carried forward.In respect of stepwise disposal of equity investment in a subsidiary through multiple transactions
until control is lost where the transactions 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 carrying amount of long-
term equity investments corresponding to the disposal of equity is recognized as other comprehensive
income in the individual financial statements and is transferred to the profits or losses of the current period
during which control is lost upon loss of control. Where the transactions do not constitute a basket of
transactions each transaction shall be accounted for separately.
22. Investment real estate
Not applicable
23. Fixed assets
(1). Recognition conditions
√ 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:
* It is probable that the economic benefits associated with the fixed assets will flow to the enterprise;
* The cost of fixed assets can be reliably measured.A fixed asset is initially measured at its cost (and considering the impact of expected abandonment
cost factors).Subsequent expenditures related to fixed assets are included in the cost of fixed assets when their
related economic benefits are likely to flow in to the Company and their costs can be reliably measured;
the book value of the replaced part is derecognized; all other subsequent expenditures are included in the
profits or losses of the current period at the time of occurrence.
(2). Method for depreciation
√ Applicable □ Not applicable
Method for Useful lives of Annual
Category Residual value
depreciation depreciation (year) depreciation rate
Property and Straight-line 20% 5% 4.75%
buildings method
Machinery and Straight-line 10% 5-10% 9.5-9%
equipment method
Transportation Straight-line 4-10% 0-10% 25-9%
vehicles method
Other equipment Straight-line 2-10% 0-10% 47.5-9.5%
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.For fixed assets with provision for impairment accrued the depreciation amount shall be determined
according to the book value after deduction of the impairment provision and the remaining useful life in
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the future period. 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.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.
(3). Recognition basis and valuation and depreciation of fixed assets under finance lease
√ Applicable □ Not applicable
Assets acquired under finance leases: At the commencement of the lease term assets acquired under
finance 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 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.For the finance leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to recognize the unrecognized financing expenses as the current financing expenses
at the same discount rate as before the concessions and continues to accrue the depreciation of assets
under finance lease using the same method as before the concessions. In case of any rent reduction and
exemption the Company will regard the reduced and exempted rent as contingent rent. When a concession
agreement is reached to release the original obligation to pay the rent the Company will include the
reduced and exempted rent in the current profit and loss and adjust the long-term payables accordingly or
discount the reduced and exempted rent at the discount rate before the concessions include it in the current
profit and loss and adjust the unrecognized financing expenses. In case of any deferred rent payment the
Company will offset the long-term payables recognized in the previous period when the rent is actually
paid.
24. Construction in progress
√ Applicable □ Not applicable
Construction in progress is measured at the actual cost incurred. Actual cost includes construction
cost installation cost borrowing expense qualified for capitalization and other necessary expenditures
incurred before the construction in progress reaches its intended use status. When the construction in
progress reaches the intended use status it shall be transferred to fixed assets and its depreciation shall be
accrued from the next month.
25. Borrowing costs
√ Applicable □ Not applicable
(1) Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition
construction or production of assets qualified for capitalization the costs will be capitalized and included
in the costs of the related assets. Other borrowing costs shall be recognized as expense in the period in
which they incur and are included in the current profit or loss.
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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.
(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 begins when the following three conditions are fully satisfied:
* 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;
* borrowing costs have been incurred;
* acquisition construction or production that are necessary to enable the asset reach its intended
usable or saleable condition have commenced.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.
(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 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 actual
interest rate of the general borrowings.During the capitalization period the exchange difference between the principal and interest of
dedicated borrowings in foreign currency is capitalized and included in the cost of the assets qualified for
capitalization. Exchange differences arising from the principal and interest of borrowings in foreign
currency other than dedicated borrowings in foreign currency are included in the profits or losses of the
current period.
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26. Biological assets
□ Applicable √ Not applicable
27. Oil and gas assets
□ Applicable √ Not applicable
28. Right-of-use assets
□ Applicable √ Not applicable
29. Intangible assets
(1). Valuation method useful life and impairment test
√ Applicable □ Not applicable
* 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.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 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.* 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
* 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.
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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.* Specific criteria for capitalization at development phase
Expenditure in the research phase is included in the profit or loss for the current period at the time of
occurrence. Expenses in the development phase are recognized as an intangible asset when all of the
following conditions are satisfied otherwise are included in the current profit or loss:
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.If it is impossible to distinguish the expenses in the research phase from the expenses in the
development phase all the incurred research and development expenses shall be included in the current
profit or loss.
30. Impairment of long-term assets
√ Applicable □ Not applicable
Long-term assets such as long-term equity investment fixed assets construction in progress right-
of-use assets intangible assets with finite useful life and oil and gas assets 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 formed by business combination 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 regardless of
whether there are any indications of impairment.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. Relevant asset groups or portfolio of asset groups refer to the asset groups or
portfolio of asset groups that can benefit from the synergistic effect of business combination.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
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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 their carrying value
with their recoverable amount. Where the recoverable amount is lower than the carrying value thereof the
amount of impairment loss is first deducted and allocated to the carrying value of goodwill in the asset
groups or portfolio of asset groups and then the carrying value of other assets other than goodwill in the
asset groups or portfolio of asset groups is deducted according to the percentages of the carrying value of
such other assets.Once the above asset impairment loss is recognized it will not be reversed in the subsequent
accounting periods.
31. 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.Amortization periods and amortization methods of various expenses are as follows:
Item Estimated useful lives Basis
Decoration fee 3 to 5 years Expected years of benefit
Others 2 Expected years of benefit
32. Contract liabilities
(1). Recognition of contract liabilities
√ Applicable □ Not applicable
The Company presents contract assets or contract liabilities in the balance sheet based on the
relationship between performance obligations and customer payments. The Company's obligation to
transfer goods or provide services to customers for consideration received or receivable from customers
is presented as contract liabilities. Contract assets and contract liabilities under the same contract are
presented in net amounts.
33. Employee benefits
(1). Accounting treatment of short-term benefits
√ Applicable □ Not applicable
During the accounting period when employees provide service the Company will recognize the
short-term benefits 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 determine relevant amount of
employee benefits in accordance with the required provision basis and provision ratios.The employee welfare expenses incurred by the Company are included in the current profit or loss or
related asset costs based on the actual amounts when they actually occur. Among them non-monetary
benefits are measured at fair value.
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(2). Accounting treatment of post-employment benefits
√ Applicable □ Not applicable
* 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.* 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 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 treatment of termination benefits
√ Applicable □ Not applicable
Where the Company provides termination benefits to its employees the employee benefits liabilities
resulting from termination benefits are recognized on the following date (whichever is earlier) and are
included in the current profit or loss: when the Company cannot unilaterally withdraw the termination
benefits provided due to the cancellation of the labor relationship with the employees or the layoff proposal;
or when the Company recognizes the costs or expenses of reorganization relating to payment of
termination benefits.
(4). Accounting treatment of other long-term employees' benefits
□ Applicable √ Not applicable
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34. Lease liabilities
□ Applicable √ Not applicable
35. Estimated liabilities
√ Applicable □ Not applicable
The Company shall recognize the obligations related to contingencies when all of the following
conditions are satisfied:
(1) obligation is a present obligation of the Company;
(2) it is probable that an outflow of economic benefits of the Company will be required to settle the
obligation; and
(3) the amount of the obligation can be measured reliably.
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.Where the expenses required have a successive range and the possibilities of occurrence of each result
are the same in the range the best estimate shall be determined according to the median value within the
range; in other cases the best estimate shall be determined as below:
* If contingencies involve a single item the best estimate shall be determined according to the most
possible occurrence amount.* If contingencies involve multiple items the best estimate shall be calculated and determined in
accordance with various possible outcomes and related 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.The Company reviews the carrying value of the estimated liabilities at the balance sheet date. If there
is any exact evidence indicating that the carrying value cannot really reflect the current best estimate the
carrying value shall be adjusted in accordance with the current best estimate.
36. 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.
(1) Equity-settled share-based payments and equity instruments
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. Share-based payment transactions
vested immediately after the date of grant shall be included in the relevant cost or expense based on the
fair value of equity instruments at the date of grant and the capital reserve shall be increased accordingly.
124 / 237Annual Report 2021
For share-based payment transactions vested only when the services during the waiting period are
completed or the specified performance conditions are satisfied after the grant the Company shall at each
balance sheet date during the waiting period include the services obtained during the period in relevant
cost or expense at the fair value of the date of grant according to the best estimate of the number of vested
equity instruments and the capital reserve shall be increased accordingly.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.During the waiting period if the granted equity instrument is cancelled the Company will accelerate
the vesting thereof immediately include the remaining amount that should be recognized in the waiting
period in the current profit or loss and recognize the capital reserve. 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.
(2) Cash-settled share-based payments and equity instruments
Cash-settled share-based payments are measured at the fair value of the liabilities calculated and
determined on the basis of shares or other equity instruments undertaken by the Company. Share-based
payment transactions vested immediately after the date of grant shall be included in the relevant cost or
expense based on the fair value of liabilities undertook at the date of grant and the liabilities shall be
increased accordingly. For share-based payment transactions vested only when the services during the
waiting period are completed or the specified performance conditions are satisfied after the grant the
Company shall include the services obtained during the period in relevant cost or expense at the fair value
of the liabilities undertook by the Company based on the best estimate of the vesting situation and the
liabilities shall be included accordingly. At each balance sheet date before the settlement and the settlement
date of relevant liabilities the fair value of the liabilities is remeasured and its changes are included in the
current profit or loss.
37. Preference shares perpetual bonds and other financial instruments
□ Applicable √ Not applicable
38. Revenue
(1). Accounting policies used in recognition and measurement of revenue
√ Applicable □ Not applicable
The Company recognizes revenue when its performance obligations in the contract are fulfilled that
is the control over the relevant goods or services is obtained by the customer. Obtaining control over
related goods or services means being able to lead the use of the goods or services and obtain almost all
of the economic benefits from the goods or services.If the contract contains two or more performance obligations the Company will at the date of the
contract allocate the transaction price to each individual performance obligation in accordance with the
relative proportion of the stand-alone selling price of the goods or services promised by each individual
125 / 237Annual Report 2021
performance obligation. The Company measures revenue based on the transaction price allocated to each
individual performance obligation.Transaction price refers to the amount of consideration that the Company expects to be entitled to
receive due to the transfer of goods or services to customers excluding amounts collected on behalf of
third parties and amounts expected to be returned to customers. The Company determines the transaction
price in accordance with the terms of the contract and combined with its past customary practices. When
determining the transaction price the Company considers the impact of variable consideration major
financing components in the contract non-cash consideration consideration payable to customers and
other factors. The Company determines the transaction price that includes variable consideration at an
amount that does not exceed the amount of accumulated recognized revenue that is unlikely to be
significantly reversed when the relevant uncertainty is eliminated. If there is a major financing component
in the contract the Company determines the transaction price based on the amount payable in cash when
the customer obtains control over the goods or services and amortizes the difference between the
transaction price and the contract consideration with the actual interest rate method during the contract
period.The performance obligation is fulfilled during a certain period of time if one of the following
conditions is satisfied otherwise the performance obligation is fulfilled at a certain point in time:
* the customer obtains and consumes the economic benefits brought by the Company's performance
at the same time as the Company's performance.* the customer can control the products under construction during the Company's performance.* the goods produced during the Company's performance have irreplaceable uses and the Company
has the right to collect payment for the cumulative performance part that has been completed so far during
the entire contract period.For performance obligations performed within a certain period of time the Company recognizes
revenue in accordance with the performance progress during that period except where the performance
progress cannot be reasonably determined. The Company considers the nature of the goods or services
and adopts the output method or the input method to determine the performance progress. When the
performance progress cannot be reasonably determined and the cost incurred is expected to be
compensated the Company recognizes the revenue according to the amount of the cost incurred until the
performance progress can be reasonably determined.For performance obligations performed at a certain point in time the Company recognizes revenue
at the point when the customer obtains control over the relevant goods or services. When judging whether
the customer has obtained control over goods or services the Company considers the following signs:
* the Company has the current right to receive payment for the goods or services that is the customer
has the current payment obligation for the goods or services;
* the Company has transferred the legal ownership of the goods to the customer that is the customer
has the legal ownership of the goods;
* the company has transferred the goods to the customer in kind that is the customer has taken
possession of the goods in kind;
* the company has transferred the main risks and rewards of the ownership of the goods to the
customer that is the customer has obtained the main risks and rewards of the ownership of the goods;
* the customer has accepted the goods or services.
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(2). Differences in accounting policies for revenue recognition caused by the adoption of different
operation models for similar businesses
□ Applicable √ Not applicable
39. Contract cost
√ Applicable □ Not applicable
Contract cost includes contract performance cost and contract acquisition cost.If the cost incurred by the Company for the performance of the contract does not fall within the scope of
relevant standards and regulations for inventories fixed assets or intangible assets it shall be recognized
as an asset as the contract performance cost when the following conditions are met:
* the cost is directly related to a current or expected contract;
* the cost increases the Company's future resources for fulfilling its performance obligations;
* the cost is expected to be recovered.If the incremental cost incurred by the Company to obtain the contract is expected to be recovered it will
be recognized as an asset as the cost of obtaining the contract.Assets related to contract costs are amortized on the same basis as the revenue recognition of goods or
services related to the assets; however if the amortization period of cost of obtaining the contract does not
exceed one year the Company will include it in the current profit or loss when it occurs.If the carrying value of the assets related to the contract cost is higher than the difference between the
following two items the Company will make provision for impairment of the excess part and recognize it
as an asset impairment loss:
(1) the remaining consideration expected to be obtained due to the transfer of goods or services related to
the assets; and
(2) the costs expected to be incurred due to the transfer of the related goods or services.
If the depreciation factors in the previous period change later causing the aforementioned difference to
be higher than the carrying value of the assets the Company will reverse the previously-made provision
for impairment and include it in the current profit or loss but the carrying value of the assets after the
reversal cannot exceed the carrying value of the assets at the date of reversal under the assumption that no
provision is made for the impairment.
40. Government subsidies
√ Applicable □ Not applicable
(1) Types
Government subsidies are monetary or non-monetary assets obtained by the Company from the
government free of charge. They are divided into government subsidies related to assets and government
subsidies related to income.Government subsidies related to assets refer to government subsidies obtained by the Company that
are used to purchase or construct or otherwise form long-term assets. Government subsidies related to
income refer to the government subsidies other than government subsidies related to assets.The specific standards for the Company to classify government subsidies into government subsidies
related to assets are as follows:
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If obtained subsidies are used to purchase construct or otherwise form fixed assets intangible assets
and other long-term assets as expressly stipulated in government documents then such subsidies are
deemed as asset-related government subsidies.The specific standards for the Company to classify government subsidies into income-related
government subsidies are as follows:
If the government subsidies (excluding asset-related subsidies) are used to compensate relevant costs
or losses of the Company that have been already incurred or to be incurred in subsequent periods then
such subsidies are deemed as income-related government subsidies.Where there is no express regulation on the object of subsidies in government documents then the
Company will classify the government subsidies as assets-related or income-related depending on the
specific purpose that the subsidies are used for.
(2) Timing of recognition
Government subsidies are recognized when the Company can meet the conditions attached and can
receive them.
(3) Accounting treatment
Government subsidies 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 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 subsidies 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 they are related
to the daily activities of the Company they shall be included in other income; otherwise they shall be
included in the non-operating income) or offset the relevant costs or losses; Government subsidies 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 they are related to the daily activities of
the Company they shall be included in other income; otherwise they 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:
* 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.* When the government directly distributes the interest-grant funds to the Company the
corresponding discount will offset the relevant borrowing costs.
41. Deferred income tax assets and liabilities
√ Applicable □ Not applicable
128 / 237Annual Report 2021
Income taxes include current income tax and deferred income tax. Except for income tax arising from
business combination and transactions or events that are directly included in owners' equity (including
other comprehensive income) the Company includes current income tax and deferred income tax in the
current profit or loss.Deferred income tax assets and deferred income tax liabilities are calculated and recognized based
on the difference (temporary difference) between the tax base of assets and liabilities and their carrying
value.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.Deferred income tax liabilities are recognized for all taxable temporary differences arising from the
investments in subsidiaries joint ventures and associates except to the extent that both of the following
conditions are satisfied: the Company is able to control the timing of the reversal of the temporary
differences; and it is likely that the temporary difference will not reverse in the foreseeable future. Deferred
income tax assets are recognized for all deductible temporary differences associated with investments in
subsidiaries joint ventures and associates if all of the following conditions are satisfied: It is likely that
the deductible temporary difference will reverse in the foreseeable future and it is likely that taxable profit
in the future will be available against which the deductible temporary difference can be offset.At the balance sheet date deferred income tax assets and liabilities are measured at tax rates expected
to be applied to the period when the assets are recovered or the liabilities are settled according to the tax
law.At the balance sheet date the Company reviews the carrying value of deferred income tax assets. The
carrying value of the deferred income tax assets are reduced if it is unlikely to obtain sufficient taxable
income to offset the benefit of the deferred income tax assets in the future. When it is likely that sufficient
taxable income will be available the amount of write-down is reversed.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.At the balance sheet date the deferred income tax assets and the deferred income tax liabilities are
offset and presented on a net basis when all of the following conditions are satisfied:
* the taxable entity has a legal right to settle current income tax assets and liabilities on a net basis;
and
* deferred income tax assets and deferred income 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.
129 / 237Annual Report 2021
42. Lease
(1). Accounting treatment of operating leases
√ Applicable □ Not applicable
* 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.For the operating leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to include the original contract rent in the relevant asset costs or expenses using the
same method as before the concessions. In case of any rent reduction and exemption the Company will
regard the reduced and exempted rent as contingent rent and include it in the current profit and loss during
the period of rent reduction and exemption. In case of any deferred rent payment the Company will
recognize the rent payable as payable in the original payment period and offset the payable recognized in
the previous period when the rent is actually paid.* 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.For the operating leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to recognize the original contract rent as rental income with the same method as before
the concessions. In case of any rent reduction and exemption the Company will regard the reduced and
exempted rent as contingent rent and offset the rental income during the period of rent reduction and
exemption. In case of any deferred rent collection the Company will recognize the rent that should be
collected as receivable during the original collection period and offset the receivable recognized in the
previous period when the rent is actually received.
(2). Accounting treatment of finance leases
√ Applicable □ Not applicable
* Assets acquired under finance leases: At the commencement of the lease term assets acquired
under finance 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 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.
130 / 237Annual Report 2021
For the finance leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to recognize the unrecognized financing expenses as the current financing expenses
at the same discount rate as before the concessions and continues to accrue the depreciation of assets
under finance lease using the same method as before the concessions. In case of any rent reduction and
exemption the Company will regard the reduced and exempted rent as contingent rent. When a concession
agreement is reached to release the original obligation to pay the rent the Company will include the
reduced and exempted rent in the current profit and loss and adjust the long-term payables accordingly or
discount the reduced and exempted rent at the discount rate before the concessions include it in the current
profit and loss and adjust the unrecognized financing expenses. In case of any deferred rent payment the
Company will offset the long-term payables recognized in the previous period when the rent is actually
paid.* Assets leased out under finance leases: On the lease beginning date the Company recognizes the
difference between the sum of finance 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 finance lease receivables and
the amount of income recognized in the lease term will be reduced.For the finance leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to recognize unrealized financing income as rental income at the same interest rate
implicit in lease as before the concessions. In case of any rent reduction and exemption the Company will
regard the reduced and exempted rent as contingent rent. When a concession agreement is reached to give
up the original right to collect the rent the Company will offset the originally recognized rental income
include the portion insufficient for offset in the investment income and adjust the long-term receivables
accordingly or discount the reduced and exempted rent at the discount rate before the concessions include
it in the current profit and loss and adjust the unrealized financing income. In case of any deferred rent
collection the Company will offset the long-term payable recognized in the previous period when the rent
is actually received.
(3). Determination method and accounting treatment method of lease under new lease standards
√ Applicable □ Not applicable
Accounting policies from 1 January 2021
A lease is a contract whereby the lessor conveys to the lessee the right to use an asset in exchange for
consideration. On the commencement date of the contract the Company assesses whether the contract is
or contains a lease. A contract is or contains a lease if one party to the contract gives the right to control
the use of an identified asset or identified assets for a period of time in exchange for consideration.If the contract contains multiple separate leases simultaneously the Company will split the contract
and conduct separate accounting treatment for each separate lease. If the contract contains lease
components and non-lease components simultaneously the lessee and the lessor will split the lease
components and the non-lease components.For rent concessions including rent reduction and exemption and deferred rent payment directly
caused by COVID-19 and reached on existing lease contracts if the following conditions are satisfied
simultaneously the Company adopts the simplified accounting for all leases. If not all of the leases are
subject to the simplified accounting the Company shall disclose the nature of the lease contract subject to
the simplified accounting. However the simplified accounting choice shall be consistently applied to
131 / 237Annual Report 2021
similar lease contracts that meet the conditions before and after the adjustment of the scope of application
of the Provisions on the Accounting Treatment of COVID-19-related Rent Concessions namely the
Company will not assess whether a lease change has occurred and will not reassess the lease classification:
* The lease consideration after the concessions is reduced or basically unchanged from that before
the concessions and the lease consideration can be undiscounted or discounted at the discount rate before
the concessions;
* The concessions are only for lease payments payable before 30 June 2022 an increase in lease
payments payable after 30 June 2022 does not affect the satisfaction of this condition and a decrease in
lease payments payable after 30 June 2022 does not satisfy this condition; and
* It is determined that there are no significant changes in other terms and conditions of the lease after
comprehensive consideration of qualitative and quantitative factors.* The Company as the lessee
A. Right-of-use assets
At the commencement date of the lease term the Company recognizes right-of-use assets for leases
other than short-term leases and low-value asset leases. Right-of-use assets are initially measured at cost.The cost comprises:
* the amount of the initial measurement of the lease liability;
* any lease payments made at or before the commencement date of the lease term less any lease
incentives received;
* any initial direct costs incurred by the Company; and
* an estimate of costs to be incurred by the Company in dismantling and removing the leased asset
restoring the site on which it is located or restoring the leased asset to the condition required by the terms
and conditions of the lease unless those costs are incurred to produce inventories.The Company subsequently adopts the straight-line method to depreciate the right-of-use assets. 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; otherwise
depreciation will be prepared during the lease term or the remaining useful life of the leased asset
whichever is shorter.The Company determines whether the right-of-use asset has been impaired in accordance with the
principles described in Note "V (30) Impairment of long-term assets" and performs accounting treatment
for the identified impairment losses.B. Lease liabilities
At the commencement date of the lease term the Company recognizes lease liabilities for leases other
than short-term leases and low-value asset leases. Lease liabilities are initially measured at the present
value of the lease payments that are not paid. Lease payments comprise:
* fixed payments (including substantial fixed payments) less any lease incentives received;
* variable lease payments that depend on an index or a rate;
* amounts expected to be payable by the lessee under residual value guarantees provided by the
Company;
* the exercise price of a purchase option if the Company is reasonably certain to exercise that option;
and
132 / 237Annual Report 2021
* Payments for exercising an option to terminate the lease if the lease term reflects the lessee
exercising an option to terminate the lease.The Company uses the interest rate implicit in lease as the discount rate but if the interest rate implicit
in lease cannot be reasonably determined the Company's incremental borrowing rate is used as the
discount rate.The Company calculates the interest expense of the lease liability in each period of the lease term
according to the fixed periodic interest rate and includes it in the current profit and loss or the related asset
costs.Variable lease payments excluded in the measurement of lease liabilities are included in the current
profit and loss or the related asset costs when they are actually incurred.After the commencement date of the lease term the Company re-measures the lease liabilities and
adjusts the corresponding right-of-use assets under the following circumstances. If the carrying amount of
the right-of-use assets is reduced to zero but the lease liabilities still need to be further reduced the
difference is included in the current profit and loss:
* when there is a change in the assessment result of an option to purchase renew or terminate the
lease or the actual exercise of the aforementioned options is inconsistent with the original assessment
result the Company remeasures the lease liabilities at the present value calculated according to the
changed lease payments and the revised discount rate; and
* When there is a change in the substantial fixed payments a change in the amounts expected to be
payable under a residual value guarantee or a change in an index or a rate used to determine the lease
payments the Company remeasures the lease liabilities at the present value calculated according to the
changed lease payments and the unchanged discount rate. However the present value is calculated
according to the revised discount rate if the change in lease payments is caused by a change in floating
interest rates.C. Short-term leases and low-value asset leases
The Company chooses not to recognize right-of-use assets and lease liabilities for short-term leases
and low-value asset leases and includes relevant lease payments in the current profit and loss or related
asset costs over the lease term on straight-line basis. A short-term lease is a lease that at the
commencement date has a lease term of 12 months or less and does not contain a purchase option. A low-
value asset lease is a lease with a lower value when a single leased asset is a brand-new asset. If the
Company subleases or expects to sublease a leased asset the original lease is not a low-value asset lease.D. Lease modifications
The Company accounts for a lease modification as a separate lease if the following conditions are
satisfied simultaneously:
* the lease modification increases the lease scope by adding the right to use one or more lease assets;
and
* the consideration for the lease increases by an amount commensurate with the stand-alone price for
the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances
of the particular contract.When a lease modification is not treated as a separate lease at the effective date of the lease
modification the Company re-allocates the consideration of the contract after the change re-determines
133 / 237Annual Report 2021
the lease term and remeasures the lease liability at the present value calculated according to the changed
lease payments and the revised discount rate.When a lease modification decreases the lease scope or shortens the lease term the Company reduces
the carrying value of the right-of-use asset and includes the relevant gain or loss resulting from partial of
full termination of the lease in the current profit and loss. When other lease modifications result in re-
measurement of the lease liability the Company adjusts the carrying value of the right-of-use asset
accordingly.E. COVID-19-related rent concessions
For the leases subject to simplified accounting of COVID-19-related rent concessions the Company
does not assess whether there is a lease modification but continues to calculate the interest expense of the
lease liability at the same discount rate as before the concessions and include it in the current profit and
loss and also continues to depreciate the right-of-use asset using the same method as before the
concessions. In case of any rent reduction and exemption the Company will regard the reduced and
exempted rent as variable lease payment. When a concession agreement is reached to release the original
obligation to pay the rent the Company will offset the relevant asset costs or expenses at the undiscounted
amount or the amount discounted at the discount rate before the concessions and adjust the lease liabilities
accordingly. In case of any deferred rent payment the Company will offset the lease liability recognized
in the previous period when the rent is actually paid.For short-term leases and low-value asset leases the Company continues to include the original
contract rent in the relevant asset costs or expenses using the same method as before the concessions. In
case of any rent reduction and exemption the Company will regard the reduced and exempted rent as
variable lease payment and offset the relevant asset costs or expenses during the period of rent reduction
and exemption. In case of any deferred rent payment the Company will recognize the rent payable as
payable in the original payment period and offset the payable recognized in the previous period when the
rent is actually paid.* The Company as the lessor
At the commencement date of the lease term the Company classifies lease into finance lease and
operating lease. Finance lease refers to a lease that has transferred in substance all the risks and rewards
related to the ownership of an asset regardless of whether the ownership is ultimately transferred.Operating lease refers to a lease other than a finance lease. When the Company acts as a sublease lessor
it classifies the sublease based on the right-of-use asset arising from the original lease.A. Accounting treatment of operating leases
Lease receipts from operating leases are recognized as rental income over the lease term on straight-
line basis. The Company capitalizes the initial direct expenses incurred in relation to operating leases and
amortizes and includes them in the current profit and loss on the same basis as the rental income is
recognized during the lease term. Variable lease payments excluded in lease receipts are included in the
current profit and loss when they are actually incurred. In case of any operating lease modification the
Company will account for it as a new lease from the effective date of the modification and regard the
lease advance or lease receivable related to the lease before the modification as the receipt from the new
lease.
134 / 237Annual Report 2021
B. Accounting treatment of finance leases
At the commencement of the lease the Company recognizes a finance lease receivable for a finance
lease and derecognizes finance lease assets. At the initial measurement of the finance lease receivable
the Company regards the net investment in the lease as the entry value of the finance lease receivable. Net
investment in the lease is the sum of the following items discounted at the interest rate implicit in lease:
any unguaranteed residual value; and any lease receipt which is received at the commencement of the
lease.The Company calculates and recognizes the interest income over the lease term at the fixed periodic
interest rate. Derecognition and impairment of finance lease receivables are subject to the accounting
treatment in accordance with Note "V (10) Financial Instruments".Variable lease payments excluded in net investment in the lease are included in measurement the
current profit and loss when they are actually incurred.The Company accounts for a finance lease modification as a separate lease if the following conditions
are satisfied simultaneously:
* the modification increases the lease scope by adding the right to use one or more lease assets; and
* the consideration for the lease increases by an amount commensurate with the stand-alone price for
the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances
of the particular contract.When a finance lease modification is not treated as a separate lease the Company accounts for the
modified lease as follows:
* if the lease would have been classified as an operating lease had the modification been in effect at
the commencement date the Company accounts for the lease modification as a new lease from the
effective date of the modification and measures the carrying value of the lease asset as the net investment
in the lease immediately before the effective date of the lease modification.* if the lease would have been classified as an finance lease had the modification been in effect at the
commencement date the Company accounts for the lease modification according to the policies for
modification or renegotiation of contracts in Note "V (10) Financial Instruments".C. COVID-19-related rent concessions
For the operating leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to recognize the original contract rent as rental income with the same method as before
the concessions. In case of any rent reduction and exemption the Company will regard the reduced and
exempted rent as the variable lease payment and offset the rental income during the period of rent reduction
and exemption. In case of any deferred rent collection the Company will recognize the rent that should
be collected as receivable during the original collection period and offset the receivable recognized in the
previous period when the rent is actually received.* For the finance leases subject to simplified accounting of COVID-19-related rent concessions the
Company continues to calculate the interest at the same discount rate as before the concessions and
recognize it as rental income. In case of any rent reduction and exemption the Company will regard the
reduced and exempted rent as variable lease payment. When a concession agreement is reached to give up
the original right to collect the rent the Company will offset the originally recognized rental income at the
undiscounted amount or the amount discounted at the discount rate before the concessions include the
portion insufficient for offset in the investment income and adjust the finance lease receivable accordingly.
135 / 237Annual Report 2021
In case of any deferred rent collection the Company will offset the finance lease receivable recognized in
the previous period when the rent is actually received.* Sale and leaseback transactions
The Company assesses and determines whether the transfer of the asset in the sale and leaseback
transactions is a sale according to Note "V (38) Income".A. The Company as the lessee
When the transfer of the asset in the sale and leaseback transactions is a sale the Company as the
lessor measures the right-of-use asset arising from the sale and leaseback at the proportion of the previous
carrying amount of the asset that relates to the right of use retained through leaseback and recognizes the
relevant gain or loss at the amount that relates to the rights transferred to the lessor. When the transfer of
the asset in the sale and leaseback transactions is not a sale the Company as the lessor continues to
recognize the transferred assets and also recognizes a financial liability equal to the transfer income.Details of accounting treatment of financial liabilities are set out in Note "V (10) Financial Instruments".B. The Company as a lessor
When the transfer of the asset in the sale and leaseback transactions is a sale the Company as the
lessor accounts for the purchase of the asset and accounts for the lease of the asset in accordance with the
aforementioned policy of "* The Company as the lessor"; When the transfer of the asset in the sale and
leaseback transactions is not a sale the Company as the lessor does not recognize the transferred asset
but recognizes a financial asset equal to the transfer income. Details of accounting treatment of financial
assets are set out in Note "V (10) Financial Instruments".Accounting policies before 1 January 2021
Lease is classified into finance lease and operating lease. Finance lease refers to a lease that has
transferred in substance all the risks and rewards related to the ownership of an asset. Operating lease
refers to a lease other than a finance lease.For rent concessions including rent reduction and exemption and deferred rent payment directly
caused by COVID-19 and reached on existing lease contracts if the following conditions are satisfied
simultaneously the Company adopts the simplified accounting for all leases without assessing whether a
lease change has occurred and reassessing the lease classification:
* The lease consideration after the concessions is reduced or basically unchanged from that before
the concessions and the lease consideration can be undiscounted or discounted at the discount rate before
the concessions;
* The concessions are only for lease payments payable before 30 June 2021 an increase in lease
payments payable after 30 June 2021 does not affect the satisfaction of this condition and a decrease in
lease payments payable after 30 June 2021 does not satisfy this condition; and
* It is determined that there are no significant changes in other terms and conditions of the lease after
comprehensive consideration of qualitative and quantitative factors.
43. 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;
136 / 237Annual Report 2021
(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.
The profit and loss from continuing operations and the profit and loss from discontinued operations
are separately presented in the income statement. Operational gains and losses such as impairment losses
and reversal amounts and disposal gains and losses from discontinued operations are reported as gains and
losses from discontinued operations. For the discontinued operations reported in the current period the
Company re-reports the information previously reported as profits and losses from continuing operations
as the profits and losses from discontinued operations for the comparable accounting period in the current
financial statements.
44. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
√ Applicable □ Not applicable
Contents and reasons of changes in Review and approval Remarks (name and amount of
accounting policies procedure report items affected materially)
Implementation of the Notice of the The 5th meeting of the See other descriptions l
Ministry of Finance on Revising and 5th session of Board of
Issuing the Accounting Standards for Directors
Business Enterprises No. 21 - Leases
(Cai Kuai [2018] No.35)
Other descriptions
1. Implementation of the Accounting Standards for Business Enterprises No. 21 - Leases (revised in
2018)
The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 21 - Leases
(hereinafter referred to as "New Lease Standards") in 2018. The Company implements the new lease
standards from 1 January 2021. In accordance with the revised standards the Company has chosen not to
reassess whether a contract executed prior to the first implementation date is a lease contract or contains
a lease at the first implementation date.
(1) The Company as the lessee
According to the cumulative effects of first implementation of the New Lease Standards the
Company chose to adjust the current retained earnings at the beginning of the period for first
implementation of the New Lease Standards as well as the amount of other related items in the financial
statements without adjustment to the information for the comparable period.For operating leases prior to the first implementation date the Company measured the lease liability
at the date of initial implementation based on the present value of the remaining lease payments discounted
at the Company's incremental borrowing rate on the date of initial implementation and chose one of the
following two methods to measure the right-of-use assets by each lease:
-Assuming that the carrying amount under the New Lease Standards prevails from the
commencement date of the lease term the Company's incremental borrowing rate as of the first
implementation date is deemed as the discount rate.-A necessary adjustment is made to an amount equal to the lease liability according to prepaid rents.By each lease a company may choose to measure the right-of-use assets with either of the above two
methods.
137 / 237Annual Report 2021
For operating leases prior to the first implementation date the Company conducted one or more of
the following simplified treatments by each lease option while applying the above method:
* Leases that are completed within 12 months after the first implementation date are deemed as
short-term leases;
* The same discount rate is used for leases with similar characteristics when measuring the lease
liability;
* The measurement of right-to-use assets does not include initial direct costs;
* Where a renewal option or terminal option exists the lease term is determined based on the actual
exercise of the option prior to the first implementation date and other recent circumstances;
* As an alternative for impairment test on right-of-use assets the Company assessed whether the
contract containing the lease is an onerous contract prior to the first implementation date at estimated
liabilities and adjusted the right-of-use asset by the amount of the provision for losses recorded in the
balance sheet prior to the first implementation date.* Lease changes before the first implementation are not retroactively adjusted and are accounted for
in accordance with final arrangements for lease changes and New Lease Standards.When measuring a lease liability the Company discounts the lease payment using the lessee's
incremental borrowing rate at 1 January 2021.Outstanding minimum lease payments for significant operating leases
disclosed in the consolidated financial statements as of 31 December 2020
Discounted present value at the Company's incremental borrowing rate as
307325185.80
of 1 January 2021
Lease liabilities under the New Lease Standards as of 1 January 2021 176620358.65
Non-current liabilities due within one year under the New Lease Standards
130704827.15
as of 1 January 2021
Difference between the above discounted present value and the lease
liability
(2) The Company as the lessor
For subleases classified as operating leases prior to the first implementation date and still in existence
after the first implementation date the Company reassessed these leases based on the remaining
contractual term and conditions of the original lease and sublease on the first implementation date and
classifies them in accordance with the provisions of the new lease standards. If reclassified as a finance
lease the Company will treat it as a new financial lease.Except for subleases the Company is not required to adjust leases as the lessor in accordance with
the New Lease Standards. The Company accounted for leases in accordance with the New Lease Standards
from the first implementation date.
(3) The major impact of the Company's implementation of the New Lease Standards on the financial
statements is as follows:
Contents and reasons of Review and Effect on balance on 1 January 2021
Affected item in
changes in accounting approval
statement Consolidation Parent company
policies procedure
(1) Adjustments made by The 5th Right-of-use assets 327386662.94 7470972.21
the Company as a lessee to meeting of the Lease liabilities 176620358.65 1264270.31
the existing operating 5th session of Non-current liabilities
130704827.153648655.35
leases before the date of Board of due within one year
initial implementation Directors Prepayments -20061477.14 -2558046.55
138 / 237Annual Report 2021
2. Implementation of the Interpretation of Accounting Standards for Business Enterprises No. 14
The Ministry of Finance issued the Interpretation of Accounting Standards for Business Enterprises
No. 14 (CK [2021] No. 1 hereinafter referred to as "Interpretation No. 14") on 2 February 2021 which
comes into force as of the date of promulgation. The relevant businesses increased from 1 January 2021
to the implementation date were adjusted as required by Interpretation No. 14.* Public-Private Partnership (PPP) project contract
Interpretation No. 14 is applicable to PPP project contracts that meet both the "dual characteristics"
and "dual control" described in such Interpretation. Retrospective adjustments should be made to relevant
PPP project contracts that were implemented before 31 December 2020 and have not been completed by
the implementation date. In the event that retrospective adjustment is not feasible such Interpretation shall
be applied from the beginning of the initial stage at which the retrospective adjustment is feasible. The
retained earnings at the beginning of the current year and other relevant items in the financial statements
on the effective date of the adjustment of cumulative impact other than those in the comparable periods
shall be adjusted. The Company's implementation of this Provision has no impact.* Reform of benchmark interest rate
Interpretation No. 14 provides a simplified accounting treatment for cases where the benchmark rate
reform results in a change in the basis for determining cash flows related to financial instrument contracts
and lease contracts.According to the provisions of such Interpretation the business pertaining to the benchmark interest
rate reform before 31 December 2020 should be adjusted retrospectively except where retrospective
adjustment is not feasible and there is no need to adjust the data in the comparative financial statements
of the previous period. On the implementation date of such Interpretation the difference between the
original carrying amount and the new carrying amount of financial assets and financial liabilities shall be
included in the beginning retained earnings or other comprehensive income of the Reporting Period in
which such Interpretation is implemented. The implementation of this provision has not had a material
impact on the financial position and operating results of the Company.
3. Implementation of the Circular on Adjusting the Scope of Application of the Provisions on the
Accounting Treatment of COVID-19-related Rent Concessions
On 19 June 2020 the Ministry of Finance issued the Provisions on the Accounting Treatment of
COVID-19-related Rent Concessions (CK (2020) No. 10) allowing companies to resort to a simplified
method for accounting treatment for rental reductions deferred rent payment and other rental concessions
related to COVID-19 pandemic that meet the stipulations of the Provisions.On 26 May 2021 the Ministry of Finance issued the Circular on Adjusting the Scope of Application
of the Provisions on the Accounting Treatment of COVID-19-related Rent Concessions (CK [2021] No.
9) which was implemented on 26 May 2021. According to such Circular the scope of application of
"using simplified method for rental reductions related to COVID-19 pandemic" is changed from
"concession is only applicable to lease payments payable before 30 June 2021" to "concession is only
applicable to lease payments payable before 30 June 2022" with other applicable conditions unchanged.The Company has adopted simplified accounting methods for all lease contracts that meet the
requirements before the adjustment of scope of application and also adopted the simplified method for
accounting treatment of all similar lease contracts that meet the requirements after the adjustment of the
scope of application. Retrospective adjustments have been made to the relevant lease contracts which have
been subjected to accounting treatment by lease change before the issuance of the Circular but the
139 / 237Annual Report 2021
comparative financial statements of the previous period have not been adjusted; the relevant rental
concessions that occurred between 1 January 2021 and the effective date of the Circular and were not
subjected to accounting treatment as required by such provisions shall be adjusted according to the
Circular.
4. Implementation of presentation of the centralized management of funds set forth in Interpretation
No. 15 of the Accounting Standards for Business Enterprises
On 30 December 2021 the Ministry of Finance issued the Interpretation No. 15 of Accounting
Standards for Business Enterprises (CK [2021] No. 35 hereinafter referred to as "Interpretation No. 15").The "presentation of centralized management of funds" was implemented as of the date of publication and
the financial statements in comparable periods were adjusted accordingly.Interpretation No. 15 clearly stipulates how the balance involved in the centralized and unified
management of the funds of the parent company and members through internal settlement centers and
financial companies should be presented and disclosed in the balance sheet. The implementation of this
provision has not had a material impact on the financial position and operating results of the Company.
(2). Changes in significant accounting estimates
□ Applicable √ Not applicable
(3). Particulars on adjustment to relevant items of the financial statements for the year of the first
implementation due to the first implementation of new lease standards from 2021
√ Applicable □ Not applicable
Consolidated Balance Sheet
Unit: RMB Currency: RMB
Item 31 December 2020 1 January 2021 Adjustment amount
Current assets:
Cash and equivalents 2562158926.11 2562158926.11
Transaction settlement funds
Lending funds
Held-for-trading financial assets 1428277848.33 1428277848.33
Derivative financial assets
Bills receivable
Accounts receivable 1561211468.90 1561211468.90
Receivables financing 61412976.46 61412976.46
Prepayment 131596384.76 111534907.62 -20061477.14
Premium receivable
Reinsurance premium receivable
Reserves for reinsurance contract
receivable
Other receivables 141753102.00 141753102.00
Including: Interest receivable
Dividend receivable
Financial assets purchased under
agreements to resell
Inventories 1322812846.83 1322812846.83
Contract assets
Held for sale assets
Non-current assets due within one 4637213.00 4637213.00
year
Other current assets 27286607.30 27286607.30
Total current assets 7241147373.69 7221085896.55 -20061477.14
Non-current assets:
140 / 237Annual Report 2021
Loans and advances to customers
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments 34722395.67 34722395.67
Investments in other equity 5476577.42 5476577.42
instruments
Other non-current financial assets
Investment real estate
Fixed assets 1847635724.45 1847635724.45
Construction in progress 54946300.66 54946300.66
Productive biological assets
Oil and gas assets
Right-of-use assets 327386662.94 327386662.94
Intangible assets 320746328.60 320746328.60
Development expenses
Goodwill
Long-term prepaid expenses 99035852.78 99035852.78
Deferred income tax assets 99939414.58 99939414.58
Other non-current assets 6258468.47 6258468.47
Total non-current assets 2468761062.63 2796147725.57 327386662.94
Total assets 9709908436.32 10017233622.12 307325185.80
Current liabilities:
Short-term borrowings 180176000.00 180176000.00
Borrowings from central bank
Placements from banks and other
financial institutions
Held-for-trading financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable 2602020507.99 2602020507.99
Accounts received in advance
Contract liabilities 114100035.35 114100035.35
Financial assets sold under
repurchase agreements
Deposits from customers and other
banks
Brokerage for trading securities
Brokerage for underwriting securities
Employee benefits payable 152625106.89 152625106.89
Taxes payable 477240219.10 477240219.10
Other payables 625468675.97 625468675.97
Including: Interest payable
Dividend payable
Fees and commissions payable
Reinsured accounts payable
Held-for-sale liabilities
Non-current liabilities due within one 130704827.15 130704827.15
year
Other current liabilities 13746089.97 13746089.97
Total current liabilities 4165376635.27 4296081462.42 130704827.15
Non-current liabilities:
Reserves for insurance contracts
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities 176620358.65 176620358.65
Long-term payable 8420000.00 8420000.00
Long-term employee benefits payable
Estimated liabilities 12211357.80 12211357.80
Deferred income 46132513.40 46132513.40
Deferred income tax liabilities 36781069.25 36781069.25
Other non-current liabilities
141 / 237Annual Report 2021
Total non-current liabilities 103544940.45 280165299.10 176620358.65
Total liabilities 4268921575.72 4576246761.52 307325185.80
Owner's equity (or shareholders' equity):
Share capital 927427600.00 927427600.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 533384131.66 533384131.66
Less: Treasury shares 176034120.00 176034120.00
Other comprehensive income 2141402.48 2141402.48
Special reserve
Surplus reserve 464042659.91 464042659.91
General risk provision
Undistributed profit 3442607038.00 3442607038.00
Total equity attributable to the 5193568712.05 5193568712.05
owners of the parent company
Minority equity 247418148.55 247418148.55
Total owners' equity (or 5440986860.60 5440986860.60
shareholders' equity)
Total liabilities and owner's 9709908436.32 10017233622.12 307325185.80
equity (or shareholders' equity)
Description on adjustment to relevant items:
□ Applicable √ Not applicable
Parent Company's Balance Sheet
Unit: RMB Currency: RMB
Item 31 December 2020 1 January 2021 Adjustment amount
Current assets:
Cash and equivalents 1887003379.89 1887003379.89
Held-for-trading financial assets 1272219811.46 1272219811.46
Derivative financial assets
Bills receivable
Accounts receivable 177648799.65 177648799.65
Receivables financing
Prepayment 36987935.22 34429888.67 -2558046.55
Other receivables 399678347.22 399678347.22
Including: Interest receivable
Dividend receivable
Inventories 332755309.92 332755309.92
Contract assets
Held for sale assets
Non-current assets due within one 4637213.00 4637213.00
year
Other current assets 150000000.00 150000000.00
Total current assets 4260930796.36 4258372749.81 -2558046.55
Non-current assets:
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments 1098535037.00 1098535037.00
Investments in other equity 5476577.42 5476577.42
instruments
Other non-current financial assets
Investment real estate
Fixed assets 1471196714.32 1471196714.32
Construction in progress 50603926.95 50603926.95
Productive biological assets
Oil and gas assets
Right-of-use assets 7470972.21 7470972.21
Intangible assets 177722510.27 177722510.27
142 / 237Annual Report 2021
Development expenses
Goodwill
Long-term prepaid expenses 5417965.45 5417965.45
Deferred income tax assets 29239636.35 29239636.35
Other non-current assets 5829768.47 5829768.47
Total non-current assets 2844022136.23 2851493108.44 7470972.21
Total assets 7104952932.59 7109865858.25 4912925.66
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable 320744916.72 320744916.72
Accounts received in advance
Contract liabilities 76291447.04 76291447.04
Employee benefits payable 84898291.78 84898291.78
Taxes payable 263690993.11 263690993.11
Other payables 1089678737.94 1089678737.94
Including: Interest payable
Dividend payable
Held-for-sale liabilities
Non-current liabilities due within 3648655.35 3648655.35
one year
Other current liabilities 9917888.11 9917888.11
Total current liabilities 1845222274.70 1848870930.05 3648655.35
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities 1264270.31 1264270.31
Long-term payable 260420000.00 260420000.00
Long-term employee benefits
payable
Estimated liabilities
Deferred income 23417137.82 23417137.82
Deferred income tax liabilities 3614458.33 3614458.33
Other non-current liabilities
Total non-current liabilities 287451596.15 288715866.46 1264270.31
Total liabilities 2132673870.85 2137586796.51 4912925.66
Owner's equity (or shareholders' equity):
Share capital 927427600.00 927427600.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 538163670.62 538163670.62
Less: Treasury shares 176034120.00 176034120.00
Other comprehensive income 2329031.21 2329031.21
Special reserve
Surplus reserve 463713800.00 463713800.00
Undistributed profit 3216679079.91 3216679079.91
Total owners' equity (or 4972279061.74 4972279061.74
shareholders' equity)
Total liabilities and owner's 7104952932.59 7109865858.25 4912925.66
equity (or shareholders'
equity)
Description on adjustment to relevant items:
□ Applicable √ Not applicable
143 / 237Annual Report 2021
(4). Description on retrospective adjustment to previous comparative data due to the first
implementation of new lease standards from 2021
□ Applicable √ Not applicable
45. Others
√ Applicable □ Not applicable
Hedge accounting
(1) Classification of hedging
* 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).* 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 expected
transaction that is likely to occur or the foreign exchange risk included in an unrecognized firm
commitment.* 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
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:
* There is an economic relationship between the hedged item and the hedging instrument.* 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.* 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.
(3) Accounting treatment method of hedge
* Fair value hedge
144 / 237Annual Report 2021
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.* 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 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 other comprehensive income are transferred out and
included in the current profit or 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.* 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 other comprehensive
income are transferred out and included in the current profit or loss.Repurchase of the Company's shares
The Company manages the repurchased shares as treasury shares before cancellation or transfer and
transfers all the expenses for the repurchase to the costs of treasury shares. The consideration and
transaction costs paid for the repurchase reduce the owner's equity and no gain or loss is recognized when
the Company's shares are repurchased transferred or cancelled.
145 / 237Annual Report 2021
(1) Where the Company's shares are acquired for reasons such as reduction of registered capital or
reward to employees they will be treated as treasury shares based on the amount actually paid for the
repurchase and also be registered for future reference. If the repurchased shares are cancelled the
difference between the total nominal value of the shares calculated based on the nominal value and number
of the cancelled shares and the amount actually paid for the repurchase will be offset against the capital
reserve and if the capital reserve is insufficient to offset the remaining difference will be offset against
the retained earnings. If the repurchased shares are awarded to employees of the Company as equity-settled
share-based payment when receiving the price from the exercise by the employees of the option to
purchase the Company's shares the Company resells and delivers the cost of employees' treasury shares
and the accumulated amount of capital reserves (other capital reserves) during the waiting period and
adjusts the capital reserve (share premium) based on the difference between them.
(2) For the shares repurchased in accordance with the equity incentive plan the Company will
repurchase and cancel the restricted stocks that fail to meet the unlocking conditions. For the stocks
required to be repurchased due to failure to unlocking conditions for restricted stocks the Company debits
them to "Other payables - Repurchase obligations of restricted stocks" and other subjects and credits them
to "Bank deposits" and other subjects. At the same time the Company debits the amount of share capital
corresponding to the number of cancelled restricted stocks in the subject of "Share capital" credits the
carrying value of the treasury stocks corresponding to the number of cancelled restricted stocks in the
subject of "Treasury shares" and debits the difference of them to the subject of "Capital Reserve - Share
premium".Segment reporting
The Company determines the operating segment based on the internal organizational structure
management requirements and internal reporting system and determines the reporting segment based on
the operating segment and discloses segment information.Operating segment refers to the component of the Company that meets the following conditions
simultaneously: (1) the component can generate income and incur expenses in daily activities; (2) the
management of the Company can regularly evaluate the operating results of the component to decide to
allocate resources to it and evaluate its performance; and (3) the Company can obtain relevant accounting
information such as the financial status operating results and cash flow of the component. If two or more
operating segments have similar economic characteristics and meet certain conditions they can be
combined into one operating segment.VI. Taxes
1. Major tax types and tax rates
Particulars on major tax types and tax rates
√ Applicable □ Not applicable
Tax type Taxing basis Tax rate
Value added tax ("VAT") The output tax is calculated on the 13% 10% 9% 6% 5%
basis of the income from sales of
products and taxable income from
rendering of services calculated
according to the provisions of the
tax law. The difference between
the output tax and the input tax
146 / 237Annual Report 2021
which is allowed to be deductible
in the current period is the payable
VAT
Consumption tax
Business tax
Urban maintenance and Calculated and paid according to 7% 1%
construction tax the actually-paid VAT and
consumption tax
Enterprise income tax Calculated and paid according to 15% 20% 25% 22% 31% 17%
the taxable income 16.5%
Particulars on disclosure of taxpayers with different enterprise income tax rates
√ Applicable □ Not applicable
Name of taxpayer Income tax rate (%)
Shanghai M&G Stationery Inc. 15Shanghai M&G Zhenmei Stationery Co. Ltd.（上海晨光 25珍美文具有限公司）
Shanghai M&G Colipu Office Supplies Co. Ltd. 25Lianyungang Colipu Office Supplies Co. Ltd.（连云港市 20科力普办公用品有限公司）Shenyang M&G Colipu Office Supplies Co. Ltd.（沈阳 25晨光科力普办公用品有限公司）Shanghai M&G Stationery & Gift Co. Ltd.（上海晨光文 25具礼品有限公司）Shanghai M&G Stationery Sales Co. Ltd.（上海晨光文 25具销售有限公司）Guangzhou M&G Stationery&Gifts Sales Co. Ltd.（广州 25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 25品有限公司）Harbin M&G Sanmei Stationery Co. Ltd.（哈尔滨晨光 25三美文具有限公司）Zhengzhou M&G Stationery&Gifts Co. Ltd.（郑州晨光 25文具礼品有限责任公司）M&G Life Enterprise Management Co. Ltd.（晨光生活 25馆企业管理有限公司）Shanghai M&G Jiamei Stationery Co. Ltd.（上海晨光佳 20美文具有限公司）Jiangsu M&G Life Enterprise Management Co. Ltd.（江 25苏晨光生活馆企业管理有限公司）
Zhejiang New M&G Life Enterprise Management Co. 25
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 25木杂物社企业管理有限公司）Shanghai M&G Information Technology Co. Ltd.（上海 25晨光信息科技有限公司）
Shenzhen Erya Creative and Cultural Development Co. 25
Ltd.（深圳尔雅文化创意发展有限公司）
Shanghai M&G Office Stationery Co. Ltd. 25
147 / 237Annual Report 2021Luoyang M&G Stationery Sales Co. Ltd.（洛阳晨光文具 20销售有限公司）Hangzhou Sanmei M&G Stationery Co. Ltd.（杭州三美 25晨光文具有限公司）
Shanghai Qizhihaowan Culture and Creativity Co. Ltd. 25（上海奇只好玩文化创意有限公司）Shanghai Chenxun Enterprise Management Co. Ltd.（上 20海晨讯企业管理有限公司）Shanghai Colipu Information Technology Co. Ltd.（上海 25科力普信息科技有限公司）
Axus Stationery (Shanghai) Company Ltd. 15
Jiangsu Marco Pen Co. Ltd.（江苏马可笔业有限公司） 25Changchun Macro Stationery Co. Ltd.（长春马可文教用 25品有限公司）
Yili Senlai Wood Co. Ltd.（伊犁森徕木业有限公司） 25
Axus Stationery (Hong Kong) Company Ltd. 16.5
International stationery company 20
Shanghai Meixin Stationery Co. Ltd. (上海美新文具有限 25
公司)
SHANGHAI M&G STATIONERY (SINGAPORE) 17
PTE.LTD.Back to School Holding AS 22
Beckmann AS 22
Beckmann Norway GmbH 31
2. Tax preference
√ Applicable □ Not applicable
On 28 October 2019 the Company obtained the 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.On 24 September 2021 the subsidiary Axus Stationery (Shanghai) Company Ltd. ("Axus
Stationery") obtained the 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.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 Taxation Administration on Implementing the Inclusive Tax Deduction
and Exemption Policies for Micro and Small Enterprises (Cai Shui [2019] No. 13) starting from 1 January
2019 to 31 December 2021 for the part of small low-profit enterprises' annual taxable income not
exceeding RMB1000000 the enterprise income tax at 20% shall apply based on 25% of the taxable
income; for the part of small low-profit enterprises' annual taxable income between RMB1 million and
RMB3 million the enterprise income tax at 20% shall apply based on 50% of the taxable income.According to the Enterprise Income Tax Law of the People's Republic of China and the
Announcement of the Ministry of Finance and the State Taxation Administration on the Implementation
148 / 237Annual Report 2021
of Preferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial and
Commercial Households ([2021] No. 12) for the part of small low-profit enterprises' annual taxable
income not exceeding RMB1000000 the enterprise income tax shall be further half-reduced on the basis
of the preferential policy stipulated in Article 2 of the Notice of the Ministry of Finance and the State
Taxation Administration on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro
and Small Enterprises (Cai Shui [2019] No. 13). The enterprise income tax at 20% shall apply. This
Announcement shall be executed from 1 January 2021 to 31 December 2022. The subsidiaries including
Luoyang M&G Stationery Sales Co. Ltd.（洛阳晨光文具销售有限公司） Lianyungang Colipu Office
Supplies Co. Ltd.（连云港市科力普办公用品有限公司） Shanghai Chenxun Enterprise Management
Co. Ltd.（上海晨讯企业管理有限公司） and Shanghai M&G Jiamei Stationery Co. Ltd.（上海晨光佳美文具有限公司）meet the tax declaration requirements for micro and small enterprises and declare
the enterprise income tax at the tax rate of 20%.In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on
Value-Added Tax Policies for Software Products (Cai Shui [2011] No. 100) the subsidiary Shanghai
Colipu Information Technology Co. Ltd. (Hereinafter referred to as "Colipu Information Technology")
was granted the tax incentive regarding the refund upon payment of VAT by Shanghai Xuhui District Tax
Service State Taxation Administration on software products on 9 June 2020 with a valid period from 1
April 2020 to 31 March 2070.According to the Notice of the Ministry of Finance and the State Administration of Taxation on
Enterprise Income Tax Policies for Further Encouraging the Development of Software Industry and
Integrated Circuit Industry (Cai Shui [2012] No.27) the subsidiary Shanghai Colipu Information
Technology Co. Ltd. as an eligible software company shall be exempted from enterprise income tax for
the first 2 years as of the first profit-making year and shall pay enterprise income tax at reduced half of
the statutory tax rate of 25% for the third to the fifth years until the expiry of the preferential period.
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 404622.49 1134204.63
Cash at bank 2987373347.19 2551360452.36
Other cash and 22874220.96 9664269.12
equivalents
Total 3010652190.64 2562158926.11
Including: Total cash 28133966.57 3490810.78
deposited outside China
Other descriptions
Details of the cash and equivalents that are restricted for use due to mortgage pledge or freeze that
are restricted for withdrawal due to centralized management of funds and that are deposited overseas and
restricted for repatriation were as follows:
149 / 237Annual Report 2021
Item Closing balance Balance at the end of the year
Letter of credit ("L/C")
5103951.532137865.56
deposit
Performance bond 8647682.18 2674925.30
Time deposits over three
1457000000.001180000000.00
months
Others 415942.24
Total 1471167575.95 1184812790.86
2. Held-for-trading financial assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Financial assets at fair value through 1609123552.86 1428277848.33
profit or loss
Including:
Debt instrument investment
Equity instrument investment
Derivative financial assets
Others 1609123552.86 1428277848.33
Financial asset designated as at fair
value through profit or loss
Including:
Debt instrument investment
Others
Total 1609123552.86 1428277848.33
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
Item Closing balance Opening balance
Bank acceptance bills 30467161.11
Commercial acceptance bills 9963379.64
Less: Bad debt provisions of -718394.03
notes receivable
Total 39712146.72
(2). Notes receivable pledged by the Company at the end of the period
□ Applicable √ Not applicable
150 / 237Annual Report 2021
(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
Unit: Yuan Currency: RMB
Amount derecognized at the Amount not derecognized at the
Item
end of the period end of the period
Bank acceptance bills 8673121.72
Commercial acceptance bills 5410568.51
Total 14083690.23
(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
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debt
provisions accrued according to the general model of expected credit losses:
□ 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 descriptions
□ Applicable √ Not applicable
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 1724642750.64
1 to 2 years 31054414.49
151 / 237Annual Report 2021
2 to 3 years 3556445.00
Above 3 years 1880681.95
3 to 4 years
4 to 5 years
Above 5 years
Total 1761134292.08
(2). Disclosure by accruing method for bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Closing balance Opening balance
Carrying
Carrying balance Bad debt provisions Carrying balance Bad debt provisions
Category value
Carrying
Accruing Accruing
Percentage value Percentage
Amount Amount percentage Amount Amount percentage
(%)(%)
(%)(%)
Bad debt 8457530.82 0.48 8457530.82 100.00 8442002.81 0.53 8442002.81 100.00
provisions
accrued
separately
Including:
Bad debt 1752676761.26 99.52 31808345.83 1.81 1720868415.43 1589593697.43 99.47 28382228.53 1.79 1561211468.90
provisions
accrued
according to
the
combination
Including:
Combination 1752676761.26 99.52 31808345.83 1.81 1720868415.43 1589593697.43 99.47 28382228.53 1.79 1561211468.90
1: Account age
analysis
combination
Total 1761134292.08 / 40265876.65 / 1720868415.43 1598035700.24 / 36824231.34 / 1561211468.90
Bad debt provisions accrued separately:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Closing balance
Name Accruing
Carrying balance Bad debt provisions Accruing reason
percentage (%)
Shenzhen Diboyuan 2378521.60 2378521.60 100.00 Not expected to be
Industrial Co. Ltd. (深圳 recovered
市地博源实业有限公司)
OneSmart International 2164805.00 2164805.00 100.00 Not expected to be
Education Group Limited recovered
Shanghai Jing Xue Rui 705639.93 705639.93 100.00 Not expected to be
Information Technology recovered
Co. Ltd.Rongchuang Real Estate 339469.90 339469.90 100.00 Not expected to be
Group Co. Ltd. recovered
KAISA HOLDINGS 246800.00 246800.00 100.00 Not expected to be
LIMITED recovered
Zhengzhou Houqing 103405.87 103405.87 100.00 Not expected to be
Culture Communication recovered
Co. Ltd.Other customers 2518888.52 2518888.52 100.00 Not expected to be
recovered
Total 8457530.82 8457530.82 100.00 /
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
152 / 237Annual Report 2021
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debt
provisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
(3). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Change of the current period
Opening
Category Recovered or Resold or Other Closing balance
balance Accrued
reversed written-off changes
Accrued 8442002.81 1085770.12 1070242.11 8457530.82
separately
Combination 28382228.53 3426117.30 31808345.83
1: Account
age analysis
combination
Total 36824231.34 4511887.42 1070242.11 40265876.65
Other descriptions:
The bad debt provisions accrued this year include the impact of RMB-24055.59 of the foreign
currency statement exchange rate translation difference and the bad debt provisions of RMB208861.71
incorporated at the time of acquisition not under common control so the actually accrued bad debt
provisions are RMB4327081.30.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
Unit: Yuan Currency: RMB
Item Written-off amount
Accounts receivable actually written-off 1070242.11
Writing-off of significant accounts receivable
□ Applicable √ Not applicable
Description on writing-off of 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
Unit: Yuan Currency: RMB
Percentage (%) in the total Balance of bad debt
Company
Closing balance balance at the end of the period of provisions at the end of
name
accounts receivable the period
First 272548567.20 15.48 1550149.43
Second 219870817.81 12.48 1569808.91
Third 84272909.19 4.79 785114.66
Fourth 72722870.13 4.13 572983.93
153 / 237Annual Report 2021
Fifth 43387776.09 2.46 216938.88
Total 692802940.42 39.34 4694995.81
Other descriptions
No
(6). Accounts receivable derecognized 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 22824707.62 61412976.46
Factoring of accounts receivable
Accounts receivable
Total 22824707.62 61412976.46
Changes in receivables financing during the current period and changes in fair value:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Accumulated loss
Balance at the Increase of the Derecognition of Other provisions recognized
Item Closing balance
end of the year current period the current period changes in other
comprehensive income
Bills 61412976.46 282003344.85 320591613.69 22824707.62
receivable
Total 61412976.46 282003344.85 320591613.69 22824707.62
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debt
provisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
7. Prepayment
(1). Advance payment presented by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
154 / 237Annual Report 2021
Closing balance Opening balance
Account age
Amount Percentage (%) Amount Percentage (%)
Within 1 year 88311966.56 97.23 150881413.40 99.53
1 to 2 years 2134130.82 2.35 443712.70 0.29
2 to 3 years 370376.56 0.41 271258.66 0.18
Above 3 years 9820.00 0.01
Less: Bad debt -20000000.00
provisions
Total 90826293.94 100.00 131596384.76 100.00
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
Company name Closing balance balance at the end of the period
of advance payment
First 7174735.64 7.90
Second 2202152.19 2.42
Third 1817600.00 2.00
Fourth 1548482.32 1.70
Fifth 1406426.62 1.55
Total 14149396.77 15.57
Other descriptions
No
Other descriptions
□ Applicable √ Not applicable
8. Other receivables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Interest receivable
Dividend receivable
Other receivables 163987201.97 141753102.00
Total 163987201.97 141753102.00
Other descriptions:
□ Applicable √ Not applicable
155 / 237Annual Report 2021
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
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 143565228.56
1 to 2 years 39824525.23
2 to 3 years 16434310.48
Above 3 years 23005299.25
3 to 4 years
4 to 5 years
Above 5 years
Less: Bad debt provisions -58842161.55
Total 163987201.97
156 / 237Annual Report 2021
(2). Particulars on classification by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Carrying balance at the end of Carrying balance at the
Amount nature
the period beginning of the period
Personal loans and petty cash 7301627.23 7619165.29
Amount paid for materials 43118667.97 33583639.24
Consolidated balance of related- 45097081.97 36427271.95
parties current accounts - provisional
input tax
Margin and deposit 101987147.00 82608805.20
Others 25324839.35 18606946.07
Total 222829363.52 178845827.75
(3). Particulars on accruing of bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Phase 1 Phase 2 Phase 3
Expected credit loss Expected credit loss
Bad debt Expected credit for the entire for the entire
Total
provisions losses in the duration (no credit duration (credit
next 12 months impairment impairment
occurred) occurred)
Balance as at 1 37092725.75 37092725.75
January 2021
Balance as at 1
January 2021 in
the current period
-- Transferred into
Phase 2
-- Transferred into
Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Accrued in the 8968239.20 13000000.00 21968239.20
current period
Reserved in the
current period
Resold in the
current period
Written-off in the 208620.00 208620.00
current period
Other changes 10183.40 10183.40
Balance as at 31 45842161.55 13000000.00 58842161.55
December 2021
Particulars on significant changes in the carrying balance of other receivables with changes in the loss
provisions occurring in the current period:
√ Applicable □ Not applicable
157 / 237Annual Report 2021
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 next duration (no credit duration (credit
12 months impairment impairment
occurred) occurred)
Balance as at 1
178845827.75178845827.75
January 2021
Balance as at 1
January 2021 in
the current period
-- Transferred
into Phase 2
-- Transferred
into Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Increase of the
1085261052.1213000000.001098261052.12
current period
Derecognition of
1054277516.351054277516.35
the current period
Balance as at 31
209829363.5213000000.00222829363.52
December 2021
Amount of bad debt provisions accrued for the current period and the basis for assessing whether the credit
risk of financial instruments has increased significantly:
□ Applicable √ Not applicable
(4). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Change of the current period
Opening
Category Recovered or Resold or Other Closing balance
balance Accrued
reversed written-off changes
Bad debt 13000000.00 13000000.00
provisions
accrued
separately
Combination 37092725.75 8958055.80 208620.00 45842161.55
1: Account
age analysis
combination
Total 37092725.75 21958055.80 208620.00 58842161.55
Other descriptions:
The bad debt provisions accrued this year include the adjustment of RMB-25724.12 to foreign
exchange gains and losses in foreign-currency statements and the bad debt provisions of RMB15540.72
incorporated at the time of acquisition not under common control so the actually accrued bad debt
provisions are RMB21968239.20.Significant bad debt provision amounts reversed or recovered in the current period:
□ Applicable √ Not applicable
158 / 237Annual Report 2021
(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 208620.00
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 balance at the
Amount nature Closing balance Account age provisions
name end of the period
Closing balance
of other
receivables
First Consolidated 45097081.97 Within 1 year 20.24
related parties -
provisional input
tax
Second Others 13000000.00 1-2 years 5.83 13000000.00
Third Margin and 5500000.00 RMB4 million 2.47 650000.00
deposit within one year
RMB1.5 million
for 1-2 years
Fourth Others 5057976.56 Within 1 year 2.27 252898.83
Fifth Others 2000491.76 Within 1 year 0.90 100024.59
Total / 70655550.29 / 31.71 14002923.42
(7). Receivables involving government subsidies
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Name of
Estimated time
government Account age at the
Company name Closing balance amount and basis of
subsidy-related end of the period
receipt
items
Shanghai Xuhui District Refund upon 5057976.56 Within 1 year Refund upon payment
Tax Service State payment of VAT of VAT on software
Taxation Administration on software enterprises
enterprises
Total 5057976.56
Other descriptions
No
159 / 237Annual Report 2021
(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
Provision for Provision for
the loss on the loss on
decline in value decline in value
of inventories/ of inventories/
Item
Carrying balance provision for Carrying value Carrying balance provision for Carrying value
the impairment the impairment
of contract of contract
performance performance
cost cost
Raw materials 185915415.87 488371.55 185427044.32 171682717.53 503028.26 171179689.27
Work-in- 42444915.33 213729.51 42231185.82 67576697.07 90168.22 67486528.85
process
Finished 1328007263.14 64967133.27 1263040129.87 1065016694.84 45926598.58 1019090096.26
products
Revolving 13074916.91 317390.33 12757526.58 16274211.14 1514799.76 14759411.38
materials
Expendable 12380801.73 12380801.73 14814590.65 14814590.65
biological assets
Contract
performance
cost
Materials in 2263735.49 7997.87 2255737.62 4146657.42 39054.79 4107602.63
transit
Consigned 9560511.34 9560511.34 13713637.94 13713637.94
processing
materials
Shipped goods 19000362.02 19000362.02 17661289.85 17661289.85
Total 1612647921.83 65994622.53 1546653299.30 1370886496.44 48073649.61 1322812846.83
160 / 237Annual Report 2021
(2). Devaluation provisions of inventories and impairment provisions of contract performance cost
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase amount of the current Decrease amount of the current
period period
Item Opening balance Closing balance
Reversed or
Accrued Others Others
resold
Raw materials 503028.26 -14656.71 488371.55
Work-in-process 90168.22 123561.29 213729.51
Finished products 45926598.58 18179871.30 1566462.78 663113.79 42685.60 64967133.27
Revolving materials 1514799.76 -1197409.43 317390.33
Expendable biological assets
Contract performance cost
Materials in transit 39054.79 31056.92 7997.87
Consigned processing
materials
Total 48073649.61 17091366.45 1566462.78 694170.71 42685.60 65994622.53
Other descriptions:
Increase amount of the current period - others were caused by the business combination not under
common control while decrease amount of the current period - others were caused by the translation
difference of foreign-currency statements.
(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). Description on amortization amount of the current period of contract performance cost
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
10. Contract assets
(1). Particulars on contract assets
□ Applicable √ Not applicable
(2). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
(3). Particulars on impairment provisions accrued for contract assets in the current period
□ Applicable √ Not applicable
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debt
provisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
161 / 237Annual Report 2021
11. Held for sale assets
□ Applicable √ Not applicable
12. Non-current assets due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Debt investment due within one year
Other debt investments due within one year
Long-term receivables due within one year 3312295.00 4637213.00
Total 3312295.00 4637213.00
Important debt investments at the end of the period and other debt investments:
□ Applicable √ Not applicable
Other descriptions
No
13. Other current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Contract acquisition cost
Receivable return cost 54709110.46 10541165.83
VAT input tax to be deducted 5154242.22 8685801.62
Pre-paid enterprise income tax 6598599.26 549155.49
Others 12691.98
Pre-paid value added tax 19323089.61 7510484.36
Total 85797733.53 27286607.30
Other descriptions
No
14. 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
162 / 237Annual Report 2021
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. 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
16. Long-term receivables
(1). Long-term receivables
□ Applicable √ Not applicable
(2). Particulars on accruing of bad debt provisions
□ Applicable √ Not applicable
Amount of bad debt provisions accrued for the current period and the basis for assessing whether the credit
risk of financial instruments has increased significantly
□ Applicable √ Not applicable
(3). Long-term receivables derecognized due to the transfer of financial assets
□ Applicable √ Not applicable
(4). Assets and liabilities formed due to the transfer and continuous involvement of long-term
receivables
□ Applicable √ Not applicable
163 / 237Annual Report 2021
Other descriptions
□ Applicable √ Not applicable
17. Long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Change of the current period Balance of
At the beginning Investment gains Adjustment to Declaration on At the end of impairment Invested
of the period Accruing of
company Additional Withdrawn and losses other Other equity distribution of
the period provisions at
Balance impairment Others investment investment recognized under comprehensive changes cash dividends Balance the end of the
provisions
the equity method income or profits period
I. Joint venture
Subtotal
II. Associate
Ningbo 29693097.54 1634406.40 418198.53 31745702.47
Zhongchen
Equity
Investment
Partnership
(Limited
Partnership)
Shanghai Pen- 5029298.13 -262298.80 4766999.33
making
Technology
Services Co.Ltd.Subtotal 34722395.67 1372107.60 418198.53 36512701.80
Total 34722395.67 1372107.60 418198.53 36512701.80
Other descriptions
No
18. 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 Creativity 6745402.14 5476577.42
Co. Ltd.Total 6745402.14 5476577.42
(2). Particulars on non-trading equity instrument investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Reason for Reason for
Dividend Amount transferred designation transfer from
income from other as at fair other
Accumulated Accumulate
Item recognized in comprehensive value through comprehensi
gains d losses
the current income into other ve income
period retained earnings comprehensi into retained
ve income earnings
164 / 237Annual Report 2021
Shanghai 3145402.14 The
M&G Culture Company
and Creativity held the
Co. Ltd. investment
for non-
trading
purposes
Other descriptions:
□ Applicable √ Not applicable
19. Other non-current financial assets
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
20. Investment real estate
Measurement model of investment real estate
Not applicable
21. Fixed assets
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Fixed assets 1840104394.34 1847635724.45
Disposal of fixed assets
Total 1840104394.34 1847635724.45
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
Item Other equipment Total
buildings equipment transportation
I. Original carrying value:
1. Balance at the beginning of
1714483793.25773301296.0457554746.98323093772.942868433609.21
the period
2. Increase amount of the
5454469.93127265122.5610495391.7871083380.68214298364.95
current period
(1) Acquisition 601124.39 2442596.04 8582658.82 7872949.49 19499328.74
(2) Transfer-in from
3669724.80121967662.671436220.4962250395.95189324003.91
construction in progress
(3) Increase for business
1183620.742854863.85476512.47960035.245475032.30
combination
3. Decrease amount of the
315467.6527335972.834737911.4827742158.3760131510.33
current period
165 / 237Annual Report 2021
(1) Disposal or scraping
26346729.174716311.3227597443.7858660484.27
(2) Translation difference of
315467.65989243.6621600.16144714.591471026.06
foreign-currency statements
4. Balance at the end of the
period 1719622795.53 873230445.77 63312227.28 366434995.25 3022600463.83
II. Accumulated depreciation
1. Balance at the beginning of
the period 309918625.82 404668124.50 46671047.39 259305938.35 1020563736.06
2. Increase amount of the
current period 88705982.93 75322784.30 4859361.11 43703427.39 212591555.73
(1) Accruing
87764950.9074292517.764382848.6442955198.62209395515.92
(2) Increase for business 941032.03 1030266.54 476512.47 748228.77 3196039.81
combination
3. Decrease amount of the
current period 78047.66 20277441.13 4477151.75 26060730.46 50893371.00
(1) Disposal or scraping
19521522.104458866.1725962157.7449942546.01
(2) Translation difference of 78047.66 755919.03 18285.58 98572.72 950824.99
foreign-currency statements
4. Balance at the end of the
period 398546561.09 459713467.67 47053256.75 276948635.28 1182261920.79
III. Impairment provisions
1. Balance at the beginning of
the period 234148.70 234148.70
2. Increase amount of the
current period
(1) Accruing
(2) Increase for business
combination
3. Decrease amount of the
current period
(1) Disposal or scraping
4. Balance at the end of the
period 234148.70 234148.70
IV. Carrying value
1. Carrying value at the end
of the period 1321076234.44 413282829.40 16258970.53 89486359.97 1840104394.34
2. Carrying value at the
beginning of the period 1404565167.43 368399022.84 10883699.59 63787834.59 1847635724.45
166 / 237Annual Report 2021
(2). Particulars on temporary idle fixed assets
□ Applicable √ Not applicable
(3). Particulars on fixed assets leased in under finance 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
22. Construction in progress
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Construction in progress 66743168.66 54946300.66
Engineering materials
Total 66743168.66 54946300.66
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 Impairment Impairment
Carrying balance Carrying value Carrying balance Carrying value
provisions provisions
Fixed assets not 38399450.39 38399450.39 23771536.87 23771536.87
yet installed
and put into use
Others 28343718.27 28343718.27 31174763.79 31174763.79
Total 66743168.66 66743168.66 54946300.66 54946300.66
(2). Changes in important construction in progress projects in the current period
√ Applicable □ Not applicable
167 / 237Annual Report 2021
Unit: Yuan Currency: RMB
Including:
Proportion of
At the Amount of fixed Accumulated Amount of Interest
Increase amount Other decrease At the end of the cumulative
beginning of the assets transferred Progress amount of interest capitalization
Items Budget of the current amounts in the period investment in Source of fund
period in the current of works interest capitalization in rate (%) in the
period current period Balance the project to
Balance period capitalization the current current period
the budget (%)
period
Fixed assets 23771536.87 132578134.28 117718027.07 232193.69 38399450.39 Self-owned
not yet capital
installed and
put into use
Others 31174763.79 129476402.11 71605976.84 60701470.79 28343718.27 Self-owned
capital
Total 54946300.66 262054536.39 189324003.91 60933664.48 66743168.66 / / / /
Other descriptions:
Other decreases were mainly caused by the transfer of the renovation project of the office building
of Rafael Cloud Gallery from the construction in progress into the long-term deferred expenses this year.
(3). Particulars on impairment provisions accrued for construction in progress in the current
period
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Engineering materials
(1). Particulars on engineering materials
□ Applicable √ Not applicable
23. 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
Other descriptions
□ Applicable √ Not applicable
24. Oil and gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
168 / 237Annual Report 2021
Item Property and buildings Transportation vehicles Total
I. Original carrying value
1. Balance at the beginning of the 327386662.94 327386662.94
period
2. Increase amount of the current 219326092.81 1515510.36 220841603.17
period
(1) New leases 194417049.77 194417049.77
(2) Increase for business combination 17868814.10 1562651.03 19431465.13
(3) Revaluation adjustment 7579279.47 7579279.47
(4) Translation difference of foreign- -539050.53 -47140.67 -586191.20
currency statements
3. Decrease amount of the current 7725998.46 7725998.46
period
(1) Transfer out to fixed assets
(2) Disposal 7725998.46 7725998.46
4. Balance at the end of the period 538986757.29 1515510.36 540502267.65
II. Accumulated depreciation
1. Balance at the beginning of the
period
2. Increase amount of the current 184342982.85 899358.68 185242341.53
period
(1) Accrual 175459658.67 134244.98 175593903.65
(2) Increase for business combination 9159644.20 788912.92 9948557.12
(3) Translation difference of foreign- -276320.02 -23799.22 -300119.24
currency statements
3. Decrease amount of the current 2280187.22 2280187.22
period
(1) Disposal 2280187.22 2280187.22
(2) Transfer out to fixed assets
4. Balance at the end of the period 182062795.63 899358.68 182962154.31
III. Impairment provisions
1. Balance at the beginning of the
period
2. Increase amount of the current
period
(1) Accrual
(2) Increase for business combination
3. Decrease amount of the current
period
(1) Disposal
(2) Transfer out to fixed assets
4. Balance at the end of the period
IV. Carrying value
1. Carrying value at the end of the 356923961.66 616151.68 357540113.34
period
2. Carrying value at the beginning of 327386662.94 327386662.94
the period
Other descriptions:
No
26. Intangible assets
(1). Particulars on intangible assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
169 / 237Annual Report 2021
Image
Unpatented Trademark use
Item Land use rights Patent right identification Software Others Total
technology rights
rights
I. Original carrying value
1. Balance at the 338919937.61 13175147.06 93989.00 36189394.22 2090716.14 390469184.03
beginning of the
period
2. Increase amount of 1745520.70 102215584.37 6668633.60 33567059.53 144196798.20
the current period
1745520.7034095.913472469.425252086.03
(1) Acquisition
(2) Internal R&D
(3) Transfer-in from 1077742.55 1077742.55
construction in
progress
(4) Increase for 102181488.46 2118421.63 33567059.53 137866969.62
business combination
3. Decrease amount 2870522.26 2630588.81 5211427.95 10712539.02
of the current period
2424213.175147521.297571734.46
(1) Disposal
(2) Invalid and
derecognized portion
(3) Translation 446309.09 2630588.81 63906.66 3140804.56
difference of foreign-
currency statements
4. Balance at the end 336049415.35 14920667.76 93989.00 99584995.56 37646599.87 35657775.67 523953443.21
of the period
II. Accumulative amortization
1. Balance at the 43068683.59 4132625.91 93989.00 20906939.22 1520617.71 69722855.43
beginning of the
period
2. Increase amount of 7273080.92 884670.16 7636173.77 5446581.71 2589994.12 23830500.68
the current period
7273080.92884670.16-786748.544520797.862589994.1216055291.60
(1) Accruing
(2) Increase for - 7062479.85 954580.77 8017060.62
business combination
(3) Translation - -213054.62 -28796.92 -241851.54
difference of foreign-
currency statements
3. Decrease amount 580542.42 3867509.17 4448051.59
of the current period
580542.423867509.174448051.59
(1) Disposal
4. Balance at the end 49761222.09 5017296.07 93989.00 7636173.77 22486011.76 4110611.83 89105304.52
of the period
III. Impairment provisions
1. Balance at the
beginning of the
period
2. Increase amount of
the current period
(1) Accruing
3. Decrease amount
of the current period
(1) Disposal
4. Balance at the end
of the period
IV. Carrying value
1. Carrying value at 286288193.27 9903371.69 91948821.79 15160588.11 31547163.84 434848138.70
the end of the period
2. Carrying value at 295851254.02 9042521.15 15282455.00 570098.43 320746328.60
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
170 / 237Annual Report 2021
(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
27. Development expenses
□ Applicable √ Not applicable
28. Goodwill
(1). Original carrying value of goodwill
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase of the current period Decrease of the current period
Name of invested company or
Opening balance Formed due to Closing balance
event forming goodwill
business Others Disposal Others
combination
Shenzhen Erya Creative and 131001.23 131001.23
Cultural Development Co.Ltd.（深圳尔雅文化创意发展有限公司）
Axus Stationery (Shanghai) 30175537.19 30175537.19
Company Ltd.Beckmann Holding AS 63529740.20 63529740.20
30306538.4263529740.2093836278.62
Total
(2). Impairment provisions of goodwill
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase of the current period Decrease of the current period
Name of invested company
Opening balance Closing balance
or event forming goodwill Accrued Others Disposal Others
Shenzhen Erya Creative 131001.23 131001.23
and Cultural DevelopmentCo. Ltd.（深圳尔雅文化创意发展有限公司）
Axus Stationery 30175537.19 30175537.19
(Shanghai) Company Ltd.Total 30306538.42 30306538.42
(3). Information regarding the asset group or the combination of asset groups to which goodwill
belongs
√ Applicable □ Not applicable
Carrying value of
Carrying value of the
goodwill Carrying value of Carrying value of other
asset group or the Whether the
attributable to goodwill attributable Total carrying value of assets in the asset group
Name of asset group combination of asset asset group
shareholders of to minority goodwill or the combination of
groups including has changed
the parent shareholders asset groups
goodwill
company
Shenzhen Erya Creative
and Cultural
Development Co. Ltd. 131001.23 125863.93 256865.16 603635.03 860500.19 No
（深圳尔雅文化创意发展有限公司）
Axus Stationery
30175537.1
(Shanghai) Company 23709350.65 53884887.84 360477156.53 414362044.37 No
9
Ltd.
171 / 237Annual Report 2021
63529740.2
Beckmann Holding AS 5977634.20 69507374.40 116203844.26 185711218.66 No
0
(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 of impairment losses of goodwill
√ Applicable □ Not applicable
Unit: RMB 0'000
Key parameter Amount of
Present value of
Growth rate Discount rate goodwill
Name of asset group estimated future
Forecast period in the steady Profit margin (weighted average cost impairment
cash flow
period of capital WACC) provisions
Calculated according to
Beckmann Holding AS 2022-2025 1.5% predicted income costs 10% after tax 26043.55
expenses etc.
(5). Effect of goodwill impairment test
√ Applicable □ Not applicable
For the current year the Company hired KPMG Asset Appraisal (Shanghai) Co. Ltd. to issue the
Asset Appraisal Report on the Recoverable Amount of Goodwill Asset Groups of Back to School Holding
AS (Beckmann) 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 KPMG Ping Bao Zi [2022] No.005 on
25 March 2022. According to the appraisal results as of 31 December 2021 the carrying value of the asst
group or the combination of asset groups including goodwill of Beckmann acquired by the Company was
RMB185711200 and the recoverable amount was RMB260435500; after the test there was no
impairment risk in the goodwill formed by the Company's acquisition of Beckmann.Other descriptions
□ Applicable √ Not applicable
29. Long-term prepaid expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening Increase amount Amortization Other Closing balance
balance of the current amount of the decrease
period current period amounts
Decoration 97168999.11 110534370.70 59115340.02 398773.20 148189256.59
fee
Others 1866853.67 14227274.45 2075603.87 953.38 14017570.87
Total 99035852.78 124761645.15 61190943.89 399726.58 162206827.46
Other descriptions:
No
30. Deferred income tax assets/Deferred income tax liabilities
(1). Unoffset deferred income tax assets
√ Applicable □ Not applicable
172 / 237Annual Report 2021
Unit: Yuan Currency: RMB
Closing balance Opening balance
Item Deductible Deferred income Deductible Deferred
temporary tax temporary income tax
differences Assets differences Assets
Impairment provisions of 85392119.05 20785685.43 62830410.42 15736764.19
assets
Unrealized profits from 145744676.94 24173424.79 128331275.32 19493583.59
internal transactions
Deductible losses 15475765.74 3868941.44
Cash flow hedging 147570.52 32465.51
Deferred income 46648325.34 9004394.46 43408616.60 8510440.37
Depreciation or 161342324.44 40345663.12 88272113.20 22068028.30
amortization difference
Time difference in 58634241.79 14658560.45 1591710.76 397927.68
revenue recognition
New lease standards 82821125.87 19804926.97
Difference between the 39095966.44 6354110.72 101643345.93 16511152.05
expected pre-tax
deductible amount of
equity incentive expenses
during the waiting period
and the fair value of the
stock at the date of grant
Equity incentive 114806434.60 18697069.05 82199024.88 13352576.96
Total 734632785.00 153856300.50 523752262.85 99939414.58
(2). Unoffset deferred income tax liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Closing balance Opening balance
Item Taxable Deferred income Taxable Deferred income
temporary tax temporary tax
differences Liabilities differences Liabilities
Assets appreciation for 207741970.29 38990035.12 175784995.89 31652101.70
business combination not
under the common
control
Changes in fair value of
other debt investments
Changes in fair value of 3145402.14 471810.32 1876577.42 281486.61
other equity instrument
investments
Depreciation or 76696943.59 16873327.59
amortization difference
Time difference in cost 52613962.26 13223117.61
recognition
Changes in right-of-use 90676436.99 21672861.34
assets
Changes in fair value of 9123552.86 1434785.40 28277848.33 4847480.94
trading financial assets
Total 439998268.13 92665937.38 205939421.64 36781069.25
173 / 237Annual Report 2021
(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 359740315.61 62196722.99
differences
Deductible losses 424942206.24 351596864.50
Total 784682521.85 413793587.49
(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 end of Amount at the beginning of
Year Note
the period the period
2026119865224.32
2025136486913.76118026277.48
202455928624.1361116333.17
202396680220.71110708628.54
202215981223.3235828658.63
202125916966.68
Total 424942206.24 351596864.50 /
Other descriptions:
□ Applicable √ Not applicable
31. Other non-current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Closing balance Opening balance
Item Carrying Impairment Carrying Impairment
Carrying value Carrying value
balance provisions balance provisions
Contract acquisition
cost
Contract performance
cost
Receivable return cost
Contract assets
Prepayments for real 8543306.18 8543306.18 6258468.47 6258468.47
estate engineering
equipment etc.Total 8543306.18 8543306.18 6258468.47 6258468.47
Other descriptions:
No
174 / 237Annual Report 2021
32. Short-term borrowings
(1). Classification of short-term borrowings
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Pledged borrowings 166063550.00 180000000.00
Mortgaged borrowings
Guaranteed borrowings
Credit borrowings 10676127.66
Borrowing interest expenses 3185892.63 176000.00
Total 179925570.29 180176000.00
Description on classification of short-term borrowings:
See 1. Important commitments under 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 descriptions
□ Applicable √ Not applicable
33. Held-for-trading financial liabilities
□ Applicable √ Not applicable
34. Derivative financial liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Foreign exchange derivatives - Cash 147570.52
flow hedging
Total 147570.52
Other descriptions:
No
35. Bills payable
(1). Presentation of notes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Type Closing balance Opening balance
Commercial acceptance bills
Bank acceptance bills 172167.42
Total 172167.42
175 / 237Annual Report 2021
At the end of the period the total amount of expired but unpaid bills payable was RMB0.
36. Accounts payable
(1). Presentation of accounts payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Within 1 year 2780630084.87 2552911388.83
1 to 2 years 27551065.81 46850996.73
2 to 3 years 1215988.70 1389918.08
Above 3 years 196302.04 868204.35
Total 2809593441.42 2602020507.99
(2). Accounts payable with the account age over one year
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
37. Accounts received in advance
(1). Presentation of advance received from customers
□ Applicable √ Not applicable
(2). Significant advance received from customers with the account age over one year
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
38. Contract liabilities
(1). Particulars on contract liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Loans 118419358.01 107856804.87
Membership points 14057291.44 2701304.36
Vouchers 14108591.36 3541926.12
Total 146585240.81 114100035.35
(2). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
176 / 237Annual Report 2021
39. Employee benefits payable
(1). Presentation of employee benefits payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase of the Decrease of the
Item Opening balance Closing balance
current period current period
I. Short-term benefits 145779153.22 909800804.26 872883888.11 182696069.37
II. Post-employment 6248465.67 94056554.96 91865706.74 8439313.89
benefits - Defined
contribution plans
III. Termination 597488.00 3194307.07 3623795.07 168000.00
benefits
IV. Other benefits due
within one year
Total 152625106.89 1007051666.29 968373389.92 191303383.26
(2). Presentation of short-term benefits
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
Increase of the Decrease of the
Item Opening balance Closing balance
current period current period
I. Salary bonus 137387024.38 789636241.79 754079338.19 172943927.98
allowance and subsidy
II. Employee benefits 32733.33 26520750.27 26553483.60
III. Social insurance 3740523.10 60327424.07 59641487.13 4426460.04
Including: Medical 3618360.04 57728721.67 57087339.18 4259742.53
insurance
Work-related injury 112453.87 2115772.34 2061880.60 166345.61
insurance
Maternity insurance 9709.19 482930.06 492267.35 371.90
IV. Housing provident 2762792.89 28298583.39 27921933.39 3139442.89
fund
V. Labor union and 1853920.06 342864.78 1648367.98 548416.86
employee education
funds
VI. Short-term 3602981.96 2446795.85 1156186.11
compensated absences
VII. Short-term profit
sharing plan
VIII. Other short-term 2159.46 1071958.01 592481.98 481635.49
benefits
Total 145779153.22 909800804.26 872883888.11 182696069.37
(3). Presentation of defined contribution plans
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Opening Increase of the Decrease of the
Item Closing balance
balance current period current period
1. Basic pension 6114341.66 91166091.60 89040778.59 8239654.67
2. Unemployment 134124.01 2890463.36 2824928.15 199659.22
insurance
177 / 237Annual Report 2021
3. Enterprise annuity
payment
Total 6248465.67 94056554.96 91865706.74 8439313.89
Other descriptions:
□ Applicable √ Not applicable
40. Taxes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Value added tax ("VAT") 167980268.23 223026940.44
Consumption tax
Business tax
Enterprise income tax 140981979.46 217311562.20
Personnel income tax 12603584.91 9161957.00
Urban maintenance and 9921562.52 7416779.26
construction tax
Property tax 1098726.57 290044.29
Education surcharge 8657921.31 10972177.74
Land use tax 1531862.63 1539806.37
Stamp duty 10420464.12 7505424.40
Others 32557.82 15527.40
Total 353228927.57 477240219.10
Other descriptions:
No
41. Other payables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Interest payable
Dividend payable
Other payables 593242385.96 625468675.97
Total 593242385.96 625468675.97
Other descriptions:
□ Applicable √ Not applicable
Interest payable
(1). Presentation by category
□ Applicable √ Not applicable
178 / 237Annual Report 2021
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
Margin and deposit 175505357.38 161138624.45
Repurchase obligations of 146656903.00 176034120.00
restricted stocks
Product license fee 1199000.00 1860000.00
Estimated fees 206667320.59 189127390.60
Engineering and decoration 21964400.63 75577971.07
fund
Others 41249404.36 21730569.85
Total 593242385.96 625468675.97
(2). Other payables with the account age over one year
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
42. Held-for-sale liabilities
□ Applicable √ Not applicable
43. Non-current liabilities due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Long-term borrowings due 10128047.46
within one year
Bonds payable due within one
year
Long-term payables due within
one year
Lease liabilities due within one 168483555.19 130704827.15
year
Total 178611602.65 130704827.15
Other descriptions:
For details of the classification of long-term borrowings due within one year see 1. Important
commitments under Note XIV. Commitments and Contingencies.
179 / 237Annual Report 2021
44. Other current liabilities
Particulars on other current liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Short-term bonds payable
Return amount payable 61407275.43
Output tax to be written off 14095441.07 13746089.97
Receivables that cannot be 15372805.47
derecognized
Total 90875521.97 13746089.97
Changes in short-term bonds payable:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
45. Long-term borrowings
(1). Classification of long-term borrowings
□ Applicable √ Not applicable
Other descriptions including interest rate ranges:
□ Applicable √ Not applicable
46. 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 on the basis for classification of other financial instruments as financial liabilities:
180 / 237Annual Report 2021
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
47. Lease liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Long-term lease liabilities 341407721.40 307325185.80
Less: Lease liabilities due within one year -168483555.19 -130704827.15
Total 172924166.21 176620358.65
Other descriptions:
No
48. Long-term payables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Long-term payable
Special payables 8420000.00 8420000.00
Total 8420000.00 8420000.00
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
Opening Increase of Decrease of Closing Cause of
Item balance the current the current balance formation
period period
181 / 237Annual Report 2021
New environment- 8420000.00 8420000.00
friendly pen-making
material project
belonging to key
special projects for
improvement and
industrialization of key
basic materials under
the national key R&D
plan
Total 8420000.00 8420000.00 /
Other descriptions:
No
49. Long-term employee benefits payable
□ Applicable √ Not applicable
50. Estimated liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening balance Closing balance Cause of formation
External guarantee
Pending litigation
Product quality
assurance
Restructuring
obligations
Onerous contract to be
implemented
Return amount 12211357.80
payable
Others
Repurchase 35311258.55
obligations
Total 12211357.80 35311258.55 /
Other descriptions including descriptions on important assumptions and estimates related to important
estimated liabilities:
The Company acquired a 91.4% stake in Back to School Holding AS on 1 September 2021. Pursuant
to the Shareholder Agreement signed by and between the Company and the Minority Shareholders after
the date of approval of the 2023 financial report by Back to School Holding AS or 31 March 2024
whichever is earlier (the "Exercise Date") the Company shall have the option to purchase the shares held
by the minority shareholders and the minority shareholders shall have the option to sell the shares held
by them to the Company or Back to School Holding AS.
51. Deferred income
Particulars on deferred income
√ Applicable □ Not applicable
182 / 237Annual Report 2021
Unit: Yuan Currency: RMB
Decrease of
Opening Increase of the Cause of
Item the current Closing balance
balance current period formation
period
Government 46132513.40 8650000.00 6692948.64 48089564.76
subsidies
Total 46132513.40 8650000.00 6692948.64 48089564.76 /
Items involving government subsidies:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount included
Subsidy amount Amount included in
in non-operating Other Related to
Liability items Opening balance increased in the other income of the Closing balance
income of the changes assets/income
current period current period
current period
2015 Informatization Development
Project - Data Sharing-based VOS
1400581.20 259709.40 1140871.80 Pertinent to assets
Enterprise Management Cloud
Collaboration Platform
2015 Key Technical Transformation
Project - Technical Transformation of
3137154.33 561878.28 2575276.05 Pertinent to assets
M&G Stationery Automated Assembly
Production Technology Application
2016 Industrial Transformation and
Upgrading Development Project -
Machine Vision-based Detection 1707483.68 296953.68 1410530.00 Pertinent to assets
Technology Development and Its
Application in Pen Industry - EIT2016
2016 Cultural and Creative Project -
M&G Youpin - High Value-Added 138421.73 29437.44 108984.29 Pertinent to assets
Creative Product Development Project
2014 Service Industry Guiding Fund -
M&G Life Project based on Intelligent 1465747.85 328891.68 1136856.17 Pertinent to assets
Network Management and Control
2014 Special Fund to Encourage the
Purchase of International Advanced R&D
Instruments and Equipment - R&D of
Key Materials and Preparation
435000.00 174000.00 261000.00 Pertinent to assets
Technologies in the Pen-making Industry
- Project of Introducing MIKRON
Multistar LX-24 Station Combination
Machine Tools
2015 Cultural and Creative Project -
Inbound Marketing - Internet + Product 472408.64 107310.24 365098.40 Pertinent to assets
Development Model Innovation Project
Science & Technology Projects of the
477316.57 244646.88 232669.69 Pertinent to assets
12th Five-Year Plan
Improvement of Capability of Shanghai
Engineering Technology Research Center 1000000.00 590711.49 409288.51 Pertinent to assets
- EC2017
2010-2011 Shanghai Characteristic
Industry Small and Medium-Sized
Enterprise Development Fund Project -
25676.29 25676.29 Pertinent to assets
R&D Technology Transformation of
New Material Series for "Writing
Creativity" Writing Instruments
2012 Comprehensive Pilot of Modern
Service Industry - Network Platform 8736231.51 672017.88 8064213.63 Pertinent to assets
Expansion and Upgrade Project
2014 Absorption and Innovation Project -
R&D and Industrialization Project of 439330.47 90443.52 348886.95 Pertinent to assets
New Needle Spring Pen Tips
Subsidies for injection molding machine
570000.00 72488.12 497511.88 Pertinent to assets
intelligent equipment
2013 Special Fund for Key
1611785.55 586104.12 1025681.43 Pertinent to assets
Technological Renovation
Cultural and Creative Project 700000.00 700000.00 Pertinent to assets
Academician Expert Workstation 100000.00 100000.00 Pertinent to assets
Special Funds for Shanghai Writing
Instrument Engineering Technology 1000000.00 1000000.00 Pertinent to assets
Research Center
Development of New Environmentally
Friendly Materials and Intelligent
400000.00 400000.00 Pertinent to assets
Manufacturing Technology for Writing
Instruments/TLP2021
Special Funds for Shanghai
7500000.00 7500000.00 Pertinent to assets
Manufacturing Brand Project
Zhangjiang Special Development Fund in
2017 - Achievement Transformation of
1188615.97 174080.64 1014535.33 Pertinent to assets
"Green Design - Innovative R&D" by
Marco Colorful Painting Pen C1085
Special Fund Plan for Key Technological
Renovation Projects in Qingpu District in 280333.26 116000.04 164333.22 Pertinent to assets
2012
Construction Project of "Marco-Color-
312370.91 50000.04 262370.87 Pertinent to assets
Source" Creative Experience Center
183 / 237Annual Report 2021
Special Funds for Central Foreign
662576.66 662576.66 Pertinent to assets
Economic and Trade Development
Subsidies for Boiler Retrofit 280000.00 280000.00 Pertinent to assets
Special Funds for Development of SMEs
76470.66 49274.85 27195.81 Pertinent to assets
in Shanghai in 2016
Subsidies for Internet Projects 905008.12 156197.15 748810.97 Pertinent to assets
Special Funds for Development of
750000.00 750000.00 464550.24 1035449.76 Pertinent to assets
Modern Service Industry
Special Development Funds for
18260000.00 18260000.00 Pertinent to assets
Enterprises
Total 46132513.40 8650000.00 6692948.64 48089564.76
Other descriptions:
□ Applicable √ Not applicable
52. Other non-current liabilities
□ Applicable √ Not applicable
53. Share capital
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase or decrease (+ or -) due to this change
Opening balance Issue Bonus Provident funds Closing balance
Others Subtotal
New shares shares Transferred shares
Total 927427600.00 689400.00 -371410.00 317990.00 927745590.00
shares
Other descriptions:
(1) At the 7th meeting of the 5th session of the Board of Directors and the 6th meeting of the 5th
session of the Board of Supervisors held by the Company on 29 April 2021 the Proposal on Granting
Reserved Restricted Stocks to Incentive Objects of the 2020 Restricted Stock Incentive Plan was considered
and approved. According to the Proposal 6894000000 shares were granted to 119 incentive objects and
the grant price per share was RMB45.03; the capital increase actually received from the incentive objects
was RMB31043682.00 of which the share capital increased by RMB689400 and the capital reserve
increased by RMB30354282.00;
(2) At the 5th meeting of the 5th session of Board of Directors and the 4th meeting of the 5th session
of Board of Supervisors held on 26 March 2021 the Proposal on Repurchase and Cancellation of Some
Restricted Shares was considered and approved. The number of shares repurchased and cancelled was
371410 shares and the repurchase price was RMB23.70.
54. 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:
184 / 237Annual Report 2021
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
55. Capital reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase of the Decrease of the
Item Opening balance Closing balance
current period current period
Capital premium 440954284.53 162724646.30 259469119.80 344209811.03
(Share premium)
Other capital 92429847.13 68666969.63 51119837.00 109976979.76
reserve
Total 533384131.66 231391615.93 310588956.80 454186790.79
Other descriptions including descriptions on changes of the current period and reasons for changes:
1. Increase or decrease in capital premium for the current year:
(1) As stated in Note VII (53) the capital reserve was increased by RMB30354282.00 due to the
issuance of restricted stocks;
(2) As stated in Note VII (53) the capital reserve was decreased by RMB8278752.00 due to the
repurchase of shares;
(3) Due to the release of the restrictions on some restricted stocks the equity incentive expenses for
such stocks were adjusted from other capital reserves to the capital premium resulting in an increase of
RMB51119837.00;
(4) The capital reserve increased by RMB6583260.99 due to the subsidiary's recognition of the
equity incentive expenses for the waiting period for the Company's implementation of the restricted stock
incentive plan in accordance with the relevant resolutions;
(5) The capital reserve decreased by RMB215879109.27 due to the further acquisition of minority
shareholders' equity of M&G Life Enterprise Management Co. Ltd. as a subsidiary;
(6) As stated in Note VII (50) due to the Company's obligation to repurchase equities in the process
of acquiring Back to School Holding AS the capital reserve of RMB35311258.55 was written off when
the liabilities were recognized;
(7) The capital reserve increased by RMB73704828.72 due to the sale of part of the equity of Jiumu
M&G Store Enterprise Management Co. Ltd. by the Company's subsidiaries;
(8) The corresponding proportion of capital reserve increased by RMB962437.59 due to changes in
other capital reserves of the Company's subsidiaries.
2. Increase or decrease in other capital reserves for the current year:
(1) The capital reserve increased by RMB68319695.36 due to the Company's recognition of the
equity incentive expenses for the waiting period for the Company's implementation of the restricted stock
incentive plan in accordance with the relevant resolutions;
(2) Due to the release of the restrictions on some restricted stocks the equity incentive expenses for
such stocks were adjusted from other capital reserves to the capital premium resulting in a decrease of
RMB51119837.00;
185 / 237Annual Report 2021
(3) The capital reserve increased by RMB347274.27 due to the recognition of the difference between
the estimated pre-tax deductible amount of equity incentive expenses during the waiting period and the
fair value of the stock on the date of grant as deferred income tax assets for the implementation of the
restricted stock incentive plan in accordance with the relevant resolutions of the Company.
56. Treasury shares
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase of the Decrease of the
Item Opening balance Closing balance
current period current period
Repurchase of 176034120.00 31043682.00 58971328.00 148106474.00
restricted stocks
Total 176034120.00 31043682.00 58971328.00 148106474.00
Other descriptions including descriptions on changes of the current period and reasons for changes:
(1) As stated in Note VII (53) the repurchase obligations increased by RMB31043682.00 due to the
issuance of restricted stocks;
(2) The repurchase obligations decreased by RMB58971328.00 due to the release of the restrictions
on and the repurchase of some restricted stocks issued by the Company.
57. Other comprehensive income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in the current period
Less: Included in Less: Included in
At the other other comprehensive
beginning of Amount incurred comprehensive income in the Attributable to Attributable
At the end of
Item
the period before income income in the previous period and Less: Income the parent to minority
the period
tax for the previous period transferred to tax expenses company after shareholders Balance Balance
current period and transferred to retained earnings in the tax after the tax
profit or loss in the current period
the current period
I. Other comprehensive income 2333242.35 1686645.00 190323.71 1496321.29 3829563.64
not to be reclassified into profit or
loss
Including: Change in re-
measurement of defined benefit
plans
Other comprehensive income that 738151.54 417820.28 417820.28 1155971.82
may not be reclassified to profit
or loss under equity method
Changes in fair value of other 1595090.81 1268824.72 190323.71 1078501.01 2673591.82
equity instrument investments
Change in fair value of
enterprise's own credit risk
II. Other comprehensive income -191839.87 -3786554.68 -3373681.63 -412873.05 -3565521.50
to be reclassified into profit or
loss
Including: Other comprehensive -4211.14 378.25 378.25 -3832.89
income that may be 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
Cash flow hedging reserve 118924.18 108696.70 10227.48 108696.70
Exchange differences from -187628.73 -3905857.11 -3482756.58 -423100.53 -3670385.31
translation of financial statements
Total other comprehensive 2141402.48 -2099909.68 190323.71 -1877360.34 -412873.05 264042.14
income
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:
186 / 237Annual Report 2021
No
58. Special reserve
□ Applicable √ Not applicable
59. 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 464042659.91 158995.00 464201654.91
reserve
Arbitrary surplus
reserve
Reserve fund
Enterprise
development fund
Others
Total 464042659.91 158995.00 464201654.91
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 and is capped at
50% of the share capital.
60. Undistributed profit
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Current period Previous period
Pre-adjustment undistributed profits at 3442607038.00 2568365861.32
the end of the previous period
Total adjustment amount of 10596781.73
undistributed profits at the beginning
of the period ("+" refers to increase by
adjustment and "-" refers to decrease
by adjustment)
Post-adjustment amount of 3442607038.00 2578962643.05
undistributed profits at the beginning
of the period
Add: Net profit attributable to 1517866131.16 1255426655.27
shareholders of the parent company in
the current period
Less: Statutory surplus reserve 158995.00 23782260.32
accrued
Arbitrary surplus reserve accrued
Withdrawal of general risk provision
Dividends on common shares payable 463713800.00 368000000.00
Dividends on common shares
converted to stock capital
187 / 237Annual Report 2021
Undistributed profit at the end of the 4496600374.16 3442607038.00
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
RMB0.
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.
61. Revenue and operating costs
(1). Particulars on revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in the previous
Amount accounted for in the current period
Item period
Revenue Costs Revenue Costs
Main 17602085153.48 13516552134.55 13133546117.73 9806354519.82
operations
Other 5318096.64 4289618.71 4199609.45 255479.66
operations
Total 17607403250.12 13520841753.26 13137745727.18 9806609999.48
188 / 237Annual Report 2021
(2). Particulars on revenue from contracts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Classification of contracts Total
Types of goods
1. Sales of goods 17596925530.39
2. Management fee for franchising 1261896.79
3. Hardware and software 416068.33
4. Material income 605898.50
5. Others 8193856.11
Classification by operation territory
1. China 17189075699.23
2. Other countries 418327550.89
Total 17607403250.12
Description on revenue from contracts
□ Applicable √ Not applicable
(3). Description on performance obligations
□ Applicable √ Not applicable
(4). Description on allocation to remaining performance obligations
□ Applicable √ Not applicable
Other descriptions:
Details on revenue:
Item Amount in the current Amount in the last
period period
Description on revenue from customer 17607403250.12 13137129583.33
contracts
Rental income 616143.85
Total 17607403250.12 13137745727.18
62. 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
Urban maintenance and 20504490.77 15541751.43
construction tax
Education surcharge 25283863.66 25015709.73
Resource tax
Property tax 2997316.08 1535728.76
Land use tax 1285952.84 1045803.55
Vehicle usage tax
Stamp duty 16217678.50 7261952.70
Others 218656.47 294018.54
Total 66507958.32 50694964.71
Other descriptions:
No
189 / 237Annual Report 2021
63. Selling expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
Salaries and benefits 376564976.37 308941016.61
Channel construction fee 110493640.33 84054269.88
Brand promotion fee 75686376.61 68021855.27
Transportation and handling charge 19246491.43 18558875.62
Business promotion fee 113832914.47 87880339.63
Others 701821061.61 535727666.50
Total 1397645460.82 1103184023.51
Other descriptions:
No
64. Administrative expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for in
the current period the previous period
Salaries and benefits 324702182.60 254969061.73
Depreciation and amortization 107172048.15 64967664.15
Office expense 19493369.38 21420634.26
Share-based payments 77655911.24 82199024.88
Others 216001226.91 179070750.39
Total 745024738.28 602627135.41
Other descriptions:
No
65. R&D expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for in
the current period the previous period
Salaries and benefits 80430192.57 66828400.15
Inventory consumption 65953582.78 54757593.65
Others 42374440.15 38592948.09
Total 188758215.50 160178941.89
Other descriptions:
No
66. Financial expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount accounted for in Amount accounted for in
the current period the previous period
Interest expense 22849307.31 6948206.51
Less: Interest income -31800258.52 -13415173.15
Exchange gains and losses 9478383.76 12089237.27
190 / 237Annual Report 2021
Others 6377331.97 3437905.72
Total 6904764.52 9060176.35
Other descriptions:
No
67. 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 subsidies 72246185.12 44472282.85
Handling charge on withholding 501542.81 1193126.92
personnel income tax
Total 72747727.93 45665409.77
Other descriptions:
Government subsidies included in other income
Amount in the current Amount in the last Related to
Subsidy projects
period period assets/income
2015 Informatization Development
Project - Data Sharing-based VOS
259709.40 194331.20 Pertinent to assets
Enterprise Management Cloud
Collaboration Platform
2015 Key Technical Transformation
Project - Technical Transformation
of M&G Stationery Automated 561878.28 561878.28 Pertinent to assets
Assembly Production Technology
Application
2016 Industrial Transformation and
Upgrading Development Project -
Machine Vision-based Detection
296953.68 271637.22 Pertinent to assets
Technology Development and Its
Application in Pen Industry -
EIT2016
2016 Cultural and Creative Project -
M&G Youpin - High Value-Added
29437.44 29437.44 Pertinent to assets
Creative Product Development
Project
2014 Service Industry Guiding Fund
- M&G Life Project based on
328891.68 328891.68 Pertinent to assets
Intelligent Network Management
and Control
2014 Special Fund to Encourage the
Purchase of International Advanced
R&D Instruments and Equipment -
R&D of Key Materials and
Preparation Technologies in the Pen- 174000.00 174000.00 Pertinent to assets
making Industry - Project of
Introducing MIKRON Multistar LX-
24 Station Combination Machine
Tools
2015 Cultural and Creative Project -
Inbound Marketing - Internet +
107310.24 107310.24 Pertinent to assets
Product Development Model
Innovation Project
191 / 237Annual Report 2021
Science & Technology Projects of
244646.88 244646.88 Pertinent to assets
the 12th Five-Year Plan
Improvement of Capability of
Shanghai Engineering Technology 590711.49 Pertinent to assets
Research Center - EC2017
2010-2011 Shanghai Characteristic
Industry Small and Medium-Sized
Enterprise Development Fund
Project - R&D Technology 25676.29 105943.09 Pertinent to assets
Transformation of New Material
Series for "Writing Creativity"
Writing Instruments
2012 Comprehensive Pilot of
Modern Service Industry - Network
672017.88 672017.88 Pertinent to assets
Platform Expansion and Upgrade
Project
2014 Absorption and Innovation
Project - R&D and Industrialization
90443.52 90443.52 Pertinent to assets
Project of New Needle Spring Pen
Tips
Subsidies for injection molding
72488.12 Pertinent to assets
machine intelligent equipment
2013 Special Fund for Key
586104.12 586104.12 Pertinent to assets
Technological Renovation
Cultural and Creative Project 700000.00 Pertinent to assets
Zhangjiang Special Development
Fund in 2017 - Achievement
Transformation of "Green Design - 174080.64 174080.64 Pertinent to assets
Innovative R&D" by Marco Colorful
Painting Pen C1085
Special Fund Plan for Key
Technological Renovation Projects 116000.04 116000.04 Pertinent to assets
in Qingpu District in 2012
Construction Project of "Marco-
Color-Source" Creative Experience 50000.04 50000.04 Pertinent to assets
Center
Special Funds for Central Foreign
662576.66 73619.64 Pertinent to assets
Economic and Trade Development
Subsidies for Boiler Retrofit 280000.00 70000.00 Pertinent to assets
Special Funds for Development of
49274.85 78831.89 Pertinent to assets
SMEs in Shanghai in 2016
Subsidies for Internet Projects 156197.15 1684991.88 Pertinent to assets
Special Funds for Development of
464550.24 Pertinent to assets
Modern Service Industry
Special Funds for Technological
Transformation and Structural 888000.00 Related to income
Adjustment of Enterprises
Financial support funds 400000.00 Related to income
Subsidies 492000.00 Related to income
Bonus awards 813191.80 Related to income
Disability benefit awards 1249.00 70229.10 Related to income
Taxes paid through the bank 37591.52 Related to income
Refund upon payment of VAT 10152281.04 7039516.55 Related to income
Rebate of import logistics tariff 606279.05 Related to income
Government support funds 6397400.00 Related to income
Training fee subsidies 1729192.00 3305599.20 Related to income
192 / 237Annual Report 2021
Other subsidies 406846.25 Related to income
Special funds for development of
41141500.00 18400000.00 Related to income
enterprises
Unemployment insurance subsidies 600.00 Related to income
Post stability subsidies 319605.82 2971018.41 Related to income
Inclusion subsidies for enterprises
above designated size in total retail 2000.00 Related to income
sales of social consumer goods
Notice of the General Office of the
Zhengzhou Municipal People's
Government on Further
Strengthening the Inclusion of
Industrial Enterprises Above
Designated Size Wholesale and
80000.00 Related to income
Retail Catering Enterprises Above
Designated Size Qualified
Construction Enterprises and
Service Enterprises Above
Designated Size (Zheng Zhanjiang
Ban Wen [2015] No. 43)
Subsidies for patents 5500.00 417000.00 Related to income
Special Subsidy of Qingcun Town
for the Project Recognized by Trade- 720000.00 Related to income
natured Headquarters in 2020
Special Subsidy of Fengxian District
for the Project Established by Trade- 280000.00 Related to income
natured Headquarters in 2020
Grants and Incentives of Fengxian
District for the Fengxian District 112000.00 Related to income
Standardization Project in 2021
Grants and Incentives for the
Shanghai Standardization Project in 70000.00 Related to income
2021
Government Grants for the Cultural
300000.00 Related to income
and Creative Project
Supporting Funds from the
Propaganda Department of the CPC
300000.00 Related to income
Shanghai Fengxian District
Committee
Grants from Fengxian District for
Overseas Trademark Registrations in 10000.00 Related to income
2021
Grants and Incentives of Qingcun
Town for the Fengxian District 288000.00 Related to income
Standardization Project in 2021
Special Certificate Safety Skills
3180.00 Related to income
Training Subsidies
"Four-helping and Four-Sending"
20000.00 Related to income
Sales Incentives
Incentives for Inclusion of
40800.00 Related to income
Technology SMEs
Zhangjiang Special Development
Fund in 2017 - Achievement
Transformation of "Green Design - 370000.00 Related to income
Innovative R&D" by Marco Colorful
Painting Pen C1085
193 / 237Annual Report 2021
Subsidies for Passing the
Assessment by Shanghai Municipal 100000.00 Related to income
Enterprise Technology Center
Subsidies from Shanghai Municipal
Commission of Economic and 25440.00 Related to income
Information Technology
Subsidies from Shanghai Municipal
Commission of Commerce for
53008.00 Related to income
Lawyer Fees in the Anti-dumping
Case in Brazil
Shanghai Qingpu District Enterprise
255800.00 Related to income
Supporting Funds
2019 District Comprehensive
Supporting Fund for Hangzhou
450000.00 Related to income
Qiantang Smart City Industrial
Construction Center
Anti-epidemic Special Rent
Subsidies and Special Salary 83651.00 Related to income
Supporting Funds
2019 Central Import Discount
Interest Funds (Direct Payment by
210146.00 Related to income
Shanghai Municipal Finance
Bureau)
Subsidies for the R&D and
Innovation of the First Batch of
"Three Hundreds" Enterprises 439500.00 Related to income
(Payment by Shanghai Municipal
Fengxian District Finance Bureau)
Special Funds for Scientific and
Technological Innovation and 90000.00 Related to income
Development
Epidemic-related Subsidies for
100000.00 Related to income
Buildings
Talent Development Funds 315200.00 Related to income
Talent Subsidies from Shanghai
Municipal Human Resources and 252400.00 Related to income
Social Security Bureau
Subsidies for Coal-fired Boilers 170000.00 Related to income
Government Subsidies 3452666.13 Related to income
Unemployment Insurance from
Yiwu Municipal Employment 163362.78 Related to income
Management Service Bureau
The Second Batch of Incentives for
Epidemic Prevention Effects in 2020
from Industry and Information 20000.00 Related to income
Technology Bureau of Longgang
District Shenzhen
Subsidies for Work-based Trainings 39600.00 Related to income
Total 72246185.12 44472282.85
68. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
194 / 237Annual Report 2021
Long-term equity investment income 1372107.60 -1610614.02
accounted for under the equity method
Investment income from disposal of
long-term equity investment
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 4921056.44 5461768.72
held-for-trading financial assets
Investment income from disposal of
other equity instrument investments
Investment income from disposal of
debt investment
Investment income from disposal of
other debt investments
Gains from debt restructuring
Total 6293164.04 3851154.70
Other descriptions:
No
69. Net gain on exposure hedging
□ Applicable √ Not applicable
70. Gain on change in fair value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Sources of income from changes in Amount accounted for in the Amount accounted for in the
fair value current period previous period
Held-for-trading financial assets 38636606.71 32281250.23
Including: Income from changes in
fair value of derivative financial
instruments
Held-for-trading financial liabilities
Investment real estate measured at
fair value
Total 38636606.71 32281250.23
Other descriptions:
No
71. Credit impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
195 / 237Annual Report 2021
Bad debt losses of notes receivable 718394.03
Bad debt losses of accounts receivable 4327081.30 5656026.24
Bad debt losses of other receivables 21968239.20 12569875.88
Impairment losses of debt investment
Impairment losses of other debt
investments
Bad debt losses of long-term receivables
Impairment losses of contract assets
Bad debt losses of prepayments -20000000.00 20000000.00
Total 7013714.54 38225902.12
Other descriptions:
No
72. Asset impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in Amount accounted for in the
Item
the current period previous period
1. Bad debt losses
II. Loss for decline in value of 17091366.45 10111946.64
inventories and loss for impairment
of contract performance cost
III. Impairment losses of long-term
equity investment
IV. Impairment losses of investment
real estate
V. Impairment losses of fixed assets
VI. Impairment losses of engineering
materials
VII. Impairment losses of
construction in progress
VIII. Impairment losses of productive
biological assets
IX. Impairment losses of oil and gas
assets
X. Impairment losses of intangible
assets
XI. Impairment losses of goodwill 30175537.19
XII. Others
Total 17091366.45 40287483.83
Other descriptions:
No
73. 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 disposal of 2818017.84 169704.92
fixed assets
196 / 237Annual Report 2021
Gaines or losses from disposal of 415634.64
right-of-use assets
Gaines or losses from disposal of 2864437.74
intangible assets
Total 6098090.22 169704.92
Other descriptions:
No
74. Non-operating profits
Particulars on non-operating profits
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount included in the
Amount accounted for Amount accounted for
Item current non-recurring
in the current period in the previous period
gains and losses
Total gains from
disposal of non-
current assets
Including: Gains from
disposal of fixed
assets
Gains from disposal
of intangible assets
Gains from exchange
of non-currency assets
Government subsidies 91140149.50 89557520.24 91140149.50
Inventory profit 36601.59
Brand maintenance 34156820.50
Liquidated damages 1603515.51 1790210.19 1603515.51
and fine income
Others 5415382.87 3234345.57 5415382.87
Total 98159047.88 128775498.09 98159047.88
Government subsidies included in current profit and loss
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for Amount accounted for
Subsidy projects Related to assets/income
in the current period in the previous period
Financial support 91140149.50 89557520.24 Related to income
Total 91140149.50 89557520.24
Other descriptions:
□ Applicable √ Not applicable
75. Non-operating expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount included in the
Amount accounted for in Amount accounted for in
Item current non-recurring
the current period the previous period
gains and losses
Total losses from
disposal of non-
current assets
197 / 237Annual Report 2021
Including: Losses
from disposal of
fixed assets
Losses from disposal
of intangible assets
Losses from
exchange of non-
currency assets
Offering of 6116822.44 8044041.60 6116822.44
donations
Inventory losses 22163.89 180639.72 22163.89
Loss from damage 5328149.21 2596461.69 5328149.21
and retirement of
non-current assets
Fine late payment 1224491.83 1042177.33 1224491.83
Compensation 1773653.01 3191899.75 1773653.01
expenses
Others 3681527.82 5416086.34 3681527.82
Total 18146808.20 20471306.43 18146808.20
Other descriptions:
No
76. Income tax expenses
(1). Table of income tax expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in the Amount accounted for in the
Item
current period previous period
Current income tax expenses 363970383.16 326704216.12
Deferred income tax expenses -36162941.52 -47929130.96
Total 327807441.64 278775085.16
(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 1861403107.01
Income tax expenses calculated at 279210466.05
statutory/applicable rates
Effect of applying different tax rates to 49376628.98
subsidiaries
Effect of adjusting income taxes of the previous -4842197.84
periods
Effect of non-taxable income -15376429.94
Effect of non-deductible costs expenses and 5073121.58
losses
Effect of deductible losses of deferred income -17787596.08
tax assets not recognized in the previous period
Effect of deductible temporary differences or 32153448.89
deductible losses of deferred income tax assets
not recognized in the current period
Income tax expenses 327807441.64
198 / 237Annual Report 2021
Other descriptions:
□ Applicable √ Not applicable
77. Other comprehensive income
√ Applicable □ Not applicable
For details refer to Note VII (57) Other Comprehensive Income.
78. 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 the Amount accounted for in the
current period previous period
Recovery of current amount and 581182581.81
advances 1132038976.18
Special allowances and subsidies 165844928.79 148419247.78
Interest income 31800258.52 13415173.15
Non-operating profits 138440.75 1278211.47
Total 1329822604.24 744295214.21
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 the Amount accounted for in the
current period previous period
Inter-company business 1647285487.11 1207529783.72
Sales expenses 843998839.58 641492275.98
Administration expenses 192464818.60 226914119.41
Financial expenses 6683537.49 3754024.37
Non-operating expenses 12818658.99 14108869.53
R&D expenses 42799220.62 86459958.29
Total 2746050562.39 2180259031.30
Descriptions on cash paid for other operating activities:
No
(3). Other cash received relating to investing activities
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
Item Amount accounted for in the Amount accounted for in the
current period previous period
Compensation for the acquisition of 1987377.00
the original controlling shareholders
of Axus Stationery 1324918.00
Total 1324918.00 1987377.00
Description on other cash received relating to investing activities:
No
199 / 237Annual Report 2021
(4). Other cash paid relating to investing activities
□ Applicable √ Not applicable
(5). Other cash received related to financing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount accounted for in the Amount accounted for in the
current period previous period
Sale of minority stake in subsidiary 67500000.00
Total 67500000.00
Description on other cash received relating to financing activities:
No
(6). Other cash paid for financing-related activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount accounted for in the Amount accounted for in the
current period previous period
Repurchase payment of treasury 1585530.00
shares 8694108.00
Lease payments related to the new
lease standards 168163726.03
Acquisition of minority stake in
subsidiary 180000000.00
Total 356857834.03 1585530.00
Descriptions on other cash paid for financing-related activities:
No
79. Supplementary information for the cash flow statement
(1). Supplementary information for the cash flow statement
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Supplementary information Amount in the current period Amount in the last period
1. Reconciliation of net profit to cash flow from operating activities:
Net profit 1533595665.37 1238373726.00
Add: Impairment provisions of assets 17091366.45 40287483.83
Credit impairment losses 7013714.54 38225902.12
Depreciation of fixed assets oil and 209395515.92 179248165.03
gas assets and productive biological
assets
Amortization of right-of-use assets 175593903.65
Amortization of intangible assets 16055291.60 13116340.82
Amortization of long-term prepaid 61190943.89 64190565.17
expenses
Losses from disposal of fixed assets -6098090.22 -169704.92
intangible assets and other long-term
assets ("-" refers to gains)
Losses from retirement of fixed assets 5251464.15 2596461.69
("-" refers to gains)
Losses from changes in fair value ("-" -38636606.71 -32281250.23
refers to gains)
200 / 237Annual Report 2021
Financial expenses ("-" refers to 40967714.66 13239741.30
income)
Investment losses ("-" refers to gains) -6293164.04 -3851154.70
Decrease in deferred income tax assets -53307857.66 -48643095.04
("-" refers to increase)
Increase in deferred income tax 27525823.89 204324.70
liabilities ("-" refers to decrease)
Decrease in inventories ("-" refers to -263905945.00 55821469.29
increase)
Decrease in operating receivables ("-" -252274754.20 -638589375.17
refers to increase)
Increase in operating payables ("-" 88031434.48 349928292.39
refers to decrease)
Others
Net cash flow generated from 1561196420.77 1271697892.28
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. Particulars on net changes in cash and cash equivalents:
Closing balance of cash 1539484614.69 1377346135.25
Less: Opening balance of cash 1377346135.25 1377446435.89
Add: Closing balance of cash
equivalents
Less: Opening balance of cash
equivalents
Net increase in cash and cash 162138479.44 -100300.64
equivalents
(2). Net cash amount paid for the acquisition of subsidiaries in the current period
□ Applicable √ Not applicable
(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 1539484614.69 1377346135.25
Including: Cash on hand 404622.49 1134204.63
Bank deposits readily available for 1530373347.19 1371360452.36
payment
Other cash and equivalents readily 8706645.01 4851478.26
available for payment at 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
201 / 237Annual Report 2021
II. Cash equivalents
Including: Bond investments due
within three months
III. Closing balance of cash and cash 1539484614.69 1377346135.25
equivalents
Including: Cash and cash equivalents
of which the use is restricted for the
parent company or subsidiaries
within the group
Other descriptions:
□ Applicable √ Not applicable
80. 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
81. Assets with restricted ownership or use rights
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Carrying value at the end of the period Reason for restriction
Cash and equivalents 1471167575.95 Letter of credit deposit and
fixed deposit with restricted
use and over three months
etc.Fixed assets 79314986.42 Loan mortgage
Total 1550482562.37 /
Other descriptions:
No
82. Foreign currency monetary items
(1). Foreign currency monetary items
√ Applicable □ Not applicable
Unit: RMB Yuan
Foreign currency RMB translated at
Translation foreign
Item balance at the end of the end of the period
exchange rate
the period Balance
Cash and equivalents - - 97409027.62
Including: USD 10166602.64 6.3757 64819208.45
EURO 1226972.33 7.2197 8858372.13
JPY 1121.00 0.0554 62.12
HKD 12405.85 0.8176 10143.02
GBP 375.00 8.6064 3227.40
VND 5337607268.78 0.0003 1470340.00
NOK 30439465.66 0.7234 22020882.35
DKK 233541.50 0.9711 226792.15
Accounts receivable - - 124704379.99
Including: USD 17910742.33 6.3757 114193519.87
EURO 78208.69 7.2197 564643.28
NOK 13748655.53 0.7234 9946216.84
Long-term borrowings - -
202 / 237Annual Report 2021
Including: USD
EURO
HKD
Accounts payable - - 75117398.28
Including: USD 9723521.44 6.3757 61994255.65
EURO 8296.92 7.2197 59901.27
VND 6718066848.50 0.0003 1850612.44
NOK 15499216.95 0.7234 11212628.92
Other receivables - - 559693.13
Including: VND 1665497696.12 0.0003 458791.32
NOK 139476.57 0.7234 100901.81
Other payables - - 1240765.69
Including: USD 117726.57 6.3757 750589.29
VND 1374579940.00 0.0003 378652.79
HKD 16480.00 0.8176 13474.05
NOK 135533.90 0.7234 98049.56
Long-term borrowings - Non- - - 10128047.46
current liabilities due within
one year
Including: USD
NOK 14000000.00 0.7234 10128047.46
Other descriptions:
No
(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
83. Hedging
□ Applicable √ Not applicable
84. Government subsidies
(1). Basic information on government subsidies
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount included in
Type Amount Presentation item
current profit and loss
2015 Informatization Development 1920000.00 Deferred income 259709.40
Project - Data Sharing-based VOS
Enterprise Management Cloud
Collaboration Platform
2015 Key Technical Transformation 4880000.00 Deferred income 561878.28
Project - Technical Transformation
of M&G Stationery Automated
Assembly Production Technology
Application
2016 Industrial Transformation and 2100000.00 Deferred income 296953.68
Upgrading Development Project -
Machine Vision-based Detection
Technology Development and Its
Application in Pen Industry -
203 / 237Annual Report 2021
EIT2016
2016 Cultural and Creative Project - 378588.24 Deferred income 29437.44
M&G Youpin - High Value-Added
Creative Product Development
Project
2014 Service Industry Guiding 3450000.00 Deferred income 328891.68
Fund - M&G Life Project based on
Intelligent Network Management
and Control
2014 Special Fund to Encourage the 1740000.00 Deferred income 174000.00
Purchase of International Advanced
R&D Instruments and Equipment -
R&D of Key Materials and
Preparation Technologies in the
Pen-making Industry - Project of
Introducing MIKRON Multistar
LX-24 Station Combination
Machine Tools
2015 Cultural and Creative Project - 1000000.00 Deferred income 107310.24
Inbound Marketing - Internet +
Product Development Model
Innovation Project
Science & Technology Projects of 2446471.05 Deferred income 244646.88
the 12th Five-Year Plan
Improvement of Capability of 1000000.00 Deferred income 590711.49
Shanghai Engineering Technology
Research Center - EC2017
2010-2011 Shanghai Characteristic 786219.51 Deferred income 25676.29
Industry Small and Medium-Sized
Enterprise Development Fund
Project - R&D Technology
Transformation of New Material
Series for "Writing Creativity"
Writing Instruments
2012 Comprehensive Pilot of 13131632.13 Deferred income 672017.88
Modern Service Industry - Network
Platform Expansion and Upgrade
Project
2014 Absorption and Innovation 789748.58 Deferred income 90443.52
Project - R&D and Industrialization
Project of New Needle Spring Pen
Tips
Subsidies for injection molding 570000.00 Deferred income 72488.12
machine intelligent equipment
2013 Special Fund for Key 5328614.61 Deferred income 586104.12
Technological Renovation
Cultural and Creative Project 700000.00 Deferred income 700000.00
Academician Expert Workstation 100000.00 Deferred income
Special Funds for Shanghai Writing 1000000.00 Deferred income
Instrument Engineering Technology
Research Center
Development of New 400000.00 Deferred income
Environmentally Friendly Materials
and Intelligent Manufacturing
Technology for Writing
Instruments/TLP2021
204 / 237Annual Report 2021
Special Funds for Shanghai 7500000.00 Deferred income
Manufacturing Brand Project
Zhangjiang Special Development 4600000.00 Deferred income 174080.64
Fund in 2017 - Achievement
Transformation of "Green Design -
Innovative R&D" by Marco
Colorful Painting Pen C1085
Special Fund Plan for Key 1160000.00 Deferred income 116000.04
Technological Renovation Projects
in Qingpu District in 2012
Construction Project of "Marco- 2500000.00 Deferred income 50000.04
Color-Source" Creative Experience
Center
Special Funds for Central Foreign 1000000.00 Deferred income 662576.66
Economic and Trade Development
Subsidies for Boiler Retrofit 350000.00 Deferred income 280000.00
Special Funds for Development of 465108.77 Deferred income 49274.85
SMEs in Shanghai in 2016
Subsidies for Internet Projects 2590000.00 Deferred income 156197.15
Special Funds for Development of 750000.00 Deferred income 464550.24
Modern Service Industry
Special Development Funds for 18260000.00 Deferred income
Enterprises
Financial support 91140149.50 Non-operating profits 91140149.50
Special Funds for Technological 888000.00 Other income 888000.00
Transformation and Structural
Adjustment of Enterprises
Financial support funds 400000.00 Other income 400000.00
Subsidies 492000.00 Other income 492000.00
Bonus awards 813191.80 Other income 813191.80
Disability benefit awards 1249.00 Other income 1249.00
Taxes paid through the bank 37591.52 Other income 37591.52
Refund upon payment of VAT 10152281.04 Other income 10152281.04
Rebate of import logistics tariff 606279.05 Other income 606279.05
Government support funds 6397400.00 Other income 6397400.00
Training fee subsidies 1729192.00 Other income 1729192.00
Other subsidies 406846.25 Other income 406846.25
Special funds for development of 41141500.00 Other income 41141500.00
enterprises
Unemployment insurance subsidies 600.00 Other income 600.00
Post stability subsidies 319605.82 Other income 319605.82
Inclusion subsidies for enterprises 2000.00 Other income 2000.00
above designated size in total retail
sales of social consumer goods
Notice of the General Office of the 80000.00 Other income 80000.00
Zhengzhou Municipal People's
Government on Further
Strengthening the Inclusion of
Industrial Enterprises Above
Designated Size Wholesale and
Retail Catering Enterprises Above
Designated Size Qualified
Construction Enterprises and
Service Enterprises Above
Designated Size (Zheng Longing
Ban Wen [2015] No. 43)
205 / 237Annual Report 2021
Patent subsidies 5500.00 Other income 5500.00
Special Subsidy of Qingcun Town 720000.00 Other income 720000.00
for the Project Recognized by
Trade-natured Headquarters in 2020
Special Subsidy of Fengxian 280000.00 Other income 280000.00
District for the Project Established
by Trade-natured Headquarters in
2020
Grants and Incentives of Fengxian 112000.00 Other income 112000.00
District for the Fengxian District
Standardization Project in 2021
Grants and Incentives for the 70000.00 Other income 70000.00
Shanghai Standardization Project in
2021
Government Grants for the Cultural 300000.00 Other income 300000.00
and Creative Project
Supporting Funds from the 300000.00 Other income 300000.00
Propaganda Department of the CPC
Shanghai Fengxian District
Committee
Grants from Fengxian District for 10000.00 Other income 10000.00
Overseas Trademark Registrations
in 2021
Grants and Incentives of Qingcun 288000.00 Other income 288000.00
Town for the Fengxian District
Standardization Project in 2021
(2). Particulars on return of government subsidies
□ Applicable √ Not applicable
Other descriptions:
No
85. Others
□ Applicable √ Not applicable
VIII. Change in Consolidation Scope
1. Business combination not under common control
√ Applicable □ Not applicable
(1). Business combination not under common control occurring during the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Basis for Income of acquiree Net profit of
Equity
Equity Equity determining from the acquiree from the
Name of Equity acquisition acquisition Date of
acquisition acquisition the acquisition date to acquisition date
acquiree cost percentage acquisition
time type acquisition the end of the to the end of the
(%)
date period period
Back to 1 September 186581434.21 91.40 Acquisition 1 September Equity 21046674.22 -6454094.30
School 2021 2021 delivery date
Holding
AS
Other descriptions:
No
(2). Business combination cost and goodwill
√ Applicable □ Not applicable
206 / 237Annual Report 2021
Unit: Yuan Currency: RMB
Combination cost Back to School Holding AS
--Cash 186581434.21
--Fair value of non-cash assets
--Fair value of the debts issued or assumed
--Fair value of the equity securities issued
--Fair value of contingent consideration
--Acquisition-date fair value of the equity held
before the acquisition date
--Others
Total combination cost 186581434.21
Less: Fair value share of the identifiable net assets 123051694.01
acquired
Goodwill/Amount of the combination cost below 63529740.20
fair value share of the identifiable net 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:
No
(3). Identifiable assets and liabilities of acquiree on the acquisition date
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Back to School Holding AS
Fair value on the acquisition date Carrying value on the acquisition date
Assets: 207019970.34 175394363.85
Cash and 31328427.08 31328427.08
equivalents
Receivables 20849317.55 20849317.55
Inventories 8759368.47 8759368.47
Fixed assets 2278992.49 1748683.95
Intangible 129849909.00 81301910.39
assets
Goodwill 17452700.66
Other assets 13953955.75 13953955.75
Liabilities: 72390108.18 61592880.61
Borrowings 12702401.17 12702401.17
Payables 4644332.81 4644332.81
Deferred 28421728.40 17624500.83
income tax
liabilities
Other 26621645.80 26621645.80
liabilities
Net assets 134629862.16 113801483.24
Less: Minority 11578168.15 9786927.56
equity
Net assets 123051694.01 104014555.68
acquired
207 / 237Annual Report 2021
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
(6). Other descriptions
□ Applicable √ Not applicable
2. Business combination under common control
□ Applicable √ Not applicable
3. Reverse acquisition
□ Applicable √ Not applicable
208 / 237Annual Report 2021
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
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) Three subsidiaries were established for the current year: Shanghai Meixin Stationery Co. Ltd. SHANGHAI M&G STATIONERY (SINGAPORE) PTE.LTD.
and M&G Jiumu Enterprise Management (Beijing) Co. Ltd.
(2) One subsidiary was deregistered for the current year: M&G Life Enterprise Management (Shanghai) Co. Ltd.（晨光生活馆企业管理（上海）有限公司）
6. Others
□ Applicable √ Not applicable
209 / 237Annual Report 2021
IX. Equity in Other Entities
1. Equity in subsidiaries
(1). Composition of the corporate group
√ Applicable □ Not applicable
Subsidiary name Main place of Registered Nature of the Shareholding ratio (%) Acquisition
Name business address business Direct Indirect way
Shanghai M&G Colipu Office Shanghai Shanghai Retail 70.00 Establishment
Supplies Co. Ltd. wholesale etc.Shanghai M&G Stationery & Gift Shanghai Shanghai Production sale 100.00 EstablishmentCo. Ltd.（上海晨光文具礼品有限 and so forth公司）
Shanghai M&G Stationery Sales Shanghai Shanghai Retail 100.00 EstablishmentCo. Ltd.（上海晨光文具销售有限 wholesale etc.公司）
Guangzhou M&G Stationery&Gifts Guangzhou Guangzhou Retail 100.00 EstablishmentSales Co. Ltd.（广州晨光文具礼 wholesale etc.品销售有限公司）
Yiwu Chenxing Stationery Co. Ltd. Yiwu Yiwu Retail 100.00 Establishment
（义乌市晨兴文具用品有限公 wholesale etc.司）
M&G Life Enterprise Management Shanghai Shanghai Retail 100.00 EstablishmentCo. Ltd.（晨光生活馆企业管理有 wholesale etc.限公司）
Shanghai M&G Jiamei Stationery Shanghai Shanghai Production sale 100.00 EstablishmentCo. Ltd.（上海晨光佳美文具有限 and so forth公司）
Shanghai M&G Information Shanghai Shanghai E-commerce 55.00 EstablishmentTechnology Co. Ltd.（上海晨光信 business etc.息科技有限公司）
Jiangsu M&G Life Enterprise Nanjing Nanjing Retail 100.00 EstablishmentManagement Co. Ltd.（江苏晨光 wholesale etc.生活馆企业管理有限公司）
Zhejiang New M&G Life Hangzhou Hangzhou Retail 100.00 Establishment
Enterprise Management Co. Ltd. wholesale etc.（浙江新晨光生活馆企业管理有限公司）
Jiumu M&G Store Enterprise Shanghai Shanghai Retail 85.00 EstablishmentManagement Co. Ltd.（九木杂物 wholesale etc.社企业管理有限公司）
Shanghai M&G Zhenmei Stationery Shanghai Shanghai Retail 100.00 Acquired byCo. Ltd.（上海晨光珍美文具有限 wholesale etc. business公司） combination
under common
control
Harbin M&G Sanmei Stationery Harbin Harbin Retail 100.00 Acquired byCo. Ltd.（哈尔滨晨光三美文具有 wholesale etc. business限公司） combination
under common
control
Zhengzhou M&G Stationery&Gifts Zhengzhou Zhengzhou Retail 100.00 Acquired byCo. Ltd.（郑州晨光文具礼品有限 wholesale etc. business责任公司） combination
under common
control
Shenzhen Erya Creative and Shenzhen Shenzhen Design and so 51.00 Acquired by
Cultural Development Co. Ltd. forth business
（深圳尔雅文化创意发展有限公 combination not司） under common
control
Shanghai M&G Office Stationery Shanghai Shanghai Retail 100.00 Establishment
Co. Ltd. wholesale etc.
210 / 237Annual Report 2021
Lianyungang Colipu Office Lianyungang Lianyungang Retail 100.00 EstablishmentSupplies Co. Ltd.（连云港市科力 wholesale etc.普办公用品有限公司）
Shenyang M&G Colipu Office Shenyang Shenyang Retail 100.00 EstablishmentSupplies Co. Ltd.（沈阳晨光科力 wholesale etc.普办公用品有限公司）
Hangzhou Sanmei M&G Stationery Hangzhou Hangzhou Retail 100.00 EstablishmentCo. Ltd.（杭州三美晨光文具有限 wholesale etc.公司）
Luoyang M&G Stationery Sales Luoyang Luoyang Retail 100.00 EstablishmentCo. Ltd.（洛阳晨光文具销售有限 wholesale etc.公司）
Axus Stationery (Shanghai) Shanghai Shanghai Production sale 56.00 Acquired by
Company Ltd. and so forth business
combination not
under common
controlJiangsu Marco Pen Co. Ltd.（江苏 Jiangsu Jiangsu Production sale 100.00 Acquired by马可笔业有限公司） and so forth business
combination not
under common
control
Changchun Macro Stationery Co. Jilin Jilin Production sale 100.00 Acquired byLtd.（长春马可文教用品有限公 and so forth business司） combination not
under common
controlYili Senlai Wood Co. Ltd.（伊犁 Xinjiang Xinjiang Production sale 100.00 Acquired by森徕木业有限公司） and so forth business
combination not
under common
control
Axus Stationery (Hong Kong) Hong Kong Hong Kong Retail 100.00 Acquired by
Company Ltd. wholesale etc. business
combination not
under common
control
International stationery company Vietnam Vietnam Production sale 100.00 Acquired by
and so forth business
combination not
under common
control
Shanghai Qizhihaowan Culture and Shanghai Shanghai Creative service 57.00 EstablishmentCreativity Co. Ltd.（上海奇只好玩文化创意有限公司）
Shanghai Chenxun Enterprise Shanghai Shanghai Enterprise 100.00 EstablishmentManagement Co. Ltd.（上海晨讯 management企业管理有限公司）
Shanghai Colipu Information Shanghai Shanghai Software 100.00 EstablishmentTechnology Co. Ltd.（上海科力普 development信息科技有限公司）
Shanghai Meixin Stationery Co. Shanghai Shanghai Wholesale and 100.00 Establishment
Ltd. (上海美新文具有限公司) retail
SHANGHAI M&G STATIONERY Singapore Singapore Enterprise 100.00 Establishment
(SINGAPORE) PTE.LTD. management
M&G Jiumu Enterprise Beijing Beijing Wholesale and 100.00 Establishment
Management (Beijing) Co. Ltd. retail
（晨光九木企业管理（北京）有限公司）
Back to School Holding AS Norway Norway Holding 91.40 Acquired by
company business
combination not
211 / 237Annual Report 2021
under common
control
Beckmann AS Norway Norway Production sale 100.00 Acquired by
and so forth business
combination not
under common
control
Beckmann Norway GmbH Germany Germany Retail 100.00 Acquired by
wholesale etc. business
combination not
under common
control
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: RMB Currency: RMB
Dividends declared
Profits and losses
Minority and distributed to Minority equity
Name of attributable to
shareholding minority balance at the end
subsidiaries minority shareholders
ratio shareholders in the of the period
in the current period
current period
Shanghai M&G 30.00% 43148587.48 170638348.86
Colipu Office
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
(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-
subsidiaries Non-current Current Non-current Total Current Current Non-current Total
Current assets Total assets current Total assets
assets liabilities liabilities liabilities assets liabilities liabilities liabilities
assets
212 / 237Annual Report 2021
Shanghai M&G 296293.71 13242.50 309536.21 222998.54 4519.22 227517.76 237271.61 6474.92 243746.53 184145.14 2721.93 186867.07
Colipu Office
Supplies Co. Ltd.Amount accounted for in the current period Amount accounted for in the previous period
Name of subsidiaries Total Cash flow from Total Cash flow
Revenue Net profit comprehensive operating Revenue Net profit comprehensive from operating
income activities income activities
Shanghai M&G 776565.05 24198.53 24198.53 3762.50 500027.59 14382.86 14382.86 22586.95
Colipu Office
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
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 the
period/Amount accounted for in period/Amount accounted for in
the current period 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
213 / 237Annual Report 2021
Associates:
Total carrying value of 36512701.80 34722395.67
investments
Total of the following items calculated according to the shareholding ratio
--Net profits 1372107.60 -1610614.02
--Other comprehensive income 418198.53 750226.22
--Total comprehensive income 1790306.13 -860387.80
Other descriptions
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
X. Risks Associated with Financial Instruments
√ Applicable □ Not applicable
The Company faces various financial risks in its business operations: credit risk liquidity risk and
market risk (including exchange rate risk interest rate risk and other price risk). The above financial risks
and the risk management policies adopted by the Company to reduce these risks are as follows:
The Board of Directors is responsible for planning and establishing the Company's risk management
structure formulating the Company's risk management policies and related guidelines and supervising
the implementation of risk management measures. The Company has formulated risk management policies
to identify and analyze the risks faced by the Company. These risk management policies clearly stipulate
specific risks covering many aspects in the management of market risk credit risk and liquidity risk. The
Company regularly evaluates the market environment and changes in the Company's business activities to
determine whether to update the risk management policies and systems. The Company's risk management
is carried out by the Risk Management Committee in accordance with the policies approved by the Board
of Directors. The Risk Management Committee works closely with other business departments of the
Company to identify evaluate and avoid related risks. The Internal Audit Department of the Company
conducts regular audits on risk management control and procedures and reports the audit results to the
Audit Committee of the Company.
214 / 237Annual Report 2021
The Company diversifies the risk of financial instruments through appropriate diversified investment
and business portfolios and reduces the risks relating to concentration in a single industry specific region
or specific counterparty through formulation of corresponding risk management policies.(I) Credit risk
Credit risk refers to the risk of the Company's financial losses due to the failure of the counterparty
to perform its contractual obligations.The Company's monetary funds are mainly bank deposits deposited in reputable state-owned banks
and other large and medium-sized listed banks with high credit ratings thus the Company believes that
there are no significant credit risks and almost no major losses caused by bank defaults.In addition for notes receivable accounts receivable financing receivables and other receivables
the Company sets relevant policies to control credit risk exposure. The Company evaluates the customer's
credit qualifications and sets the corresponding credit period based on the customer's financial status
possibility of obtaining guarantees from a third party credit history and other factors such as current
market conditions. The Company regularly monitors customer credit records. For customers with poor
credit records the Company uses written dunning and shortens or cancels the credit period etc. to ensure
that the Company's overall credit risk is within the controllable range.(II) 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. Finance
Department also continuously monitors whether the Company complies with the provisions of the loan
agreement and obtains commitments from major financial institutions to provide sufficient reserve funds
so as to meet short- and long-term funding needs.Financial liabilities of the Company are presented as unrealized contractual cash flows on the
maturity date as follows:
Closing balance
Item Immediate 1-2 2--5 Above 5
Within 1 year Total
repayment years years years
Short-term 23425570.29 156500000.00 179925570.29
borrowings
Non-current 10128047.46 10128047.46
liabilities due
within one year
Total 23425570.29 166628047.46 190053617.75
Balance at the end of the year
Item Immediate 1-2 2--5 Above 5
Within 1 year Total
repayment years years years
Short-term 176000.00 180000000.00 180176000.00
borrowings
Total 176000.00 180000000.00 180176000.00
(III) 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 interest rate risk
and other price risks.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate due to changes in market rates.Interest-bearing financial instruments with fixed and floating rates expose the Company to fair value
interest rate risk and cash flow interest rate risk respectively. The Company determines the percentages
of fixed interest rate instruments and floating interest rate instruments according to the market environment
and maintains an appropriate combination of fixed interest rate instruments and floating interest rate
215 / 237Annual Report 2021
instruments through regular review and monitoring. When necessary the Company adopts interest rate
swap instruments to hedge the interest rate risk.
2. Exchange rate risk
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 continuously monitors the scale of foreign-currency transactions and foreign-currency
assets and liabilities to minimize foreign exchange risks. 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 Balance at the end of the year
Item Other foreign Other foreign
USD Total USD Total
currencies currencies
Cash and equivalents 64819208.45 32589819.17 97409027.62 82557145.55 2607950.11 85165095.66
Accounts receivable 114193519.87 10510860.12 124704379.99 31500641.44 186699.84 31687341.28
Other receivables 559693.13 559693.13 427463.91 427463.91
Total foreign 179012728.32 43660372.42 222673100.74 114057786.99 3222113.86 117279900.85
currency financial
assets
Short-term 9583416.04 9583416.04
borrowings
Non-current
liabilities due within 10128047.46 10128047.46
one year
Accounts payable 61994255.65 13123142.63 75117398.28 3968191.47 1778217.76 5746409.23
Other payables 750589.29 490176.40 1240765.69 282014.95 282014.95
Total 72328260.98 23741366.49 96069627.47 3968191.47 2060232.71 6028424.18
XI. Disclosure of Fair Value
1. Closing fair value of assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
Closing fair value
Level-2 fair Level-3 fair
Item Level-1 fair value
value value Total
measurement
measurement measurement
I. Continuous fair
value measurement
(I) 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 1609123552.86 1609123552.86
2. Financial assets
designated as at fair
value through profit or
loss
216 / 237Annual Report 2021
(1) Debt instrument
investment
(2) Equity instrument
investment
(II) Other debt
investments
(III) Other equity 6745402.14 6745402.14
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
(V) Biological assets
1. Consumable
biological assets
2. Productive
biological assets
(VI) Receivables 22824707.62 22824707.62
financing
Total assets 1609123552.86 29570109.76 1638693662.62
continuously
measured at fair
value
(VI) Trading financial
liabilities
1. Financial liabilities
at fair value through
profit or loss
Including: Trading
bonds issued
Derivative financial 147570.52 147570.52
liabilities
Others
2. Financial liabilities
designated as at fair
value through profit or
loss
Total liabilities 147570.52 147570.52
continuously
measured at fair
value
II. Non-continuous
fair value
measurement
(I) Assets held for sale
Total assets not
continuously
measured at fair
value
Total liabilities not
continuously
217 / 237Annual Report 2021
measured at fair
value
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
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 company's
Name of the Registered Nature of the Registered company's
voting right ratio in
parent company address business capital shareholding ratio
the Company (%)
in the Company (%)
M&G Holdings Shanghai Industrial RMB300 million 57.77 57.77
(Group) Co. Investment
Ltd.Descriptions on the parent company of the Company
No
218 / 237Annual Report 2021
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 IX. 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
For important joint ventures and associates of the Company see Note IX. "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 Partnership Associates
(Limited Partnership)
Shanghai Pen-making Technology Services Co. Associates
Ltd.Other descriptions
□ 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 Firm (L.P.) Share-participation shareholders
Shanghai Keying Investment Management Office (L.P.) Share-participation shareholders
PELEG DESIGN Ltd Others
Shanghai M&G Charity Foundation Others
Shanghai KACO Industrial Co. Ltd. Others
Guo Weilong Others
Nanjing Zhaochen Stationery Sales Co. Ltd. Others
Nanjing Chenri Stationery Sales Co. Ltd. Others
Nanjing Youchen Stationery Sales Co. Ltd. Others
Huaian Youpin Chenguang Trading Co. Ltd. (淮安优品晨 Others
光贸易有限公司)
Other descriptions
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
Unit: Yuan Currency: RMB
219 / 237Annual Report 2021
Related-party Amount accounted for Amount accounted for
Related party
transaction content in the current period in the previous period
PELEG DESIGN Ltd Purchase of goods 2363756.97 702355.15
Shanghai KACO Purchase of goods 177706.19
Industrial Co. Ltd.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 421648593.59 439535408.86
by Guo Weilong
PELEG DESIGN Ltd Sale of goods 360972.26
Shanghai M&G Charity Sale of goods 119375.53
Foundation
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
Types of leased Rental income recognized Rental income recognized in
Name of lessee
assets in the current period the previous period
Shanghai Jiekui Self-owned office
Investment building
Management Firm
(L.P.)
Shanghai Keying Self-owned office
Investment building
Management
Office (L.P.)
The Company as the lessee:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Rental fee recognized in Rental fee recognized in the
Name of lessor Types of leased assets
the current period previous period
M&G Holdings Self-owned houses 4620952.60 4620952.38
(Group) Co. Ltd. (including office
220 / 237Annual Report 2021
buildings workshops
parking spaces
warehouses dormitory
buildings etc.)
M&G Holdings Self-owned office 19222690.29 18693105.31
(Group) Co. Ltd. buildings and parking
spaces
M&G Holdings Utilities 5819952.08 5164795.80
(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
(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: RMB Currency: RMB
Closing balance Opening balance
Items Related party Carrying Bad debt Carrying
Bad debt provisions
balance provisions balance
M&G Holdings 5301834.70
Prepayment (Group) Co.Ltd.
(2). Payables
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
Items Related party Carrying balance at Carrying balance at
the end of the period the beginning of the
period
Sales entities controlled by 7772.17 87891.05
Accounts payable
Guo Weilong
221 / 237Annual Report 2021
Shanghai KACO Industrial 17175.23
Accounts payable
Co. Ltd.Accounts payable PELEG DESIGN Ltd 660345.39
Sales entities controlled by 585000.00 1485000.00
Other payables
Guo Weilong
M&G Holdings (Group) 480028.03 1144105.84
Other payables
Co. Ltd.Sales entities controlled by 19432606.22 21037129.41
Contract liabilities
Guo Weilong
Non-current liabilities M&G Holdings (Group) 13243573.62
due within one year Co. Ltd.
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
Unit: Share Currency: RMB
Total amount of equity instruments granted 689400
by the Company in the current period
Total amount of equity instruments vested 2010380
by the Company in the current period
Total amount of equity instruments of the 371410
Company expired in the current period
Scope of the vesting price of the 2020 Restricted Stock Incentive Plan: Restricted stocks
outstanding stock options of the Company are granted at a price of RMB23.7/share and are valid for
at the end of the period and the remaining 3 years from the date of grant; the remaining validity
period of the contract period is 1.33 years.
2021 Restricted Stock Incentive Plan: Restricted stocks
are granted at a price of RMB45.03/share and are valid
for 2 years from the date of grant; the remaining validity
period is 1.33 years.Scope of the vesting price of other
outstanding equity instruments of the
Company at the end of the period and the
remaining period of the contract
Other descriptions
No
2. Particulars on equity-settled share-based payment
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Determination of the fair value of equity 2020 Restricted Stock Incentive Plan: The
instruments at the date of grant closing price of the stocks on the date of grant is
RMB52.70/share
2021 Restricted Stock Incentive Plan: The
closing price of the stocks on the date of grant
was RMB91.75/share
222 / 237Annual Report 2021
Determination basis for the number of vesting At each balance sheet date during the waiting
equity instruments period the Company will make the best estimate
based on the latest obtained follow-up
information such as changes in the number of
vesting employees and revise the expected
number of vesting equity instruments
Reasons for the significant difference between the No
current estimate and the previous estimate
Cumulative amount of equity-settled share-based 159854936.12
payments included in the capital reserve
Total amount of expenses recognized by equity- 77655911.24
settled share-based payments in the current period
Other descriptions
(1) Description on 2020 Restricted Stock Incentive Plan:
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 for the first grant the Company intended to grant a total of 9180600 restricted stocks to 343
incentive objects at a price of RMB24.1/share.On 8 May 2020 the Company held the 2019 Annual General Meeting of Shareholders which
considered and approved the Proposal on the Company's 2020 Restricted Stock Incentive Plan (Draft) and
Its Summary the Proposal on the Management Measures for the Implementation of the Company's 2020
Restricted Stock Incentive Plan and the Proposal on Requesting the General Meeting of Shareholders to
Authorize the Board of Directors to Deal with Matters Related to Restricted Stock Incentives.On 8 May 2020 the Company held the 1st meeting of the 5th session of Board of Directors and the
1st meeting of the 5th session of Board of Supervisors which considered and approved the Proposal on
Adjusting the 2020 Restricted Stock Incentive Plan and the Proposal on Granting Restricted Stocks to
Incentive Objects in 2020. Pursuant to the proposals the Company intended to grant 7441200 restricted
stocks to 335 incentive objects at a price of RMB23.70/share.According to the Proposal on Adjusting the 2020 Restricted Stock Incentive Plan considered and
approved at the 1st meeting of the 5th session of Board of Directors and the 1st meeting of the 5th session
of Board of Supervisors held by the Company on 8 May 2020 the first grant price of restricted stocks was
adjusted from RMB24.1/share to RMB23.7/share the first grant number of incentive objects from 343 to
335 and the first grant number of restricted stocks from 7583000 to 7441200 while the total number
of restricted stocks to be granted according to this equity incentive plan was adjusted from 9180600 to
9038700.
After the date of grant of the restricted stock incentive plan was determined 6 incentive objects
resigned and abandoned the equity incentive plan. As of 31 December 2020 the number of incentive
objects actually granted by the stock incentive plan was 329 and the number of restricted stocks actually
granted was 7289000 shares.The incentive plan evaluates the Company's operating performance annually and takes the
achievement of the performance evaluation target as one of the conditions for releasing the sales
restrictions for the incentive objects in the current year. The performance evaluation objectives of the
incentive plan are shown in the following table:
Date of releasing the sales Performance evaluation objective
restrictions
Based on 2019 the growth rate of revenue in 2020 will not be less
The first period of releasing the
than 15% and the growth rate of net profit in 2020 will not be less
sales restrictions
than 10%;
Based on 2019 the growth rate of revenue in 2021 will not be less
The second period of releasing
than 45% and the growth rate of net profit in 2021 will not be less
the sales restrictions
than 34%;
Based on 2019 the growth rate of revenue in 2022 will not be less
The third period of releasing the
than 75% and the growth rate of net profit in 2022 will not be less
sales restrictions
than 66%.Note: the above-mentioned "net profit" refers to the audited net profit attributable to shareholders of
the parent company.
223 / 237Annual Report 2021
During the period of releasing the sales restrictions the Company handles the matter related to
releasing the sales restrictions for the incentive objects that meet the conditions for releasing the sales
restrictions. If the Company's current performance level fails to meet the performance evaluation target
conditions during each period of releasing the sales restrictions the restricted stocks of all the incentive
objects that meet conditions for release during the corresponding year cannot be released from sales
restrictions but shall be repurchased and cancelled by the Company at the grant price.For the current year the Company repurchased and cancelled a total of 371410 restricted stocks; the
number of restricted stocks that can be released by the Company from sales restrictions was 2010380.
(2) Description on 2021 Restricted Stock Incentive Plan:
At the 7th meeting of the 5th session of the Board of Directors and the 6th meeting of the 5th session
of the Board of Supervisors held by the Company on 29 April 2021 the Proposal on Granting Reserved
Restricted Stocks to Incentive Objects of the 2020 Restricted Stock Incentive Plan was considered and
approved. It was determined that 29 April 2021 was the date of grant of the incentive plan the number of
incentive objects granted was 120 the number of restricted stocks granted was 705500 and the grant
price was RMB45.03 per share. The independent directors of the Company expressed their independent
opinions on such determination. After the date of grant of the restricted stock incentive plan was
determined one incentive object voluntarily abandoned the stocks incentive plan due to personal reasons.The number of incentive objects actually granted by the stock incentive plan was 119 the number of
restricted stocks actually granted was 689400 shares and the actual receivables for subscription of
restricted shares amounted to RMB31043682.00.The incentive plan evaluates the Company's operating performance annually and takes the
achievement of the performance evaluation target as one of the conditions for releasing the sales
restrictions for the incentive objects in the current year. The performance evaluation objectives of the
incentive plan are shown in the following table:
Date of releasing the sales Performance evaluation objective
restrictions
Based on 2019 the growth rate of revenue in 2021 will not be less
The first period of releasing
than 45% and the growth rate of net profit in 2021 will not be less
the sales restrictions
than 34%;
Based on 2019 the growth rate of revenue in 2022 will not be less
The second period of releasing
than 75% and the growth rate of net profit in 2022 will not be less
the sales restrictions
than 66%.Note: the above-mentioned "net profit" refers to the audited net profit attributable to shareholders of
the parent company.During the period of releasing the sales restrictions the Company handles the matter related to
releasing the sales restrictions for the incentive objects that meet the conditions for releasing the sales
restrictions. If the Company's current performance level fails to meet the performance evaluation target
conditions during each period of releasing the sales restrictions the restricted stocks of all the incentive
objects that meet conditions for release during the corresponding year cannot be released from sales
restrictions but shall be repurchased and cancelled by the Company at the grant price.
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
224 / 237Annual Report 2021
(1) On 16 September 2021 the subsidiary Axus Stationery (Shanghai) Company Ltd. ("Axus
Stationery") and China Merchants Bank Co. Ltd. Shanghai Branch ("CMB Shanghai Branch") entered
into the Credit Agreement numbered 121XY2021031380 with the credit line of RMB180000000.00 for
36 months from 16 September 2021 to 15 September 2024. The specific types of line business include
but are not limited to working capital loans bank notes and letters of credit.On 16 September 2021 Axus Stationery and CMB Shanghai Branch entered into the Maximum
Mortgage Contract numbered 121XY2021031380 which is a sub-contract of the Credit Agreement. The
maximum principal limit of the mortgage under this contract is RMB180000000.00 and the mortgage
limit is valid from 16 September 2021 to 15 September 2024.The mortgage term runs 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 for mortgage include:
Accumulated
Name of collateral Ownership No. Original value Net value
depreciation
No. 111 Xuezi South HFDQ Zi
Road Xianghuaqiao (2013) No. 47061453.52 27468676.83 19592776.69
Street Qingpu District 015437
No. 233 Xuezi South HFDQ Zi
Road Xianghuaqiao (2013) No. 32156238.78 14464816.47 17691422.31
Street Qingpu District 013396
No. 333 Xuezi South HFDQ Zi
Road Xianghuaqiao (2015) No. 60230210.97 18199423.55 42030787.42
Street Qingpu District 015718
Total 139447903.27 60132916.85 79314986.42
As of 31 December 2021 the outstanding loan of Axus Stationery was RMB156500000.00 and
USD1500000.00.
(2) On 7 August 2017 the subsidiary Back to School Holding AS borrowed a long-term loan from
a local bank in Norway with all the shares held by the Group's subsidiary Beckmann AS as pledge. As
of 31 December 2021 the balance of the loan was NOK14 million and was presented in the non-current
liabilities due within one year in the statements.
(3) As of the end of the Reporting Period the Company had restricted monetary funds of
RMB1471167575.95 mainly including letter of credit deposit performance bond and fixed deposit
over 3 months.
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
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
Profits or dividends proposed to be distributed 556647354
225 / 237Annual Report 2021
Profits or dividends reviewed and approved to be
declared for distribution
According to the Profit Distribution Plan for 2021 reviewed and approved at the 12th meeting of the
5th session of Board of Directors held by the Company on 25 March 2022 based on the total stock capital
registered on the registration date for the implementation of the equity distribution the Company intends
to distribute the dividend in cash at RMB6 every 10 shares (tax inclusive) to all shareholders. The
remaining distributable profits in 2021 will be carried forward to the following year.
3. Sales return
□ Applicable √ Not applicable
4. Particulars on other post-balance-sheet-date events
□ Applicable √ Not applicable
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
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: direct office supplies business and core
traditional 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.
226 / 237Annual Report 2021
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.
(2). Financial information of reporting segments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Direct office Core traditional Inter-segment Total
supplies business business elimination
Revenue from 7749228480.18 9858174769.94 17607403250.12
foreign
transactions
Revenue from 16421999.56 76300858.12 92722857.68
inter-segment
transactions
Income from 1372107.60 1372107.60
investments in
associates and
joint ventures
Credit 2649450.85 -9663165.39 -7013714.54
impairment
losses
Asset -982839.16 -16108527.29 -17091366.45
impairment loss
Depreciation and 35886532.84 426349122.22 462235655.06
amortization
charges
Total profits 296666617.92 1565145973.86 409484.77 1861403107.01
(total losses)
Income tax 54681349.46 273023720.99 -102371.19 327807441.64
expenses
Net profits (net 241985268.46 1291917510.49 307113.58 1533595665.37
losses)
Total assets 3095362065.39 8350067519.96 21041655.02 11424387930.33
Total liabilities 2275177642.17 2646653638.04 20734541.44 4901096738.77
(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 descriptions
□ Applicable √ Not applicable
7. Other important transactions and matters that have an impact on investors' decisions
□ Applicable √ Not applicable
8. Others
□ Applicable √ Not applicable
227 / 237Annual Report 2021
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 129551588.15
1 to 2 years 2709211.72
2 to 3 years
Above 3 years
3 to 4 years
4 to 5 years
Above 5 years
Total 132260799.87
(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 132260799.87 100.00 4466584.10 3.38 127794215.77 181133866.23 100.00 3485066.58 1.92 177648799.65
accrued according to
the combination
Including:
Combination 1: 75785623.81 57.30 4466584.10 5.89 71319039.71 69701331.66 38.48 3485066.58 5.00 66216265.08
Account age analysis
combination
Combination III: 56475176.06 42.70 56475176.06 111432534.57 61.52 111432534.57
Related parties in the
scope of the
consolidated financial
statements
Total 132260799.87 / 4466584.10 / 127794215.77 181133866.23 / 3485066.58 / 177648799.65
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debt
provisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
(3). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Change of the current period
Category Opening balance Recovered or Resold or Other Closing balance
Accrued
reversed written-off changes
Combination 1: 3485066.58 981517.52 4466584.10
Account age
analysis
combination
Total 3485066.58 981517.52 4466584.10
228 / 237Annual Report 2021
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
Unit: Yuan Currency: RMB
Percentage (%) in the total Balance of bad debt
Company name Closing balance balance at the end of the period provisions at the end of
of accounts receivable the period
First 42063973.89 31.8
Second 12663274.18 9.57 633163.71
Third 6835241.86 5.17 341762.09
Fourth 6364489.64 4.81 318224.48
Fifth 5465480.41 4.13 273274.02
Total 73392459.98 55.48 1566424.30
Other descriptions
No
(6). Accounts receivable derecognized 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 35000.00
Dividend receivable
Other receivables 600504253.91 399643347.22
Total 600504253.91 399678347.22
Other descriptions:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
229 / 237Annual Report 2021
Time deposits
Entrusted loans 35000.00
Bond investment
Total 35000.00
(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
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 216245192.96
1 to 2 years 121411432.11
2 to 3 years 92280776.87
Above 3 years 172055312.40
3 to 4 years
4 to 5 years
Above 5 years
Less: Bad debt provisions -1488460.43
Total 600504253.91
(2). Particulars on classification by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount nature Carrying balance at the end of Carrying balance at the
the period beginning of the period
Personal loans and petty cash 1883898.16 1680200.77
Consolidated balance of related- 590726479.67 391720050.07
parties current accounts
230 / 237Annual Report 2021
Amount paid for materials 843752.96 174142.29
Consolidated balance of related- 1766952.16 1937167.34
parties current accounts -
provisional input tax
Margin and deposit 1855862.39 5383734.67
Others 4915769.00 3345941.78
Total 601992714.34 404241236.92
(3). Particulars on accruing of bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Phase 1 Phase 2 Phase 3
Expected credit loss Expected credit loss
Bad debt Expected credit for the entire for the entire Total
provisions losses in the duration (no credit duration (credit
next 12 months impairment impairment
occurred) occurred)
Balance as at 1 4597889.70 4597889.70
January 2021
Balance as at 1
January 2021 in
the current period
-- Transferred into
Phase 2
-- Transferred into
Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Accrued in the -3109429.27 -3109429.27
current period
Reserved in the
current period
Resold in the
current period
Written-off in the
current period
Other changes
Balance as at 31 1488460.43 1488460.43
December 2021
Particulars on significant changes in the carrying balance of other receivables with changes in the loss
provisions occurring in the current period:
√ Applicable □ Not applicable
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 next 12 duration (no credit duration (credit
months impairment impairment
occurred) occurred)
Balance as at 1
404241236.92404241236.92
January 2021
231 / 237Annual Report 2021
Balance as at 1
January 2021 in
the current period
-- Transferred
into Phase 2
-- Transferred
into Phase 3
-- Reversed into
Phase 2
-- Reversed into
Phase 1
Increase of the
403158817.53403158817.53
current period
Derecognition of
205407340.11205407340.11
the current period
Other changes
Balance as at 31
601992714.34601992714.34
December 2021
Amount of bad debt provisions accrued for the current period and the basis for assessing whether the credit
risk of financial instruments has 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 or Resold or Other
balance Accrued balance
reversed written-off changes
Combination 1: 4597889.70 -3109429.27 1488460.43
Account age
analysis
combination
Total 4597889.70 -3109429.27 1488460.43
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
Bad debt
the total balance at
Company provisions
Amount nature Closing balance Account age the end of the
name Closing
period of other
balance
receivables
First Consolidated 236033960.10 Within 1 year: 39.21
balance of RMB48658500
related-parties Above 1 year:
current accounts RMB187375500
232 / 237Annual Report 2021
Second Consolidated 119222002.29 Within 1 year: 19.80
balance of RMB2048500
related-parties Above 1 year:
current accounts RMB117373500
Third Consolidated 107458390.94 Within 1 year: 17.85
balance of RMB50459600
related-parties Above 1 year:
current accounts RMB56998800
Fourth Consolidated 40000000.00 Within 1 year 6.64
balance of
related-parties
current accounts
Fifth Consolidated 22000000.00 Within 1 year 3.65
balance of
related-parties
current accounts
Total / 524714353.33 / 87.15
(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
Closing balance Opening balance
Item Impairment Impairment
Carrying balance Carrying value Carrying balance Carrying value
provisions provisions
Investment to subsidiaries 1501648897.21 1501648897.21 1063812641.33 1063812641.33
Investments to associates 36512701.80 36512701.80 34722395.67 34722395.67
and joint ventures
Total 1538161599.01 1538161599.01 1098535037.00 1098535037.00
(1). Investment to subsidiaries
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Balance of
Impairment
Decrease of impairment
Increase of the provisions
Invested company Opening balance the current Closing balance provisions at
current period accrued in the
period the end of the
current period
period
Shanghai M&G 500227232.24 9336255.88 509563488.12
Colipu Office
Supplies Co. Ltd.Shanghai M&G 13288599.09 13288599.09
Zhenmei StationeryCo. Ltd.（上海晨光珍美文具有限公司）
Shanghai M&G 199419400.00 199419400.00
Stationery & Gift Co.Ltd.（上海晨光文具礼品有限公司）
233 / 237Annual Report 2021
M&G Life Enterprise 60000000.00 180000000.00 240000000.00
Management Co. Ltd.（晨光生活馆企业管理有限公司）
Shanghai M&G 30000000.00 30000000.00
Jiamei Stationery Co.Ltd.（上海晨光佳美文具有限公司）
Shanghai M&G 27500000.00 27500000.00
Information
Technology Co. Ltd.（上海晨光信息科技有限公司）
Shenzhen Erya 6339300.00 6339300.00
Creative and Cultural
Development Co.Ltd.（深圳尔雅文化创意发展有限公司）
Shanghai M&G 50000000.00 50000000.00
Information
Technology Co. Ltd.（上海晨光信息科技有限公司）
Axus Stationery 177038110.00 177038110.00
(Shanghai) Company
Ltd.Shanghai 28500000.00 28500000.00
Qizhihaowan Culture
and Creativity Co.Ltd.（上海奇只好玩文化创意有限公司）
Shanghai Chenxun 220000000.00 220000000.00
Enterprise
Management Co. Ltd.（上海晨讯企业管理有限公司）
Total 1063812641.33 437836255.88 1501648897.21
(2). Investments to associates and joint ventures
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Change of the current period Balance of
At the beginning Investment gains Adjustment to Declaration on At the end of the impairment
Investment Other Accruing of
of the period Additional Withdrawn and losses other distribution of period provisions at
Unit equity impairment Others
Balance investment investment recognized under comprehensive cash dividends Balance the end of the
changes provisions
the equity method income or profits period
I. Joint venture
Subtotal
II. Associate
Ningbo Zhongchen 29693097.54 1634406.40 418198.53 31745702.47
Equity Investment
Partnership (Limited
Partnership)
Shanghai Pen-making 5029298.13 -262298.80 4766999.33
Technology Services
Co. Ltd.Subtotal 34722395.67 1372107.60 418198.53 36512701.80
Total 34722395.67 1372107.60 418198.53 36512701.80
Other descriptions:
No
4. Revenue and operating costs
(1). Particulars on revenue 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
234 / 237Annual Report 2021
Main 4692104398.60 2568183955.45 4130671233.32 2164311904.18
operations
Other 83787431.99 866.69 65240228.87
operations
Total 4775891830.59 2568184822.14 4195911462.19 2164311904.18
(2). Particulars on revenue from contracts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Classification of contracts Total
Types of goods
1. Sales of goods 4692104398.60
2. Others 74881124.89
Classification by operation territory
1. China 4612272861.13
2. Other countries 154712662.36
Total 4766985523.49
Description on revenue from contracts
□ Applicable √ Not applicable
(3). Description on performance obligations
□ Applicable √ Not applicable
(4). Description on allocation to remaining performance obligations
□ Applicable √ Not applicable
Other descriptions:
Details on revenue:
Item Amount in the current Amount in the last
period period
Description on revenue from customer 4766985523.49 4190349929.22
contracts
Rental income 8906307.10 5561532.97
Total 4775891830.59 4195911462.19
5. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount accounted for in Amount accounted for in the
Item
the current period previous period
Long-term equity investment income
calculated by cost method
Long-term equity investment income 1372107.60 -1610614.02
accounted for under the equity method
Investment income from disposal of long-
term equity investment
Investment income from held-for-trading
financial assets during the holding period
Dividend income from other equity
instrument investments during the holding
period
235 / 237Annual Report 2021
Interest income from debt investment
during the holding period
Interest income from other debt investments
during the holding period
Investment income from disposal of held- 4067412.24 4763925.06
for-trading financial assets
Investment income from disposal of other
equity instrument investments
Investment income from disposal of debt
investment
Investment income from disposal of other
debt investments
Gains from debt restructuring
Total 5439519.84 3153311.04
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
6098090.22 Compensation for land
Gains or losses on disposal of non-current
expropriation by the
assets
Government
Government subsidies included in the profits 163887877.43 Mainly including government
and losses of the current period (except those subsidies received during the
closely related to the Company's business Reporting Period and
and of fixed amount or fixed quantity granted government subsidies
in accordance with national uniform transferred from deferred
standards) income
Investment income arising from changes in 43557663.15 Revenue generated from
fair values held-for-trading financial assets purchase of wealth
derivative financial assets held-for-trading management products
financial liabilities and derivative financial
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
20000000.00 Mainly due to the provision
Reversal of provision for impairment of
reversal of bad debts on
receivables and contractual assets which are
individual receivables of
individually tested for impairment.M&G Colipu
-11127909.82 Mainly including the
expenditure of charity
Other net non-operating income and
donations and the loss
expenses other than the above items
generated by scrapping part of
the old equipment
236 / 237Annual Report 2021
Minus: Effect of income tax 33537580.85
Effect of minority equity 20550381.69
Total 168327758.44
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
Earnings per share
Profits during the Reporting Weighted average
Basic earnings per Diluted earnings per
Period ROE (%)
share share
Net profit attributable to 26.82 1.6450 1.6425
ordinary shareholders of the
company
Net profit attributable to 23.84 1.4623 1.4603
ordinary shareholders of the
company after deducting 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
Chairman: Chen Huwen
Date of report and submission approved by the Board of Directors: 25 March 2022
Revision information
□ Applicable √ Not applicable
