Section I Important Notice, Contents and Interpretation
The Board of Directors and the Board of Supervisors of the Company and its directors,
supervisors and senior management warrant that the information contained in this report is
truthful, accurate and complete and there are no false presentations or misleading statements
contained in, or material omissions from, this report, and that they assume severally and
jointly legal liability.
Declaration by Deng Yingzhong, legal representative, Dong Ye, person in charge of accounting,
and Xu Xianjing, person in charge of accounting department of the Company warrant that
the information contained in this report is truthful, accurate, and complete.
All directors attended the meeting of the Board of Directors where this report was reviewed.
Any discrepancy between the total number and the sum of sub-items in this report is caused
by rounding off.
This report may involve forward-looking statements on the Company's plan which by no
means constitute any substantive commitment by the Company for investors. Investors are
advised to be aware of investment risks.
I. Risk of Great Fluctuations in Pulp Prices
Pulp, as an international bulk raw material, is subject to the global economic cycle.
Pulp prices have tumbled sharply since 2019, owing to weaker Chinese market demand, trade
disputes across the world, exchange rate movement, and increased pulp inventories. Besides,
such prices continued to fall with fluctuations in the first half of 2020.
The primary raw material of the Company is pulp, accounting for 40%-60% of the total
production costs. Therefore, the above situation poses a risk of great fluctuations in pulp
prices to the Company.
II. Currency Risk
Imported machinery equipment and pulp plus exported products of the Company are mainly
settled in USD, HKD, and EUR. Since exchange rates are affected by the international
economic situation, the Company faces exchange rate risks.
III. Regional Market Competition Risk
Household paper is a vast market in China in terms of both geography and market space.
The main competition in the household paper industry lies in regional markets, given the low
unit value, transportation expenses taking up a large part of the sales price, and limitations of
the transportation radius. Additionally, high-end, mid-end, and low-end products compete in
regional markets, as influenced by spending power and consumption habit. In regard to the
development trend of the industry, mid- and high-end household paper of national brands is
more competitive. However, a handful of regional brands have an advantage in some regional
markets. China's household paper industry requires continued integration, compared with
overseas counterparts.
The Company embraces production bases and a sales network across the country and offers
mid- and high-end products under national brands. Nevertheless, it is inescapable from the
risk of regional market competition.
IV. Industrial Policy Risk
Stricter requirements have been raised for the papermaking industry in the aspects of scale,
technology, equipment, and environmental protection, as multiple industry plans, such as the
Papermaking Industry Development Policy, the Notice on the Management of Pollution
Discharge License for Thermal Power and Papermaking Industries and High Chimney Emission
Sources in Pilot Cities in Beijing-Tianjin-Hebei Region, and the Opinions of China Paper
Association on "Thirteenth Five-year" Development Plan of Papermaking Industry, as well as
supporting policies successively issued by relevant departments. Particularly, a number of
measures have been introduced through environmental protection policies to drive the
all-round, coordinated, and sustainable development of the household paper industry,
including: 1) optimizing the industrial distribution to reasonably allocate resources and
promoting clean production to preserve the ecological environment; 2) pushing energy
conservation and emission reduction to shut down outdated production facilities, and
adjusting product structure and improve product quality; and 3) developing resource-saving
models to advocate green consumption, and optimizing enterprise structure and drive M&A
and restructuring. These policies are designated to strengthen household paper industry
concentration, close backward production facilities, and optimize resource allocation. The
Company, as an enterprise in the first echelon of the domestic household paper industry, is
underpinned by national policies related to the sustainable development of the household
paper industry. Precisely because of this, industrial policy adjustment, if any, will impact the
production and operations of the Company, to some extent.
V. Safe Production Risk
Most of the materials involved in the household paper industry are flammable, including the
main raw material of pulp, the main packing materials of plastic-film packing bags and
cartons, the semi-finished product of body paper, and finished products.
Due to the characteristics of low unit value and large market consumption, household paper
manufacturers have to keep a mass of pulp, packing materials, and semi-finished and finished
products from the entry of raw materials to the plant to the delivery of products to the market.
Thus, fire can cause enormous losses to such manufacturers.
In view of this, the Company has formulated strict fire protection policies for the warehouse
management of raw materials and finished products and the placement and transfer of
semi-finished products, equipped workshops and warehouses with adequate fire protection
equipment, and bought full insurance for risky properties. Even so, it still faces safe
production risks.
VI. Logistics Transportation Risk
The spread of the COVID-19 pandemic since the beginning of 2020 has hindered domestic
and foreign logistics transportation by sea and land to varying degrees, affecting both the
Company's procurement and sales and upstream suppliers and downstream dealers. In other
words, the Company has suffered from multiple dimensions. Risks are unavoidable for the
Company at the mid- and downstream of the household paper industry chain, though impacts
of the pandemic are phased and temporary.
"X. Risks and Countermeasures" in "Section IV Discussion and Analysis of Operation
Status" in this report is devoted to elaborated on possible risks and countermeasures of the
Company. Investors are advised to pay attention to the relevant contents.
The Company plans not to distribute cash or share dividends or convert capital reserve to
share capital.
Table of Contents
Section I Important Notice, Contents and Interpretation ........................................................... 1
Section II Company Profile and Key Financial Indicators.......................................................... 5
Section III Business Overview ...................................................................................................... 8
Section IV Discussion and Analysis of Operation Status ........................................................... 12
Section V Important Events........................................................................................................ 22
Section VI Equity Changes and Shareholders ........................................................................... 48
Section VII Details of Preference Shares.................................................................................... 55
Section VIII Convertible Corporate Bonds................................................................................ 56
Section IX Profiles of Directors, Supervisors, and Senior Management................................... 57
Section X Corporate Bonds ........................................................................................................ 59
Section XI Financial Report ....................................................................................................... 60
Section XII Catalog of Documents for Reference .................................................................... 181
Definitions
Term Means Definition
The Company,Company,issuer, Means C&S Paper Co., Ltd.
joint-stock company,C&S
Zhongshun Group Means Guangdong Zhongshun Paper Group Co., Ltd.
Hong Kong C&S Means Chung Shun Co. is a Hong Kong-based company.
Zhongshun Trading, Zhongshan Means Zhongshan Zhongshun TradingCo., Ltd.
Trading
Zhong Shun International Means Zhong Shun International Co., Ltd. is a Hong Kong-based
company.
C&S Hong Kong Means C&S Hong Kong Co., Ltd. isa Hong Kong-based
company.
Beijing C&S Means Beijing C&S Paper Co., Ltd.
Xiaogan C&S Means XiaoganC&S TradingCo., Ltd.
Chengdu C&S Means Chengdu Zhongshun Paper Co., Ltd.
Hangzhou JieRou Means Hangzhou JieRou TradingCo., Ltd.
Shanghai Huicong Means Shanghai Huicong Paper Co., Ltd.
Sichuan C&S, ChengduTiantian Means C&S (Sichuan) Paper Co., Ltd.,formerlyknown as
ChengduTiantianPaper Co., Ltd.
Jiangmen Jie Rou Means Jiangmen C&S Paper Co., Ltd.
Jiangmen C&S Means Jiangmen Zhongshun Paper Co., Ltd.
Zhejiang C&S Means Zhejiang Zhongshun Paper Co., Ltd.
Hubei C&S Means C&S (Hubei) Paper Co., Ltd., formerlyknown as Hubei
ZhongshunHongchang Paper Co., Ltd.
YunfuC&S Means C&S (Yunfu)Paper Co., Ltd.
YunfuTrading Means C&S (Yunfu)TradingCo., Ltd.
Tangshan Branch, TangshanC&S Means C&S Paper Co., Ltd.TangshanBranch
Zhongshan Jie Rou Paper Means C&S (Zhongshan) Paper Co., Ltd., formerlyknown as
ZhongshanTongfuTradeCo., Ltd.
Macao C&S Means C&S (Macao) Co., Ltd.
Dazhou C&S Means C&S (Dazhou) Paper Co., Ltd.
Sun C&S Means Sun Daily Necessities Co., Ltd.
Section II Company Profile and Key Financial Indicators
I. Company Profile
Stock name C&S Stockcode 002511
Stock exchange ShenzhenStockExchange
Chinese nameofthe C&SPaperCo., Ltd.
company
Chinese abbreviationofthe C&S
company (ifany)
English nameofthe C&SPaperCo., Ltd.
company (ifany)
English abbreviationofthe C&S
company (ifany)
Legal representative DengYingzhong
II. Contact and Contact Information
Board secretary Representativeofsecuritiesaffairs
Name ZhouQichao CaoHui
Address 136CaihongAvenue,WestDistrict, 136CaihongAvenue,WestDistrict,
Zhongshan City ZhongshanCity
Tel. 0760-87883333 0760-87883333
Fax 0760-23886886 0760-23886886
Email seven.zhou@cs-paper.com huicao@cs-paper.com
III. Other Information
1. Company contact
Whether the registered and office addresses and their post codes, official website, and email of the
Company were changed during the reporting period
□ Applicable √ Inapplicable
The registered and office addresses and their post codes, official website, and email of the Company
were not changed during the reporting period. See the 2019 Annual Report for details.
2. Information disclosure and place where financial statements are kept
Whether information disclosure and the place where the semi-annual report is kept were changed
during the reporting period
□ Applicable √ Inapplicable
The newspapers selected by the Company for information disclosure, the websites designated by the
China Securities Regulatory Commission (CSRC) for publishing the semi-annual report, and the
place where the semi-annual report is kept were not changed during the reporting period. See the
2019 Annual Report for details.
3. Other relevant information
Whether other relevant information was changed during the reporting period
√ Applicable □ Inapplicable
The Company changed matters of industrial and commercial registration during the reporting
period.
(1) The business cope was expanded from "R&D, production, processing, and sales (including
online sales): High-end household paper series products, tissue boxes, sanitation supplies, cosmetics,
non-woven products, and daily necessities (limited to plastic products for daily use, chemicals for
daily use, metalware for daily use, rubber products for daily use, and ceramics for daily use). Pulp
import and export" to "R&D, production, processing, and sales (including online sales): High-end
household paper series products, tissue boxes, sanitation supplies, cosmetics, non-woven products,
daily necessities (limited to plastic products for daily use, metalware for daily use, rubber products
for daily use, and ceramics for daily use), and chemicals for daily use (excluding hazardous
chemicals), Class I medical devices. Pulp import and export (excluding state trading commodities;
products in the quota system or requiring a license are applied for in line with relevant national
regulations). Operations and production of Class II and III medical devices (involving the
production of medical devices and cosmetics)".
(2) The registered capital was changed from "RMB1,306,099,573" to "RMB1,308,891,273". See
the Announcement on the Completion of Industrial and Commercial Registration Amendment of
Company and Partially-owned Subsidiaries (Announcement No.: 2020-19) published on March 31,
2020, in the designated media for information disclosure, namely, Securities Times (STCN,
www.stcn.com), China Securities Journal (www.cs.com.cn), Securities Daily (www.zqrb.com),
Shanghai Securities News (www.cnstock.com), and CNINFO (www.cninfo.com.cn).
IV. Main Accounting Data and Financial Indicators
Whether the Company needs to perform retrospective adjustment or restatement of accounting data
for previous years
□ Yes √ No
Currentreportingperiod Sameperiodlastyear YoYchanges
Operating income(RMB) 3,616,201,399.80 3,172,389,026.96 13.99%
Net profitattributableto
shareholders oflistedcompanies 452,699,484.61 274,874,634.43 64.69%
(RMB)
Net profitattributableto
shareholders oflistedcompanies 446,535,737.96 269,657,245.92 65.59%
less non-recurringprofitandloss
(RMB)
Net cashflowsfromoperating 504,558,588.33 734,985,638.36 -31.35%
activities (RMB)
Basic earningspershare 0.3519 0.2162 62.77%
(RMB/share)
Diluted earningspershare 0.3462 0.2156 60.58%
(RMB/share)
Weighted averagereturn onnet 10.46% 7.90% 2.56%
assets
End ofthecurrent Changesinthecurrent
reportingperiod Endoflastyear reportingperiodfromthe
endoflastyear
Total assets(RMB) 6,612,703,642.31 6,026,271,823.64 9.73%
Net assetsattributableto
shareholders oflistedcompanies 4,532,240,640.94 4,077,004,459.23 11.17%
(RMB)
V. Differences between Accounting Data Disclosed under Domestic and Overseas Accounting
Standards
1. Differences in net profit and net assets between the financial statements disclosed under the
IAS and the PRC GAAP
□ Applicable √ Inapplicable
The Company did not have any differences in net profit and net assets between the financial
statements disclosed under the IAS and the PRC GAAP during the reporting period.
2. Differences in net profit and net assets between the financial statements disclosed under
overseas accounting standards and the PRC GAAP
□ Applicable √ Inapplicable
The Company did not have any differences in net profit and net assets between the financial
statements disclosed under overseas accounting standards and the PRC GAAP during the reporting
period.
VI. Items and Amounts of Non-Recurring Profit and Loss
√ Applicable □ Inapplicable
Unit: RMB
Item Amount Remarks
Profit andlossfromdisposalofnon-currentassets
(including theoffsetportionwithprovisionsforasset -896,870.05
impairment alreadysetaside)
Government grantsmeasuredatfairvaluethroughprofit
and lossofthecurrentperiod(exceptforthegovernment
grants thatarecloselyrelatedtotheCompany'sbusiness 16,474,867.62
and distributedinafixquotaoramountinaccordancewith
unified nationalstandards)
Returns onprincipal-protected
Profit andlossfromassetsentrustedto othersfor 2,287,274.87wealthmanagementproductsat
investment ormanagement maturityandreverserepoof
treasury bonds
Other non-operatingexpensesexcludingtheaboveitems -11,371,164.42
Less: Influenceofincometax 330,361.37
Total 6,163,746.65 --
The reasons why the Company defined certain items as non-recurring profit and loss in line with the
No. 1 Explanatory Announcement on Information Disclosure of Companies Offering Securities to
the Public—Non-recurring Profit and Loss and some items listed in the above announcement as
recurring profit and loss shall be specified.
□ Applicable √ Inapplicable
The Company did not define any non-recurring profit and loss defined or listed in the No. 1
Explanatory Announcement on Information Disclosure of Companies Offering Securities to the
Public—Non-recurring Profit and Loss as recurring profit and loss.
Section III Business Overview
I. Main Businesses of the Company during the Reporting Period
The Company's main businesses include R&D, production, processing, and sales (including online
sales): High-end household paper series products, cotton tissues, and personal care products.
The Company features three major brands, namely, Jie Rou, Sun, and Dolemi, and two main
products, that is, household paper and personal care products. Specifically, its products fall into
seven major categories, including centerfeed rolls, coreless rolls, facial tissues, tissue handkerchiefs,
wipes, cotton tissues, and personal care products. Main information on its products is as follows:
i. Household paper
1. Face Series: Face tissue handkerchiefs adopts unique papermaking processes. They remain pliable
even when they are wet and can be used as a face towel. Face tissue handkerchiefs is a knock-out
product under the brand of Jie Rou. Based on constant quality upgrading, the newly developed
four-layer thick facial tissues are pliable and thick. One piece of this facial tissue is as thick as two
pieces of average tissues. Moreover, its exquisite and fashionable knurling make user experience
better.
2. Lotion Series: Lotion water retention facial tissues are characterized by the skin-friendly lotion and
moisturizing factor. They feel soft and smooth, thanks to the water retention function. This product is
especially suitable for delicate skin and applicable to mothers and infants, people with nasal allergy,
and people wearing makeup.
3. Natural Wood Series: The Company launched the first noble yellow tissues (with low whiteness),
"Jie Rou Natural Wood Series" in 2018, based on the consumption concepts of health and safety. Its
soft and pliable texture is attributable to 100% imported raw wood pulp. Quality of the whole series is
superb.
4. Cotton Tissue Series:
"Cotton Tissue" products: The products feature 100% fresh cotton, complete physical processes, and
unbleached tissues. As they are soft, thick, and skin-friendly. They can be used, dry and wet. Besides,
they can be used for personal cleaning and care as cotton pads and face towels, especially infants and
women.
Absorbent towels: These products are made from 100% cotton, soft and skin-friendly. They can
quickly absorb sweat and leave your skin dry and comfortable. Additionally, the absorbent towels
are mild, non-stimulating, and natural. They are an optimal choice for delicate skin.
5. Sun Series: The Company re-activated the brand, Sun, in 2019 in order to accelerate the coverage
of high-, mid-, and low-end household paper markets in China and satisfy consumption needs at
different levels. Sun is positioned to be a highly cost-effective product that has better quality yet
lower prices and faces over 60% of the mid- and low-end markets in China. Moreover, it is the key to
raise the market share of the Company.
6. Jin Zun Series: Jin Zun products are made from 100% imported raw wood pulp, thick, pliable, and
cost-effective.
7. Wipes:
Kitchen wipes: Quality and thick pearl non-women cloth is used to produce the soft and pliable
kitchen wipes. It has an enhanced effect of deoiling and cleaning. Additionally, coconut oil extract
is added to protect your hands.
Baby wipes: The products have passed oral mucous and skin irritating tests. Featuring a mild
formula, they are suitable for babies.
Portable wipes: These products are made from thickened spunlace non-woven cloth, so they are
thick. One piece of this wipe is as thick as two pieces of average wipes. They are mild and free from
alcohol, pigments, and fluorescent agents.
Makeup removal wipes: The products are mild and free from alcohol or migrating fluorescent
brighteners. They have passed the skin irritating test. They are rich in Honeysuckle Flower and
Chamomilla Recutita Flower extracts. While removing your makeup, they can care for your skin.
Your skin will feel refreshing and moisturizing after makeup removal.
Toilet wipes: These products are natural, mild, and alcohol-free. They have a weakly acidic formula.
They have passed vagina mucosa and skin irritating tests. They can effectively remove odor and
care for your skin.
Disinfectant wipes: These products feel soft and comfortable and are free from migrating
fluorescent brighteners. They are made from 100% cotton non-woven cloth. With the alcohol-based
formula, the wipes have an effective cleaning and disinfection effects. You will feel more assured
because of quick volatilization.
ii. Personal care products
Dolemi Series: In June 2019, the Company launched a new personal care brand, Dolemi, to cater
for upgrading consumption. The surface of Dolemi products is made from cotton. They are
characterized by two-way air circulation. They are elastic, soft, and fit. Thanks to the good air
circulation, you will feel at ease. They enable the women pursuing better quality of life to
experience "thin pads and get rid of side leakage".
Facial masks: In quick response to the pandemic, the Company started to produce and sell facial
masks to address the shortage of facial masks in March 2020. Its products include facial masks for
adults and children. The three-layer facial masks can filter over 95% of bacteria so as to better
protect consumers.
The Company has always centered on consumer needs and value user experience. As an enterprise
in the first echelon of the domestic household paper industry, it has gathered top R&D talent,
embraced outstanding and independent R&D technology, and featured industry-leading innovation
capabilities. The Company keeps offering better and more diversified products by acclimating the
consumption trend and satisfying multi-level and diversified needs.
II. Major Changes in Main Assets
1. Major changes in main assets
Main assets Majorchanges
Equity assets Therewerenomajorchangesduringthereportingperiod.
Property andequipment Therewerenomajorchangesduringthereportingperiod.
Intangible assets Therewerenomajorchangesduringthereportingperiod.
Construction workin progress Therewerenomajorchangesduringthereportingperiod.
2. Main overseas assets
□ Applicable √ Inapplicable
III. Analysis of Core Competitiveness
1. Included in the first echelon of the domestic household paper industry
The Company is a top-performing enterprise in the first echelon of the domestic household paper
industry. Besides, it is the first and only A-share listed household paper enterprise in China with
products sold at home and abroad including Southeast Asia, the Middle East, and Europe.
2. Constantly optimized product structure
The Company boasts three major brands, namely, Jie Rou, Sun, and Dolemi. Its current brand
positioning is: High-end Life, High-grade Jie Rou. Its products primarily fall into seven major
categories, including centerfeed rolls, coreless rolls, facial tissues, tissue handkerchiefs, wipes,
cotton tissues, and personal care products. The brands are superior in quality, taste, and category.
Furthermore, the Company has continuously optimized its product structure and raised the
proportion of high-end and high-gross profit products and non-roll categories. In addition, it has
strengthened the sales of major series like Face, Lotion, and Natural Wood, formulated distribut ion
standards for each major channel, raised the market share in each channel, and continuously
improved gross profit and profitability.
3. Stable and effective management team
The R&D, production, procurement, sales, quality control, and operation teams have successively
attracted excellent professionals since 2014. At present, the Company features the most outstanding
R&D, production, and sales teams. Its product R&D and quality and marketing management have
been effectively reinforced. The management team of the Company has formulated long-term and
strategic plans in line with actual situation of the Company, industry development level, and market
demand. Moreover, it has made reasonable decisions on operation management, covering R&D,
production, marketing, investment, and financing, and effectively implemented such decision. The
excellent management team is the fundamental guarantee of maintaining competitiveness and
achieving sustainable development in the future.
4. Nationwide marketing network
The Company has been building and improving its marketing networks based on its keen and
strategic insights and reasonable layout. The Company has enhanced its profitability by expanding
its channels from a single dealer channel in 2015 to six channels, namely, GT (general trade
channels), KA (key account channels), AFH (away from home channels), EC (e-commerce
channels), RC (new retail channels), and SC (maternal and infant channels). Its current marketing
network covers most of the prefecture-level (and county-level) cities. Products are directly sold to
counties and then distributed to towns. The Company has adopted a segmented and flat market
operation method and expanded the dealer network.
Furthermore, the Company has devoted more resources to e-commerce platforms, such as Tmall,
Taobao, JD, Vipshop, Suning, and Pinduoduo and built and improved the corresponding supply
chain system. Meanwhile, it has intensified its routine operation management and formed a
professional e-commerce operation team. In addition, it has developed an AFH service team for
AFH channels and customer bases to match the growing AFH market. The Company has constantly
consolidated its market basis, improved consumer experience, and enhanced brand reputation,
attributable to a robust sales network and quality and diversified products, in order to achieve future
sustainable and stable growth.
5. Nationwide layout of production bases
The Company has developed a production layout covering East China, South China, West China,
North China, and Central China, through its subsidiaries, including Jiangmen C&S, Yunfu C&S,
Sichuan C&S, Zhejiang C&S, Hubei C&S, and Tangshan Branch. Thanks to the nationwide layout
of production bases, the Company has narrowed the distance to customers, reduced transportation
costs, and enhanced transportation efficiency.
6. Product quality at an international level
The Company has always regarded product quality as its lifeline of survival and development, since
its incorporation. First-class quality derives from first-class raw materials. Raw materials of the
Company have passed the ISO quality management system certification. Besides strict feed
inspection procedures, it has introduced HACCP food hygiene and safety management system to
control the hygiene and quality of products from the source. Moreover, its products have passed
ISO9001 quality management system certification which is the strictest detecting system for
product quality. Meanwhile, the Company has observed internationally advanced quality
management system standards and utilized advanced processes, formulas, and control procedures to
ensure each technical performance indicator.
7. Good R&D capabilities
Along with the emergence of modern lifestyle, the range of application of household paper has been
increasing. Household paper has become a daily necessity. People are enjoying the comfort brought
by such products. The Company features a complete product development system. Its R&D
departments embrace strong and independent R&D capabilities and outstanding formulas and
processes. Recently, the Company has been launching new brands, such as Face, Lotion, Natural
Wood, cotton tissues, and personal care products, and gained a leading position in the industry.
8. First-class production equipment
The Company drives development via technology. It has introduced advanced papermaking and
processing equipment from countries and regions like Austria, Germany, Italy, Japan, South Korea,
and Taiwan. Advanced technology and highly automatic equipment have strengthened the
Company's efficiency, further satisfied the ever-growing market demand, and served as an
unstoppable driving force to development.
9. High awareness and technology of environmental protection
Along with the development of industrialization, the concept of environmental protection has been
deeply rooted among the people. The Company has adhered to the concept of "seeking green
benefits, fulfilling corporate social responsibilities" and utilized advanced environmental protection
technology to pursue its objective of environmental protection. Its emissions, such as waste water
and gas, are superior to the national standards and industry-leading.
Section IV Discussion and Analysis of Operation Status
I. Overview
The COVID-19 pandemic exerted a short-term influence on the procurement, production, and sales of
the household paper industry in the first half of 2020. Nevertheless, the Company rapidly responded
at the beginning of the outbreak and converted challenges to opportunities, by resuming production
early and routine operations at the fastest rate. Meanwhile, the Company has upheld its core strategies
and operation objectives. It improved results and profit steadily by adopting effective measures,
including expanding categories and channels and accelerating marketing and promotion. In H1 2020,
it recorded operating income of RMB3,616 million with a YoY increase of 13.99% and net profit
attributed to the listed company of RMB453 million, up by 64.69% YoY. Key tasks of the Company
are reviewed below:
1. Expansion of product categories to drive sales
Consumption habits changed amid the pandemic during the reporting period. The Company quickly
adapted to the consumption trend, continuously enriched its channels, launched new products like
facial masks, disinfectant wipes, hand sanitizers, and mouth wash to effectively raise its brand
effect and seized another profit growth point. Favorable sales results during the reporting period
promoted the continuous improvement in the operating results.
2. Constant optimization of product structure + improvement of channels to push steady
growth in sales
During the reporting period, the Company accelerated to introduce new and key products,
constantly raised the proportion of high-gross margin products, and further optimized its product
structure. In addition, it actively adapted to changes, kept optimizing its marketing system, and
stimulated online consumption growth despite the pandemic. Meanwhile, it invested more resources
in the layout and development of online business and exerted great efforts to improve other
channels. Favorable results were achieved in all channels during the reporting period. The
Company's gross margin in household paper reached 46.19%, making it the top enterprise in the
domestic household paper industry.
3. Increase in gross margin thanks to the decrease in international pulp prices
The price of pulp, the main raw material of the Company, declined during the reporting period. As a
result, the Company's production costs decreased, while its gross margin and profitability increased.
4. Employee enthusiasm boosted by the first release period of unlocking/exercising of the firstly
granted portion of the stock incentive plan
During the reporting period, the Company successfully unlocked the restricted stock in the first
unlock period and exercised the stock option in the first exercise period of the firstly granted portion
of the 2018 Stock Option and Restricted Stock Incentive Plan. 5,593,428 shares of the restricted
stock were unlocked, while the number of vesting stock options was 3,431,505 shares. Employees
enjoyed the development dividends of the Company through the unlock/exercise. They were
motivated to add value to work. The unlock/exercise laid a solid foundation for the sustainable and
stable development of the Company.
5. Fulfillment of corporate social responsibilities and demonstrating the corporate culture as a
top-performing enterprise
Amid the pandemic, the Company, as a leading enterprise in the household paper industry,
vigorously fulfilled its corporate social responsibilities and quickly donated RMB10.80 million in
cash and disinfectant wipes and other household paper products worth RMB500,000 to support
pandemic prevention and control. Moreover, it contributed to fighting against the pandemic by
donating over one million pieces of surgical masks and over 5,000 pads for women to front-line
medical institutions.
II. Analysis of Main Businesses
Overview
See "I. Overview" in "Discussion and Analysis of Operation Status" for details.
YoY changes in main financial data
Unit: RMB
Current reporting Sameperiodlast YoY Reasonofchange
period year changes
Operating income 3,616,201,399.80 3,172,389,026.96 13.99%
Operating cost 1,931,406,918.16 2,008,336,231.02 -3.83%
Sellingexpensesroseby
RMB240,301,801.11or39.54%duringthe
reportingperiodfromthesame periodlast
Selling expenses 848,071,082.60 607,769,281.49 39.54%year,mainlybecause:First,thesalesrevenue
increased.Second,theCompanykeptraising
itsmarketinput,exertedgreateffortsfor
promotion,andexpandedthesalesnetwork.
Duringthereportingperiod,management
costswereupbyRMB58,914,203.79or
Administrative 185,701,854.01 126,787,650.22 46.47%46.47%YoY,mainlyduetotheincreasein
expenses expensesincurredfromshare-based payment,
payroll,anddepreciationandamortization
expenses.
Duringthereportingperiod,management
costsweredownbyRMB15,846,425.64or
Finance expenses -1,022,002.23 14,824,423.41 -106.89%106.89%YoY,mainlyduetothedecreasein
bankinterestexpensesandincreasein
exchangegain.
Duringthereportingperiod,management
Income taxes 85,783,253.92 63,045,961.23 36.06%costswereupbyRMB22,737,292.694or
36.06%YoY,mainlyduetotheincreasein
totalprofit.
Duringthereportingperiod,management
Investment in 90,860,828.24 64,040,654.87 41.88%costswereupbyRMB26,820,173.37or
R&D 41.88%YoY,mainlyduetotheincreasein
R&Dexpenses.
Netcashflowsfromoperatingactivities:
Net cashflows Duringthereportingperiod,it declinedby
from operating 504,558,588.33 734,985,638.36 -31.35%RMB230,427,050.03or31.35%fromayear
activities earlier,primarilyattributabletoincreased
paymentfor materialsandtaxes.
Netcashflowsfrominvestingactivities:
Net cashflows Duringthereportingperiod,it increasedby
from investing -241,861,919.70 -357,270,668.08 32.30%RMB115,408,748.38or32.30%fromayear
activities earlier,primarilyattributabletodecreased
paymentforengineeringequipment.
Net cashflows Netcashflowsfromfinancingactivities:
from financing -45,815,658.83 -173,684,376.51 73.62%Duringthereportingperiod,it increasedby
activities RMB127,868,717.68or73.62%fromayear
earlier,primarilyattributabletoincreased
paymentforloanproceedsreceivedand
decreasedrepaymentforloans.
Net increasein
cash andcash 220,436,993.67 203,573,288.77 8.28%
equivalents
Any major changes in the profit composition or profit source of the Company during the reporting
period
□ Applicable √ Inapplicable
No major change occurred in the profit composition or profit source of the Company during the
reporting period.
Composition of operating income
Unit: RMB
Currentreportingperiod Sameperiodlastyear
Amount Proportionagainst Amount Proportionagainst YoYchanges
operatingincome operatingincome
Totaloperating 3,616,201,399.80 100% 3,172,389,026.96 100% 13.99%
income
By Industry
Household 3,533,490,254.91 97.71% 3,117,352,958.19 98.27% 13.35%
paper
Personal care 67,214,587.03 1.86% 419,218.91 0.01% 15,933.29%
Others 15,496,557.86 0.43% 54,616,849.86 1.72% -71.63%
By Products
Finished 3,595,014,915.99 99.41% 3,103,060,788.64 97.82% 15.85%
products
Semi-finished 5,689,925.95 0.16% 14,711,388.46 0.46% -61.32%
products
Others 15,496,557.86 0.43% 54,616,849.86 1.72% -71.63%
By Regions
Chinese 3,522,252,149.36 97.40% 3,104,647,040.29 97.86% 13.45%
mainland
Overseas 93,949,250.44 2.60% 67,741,986.67 2.14% 38.69%
Industries, products, or regions that accounted for over 10% of the Company's operating income or
operating profit
√ Applicable □ Inapplicable
Unit: RMB
Operating Grossprofit YoYchanges YoYchanges YoYchanges
income Operatingcost margin inoperating inoperating ingross
income cost margin
By Industry
Household 3,533,490,254.911,901,531,921.16 46.19% 13.35% -2.85% 8.98%
paper
By Products
Finished 3,595,014,915.991,913,451,891.52 46.77% 15.85% -1.57% 9.42%
products
By Regions
Chinese 3,522,252,149.361,883,003,659.17 46.54% 13.45% -3.82% 9.60%
mainland
For changes in the statistical caliber for the main business data during the reporting period, the
Company was subject to the main business data for the current period according to the year-end
statistical caliber.
□ Applicable √ Inapplicable
Explanation for +30% deviation YOY of relevant data
□ Applicable √ Inapplicable
III. Analysis of Non-main Businesses
√ Applicable □ Inapplicable
Unit: RMB
Proportion Isitconsistently
Amount againsttotal Cause applied?
profit
Returns onprincipal-protectedwealth
Investment income 2,287,274.87 0.42%managementproductsat maturityand No
reverse repo oftreasurybonds
Profit andlossfrom 0.00 0.00%
changes infairvalue
Asset impairment -850,381.40 -0.16% Provisionforimpairmentofinventories No
Non-operating 3,169,241.16 0.59%Governmentgrants,incomefromfineand No
income compensation,andothers
Non-operating 13,240,183.16 2.46%Externaldonationsandothers No
expense
IV. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: RMB
Endofthecurrentreporting Endofthesamereporting
period periodlastyear Changes
Proportion Proportion in Explanation
Amount against Amount againsttotal proportion
totalassets assets
Monetary fundsroseby
RMB299,023,048.61 or
47.13% attheendofthe
current reportingperiod
Monetary 933,473,976.97 14.12% 634,450,928.36 11.34% 2.78%fromayearearlier,mainly
funds owingtotheincreasein
the balanceatthe
beginning ofthecurrent
report fromthesame
period lastyear.
Accounts 822,077,129.81 12.43% 726,655,599.93 12.99% -0.56%
receivable
Monetary fundsroseby
RMB289,922,434.23 or
32.61% attheendofthe
current reportingperiod
Inventory 1,178,918,505.39 17.83% 888,996,071.16 15.89% 1.94%fromayearearlier,mainly
owing tothe increasein
raw materialsofthe
current reportfromthe
same periodlastyear.
Investment 35,336,048.69 0.53% 34,753,136.68 0.62% -0.09%
property
Long-term
equity 0.00 0.00% 0.00 0.00% 0.00%
investment
Property and 2,907,864,726.86 43.97%2,633,132,265.18 47.06% -3.09%
equipment
Monetary fundsdecreased
by RMB274,497,431.18
or 92.50%attheendof
Construction thecurrentreporting
work in 22,256,470.46 0.34% 296,753,901.64 5.30% -4.96%periodfromayearearlier,
progress mainlyowingtothe
decrease inconstructionin
progress ofthecurrent
report fromthesame
period lastyear.
Short-term 161,860,368.50 2.45% 215,135,598.86 3.84% -1.39%
loans
Monetary fundsdecreased
by RMB24,000,000.00or
100.00% attheendofthe
Long-term currentreportingperiod
loans 0.00 0.00% 24,000,000.00 0.43% -0.43%fromayearearlier,mainly
owing to prepaymentof
long-term borrowingsof
the currentreportfromthe
same periodlastyear.
2. Assets and liabilities measured at fair value
□ Applicable √ Inapplicable
3. Restriction of main assets and rights as at the end of the reporting period
Item Closingbookvalueoftheperiod Reasonforrestriction
(RMB)
Monetary funds 37,040,130.33Margins forletterofcreditandnotes
wereissued.
Total 37,040,130.33
V. Analysis of Investment
1. Overview
√ Applicable □ Inapplicable
Investment amountduringthe Investmentamountofpreviousyear Changes
reporting period(RMB) (RMB)
401,314,982.57 358,177,083.79 12.04%
2. Major equity investment during the reporting period
□ Applicable √ Inapplicable
3. Major non-equity investment during the reporting period
□ Applicable √ Inapplicable
4. Financial assets measured at fair value
□ Applicable √ Inapplicable
5. Financial asset investment
(1) Security investment
□ Applicable √ Inapplicable
The Company did not invest in securities during the reporting period.
(2) Derivative investment
□ Applicable √ Inapplicable
The Company did not invest in derivatives during the reporting period.
6. Utilization of raised funds
□ Applicable √ Inapplicable
No raised funds were used by the Company during the reporting period.
7. Description of key projects not invested with raised funds
√ Applicable □ Inapplicable
Unit: RMB10,000
Planned Investment Actualaccumulative Dateof Indexof
Itemname investment amountinthe investmentamountas Project Project disclosure(if disclosure(if
amount current attheendofthe phase income any) any)
reportingperiod reportingperiod
Tangshan November
C&S 32,700 1,292.57 7,563.92 23.13% 16,2016 2016-50
Project
Hubei December
C&S 133,020 9,460.02 65,868.33 49.52%34,483.98 31,2016 2016-59
Project
Total 165,720 10,752.59 73,432.25 -- -- -- --
VI. Major Asset and Equity Sales
1. Sales of major assets
□ Applicable √ Inapplicable
The Company did not sell major assets during the reporting period.
2. Sales of major equity
□ Applicable √ Inapplicable
VII. Analysis of Main Holding and Joint-stock Companies
√ Applicable □ Inapplicable
Main subsidiaries and joint-stock companies affecting more than 10% of the Company's net profit
Unit: RMB
Company Company Mainbusinesses Registeredcapital Totalassets Netassets Operatingincome Operatingprofit Netprofit
name type
R&D,production,andsales
(includingonlinesales):
Householdpaper,maternaland
infantproducts,cosmetics,
wipes,non-wovenproducts,
dailynecessities,andcleaning
supplies;andsales(including
onlinesales) ofClass IandII
Jiangmen medicaldevices.(Business
C&S Subsidiary activitiesabovearenot RMB345,985,031 1,701,542,683.92 1,391,521,284.56 697,501,626.59 109,252,057.26 93,179,032.72
restrictedbytheSpecial
AdministrativeMeasuresfor
theAccessofForeign
Investment)(Business
activitiessubjecttoapprovalin
accordancewithlawsshall not
becarriedoutuntilapproval
fromcompetentauthoritieshas
beenobtained.))
R&D,production,wholesale,
retailandonlinesales:
High-endhouseholdpaper
seriesproducts,hygiene
products,maternalandinfant
products,dailynecessities,
cosmetics,medicaldevices,
Yunfu Subsidiary hygienematerials,non-woven RMB650million 2,008,061,450.93 1,195,306,900.30 1,384,931,367.57 205,801,295.96 184,345,385.92
C&S products,polymermaterials
andproducts,dailygroceries,
andsterilizationsupplies
(excludinghazardous
chemicals);importandexport
ofgoodsortechnologies
(excludingtheimportand
exportofgoodsand
technologiesprohibitedbythe
countryorsubjectto
administrativeapproval);and
warehouseservices(limitedto
warehousesqualifiedinfire
protectionwithouthazardous
chemicals).(Businessactivities
subjecttoapprovalin
accordancewithlawsshall not
becarriedoutuntilapproval
fromcompetentauthoritieshas
beenobtained.))
R&D,production,processing,
andsalesofhygieneproducts
[tissues(paper)],baby
products,dailynecessities,
non-wovenproducts,and
femininehygieneproducts;
exportofself-produced
productsandimportof
necessarymechanical
equipment,partsand
Sichuan accessories,andrawand
C&S Subsidiary auxiliarymaterials;andsales RMB100million 1,089,874,387.94 748,997,486.20 857,316,535.93 102,940,900.21 86,792,873.64
ofdailychemicalproducts,
articlesofdailyuse,medical
devices,medicalsupplies,and
sterilizationsupplies
(excludinghazardous
chemicals)[Businessactivities
subjecttoapprovalin
accordancewithlawsshall not
becarriedoutuntilapproval
fromcompetentauthoritieshas
beenobtained.]]
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Inapplicable
Description of main holding and joint-stock companies
None
VIII. Structured Entity Controlled by the Company
□ Applicable √ Inapplicable
IX. Prediction of Operating Results from January to September 2019
Warning and explanation of the predication that the accumulated net profit from the beginning of
the year to the end of the next reporting period may be negative or there will be large changes
compared to the corresponding period of previous year
□ Applicable √ Inapplicable
X. Risks and Countermeasures
1. Risk of large fluctuations in pulp prices
The Company features a professional procurement team that collects professional data, assesses the
future trend of pulp prices. Moreover, the team dynamically adjusts the inventory of pulp to ensure
normal production and respond to the international pulp market. At present, the Company has
developed a global procurement network, covering multiple countries, such as Finland, Canada,
Chile, Brazil, and China. Besides, it ensures stable procurement of raw materials by signing
long-term supply contracts with large-scale pulp suppliers embracing large production scale,
abundant forest resources, and advanced production technologies.
2. Currency risk
(1) The Company closely observes the changes in the foreign exchange market. Additionally, it
offsets exchange losses arising from the RMB devaluation or bi-directional volatility by adjusting
the asset and liability structure of foreign currencies and reducing the total liabilities of foreign
currencies.
(2) The Company has kept the account of foreign currency transactions at the selling rate since
October 2015 in accordance with its actual demand and in line with foreign exchange requirements.
It purchases foreign currencies at an appropriate rate to repay loans.
(3) The Company offsets and avoids currency risk through centralized management of foreign
exchange funds, offsetting based on purchasing and payment, and hedging based on changes in the
foreign exchange market and its actual development. In addition, it utilizes risk aversion
instruments like hedging to address currency risk exposure. It reasonably manages risks not for the
sake of speculation.
3. Safe production risk
The Company has formulated strict fire protection policies for the warehouse management of raw
materials and finished products and the placement and transfer of semi-finished products, equipped
workshops and warehouses with adequate fire protection equipment, and bought full insurance for
risky properties. Relevant responsible persons regularly inspect fire protection equipment to ensure
they are effective. Moreover, the Company offered safety education and training to its employees to
avoid possible risks in production to the maximum extent.
Section V Important Events
I. Annual and Extraordinary General Meetings during the Reporting Period
1. General meeting of shareholders during the reporting period
Sessionsof Typesof Proportionof Dateofmeeting Dateofdisclosure Indexofdisclosure
meetings meetings attendedinvestors
March13,2020 March14,2020 Announcementon
Resolutionsof2020
FirstExtraordinary
GeneralMeetingof
Shareholders
(AnnouncementNo.:
2020-15).See
SecuritiesTimes
Extraordinary (STCN,
2020 First general www.stcn.com),
Extraordinary meetingof 59.84% SecuritiesDaily
General Meeting shareholders (www.zqrb.com),
ChinaSecurities
Journal
(www.cs.com.cn),
ShanghaiSecurities
News
(www.cnstock.com),
andCNINFO
(www.cninfo.com.cn)
fordetails.
May21,2020 May22,2020 Announcementon
Resolutionsof2019
AnnualGeneral
Meetingof
Shareholders
(AnnouncementNo.:
2020-34).See
SecuritiesTimes
(STCN,
2019 Annual Annual www.stcn.com),
General Meeting General 55.09% SecuritiesDaily
of Shareholders Meeting (www.zqrb.com),
ChinaSecurities
Journal
(www.cs.com.cn),
ShanghaiSecurities
News
(www.cnstock.com),
andCNINFO
(www.cninfo.com.cn)
fordetails.
June15,2020 June16,2020 Announcementon
Resolutionsof2020
2020 Second Extraordinary SecondExtraordinary
Extraordinary general 53.75% GeneralMeetingof
General Meeting meetingof Shareholders
of Shareholders shareholders (AnnouncementNo.:
2020-53).See
SecuritiesTimes
(STCN,
www.stcn.com),
SecuritiesDaily
(www.zqrb.com),
ChinaSecurities
Journal
(www.cs.com.cn),
ShanghaiSecurities
News
(www.cnstock.com),
andCNINFO
(www.cninfo.com.cn)
fordetails.
2. Request for extraordinary general meetings by preference shareholders with recovered
voting rights
□ Applicable √ Inapplicable
II. Profit Distribution and Conversion of Capital Reserve to Share Capital during the
Reporting Period
□ Applicable √ Inapplicable
The Company plans not to distribute cash or share dividends or convert capital reserve to share
capital semi-annually.
III. Commitments Fulfilled by the De Facto Controller, Shareholders, Related Parties, and
Acquirers of the Company during the Reporting Period and Commitments not Fulfilled by
Them as at the End of the Reporting Period
√ Applicable □ Inapplicable
Typeof Timeof Termof Fulfillme
Commitments Committedby commitme Description commit commit ntof
nt ment ment commitm
ent
Share reform
commitment
Commitments inthe
acquisition reportor
the equitychange
report
Commitment made
during asset
restructuring
Directors, supervisors,and Novemb
senior executivespromise er25,
that theywill nottransfer 2010
Commitments made Directors, morethan25%ofthetotal
during theinitial supervisors,and sharesoftheCompanythey Long-ter Strictly
public offeringor seniorexecutives holdeachyearduringthe m observed
refinancing termofoffice.Iftheyleave
office beforetheexpiryof
the termofoffice,they
promise thattheywillnot
transfer morethan25%of
the totalsharesofthe
Company theyholdeach
year withinthetermofoffice
and withinsix monthsafter
the termofofficeexpires
(which isagreedwhenthey
take office).Moreover,they
will nottransfertheirshares
of theCompanywithinhalfa
year aftertheyleaveoffice.
They promisenottosellall June5,
their shares(includingshares 2020 During
obtained fromexerciseand the
Dai Zhenji,Dong othershares)withinsix impleme
Equity incentive Ye,andYe monthsaftertheendofthe ntation Strictly
commitment Longfang exerciseofthelaststock ofthe observed
options. Besides,theywill equity
strictly conformtostock incentive
trading-related lawsand plan
regulations.
DengGuanbiao, January
DengGuanjie, Nocompetitionwiththe 1,2009
DengYingzhong, Companyinthesame Long-ter Strictly
andGuangdong business m observed
ZhongshunPaper
GroupCo.,Ltd.
Cash dividendsshallbe Decembe
distributed whendividend r6,2019
conditions are met.The
Board ofDirectorsofthe
Other commitments Companyshall
to mediumandsmall comprehensivelyconsider
shareholders industrycharacteristics,
C&SPaperCo., developmentstage,business Long-ter Strictly
Ltd. model,profitability,and m observed
major capitalspending(if
any), distinguishthe
following circumstances,and
follow theprocedures
stipulated intheArticlesof
Association, andpropose
differentiated cashdividend
policies.
Whether
commitments are Yes
fulfilled ontime
IV. Engagement and Dismissal of an Accounting Firm
Whether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual report has not been audited yet.
V. Explanation by the Board of Directors and the Board of Supervisors of the "Non-standard
Audit Report" for the Reporting Period Issued by the Accounting Firm
□ Applicable √ Inapplicable
VI. Explanation by the Board of Directors of the "Non-standard Audit Report" for Last Year
□ Applicable √ Inapplicable
VII. Bankruptcy Restructuring-related Matters
□ Applicable √ Inapplicable
No bankruptcy restructuring-related matters of the Company happened during the reporting period.
VIII. Litigations
Material litigations and arbitrations
□ Applicable √ Inapplicable
The Company did not have major litigations or arbitrations during the reporting period.
Other litigations
√ Applicable □ Inapplicable
Basicinformationon Whether Litigation Hearingresultsand Executionof
litigations Amountinvolved projected (arbitration) influencesof judgmentof
(arbitrations) (RMB10,000) liabilitieswere progress litigations litigations
incurred (arbitrations) (arbitrations)
Thefirst
instanceruled
Zhongshan Trading thatZhongshan
sued Shenzhen Tradingwon
YongxinghuaTrading thecase.The Theverdictof
Co., Ltd.,Feng,& 660.374109 No secondinstance secondinstancehas Notapplicable
Liang forasales hasbeenheard. notbeenmade.
contract dispute AndZhongshan
Tradingis
waitingforthe
verdict.
Zhongshan Trading Thefirst Thefirstroundof
sued Guangzhou instance Theverdictoffirst executionended.
YingjingTradeCo., 31.3604 No supportedall instancecameinto Noproperties
Ltd. forasales theclaimsby force. havebeen
contract dispute Zhongshan recovered.
Trading.
Thefirst Theverdictoffirst
Zhongshan Trading instance instancecameinto
sued ShaoyangJiahe 33.638552 No supportedall force.Zhongshan Ongoing
TradingCo.,Ltd.fora theclaimsby Tradinghasapplied
sales contractdispute Zhongshan forexecution.
Trading.
Zhongshan Trading No(Note: Thefirst
sued ShanghaiTongli Whether instanceruled Theverdictof
TradingCo.,Ltd.and 2932.009863 projected thatZhongshan secondinstancehas Notapplicable
eight naturalperson liabilitieswill Tradingwon notbeenmade.
defendants including beincurred thecase.The
Liu forasales cannotbe secondinstance
contract dispute determined hasbeenheard.
prior tothe AndZhongshan
verdict.) Tradingis
waitingforthe
verdict.
Thefirst
No (Note: instanceruled
Whether thatZhongshan
projected Tradingwon
Yin suedC&Sfora liabilitieswill thecase.The Theverdictof
dispute overtheright 30.247331 beincurred secondinstance secondinstancehas Notapplicable
to health cannotbe hasnotbeen notbeenmade.
determined heard.And
prior tothe Zhongshan
verdict.) Tradingis
waitingforthe
verdict.
Sichuan HuaXiDa
Cheng Construction Theoriginalclaim Allpartiesofthe
Co., Ltd.Zhuhai was lawsuitfulfilled
Branch suedSichuan RMB7,516,032.39, Thecasewas theirrespective
Luxian No.9 whichwas mediatedand obligationof Thepaperofcivil
Construction changedto Yes closedinthe settlementofthe mediationhas
Engineering Co.,Ltd. RMB9,124,489.89 firstinstance. relevantproject beenfulfilled.
andYunfuC&Sfora duringthefirst costsagreedinthe
contract disputeover instance. contract.
the YunfuC&S
construction project
Thefirst
No (Note: instanceruled
Whether thatZhongshan
GuangdongWeihong projected Tradingwon
Plastics Technology liabilitieswill thecase.The Theverdictof
Co., Ltd.suedHubei 225.9055 beincurred secondinstance secondinstancehas Notapplicable
C&S foracontractor cannotbe hasnotbeen notbeenmade.
contract dispute determined heard.And
prior tothe Zhongshan
verdict.) Tradingis
waitingforthe
verdict.
Sichuan C&Ssued Xi'anMinshenghas
Xi'an Minsheng Thecasewas notfulfilledthe SichuanC&Sis
Department Store 5.651847 No mediatedand repayment applyingforlegal
Management Co., Ltd. closedinthe obligationinline enforcement.
for acontractdispute firstinstance. withthepaperof
civil mediation.
Thefirst
Zhongshan Trading instanceis
sued GuangzhouJvSe beingheard. Theverdictoffirst
Mai KeInternet 28.554681 No Zhongshan instancehasnot Notapplicable
Service Co., Ltd.fora Tradingis beenmade.
sales contractdispute waitingforthe
courtsessionto
open.
Thefirst
Xiaogan C&Ssued instanceis
Wuhan Xincheng beingheard. Theverdictoffirst
TongdaTradingCo., 525.162529 No Zhongshan instancehasnot Notapplicable
Ltd. forasales Tradingis beenmade.
contract dispute waitingforthe
courtsessionto
open.
IX. Doubts from Media
□ Applicable √ Inapplicable
The Company did not have any matters that were generally doubted by media during the reporting
period.
X. Penalties and Remediation
□ Applicable √ Inapplicable
No penalties and remediation of the Company occurred during the reporting period.
XI. Integrity Records of the Company and its Controlling Shareholder and De Facto
Controller
□ Applicable √ Inapplicable
XII. Implementation of Stock Incentive Plan, Employee Stock Ownership Plan, and Other
Employee Incentives of the Company
√ Applicable □ Inapplicable
1. 2018 stock option and restricted stock incentive plan
On December 18, 2018, at the ninth meeting of the fourth Board of Directors and the seventh
meeting of the fourth Board of Supervisors of the Company, 2018 Stock Option and Restricted
Stock Incentive Plan of C&S Paper Co., Ltd. (Draft) and its summary, Proposal on the Appraisal
Management Measures of the Implementation of the Company's Restricted Stock Incentive Plan,
and Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of
Directors to Handle Matters Related to Restricted Stock Incentive Plan, were reviewed and
approved respectively. The independent directors of the Company issued an independent opinion to
agree that the equity incentive plan was conducive to the Company's sustainable development and
there was no situation that harms the Company and shareholders. The Board of Supervisors of the
Company verified the list of incentive recipients of the Company's equity incentive plan. Details
can be found in the following documents published on December 19, 2018 on the designated
information disclosure media including Securities Times (STCN, www.stcn.com), China Securities
Journal (www.cs.com.cn), Securities Daily (www.zqrb.com), Shanghai Securities News
(www.cnstock.com) and Juchao Information Website (http://www.cninfo.com.cn): 2018 Stock
Option and Restricted Stock Incentive Plan (Draft), Summary of 2018 Stock Option and Restricted
Stock Incentive Plan (Draft), List of Incentive Recipients of the Equity Incentive Plan, Appraisal
Management Measures of the Implementation of 2018 Stock Option and Restricted Stock Incentive
Plan, Announcement on Resolutions of the Ninth Meeting of the Fourth Board of Directors
(Announcement No. 2018-89) and Announcement on Resolutions of the Seventh Meeting of the
Fourth Board of Supervisors (Announcement No. 2018-90).
On January 8, 2019, at the Company's first extraordinary general meeting of 2019, 2018 Stock
Option and Restricted Stock Incentive Plan of C&S Paper Co., Ltd. (Draft) and its summary,
Appraisal Management Measures of the Implementation of 2018 Stock Option and Restricted Stock
Incentive Plan of C&S Paper Co., Ltd., and Proposal on Requesting the General Meeting of
Shareholders to Authorize the Board of Directors to Handle Matters Related to the Company's 2018
Stock Option and Restricted Stock Incentive Plan, were reviewed and approved. The Board of
Directors was authorized to determine the grant date of the incentive plan, grant stock options or
restricted stocks to the incentive recipients when the incentive recipients meet the conditions, and
handle all matters necessary for granting equity incentives. Details can be found in Announcement
on Resolutions of the First Extraordinary General Meeting of 2019 (Announcement No. 2019-02),
published on January 9, 2019 on the designated information disclosure media including Securities
Times (STCN, www.stcn.com), China Securities Journal (www.cs.com.cn), Securities Daily
(www.zqrb.com), Shanghai Securities News (www.cnstock.com) and Juchao Information Website
(http://www.cninfo.com.cn).
On March 1, 2019, at the tenth meeting of the fourth Board of Directors and the eighth meeting of
the fourth Board of Supervisors of the Company, Proposal on Adjusting Matters Related to 2018
Stock Option and Restricted Stock Incentive Plan and Proposal on Granting Stock Options and
Restricted Stocks to Incentive Recipients, were reviewed and approved respectively. The Company's
Board of Directors adjusted the grantees and the number of stock options granted of 2018 Stock
Option and Restricted Stock Incentive Plan in conformity with the authorization of the general
meeting of shareholders, and determined the first grant date of stock options and restricted stocks as
March 1, 2019. 13,734,500 stock options were granted to 3,118 eligible incentive recipients, and
19,675,500 restricted stocks were granted to 569 incentive recipients. Details can be found in the
following documents published on March 2, 2019 on the designated information disclosure media
including Securities Times (STCN, www.stcn.com), China Securities Journal (www.cs.com.cn),
Securities Daily (www.zqrb.com), Shanghai Securities News (www.cnstock.com) and Juchao
Information Website (http://www.cninfo.com.cn): Announcement on Resolutions of the Tenth
Meeting of the Fourth Board of Directors (Announcement No.: 2019-09), Announcement on
Adjusting Matters Related to 2018 Stock Option and Restricted Stock Incentive Plan
(Announcement No.: 2019-11), Announcement on Granting Stock Options and Restricted Stocks to
Incentive Recipients (Announcement No. 2019-12), List of Incentive Recipients of the Equity
Incentive Plan (Grant Date), and Legal Opinion of Kingson Law Firm on the Adjustment and First
Granting of the Company's 2018 Stock Option and Restricted Stock Incentive Plan.
On September 11, 2019, at the 16th meeting of the fourth Board of Directors and the 14th meeting
of the fourth Board of Supervisors of the Company, Proposal on Adjusting Matters Related to 2018
Stock Option and Restricted Stock Incentive Plan and Proposal on Granting Reserved Stock
Options and Restricted Stocks to Incentive Recipients, were reviewed and approved. The Board of
Directors of the Company adjusted the number of stock options reserved in the incentive plan from
2.5 million to 2.4 million in conformity of the authorization of the general meeting of shareholders.
And it was scheduled to grant 2.4 million reserved stock options to 114 eligible incentive recipients
and 3.5 million reserved restricted stock shares to 64 incentive recipients on September 11, 2019.
Details can be found in the following documents published on September 12, 2019 on the
designated information disclosure media including Securities Times (STCN, www.stcn.com), China
Securities Journal (www.cs.com.cn), Securities Daily (www.zqrb.com), Shanghai Securities News
(www.cnstock.com) and CNINFO (http://www.cninfo.com.cn): Announcement on Resolutions of
the 16th Meeting of the Fourth Board of Directors (Announcement No.: 2019-61), Announcement
on Adjusting Matters Related to 2018 Stock Option and Restricted Stock Incentive Plan
(Announcement No.: 2019-64), Announcement on Granting Reserved Stock Options and Restricted
Stocks to Incentive Recipients (Announcement No. 2019-65), List of Incentive Recipients of the
Equity Incentive Plan (Grant Date), and Legal Opinion of Kingson Law Firm on the Company's
Adjustment of 2018 Stock Option and Restricted Stock Incentive Plan and the Granting of Reserved
Parts.
On October 28, 2019, the registration for the grant of reserved parts of 2018 Stock Option and
Restricted Stock Incentive Plan was completed. The reserved stock options shall be registered on
October 30, 2019, and the reserved restricted stocks shall be listed on October 30, 2019.
On May 21, 2020, at the 23rd meeting of the fourth Board of Directors and the 19th meeting of the
fourth Board of Supervisors, Proposal on the Achievement of Unlock Conditions of the First Unlock
Period of Restricted Stock for the First Time under the Company's 2018 Stock Option and
Restricted Stock Incentive Plan, Proposal on the Achievement of Exercise Conditions of the First
Exercise Period of Stock Option for the First Time under the Company's 2018 Stock Option and
Restricted Stock Incentive Plan, Proposal on the Achievement of Exercise Conditions of the First
Exercise Period of Stock Option for the First Time under the Company's 2018 Stock Option and
Restricted Stock Incentive Plan, and Proposal on the Repurchase and Deregistration of Partial
Restricted Stock for the First Time under the Company's 2018 Stock Option and Restricted Stock
Incentive Plan were reviewed and approved. In conformity with Draft of 2018 Stock Option and
Restricted Stock Incentive Plan, the Board of Directors considered that the first unlock/exercise
period unlock/exercise conditions of the restricted stock/stock option granted for the first time had
been fulfilled. There were 533 holders of restricted stocks meeting the unlock conditions, and the
number of stocks that could be unlocked was 5,593,428, accounting for 0.43% of the Company's
total share capital; There were 2,522 holders of stock options meeting the exercise conditions, and
the number of options that could be exercised was 3,431,505, accounting for 0.26% of the
Company's total share capital. In addition, a total of 802,722 restricted stocks of 241 incentive
recipients that did not meet the unlock conditions were repurchased and deregistered. A total of
2,110,545 stock options of 1,594 incentive subjects who did not meet the exercise conditions were
canceled. Details can be found in the relevant announcements published on May 22, 2020 on the
designated information disclosure media including Securities Times (STCN, www.stcn.com), China
Securities Journal (www.cs.com.cn), Securities Daily (www.zqrb.com), Shanghai Securities News
and CNINFO (http://www.cninfo.com.cn).
On June 15, 2020, the Company was in the process of completing the deregistration of the partial
stock options granted for the first time that had been granted but not exercised.
Please continue to pay attention to the Company's information disclosure for subsequent
implementation progress or changes.
2. Phase II employee stock ownership plan
At the Company's 14th meeting of the fourth Board of Directors on July 9, 2019, and the
Company's second extraordinary general meeting of 2019 on July 26, 2019, Proposal on Phase II
Employee Stock Ownership Plan (Draft) and its summary (hereinafter referred to as "Phase II
Employee Stock Ownership Plan") was reviewed and approved. Details can be found in the relevant
announcements published on the designated information disclosure media including CNINFO
(www.cninfo.com.cn), China Securities Journal (www.cs.com.cn), Shanghai Securities News
(www.cnstock.com), Securities Times (STCN, www.stcn.com) and Securities Daily
(www.zqrb.com).
On November 11, 2019, at the 18th meeting of the fourth Board of Directors of the Company,
Proposal on Revising Phase II Employee Stock Ownership Plan (Draft) and its summary was
reviewed and approved. The Company planned to revise some clauses in Phase II Employee Stock
Ownership Plan (Draft) and its summary in conformity with the market allocation situation. Details
can be found in the relevant announcements published on the designated information disclosure
media including CNINFO (www.cninfo.com.cn), China Securities Journal (www.cs.com.cn),
Shanghai Securities News (www.cnstock.com), Securities Times (STCN, www.stcn.com) and
Securities Daily (www.zqrb.com).
As at November 29, 2019, all the repurchased stocks held in the "C&S Paper Co., Ltd. Repurchase
Special Securities Account" opened by the Company had been transferred to the "C&S Paper Co.,
Ltd. - Phase II Employee Stock Ownership Plan" special account. Details can be found in
Announcement on Completion of Non-Transaction Transfer of Phase II Employee Stock Ownership
Plan (Announcement No. 2019-85) published on the designated information disclosure media
including CNINFO (www.cninfo.com.cn), China Securities Journal (www.cs.com.cn), Shanghai
Securities News (www.cnstock.com), Securities Times (STCN, www.stcn.com) and Securities Daily
(www.zqrb.com).
In conformity with Accounting Standards for Enterprises No.11–Share-based Payments and
relevant application guidelines and other documents, the Company's Phase II Employee Stock
Ownership Plan meets the definition of share-based payment, and the total share-based payment
expenses incurred were RMB56.44 million, of which RMB4.7 million were allocated in 2019, and
RMB51.74 million in 2020.
Please continue to pay attention to the Company's information disclosure for subsequent
implementation progress or changes.
XIII. Material Related Party Transaction
1. Related party transaction relevant to daily operations
√ Applicable □ Inapplicable
Pricing Proportion Whether Available
Typeof Contentof rulesof Priceof Amountof inthe Approved to Settlement market
Party ofrelated Connected related related related related relatedparty amountof transaction outstrip ofrelated pricesfor Dateof Indexof
partytransaction relation party party party party transactions similar limit the party similar disclosure disclosure
transactiontransactionstransactionstransactions(RMB10,000)transactions(RMB10,000)approvedtransactiontransactions
limit
Deng Yingzhong, Actual December
Deng Guanbiao, controller Leases Rental Marketfair Marketfair 147.4 42.17% 589.62No Transfer Marketfair 6,2019 2019-93
Deng Guanjie ofthe price price settlement price
Company
A company December
where the 6,2019
senior
Pengzhou manager Routine Saleof Marketfair Marketfair Transfer Marketfair
Lexiangshenghuo YueYong's operation goods price price 82.87 0.02% 300No settlement price 2019-93
Trading Co.,Ltd. sonholds transaction
shares and
serves asa
supervisor
A company December
where the 6,2019
senior
Sichuan West manager Routine Saleof Marketfair Marketfair Transfer Marketfair
Lexiangshenghuo YueYong's operation goods price price 18.08 0.00% 100No settlement price 2019-93
Trading Co.,Ltd. sonholds transaction
shares and
serves asa
supervisor
A company December
where the 6,2019
senior
Chongqing manager Routine
Qinyue Trading YueYong's operation Saleof Marketfair Marketfair 24.8 0.01% 240No Transfer Marketfair 2019-93
Co., Ltd. brother transactiongoods price price settlement price
holds
shares and
serves asa
supervisor
Guangdong Controlling Routine Saleof Marketfair Marketfair 5.66 0.002% Yes Transfer Marketfair
Zhongshun Paper shareholderoperation goods price price settlement price
Group Co.,Ltd. transaction
Total -- -- 278.81 -- 1,229.62 -- -- -- -- --
Details ofreturnsoflargesales Notapplicable
Estimation ofthetotalamountofdailyrelatedparty TheexcessrelatedpartytransactionamountofRMB56,600istheCompany'sbusinessofsellingmaskproductstorelated
transactions thatwilloccurinthecurrentperiodby parties,anditisatemporarynewrelatedsalein2020.Itfallswithintheauthority ofthechairmanoftheCompanyand
category,andtheactualperformanceduringthe canbeimplementedwithouttheapprovaloftheBoardofDirectors.
reporting period(ifany)
Reason(s) foralargedifferencebetweenthe
transaction priceandthe marketreferenceprice(if Exerciseatfairprice
applicable)
2. Related party transactions of acquisition and sale of assets or equity
□ Applicable √ Inapplicable
During the reporting period, there was no related party transaction of acquisition and sale of assets
or equity.
3. Related party transactions of joint outbound investment
□ Applicable √ Inapplicable
During the reporting period, there was no related party transaction of joint outbound investment.
4. Related party transactions of creditor's rights and debts
√ Applicable □ Inapplicable
Whether there was non-operating related party transaction of creditor's rights and debts
□ Yes √ No
During the reporting period, there was no non-operating related party transaction of creditor's rights
and debts.
5. Other material related party transactions
□ Applicable √ Inapplicable
During the reporting period, there was no other material related party transactions.
XIV. Misappropriation of Funds for Non-operating Purposes by Controlling Shareholders
and Related Parties
□ Applicable √ Inapplicable
During the reporting period, there was no misappropriation of funds for non-operating purposes by
controlling shareholders and related parties.
XV. Material Contracts and Their Performance
1. Custody, contract and lease
(1) Custody
□ Applicable √ Inapplicable
During the reporting period, there was no custody.
(2) Contract
□ Applicable √ Inapplicable
During the reporting period, there was no contract.
(3) Lease
√ Applicable □ Inapplicable
Lease statement
On December 5, 2019, the Company at the 19th meeting of the fourth Board of Directors approved
the Proposal on Daily Related Party Transactions. Due to the needs of operation and business, the
Company and its wholly-owned subsidiary, Zhongshan Zhongshun Trading Co., Ltd., leased the
real estate jointly owned by Mr. Deng Yingzhong, the actual controller, Mr. Deng Guanbiao and Mr.
Deng Guanjie. The lease term is from January 1, 2020 to December 31, 2021, and the related party
transaction involves RMB5,896,200. During the consideration of this proposal, the Company's three
related directors, Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie, withdrew from
voting, while the remaining six attending directors unanimously approved this related transaction.
The three independent directors of the Company respectively issued Prior Approval Opinions and
Opinions of Independent Directors on the proposal, agreeing to submit the proposal to the Board of
Directors for deliberation and agreeing to the related party transaction.
Projects whose profits or losses brought to the Company reached more than 10% of the total profits
of the Company during the reporting period
□ Applicable √ Inapplicable
During the reporting period, there was no leasing projects whose profits or losses brought to the
Company reached more than 10% of the total profits of the Company during the reporting period.
2. Material guarantee
√ Applicable □ Inapplicable
(1) Guarantee
Unit: RMB10,000
Theoverseasguaranteeofthecompanyanditssubsidiaries(guaranteetosubsidiariesis notincluded).
Disclosuredate Whether Whether
Nameofthe ofrelevant Guarantee Actualdate Actual Guarantee Guarantee ithas itis
borrower announcements limit of guarantee type period been related
of guarantee occurrence amount completed party
limit guarantee
The company'sguaranteetoitssubsidiaries
Disclosuredate Whether Whether
Nameofthe ofrelevant Guarantee Actualdate Actual Guarantee Guarantee ithas itis
borrower announcements limit of guarantee type period been related
of guarantee occurrence amount completed party
limit guarantee
Zhongshun Jointand October22,
Trading Co., December19, 15,000October22, 12,323.09several 2019-August No Yes
Ltd. 2018 2019 liability 27,2022
guarantee
Zhongshun Jointand April14,
Trading Co., December5, 15,000April14, 19.92several 2020-October No Yes
Ltd. 2019 2020 liability 23,2022
guarantee
Zhongshun Jointand December6,
Trading Co., December19, 15,000December 1,106.48several 2019-December No Yes
Ltd. 2018 5,2019 liability 5,2022
guarantee
Zhongshun Jointand June6,
Trading Co., December19, 20,000June6, 1,076.66several 2019-June6, No Yes
Ltd. 2018 2019 liability 2024
guarantee
Zhongshun December15, November Jointand November19,
Trading Co., 2017 10,00019,2018 0several 2018-November No Yes
Ltd. liability 18,2022
guarantee
Jointand October22,
Jiangmen December19, 12,000October22, 2,345.35several 2019-August No Yes
C&S 2018 2019 liability 27,2022
guarantee
March27, Jointand March27,
Jiangmen December15, 10,0002018 0several 2018-December No Yes
C&S 2017 liability 31,2023
guarantee
May5, Jointand May5,
Jiangmen December19, 7,0002019 3,470.36several 2019-August5, No Yes
C&S 2018 liability 2021
guarantee
July1,2019 Jointand July1,
Jiangmen December19, 10,000 1,284.87several 2019-June30, No Yes
C&S 2018 liability 2022
guarantee
May30, Jointand May30,
Jiangmen December15, 16,0002018 0several 2018-May30, No Yes
C&S 2017 liability 2023
guarantee
Jointand April14,
YunfuC&S December5, 8,000April14, 0several 2020-April14, No Yes
2019 2020 liability 2028
guarantee
Jointand February25,
Hubei C&S December5, 10,000February 0several 2020-December No Yes
2019 25,2020 liability 4,2025
guarantee
June3, Jointand June3,
Hubei C&S December5, 10,0002020 9,000several 2020-May29, No Yes
2019 liability 2023
guarantee
Jiangmen January8, Jointand January8,
C&S, Yunfu December19, 25,0002019 1,138.7several 2019-January8, No Yes
C&S, Hubei 2018 liability 2021
C&S guarantee
C&S Hong September Jointand
Kong, Zhong December19, 2,2019 several September2,
Shun 2018 21,247.5 13,551.77liability 2019-July31, No Yes
International, guarantee 2023
Macao C&S
C&S Hong March20, Jointand March20,
Kong, Zhong December5, 18,550.142020 8,094.24several 2020-SeptemberNo Yes
Shun 2019 liability 19,2022
International guarantee
C&S Hong February Jointand February17,
Kong, December5, 38,00017,2020 24,830several 2020-December No Yes
Macao C&S 2019 liability 23,2022
guarantee
C&S Hong February Jointand
Kong, Zhong December5, 12,2020 several February12,
Shun 2019 44,973.88 30,696.43liability 2020-February No Yes
International, guarantee 12,2022
Macao C&S
C&S Hong December5, 14,165February 1,965.89Jointand February25, No Yes
Kong, 2019 25,2020 several 2020-February
Macao C&S liability 25,2022
guarantee
C&S Hong September Jointand September16,
Kong, December19, 7,082.516,2019 0several 2019-January No Yes
Macao C&S 2018 liability 13,2023
guarantee
C&S Hong March27, Jointand March27,
Kong, December5, 16,9982020 4,934.61several 2020-February No Yes
Macao C&S 2019 liability 19,2022
guarantee
C&S Hong September Jointand
Kong, Zhong December15, 28,2018 several September28,
Shun 2017 19,738.08 8,489.41liability 2018-August No Yes
International, guarantee 31,2022
Macao C&S
C&S Hong January30, Jointand
Kong, Zhong December5, 2020 several January30,
Shun 2019 21,247.5 18,259.7liability 2020-January No Yes
International, guarantee 30,2022
Macao C&S
March23, Jointand March23,
Macao C&S December15, 7,790.752018 808.21several 2018-SeptemberNo Yes
2017 liability 23,2021
guarantee
August15, Jointand August15,
Macao C&S December15, 7,0002018 2,379.72several 2018-August No Yes
2017 liability 15,2025
guarantee
April9, Jointand April9,
C&S Hong December15, 10,623.752018 7,899.95several 2018-January No Yes
Kong 2017 liability 24,2020
guarantee
Totalapprovedamountof Totalactualamount
guarantee forsubsidiaries ofguaranteefor
during thereportingperiod 196,934.52 subsidiariesduring 97,800.79
(B1) thereporting period
(B2)
Totalapprovedamountof Totalactual
guarantee forsubsidiariesat guaranteebalanceto
the endofthereporting 410,417.1 subsidiariesatthe 153,675.36
period (B3) endofthereporting
period(B4)
The guaranteeofsubsidiariestosubsidiaries
Disclosuredate Whether Whether
Nameofthe ofrelevant Guarantee Actualdate Actual Guarantee Guarantee ithas itis
borrower announcements limit of guarantee type period been related
of guarantee occurrence amount completed party
limit guarantee
TotalamountoftheCompany'sguarantee(thesum ofthe firstthreeitems)
Totalapprovedamountof Totalactualamount
guarantee duringthe 196,934.52 ofguaranteeduring 97,800.79
reporting period(A1+B1+ thereporting period
C1) (A2+B2+C2)
Totalapprovedamountof Totalactual
guarantee attheendofthe 410,417.1 guaranteebalanceat 153,675.36
reporting period(A3+B3+ theendofthe
C3) reportingperiod(A4
+B4+C4)
Proportion ofthetotalactualamountofguarantee 33.91%
(A4 +B4+C4)inthenetassetsoftheCompany
Wherein:
The balanceofguaranteeforshareholders,actual 0
controllers andtheirrelatedparties(D)
The balanceofdebtguaranteeprovideddirectlyor
indirectly fortheborrowerwhoseasset-liabilityratio 45,788.42
exceeds 70%(E)
The amountofguaranteeinexcessof50%ofnet 0
assets (F)
Totalamountoftheabovethree guarantees(D+E+ 45,788.42
F)
Statements ofthefactthattheguaranteeliabilityhas
occurred ormaybejointlyandseverallyliablefor None
the unexpiredguaranteeduringthereportingperiod
(if any)
Statements ofprovidingexternalguaranteein None
violation ofprescribedprocedures(ifany)
(2) External guarantee in violation of prescribed procedures
□ Applicable √ Inapplicable
During the reporting period, there was no external guarantee in violation of prescribed procedures.
3. Entrusted WM
√ Applicable □ Inapplicable
Unit: RMB10,000
Specific types Sourcesofentrusted Incurredamountof Unduebalance Theamountoverdue
WM funds entrustedWM butnotrecovered
Banking WM Self-ownedfund 21,240 21,240 0
product
Total 21,240 21,240 0
Specific situations of high-risk entrusted WM with individually significant amounts or low safety,
poor liquidity and no principal guarantee
□ Applicable √ Inapplicable
Entrusted WM is expected to fail to recover the principal or there are other circumstances that may
lead to impairment
□ Applicable √ Inapplicable
4. Other major contracts
□ Applicable √ Inapplicable
During the reporting period, there was no other major contracts.
XVI. Social Responsibility
1. Major environmental issues
Whether listed companies and the subsidiaries are the key pollution discharge units published by the
department of environmental protection
Yes
Names ofmain Number Implemented Total
Company/subsidiary pollutantsand Waysofdischarge of Distributionofdischarge Concentration pollutantdischarge Total approved Excessive
name particular discharge outlets ofdischarge standards discharge discharge discharge
pollutants outlets
Jiangmen COD Aftertreatment,it 141.5mg/L ≤200 mg/L 144.59t 335.600 None
Zhongshun Paper Waste isdischargedto 1 Centralizedprocessing t/a
Co.,Ltd. water Ammonia thesewage facilitiesinthefactory 5.35 mg/L ≤8 mg/L 2.65t 13.4t/a None
nitrogen treatmentplant
COD Aftertreatment,it Productionwastewater 33 mg/L ≤80 mg/L 13.8626t 96t/a None
enters thewater discharge(DW001)flows
Waste Ammonia purification 1 throughthechannelinto
water nitrogen stationthrough themainoutletDW002 0.496mg/L ≤8 mg/L 0.2084t 9.6t/a None
urban sewage (confluentwithdomestic
pipeline wastewater)
1#furnace9.8 1#furnace
PM mg/m3 0.1634t
(particulate 3#furnace3.6 ≤20 mg/m3 3#furnace 5.6088 None
C&S (Sichuan) matter) mg/m3 0.1160t t/a
Paper Co.,Ltd. 4#furnace3.2 4#furnace
mg/m3 0.1684t
Waste Dischargedirectly 4 Fourchimneys(one 1#furnace107 1#furnace
gas throughtheflue spare) mg/m3 1.8100t
Nitrogen 3#furnace81 ≤150 mg/m3 3#furnace 42.022 None
oxide mg/m3 2.5625t t/a
4#furnace 83 4#furnace
mg/m3 2.8129t
Sulfur 0 ≤50 mg/m3 0 0.44t/a None
dioxide
COD Aftertreatment,it 33.28mg/L ≤500 mg/L 3.15t 13.97t/a None
Zhejiang isdischargedto
Zhongshun Paper Waste JiaxingUnion 1 Centralizedprocessing
Co.,Ltd. water Ammonia SewageTreatment facilitiesinthefactory 1.92 mg/L ≤35 mg/L 0.18t 9.78t/a None
Co.,Ltd. nitrogen Co.,Ltd.through
municipal pipe
COD Aftertreatment,it Afterpre-processingof 56.99mg/L ≤400 mg/L 22.23t 152.25 None
C&S(Hubei)Paper Waste isdischargedto centralizedprocessing t/a
Co.,Ltd. water Ammonia BiquanSewage 1 facilitiesinthefactory,it
nitrogen TreatmentPlant isdischargedtoBiquan 1.151mg/L ≤30 mg/L 0.639t 15.25t/a None
through municipal SewageTreatmentPlant
pipe
PM Dedustingbybag
(particulate filter, 5.09 mg/m3 30 mg/Nm3 6.488t / None
Waste matter) desulfurizationby
gas Sulfur limestone-gypsum 1 Onechimney 23.07mg/m3 200 mg/Nm3 23.7t 203.87 None
dioxide anddenitrationby t/a
Nitrogen SNCR 48.91mg/m3 200 mg/Nm3 61.515t 239.85 None
oxide t/a
COD Continuous 1 Sewagetreatmentstation 30.46mg/L ≤80 mg/L 33.54t 197.1t/a None
C&S(Yunfu)Paper Waste discharge inthefactory
Co.,Ltd. water Ammonia Continuous 1 Sewagetreatmentstation 1.043mg/L ≤8 mg/L 2.65t 19.76t/a None
nitrogen discharge inthefactory
COD Afterbeing 28.94mg/L ≤50 mg/L 1.85t 16.5t/a None
treated bythe
plant sewage Themainoutletofthe
Waste Ammonia treatmentstation, 1 zone(LvyuanSewage
water nitrogen itisdischargedto TreatmentPlant) 0.62 mg/L ≤5 mg/L 0.04t 1.65t/a None
the Lvyuan
C&SPaperCo., SewageTreatment
Ltd.Tangshan Plantinthezone
Branch PM
(particulate 2.06 mg/m3 ≤5 mg/m3 0.053t 2.46t/a None
Waste matter) Dischargedirectly
gas Nitrogen throughtheflue 1 Onechimney 16.38mg/m3 ≤30 mg/m3 0.419t 18.46t/a None
oxide
Sulfur 3.09 mg/m3 ≤10 mg/m3 0.078t 6.15t/a None
dioxide
Construction and operation of pollution prevention and control facilities
(1) Compliance obligations fulfillment: the Company and its subsidiaries strictly abide by national
and local environmental laws and regulations; all new projects strictly implement the environmental
impact assessment system and "Three simultaneous" system; all production activities strictly
comply with the Environmental Protection Law of the People's Republic of China, the Law of the
People's Republic of China on the Prevention and Control of Water Pollution, the Law of the
People's Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the
People's Republic of China on the Prevention and Control of Environmental Pollution by Solid
Waste and the Action Plan for Prevention and Control of Water Pollution, and ensure all pollutant
treatment and discharge in line with the requirements of laws and regulations.
(2) Configuration and operation of water treatment equipment and facilities: Each subsidiary has a
complete set of environmental protection treatment equipment and facilities. The main sewage
treatment processes are anaerobic, aerobic and subsequent deep treatment processes, which can
achieve the discharge standards of various sewage indicators. In addition, each subsidiary is
equipped with a recycling water system, in which the reclaimed water that meets the usage standard
is used for re-production to reduce the discharge of sewage as far as possible. The sewage of
Jiangmen, Zhejiang, Hubei and Tangshan companies is discharged after centralized treatment in the
Company and treated by the local sewage treatment plants. After centralized treatment in the
Company, the sewage of Sichuan Company enters water purification station through urban sewage
pipeline; the sewage of Yunfu Company, after treated by the company's sewage treatment station
and reaching the standard, is discharged organically.
(3) On-line monitoring and operation of water treatment facilities: Four subsidiaries in Yunfu,
Sichuan, Zhejiang and Hubei have all installed on-line sewage monitoring facilities, which are
directly supervised by local Environmental Protection Bureau. The sewage of Tangshan Company,
after centralized treatment in the Company, is discharged to the sewage plant of the local paper
industry base without any other sewage outlet. Monitoring facilities are installed in the company for
internal control reference. After the centralized treatment within the Company, the sewage of
Jiangmen Company is discharged to the sewage plant of the local paper industry base. There is no
other sewage outlet and no on-line monitoring facilities. The Environmental Protection Bureau goes
to the company regularly every quarter to compare the on-line monitoring data, which all meet the
requirements.
(4) Boiler waste gas emission: Sichuan Branch and Tangshan Branch are equipped with natural gas
boilers. Hubei Branch is equipped with a coal-fired boiler, and waste gas is emitted uniformly after
desulfurization and denitrification. Boiler waste gas emission conforms to GB13271-2014 Emission
Standard of Air Pollutants for Boiler.
Environmental impact assessment of construction projects and other administrative permits for
environmental protection
(1) Administrative permits: According to the Measures for the Administration of Pollutant
Discharge Permit of the Ministry of Environmental Protection of the People's Republic of China,
the applications were submitted to the Environmental Protection Bureau. All the subsidiaries'
permissions would expire in 2020 and they all applied for the extension on time in accordance with
the regulations.
(2) Construction projects: the Company has always been strictly in accordance with environmental
laws and regulations to implement the control of construction projects. Environmental impact
assessment was carried out for all construction projects and environmental protection project
construction was arranged according to construction plan, to ensure that the environmental
protection facilities and the main project are designed, constructed and put into use at the same time.
At present, all construction projects put into production have completed environmental impact
assessment and acceptance and approval.
Emergency plan for sudden environmental events
(1) Preparation and reporting of emergency plan for sudden environmental events: The Company
strictly implements emergency rules for sudden environmental events, and according to the
technical requirements in the Technical Guidelines for Preparation of Emergency Plans for
Environmental Pollution Accidents employs a professional advisory and guidance organization to
formulate the Emergency Plan for Sudden Environmental Events, which has been reviewed and
filed by the Environmental Protection Bureau.
(2) Emergency supplies, training and drill: The Company has matched the corresponding
emergency supplies according to the requirements of the Emergency Plan for Sudden
Environmental Events. Emergency measures for hazardous chemicals have been prepared according
to environmental protection requirements, and necessary labor protection supplies and emergency
supplies have been provided in accordance with safety technical instructions, and checked and
updated regularly. The Company regularly carries out emergency training and drill and suitability
assessment of emergency plan to ensure the effectiveness and enforceability of emergency plan.
Environmental self-monitoring program
(1) Self-monitoring ledger: The Company strictly abides by laws and regulations, carries out
self-monitoring work in accordance with environmental protection requirements, establishes
environmental management ledger and data, and constantly improves it.
(2) Waste water monitoring: At present, self-monitoring is a combination of manual monitoring and
automatic monitoring, and qualified units are entrusted to carry out monitoring regularly. Automatic
monitoring projects: main discharge outlet of waste water (COD, ammonia nitrogen, flow rate, PH,
total nitrogen); Manual monitoring projects: daily monitoring of COD, BOD, ammonia nitrogen, SS,
chroma, PH, total phosphorus and total nitrogen indicators; other sewage monitoring projects,
uncontrolled emissions, solid waste and factory boundary noise; each subsidiary entrusts qualified
units to carry out monitoring work on a monthly or quarterly basis according to the local
environmental protection requirements.
(3) Waste gas monitoring: the main testing items are nitrogen oxide, ringelman emittance, sulfur
dioxide and soot. The testing frequency is in compliance with the requirements of regulations.
(4) The self-monitoring data of pollutant discharge and environmental monitoring plans of each
subsidiary are disclosed on the national key pollution source information disclosure website and the
provincial key pollution source information disclosure website.
Other environmental information that should be disclosed
(1) The information of pollution discharge permit and relevant environmental information required
by pollution permits shall be published on the National Pollution Discharge Permit Management
Information Platform. If the competent government department in the location of the subsidiary has
specific requirements, the information shall be published on its required environmental information
platform in local area.
(2) Other information related to environmental protection shall be published in the “News” section
of our website.
Other relevant information on environmental protection
None
2. Performance of social responsibility for targeted poverty alleviation
(1) Targeted poverty relief planning
The Company carried out targeted poverty alleviation in the first half of 2020, and the following
work plan will be carried out in accordance with the Company’s situation and work arrangement.
(2) Summary of semi-annual targeted poverty alleviation
In order to implement General Secretary Xi Jinping’s important guidance that poverty alleviation
and development should be precise and non-public enterprises are encouraged to participate in
poverty alleviation by taking a turnkey approach in terms of resources, we have actively responded
to the government’s appeal in the first half of 2020, fulfilled corporate social responsibility, and
provided financial and material assistance to poor areas. Targeted poverty alleviation work:
1. We have fulfilled corporate social responsibility by participating in the activity of “Assistance in
pandemic fighting, love never stop spreading”, and donating 10,000 masks, disinfectant,
disinfection powder, protective clothing and other pandemic prevention materials to Yunmeng
County of Xiaogan City, which totally worth RMB35,000.
2. The Company has participated in the “Guangdong Poverty Alleviation Day” in Luoding City,
Guangdong Province and donated RMB100,000 in cash.
(3) Targeted poverty relief achievements
Indicator Unitof Amountanddescription
measurement
I. OverallSituation - -
Including:1.Capital RMB10,000 10
2.Moneyequivalentofsupplies RMB10,000 3.5
II. Investmentsby Items - -
1. Povertyalleviationinitiativestopromoteindustry - -
development
2. Povertyalleviationinitiativestotransferemployment - -
3. Povertyalleviationinitiativestorelocateimpoverished - -
residents
4. Povertyalleviationinitiativestopromoteeducation - -
5. Povertyalleviationinitiativestopromotehealthcare - -
6. Povertyalleviationinitiativestopromoteecological - -
protection
7. Povertyalleviationinitiativestostrengthensecurity - -
guarantee
8. Povertyalleviationinitiativestopromotesocialcauses - -
8.2Amountoftargetedpovertyreliefinput RMB10,000 13.5
9. Otherprojects - -
III. Awards(includingContentandLevel) - -
(4) Subsequent targeted poverty alleviation plan
The following work plan will be carried out in accordance with the Company’s situation and work
arrangement.
XVII. Statement on Other Significant Events
√ Applicable □ Inapplicable
No.Announcement Announcementname Announcement Disclosuremedia
time number
1 January9, Pre-disclosureAnnouncementon ShareReduction Plan January2020
2020 forDirectorsandSeniorOfficersoftheCompany
2 February3, Announcement on Resolutions of the 20th Meeting ofFebruary2020
2020 theFourthBoardofDirectors
3 February3, AnnouncementonExternalDonations March2020
2020
4 February10, Announcement on the Production and Sale of Medical April2020
2020 Masks byWholly-ownedSubsidiaries
5 December2, May2020
2020
Announcement on the Acquisition of Emergency
6 February13, Medical Device Production and Emergency Medical June2020
2020 Device Record Certificate by Wholly-owned
Subsidiaries
7 February15, Progress Announcement on Share Reduction Plan for 2020-07
2020 DirectorsandSeniorOfficersoftheCompany
8 February26, Announcement on Resolutions of the 21st Meeting of 2020-08
2020 theFourthBoardofDirectors
9 February26, Announcement on Resolutions of the 17th Meeting of 2020-09
2020 theFourthBoardofSupervisors
10 February26, AnnouncementonChangestoAccountingPolicies 2020-10 SecuritiesTimes
2020 (STCN,
11 February26, Notice on Holding 2020 First Extraordinary General 2020-11 www.stcn.com)
2020 Meeting (STCN,
12 February29, 2019AnnualPerformanceBulletin 2020-12 www.stcn.com),
2020 SecuritiesDaily
13 March6,2020Completion Announcement on Share Reduction Plan 2020-13 (www.zqrb.com),
forSeniorManagersoftheCompany ChinJaoSuerncaulrities
14 March11, Announcement on the Completion of Industrial and 2020-14 (www.cs.com.cn),
2020 CommercialRegistrationAmendmentofSubsidiaries ShanghaiSecurities
15 March14, Announcement on Resolutions of 2020 First 2020-15 News
2020 ExtraordinaryGeneralMeetingofShareholders (www.cnstock.com),
16 March18, Announcementon theResignationof Representativesof 2020-16 andCNINFO
2020 SecuritiesAffairs (www.cninfo.com.cn)
17 March20, Announcement on the First Repurchase of Company 2020-17
2020 Shares
18 March21, Announcement on the Progress of Repurchase of 2020-18
2020 CompanyShares
March31, Announcement on the Completion of Industrial and
19 2020 Commercial Registration Amendment of the Company 2020-19
andPartially-ownedSubsidiaries
20 April3,2020 Announcement on the Progress of Repurchase of 2020-20
CompanyShares
21 April8,2020 Pre-disclosureAnnouncementon ShareReduction Plan 2020-21
forDirectorsandSeniorOfficersoftheCompany
22 April30,2020Announcement on Resolutions of the 22nd Meeting of 2020-22
theFourthBoardofDirectors
23 April30,2020Announcement on Resolutions of the 18th Meeting of 2020-23
theFourthBoardofSupervisors
24 April30,2020Summaryof2019AnnualReport 2020-24
25 April30,2020Announcement on the Proposal on the 2019 Profit 2020-25
DistributionPlan
26 April30,2020NoticeonHolding2019AnnualGeneralMeeting 2020-26
27 April30,2020Notification on Holding the Online Performance 2020-27
Presentationforthe2019AnnualReport
28 April30,2020Body oftheReportfortheFirstQuarterof2020 2020-28
29 May8,2020 Announcement on the Progress of Repurchase of 2020-29
CompanyShares
30 May8,2020 Progress Announcement on Share Reduction Plan for 2020-30
SeniorManagersoftheCompany
31 May15,2020 Announcement on the Completion of Industrial and 2020-31
CommercialRegistrationAmendmentofSubsidiaries
32 May15,2020 Completion Announcement on Share Reduction Plan 2020-32
forDirectorsandSeniorManagersoftheCompany
Notice of Pre-disclosure on Expiration of the
33 May16,2020 Shareholding Reduction Plan for Senior Managers of 2020-33
the Company and the Next Shareholding Reduction
Plan
34 May22,2020 Announcement on Resolutions of 2019 Annual General 2020-34
MeetingofShareholders
35 May22,2020 Announcement on Resolutions of 23rd Meeting of the 2020-35
FourthBoardofDirectors
36 May22,2020 Announcement on Resolutions of the 19th Meeting of 2020-36
theFourthBoardofSupervisors
37 May22,2020 Announcement on the Termination of Repurchase of 2020-37
CompanyShares
Announcement on the Unlock Condition Achievement
38 May22,2020 for the First Release Period Firstly Granted by 2018 2020-38
StockOptionandRestrictedStockIncentivePlan
Announcement on the Exercise Conditions of the First
39 May22,2020 Exercise Period of the Equities Option Firstly Granted 2020-39
by 2018 Stock Option and Restricted Stock Incentive
Plan
Announcement on the Repurchase and Deregistration
40 May22,2020 of Partial Restricted Stock Firstly Granted by 2018 2020-40
StockOptionandRestrictedStockIncentivePlan
Announcement on the Deregistration of Partial Stock
41 May22,2020 Options Firstly Granted by 2018 Stock Option and 2020-41
RestrictedStockIncentivePlan
42 May23,2020 Announcement on the Implementation of 2019 Annual 2020-42
EquityAllocation
43 May27,2020 Announcement on the Resignation of the Company’s 2020-43
Director
44 May29,2020 Announcement on Resolutions of the 24th Meeting of 2020-44
theFourthBoardofDirectors
45 May29,2020 Announcement on Resolutions of the 20th Meeting of 2020-45
theFourthBoardofSupervisors
Announcement on the Adjustment of Exercise Price of
46 May29,2020 Stock Options of 2018 Stock Option and Restricted 2020-46
StockIncentivePlan
47 May29,2020 Announcement on the By-election of Dependent 2020-47
DirectorsoftheFourthBoardofDirectors
48 May29,2020 Notice on Holding 2020Second ExtraordinaryGeneral 2020-48
Meeting
Indicative Announcement on Lifting the Sales
49 June4,2020 Restriction in the First Release Period Firstly Granted 2020-49
by 2018 Stock Option and Restricted Stock Incentive
Plan
Indicative Announcement on the Adoption of the
50 June8,2020 Autonomous Exercise Mode in the First Exercising 2020-50
Period of the Stock Option Firstly Granted by 2018
StockOptionandRestrictedStockIncentivePlan
51 June16,2020 Progress Announcement on Share Reduction Plan for 2020-51
SeniorManagersoftheCompany
Announcement on the Accomplishment of the
52 June16,2020 Deregistration of Partial Stock Option Firstly Granted 2020-52
by 2018 Stock Option and Restricted Stock Incentive
Plan
53 June16,2020 Announcement on Resolutions of 2020 Second 2020-53
ExtraordinaryGeneralMeetingofShareholders
54 June16,2020 AnnouncementonCapitalDecrease 2020-54
55 June23,2020 Announcement on Resolutions of the 25th Meeting of 2020-55
theFourthBoardofDirectors
56 June23,2020 Announcement on the Election of Vice Chairman of the 2020-56
FourthBoardofDirectors
57 June23,2020 Announcement on the Appointment of Joint General 2020-57
ManageroftheCompany
XVIII. Major Issues of the Company’s Subsidiaries
√ Applicable □ Inapplicable
1. In February 2020, the Company’s wholly-owned subsidiary, C&S (Yunfu) Paper Co., Ltd. made
rapid response to the pneumonia outbreak based on the implementation of local government
requirements. It solved the problem of scarce mask production, developed its business of producing
and selling surgical masks and has acquired the Emergency Medical Device Production and
Emergency Medical Device Record Certificate, possessing the qualifications in the production and
sale of surgical masks. Details can be found in the following documents published on February 10,
2020 and February 13, 2020 on the designated information disclosure media Securities Times
(STCN, www.stcn.com), China Securities News, Securities Daily (www.zqrb.com), Shanghai
Securities News (www.cnstock.com) and CNINFO (http://www.cninfo.com.cn): Announcement on
the Production and Sale of Medical Masks by Wholly-owned Subsidiaries (Announcement No.
2020-04) and Announcement on the Acquisition of Emergency Medical Device Production and
Emergency Medical Device Record Certificate by Subordinate Subsidiaries (Announcement No.
2020-06).
2. The company and its seven subsidiaries have increased business scope of selling daily-use
chemical products and medical devices, and augmented the registered capital and changed the legal
representative. Moreover, the Company has completed the industrial and commercial procedures
and obtained new licenses. Details can be found in the following documents published on March 11,
2020 and March 31, 2020 on the designated information disclosure media Securities Times (STCN,
www.stcn.com), China Securities News, Securities Daily (www.zqrb.com), Shanghai Securities
News (www.cnstock.com) and CNINFO (http://www.cninfo.com.cn): Notice on Completion of
Industrial and Commercial Change Registration of Subordinate Subsidiaries (Announcement No.
2020-14) and the Announcement on the Completion of Industrial and Commercial Registration
Amendment of Company and Partially-owned Subsidiaries (Announcement No. 2020-19) and
Announcement on the Completion of Industrial and Commercial Registration Amendment of
Subsidiaries (Announcement No. 2020-31).
Section VI Equity Changes and Shareholders
I. Changes in Shares
1. Changes in shares
Unit: Share
Beforethischange Increaseanddecreaseofthischange(+, -) Afterthischange
Issuance Shares
Numberof of Bonus transferred Numberof
shares Percentageadditional shares from Others Subtotal shares Percentage
shares surplus
reserve
I. Share
Subject to 43,764,852 3.34% -6,396,337-6,396,337 37,368,515 2.85%
Restrictions
on Sales
3. Other
domestic 41,134,807 3.14% -5,718,326-5,718,326 35,416,481 2.70%
shareholding
Shares held 41,134,807 3.14% -5,718,326-5,718,326 35,416,481 2.70%
by domestic
individuals
4. Foreign 2,630,045 0.20% -678,011 -678,011 1,952,034 0.15%
shareholdings
Shares held 2,630,045 0.20% -678,011 -678,011 1,952,034 0.15%
by overseas
individuals
II. Shares
Not Subject
to 1,265,126,421 96.66% 8,976,055 8,976,0551,274,102,476 97.15%
Restrictions
on Sales
1. Ordinary
domestic 1,265,126,421 96.66% 8,976,055 8,976,0551,274,102,476 97.15%
shares
III. Total
Number of 1,308,891,273 100.00% 2,579,718 2,579,718 1,311,470,991 100.00%
Shares
Reason of change in shares
√ Applicable □ Inapplicable
On May 21, 2020, after holding the 23rd meeting of the fourth Board of Directors, the Company
passed the Proposal on the Achievement of Exercise Conditions of the First Exercise Period of Stock
Option for the First Time under the Company's 2018 Stock Option and Restricted Stock Incentive
Plan, and the exercise conditions of the first exercise period of the equities options for the first time
have been fulfilled. This time, the independent exercise mode is adopted with the actual exercise
period from June 10, 2020 to February 26, 2021. As at June 29, 2020, the options of 2,579,718 shares
have been exercised and 2,579,718 shares have been issued, and the total share capital has increased
from 1,308,891,273 to 1,311,470,991.
Approval of share changes
√ Applicable □ Inapplicable
The related matters in the first unlocking period of restricted stocks firstly granted by Stock Options
and Restricted Stock Incentive Plan in 2018 has been authorized by the first general meeting of
shareholders of the Company in 2019 and approved by the 23rd meeting of the Board of Directors,
together with the achievement of exercise conditions in the first exercise period.
Transfer of shares
□ Applicable √ Inapplicable
Implementation of share repurchase
√ Applicable □ Inapplicable
Phase II share repurchase plan
On April 18, 2019, the 12th meeting of the fourth Board of Directors passed the Proposal on the
Company's Share Repurchase. The Company aims to repurchase part of the Company's shares by
centralized bidding transaction, with a total amount of RMB200 million (inclusive) - RMB400
million (inclusive). The buyback price shall not outstrip RMB13.69/share (inclusive). All shares to
be repurchased will be used for employee stock ownership plans.
On August 5, 2019, the Company held the 15th meeting of the fourth of Board of Directors and
passed Proposal on Adjustment of the Upper Limit of Share Repurchase Price. In line with the
positive changes in the capital market and the Company's stock price, the Company adjusted the
share repurchase price to ensure company's share repurchase based on the development confidence
in the Company's future business and market value. The repurchase price was adjusted from no
more than RMB13.69/share (inclusive) to no more than RMB18.81/share (inclusive).
From March 19 to March 20, 2020, the Company conducted share repurchase by centralized
bidding. The number of shares repurchased was 1,895,900 accumulatively, accounting for 0.1448%
of the Company's total share capital. The highest transaction amount was RMB15/share, the lowest
one was RMB14.34/share, and the total transaction amount was RMB27,680,721.76(with no
transaction costs included).
On May 21, 2020, after holding the 23rd meeting of the fourth Board of Directors, the Company
passed the Proposal on Termination of Share Repurchase of the Company, and then the Company
terminated the share repurchase plan.
Implementation of share repurchase by centralized bidding
□ Applicable √ Inapplicable
The impact of share changes on basic earnings per share and diluted earnings per share, net assets
per share attributable to ordinary shareholders of the Company in last year and the latest period
□ Applicable √ Inapplicable
Other contents considered necessary by the Company or required to be disclosed by the securities
regulatory authority
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
Number of Numberof
restricted Numberofshares Increaseof restricted Dateof
Nameof sharesatthe releasedfrom restrictedshares sharesatthe Reasonsforsales liftingsales
shareholder beginningof restrictedsalesin inthecurrent endofthe restriction restriction
thereporting thecurrentperiod period period
period
Deng Lock-inshares of
Yingzhong 4,679,558 4,679,558senior Long-term
management
Deng Lock-inshares of
Guanbiao 3,718,105 3,718,105senior Long-term
management
Lock-in shares of
Deng Guanjie 900,730 900,730senior Long-term
management
Lock-in shares of
Liu Jinfeng 1,733,967 703,492 1,030,475senior Long-term
management
Lock-in shares of
Zhou Qichao 663,579 165,825 497,754senior Long-term
management
As forsenior
management
lock-in shares,
the increased
restricted shares
Dong Ye 134,625 71,081 45,000 108,544areunlocked Long-term
restricted stocks
due tothe
proportional
locking ofsenior
management.
Lock-in shares of
Li Youquan 40,800 15,000 33,300senior Long-term
management
As forsenior
management
lock-in shares,
the increased
restricted shares
Dai Zhenji 220,045 555,011 600,000 265,034areunlocked Long-term
restricted stocks
due tothe
proportional
locking ofsenior
management.
As forsenior
management
YueYong 9,206,243 55,000 9,261,243lock-inshares, Long-term
the increased
restricted shares
are unlocked
restricted stocks
due tothe
proportional
locking ofsenior
management.
In accordance
with 2018Stock Restricted
Option and shareswere
Restricted Stock releasedas
Incentive Plan earlyasJune
(Draft), the 8,2020,and
unlocking theremaining
conditions ofthe restricted
Equity firstrelease shareswillbe
incentive 22,467,200 5,593,428 16,873,772periodforsome released
recipients restrictedstocks accordingto
granted forthe 2018Stock
first timehave Optionand
been fulfilled. Restricted
The Company Stock
will unlockthe Incentive
shares withthe Plan(Draft).
number of
5,593,428 shares.
Total 43,764,852 7,158,837 645,000 37,368,515 -- --
II. Details of Securities Issuance and Listing
□ Applicable √ Inapplicable
III. Number of Shareholders and Particulars of Shareholding
Unit: Share
Total numberof Totalnumberofpreference
ordinary shareholderswithvotingrights
shareholders atthe 38,258restoredattheendofthe 0
end ofthereporting reportingperiod(ifany)(referto
period note8)
Ordinaryshareholdersboastingmorethan5%ortoptenordinaryshareholders
Total Pledgedor
number of Changesin Numberof Numberof locked-up
ordinary shareholdin ordinary ordinaryshares shares
Nameof Natureof Shareholdin shareholder gduringthe shares withno
shareholder shareholder gpercentage sattheend reporting subjectto restrictionson Share Numbe
ofthe period restrictions sales status rof
reporting onsales shares
period
Guangdong Domestic
Zhongshun non-state-owne 28.64%375,655,958 375,655,958
Paper Group dlegalperson
Co., Ltd.
Chung Shun Foreignlegal 20.32%266,504,789 266,504,789
Co. person
Hong Kong Foreignlegal 7.66%100,420,938Buy 100,420,938
Securities person
Clearing
Co., Ltd.
China
Merchants
Bank Co.,
Ltd. -
Xingquan
Heyi
Flexible Others 1.09% 14,326,980New 14,326,980
Allocation
Graded
Hybrid
Securities
Investment
Fund (LOF)
YueYong Domestic 0.97% 12,743,741Reduce 10,031,243 2,712,498
naturalperson
C&S Paper
Co., Ltd.--
Phase II
Employee Others 0.89% 11,709,583New 11,709,583
Stock
Ownership
Plan
Investec
Asset
Managemen
t Co.,Ltd.--
Investec Foreignlegal 0.79% 10,333,380New 10,333,380
Global Fund person
Strategy --
China Stock
Fund
(Exchange)
National
Social
Security Others 0.78% 10,286,511New 10,286,511
Fund
Portfolio
406
National
Social
Security Others 0.75% 9,852,669New 9,852,669
Fund
Portfolio
101
China
Merchants
Bank Co.,
Ltd. --
Xingquan Others 0.71% 9,368,027New 9,368,027
Herun
Graded
Hybrid
Securities
Investment
Fund
Strategic investorsorgeneral
legal personsbecomingtop
ten ordinaryshareholderson None
account ofplacementofnew
shares (ifany)(seenote3)
1.Amongthetoptenshareholdersmentionedabove,GuangdongZhongshunPaper
Whether the GroupCo.,Ltd.andChungShunCo.aretheenterprisescontrolledbyDeng
above-mentioned Yingzhong,DengGuanbiaoandDengGuanjie.Thatis,GuangdongZhongshun
shareholders havearelated PaperGroupCo., Ltd.andChungShunCo.arerelatedparties.
party relationshiporare 2.TheCompanydoesnotfigureoutwhetherthereisarelatedpartyrelationship
persons actinginconcert betweenothershareholders,andwhetherthereisapersonactinginconcertas
stipulatedintheAdministrativeMeasuresfortheDisclosureofInformationon
ChangesinShareholders'ShareholdingofListedCompanies.
Holdingsofthetoptenordinaryshareholdersnotsubjecttorestrictionsonsales
Number ofordinarysharesheldthatarenot Typeofshares
Nameofshareholder subjecttorestrictionsonsalesattheendofthe Typeofshares Numberof
reportingperiod shares
Guangdong ZhongshunPaper 375,655,958RMB-denominate 375,655,958
Group Co.,Ltd. dordinaryshares
Chung ShunCo. 266,504,789RMB-denominate 266,504,789
d ordinaryshares
Hong KongSecurities 100,420,938RMB-denominate 100,420,938
Clearing Co.,Ltd. dordinaryshares
China MerchantsBankCo.,
Ltd. -XingquanHeyiFlexible RMB-denominate
Allocation GradedHybrid 14,326,980dordinaryshares 14,326,980
Securities InvestmentFund
(LOF)
C&S PaperCo., Ltd.--Phase RMB-denominate
II EmployeeStockOwnership 11,709,583dordinaryshares 11,709,583
Plan
Investec AssetManagement
Co., Ltd.-- InvestecGlobal 10,333,380RMB-denominate 10,333,380
Fund Strategy-- ChinaStock dordinaryshares
Fund (Exchange)
National SocialSecurityFund 10,286,511RMB-denominate 10,286,511
Portfolio 406 dordinaryshares
National SocialSecurityFund 9,852,669RMB-denominate 9,852,669
Portfolio 101 dordinaryshares
China MerchantsBankCo.,
Ltd. -- XingquanHerun 9,368,027RMB-denominate 9,368,027
Graded HybridSecurities dordinaryshares
Investment Fund
Li Hong 8,706,669RMB-denominate 8,706,669
d ordinaryshares
Whether thetopten 1.Amongthetoptenshareholdersmentionedabove,GuangdongZhongshunPaper
shareholders ofordinary GroupCo.,Ltd.andChungShunCo.aretheenterprisescontrolledbyDeng
shares withoutrestrictionson Yingzhong,DengGuanbiaoandDengGuanjie.Thatis,GuangdongZhongshun
sale, ortheabove-mentioned PaperGroupCo., Ltd.andChungShunCo.arerelatedparties.
shareholders andthetopten 2.TheCompanydoesnotfigureoutwhetherthereisarelatedpartyrelationship
ordinary shareholdershavea betweenothershareholders,andwhetherthereisapersonactinginconcertas
related partyrelationshipor stipulatedintheAdministrativeMeasuresfortheDisclosureofInformationon
are personsactinginconcert. ChangesinShareholders'ShareholdingofListedCompanies.
Description oftopten
ordinary shareholders None
engaging in margintrading
and short-selling(ifany)(see
note 4)
Whether the top ten ordinary shareholders and the top ten shareholders without restrictions on sale
conducted the agreed repurchase transaction during the reporting period
□ Yes √ No
The Company's top ten ordinary shareholders and top ten ordinary shareholders without restrictions
on sale did not conduct agreed repurchase transactions during the reporting period.
IV. The Change in Controlling Shareholder or De Facto Controller
Changes of controlling shareholders during the reporting period
□ Applicable √ Inapplicable
There was no change in the controlling shareholder during the reporting period.
Change of actual controlling shareholder during the reporting period
□ Applicable √ Inapplicable
There was no change in actual controlling shareholder during the reporting period.
Section VII Details of Preference Shares
□ Applicable √ Inapplicable
During the reporting period, there was no preference stock.
Section VIII Convertible Corporate Bonds
□ Applicable √ Inapplicable
During the reporting period, there was no convertible bond.
Section IX Profiles of Directors, Supervisors, and Senior ManagementI. Changes in Shareholding of Directors, Supervisors and Senior Managers
√ Applicable □ Inapplicable
Number Number Number
Numberof Number Number Numberof of of of
shares held ofshares ofshares sharesheld restricted restricted restricted
atthe increased decreased attheend shares shares shares
Name Title Position beginning inthe inthe ofthe grantedat granted granted
status ofthe current current reporting the inthe attheend
reporting period period period beginning current ofthe
period (shares) (shares) (shares) ofthe period period
(shares) period (shares) (shares)
(shares)
Deng Chairmanof
Yingzhong theBoardof Incumbent 6,239,411 6,239,411
Directors
Deng Vice Incumbent 4,957,473 4,957,473
Guanbiao Chairman
Deng General Incumbent
Guanbiao Manager
Deng Vice Incumbent 1,200,974 1,200,974
Guanjie Chairman
Liu Director Incumbent 2,813,967 703,417 2,110,550
Jinfeng
Liu Deputy
Jinfeng General Incumbent
Manager
Dai Zhenji Director Incumbent
Joint
Dai Zhenji General Incumbent 2,220,045 550,045 1,670,000
Manager
Zeng Yi Director Incumbent
Huang Independent Incumbent
Hongyan Director
Ge Independent Incumbent
Guangrui Director
He Haidi Independent Incumbent
Director
Chen Chairmanof
Haiyuan theBoardof Incumbent
Supervisors
Liang Supervisor Incumbent
Yongliang
Li Supervisor Incumbent 62,280 62,280
Youquan
Zhou Deputy
Qichao General Incumbent 663,672 165,000 498,672
Manager
Zhou Board Incumbent
Qichao Secretary
Chief
Dong Ye Financial Incumbent 284,725 71,000 213,725
Officer
YueYong Deputy Incumbent 13,374,991 631,250 12,743,741
General
Manager
Ye Deputy
Longfang General Incumbent
Manager
Deng Deputy
Guanjie General Resigned
Manager
Zhou Director Resigned
Qichao
Total -- -- 31,817,538 0 2,120,712 29,696,826 0 0 0
II. Changes in Directors, Supervisors and Senior Managers
√ Applicable □ Inapplicable
Name Position Type Date Reason
Zhou Qichao Director Resigned May26,2020 Voluntarilyresign
Dai Zhenji Director Elected June15,2020 Electedata meetingofthe BoardofDirectors
Dai Zhenji JointGeneral Appointed June22,2020 AppointedatameetingoftheBoardof
Manager Directors
Deputy June22,2020
Deng Guanjie General Dismissed Voluntarilyresign
Manager
Deng Guanjie ViceChairman Elected June22,2020 Electedata meetingoftheBoardofDirectors
Section X Corporate Bonds
Whether there are any publicly issued corporate bonds that are listed on the stock exchange and are
not due at the date of issuance of the semi-annual report approval or fail to be redeemed for full face
value at maturity
No
Section XI Financial Report
I. Audit Report
Whether the semi-annual report has been audited
□ Yes √ No
The semi-annual financial report has not been audited.
II. Financial Statements
The unit of financial statements is: RMB
1. Consolidated balance sheet
Prepared by: C&S Paper Co., Ltd.
June 30, 2020
Unit: RMB
Item June30,2020 December31,2019
Current assets:
Monetaryfunds 933,473,976.97 703,746,624.42
Settlementreserve
Lendingtobanksandother
financial institutions
Tradablefinancialassets
Derivativefinancialassets
Notesreceivable 608,962.30 301,904.32
Accountsreceivable 822,077,129.81 807,772,897.68
Accountsreceivable
financing
Prepayments 43,008,049.97 14,877,757.16
Premiumreceivable
Reinsurancepayables
Reinsurancecontractreserves
receivable
Otherreceivables 32,122,559.84 8,240,417.99
Including:Interest
receivable
Dividends
receivable
Financialassetsheldunder
resale agreements
Inventory 1,178,918,505.39 986,405,689.17
Contractassets
Assetsheldforsale 57,073,059.69 57,073,059.69
Non-currentassetsduewithin
one year
Othercurrentassets 252,093,066.16 165,567,805.78
Totalcurrentassets 3,319,375,310.13 2,743,986,156.21
Non-current assets:
Loansandadvancesto
customers
Creditrightinvestments
Othercreditrightinvestments
Long-termreceivable
Long-termequityinvestment
Investmentin otherequity
instruments
Othernon-currentassets
Investmentproperty 35,336,048.69 36,039,381.30
Propertyandequipment 2,907,864,726.86 2,921,392,106.87
Constructionworkin 22,256,470.46 55,734,236.91
progress
Productivebiologicalassets
Oil&gasassets
Right-of-useassets
Intangibleassets 167,613,708.93 168,731,781.83
Developmentexpenses
Goodwill 64,654.15 64,654.15
Long-termdeferredexpenses 16,792,595.91 13,686,397.24
Deferredincometaxassets 106,712,993.49 80,331,080.17
Othernon-currentassets 36,687,133.69 6,306,028.96
Totalnon-currentassets 3,293,328,332.18 3,282,285,667.43
Totalassets 6,612,703,642.31 6,026,271,823.64
Current liabilities:
Short-termloans 161,860,368.50 14,721,492.38
BorrowingsfromPBC
Placementsfrombanksand
other financialinstitutions
Tradablefinancialliabilities
Derivativefinancialliabilities
Notespayable 204,505,448.05 202,653,860.31
Accountspayable 586,807,107.68 578,212,781.22
Paymentsreceivedin 142,476,562.31
advance
Contractliabilities 79,981,886.78
Proceedsfromfinancial
assets soldunderrepo
Customerbankdepositsand
due tobanksandotherfinancial
institutions
Fundsfromsecuritiestrading
agency
Fundsfromsecurities
underwriting agency
Employeeremuneration 92,264,018.86 106,413,600.27
payable
Taxandfeespayable 101,707,460.78 101,670,618.11
Otherpayables 712,822,436.31 635,834,511.05
Including:Interests 41,625.00 173,259.89
payable
Dividendspayable 1,510,753.80 452,536.50
Transactionfeeand
commission receivable
Reinsurancepayable
Liabilitiesheldforsale
Non-currentliabilitiesdue 32,400,000.00
within oneyear
Othercurrentliabilities
Totalcurrentliabilities 1,939,948,726.96 1,814,383,425.65
Non-current liabilities:
Insurancecontractreserves
Long-termLoans 22,500,000.00
Bondspayable
Including:Preference
shares
Perpetualbonds
Leaseliabilities
Long-termpayable
Long-termemployee
remuneration payable
Provision
Deferredincome 102,975,006.83 82,367,831.33
Deferredincometax 37,539,267.58 30,016,107.43
liabilities
Othernon-currentliabilities
Totalnon-currentliabilities 140,514,274.41 134,883,938.76
Totalliabilities 2,080,463,001.37 1,949,267,364.41
Owner's equity:
Sharecapital 1,310,680,059.00 1,308,891,273.00
Otherequityinstruments
Including:Preference
shares
Perpetualbonds
Capitalreserve 858,352,488.79 760,731,416.57
Less:Treasuryshares 103,719,823.96 104,792,649.00
Othercomprehensiveincome
Specialreserves
Surplusreserves 53,205,582.86 53,205,582.86
Generalreserves
Retainedearnings 2,413,722,334.25 2,058,968,835.80
Totalequityattributabletothe 4,532,240,640.94 4,077,004,459.23
owners oftheparentcompany
Equitiesofminority
shareholders
Totalowner'sequity 4,532,240,640.94 4,077,004,459.23
Totalliabilitiesandowners' 6,612,703,642.31 6,026,271,823.64
equities
Legal representative: Deng Yingzhong Person in charge of accounting: Dong Ye Person in charge of
accounting department: Xu Xianjing
2. The parent company's balance sheet
Unit: RMB
Item June30,2020 December31,2019
Current assets:
Monetaryfunds 186,441,417.73 156,202,659.45
Tradablefinancialassets
Derivativefinancialassets
Notesreceivable
Accountsreceivable 87,304,544.39 127,203,426.87
Accountsreceivable
financing
Prepayments 7,274,161.53 2,565,716.66
Otherreceivables 42,634,717.52 637,511,752.54
Including:Interest
receivable
Dividends
receivable
Inventory 98,445,575.21 84,567,041.98
Contractassets
Assetsheldforsale
Non-currentassetsduewithin
one year
Othercurrentassets 154,346,353.09 129,377,576.74
Totalcurrentassets 576,446,769.47 1,137,428,174.24
Non-current assets:
Creditrightinvestments
Othercreditrightinvestments
Long-termreceivable
Long-termequityinvestment 1,918,835,099.92 1,231,245,128.96
Investmentin otherequity
instruments
Othernon-currentassets
Investmentproperty 18,370,935.84 18,745,192.09
Propertyandequipment 264,916,338.29 222,724,273.70
Constructionworkin 301,278.46 35,260,100.44
progress
Productivebiologicalassets
Oil&gasassets
Right-of-useassets
Intangibleassets 21,861,883.64 21,259,498.66
Developmentexpenses
Goodwill
Long-termdeferredexpenses
Deferredincometaxassets 43,951,221.49 18,366,334.29
Othernon-currentassets 5,485,050.50 4,521,074.21
Totalnon-currentassets 2,273,721,808.14 1,552,121,602.35
Totalassets 2,850,168,577.61 2,689,549,776.59
Current liabilities:
Short-termloans
Tradablefinancialliabilities
Derivativefinancialliabilities
Notespayable
Accountspayable 403,841,455.14 325,506,510.90
Paymentsreceivedin 28,227,454.47
advance
Contractliabilities 28,841,094.26
Employeeremuneration 28,873,838.23 24,280,403.99
payable
Taxandfeespayable 2,223,293.82 3,225,793.88
Otherpayables 135,745,112.94 167,279,884.09
Including:Interests
payable
Dividendspayable 1,510,753.80 452,536.50
Liabilitiesheldforsale
Non-currentliabilitiesdue
within oneyear
Othercurrentliabilities
Totalcurrentliabilities 599,524,794.39 548,520,047.33
Non-current liabilities:
Long-termLoans
Bondspayable
Including:Preference
shares
Perpetualbonds
Leaseliabilities
Long-termpayable
Long-termemployee
remuneration payable
Provision
Deferredincome 6,459,142.97 7,062,818.69
Deferredincometax 6,316,553.92 5,575,323.82
liabilities
Othernon-currentliabilities
Totalnon-currentliabilities 12,775,696.89 12,638,142.51
Totalliabilities 612,300,491.28 561,158,189.84
Owner's equity:
Sharecapital 1,310,680,059.00 1,308,891,273.00
Otherequityinstruments
Including:Preference
shares
Perpetualbonds
Capitalreserve 781,290,779.90 690,241,724.38
Less:Treasuryshares 103,719,823.96 104,792,649.00
Othercomprehensiveincome
Specialreserves
Surplusreserves 53,084,248.58 53,084,248.58
Retainedearnings 196,532,822.81 180,966,989.79
Totalowner'sequity 2,237,868,086.33 2,128,391,586.75
Totalliabilitiesandowners' 2,850,168,577.61 2,689,549,776.59
equities
3. Consolidated income statement
Unit: RMB
Item Firsthalfof2020 Firsthalfof2019
I. TotalOperatingIncome 3,616,201,399.80 3,172,389,026.96
Including:Operatingincome 3,616,201,399.80 3,172,389,026.96
InterestIncome
Grossearnedpremiums
Servicechargeandcommissionincome
II. TotalOperatingCost 3,081,938,688.14 2,839,540,130.78
Including:Operatingcosts 1,931,406,918.16 2,008,336,231.02
Interestexpenses
Servicechargeandcommissionexpenses
Surrendervalue
Netcompensationexpenses
Netappropriationofinsurancereserve
Policydividendsexpenses
Reinsurancecosts
Taxandsurcharges 26,920,007.36 17,781,889.77
Sellingexpenses 848,071,082.60 607,769,281.49
Administrativeexpense 185,701,854.01 126,787,650.22
R&Dexpenses 90,860,828.24 64,040,654.87
Financeexpenses -1,022,002.23 14,824,423.41
Including:Interestfees 1,140,788.29 8,797,536.95
Interest Income 4,060,998.02 1,693,449.28
Plus:Otherincome 15,174,645.20 4,557,020.41
Returnoninvestment("-" indicatesloss) 2,287,274.87 72,378.41
Including:Returnoninvestmentin
associates andjointventures
Incomefromthederecognitionof
financial assetsmeasuredatamortizedcost
Exchangegain("-" indicatesloss)
Gainsfromnetexposurehedging("-"
indicates loss)
Gainsfromchangesinfairvalue("-"
indicates loss)
Creditimpairmentlosses("-" indicatesloss) -1,423,699.75 1,029,502.08
Assetimpairmentlosses("-" indicatesloss) -850,381.40 -2,522,408.99
Returnondisposalofassets("-" indicates -896,870.05 -389,173.07
loss)
III. OperatingProfit("-" indicatesloss) 548,553,680.53 335,596,215.02
Plus:Non-operatingincome 3,169,241.16 2,735,749.22
Less:Non-operatingexpenditure 13,240,183.16 411,368.58
IV.TotalProfit("-" indicatestotalloss) 538,482,738.53 337,920,595.66
Less:Incometaxexpense 85,783,253.92 63,045,961.23
V.NetProfit("-" indicatesnetloss) 452,699,484.61 274,874,634.43
i. Classifiedbyoperationcontinuity
1.Netprofitfromcontinuedoperation("-" 452,699,484.61 274,874,634.43
indicates netloss)
2.Netprofitfromdiscontinuedoperation("-"
indicates netloss)
ii. Classifiedbyattributionofownership
1.Netprofitattributabletoownersoftheparent 452,699,484.61 274,874,634.43
company
2.Minorityshareholders'profitsandlosses
VI. NetAmountofOtherComprehensiveIncomeafter
Tax
Totalothercomprehensiveafter-taxnetincome
attributable toownersoftheparentcompany
i.Othercomprehensiveincomenotabletobe
reclassified intotheprofitorloss
1.Changesofre-measurementofthe
defined benefitplan
2.Othercomprehensiveincomecannotbe
transferred intotheprofitorlossunderequitymethod
3.Changesin fairvalueofinvestmentin
other equityinstruments
4.Changesin fairvalueofcreditrisk of
the enterprise
5.Others
ii.Othercomprehensiveincomereclassifiedinto
the profitorloss
1.Othercomprehensiveincometobe
transferred intotheprofitorlossunderequitymethod
2.Changesin fairvalueofinvestmentin
other creditor'srights
3.Financialassetsreclassifiedintoother
comprehensive income
4.Impairmentprovisionforcreditof
investment in othercreditor'srights
5.Reserveofcashflowhedge
6.Converteddifferencein foreign
currency financialstatements
7.Others
Totalothercomprehensiveafter-taxnetincome
attributable tominorityshareholders
VII. TotalComprehensiveIncome 452,699,484.61 274,874,634.43
Totalcomprehensiveincomeattributableto 452,699,484.61 274,874,634.43
owners oftheparentcompany
Totalcomprehensiveincomeattributableto
minority shareholders
VIII. EarningsperShare:
i.Basicearningspershare 0.3519 0.2162
ii.Dilutedearningspershare 0.3462 0.2156
For business combinations of the current period under common control, the net profit realized by
the combined party before the combination is: RMB0.00, the net profit realized by the combined
party in last period is: RMB0.00.
Legal representative: Deng Yingzhong Person in charge of accounting: Dong Ye Person in charge of
accounting department: Xu Xianjing
4. Income statement of the parent company
Unit: RMB
Item Firsthalfof2020 Firsthalfof2019
I. OperatingIncome 853,891,264.03 563,613,980.60
Less:Operatingcost 712,614,977.74 468,243,872.96
Taxandsurcharges 2,631,659.04 2,164,518.74
Sellingexpenses 66,501,515.28 55,775,298.51
Administrativeexpense 91,173,785.60 26,638,400.13
R&Dexpenses
Financeexpenses 672,377.63 -3,248,789.47
Including:Interestfees 6,705,100.34
InterestIncome 1,722,164.19 11,428,271.08
Plus:Otherincome 1,098,835.80 484,357.53
Returnoninvestment("-" indicatesloss) 142,109,515.77 72,378.41
Including:Returnoninvestmentin
associates andjointventures
Profitsfromderecognitionoffinancial
assets atamortizedcost("-" indicatesloss)
Gainsfromnetexposurehedging("-"
indicates loss)
Gainsfromchangesinfairvalue("-"
indicates loss)
Creditimpairmentlosses("-" indicatesloss) -1,477,826.65 -361,332.13
Assetimpairmentlosses("-" indicatesloss) -235,210.66 -165,408.68
Returnondisposalofassets("-" indicates -613,479.84 -469,019.25
loss)
II. OperatingProfit("-" indicatesloss) 121,178,783.16 13,601,655.61
Plus:Non-operatingincome 367,540.33 172,026.18
Less:Non-operatingexpenditure 11,762,151.77 55,898.92
III. TotalProfit("-" indicatestotalloss) 109,784,171.72 13,717,782.87
Less:Incometaxexpense -3,727,647.46 3,388,493.80
IV.NetProfit("-" indicatesnetloss) 113,511,819.18 10,329,289.07
i.Netprofitfromcontinuedoperation("-" 113,511,819.18 10,329,289.07
indicates netloss)
ii.Netprofitfromdiscontinuedoperation("-"
indicates netloss)
V.NetAmountofOtherComprehensiveIncomeafter
Tax
i.Othercomprehensiveincomenotabletobe
reclassified intotheprofitorloss
1.Changesofre-measurementofthe
defined benefitplan
2.Othercomprehensiveincomecannotbe
transferred intotheprofitorlossunderequitymethod
3.Changesin fairvalueofinvestmentin
other equityinstruments
4.Changesin fairvalueofcreditrisk of
the enterprise
5.Others
ii.Othercomprehensiveincomereclassifiedinto
the profitorloss
1.Othercomprehensiveincometobe
transferred intotheprofitorlossunderequitymethod
2.Changesin fairvalueofinvestmentin
other creditor'srights
3.Financialassetsreclassifiedintoother
comprehensive income
4.Impairmentprovisionforcreditof
investment in othercreditor'srights
5.Reserveofcashflowhedge
6.Converteddifferencein foreign
currency financialstatements
7.Others
VI. TotalComprehensiveIncome 113,511,819.18 10,329,289.07
VII. EarningsperShare:
i.Basicearningspershare
ii.Dilutedearningspershare
5. Consolidated statement of cash flows
Unit: RMB
Item Firsthalfof2020 Firsthalfof2019
I. CashFlowsfromOperatingActivities:
Cashreceivedfromsale ofgoodsorrendering 3,613,430,926.28 3,347,802,544.33
of services
Netincreasein depositsfromcustomers,
banks andnon-bankfinancialinstitutions
Netincreasein duetocentralbanks
Netincreasein placementsfromother
financial institutions
Cashreceivedfromthepremiumofdirect
insurance contracts
Netcashfromreinsurancebusiness
Netincreasein depositsandinvestmentofthe
insured
Cashobtainedfrominterest,netfeeand
commission
Netincreasein placementsfrombanksand
other financialinstitutions
Netincreaseinreposervicefund
Netcashfromagentsecuritiestrading
Taxrebates 120,214.00 33,279.31
Cashreceivedrelatedto otheroperating 76,989,647.10 40,848,294.35
activities
Sub-total ofcashinflowfromoperatingactivities 3,690,540,787.38 3,388,684,117.99
Cashpaidforgoodspurchasedandservices 2,226,834,895.97 1,911,521,962.24
rendered
Netloansandadvancesto customers
Netincreasein depositswiththecentralbank,
banks andnon-bankfinancialinstitutions
Cashpaidforclaimsofdirectinsurance
contracts
Netincreasein placementswithbanksand
non-bank financialinstitutions
Cashpaidforinterest,feeandcommission
Cashpaidfordividendsoftheinsured
Cashpaidtoandonbehalfofemployees 340,957,388.41 284,005,440.48
Taxpayments 259,738,653.85 135,395,919.51
Cashpaymentsrelatedtootheroperating 358,451,260.82 322,775,157.40
activities
Sub-total ofcashoutflowfromoperatingactivities 3,185,982,199.05 2,653,698,479.63
Net cashflowsfromoperatingactivities 504,558,588.33 734,985,638.36
II. CashFlowsfromInvestingActivities:
Cashfromrealizationofinvestment
Cashreceivedfromthereturn oninvestments 2,287,274.87 72,378.41
Netcashreceivedfromthe disposaloffixed 30,060,788.00 834,037.30
assets, intangibleassets,andotherlong-termassets
Netamountofcashreceivedfromthedisposal
of subsidiariesandotheroperatingorganizations
Cashreceivedrelatedto otherinvesting 127,105,000.00
activities
Sub-total ofcashinflowfrominvestingactivities 159,453,062.87 906,415.71
Cashpaidfortheacquisitionandconstruction
of fixedassets,intangibleassets,andother 188,914,982.57 358,177,083.79
long-term assets
Cashpaidforinvestments
Netincreasein pledgedloans
Netamountofcashpaidforacquisitionof
subsidiaries andotheroperatingorganizations
Cashpaymentsrelatedtootherinvesting 212,400,000.00
activities
Sub-total ofcashoutflowfrominvestingactivities 401,314,982.57 358,177,083.79
Net cashflowsfrominvestingactivities -241,861,919.70 -357,270,668.08
III. CashFlowsfromFinancingActivities:
Cashreceivedfromcapitalcontribution 85,194,915.00
Including:Proceedsreceivedbysubsidiaries
from minorityshareholders'investment
Cashreceivedfromborrowings 257,722,148.28 137,829,746.31
Cashreceivedrelatedto otherfinancing
activities
Sub-total ofcashinflowfromfinancingactivities 257,722,148.28 223,024,661.31
Cashpaidforrepaymentsofborrowings 164,917,045.18 339,611,101.42
Cashpaymentforinterestexpensesand 98,173,895.03 40,789,942.78
distribution ofdividendsorprofits
Including:Dividendandprofitpaidby
subsidiaries to minorityshareholders
Cashpaymentsrelatedtootherfinancing 40,446,866.90 16,307,993.62
activities
Sub-total ofcashoutflowfromfinancingactivities 303,537,807.11 396,709,037.82
Net cashflowsfromfinancingactivities -45,815,658.83 -173,684,376.51
IV.EffectofExchangeRateChangesonCashand 3,555,983.87 -457,305.00
Cash Equivalents
V.NetIncreaseinCashandCashEquivalents 220,436,993.67 203,573,288.77
Plus:Openingbalanceofcashandcash 675,996,852.97 371,129,472.06
equivalents
VI. ClosingBalanceofCashandCashEquivalents 896,433,846.64 574,702,760.83
6. Statement of cash flows of the parent company
Unit: RMB
Item Firsthalfof2020 Firsthalfof2019
I. CashFlowsfromOperatingActivities:
Cashreceivedfromsale ofgoodsor 746,412,698.39 468,701,075.17
rendering ofservices
Taxrebates 120,214.00 20,189.55
Cashreceivedrelatedto otheroperating 987,204,013.79 587,308,960.78
activities
Sub-total ofcashinflowfromoperating 1,733,736,926.18 1,056,030,225.50
activities
Cashpaidforgoodspurchasedand 491,197,761.73 221,022,475.25
services rendered
Cashpaidtoandonbehalfofemployees 66,675,479.70 36,380,500.54
Taxpayments 21,863,845.36 11,302,940.79
Cashpaymentsrelatedtootheroperating 428,397,315.97 567,775,504.30
activities
Sub-total ofcashoutflowfromoperating 1,008,134,402.76 836,481,420.88
activities
Net cashflowsfromoperatingactivities 725,602,523.42 219,548,804.62
II. CashFlowsfromInvestingActivities:
Cashfromrealizationofinvestment
Cashreceivedfromthereturn on 141,992,629.47 72,378.41
investments
Netcashreceivedfromthe disposalof
fixed assets,intangibleassets,andother 417,864.00
long-term assets
Netamountofcashreceivedfromthe
disposal ofsubsidiariesandotheroperating
organizations
Cashreceivedrelatedto otherinvesting 127,105,000.00
activities
Sub-total ofcashinflowfrominvesting 269,097,629.47 490,242.41
activities
Cashpaidfortheacquisitionand
construction offixedassets,intangibleassets, 18,608,797.77 6,231,934.84
and otherlong-termassets
Cashpaidforinvestments 665,600,000.00
Netamountofcashpaidforacquisition
of subsidiariesandotheroperating
organizations
Cashpaymentsrelatedtootherinvesting 152,400,000.00
activities
Sub-total ofcashoutflowfrominvesting 836,608,797.77 6,231,934.84
activities
Net cashflowsfrominvestingactivities -567,511,168.30 -5,741,692.43
III. CashFlowsfromFinancingActivities:
Cashreceivedfromcapitalcontribution 85,194,915.00
Cashreceivedfromborrowings
Cashreceivedrelatedto otherfinancing 3,420,478.96
activities
Sub-total ofcashinflowfromfinancing 88,615,393.96
activities
Cashpaidforrepaymentsofborrowings 197,600,000.00
Cashpaymentforinterestexpensesand 96,955,934.28 38,405,658.84
distribution ofdividendsorprofits
Cashpaymentsrelatedtootherfinancing 31,482,661.04 460,054.74
activities
Sub-total ofcashoutflowfromfinancing 128,438,595.32 236,465,713.58
activities
Net cashflowsfromfinancingactivities -128,438,595.32 -147,850,319.62
IV.EffectofExchangeRateChangesonCash 259,845.46 -1,684.66
and CashEquivalents
V.NetIncreaseinCashandCashEquivalents 29,912,605.26 65,955,107.91
Plus:Openingbalanceofcashandcash 156,151,560.82 95,287,969.57
equivalents
VI. ClosingBalanceofCashandCash 186,064,166.08 161,243,077.48
Equivalents
7. Consolidated statement of changes in owner's equity
Amount of the current period
Unit: RMB
Firsthalfof2020
Owner'sequityattributabletotheparentcompany Equitiesof
Item Otherequityinstruments Less:Treasury Other Special Surplus General Retained minority Totalowner's
Share capital PreferencePerpetualOthers Capitalreserve shares comprehensivereserves reserves reserves earnings Others Subtotal shareholders equity
shares bonds income
I. Balanceat
the Endof 1,308,891,273.00 760,731,416.57104,792,649.00 53,205,582.86 2,058,968,835.80 4,077,004,459.23 4,077,004,459.23
Last Year
Plus:
Alternation to
accounting
policies
Correction to
previous errors
Business
combinations
involving
enterprises
under common
control
Others
II. Balanceat
the Beginning 1,308,891,273.00 760,731,416.57104,792,649.00 53,205,582.86 2,058,968,835.80 4,077,004,459.23 4,077,004,459.23
of theYear
III. Changesin
the Period("-" 1,788,786.00 97,621,072.22 -1,072,825.04 354,753,498.45 455,236,181.71 455,236,181.71
Indicates
Decrease)
i. Total
comprehensive 452,699,484.61 452,699,484.61 452,699,484.61
income
ii. Capital
contributed or 1,788,786.00 97,621,072.22 -1,072,825.04 100,482,683.26 100,482,683.26
decreased by
owner
1. Ordinary 2,591,508.00 19,622,899.06 22,214,407.06 22,214,407.06
shares
contributed by
owners
2. Capital
contributed by
owners of
other equity
instruments
3. Sharebased
payments -802,722.00 77,998,173.16 -28,753,546.80 105,948,997.96 105,948,997.96
recognized as
owner's equity
4. Others 27,680,721.76 -27,680,721.76 -27,680,721.76
iii. Profit -97,945,986.16 -97,945,986.16 -97,945,986.16
distribution
1.
Appropriation
of surplus
reserves
2.
Appropriation
of generalrisk
reserves
3. Distribution
to owners(or -97,945,986.16 -97,945,986.16 -97,945,986.16
shareholders)
4. Others
iv. Interior
balance from
owner's equity
1. Added
capital (or
share capital)
from capital
reserves
2. Added
capital (or
share capital)
from surplus
reserves
3.
Compensation
of losswith
surplus
reserves
4. Retained
earnings of
carry-over of
changes ofthe
defined benefit
plan
5. Retained
earnings of
carry-over of
other
comprehensive
income
6. Others
v. Special
reserves
1.
Appropriation
for theperiod
2. Useforthe
period
vi. Others
IV.Closing
Balance ofthe 1,310,680,059.00 858,352,488.79103,719,823.96 53,205,582.86 2,413,722,334.25 4,532,240,640.94 4,532,240,640.94
Period
Amount of last period
Unit: RMB
Firsthalfof2019
Owner'sequityattributabletotheparentcompany Equitiesof
Item Otherequityinstruments Less:Treasury Other Special Surplus General Retained minority Totalowner's
Share capital PreferencePerpetualOthers Capitalreserve shares comprehensivereserves reserves reserves earnings Others Subtotal shareholders equity
shares bonds income
I. Balanceat
the Endof 1,286,692,741.00 609,403,941.54122,916,831.04 47,304,683.01 1,490,758,189.02 3,311,242,723.53 3,311,242,723.53
Last Year
Plus:
Alternation to
accounting
policies
Correction to
previous errors
Business
combinations
involving
enterprises
under common
control
Others
II. Balanceat
the Beginning 1,286,692,741.00 609,403,941.54122,916,831.04 47,304,683.01 1,490,758,189.02 3,311,242,723.53 3,311,242,723.53
of theYear
III. Changesin
the Period("-" 19,406,832.00 123,064,031.93 56,859,631.31 245,153,530.23 330,764,762.85 330,764,762.85
Indicates
Decrease)
i. Total
comprehensive 274,874,634.43 274,874,634.43 274,874,634.43
income
ii. Capital
contributed or 19,406,832.00 123,064,031.93 56,859,631.31 85,611,232.62 85,611,232.62
decreased by
owner
1. Ordinary
shares 19,675,500.00 65,519,415.00 85,194,915.00
contributed by
owners
2. Capital
contributed by
owners of
other equity
instruments
3. Sharebased
payments -268,668.00 57,544,616.93 -28,335,283.69 85,611,232.62 85,611,232.62
recognized as
owner's equity
4. Others
iii. Profit -29,721,104.20 -29,721,104.20 -29,721,104.20
distribution
1.
Appropriation
of surplus
reserves
2.
Appropriation
of generalrisk
reserves
3. Distribution
to owners(or -29,721,104.20 -29,721,104.20 -29,721,104.20
shareholders)
4. Others
iv. Interior
balance from
owner's equity
1. Added
capital (or
share capital)
from capital
reserves
2. Added
capital (or
share capital)
from surplus
reserves
3.
Compensation
of losswith
surplus
reserves
4. Retained
earnings of
carry-over of
changes ofthe
defined benefit
plan
5. Retained
earnings of
carry-over of
other
comprehensive
income
6. Others
v. Special
reserves
1.
Appropriation
for theperiod
2. Useforthe
period
vi. Others
IV.Closing
Balance ofthe 1,306,099,573.00 732,467,973.47179,776,462.35 47,304,683.01 1,735,911,719.25 3,642,007,486.38 3,642,007,486.38
Period
8. Statement of changes in owner's equity of the parent company
Amount of the current period
Unit: RMB
First halfof2020
Item Otherequityinstruments Less:Treasury Other Special Surplus Retained
Sharecapital Preference Perpetual Others Capitalreserve shares comprehensive reserves reserves earnings Others Totalowner'sequity
shares bonds income
I. Balanceatthe 1,308,891,273.00 690,241,724.38 104,792,649.00 53,084,248.58 180,966,989.79 2,128,391,586.75
End ofLastYear
Plus:
Alternation to
accounting policies
Correction to
previous errors
Others
II. Balanceatthe
Beginning ofthe 1,308,891,273.00 690,241,724.38 104,792,649.00 53,084,248.58 180,966,989.79 2,128,391,586.75
Year
III. Changesinthe
Period ("-" 1,788,786.00 91,049,055.52 -1,072,825.04 15,565,833.02 109,476,499.58
Indicates
Decrease)
i. Total
comprehensive 113,511,819.18 113,511,819.18
income
ii. Capital
contributed or 1,788,786.00 91,049,055.52 -1,072,825.04 93,910,666.56
decreased by
owner
1. Ordinaryshares 2,591,508.00 19,622,899.06 22,214,407.06
contributed by
owners
2. Capital
contributed by
owners ofother
equity instruments
3. Sharebased
payments -802,722.00 71,426,156.46 -28,753,546.80 99,376,981.26
recognized as
owner's equity
4. Others 27,680,721.76 -27,680,721.76
iii. Profit -97,945,986.16 -97,945,986.16
distribution
1. Appropriationof
surplus reserves
2. Distributionto
owners (or -97,945,986.16 -97,945,986.16
shareholders)
3. Others
iv.Interiorbalance
from owner's
equity
1. Addedcapital
(or sharecapital)
from capital
reserves
2. Addedcapital
(or sharecapital)
from surplus
reserves
3. Compensation
of losswith
surplus reserves
4. Retained
earnings of
carry-over of
changes ofthe
defined benefit
plan
5. Retained
earnings of
carry-over ofother
comprehensive
income
6. Others
v. Specialreserves
1. Appropriation
for theperiod
2. Useforthe
period
vi. Others
IV.Closing
Balance ofthe 1,310,680,059.00 781,290,779.90 103,719,823.96 53,084,248.58 196,532,822.81 2,237,868,086.33
Period
Amount of last period
Unit: RMB
First halfof2019
Item Otherequityinstruments Less:Treasury Other Special Surplus Retained Totalowner's
Sharecapital Preference Perpetual Others Capitalreserve shares comprehensive reserves reserves earnings Others equity
shares bonds income
I. BalanceattheEndof 1,286,692,741.00 545,219,407.25 122,916,831.04 47,183,348.7 157,579,995.32 1,913,758,661.26
Last Year 3
Plus:Alternationto
accounting policies
Correction to
previous errors
Others
II. Balanceatthe 1,286,692,741.00 545,219,407.25 122,916,831.04 47,183,348.7 157,579,995.32 1,913,758,661.26
Beginning oftheYear 3
III. Changesinthe
Period ("-"Indicates 19,406,832.00 100,192,495.54 56,859,631.31 -19,391,815.13 43,347,881.10
Decrease)
i. Totalcomprehensive 10,329,289.07 10,329,289.07
income
ii. Capitalcontributedor 19,406,832.00 100,192,495.54 56,859,631.31 62,739,696.23
decreased byowner
1. Ordinaryshares 19,675,500.00 65,519,415.00 85,194,915.00
contributed byowners
2. Capitalcontributed
by ownersofother
equity instruments
3. Sharebasedpayments
recognized asowner's -268,668.00 34,673,080.54 -28,335,283.69 62,739,696.23
equity
4. Others
iii. Profitdistribution -29,721,104.20 -29,721,104.20
1. Appropriationof
surplus reserves
2. Distributionto
owners (or -29,721,104.20 -29,721,104.20
shareholders)
3. Others
iv. Interiorbalancefrom
owner's equity
1. Addedcapital(or
share capital)from
capital reserves
2. Addedcapital(or
share capital)from
surplus reserves
3. Compensationofloss
with surplusreserves
4. Retainedearningsof
carry-over ofchangesof
the definedbenefitplan
5. Retainedearningsof
carry-over ofother
comprehensive income
6. Others
v.Specialreserves
1. Appropriationforthe
period
2. Usefortheperiod
vi. Others
IV.ClosingBalanceof 1,306,099,573.00 645,411,902.79 179,776,462.35 47,183,348.7 138,188,180.19 1,957,106,542.36
the Period 3
III. Basic Information of the Company
1. Development history of the company
C&S Paper Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited company
restructured from Zhongshan Zhongshun Paper Manufacturing Co., Ltd., with all shareholders of
the original company as its initiators. The Company has obtained a business license of enterprise
legal person with the registration number as 442000400013713 issued by Guangdong Province
Administration for Industry and Commerce on December 31, 2008.
In November 2010, approved by the Notice on the Approval of the Initial Public Offering of Shares of
C&S Paper Co., Ltd. issued by China Securities Regulatory Commission pursuant to Document
ZH.J.X.K. [2010] No. 1539, the Company issued 40,000,000 RMB-denominated ordinary shares (A
shares) to the public, each having a par value of RMB1. The share capital after the public offering was
RMB160,000,000.00.
On May 22, 2012, the Company held the 2011 Annual General Meeting of Shareholders and
approved the Proposal on the 2011 Profit Distribution Plan, applying for an increase of registered
capital by RMB48,000,000.00. With the base number of 160,000,000.00 total shares as at the end of
2011, the Company planned to convert capital reserve into new shares on the basis of three shares for
every ten existing shares. The registered capital after the change was RMB208,000,000.00.
On June 3, 2013, the Company held the 2012 Annual General Meeting of Shareholders and approved
the Proposal on the 2012 Profit Distribution Plan, applying for an increase of registered capital by
RMB104,000,000.00. With the base number of 208,000,000.00 total shares as at the end of 2012, the
Company planned to convert capital reserve into new shares on the basis of three shares for every ten
existing shares. The registered capital after the change was RMB312,000,000.00.
On May 8, 2014, the Company held the 2013 Annual General Meeting of Shareholders and approved
the Proposal on the 2013 Profit Distribution Plan, applying for an increase of registered capital by
RMB93,600,000.00. With the base number of 312,000,000.00 total shares as at the end of 2013, the
Company planned to convert capital reserve into new shares on the basis of three shares for every ten
existing shares. The registered capital after the change was RMB405,600,000.00.
On May 8, 2015, the Company held the 2014 Annual General Meeting of Shareholders and approved
the Proposal on the 2014 Profit Distribution Plan, applying for an increase of registered capital by
RMB81,120,000.00. With the base number of 405,600,000.00 total shares as at the end of 2014, the
Company planned to convert capital reserve into new shares on the basis of two shares for every ten
existing shares. The registered capital after the change was RMB486,720,000.00.
Pursuant to the resolutions of the seventh meeting of the third Board of Directors, the ninth meeting
of the third Board of Directors, the third extraordinary general meeting of 2015 and the tenth
meeting of the third Board of Directors, the Company planned to grant 17,133,000.00 restricted
RMB-denominated ordinary shares (A shares) to 242 incentive recipients including Liu Jinfeng
through private placement, with a par value of RMB1 per share and a grant price of RMB4.25 per
share. 16,957,000.00 restricted RMB-denominated ordinary shares (A shares) were granted to a
total of 199 incentive recipients with 43 employees withdrawing from the plan. The registered
capital after the change was RMB503,677,000.00.
Pursuant to the resolutions of the third extraordinary general meeting of 2015, the 11th meeting of
the third Board of Directors and the ninth meeting of the third Board of Supervisors, the Company
planned to grant 1,867,000.00 restricted RMB-denominated ordinary shares (A shares) to 68
incentive recipients including Duan Xianglei through private placement, with a par value of RMB1
per share and a grant price of RMB4.80 per share. 1,847,000.00 restricted RMB-denominated
ordinary shares (A shares) were granted to a total of 54 incentive recipients with 14 employees
withdrawing from the plan. The registered capital after the change was RMB505,524,000.00.
On October 24, 2016, at the 15th meeting of the third Board of Directors, Proposal on the Repurchase
and Deregistration of Partial Restricted Stock under the Company's Restricted Stock Incentive Plan
and Proposal on Changing the Registered Capital and Amending the Articles of Association of the
Company were reviewed and approved. Pursuant to the resolution of the meeting of the Board of
Directors, the Company applied for the repurchase and deregistration of 266,000.00 restricted stocks.
Among them, the repurchase price of restricted stocks granted in the first grant was RMB4.25 per
share, the repurchase price of reserved restricted stocks was RMB4.80 per share, and the registered
capital after the change was RMB505,258,000.00.
On May 10, 2017, the Company held the 2016 Annual General Meeting of Shareholders and
approved the Proposal on the 2016 Profit Distribution Plan, applying for an increase of registered
capital by RMB252,629,000.00. With the base number of 505,258,000.00 total shares as at the end of
2016, the Company planned to convert capital reserve into new shares on the basis of five shares for
every ten existing shares. The registered capital after the change was RMB757,887,000.00.
Pursuant to the resolutions of the 22nd and 24th meeting of the third Board of Directors in 2017, as
part of the incentive recipients were disqualified to hold incentive stocks after leaving the Company
or failing the appraisal, the Company planned to repurchase and deregister the restrictive stocks of
35 incentive recipients. Among them, 25 incentive recipients were granted in the first period with
382,462.50 restrictive stocks and ten incentive recipients were granted with 39,997.50 reserved
restrictive stocks. A total of 422,460.00 shares were repurchased and deregistered. The registered
capital after the reduction was RMB757,464,540.00.
On May 8, 2018, the Company held the 2017 Annual General Meeting of Shareholders and approved
the Proposal on the 2017 Profit Distribution Plan, applying for an increase of registered capital by
RMB530,225,178.00. With the base number of 757,464,540.00 total shares, the Company planned to
convert capital reserve into new shares on the basis of seven shares for every ten existing shares. The
registered capital after the change was RMB1,287,689,718.00.
Pursuant to the resolution of the fifth meeting of the fourth Board of Directors in 2018, as part of
the incentive recipients were disqualified to hold incentive stocks after leaving the Company or
failing the appraisal at the second release period of the Restricted Stock Incentive Plan, the
Company planned to repurchase and deregister the restrictive stocks of 46 incentive recipients.
Among them, 985,426.00 restrictive stocks were granted to 38 incentive recipients in the first grant
and 11,551.00 reserved restrictive stocks were granted to eight incentive recipients. A total of
996,977.00 shares were repurchased and deregistered. The registered capital after the reduction was
RMB1,286,692,741.00.
Pursuant to the resolutions of the ninth meeting of the fourth Board of Directors and the first
extraordinary general meeting in 2019, the Company planned to grant 21,717,500.00 restricted
RMB-denominated ordinary shares (A shares) to 671 incentive recipients including Dong Ye
through private placement, with a par value of RMB1 per share. 19,675,500.00 restricted
RMB-denominated ordinary shares (A shares) were granted to a total of 569 incentive recipients at
the price of RMB4.33, with 102 employees withdrawing from the plan. The registered capital after
the change was RMB1,306,368,241.00.
Pursuant to the resolutions of the 12th and 13th meeting of the fourth Board of Directors, as part of
the incentive recipients were disqualified to hold incentive stocks after leaving the Company or
failing the appraisal, the Company planned to repurchase and deregister the restrictive stocks of 32
incentive recipients. Among them, 211,803.00 restrictive stocks were granted to 22 incentive
recipients in the first grant and 56,865.00 reserved restrictive stocks were granted to ten incentive
recipients. A total of 268,668.00 shares were repurchased and deregistered.
Pursuant to the Proposal on Granting Reserved Stock Options and Restricted Stocks to Incentive
Recipients reviewed and approved at the 16th meeting of the fourth Board of Directors in 2019, the
Company planned to grant 64 incentive recipients with 3,500,000.00 restrictive stocks with a grant
price of RMB7.02 per share. The incentive plan actually granted 46 incentive recipients with
2,791,700.00 restricted ordinary shares due to the exiting of 18 incentive recipients. The registered
capital after the grant was RMB1,308,891,273.00.
As at December 31, 2019, the Company has had a registered capital of RMB1,308,891,273.00 and a
share capital of RMB1,308,891,273.00.
At the 23rd meeting of the fourth Board of Directors and the 19th meeting of the fourth Board of
Supervisors, Proposal on the Achievement of Exercise Conditions of the First Exercise Period of
Stock Option for the First Time under the Company's 2018 Stock Option and Restricted Stock
Incentive Plan was reviewed and approved. In conformity with 2018 Stock Option and Restricted
Stock Incentive Plan (Draft), the Board of Directors considered that the first exercise period
exercise conditions of the stock option granted for the first time had been fulfilled. The number of
incentive recipients in conformity with the exercise conditions reached 2,522 and the number of
stock options that have met exercise conditions was 3,431,505.00, with an exercise price of
RMB8.572 per share. During the reporting period, there were 2,591,508.00 stock options exercised,
with the registered capital increased by RMB2,591,508.00.
The Company held the 23rd meeting of the fourth Board of Directors, approved the Proposal on the
Repurchase and Deregistration of Partial Restricted Stock for the First Time under the Company's
2018 Stock Option and Restricted Stock Incentive Plan. Besides, the Company convened the second
extraordinary general meeting of Shareholders in 2020, approved the Proposal on Reducing the
Company's Registered Capital and Revising the Articles of Association. When the Phase I of
restricted stock granted for the first time under the Company's 2018 Stock Option and Restricted
Stock Incentive Plan was unlocked, 241 incentive recipients lost incentive qualification due to their
dismission before unlocking, unqualified personal assessment, and failure to get the full mark
though qualified in the personal assessment, and they agreed to repurchase and write off a total of
802,722.00 granted but not unlocked restricted stocks. In June 2020, the payment for the
repurchased and deregistered shares were made to the associated personnel. The follow-up
procedures of repurchase and deregistration as well as the industrial and commercial registration of
changes are being processed.
2. The registered address, form of organization, and headquarters of the Company
Form of organization: Company limited by shares
Registered address: Shenglong Village, Tanbei, Dongsheng Town, Zhongshan
Address of the headquarters the Company: 136 Caihong Avenue, West District, Zhongshan
3. Nature, scope, and main business activities the Company
C&S Paper Co., Ltd. and all its subsidiaries (hereafter generally referred to as the Company) are in
the household paper industry. The Company mainly engages in the R&D, production, processing,
and sales (including online sales): High-end household paper series products, tissue boxes,
sanitation supplies, cosmetics, non-woven products, daily necessities (limited to plastic products for
daily use, metalware for daily use, rubber products for daily use, and ceramics for daily use), and
chemicals for daily use (excluding hazardous chemicals), Class I medical devices. Pulp import and
export (excluding state trading commodities; products in the quota system or requiring a license are
applied for in line with relevant national regulations). Operations and production of Class II and III
medical devices (involving the production of medical devices and cosmetics) (Business activities
above are not restricted by the Special Administrative Measures for the Access of Foreign
Investment) (Business activities subject to approval in accordance with laws shall not be carried out
until approval from competent authorities has been obtained.) )
Since March 2020, the Company expanded its business realm to include medical device-related
businesses.
4. De facto controller of the Company
The corporate actual controllers of the Company are Deng Yingzhong, Deng Guanbiao, and Deng
Guanjie (Deng Yingzhong is the other two’s father).
5. The issuer and the date of the approval of the financial statements
The financial statements were approved by the Board of Directors of the Company on August 6,
2020.
6. The scope of the consolidation of financial statements
As at June 30, 2020, there were 18 subsidiaries the Company that were included in the
consolidation. For details, please refer to “Note IX Equities in Other Entities”.
IV. Preparation Basis for Financial Statements
1. Basis of preparation
The recognition and measurement were made by the Company on a going concern basis and
according to the Accounting Standards for Business Enterprises - Basic Standards, and the specific
accounting standards based on actual transactions and events, and the financial statements are
prepared on such basis.
The recognition and measurement were made by the Company on a going concern basis and
according to the Accounting Standards for Business Enterprises - Basic Standards promulgated by
the Ministry of Finance (No.33 Document, No.76 Revision), and the 42 accounting standards,
guidelines for the application of the accounting standards for business enterprises, interpretation to
the accounting standards for business enterprises and other relevant regulations that are successively
promulgated on or after February 15, 2006 (hereinafter collectively referred to as "Accounting
Standards for Business Enterprises") and rules set out in No. 15 Preparation and Reporting Rules of
Information Disclosure of Public Offering Companies - General Rules for Financial Statements
(2014 Revision) issued by China Securities Regulatory Commission based on actual transactions
and events, and the financial statements are prepared on such basis.
In accordance with the relevant rules of Accounting Standards for Business Enterprises, the
financial accounting of the Company is based on accrual basis. Apart from some financial tools, the
accounting measurement of the financial statements is based on accounting costs. Provisions for
impairment of asset is set aside if it is recognized.
2. Going concern
The Company shall be a going concern for at least 12 months following the end of the reporting
period. There are no major events that will affect the Company’s operational ability, therefore the
assumption on which the financial statements are based is reasonable.
V. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates:
C&S Paper Co., Ltd. and all its subsidiaries have set out several specific accounting policies and
accounting estimates for transactions and events, such as the recognition of incomes, in accordance
with the Accounting Standards for Business Enterprises and their own operational characteristics.
Please refer to “Note V Descriptions for All.”
1. Statement of compliance with the accounting standards for business enterprises
The financial statements of the Company conform to the requirements set out for the Accounting
Standards for Business Enterprises. The statements truthfully and completely reflect the financial
status, operating results, cash flow, and other relevant information of the Company. In addition, the
financial statements of the Company are also in accordance with disclosure requirements for
financial statements and notes in No. 15 Preparation and Reporting Rules of Information
Disclosure of Public Offering Companies - General Rules for Financial Statements of the China
Securities Regulatory Commission (2014 Revision) in all major aspects.
2. Accounting period
The accounting year of the Company is from January 1 to December 31 according to the solar
calendar.
3. Operating cycle
The operating cycle of the Company normally refers to the periods during which the Company
purchases assets for processing and then gets cash or cash equivalents from the processed items.
Normally, the operating cycle of a company is shorter than a year. The Company sets 12 months as
a full operating cycle and uses the 12-month period as a standard for the liquidity of assets and
liabilities.
4. Standard currency for accounting
RMB is the main currency in Chinese mainland, where C&S Paper Co., Ltd. and its subsidiaries are
located. Therefore, the standard currency for accounting for C&S Paper Co., Ltd. and its
subsidiaries is RMB. The currency for accounting used in the Company’s financial statements is
RMB.
5. The accounting processing measures of business combinations involving enterprises under
common control and business combinations involving enterprises not under common control
Business combinations refer to the combination of two or more independent enterprises to form a
reporting entity of transactions and events. Business combination can be classified as business
combinations involving enterprises under common control and business combinations involving
enterprises not under common control.
(1) Business combinations involving enterprises under common control
Business combinations under common control means enterprises involving business combination
are under ultimate rather than temporary control by one party or the same multi-parties before and
after combination. For business combinations under common control, those who obtain control of
enterprises involving business combination on combination date are the combining party while
enterprises involving business combination are the combined party. Combination date is the date
that the combining party actually obtains control of the combined party.
Assets and liabilities that the acquirer gets from the acquiree are calculated and measured at the
book values of the date of combination. If there were differences between the book values of the net
assets and the book values of the combined consideration (or the face values of the issued shares)
the acquirer receives, the differences will be used to adjust capital reserves (share premium). Where
capital reserves (share premium) are insufficient to offset, retained earnings shall be adjusted.
All direct expenses related to the business combinations paid by the acquirer shall be included in
current profits and losses upon occurrence.
(2) Business combinations not under common control
Business combinations not under common control means enterprises involving business
combination are not under ultimate control by one party or the same multi-parties before and after
combination. For business combinations not under common control, those who obtain control of
enterprises involving business combination on the acquisition date are the acquirer while other
enterprises involving business combination are the acquiree. Acquisition date is the date that the
acquirer actually obtains control of the acquiree.
For business combinations not under common control, the costs of combinations include the assets
the acquirer pays, liabilities the acquirer bears, and the fair value of the equity securities issued on
the date of combinations for the acquisition of control over the acquiree. The costs of auditing, legal
services, evaluation consulting, and other management fees incurred for business combinations
shall be included in current profits and losses. The transaction costs of the equity securities and debt
securities issued by the acquirer shall be included in the initially confirmed amounts of equity
securities and debt securities. The contingent consideration involved shall be included in the costs
of business combinations. If, within 12 months after the acquisition, there is new or further evidence
for conditions that have already been existed on the acquisition and the contingent consideration
shall be re-adjusted, the combination goodwill shall also be adjusted accordingly. The acquirer’s
costs of business combinations and its identifiable net assets obtained from business combinations
shall be assessed at the fair values of the acquisition date. If the costs of business combinations were
higher than the identifiable net assets of the acquiree on the date of the purchase, the gap between
them shall be confirmed as goodwill. If the costs of business combinations were lower than the fair
values of the identifiable net assets of the acquiree on the date of the purchase, the identifiable
assets of the acquiree, contingent liabilities of the fair values, and costs of business combinations
shall all be reviewed. After review, if the costs of business combinations were still lower than the
fair values of the identifiable net assets of the acquiree, the gap between them shall be included in
current profits and losses.
If the deductible temporary differences the acquirer gets from the acquiree were not eligible to be
confirmed as deferred tax asset, they shall be confirmed providing that within 12 months of the
acquisition, there would be new or further evidence for the conditions that have already been
existed on the acquisition date that the economic profits the deductible temporary differences would
bring the acquiree could be achieved. At the same time, the goodwill shall be reduced. Where the
goodwill is insufficient to be deducted, the gap between them as be include in current profits and
losses. Apart from the aforementioned situations, all deductible temporary differences confirmed to
be relevant to business combinations shall be included in current profits and losses.
For business combinations not under common control that are achieved through multiple steps,
whether they can be regarded as package deals shall be in accordance with Document Notice No.5
of the Interpretation of Accounting Standards for Business Enterprises of the Ministry of Finance
(C.K. [2012] No.19), and the standards of “package deals” set out in Article 51 of the Document
Accounting Standard for Business Enterprises – Consolidation of Financial Statements No.33
(please refer to Note V, 6 "Methods for preparation of consolidated financial statements" (2)). In
case of "package deals", accounting processing shall be done by referring to the descriptions in
previous paragraphs of this section and 22 "Long-term equity investments" in Note V herein; if not
"package deals", accounting processing shall be done by distinguishing individual financial
statements from consolidated financial statements:
In individual financial statements, the initial investment costs shall be the sum of the book value of
the equity investment of the acquiree held before the acquisition date and the new investment costs
on the acquisition date; if other comprehensive income is involved in the equities of the acquiree
before the acquisition date, accounting processing shall be done for the comprehensive income
related to this investment by adopting the same basis for directly disposing of relevant assets or
liabilities of the acquiree during the disposal of this investment (that is, except for the corresponding
shares of the changes caused by re-measurement of the net liabilities or net assets of the defined
benefit plan by the acquiree, which are accounted by the equity method, others shall be transferred
to the return on investment of the current period).
In consolidated financial statements, the equities of the acquiree held before the acquisition date
shall be re-measured at the fair value of the equities on the acquisition date, and the difference
between the fair value and the book value shall be recognized as the return on investment of the
current period; if other comprehensive income is involved in the equities of the acquiree before the
acquisition date, accounting processing shall be done for the comprehensive income related to this
investment by adopting the same basis for directly disposing of relevant assets or liabilities of the
acquiree (that is, except for the corresponding shares of the changes caused by re-measurement of
the net liabilities or net assets of the defined benefit plan by the acquiree, which are accounted by
the equity method, others shall be transferred to the return on investment of the current period).
6. Methods for preparation of consolidated financial statements
(1) Principles of determining the scope of consolidated financial statements
The scope of consolidation of consolidated financial statements shall be subject to the basis of
control. Control refers to the power the investor owns against the investee, which allows the
investor to enjoy the variable return by attending relevant activities held by the investee, and to be
capable of using such power to affect the amount of return. The scope of consolidation is the
Company and all of its subsidiaries. Subsidiaries refer to entities controlled by the Company.
The Company shall reassess whether it controls an investee if facts and circumstances indicate that
there are changes to the relevant elements of control as defined above.
(2) Methods for preparation of consolidated financial statements
The Company shall include the subsidiaries in the scope of consolidation from the date it acquires
the de facto control over the net assets and the decision-making of production and operations of
such subsidiaries; accordingly, the Company shall terminate including them in the scope of
consolidation from the date it loses the de facto control. In terms of subsidiaries disposed of, the
operating results and cash flows before the disposal date have been included in the consolidated
income statements and the consolidated cash flow statements appropriately; as for subsidiaries
disposed of in current period, the opening balance in the consolidated balance sheet shall not be
adjusted. Regarding subsidiaries added, which are incorporated by combining enterprises not
controlled by the same de facto controller, the operating results and cash flows after the acquisition
date have been included in the consolidated income statements and the consolidated cash flow
statements appropriately, and the opening and comparative balance in the consolidated balance
sheet shall not be adjusted. In case of subsidiaries added, which are incorporated by combining
enterprises controlled by the same de facto controller, among which the Company absorbs the
combined party, the operating results and cash flows of the combined party from the beginning of
the period of combination to the combination date have been included in the consolidated income
statements and the consolidated cash flow statements appropriately, and the comparative balance in
the consolidated balance sheet shall be adjusted simultaneously.
In case of inconsistencies in the accounting policies or periods between subsidiaries and the
Company during preparation of consolidated financial statements, financial statements of
subsidiaries shall be adjusted according to the accounting policies and periods adopted by the
Company when necessary. For subsidiaries acquired by combining enterprises not controlled by the
same de facto controller, their financial statements shall be adjusted based on the fair value of the
identifiable net assets on the acquisition date.
All major business transaction balance, transactions, and unrealized profit of the Company shall be
offset during preparation of consolidated financial statements.
Shareholders' equities of subsidiaries and the part of the net profit and loss of the current period not
attributable to the Company shall be presented separately under the shareholders' equities and the
net profit in the consolidated financial statements as equities of minority shareholders and minority
shareholders' profits and losses. Shares of equities of minority shareholders in the net profit and loss
of the current period of subsidiaries shall be presented under the "minority shareholders' profits and
losses" in the consolidated income statement. If the loss of a subsidiary which is shared by its
minority shareholders exceeds the minority shareholders' share in the opening balance of the
subsidiary, the minority interest shall be reduced.
If the parent company loses control of a subsidiary due to partial disposal of equity investment or
other reasons, it shall re-measure the remaining equity at fair value on the date of loss of control.
The sum of consideration obtained from equity disposal and fair value of the remaining equity,
minus the difference between the parent company's share of the subsidiary's net assets that is
continuously calculated from the acquisition date, shall be recognized as investment income for the
reporting period when the loss of control takes place. Accounting processing shall be done for the
other comprehensive income related to this investment in the subsidiary's equities by adopting the
same basis for directly disposing of relevant assets or liabilities of the acquiree during the loss of
control (that is, except for the changes caused by re-measurement of the net liabilities or net assets
of the defined benefit plan by the previous subsidiary, others shall be transferred to the return on
investment of the current period). After that, subsequent measurement shall be done for the
remaining equity of this part as per relevant provisions in the Accounting Standards for Enterprises
No. 2 - Long-term Equity Investment or the Accounting Standards for Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments. See "Note V, 22" or "Note V, 10" for
details.
If the Company disposes of investments in a subsidiary's equities by steps via transactions until it
loses control, it shall check whether these transactions from disposal of the investments in the
subsidiary's equities to the loss of control are package deals. If the terms, conditions, and economic
effects of transactions on disposing of equity investment in the subsidiary conform to one or more
of the following circumstances, that means multiple transactions should be treated as package deals
in accounting processing: 1) Those transactions are reached at the same time or after taking into
consideration the influence of each other; 2) those transactions together produce a complete
commercial outcome; 3) the occurrence of one transaction depends on the occurrence of at least one
other transaction; 4) one transaction alone does not seem to be economical, but all those
transactions are economical when are considered as a whole. In terms of transactions that are not
package deals, accounting processing shall be done for each transaction following the principles
applicable to the "partial disposal of long-term equity investment in a subsidiary without loss of
control" or the "loss of control over a subsidiary due to partial disposal of equity investment or
other reasons" (see the previous paragraph for details). If those transactions are package deals, each
transaction shall be treated as a transaction that results in loss of control of the subsidiary in
accounting processing. However, the difference between each disposal price before loss of control
and the parent company's share of the subsidiary's net assets corresponding to the disposal
investment shall be recognized as other comprehensive income in the consolidated financial
statements and, after loss of control, transferred to the profit and loss of the current reporting period.
7. Classification of joint operation arrangements and accounting processing methods for joint
operations
8. Criteria for recognition of cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits that can be used for payment at any time,
and short-term (due within three months from the acquisition date) investment with high liquidity
held which is easy converted cash in a known amount with small risk of value changes.
9. Translation of transactions and financial statements denominated in foreign currencies
(1) Methods for translation of transactions denominated in foreign currencies
At the initial recognition of foreign currency transactions of the Company, foreign currency will be
translated into the amount of standard currency for accounting at the spot exchange rate or its
approximate exchange rate on the transaction date. However, the business of exchange of foreign
currencies or transactions related to the exchange of foreign currencies, foreign currency will be
translated into the amount of standard currency for accounting at the exchange rate actually
adopted.
(2) Methods for translation of monetary and non-monetary items in foreign currencies
On the balance sheet date, the foreign currency monetary items are translated at the spot exchange
rate on that date. Exchange difference resulting from the difference between the spot exchange rate
on the balance sheet date and that at the initial recognition or on the previous balance sheet date
shall be recognized as the profit and loss of the current period.
Non-monetary items that are measured at historical cost in foreign currencies shall still be converted
at the spot exchange rate on the transaction date with the amount of standard currency for
accounting unchanged. Non-monetary items that are measured at fair value in foreign currencies are
translated using the foreign exchange rates at the date the fair value is recognized. The difference
between the amount of standard currency for accounting after translation and the original amount of
the standard currency for accounting shall be treated as a change in fair value (including the change
in the exchange rate) and recognized as the profit and loss of the current period or other
comprehensive income.
(3) Methods for translation of foreign-currency financial statements
Foreign-currency financial statements of overseas operations shall be translated into RMB financial
statements by the following methods: The assets and liabilities in the balance sheet shall be
converted at the spot exchange rate on the balance sheet date; except "undistributed profits", all the
other owner's equity items are converted at the spot exchange rate at the time of occurrence. Income
and expense items in the income statement shall be translated using the foreign exchange rates
ruling at the dates of the transactions. Difference resulting from translation of foreign-currency
financial statements by the following methods shall be recognized as other comprehensive income.
Translation of comparative financial statements shall be subject to the above provisions.
10. Financial instruments
When the Company becomes a party to a financial instrument contract, its financial instrument is
confirmed to be either financial assets or financial liabilities.
(1) Classification, recognition, and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow
characteristics of financial assets, the Company classified financial assets into the following
categories: financial assets measured at the amortized cost, financial assets measured at fair value
through other comprehensive income and financial assets measured at fair value through profit and
loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at
fair value through profit and loss of the current period, transaction costs are directly included in
profit and loss of the current period. For other types of financial assets, related transaction costs are
included in their initial recognized amounts. In terms of the accounts receivable or notes receivable
arising from selling products or providing labor service without or not considering major financing
component, the Company shall regard them as the initial recognition amount at the expected
consideration amount that it has rights to charge.
1) Assets carried at amortized cost
With the business model where the Company manages the financial assets carried at amortized cost,
the Company aims to charge the contract cash flows, and the characteristics of such contract cash
flows of this kind of financial assets are consistent with the basic lending arrangements. That is,
cash flows generated on specified dates are solely payments of principal and interest on the
principal amount outstanding. This kind of financial assets are subsequently measured at amortized
cost using the effective interest method. Gain or loss arising from amortization or impairment is
recognized in profit and loss of the current period.
2) Financial assets at fair value through other comprehensive income
The business model for managing the financial assets aims at both obtaining the contract cash flows
and selling the financial assets, and the characteristics of such contract cash flows of this kind of
financial assets are consistent with the basic lending arrangements. The Company measures this
kind of financial assets at fair value through other comprehensive income, but recognizes the
impairment losses or gains, exchange profit and loss, and interest income calculated by the effective
interest method as the profit and loss of the current period.
Additionally, the Company designates some non-tradable equity instruments as financial assets at
fair value through other comprehensive income. The Company recognizes relevant dividend income
from such financial assets as the profit and loss of the current period, and changes in fair value as
other comprehensive income. When such financial assets are derecognized, the accumulated gains
or losses previously recognized as other comprehensive income shall be transferred from other
comprehensive income to retained earnings and not recognized as the profit and loss of the current
period.
3) Financial assets at fair value through profit and loss of the current period
The above financial assets measured at amortized cost and financial assets other than those
measured at fair value through other comprehensive income are classified as financial assets at fair
value through profit and loss of the current period. Moreover, at initial recognition, to eliminate or
significantly reduce accounting mismatches, the Company can designate some financial assets as
financial assets at fair value through profit and loss of the current period. Such financial assets shall
be measured at fair value, and changes in fair value are recognized as the profit and loss of the
current period.
(2) Classification, recognition, and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities at fair value through
profit or loss and other financial liabilities. For financial liabilities at fair value through profit and
loss of the current period, transaction costs are directly included in profit and loss of the current
period. For other types of financial liabilities, related transaction costs are included in their initial
recognized amounts.
1) Financial liabilities at fair value through profit and loss of the current period
Financial liabilities at fair value through profit and loss of the current period include tradable
financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities
designated to measured at fair value through profit and loss of the current period at initial
recognition.
Tradable financial liabilities (including derivatives that are financial liabilities) are subsequently
measured at fair value, and changes in fair value -- except for those related to hedging accounting --
are recognized as profit and loss of the current period.
In terms of the financial liabilities designated at fair value through profit or loss, the changes in fair
value resulting from changes in the credit risk of the Company shall be recognized as other
comprehensive income; besides, when such liabilities are derecognized, the amount of accumulative
changes in fair value resulting from credit risk changes that are recognized as other comprehensive
income shall be transferred to retained earnings. Other changes in fair value shall be recognized as
the profit and loss of the current period. If the processing of the credit risk changes in such financial
liabilities by the above methods will result in expansion of the accounting mismatch in the profit
and loss, the Company shall recognize all gains or losses in such financial liabilities (including the
amount subject to the credit risk changes of the Company) as the profit and loss of the current
period.
2) Other financial liabilities
Except for the financial asset transfer not meeting the conditions for derecognition or the financial
liabilities or financial guarantee contract resulting from continuous involvement in the transferred
financial assets, other financial liabilities shall be classified into the financial liabilities measured at
amortized cost, which shall be subsequently measured at amortized cost, and the gains or losses
resulting from derecognition or amortization shall be recognized as the profit and loss of the current
period.
(3) Recognition basis and measurement method of financial asset transfer
Once one of the following conditions is met, the financial assets shall be derecognized: 1) The
contract right to charge the cash flows of the financial assets is terminated; 2) the financial assets
have been transferred, and almost all the risks and rewards of the ownership of the financial assets
are transferred to the transferee; 3) the financial assets have been transferred, and the Company has
given up the control over the financial assets although it does not transfer or retain almost all the
risks and rewards of the ownership of the financial assets.
If the Company has neither transferred nor retained almost all the risks and rewards of the
ownership of the financial assets, and the Company does not waive its control of the financial assets,
it shall recognize the relevant financial assets within the extent of its continuous involvement in the
transferred financial assets and recognize the relevant liabilities. The continuous involvement in the
transferred financial assets refers to the level of risk with which the Company is faced due to
changes in the financial asset values.
When overall transfer of financial assets meets the conditions for derecognization, the book value of
the transferred financial assets and the difference between the consideration received due to transfer
and the accumulative changes in fair value that is originally recognized as other comprehensive
income shall be recognized as the profit and loss of the current period.
When partial transfer of financial assets meets the conditions for derecognization, the book value of
the transferred financial assets shall be apportioned to the fair value between the derecognized part
and the recognized part, and the consideration received due to transfer and the difference between
the accumulative changes in fair value that is originally recognized as other comprehensive income,
which shall be apportioned to the derecognized part, and the apportioned the book value as
mentioned above shall be recognized as the profit and loss of the current period.
When the Company sells financial assets with additional recourse or transfers the endorsed financial
assets held, it shall check whether almost all the risks and rewards of the ownership of the financial
assets are transferred. If the Company has transferred almost all the risks and rewards of the
ownership of the financial assets to the transferee, it shall derecognize the financial assets; if the
Company retains almost all the risks and rewards of the ownership of the financial assets, it shall
not derecognize the financial assets; if the Company neither transfers nor retains almost all the risks
and rewards of the ownership of the financial assets, it shall judge whether it has retained control
over the assets and conduct accounting processing following the principles described in previous
paragraphs.
(4) Derecognition of financial liabilities
If current obligations of the financial liabilities (or some of the liabilities) have been released, the
Company shall derecognize the financial liabilities (or some of the liabilities). Where the Company
(borrower) and a lender sign an agreement to replace the existing financial liability by way of
assumption of new financial liability with the terms of the new financial liability substantially
different from those of the existing financial liability, it derecognizes the existing financial liability
while recognizing the new financial liability. If the contract terms of the existing financial liability
are materially changed in whole (or in part), the existing financial liability will be derecognized,
and the financial liability after changes of terms will be recognized as a new financial liability.
If a financial liability is derecognized in whole (or in part), the difference between the book value of
the derecognized portion and the consideration paid (including the non-cash assets transferred out
or the new financial liability assumed) is recognized as the profit and loss of the current period.
(5) Offsetting financial assets and financial liabilities
When the Company has the statutory right to offset the recognized amount of financial assets and
financial liabilities, and this statutory right is currently enforceable, and the Company plans to net
the financial assets or simultaneously realize the financial assets and pay off the financial liabilities,
the financial assets and financial liabilities are presented in the balance sheet at the net amount after
offsetting each other. In addition, financial assets and financial liabilities are presented separately in
the balance sheet and are not offset against each other.
(6) Methods for determining the fair value of financial assets and financial liabilities
The fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. If there are active markets
for a financial instrument, the Company will establish its fair value by using quotes in the active
markets. Quotes in active markets refer to prices that are readily available on a regular basis from
exchanges, brokers, trade associations, pricing service institutions, etc., and represent the prices of
market transactions that actually occur in a fair trade. If there is no active market, the Company
establishes fair value by using valuation techniques. Valuation techniques include referring to price
used in recent market transactions between knowledgeable, willing parties, taking into account the
current fair value of other financial instruments that is substantially the same, discounted cash flow
analysis and option pricing models, etc. During valuation, the Company adopts the valuation
techniques that are applicable under current circumstances and that are supported by sufficient
available data and other information, and selects the input values that are consistent with the
characteristics of the assets or liabilities considered by the market participants in the transaction of
the relevant assets or liabilities, and preferentially uses the relevant observable inputs. Unobservable
input values are used where the relevant observable input values are not available or are not
practicable.
(7) Equity instruments
An equity instrument refers to a contract that can prove the Company owns the remaining equity in
the assets after deducting all liabilities. The Company's issuance (including refinancing), repurchase,
sales or cancellation of equity instruments are treated as changes in equities, and transaction costs
related to equity transactions are deducted from equities. The Company does not recognize changes
in the fair value of equity instruments.
The distribution of dividends (including the "interest" generated by the instruments classified as
equity instruments) during the existence of the Company's equity instruments shall be treated as
profit distribution.
(8) Impairment of financial assets
The financial assets for which the Company needs to recognize impairment losses are financial
assets measured at amortized cost, debt instrument investments measured at fair value through other
comprehensive income, and lease receivable, mainly including notes receivable, accounts
receivable, and other receivables. In addition, for some financial guarantee contracts, impairment
reserves are set aside and credit impairment losses are recognized as per the accounting policies
described in this section.
1) Methods for recognizing impairment reserves
Based on the expected credit loss, the Company sets aside provisions for impairment of the above
items by methods (general method or simplified method) for measuring expected credit loss
applicable to them and recognizes credit impairment loss.
Credit loss refers to the difference between all contract cash flow receivable discounted at the
original effective interest rate under the contract and all expected cash flow receivable, i.e., the
present value of all cash shortages. Specifically, for financial assets that have been credit-impaired
at the time of purchase or origin, the Company discounts the financial assets at the credit-adjusted
actual interest rate.
The general method for measuring expected credit loss means that the Company assesses on each
balance sheet date whether the credit risk of financial assets has increased significantly since the
initial recognition. If yes, the Company measures loss reserves at an amount equivalent to the
expected credit loss in the entire duration; if not, the Company measures loss reserves at an amount
equivalent to the expected credit loss in the next 12 months. The Company considers all reasonable
and evidence-based information, including forward-looking information, when assessing expected
credit loss;
As for financial instruments with low credit risk on the balance sheet date, the Company measures
the loss reserves according to the expected credit loss in the future 12 months, assuming that its
credit risk has had no significant increase since its initial recognition. The Company chooses to
measure loss reserves according to the expected credit loss in the next 12 months or in the entire
duration based on whether the credit risk has increased significantly since initial recognition.
2) Standards for judging whether credit risk has increased significantly since initial recognition
If the probability of default (PD) of a financial asset in the expected duration recognized on the
balance sheet date is significantly higher than that in the expected duration recognized at the time of
initial recognition, the credit risk of the financial asset has increased significantly. Except for
special circumstances, the Company determines whether credit risk has increased significantly since
initial recognition by reasonably assessing the changes in the PD in the entire duration with the
changes in the coming 12 months.
3) Portfolio method for assessing expected credit risk based on portfolios
The Company assesses individual credit risk of financial assets with significantly different credit
risks. Examples include the following: Receivables from related parties; receivables that have
disputes with counterparties or those involved in litigation or arbitration; there are obvious signs
that the debtor is very unlikely to fulfill the repayment obligation.
In addition to financial assets whose individual credit risk is assessed, the Company divides
financial assets into different groups based on common risk characteristics, and assesses credit risk
on a portfolio basis.
4) Accounting processing methods for impairment of financial assets
At the end of the reporting period, the Company calculates the expected credit loss of financial
assets. If the expected credit loss is greater than the book value of its current impairment provisions,
the difference is recognized as an impairment loss; if it is less than the current book value of the
impairment provisions, the difference is recognized as impairment gains.
5) Methods for recognizing credit losses of financial assets
a. Notes receivable
The Company measures loss reserves for notes receivable at an amount equivalent to expected
credit loss in the entire duration. The Company divides notes receivable into different portfolios
based on their credit risk characteristics:
Item Basisfordeterminingtheportfolio
Banker's acceptance Acceptorsarebankswithlowcreditrisk.
Tradeacceptance Theagingoftradeacceptanceis usedascreditriskcharacteristics.
b. Accounts receivable
The Company measures loss reserves for accounts receivable without major financing component at
an amount equivalent to expected credit loss in the entire duration.
The Company measures loss reserves for accounts receivable and lease receivables with major
financing component at an amount equivalent to expected credit loss in the duration.
Except for accounts receivable whose individual credit risk is assessed, the Company divides
accounts receivable into different portfolios based on their credit risk characteristics:
Item Basisfordeterminingtheportfolio
Agingportfolio Theagingofaccountsreceivableis usedascreditriskcharacteristics.
Relatedpartyportfolio Proceedsofrelatedpartieswithinthescopeofconsolidation.
c. Other receivables
The Company adopts the amount equivalent to the expected credit loss in the coming 12 months or
in the entire duration to measure impairment losses based on whether the credit risk of other
receivables has increased significantly since initial recognition. Except for other receivables whose
individual credit risk is assessed, the Company divides other receivables into different portfolios
based on their credit risk characteristics:
Item Basisfordeterminingtheportfolio
Aging portfolio Theagingofotherreceivablesis usedascreditriskcharacteristics.
Related partyportfolio Proceedsofrelatedpartieswithinthescopeofconsolidation.
11. Notes receivable
See "Section XI" - "V. Significant Accounting Policies and Accounting Estimates" - "10. Financial
instruments" for details.
12. Accounts receivable
See "Section XI" - "V. Significant Accounting Policies and Accounting Estimates" - "10. Financial
instruments" for details.
13. Accounts receivable financing
None
14. Other receivables
Recognition methods and accounting processing methods for expected credit loss in other
receivables
See "Section XI" - "V. Significant Accounting Policies and Accounting Estimates" - "10. Financial
instruments" for details.
15. Inventories
(1) Classification of inventories
Inventories mainly include raw materials, goods in process, materials for consigned processing,
commodity stocks, packages, and low-value consumables.
(2) Pricing methods for inventory acquisition and delivery
Inventories are priced at actual cost when they are acquired. Inventory costs include the
procurement cost, processing cost, and other costs. Inventories are priced by the weighted average
method during receipt and delivery.
(3) Methods for recognition of the net realizable value of inventories and the provisions for
impairment of inventories
The net realizable value refers to the amount of the estimated selling price of the inventory minus
the estimated cost, estimated selling expenses, and related taxes and fees at the time of completion
in daily activities. When recognizing the net realizable value of inventories based on the substantial
evidence obtained, the Company also considers the purpose of holding the inventories and the
impact on matters after the balance sheet date.
On the balance sheet date, inventories are measured at the lower of costs and the net realizable
value. When the net realizable value is lower than costs, the Company sets aside provisions for
inventory impairment. Provisions for inventory impairment are set aside based on the difference
between the cost of individual inventory item and its net realizable value.
After provisions for the inventory impairment are set aside, if the influencing factors in previous
write-down of the inventory value disappear, causing the net realizable value of the inventory to be
higher than its book value, it shall be reversed within the amount of the provisions for inventory
impairment that have been set aside and recognized as the profit and loss of the current period.
(4) The perpetual inventory system is adopted for the inventories.
(5) Amortization method for low-value consumables and packages
The one-time amortization method is adopted for low-value consumables and packages upon
receipt.
16. Contract assets
None
17. Contract costs
None
18. Assets held for sale
The Company classifies non-current assets or a disposal group as held for sale (including exchange
of non-monetary assets with commercial substance, the same below) if their book values are
recovered principally through disposal rather than through continuing use. Specifically, the
following conditions shall be met simultaneously: A certain non-current asset or disposal group can
be sold immediately under the current conditions according to the practice of selling such assets or
disposal groups in similar transactions; the Company has made a resolution of an offer and obtained
the purchase commitment; the sale is expected to be completed within one year. Among them, the
disposal group refers to a group of assets that are disposed of as a whole through sale or other
means in a transaction, and the liabilities directly related to these assets that are transferred in the
transaction. If the asset group or the combination of asset groups to which the goodwill (obtained
from business combination) has been allocated in accordance with the Accounting Standards for
Business Enterprises No. 8 -- Impairment of Assets, the disposal group shall include the goodwill
allocated to it.
During initial measurement or re-measurement of the non-current assets and disposal groups
classified into held-for-sale assets on the balance sheet date, if the book value of such assets is
higher than the net value deducting the cost of offer, the book value is written down to the
recoverable amount by the Company, the written-down amount is recognized as profit and loss of
the current period and impairment provisions are set aside at the same time. For the disposal group,
the recognized asset impairment loss is first deducted from the book value of the goodwill in the
disposal group, and then deducted in proportion from the book value of non-current assets specified
in the applicable Accounting Standards for Business Enterprises No. 42 - Non-Current Assets and
Disposal Groups Held for Sale and Discontinued Operations ("Standards for Assets Held for Sale").
If the fair value of the disposal group held for sale on the subsequent balance sheet date increases
after deducting the selling expenses, the previously written down amount shall be restored, and
reversed within the amount of the asset impairment losses recognized for non-current assets as per
the Standards for Assets Held for Sale applicable after the assets are classified into those held for
sale, and the reversed amount shall be recognized as the profit and loss of the current period.
Besides, the book value of the reversed amount shall be increased in proportion according to the
proportion of the book value of the non-current assets specified in the Standards for Assets Held for
Sale applicable to those except for the goodwill in the disposal group. The book value of the
goodwill that has been deducted, and the asset impairment losses recognized before the non-current
assets are classified into assets held for sale as per the Standards for Assets Held for Sale shall not
be reversed.
Non-current assets held for sale and non-current assets in the disposal group are not subject to
depreciation or amortization. Interest and other expenses on liabilities in the disposal group held for
sale continue to be recognized.
When the non-current assets or disposal group no longer meets the conditions for classification into
the assets held for sale, the Company no longer classifies them into the category or removes the
non-current assets from the disposal group held for sale, and measures them at the lower of the
following two: (1) In terms of the book value before classification into assets held for sale, the
measurement standard is the amount after adjustment according to the depreciation, amortization, or
impairment that should have been recognized under the assumption that they are not classified into
assets held for sale; and (2) the recoverable amount.
19. Investments in creditor's rights
None
20. Other investments in creditor's rights
None
21. Long-term receivables
None
22. Long-term equity investments
The long-term equity investments herein refer to the long-term equity investments in which the
Company has control, joint control, or significant influence on the investee. Long-term equity
investments where the Company has no control, joint control, or significant influence on the
investee are accounted as financial assets measured at fair value through profit and loss of the
current period. Among them, as for those that are non-tradable, the Company may choose to
designate them as the financial assets measured at fair value through other comprehensive income
for accounting during initial recognition. See "Note V, 10" for their detailed accounting policies.
Joint control refers to the common control over a particular arrangement according to relevant
agreement, and that the decisions on relevant activities under such arrangement are subject to the
unanimous consent from the parties sharing the joint control. Significant influence means having
the power to participate in the financial and operating policy decision-making of the investee, but
cannot control or, together with other parties, jointly control the formulation of these policies.
(1) Determination of investment cost
For long-term equity investments obtained from combination of enterprises under common control,
the share of the combined party's owner's equity in the book value of the consolidated financial
statements of the final controlling party which is acquired on the combination day shall be regarded
as the initial investment cost for long-term equity investments. The capital reserves shall be
adjusted if there is difference between the initial investment cost of long-term equity investment and
the cash paid, the transferred non-cash assets, and the book value of the debts assumed; if the
capital reserve is insufficient to offset, the retained earnings shall be adjusted. If the equity
securities issued are used as the combination consideration, the share of the combined party's
owner's equity in the book value of the consolidated financial statements of the final controlling
party which is acquired on the combination day shall be regarded as the initial investment cost for
long-term equity investments; the total book value of the shares issued shall be the share capital; the
capital reserves shall be adjusted if there is difference between the initial investment cost of
long-term equity investments and the total book value of the shares issued; if the capital reserves are
insufficient to balance the difference, retained earnings shall be adjusted.
For long-term equity investments obtained from combination of enterprises under different control,
the combination costs on the acquisition date shall be used as the initial investment costs of the
long-term equity investment; the combination costs include the sum of the assets paid by the
acquirer, the liabilities incurred or assumed, and the fair value of the equity securities issued.
Intermediary expenses such as auditing, legal services, assessment and consulting and other related
management expenses incurred by the combining party or acquirer for the business combination
shall be recognized as the profit and loss of the current period.
Other equity investments except for long-term equity investments formed via business combination
are initially measured at cost. Subject to the way the long-term equity investments are obtained, the
costs shall be recognized based on the cash actually paid by the Company for acquisition, the fair
value of the equity securities issued by the Company, the value agreed in the investment contract or
agreement, the fair value or original book value of the assets swapped out in a non-monetary asset
exchange transaction, and the fair value of the long-term equity investment itself. Expenses, taxes,
and other necessary expenditures directly related to acquisition of long-term equity investments are
also recognized as investment costs.
(2) Subsequent measurement and recognition of profit and loss
If the Company has common control or significant influence over the investee (except for
constituting co-proprietors), the long-term equity investment shall be accounted for by using the
equity method. Additionally, applying the cost method to the Company's financial statements can
make controlled long-term equity investments in the investee.
1) Long-term equity investments accounted for using the cost method
When using cost method, the long-term equity investments are calculated according to the initial
investment cost. In the event that the investment is added or recovered, the cost of the long-term
equity investments shall be adjusted. With the exception of the price actually paid at the acquisition
of investment or cash dividends or profits included in consideration, declared but not issued yet, the
return on investment of the current period shall be recognized according to the cash dividends or
profits declared to be issued by the investee.
2) Long-term equity investments accounted for using the equity method
When using equity method, if the initial investment cost of long-term equity investments is greater
than the fair value share of the identifiable net assets entitled of the investee at the time of
investment, the initial investment of the long-term equity investments shall not be adjusted. If the
initial investment cost of long-term equity investments is lower than the fair value share of the
identifiable net assets entitled of the investee at the time of investment, the difference shall be
recognized as profit and loss of the current period and the cost of the long-term equity investments
shall be adjusted at the same time.
When using equity method, return on investment and other comprehensive income shall be
respectively determined based on the share of net profit or loss and other comprehensive income
realized by the investee that shall be attributable or assumed and the book value of long-term equity
investments shall be adjusted. Attributable share shall be calculated based on the profit or cash
dividends declared by the investee and the book value of long-term equity investments shall be
accordingly decreased. In respect to other changes of owner's equity of the investee in addition to
net profit or loss, other comprehensive income and profit distribution, the book value of long-term
equity investments shall be adjusted and recognized as capital surplus. When confirming the share
of the investee's net profit and loss, the Company shall confirm the investee's net profit after
adjustment based on the fair value of the identifiable net assets of the investee at the acquisition of
the investment. Where the accounting policy and accounting period adopted by the investee differs
from those of the Company, the investee's financial statements shall be adjusted according to the
Company's accounting policy and accounting period, and the return on investment and other
comprehensive income shall be recognized accordingly. Where the transactions between the
Company and the associates and joint ventures, and the assets that are invested or sold do not
constitute business, unrealized internal transaction profits and losses incurred between the Company
and the associates and joint ventures shall be offset with the part attributable to the Company which
is calculated on a due pro-rata basis, and the return on investment shall be recognized on this basis.
However, unrealized internal transaction losses incurred between the Company and the investees
shall not be offset if they fall under the impairment losses on assets transferred.
When confirming the limit of net loss incurred by the investee, the limit is the extent that the book
value of the long-term equity investments and other long-term equity that substantially constitutes a
net investment in the investment target is written down to zero. Additionally, if the Company has
obligations to assume additional losses of the investee, accrued liabilities are recognized according
to the expected obligation, and recognized as investment losses for the period. Where the investee
records net profit in the future, the Company resumes and recognizes the profit-sharing amount
after such amount makes up the unrecognized loss-sharing amount.
23. Investment real estate
Measurement model for investment real estate
Measurement by the cost method
Depreciation or amortization method
Investment properties are held to generate rental income or earn capital gains or both and is not
occupied. Investment properties include land use rights leased out, land use rights held for transfer
after appreciation, buildings leased out, etc.
Investment real estate is initially measured at cost. Subsequent costs are included in the investment
real estate's book value, only when it is probable that future economic benefits associated with the
item will flow to the Company and the cost of the item can be measured reliably; Other subsequent
expenses are recognized as profit and loss of the current period when incurred.
The Company adopts the cost model for subsequent measurement of investment real estate, and
depreciates or amortizes the building based on its expected service life or land use right.
Impairment test method and impairment provision method for investment real estate are detailed in
"Note V, 31".
Investment properties are derecognized when they are disposed of, or permanently withdrawn from
use and it is expected that no economic benefit can be generated from its disposal. The income from
selling, transferring, writing off or destroying investment real estate, less its book value and relevant
taxes and fees, is recognized as profit and loss of the current period.
24. Fixed assets
(1) Recognition conditions
Fixed assets are tangible assets with a useful life of more than one accounting year that are held for
production or supply of goods or labor services, for rental to third parties, or for use in the
organizations.
Fixed assets shall only be recognized when relevant economic interest may flow into the Company
and costs thereof can be reliably measured. Fixed assets shall be initially measured at cost and by
taking into account the impact of estimated disposal expense.
(2) Depreciation method
Type Depreciation Depreciationlife Residual Annualdepreciationrate
method valuerate
Properties and Straight-line 20yearsand30 years 5%and10% 3.00%,3.17%,4.50%and4.75%
buildings depreciation
Equipment Straight-line 10yearsto20years 5%and10% 4.50%,4.75%to9.0%,9.50%
depreciation
Motor vehicles Straight-line 5years,8yearsand14 5%and10% 6.43%,6.79%,11.25%,11.88%,18.00%
depreciation years and19.00%
Office Straight-line 5yearsand8 years 5%and10% 11.25%,11.88%,18.00%and19.00%
equipment depreciation
Production Straight-line 1yearto5 years 5%and10% 18.00%,19.00%,30.00%,31.67%,
equipment depreciation 45.00%and47.50%
Estimated residual value refers to the current amount where, supposed the service life of a fixed
asset has expired and it is in the expected status of such expiration, the Company obtains from the
disposal of such asset after the estimated disposal expense is deducted.
(3) Determination basis, pricing method and depreciation method of fixed assets acquired
under finance leases
Leases of assets where substantially all the risks and rewards of ownership have been transferred
are classified as finance leases. Title may or may not eventually be transferred. The fixed asset
leased in through finance leases adopts the same depreciation policy for the finance leased assets as
those for which it has title rights. If the fixed asset can be reasonably ascertained that the ownership
of the asset leased can be obtained by the expiration of the tenancy, the asset is depreciated over its
service life; if not, the asset is depreciated over the shorter of the tenancy and the service life of the
leased asset.
25. Construction in process
Construction in progress is measured at actual project expenditure, comprising project expenditure
incurred during construction and other necessary cost incurred.
The Company's construction in progress is transferred to fixed assets when the assets are ready for
their intended use. If the constructed fixed assets have reached the expected usable status but have
not yet completed the final account for completed project, they shall be recognized as fixed assets
according to the estimated value, and accrued depreciation. After the completion of the final
account for completed project, the original estimated value is adjusted according to the actual cost,
but the original accrued depreciation amount is not adjusted.
Impairment test method and impairment provision method for construction in progress are detailed
in "Note V, 31".
26. Borrowing costs
Borrowing costs include interest on borrowings, amortizations of discounts or premiums, incidental
expenses, exchange difference resulting from foreign-currency borrowings, etc. The borrowing
costs that can be directly attributable to the acquisition, construction or production of an asset
eligible for capitalization shall be capitalized if the capital expenditures have been incurred, the
borrowing costs have been incurred, or the necessary purchase, construction or production activities
to make the assets reach the expected available or marketable state have begun. When the assets
with the purchase, construction or production meeting the capitalization conditions reach the
expected available or marketable state, they cease to be capitalized. Any other borrowing costs are
recognized as an expense in the period when they are incurred.
The amount of interest that shall be capitalized is determined based on the interest expenses
incurred in the period when a specifically borrowed fund is obtained less any income earned on the
unused borrowing fund as a deposit in a bank or as a temporary investment. Where funds are
borrowed for a general purpose, the amount of interest that shall be capitalized is determined by
multiplying the part of the accumulative asset disbursements in excess of the weighted average asset
disbursement for the specifically borrowed fund by the capitalization rate of the general borrowing
used. The capitalization rate is the weighted average interest rates applicable to the general-purpose
borrowings.
During the capitalization, all exchange differences arising from earmarked foreign-currency
borrowings shall be capitalized; exchange differences arising from general-purpose
foreign-currency borrowings shall be recognized as profit and loss of the current period.
Assets eligible for capitalization refer to assets such as fixed assets, investment real estates and
inventories that can reach the expected available or marketable status after a long period of
purchase, construction or production activities.
If the acquisition, construction or production of an asset eligible for capitalization is continuously
suspended for over three months for abnormal reasons, capitalization of the borrowing costs shall
be suspended, until the acquisition, construction or production of the asset is resumed.
27. Biological assets
None
28. Oil & gas assets
None
29. Right-of-use assets
None
30. Intangible assets
(1) Pricing method, service life, and impairment test
Intangible assets refer to identifiable non-monetary assets without physical substance owned or
controlled by the Company.
Intangible assets are initially measured at cost. Costs are included in intangible assets' book value,
only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. The expenses on other items are
recognized as profit and loss of the current period when incurred.
Land use rights acquired are generally accounted for as intangible assets. With respect to self-built
buildings including plants, the relevant land use right expenses and buildings' construction costs are
accounted for as intangible assets and fixed assets, respectively. The price paid for the house and
building purchased are distributed between the land use right and the building. If it is difficult to
distribute, it shall all be included in fixed assets.
From the beginning of use of intangible assets with finite service life, the accumulated amount of
the original value less estimated net residual value and the provisions for asset impairment set aside
shall be amortized evenly in stages by straight-line method over their service life. Intangible assets
with uncertain service lives are not amortized.
The Company reviews the service life and amortization method of intangible asset with finite
service life at the end of the reporting period, and a change therein (if any) shall be accounted for as
a change in accounting estimates. Additionally, the Company reviews the service life and
amortization method of intangible asset with uncertain service life. If there is evidence that the
period when it brings economic benefits to the enterprise is foreseeable, its service life shall be
estimated and it is amortized according to the amortization policy for intangible assets with limited
service life.
Impairment test method and impairment provision method for intangible assets
Impairment test method and impairment provision method for intangible assets are detailed in "Note
V, 31".
(2) Accounting policy for expenditure on internal research and development
The Company classifies the expenditure on an internal research and development project into
expenditure on the research phase and expenditure on the development phase.
Expenditure on the research phase is recognized as profit and loss of the current period when
incurred.
Expenditure on the development phase is recognized intangible asset when all the following criteria
are met, while expenditure in the development phase that does not meet the following criteria is
recognized as profit and loss of the current period when incurred.
1) the technical feasibility of completing the intangible asset so that it will be available for use or
sale;
2) the intention to complete the intangible asset and use or sell it;
3) how the intangible asset will generate probable future economic benefits. Among other things,
the Company can demonstrate the existence of a market for the output of the intangible asset or the
intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
4) the availability of adequate technical, financial and other resources to complete the development
and the ability to use or sell the intangible asset;
5) the ability to measure reliably the expenditure attributable to the intangible asset during the
development.
Where the expenditure on research and development incurred cannot be classified into the
expenditure on research phase or the expenditure on development, it shall be recognized as profit
and loss of the current period when incurred.
31. Long-term assets impairment
The Company determines on the balance sheet date whether there is any indication that the
non-current and non-financial assets may been impaired, including fixed assets, construction in
progress, intangible assets with limited service life, and investment real estate measured using the
cost model, long-term assets of subsidiaries, joint ventures and associates. If there is any indication
that the asset is likely to be impaired, the Company will estimate the recoverable amount and carry
out the impairment test. Impairment tests shall be conducted each year for goodwill and intangible
assets with uncertain service life and not yet in use, whether or not there is any indication of
impairment.
If an impairment test shows that the recoverable amount of an asset is lower than its book value, the
difference is recognized as a provision for impairment and recognized as the impairment loss. The
recoverable amount is determined based on the higher of the net amount of the fair value of the
asset minus the disposal expenses and the present value of the expected future cash flow of the asset.
The fair value of asset is determined according to the price of the sales agreement in fair trade. If
there is no sales agreement but active assets in the market exist, the fair value is determined
according to the price offered by the buyer of the asset. If there is neither sales agreement nor active
assets in the market, the fair value of the asset shall be estimated based on the best information
available. The disposal costs include legal fees, relevant taxes and fees, as well as handling fess
related to the disposal of asset, and the direct costs incurred to ensure the asset reaches the
marketable state. The present value of the expected future cash flow of an asset shall be determined
by the discounted cash at an appropriate discount rate, on the basis of the expected future cash flow
generated during the continuous use or final disposal of an asset. Provisions for asset impairment
are calculated and recognized on an individual basis. If it is difficult to estimate the recoverable
amount of individual assets, the Company will determine the recoverable amount of the asset group
on the basis of the asset group to which the asset belongs. Asset group refers to the smallest asset
portfolio which can independently generate cash inflows.
When an impairment test is performed on the goodwill separately listed in the financial statement,
book value of such goodwill is apportioned to the asset group or combination of asset groups that
can benefit from the synergy effect of business combination. If the test result shows that the
recoverable amount of the asset group or combination of asset groups is lower than their book value,
corresponding impairment losses on goodwill will be recognized. The impairment loss shall first
offset against the book value that is apportioned to asset group or a combination of asset groups,
and then offset against the book value of assets excluding goodwill in the asset group or the
combination of asset groups on a pro-rata basis according to the proportion of their book value.
Once the aforementioned asset impairment loss is recognized, it will not be reversed in subsequent
accounting periods even if the value can be recovered.
32. Long-term unamortized expenses
Long-term unamortized expenses are expenses which have been incurred but shall be amortized
over a period longer than one year, including the reporting period and the future periods. Long-term
unamortized expenses shall be amortized based on the straight-line method over the expected
benefit period.
33. Contract liabilities
A contract liability is the Group's obligation to transfer goods or services to a customer for which
the Group has received consideration from the customer.
Contract assets and liabilities within a single contract should be presented on a net basis. If the net
amount is debit balance, it shall be presented in the item of "contract assets" or "other non-current
assets" based on its liquidity. If the net amount is credit balance, it shall be presented in the item of
"contract liabilities" or "other non-current liabilities" based on its liquidity.
34. Employee remuneration
(1) Accounting treatment method for short-term remuneration
The Company's employee remuneration mainly includes short-term remuneration, post-employment
benefits, and dismissal benefits. Wherein:
Short-term remuneration includes salaries, bonuses, allowances and subsidies, employee welfare,
medical insurance fees, maternity insurance fees, employment injury insurance fees, housing
provident funds, labor union fees, staff education funds, and non-monetary welfare. The Company
shall, within the accounting period when its employees provide service, recognize actual short-term
remuneration as liabilities which shall be recognized as profit and loss of the current period or
relevant asset costs. Including, non-monetary benefits are measured at fair value.
(2) Accounting treatment method for post-employment benefits
Post-employment benefit includes basic endowment insurance, unemployment insurance, etc. It
also includes defined contribution plans. Where defined contribution plans are adopted, the
corresponding amount payable shall be recognized as profit and loss of the current period or
relevant asset costs in which it is incurred.
(3) Accounting treatment method for dismissal benefits
If the Company terminates the labor relationship with an employee before the employee's labor
contract expires, or proposes to give the employee compensation for encouraging the employee to
voluntarily accept dismissal, when the Company cannot unilaterally withdraw the termination of the
labor relationship plan or the dismissal proposal, or recognize the costs related to the restructuring
of the payment of the dismissal benefits, whichever is earlier, the liabilities arising from the
compensation give to the employee for the termination of the labor relationship with the employee
shall be recognized and recognized as profit and loss of the current period. However, if it is
expected that the dismissal benefits cannot be paid in full within twelve months after the end of the
annual reporting period, they shall be accounted for according to other long-term employee
remunerations.
Internal retirement schemes for employees shall be accounted for following the same principles of
the above dismissal benefits. Where the salaries and social insurance fees of early retirees to be paid
the Company from the date when employees stop providing services to the normal retirement date
meet the recognition conditions for projected liabilities, they shall be recognized as profit and loss
of the current period.
(4) Accounting treatment method for other long-term employee benefits
Other long-term benefits provided by the Company to employees that meet the conditions of the
defined contribution plan are accounted for in accordance with the defined contribution plan; other
long-term benefits are accounted for in accordance with the defined benefit plan.
35. Lease liabilities
None
36. Accrued liabilities
An obligation related to contingent issues and meeting the following conditions shall be deemed an
accrued liability: (1) such an obligation is a current one assumed by the Company; (2) fulfilling
such an obligation might cause economic benefits to flow out of the Company; and (3) the amount
of such an obligation is measurable reliably.
On the balance sheet date, a provision is measured at the best estimate of the expenditure required
to settle the related present obligation, with comprehensive consideration of factors such as the risks,
uncertainty and time value of money relating to a contingency.
An accrued liability is separately recognized as an asset and the recognized compensation amount
shall not exceed the book value of the accrued liability, when all or part of the expenses required to
pay off the accrued liability are expected to be compensated by a third party and the amount of
compensation is basically determined to be receivable.
37. Share-based payment
Share-based payment is the transaction made through granting equity instruments or bearing the
liabilities recognized based on such instruments in exchange for services rendered by employees or
other parties. The Company's share-based payment includes equity-settled share-based payment and
cash-settled share-based payment.
(1) Equity-settled share-based payment
Where the share payment is settled through equity for acquisition of service from employees, it
shall be measured at the fair value of the equity instruments granted to the employees. If the right
cannot be exercised until the vesting period ends or until the prescribed performance conditions are
met, the amount of such fair value shall, based on the best estimate of the number of vested equity
instruments, be recognized as the relevant costs or expenses by straight-line method/if the right can
be exercised immediately following the grant, the amount of such fair value shall be recognized as
the relevant costs or expenses on the grant date, and the capital reserve shall be increased
accordingly.
On each balance sheet date within the vesting period, the Company carries out the best estimation
based on such follow-up information as the variation of the number of vested staff acquired recently,
and revises the number of estimated vested equity instruments. The impact of the above estimates
shall be recognized as the relevant costs or expenses of the current period, and the capital reserve
shall be adjusted accordingly.
For an equity-settled share-based payment in return for the service of any other party, if the fair
value of the service of any other party can be reliably measured, it shall be measured at the fair
value of the service of any other party on the acquisition date; if the fair value of the service of any
other party can not be reliably measured, but the fair value of the equity instruments can be reliably
measured, it shall be measured at the fair value of the equity instruments on the acquisition date and
included in the relevant costs or expenses, and the shareholders' equity shall be increased
correspondingly.
(2) Cash-settled share payment
The cash-settled share-based payment shall be measured at the fair value of the Company's
liabilities determined based on shares or other equity instruments. If the right may be exercised
immediately after the grant, relevant costs or expenses shall be recognized the grant date, and the
liabilities shall be increased accordingly. If the right may not be exercised until the vesting period
ends or until the specified performance conditions are met, on each balance sheet date within the
vesting period, the services obtained in the current period shall, based on the best estimate of the
information about the exercisable right, be recognized as the relevant costs or expenses at the fair
value of the liability undertaken by the Company.
The fair value of liabilities is re-measured and any change thereto is recognized as profit and loss of
the current period on each balance sheet date and settlement date prior to settlement of the relevant
liabilities.
38. Preference shares, perpetual bonds and other financial instruments
None
39. Revenue
Accounting policy for recognition and measurement of revenue
The revenue is recognized when the customers take control of the relevant goods or services if the
contract between the Company and the customers meet all the following conditions: 1) the parties to
the contract has approved such contract and undertake to perform their respective obligations; 2) the
contract has specified the rights and obligations of the parties thereto and in connection with the
transfer of goods or provision of labor services; 3) the contract sets out clear payment terms related
to the transfer of goods; 4) the contract has commercial substance, meaning that the performance
thereof will change the risk, time distribution or amount of the Company's future cash flow; 5) the
Company is very likely to recover the consideration obtained by transferring goods to customers.
On the enforcing date of the contract, the Company identifies all individual performance obligations
in the contract, and apportions the transaction price to each individual performance obligation
according to the relative proportion of the individual selling price of the goods. When determining
the transaction price, the Company has considered the impact of such factors including variable
consideration, major financing component of the contract, non-cash consideration, and
consideration payable to the customer.
With respect to each individual performance obligation of the contract, the Company will recognize
the transaction price apportioned to such obligation based on the progress of performance during the
relevant performance periods, if any of the following conditions is met: 1) the customer obtains and
consumes the economic benefits brought by the Company's performance during such performance;
2) the customer can control the goods in progress during the Company's performance; 3) the goods
produced from the Company's performance has irreplaceable use, and in respect of the portion of
revenue arising from the Company's performance completed to date, the Company is entitled to
recognize revenue during the entire validity period of the contract. The progress of performance is
determined according to the nature of the transferred goods using the input or output method. When
such progress cannot be reasonably determined, if the costs incurred are expected to be
compensated, the Company recognizes revenue based on the amount of costs incurred, until the
progress of performance can be reasonably determined.
If none of the aforesaid conditions is met, the Company will recognize the transaction price
apportioned to such individual performance obligation when the customer obtains the control over
relevant goods. To decide whether the customer has obtained the control over goods, the Company
takes into account the following indications: 1) the enterprise has the present right to collection for
the goods, meaning the customer bears the present obligation to payment for the goods; 2) the
enterprise has passed the legal title to the goods to the customer, meaning the customer has had the
legal title to the goods; 3) the enterprise has transferred the physical possession of the goods to the
customer, meaning the customer has had the physical possession of the goods; 4) the enterprise has
transferred the major risks and remunerations concerning the title to the goods to the customer,
meaning the customer has obtained the major risks and remunerations concerning the title to the
goods; 5) the customer has accepted the goods; 6) other indications to show that the customer has
obtained the control over the goods.
Different business models are adopted for different businesses, which may lead to the differences in
the accounting policy for recognition of revenue.
40. Government grants
Government grants are monetary or non-monetary assets acquired by the Company from the
government free of charge, excluding the capital invested by the government as an investor and
granted corresponding owner's equity. Government grants are classified into government grants
related to assets and government grants related to income. The Company defines the government
grants for purchasing or constructing or otherwise forming long-term assets as asset-related
government grants; other government grants are defined as the income-related government grants.
Government grants shall be measured at the amount received or receivable if they are monetary
assets. Non-monetary government grants shall be measured at fair value; if the fair value cannot be
reliably obtained, they shall be measured at the nominal amount. The government grants measured
at the nominal amount shall be directly recognized as the profit and loss of the current period.
Asset-related government grants are recognized as deferred income, and as profit and loss of the
current period in stages according to a reasonable and systematic method over the service life of the
relevant assets. The income-related government grants shall be recognized as deferred income if
they are used to compensate relevant expenses or losses in subsequent periods, and shall be
recognized as profit and loss of the current period during the recognition of related expenses; the
grants used to compensate related expenses or losses incurred shall be directly recognized as profit
and loss of the current period.
The government grants related to both assets and income shall be accounted for by distinguishing
different parts; if it is difficult to distinguish, they shall be, as a whole, classified as income-related
government grants.
Government grants related to the Company's daily activities shall be recognized as other profit and
loss or write down relevant costs according to the essence of economic business; those unrelated to
the Company's daily activities shall be recognized as non-operating income and expenditure.
If the recognized government grants need to be returned and there is relevant deferred income
balance, the book balance of relevant deferred income shall be written off, and the excess shall be
recognized as profit and loss of the current period; otherwise, government grants shall be directly
recognized as profit and loss of the current period.
41. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
On the balance sheet date, the Company measures a current tax liability (or asset) arising from the
current and prior period based on the amount of income tax expected to be paid by the Company (or
returned by tax authority) calculated by related tax laws. The taxable income which is the basis for
calculation of the current income tax is calculated after appropriate adjustments to the pretax
accounting profits for the reporting period.
(2) Deferred income tax assets/deferred income tax liabilities
For the difference between the book value of certain assets and liabilities and their tax bases, and
the temporary differences between the book values and the tax bases of items, the tax bases of
which can be determined for tax purposes, but which have not been recognized as assets and
liabilities according to the tax laws, the Company recognizes deferred income tax assets and
deferred income tax liabilities using the balance sheet debt method.
Where the taxable temporary differences arise from the initial recognition of goodwill and the initial
recognition of an asset or liability arising from the transaction that is not a business combination,
nor at the time of the transaction, affects neither accounting profit and taxable profit (or deductible
loss), the relevant deferred income tax liability shall not be recognized. Additionally, in respect of
taxable temporary difference associated with to investments in subsidiaries, joint ventures and
associates, where the Company can control the timing of the reversal of the temporary differences
and it is probable that the temporary differences will not be reversed in the foreseeable future, the
relevant deferred income tax liability shall not be recognized. Other than the above exceptions, the
Company shall recognize deferred income tax liabilities arising out from all other taxable temporary
differences.
Where the taxable temporary differences arise from the initial recognition of an asset or liability
arising from the transaction that is not a business combination, nor at the time of the transaction,
affects neither accounting profit and taxable profit (or deductible loss), the relevant deferred income
tax liability shall not be recognized. Additionally, in respect of taxable temporary difference
associated with to investments in subsidiaries, joint ventures and associates, where it is probable
that the temporary differences will not be reversed in the foreseeable future or taxable profit will not
be available against which the deductible temporary differences can be utilized in the future, the
relevant deferred income tax liability shall not be recognized. Other than the above exceptions, the
Company recognizes a deferred tax asset for other deductible temporary differences, to the extent
that it is probable that future taxable profit will be available against which the deductible temporary
differences can be utilized.
The tax effects of deductable losses and taxes available for carrying over are recognized as an asset
when it is probable that future taxable profits would be available against which these losses can be
utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled, according to the
requirements of tax laws.
The book value of deferred tax assets is reviewed at the balance sheet date and written down to the
extent that it is no longer probable that sufficient taxable profit will be available in future periods to
allow the deferred tax assets to be utilized. Such write-downs is reversed when it becomes probable
that sufficient taxable profits will be available.
(3) Income tax expenses
Income taxes comprise current income tax and deferred income tax.
The current income tax and deferred income tax expense or income is recognized as the profit and
loss of the current period except for the current income tax and deferred income tax related to
transactions or events, that are recognized as other comprehensive income or directly recognized as
shareholders' equity, and thus recognized as other comprehensive income or shareholders' equity,
and for the book value of goodwill adjusted due to deferred income tax arising from business
combination.
42. Leases
(1) Accounting treatment method for operating lease
(1) The Company records operating lease business as the lessee
Lease payments under an operating lease are recognized on a straight-line basis over the lease term,
and recognized as the cost of the related asset or as profit and loss of the current period. Initial
direct costs are recognized as the profit and loss of the current period. Contingent rentals are
recognized as profit and loss of the current period when they are actually incurred.
(2) The Company records operating lease business as the lessor
Lease income under an operating lease are recognized on a straight-line basis over the lease term,
and recognized as profit and loss of the current period. The large-amount initial direct costs are
capitalized when incurred, and recognized as profit and loss of the current period on the same basis
as the recognized lease income over the lease term; the small-amount initial direct costs are
recognized as profit and loss of the current period when incurred. Contingent rentals are recognized
as profit and loss of the current period when they are actually incurred.
(2) Accounting treatment method for finance lease
Leases of assets where substantially all the risks and rewards of ownership have been transferred
are classified as finance leases. Title may or may not eventually be transferred.
43. Other important accounting policies and accounting estimates
None
44. Changes in important accounting policy and accounting estimates
(1) Key changes to accounting policies
√ Applicable □ Inapplicable
Contents andreasonsforchangesto Approvalprocedure Remarks
accountingpolicies
On July5,2017,theMinistryof
Finance issuedtherevisedAccounting
Standards forBusinessEnterprises
No. 14--Revenue(C.H.[2017]No.
22), requiringtheenterpriseslisted OnFebruary25,2020,theCompany Detailscanbefoundinthe
both withinthebordersandabroad,as convenedthe21st meetingofthe AnnouncementonChangesto
well astheenterpriseslistedabroad fourthBoard ofDirectorsandthe AccountingPolicies(Announcement
and adoptingIFRSorAccounting 17thmeetingofthefourthBoardof No.:2020-10) onFebruary26,2020
Standards forBusinessEnterprisesto SupervisorsoftheCompany,and onCNINFO
prepare financialstatements,to approvedtheProposalonChanges (http://www.cninfo.com.cn).
implement therevisedStandardsfrom toAccountingPolicies.
January 1,2018;otherenterprises
listed athomeshallimplementthe
revised StandardsfromJanuary1,
2020.
(1) Implementation of the changes to accounting policies caused by new Revenue Standards
On July 5, 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprise
No. 14 - Revenues (C.H. [2017] No. 22) (hereinafter referred to as the "new Revenue Standards").
The new Revenue Standards were reviewed and approved at the 21st meeting of the fourth Board of
Directors on February 25, 2020, and the Company started to implement such standards from
January 1, 2020.
The new Revenue Standards established a new model for recognition of revenue to regulate the
revenues generated by the contracts with customers. To implement the new Revenue Standards, the
Company re-evaluated the recognition, measurement, accounting, and presentation of main
revenues from contracts. Pursuant to the new Revenue Standards, the Company only adjusted the
accumulative number of impacts of the contracts to be completed on January 1, 2020. The
Company adjusted the amount of retained return at the beginning of the current period (i.e. January
1, 2020) and the amount of other relevant items in the financial statements based on the
accumulative number of impacts of the first implementation, except the information of the
comparable period.
(2) Main changes and impacts regarding the implementation of the new Revenue Standards are as
follows:
The Company changes the contract consideration collected from customers in advance for transfer
of goods from the item "accounts received in advance" to the item "contract liabilities" for
presentation.
The Company's implementing the new Revenue Standards does not impact the retained return at the
beginning of 2020, and its impacts on other relevant items in the financial statements dated January
1, 2020 are as follows:
Amount onDecember31,2019(priorto AmountonJanuary1,2020(afterchanges)
Statementitems changes)
Consolidation Reportsoftheparent Consolidation Reportsoftheparent
company company
Accounts received in 142,476,562.31 28,227,454.47
advance
Contract liabilities 142,476,562.31 28,227,454.47
(2) Key changes in accounting estimates
□ Applicable √ Inapplicable
(3) Since 2020, the adjustment of relevant items of the financial statements at the beginning of
the year for the first time according to the implementation of the new standards for income,
and the new leasing standards for the first time.
Rules
Whether to adjust the subjects of the balance sheet at the beginning of the year
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
Item December31, January1,2020 Adjustment
2019 number
Current assets:
Monetaryfunds 703,746,624.42 703,746,624.42
Settlementreserve
Lendingtobanksandotherfinancialinstitutions
Tradablefinancialassets
Derivativefinancialassets
Notesreceivable 301,904.32 301,904.32
Accountsreceivable 807,772,897.68 807,772,897.68
Accountsreceivablefinancing
Prepayments 14,877,757.16 14,877,757.16
Premiumreceivable
Reinsurancepayables
Reinsurancecontractreservesreceivable
Otherreceivables 8,240,417.99 8,240,417.99
Including:Interestreceivable
Dividendsreceivable
Financialassetsheldunderresaleagreements
Inventory 986,405,689.17 986,405,689.17
Contractassets
Assetsheldforsale 57,073,059.69 57,073,059.69
Non-currentassetsduewithinoneyear
Othercurrentassets 165,567,805.78 165,567,805.78
Totalcurrentassets 2,743,986,156.212,743,986,156.21
Non-current assets:
Loansandadvancestocustomers
Creditrightinvestments
Othercreditrightinvestments
Long-termreceivable
Long-termequityinvestment
Investmentin otherequityinstruments
Othernon-currentassets
Investmentproperty 36,039,381.30 36,039,381.30
Propertyandequipment 2,921,392,106.872,921,392,106.87
Constructionworkin progress 55,734,236.91 55,734,236.91
Productivebiologicalassets
Oil&gasassets
Right-of-useassets
Intangibleassets 168,731,781.83 168,731,781.83
Developmentexpenses
Goodwill 64,654.15 64,654.15
Long-termdeferredexpenses 13,686,397.24 13,686,397.24
Deferredincometaxassets 80,331,080.17 80,331,080.17
Othernon-currentassets 6,306,028.96 6,306,028.96
Totalnon-currentassets 3,282,285,667.433,282,285,667.43
Totalassets 6,026,271,823.646,026,271,823.64
Current liabilities:
Short-termloans 14,721,492.38 14,721,492.38
BorrowingsfromPBC
Placementsfrombanksandotherfinancial
institutions
Tradablefinancialliabilities
Derivativefinancialliabilities
Notespayable 202,653,860.31 202,653,860.31
Accountspayable 578,212,781.22 578,212,781.22
Paymentsreceivedinadvance 142,476,562.31 -142,476,562.31
Contractliabilities 142,476,562.31 142,476,562.31
Proceedsfromfinancialassetssoldunderrepo
Customerbankdepositsandduetobanksandother
financial institutions
Fundsfromsecuritiestradingagency
Fundsfromsecuritiesunderwritingagency
Employeeremunerationpayable 106,413,600.27 106,413,600.27
Taxandfeespayable 101,670,618.11 101,670,618.11
Otherpayables 635,834,511.05 635,834,511.05
Including:Interestspayable 173,259.89 173,259.89
Dividendspayable 452,536.50 452,536.50
Transactionfeeandcommissionreceivable
Reinsurancepayable
Liabilitiesheldforsale
Non-currentliabilitiesduewithinoneyear 32,400,000.00 32,400,000.00
Othercurrentliabilities
Totalcurrentliabilities 1,814,383,425.651,814,383,425.65
Non-current liabilities:
Insurancecontractreserves
Long-termLoans 22,500,000.00 22,500,000.00
Bondspayable
Including:Preferenceshares
Perpetualbonds
Leaseliabilities
Long-termpayable
Long-termemployeeremunerationpayable
Provision
Deferredincome 82,367,831.33 82,367,831.33
Deferredincometaxliabilities 30,016,107.43 30,016,107.43
Othernon-currentliabilities
Totalnon-currentliabilities 134,883,938.76 134,883,938.76
Totalliabilities 1,949,267,364.411,949,267,364.41
Owner's equity:
Sharecapital 1,308,891,273.001,308,891,273.00
Otherequityinstruments
Including:Preferenceshares
Perpetualbonds
Capitalreserve 760,731,416.57 760,731,416.57
Less:Treasuryshares 104,792,649.00 104,792,649.00
Othercomprehensiveincome
Specialreserves
Surplusreserves 53,205,582.86 53,205,582.86
Generalreserves
Retainedearnings 2,058,968,835.802,058,968,835.80
Totalequityattributabletotheownersoftheparent 4,077,004,459.234,077,004,459.23
company
Equitiesofminorityshareholders
Totalowner'sequity 4,077,004,459.234,077,004,459.23
Totalliabilitiesandowners'equities 6,026,271,823.646,026,271,823.64
Explanation of adjustment
The parent company's balance sheet
Unit: RMB
Item December31,2019 January1,2020 Adjustmentnumber
Current assets:
Monetaryfunds 156,202,659.45 156,202,659.45
Tradablefinancialassets
Derivativefinancialassets
Notesreceivable
Accountsreceivable 127,203,426.87 127,203,426.87
Accountsreceivablefinancing
Prepayments 2,565,716.66 2,565,716.66
Otherreceivables 637,511,752.54 637,511,752.54
Including:Interestreceivable
Dividendsreceivable
Inventory 84,567,041.98 84,567,041.98
Contractassets
Assetsheldforsale
Non-currentassetsduewithinoneyear
Othercurrentassets 129,377,576.74 129,377,576.74
Totalcurrentassets 1,137,428,174.24 1,137,428,174.24
Non-current assets:
Creditrightinvestments
Othercreditrightinvestments
Long-termreceivable
Long-termequityinvestment 1,231,245,128.96 1,231,245,128.96
Investmentin otherequityinstruments
Othernon-currentassets
Investmentproperty 18,745,192.09 18,745,192.09
Propertyandequipment 222,724,273.70 222,724,273.70
Constructionworkin progress 35,260,100.44 35,260,100.44
Productivebiologicalassets
Oil&gasassets
Right-of-useassets
Intangibleassets 21,259,498.66 21,259,498.66
Developmentexpenses
Goodwill
Long-termdeferredexpenses
Deferredincometaxassets 18,366,334.29 18,366,334.29
Othernon-currentassets 4,521,074.21 4,521,074.21
Totalnon-currentassets 1,552,121,602.35 1,552,121,602.35
Totalassets 2,689,549,776.59 2,689,549,776.59
Current liabilities:
Short-termloans
Tradablefinancialliabilities
Derivativefinancialliabilities
Notespayable
Accountspayable 325,506,510.90 325,506,510.90
Paymentsreceivedinadvance 28,227,454.47 -28,227,454.47
Contractliabilities 28,227,454.47 28,227,454.47
Employeeremunerationpayable 24,280,403.99 24,280,403.99
Taxandfeespayable 3,225,793.88 3,225,793.88
Otherpayables 167,279,884.09 167,279,884.09
Including:Interestspayable
Dividendspayable 452,536.50 452,536.50
Liabilitiesheldforsale
Non-currentliabilitiesduewithinoneyear
Othercurrentliabilities
Totalcurrentliabilities 548,520,047.33 548,520,047.33
Non-current liabilities:
Long-termLoans
Bondspayable
Including:Preferenceshares
Perpetualbonds
Leaseliabilities
Long-termpayable
Long-termemployeeremunerationpayable
Provision
Deferredincome 7,062,818.69 7,062,818.69
Deferredincometaxliabilities 5,575,323.82 5,575,323.82
Othernon-currentliabilities
Totalnon-currentliabilities 12,638,142.51 12,638,142.51
Totalliabilities 561,158,189.84 561,158,189.84
Owner's equity:
Sharecapital 1,308,891,273.00 1,308,891,273.00
Otherequityinstruments
Including:Preferenceshares
Perpetualbonds
Capitalreserve 690,241,724.38 690,241,724.38
Less:Treasuryshares 104,792,649.00 104,792,649.00
Othercomprehensiveincome
Specialreserves
Surplusreserves 53,084,248.58 53,084,248.58
Retainedearnings 180,966,989.79 180,966,989.79
Total owner'sequity 2,128,391,586.75 2,128,391,586.75
Totalliabilitiesandowners'equities 2,689,549,776.59 2,689,549,776.59
Explanation of adjustment
(4) Explanation of the retrospective adjustment of previous comparable data according to the
implementation of the new Revenue Standards and the new leasing standards for the first
time in 2020.
□ Applicable √ Inapplicable
45. Others
VI. Taxes
1. Main tax types and tax rates
Taxes Taxbasis Taxrate
TaxableVAT(calculatedbased onthe
differenceofdeductingtheamountof
Value-addedtax inputtaxwhichisallowedtobe 13%
deductedinthecurrentperiodfrom
theresultofmultiplyingtaxablesales
byapplicabletaxrate)
City constructionandmaintenance Turnovertaxpaid 5%and7%
tax
Corporate incometax Taxableincome 15%,16.5%,20%,25%,progressive
rate
Education surcharges Turnovertaxpaid 3%
Local educationsurcharges Turnovertaxpaid 2%
Explanation of disclosure if different income tax rates apply to different corporate taxpayers
Nameoftaxpayer Incometaxrate
C&S PaperCo., Ltd.,ZhongshanZhongshunTradingCo., Ltd.,C&S(Hubei)PaperCo.,
Ltd., XiaoganC&STradingCo., Ltd.,ZhejiangZhongshunPaperCo.,Ltd.,Chengdu
Zhongshun PaperCo.,Ltd.,HangzhouJieRouTradingCo.,Ltd.,ShanghaiHuicongPaper 25%
Co., Ltd.,BeijingC&SPaperCo.,Ltd.,C&S(Yunfu)TradingCo.,Ltd.,andSunDaily
Necessities Co.,Ltd.
C&S (Zhongshan)PaperCo.,Ltd.,andC&S(Dazhou)PaperCo.,Ltd. 20%
Zhong Shun InternationalCo.,Ltd.,andC&SHongKongCo.,Ltd.(Note1) 16.50%
Jiangmen ZhongshunPaperCo.,Ltd.,C&S(Sichuan)PaperCo.,Ltd.,andC&S(Yunfu) 15%
Paper Co.,Ltd.
C&S (Macao)Co.,Ltd.(Note2) Progressiverate
2. Tax incentive
C&S (Sichuan) Paper Co., Ltd. was certified as a high-tech enterprise of Sichuan Province in 2017,
and was awarded the Certificate of High-tech Enterprise (No. GR201751001108), with a valid term
of three years, on December 4, 2017. C&S (Sichuan) Paper Co., Ltd. filed a new application for
certification of high-tech enterprise on June 22, 2020, which is being reviewed as at the reporting
date. In accordance with the relevant provisions of the Announcement of the State Administration of
Taxation on Issues concerning the Implementation of the Preferential Income Tax Policies
regarding High-tech Enterprises (G.J.SH.W.Z.J.G.G. [2017] No. 24), the corporate income tax is
tentatively calculated at a tax rate of 15% during the reporting period.
C&S (Yunfu) Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province in
2017, and was awarded the Certificate of High-tech Enterprise (No. GR201744007263), with a
valid term of three years, on December 11, 2017. C&S (Yunfu) Paper Co., Ltd. filed a new
application for certification of high-tech enterprise on July 9, 2020, which is being reviewed as at
the reporting date. In accordance with the relevant provisions of the Announcement of the State
Administration of Taxation on Issues concerning the Implementation of the Preferential Income Tax
Policies regarding High-tech Enterprises (G.J.SH.W.Z.J.G.G. [2017] No. 24), the corporate income
tax is tentatively calculated at a tax rate of 15% during the reporting period.
Jiangmen Zhongshun Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province
in 2018, and was awarded the Certificate of High-tech Enterprise (No. GR201844008474), with a
valid term of three years, on November 28, 2018. Therefore, the corporate income tax is tentatively
calculated at a tax rate of 15% in 2020.
In accordance with the relevant provisions of the Announcement of the State Administration of
Taxation on Issues Concerning the Implementation of the Inclusive Income Tax Deduction and
Exemption Policies for Small Low-profit Enterprises (G.J.SH.W.Z.J.G.G. [2019] No. 2), the policy
on inclusive income tax deduction and exemption for small low-profit enterprises is applicable to
C&S (Zhongshan) Paper Co., Ltd. and C&S (Dazhou) Paper Co., Ltd. in 2019. To be specific, the
annual taxable income of these two enterprises that is not more than RMB1 million shall be
included in their taxable income at the reduced rate of 25%, with the applicable corporate income
tax rate of 20%; and the annual taxable income that is not less than RMB1 million nor more than
RMB3 million shall be included in their taxable income at the reduced rate of 50%, with the
applicable enterprise income tax rate of 20%.
3. Others
Note 1: C&S Hong Kong Co., Ltd. is a Hong Kong-based company incorporated according to the
law of Hong Kong, and adopts the tax laws thereof. The tax rate for its income tax is 16.50%;
Note 2: C&S (Macao) Co., Ltd. is a Macao-based company incorporated according to the law of
Macao. Its complementary tax adopts a progressive rate (tax on taxable income that is less than
MOP300,000 is exempted, and the taxable income that is more than MOP300,000 is taxed at 12%).
VII. Notes on Items in Consolidated Financial Statement
1. Monetary capital
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Cash onhand 81,123.62 76,152.38
Bank deposits 892,229,613.53 675,589,471.75
Other monetaryfunds 41,163,239.82 28,081,000.29
Total 933,473,976.97 703,746,624.42
Including:Totaldepositsin 29,173,507.30 63,089,915.23
overseas banks
Other descriptions
Balance of other monetary capital at the end of the reporting period is the balance of issuing letters
of credit, bank acceptance bill deposit and balance of Alipay. Refer to "Note VII, 81" for
circumstances where monetary capital ownership is restricted.
2. Transactional financial assets: None
3. Derivative financial assets: None
4. Notes receivable
(1) Classified notes receivable
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Bank acceptancebill 608,962.30 301,904.32
Total 608,962.30 301,904.32
Bad debts reserve set aside individually: None
Bad debts reserves set aside in portfolios: None
Bad debts reserves set aside in portfolios: None
Bad debts reserves set aside in portfolios: None
If the bad debts reserve of notes receivable is set aside according to general model of expected
credit loss, please refer to the disclosure method of other receivables to disclose relevant
information on bad debts reserve:
□ Applicable √ Inapplicable
(2) Bad debts reserve that is set aside, recovered or transferred back
Provision of bad debts reserve of the reporting period:
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period is
important:
□ Applicable √ Inapplicable
(3) The notes receivable that the Company has pledged at the end of the reporting period:
None
(4) Notes receivable that the Company has endorsed or discounted at the end of the reporting
period and are not due on the date of the balance sheet: None
(5) Notes that are transferred to notes receivable because the drawer does not perform the
contract at the end of the reporting period: None
Other descriptions
1. The Company has no pledged notes receivable as at June 30, 2020.
2. The Company has no derecognized notes receivable that are endorsed or discounted but not due
as at June 30, 2020.
3. The Company has no notes that are transferred to notes receivable because the drawer does not
perform the contract as at June 30, 2020.
(6) The notes receivable actually written off in the reporting period
Significant write-offs of notes receivable wherein: None
Description of write-offs of notes receivable: None
5. Accounts receivable
(1) Accounts receivable disclosed by categories
Unit: RMB
Balance attheendoftheyear Balanceatthebeginningoftheyear
Book balance Impairment Bookbalance Impairment
Type provision Book provision Book
Amount Percentage Amount Provision value Amount Percentage Amount Provision value
ratio ratio
Accounts
receivable for 34,567,65 10,681,0 23,886,5834,567,65 10,681,0 23,886,58
which baddebts 1.21 4.05% 68.59 30.90% 2.62 1.21 4.11% 68.59 30.90% 2.62
reserve isset
aside individually
Wherein:
Accounts
receivable for 819,792,3 21,601,8 798,190,5805,681,1 21,794,8 783,886,3
which baddebts 90.62 95.95% 43.43 2.64% 47.19 15.48 95.89% 00.42 2.71% 15.06
reserve isset
aside inportfolios
Wherein:
According to 819,792,3 95.95% 21,601,8 2.64% 798,190,5805,681,1 95.89% 21,794,8 2.71% 783,886,3
portfolio ofage 90.62 43.43 47.19 15.48 00.42 15.06
Total 854,360,0 100.00% 32,282,9 3.78% 822,077,1840,248,7 100.00% 32,475,8 3.87% 807,772,8
41.83 12.02 29.81 66.69 69.01 97.68
Bad debts reserve set aside individually: 10,681,068.59
Unit: RMB
Balanceattheend oftheyear
Name Bookbalance Impairment Provisionratio Reasonfor provision
provision
Institution I 6,288,113.54 2,462,996.13 39.17%Itis difficulttorecoverallloansduetothe
poorbusinessperformanceofthecustomer
Institution II 28,279,537.67 8,218,072.46 29.06%Itis difficulttorecoverallloansduetothe
poorbusinessperformanceofthecustomer
Total 34,567,651.21 10,681,068.59-- --
Bad debts reserve set aside individually:
Bad debts reserve set aside in portfolios: 21,601,843.43
Unit: RMB
Name Balanceattheendoftheyear
Bookbalance Impairmentprovision Provisionratio
Within thecreditperiod 690,347,064.80 13,806,941.30 2.00%
Credit period-oneyear 121,303,456.17 6,065,172.81 5.00%
Summary withinoneyear 811,650,520.97 19,872,114.11 2.45%
One totwoyears 6,471,482.40 970,722.36 15.00%
Twotothreeyears 380,933.36 114,280.01 30.00%
Over threeyears 1,289,453.89 644,726.95 50.00%
Total 819,792,390.62 21,601,843.43--
Description of reason for the portfolio:
Accounts receivable with the same age have similar credit risk characteristics.
Bad debts reserves set aside in portfolios:
Description of reason for the portfolio: None
Bad debts reserves set aside in portfolios:
Description of reason for the portfolio:
If the bad debts reserve of accounts receivable is set aside according to general model of expected
credit loss, please refer to the disclosure method of other receivables to disclose relevant
information on bad debts reserve:
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
Aging Balanceattheendoftheyear
Within oneyear(inclusive) 811,650,520.97
One totwoyears 6,471,482.40
Twotothreeyears 14,599,234.74
Over threeyears 21,638,803.72
Three tofouryears 14,348,062.08
Four tofiveyears 7,290,741.64
Over fiveyears 0.00
Total 854,360,041.83
(2) Bad debts reserve that is set aside, recovered or transferred back
Provision of bad debts reserve of the reporting period:
Unit: RMB
Balance atthe Amountofchangeinthereportingperiod Balanceatthe
Type beginningof Provision Recoveryor Write-offs Others endoftheyear
theyear transferback
Accounts 32,475,869.01 -79,019.13 113,937.86 32,282,912.02
receivable
Total 32,475,869.01 -79,019.13 113,937.86 32,282,912.02
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period is
important: None
(3) The accounts receivable actually written off in the reporting period
Unit: RMB
Item Written-offamount
The accounts receivableactually written off 113,937.86
Significant write-offs of accounts receivable wherein:
Explanation on write-offs of accounts receivable: None
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
Balance ofaccounts Percentageoftotalbalanceof Closingbalanceforbaddebts
Nameofinstitution receivableattheendofthe accountsreceivableatthe reserve
reportingperiod endofthereportingperiod
1st 210,108,337.32 24.59% 4,223,694.59
2nd 97,821,774.06 11.45% 2,698,303.33
3rd 65,171,610.18 7.63% 1,712,866.44
4th 28,279,537.67 3.31% 8,218,072.46
5th 26,129,086.73 3.06% 522,581.73
Total 427,510,345.96 50.04%
(5) Accounts receivable derecognized due to the transfer of financial assets
The Company has no accounts receivable derecognized due to the transfer of financial assets at the
end of the reporting period
(6) Amount of assets and liabilities that are formed by the transfer and ongoing involvement
of accounts receivable
None
Other explanations:
6. Accounts receivable financing
Increase and decrease and changes in fair value of accounts receivable financing in the reporting
period
□ Applicable √ Inapplicable
If the provisions for asset impairment of accounts receivable financing is set aside according to
general model of expected credit loss, please refer to the disclosure method of other receivables to
disclose relevant information on provisions for asset impairment:
□ Applicable √ Inapplicable
Other explanations:
None
7. Prepayments
(1) Prepayments listed as follows based on age
Unit: RMB
Aging Balanceattheendoftheyear Balanceatthebeginningoftheyear
Amount Percentage Amount Percentage
Within oneyear 42,999,445.80 99.98% 14,430,801.70 97.00%
One totwoyears 8,604.17 0.02% 446,955.46 3.00%
Total 43,008,049.97 -- 14,877,757.16 --
Explanation on the reason of untimely settlement of prepayments whose age exceed one year with
significant amount: None
(2) Top five payees in closing balance of prepayment
The total amount of the top five payees in closing balance of prepayment of the Company is
RMB30,319,748.68, accounting for 70.50% of closing balance of prepayment.
Other explanation: None
8. Other receivables
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Other receivables 32,122,559.84 8,240,417.99
Total 32,122,559.84 8,240,417.99
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Important dividends receivable exceeding one year: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
Other explanation: None
(3) Other receivables
1) Classification by the nature of amount of other receivables
Unit: RMB
Natureofamount Bookbalanceattheendoftheperiod Bookbalanceatthebeginningofthe
period
Margins anddeposits 4,339,916.45 4,098,736.90
Current accounts 3,684,770.85 3,395,872.47
Reserve 3,198,671.09 1,621,094.57
Others 23,525,358.51 255,741.34
Total 34,748,716.90 9,371,445.28
2) Provision of bad debts reserve
Unit: RMB
PhaseI PhaseII PhaseIII
Expectedcreditlosses Expectedcreditlosses
Impairmentprovision Expectedcreditlossin inthewholeduration inthewholeduration Total
the next12 months (withoutcredit (withcreditimpairment)
impairment)
As atJanuary1,2020 1,131,027.29 1,131,027.29
Balance asatJanuary1,
2020 inthereporting - - - -
period
Provision inthereporting 1,502,718.88 1,502,718.88
period
Write-offsinthereporting 7,589.11 7,589.11
period
Balance asatJune30, 2,626,157.06 2,626,157.06
2020
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
Aging Balanceattheendoftheyear
Within oneyear(inclusive) 31,022,416.69
One totwoyears 2,183,982.42
Twotothreeyears 1,078,349.94
Over threeyears 463,967.85
Three tofouryears 42,454.05
Four tofiveyears 37,613.80
Over fiveyears 383,900.00
Total 34,748,716.90
3) Bad debts reserve that is set aside, recovered or transferred back
Provision of bad debts reserve of the reporting period:
Unit: RMB
Balance atthe Amountofchangeinthereportingperiod Balanceatthe
Type beginningof Provision Recoveryor Write-offs Others endoftheyear
theyear transferback
Other 1,131,027.29 1,502,718.88 7,589.11 2,626,157.06
receivables
Total 1,131,027.29 1,502,718.88 7,589.11 2,626,157.06
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period is
important: None
4) Other receivables actually written off in the reporting period
Unit: RMB
Item Written-offamount
Other receivablesactuallywrittenoff 7,589.11
Wherein, write-offs of important other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
Percentageof Closingbalance
Nameof Natureofamount Balanceattheend Aging totalclosing forbaddebts
institution oftheyear balanceofother reserve
receivables
1st Others 22,214,407.06Withinoneyear 63.93% 1,110,720.35
2nd Marginsand 1,100,000.00Onetotwoyears 3.17% 165,000.00
deposits
3rd Marginsand 900,000.00Onetotwoyears, 2.59% 390,000.00
deposits morethanfive
years
Marginsand Twotothree
4th deposits 700,000.00years,morethan 2.01% 230,000.00
five years
5th Others 552,656.91Withinoneyear 1.59% 27,632.85
Total -- 25,467,063.97 -- 73.29% 1,923,353.20
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement of
other receivables: None
9. Inventory
Whether the Company needs to comply with requirements for disclosure in the real estate industry
No
(1) Categories of inventories
Unit: RMB
Balance attheendoftheyear Balanceatthebeginningoftheyear
Provision for
Provisionfor impairment
Item impairmentof of
Bookbalance inventoriesor Bookvalue Bookbalance inventories Bookvalue
provisions for orprovisions
contractcost forcontract
cost
Raw materials 741,974,493.37 17,983.97 741,956,509.40524,569,054.30 11,942.85 524,557,111.45
Work-in-process 38,706,917.29 418,858.03 38,288,059.26 47,577,009.45 357,365.13 47,219,644.32
products
Commodity 350,379,404.14 2,147,334.68 348,232,069.46375,752,356.14 1,562,936.40 374,189,419.74
stocks
Packages 21,916,829.27 85,423.46 21,831,405.81 24,152,524.80 154,311.71 23,998,213.09
Low-value 12,537,164.54 726,782.65 11,810,381.89 11,353,098.88 675,834.25 10,677,264.63
consumables
Materials for
consigned 16,800,079.57 0.00 16,800,079.57 5,764,035.94 5,764,035.94
processing
Total 1,182,314,888.18 3,396,382.791,178,918,505.39989,168,079.51 2,762,390.34 986,405,689.17
(2) Provision for impairment of inventories or provisions for contract cost
Unit: RMB
Balanceatthe Increaseinthecurrentperiod Decreaseinthecurrentperiod Balanceatthe
Item beginningof Provision Others Reversalor Others endoftheyear
the year chargingoff
Raw materials 11,942.85 21,931.63 15,890.51 17,983.97
Work-in-process 357,365.13 379,338.93 317,846.03 418,858.03
products
Commodity 1,562,936.40 1,302,458.45 718,060.17 2,147,334.68
stocks
Packages 154,311.71 102,826.92 171,715.17 85,423.46
Low-value 675,834.25 296,598.14 245,649.74 726,782.65
consumables
Materials for
consigned
processing
Total 2,762,390.34 2,103,154.07 1,469,161.62 3,396,382.79
(3) Explanation that balance of inventory at the end of the reporting period include amount of
capitalization of borrowing costs: None
(4) Explanation on amortized amount in the reporting period of contract cost: None
10. Contract assets
If the bad debts reserve of contrast assets is set aside according to general model of expected credit
loss, please refer to the disclosure method of other receivables to disclose relevant information on
bad debts reserve:
□ Applicable √ Inapplicable
Provision for impairment of contract assets in the reporting period: None
11. Assets held for sale
Unit: RMB
Book balanceat Impairment Closingbook Estimated Estimated
Item theendofthe provision valueofthe Fairvalue disposalfee disposaltime
period period
Immovable assetsof
the oldfactoryof 57,073,059.69 57,073,059.6966,285,118.00 December31,
Hubei C&S(including 2020
land userights)
Total 57,073,059.69 57,073,059.6966,285,118.00 --
Other explanations:
In December 2019, the Company signed an agreement on acquiring the immovable assets of the old
factory of Hubei C&S (including land use rights) upon consultation with Xiaonan District People's
Government of Xiaogan Municipality to boost the investment and building of Phase II of the program
of high-end household paper in the industrial zone in the Economic Development Area of Xiaonan
District, Xiaogan Municipality. The Company believed that the immovable assets of the old factory
of Hubei C&S (including land use rights) can be sold immediately in the current situation, according
to similar transactions where such assets were sold. The Company signed a purchase agreement with
legal constraints with Xiaogan Changxing Investment Co., Ltd. and Xiaonan District People's
Government of Xiaogan Municipality regarding the transfer of such assets in December 2019. The
Agreement included important terms and conditions including the price and time of the transaction as
well as penalty for breach of contract that is strict enough. Therefore, the is little possibility of the
Agreement to be significantly changed or canceled. The Company estimated that the ultimate transfer
will be completed before December 2020. Therefore, immovable assets of the old factory of Hubei
C&S (including land use rights) was classified as assets held for sale by the Company.
According to evaluation, the price of immovable assets of the old factory of Hubei C&S (including
land use right) was RMB66,285,100 in total. It is estimated that there are no fees for the sale other
than relevant taxes and fees related to normal sale.
12. Non-current assets due within one year: None
13. Other current assets
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Reverse reposoftreasurybonds 87,105,000.00
Wealth managementproducts 212,400,000.00 40,000,000.00
Input VATtobededucted 34,003,305.66 32,822,256.90
Prepaid corporateincometax 5,689,760.50 5,640,548.88
Total 252,093,066.16 165,567,805.78
Other explanation: None
14. Investments in creditor's rights
Important investment in creditor's rights: None
Provisions for asset impairment
Unit: RMB
Phase I PhaseII PhaseIII
Expected credit Expectedcreditlosses Expectedcreditlosses
Impairment provision lossinthenext12 inthewholeduration inthewholeduration Total
months (withoutcredit (withcreditimpairment)
impairment)
Balance asatJanuary
1, 2020inthe - - - -
reporting period
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
15. Other investments in creditor's rights
Important other investment in creditor's rights: None
Provisions for asset impairment
Unit: RMB
Phase I PhaseII PhaseIII
Expected credit Expectedcreditlosses Expectedcreditlosses
Impairment provision lossinthenext12 inthewholeduration inthewholeduration Total
months (withoutcredit (withcreditimpairment)
impairment)
Balance asatJanuary - - - -
1, 2020inthe
reporting period
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
16. Long-term receivables
(1) Long-term receivables
Impairment of bad debts reserve
Unit: RMB
Phase I PhaseII PhaseIII
Expected credit Expectedcreditlosses Expectedcreditlosses
Impairment provision lossinthenext12 inthewholeduration inthewholeduration Total
months (withoutcredit (withcreditimpairment)
impairment)
Balance asatJanuary
1, 2020inthe - - - -
reporting period
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
(2) Long-term receivables derecognized due to the transfer of financial assets: None
(3) Amount of assets and liabilities that are formed by the transfer and ongoing involvement
of long-term receivables: None
Other explanation: None
17. Long-term equity investment
Other explanation: None
18. Investment in other equity instruments
Disclosure of investments in non-tradable equity instruments of the reporting period by item: None
19. Other non-current financial assets
Other explanation: None
20. Investment real estate
(1) Investment real estate measured at cost
√ Applicable □ Inapplicable
Unit: RMB
Item Buildings Landuserights Constructionworkin Total
progress
I. OriginalBookValue
1. Balanceatthe 31,142,650.03 21,661,131.29 52,803,781.32
beginning ofthe year
2. Increaseinthecurrent
period
(1) Externalpurchase
(2)
Inventory\PP&E\Transfer
from constructionin
progress
(3) Increaseinbusiness
combination
3. Decreaseinthecurrent
period
(1) Disposal
(2) Othertransfersout
4. Closingbalance 31,142,650.03 21,661,131.29 52,803,781.32
II. Accumulated
Depreciation and
Amortization
1. Balanceatthe 11,923,174.46 4,841,225.56 16,764,400.02
beginning ofthe year
2. Increaseinthecurrent 487,472.35 215,860.26 703,332.61
period
(1) Provisionor 487,472.35 215,860.26 703,332.61
amortization
3. Decreaseinthecurrent
period
(1) Disposal
(2) Othertransfersout
4. Closingbalance 12,410,646.81 5,057,085.82 17,467,732.63
III. ImpairmentProvision
1. Balanceatthe
beginning ofthe year
2. Increaseinthecurrent
period
(1) Provision
3. Decreaseinthecurrent
period
(1) Disposal
(2) Othertransfersout
4. Closingbalance
IV.BookValue
1. Closingbookvalueof 18,732,003.22 16,604,045.47 35,336,048.69
the period
2. Openingbook value 19,219,475.57 16,819,905.73 36,039,381.30
(2) Investment real estate measured at fair value
□ Applicable √ Inapplicable
(3) Information on investment real estate that the certificate of title has not been issued
Other descriptions
The Company does not have investment real estate that the certificate of title has not been issued as
at June 30, 2020.
21. Fixed assets
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Property andequipment 2,907,864,726.86 2,921,392,106.87
Total 2,907,864,726.86 2,921,392,106.87
(1) Information on fixed assets
Unit: RMB
Item Propertiesand Equipment Office Motor Production Total
buildings equipment vehicles equipment
I. Original
Book Value:
1. Balance
at the 1,055,604,437.132,958,625,080.2147,464,949.7615,446,847.5169,259,291.884,146,400,606.49
beginning of
the year
2. Increase
in thecurrent 62,728,216.87 61,999,628.61 3,595,565.85 4,925,214.36 133,248,625.69
period
(1) 1,996,379.48 3,125,754.53 3,355,458.90 8,477,592.91
Purchase
(2)
Transfer from 62,728,216.87 60,003,249.13 469,811.32 1,569,755.46 124,771,032.78
construction in
progress
(3)
Increase in
business
combination
3. Decrease
in thecurrent 5,566,303.63 41,244.25 48,290.60 5,655,838.48
period
(1)
Disposal or 5,566,303.63 41,244.25 48,290.60 5,655,838.48
write-off
4. Closing 1,118,332,654.003,015,058,405.1951,019,271.3615,446,847.5174,136,215.644,273,993,393.70
balance
II.
Accumulated
Depreciation
1. Balance
at the 190,985,787.16 952,947,310.0022,508,285.71 7,191,366.3432,365,697.611,205,998,446.82
beginning of
the year
2. Increase
in thecurrent 19,601,479.88 116,269,551.92 3,160,138.15 354,018.96 4,877,712.71 144,262,901.62
period
(1) 19,601,479.88 116,269,551.92 3,160,138.15 354,018.96 4,877,712.71 144,262,901.62
Provision
3. Decrease
in thecurrent 2,212,729.92 32,923.86 37,666.72 2,283,320.50
period
(1)
Disposal or 2,212,729.92 32,923.86 37,666.72 2,283,320.50
write-off
4. Closing 210,587,267.041,067,004,132.0025,635,500.00 7,545,385.3037,205,743.601,347,978,027.94
balance
III.
Impairment
Provision
1. Balance
at the 18,970,596.52 29,332.40 10,123.88 19,010,052.80
beginning of
the year
2. Increase
in thecurrent
period
(1)
Provision
3. Decrease
in thecurrent 847,749.02 1,541.00 10,123.88 859,413.90
period
(1)
Disposal or 847,749.02 1,541.00 10,123.88 859,413.90
write-off
4. Closing 18,122,847.50 27,791.40 18,150,638.90
balance
IV.Book
Value
1. Closing
book valueof 907,745,386.961,929,931,425.6925,355,979.96 7,901,462.2136,930,472.042,907,864,726.86
the period
2. Opening 864,618,649.971,986,707,173.6924,927,331.65 8,255,481.1736,883,470.392,921,392,106.87
book value
(2) Information on temporarily idle fixed assets
Unit: RMB
Item Originalbook Accumulated Impairment Bookvalue Remarks
value depreciation provision
Equipment 41,682,969.05 22,202,372.94 18,122,847.50 1,357,748.61
Office equipment 263,607.34 234,345.94 27,791.40 1,470.00
Total 41,946,576.39 22,436,718.88 18,150,638.90 1,359,218.61
(3) Fixed assets acquired through finance lease: None
(4) Fixed assets leased through operating lease: None
(5) Information on fixed assets that the certificate of title has not been issued
Unit: RMB
Item Bookvalue Thereasonsforthecertificateoftitle
have notbeenissued
Workshops,warehouses,and 148,918,737.44Processing
dormitories ofHubeiC&S
Warehousesandworkshopsof 3,803,395.58Processing
Zhejiang C&S
Plants andwarehousesofTangshan 47,675,910.63Processing
Branch
Total 200,398,043.65
Other descriptions
There was no limitation on the ownership of fixed assets of the Company at the end of the reporting
period.
(6) Disposal of fixed assets: None
22. Construction in process
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Construction workin progress 22,256,470.46 55,734,236.91
Total 22,256,470.46 55,734,236.91
(1) Construction in progress
Unit: RMB
Balanceattheendoftheyear Balanceatthebeginningoftheyear
Project Bookbalance Impairment Bookvalue Bookbalance Impairment Bookvalue
provision provision
Construction of 1,278,303.32 1,278,303.32 8,149,431.17 8,149,431.17
Jiangmen C&S
Construction of 677,479.68 677,479.68 494,274.78 494,274.78
Zhejiang C&S
Construction of 2,862,634.98 2,862,634.98
Sichuan C&S
Construction of
Tangshan 301,278.46 301,278.46 35,260,100.44 35,260,100.44
Branch
Hubei C&S 12,342,010.34 12,342,010.34 5,219,006.80 5,219,006.80
Project
Construction of 4,794,763.68 4,794,763.68 6,611,423.72 6,611,423.72
YunfuC&S
Total 22,256,470.46 22,256,470.46 55,734,236.91 55,734,236.91
(2) Changes in significant construction in progress of the current period
Unit: RMB
Theamountof Proportionof Including:
Balance at Increase fixedassets Decreasein Balanceat the Accumulative Theamount Interest
Item name Budget the inthe transferredin thecurrent theendof cumulative Construction amountof ofinterest capitalization Source
number beginning current thecurrent period theyear construction progress interest capitalization rateinthe offund
oftheyear period period inputin capitalization inthecurrent currentperiod
budget period
Construction 16,162,87 8,149,431.1 7,856,300 1,278,303.
of Jiangmen 1.14 7 .54 14,727,428.39 32 99.03% 99.03% Others
C&S
Construction 4,854,261 4,271,913
ofZhejiang .08 494,274.78 .94 4,088,709.04 677,479.68 98.19% 98.19% Others
C&S
Construction 13,523,73 13,142,54 2,862,634.
of Sichuan 2.54 0.00 9.99 10,279,915.01 98 97.18% 97.18% Others
C&S
Construction 332,000,0 35,260,100. 19,337,70
ofTangshan 00.00 44 1.73 54,296,523.71 301,278.46 18.72% 18.72% Others
Branch
Hubei C&S 1,353,000 5,219,006.8 13,865,27 6,742,272.72 12,342,010 51.35% 51.35% Others
Project ,000.00 0 6.26 .34
Construction 80,750,00 6,611,423.7 32,819,52 34,636,183.91 4,794,763. 49.78% 49.78% Others
ofYunfuC&S 0.00 2 3.87 68
Total 1,800,290 55,734,236. 91,293,26 124,771,032.7 22,256,470 -- -- --
,864.76 91 6.33 8 .46
(3) The construction-in-progress provision set aside in the current period
Other descriptions
There was no recoverable amount of the construction in progress lower than the book value that
required provisions in the Company in the current reporting period.
(4) Construction materials: None
23. Productive biological assets
(1) Productive biological assets measured at cost
□ Applicable √ Inapplicable
(2) Productive biological assets measured at fair value
□ Applicable √ Inapplicable
24. Oil & gas assets
□ Applicable √ Inapplicable
25. Right-of-use assets: None
26. Intangible assets
(1) Intangible assets
Unit: RMB
Item Landuserights Patentright Non-patented Application Trademark Total
technology software right
I. OriginalBookValue
1. Balanceatthe 189,064,322.151,342,721.84 12,433,710.50168,370.83 203,009,125.32
beginning ofthe year
2. Increaseinthe 1,783,304.46 1,783,304.46
current period
(1)Purchase 1,783,304.46 1,783,304.46
(2)InternalR&D
(3)Increasein
business combination
3. Decreaseinthe
current period
(1)Disposal
4. Closingbalance 189,064,322.151,342,721.84 14,217,014.96168,370.83 204,792,429.78
II. Accumulated
Amortization
1. Balanceatthe 26,533,474.35 790,967.09 6,784,531.22168,370.83 34,277,343.49
beginning ofthe year
2. Increaseinthe 1,871,053.88 47,134.98 983,188.50 2,901,377.36
current period
(1)Provision 1,871,053.88 47,134.98 983,188.50 0.00 2,901,377.36
3. Decreaseinthe
current period
(1)Disposal
4. Closingbalance 28,404,528.23 838,102.07 7,767,719.72168,370.83 37,178,720.85
III. ImpairmentProvision
1. Balanceatthe
beginning ofthe year
2. Increaseinthe
current period
(1)Provision
3. Decreaseinthe
current period
(1)Disposal
4. Closingbalance
IV.BookValue
1. Closingbook value 160,659,793.92 504,619.77 6,449,295.24 167,613,708.93
of theperiod
2. Openingbook 162,530,847.80 551,754.75 5,649,179.28 168,731,781.83
value
The intangible assets generated by internal R&D of the Company at the end of the period occupies
0.00% of the balance of intangible assets.
(2) Information on the land use rights that the certificate of title has not been issued: None
27. Development expenses: None
28. Goodwill
(1) Original book value of the goodwill
Unit: RMB
Increaseofcurrent Decreaseinthe
Name ofinvesteeorthematters Balanceatthe period currentperiod Balanceatthe
forminggoodwill beginningof Formedby endoftheyear
the year business Disposal
combination
Zhongshan JieRouPapernotunder 64,654.15 64,654.15
common control
Total 64,654.15 64,654.15
(2) Provision for Impairment of goodwill
Relevant information on the asset groups or asset group portfolio in which the goodwill is located
Explain the method to confirm the process of goodwill impairment test, key parameters (e.g. The
growth rate in the predictive period when predicting the present value of future cash flow, the
growth rate in the stable period, profit rate, discount rate, and predictive period), and the goodwill
impairment loss:
After conducting the asset impairment test by combining the goodwill with corresponding asset
groups, there was no impairment as at June 30, 2020, and provisions at the end of the reporting
period were not set aside.
Influence of the goodwill impairment test
Other descriptions
29. Long-term unamortized expenses
Unit: RMB
Balanceatthe Increaseinthe Amortized Balanceattheend
Item beginningofthe currentperiod amountofcurrent Decrease oftheyear
year period
Use rightsof 3,763,858.78 727,629.84 3,036,228.94
sewage discharge
Property
management fees 8,942,538.46 6,306,257.46 2,367,428.95 12,881,366.97
of theoffice
building
Electricity use 980,000.00 105,000.00 875,000.00
rights
Total 13,686,397.24 6,306,257.46 3,200,058.79 16,792,595.91
Other descriptions
None
30. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that were not offset
Unit: RMB
Balanceattheendoftheyear Balanceatthebeginningoftheyear
Item Deductibletemporary Deferredincometax Deductibletemporary Deferredincometax
differences assets differences assets
Allowance for 34,779,547.97 7,720,181.43 33,522,565.26 7,354,388.34
impairment losses
Unrealized profitin 38,283,258.01 7,614,837.29 32,400,998.88 6,052,001.45
internal transaction
Deductible loss 103,971,403.92 25,992,850.98 133,306,241.56 33,326,560.39
Accrued expenses 49,082,779.64 12,270,694.91 49,082,779.64 12,270,694.91
Employee
remuneration unpaid
Provisions for
impairment offixed 18,150,638.90 3,319,714.34 19,010,052.80 3,472,180.20
assets
Provision for
impairment of 3,396,382.79 663,918.93 2,762,390.34 535,522.47
inventories
Equity incentivecost 205,234,822.09 49,130,795.61 73,883,673.67 17,319,732.41
Total 452,898,833.32 106,712,993.49 343,968,702.15 80,331,080.17
(2) Deferred income tax liabilities that were not offset
Unit: RMB
Balanceattheendoftheyear Balanceatthebeginningoftheyear
Item Taxabletemporary Deferredincometax Taxabletemporary Deferredincometax
differences liabilities differences liabilities
Pre-tax deductionof
PP&E atonetimeas 198,776,645.09 37,539,267.58 152,874,671.45 30,016,107.43
stipulated inthetax
law
Total 198,776,645.09 37,539,267.58 152,874,671.45 30,016,107.43
(3) Deferred income tax assets or liabilities presented with the net amount after offset
Unit: RMB
The offsetamountof Thebalanceofthe Theoffsetamountof Thebalanceofthe
thedeferredincome deferredincometax thedeferredincome deferredincometax
Item taxassetsand assetsorliabilities taxassetsand assetsorliabilities
liabilitiesattheendof afteroffsetattheend liabilitiesatthe afteroffsetatthe
thereporting period ofthereporting beginningofthe beginningofthe
period reportingperiod reportingperiod
Deferred incometax 106,712,993.49 80,331,080.17
assets
Deferred incometax 37,539,267.58 30,016,107.43
liabilities
(4) Breakdown of the unconfirmed deferred income tax assets
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Deductible temporarydifferences 123,638.38 84,331.04
Total 123,638.38 84,331.04
(5) Deductible loss of the unconfirmed deferred income tax assets will be due in the next year:
None
31. Other non-current assets
Unit: RMB
Balance attheendoftheyear Balanceatthebeginningoftheyear
Item Bookbalance Impairment Bookvalue Book Impairment Bookvalue
provision balance provision
Prepaid accountsofsoftware 4,084,912.11 4,084,912.113,326,948.93 3,326,948.93
Prepaid accountsof 32,602,221.58 32,602,221.582,979,080.03 2,979,080.03
engineering equipment
Total 36,687,133.69 36,687,133.696,306,028.96 6,306,028.96
Other explanation: None
32. Short-term borrowings
(1) Category of short-term borrowings
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Guaranteed borrowings 161,860,368.50 14,721,492.38
Total 161,860,368.50 14,721,492.38
Description of the category of short-term borrowings: None
(2) Short-term borrowings overdue but unpaid: None
There were no short-term borrowings overdue but unpaid in the Company at the end of the
reporting period.
33. Tradable financial liabilities: None
34. Derivative financial liabilities: None
35. Notes payable
Unit: RMB
Category Balanceattheendoftheyear Balanceatthebeginningoftheyear
Banker's acceptance 204,505,448.05 202,653,860.31
Total 204,505,448.05 202,653,860.31
The total amount of the notes payable due but unpaid at the end of the reporting period is RMB0.00.
36. Accounts payable
(1) List of accounts payable
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Accounts payable 586,807,107.68 578,212,781.22
Total 586,807,107.68 578,212,781.22
(2) Important accounts payable exceeding one year
Unit: RMB
Item Balanceattheendoftheyear Reasonfor unsettlementornot
carry-over
1st 6,260,046.15Thecontractsettlementconditions
werenotmet
Total 6,260,046.15 --
Other explanation: None
37. Payments received in advance
(1) List of payments received in advance: None
(2) Important payments received in advance exceeding one year
Other explanations:
There were no payments received in advance exceeding one year in the balance of the Company at
the end of the reporting period.
38. Contract liabilities
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Advances onsales 79,981,886.78 142,476,562.31
Total 79,981,886.78 142,476,562.31
39. Employee remuneration payable
(1) List of employee remuneration payable
Unit: RMB
Balanceatthe Increaseofcurrent Decreaseinthe Balanceatthe
Item beginningofthe period currentperiod endoftheyear
year
I. Short-termCompensation 106,224,592.83 320,003,162.18 334,022,866.76 92,204,888.25
II. Post-employmentBenefits- 189,007.44 7,184,542.44 7,314,419.27 59,130.61
Defined ContributionPlan
III. DismissalBenefits 453,642.38 453,642.38
Total 106,413,600.27 327,641,347.00 341,790,928.41 92,264,018.86
(2) List of short-term remuneration
Unit: RMB
Item Balanceatthe Increaseofcurrent Decreaseinthe Balanceattheend
beginningofthe year period currentperiod oftheyear
1. Salary,bonusand 105,632,187.56 294,152,847.35 309,532,480.75 90,252,554.16
subsidy
2. Employeewelfare 11,073,608.15 10,276,861.76 796,746.39
3. Socialinsurance 138,180.30 6,694,755.47 6,672,043.29 160,892.48
premiums
Including:Medical 123,961.21 5,655,698.30 5,623,823.24 155,836.27
insurance
Employment 7,474.96 283,553.45 290,852.30 176.11
injury insurance
Maternity 6,744.13 755,503.72 757,367.75 4,880.10
insurance
4. Housingfund 235,586.00 6,560,208.26 6,158,619.12 637,175.14
5. Laborunionfeeand 218,638.97 1,521,742.95 1,382,861.84 357,520.08
staff educationfee
Total 106,224,592.83 320,003,162.18 334,022,866.76 92,204,888.25
(3) List of defined contribution plans
Unit: RMB
Item Balanceatthe Increaseofcurrent Decreaseinthe Balanceattheendof
beginning ofthe year period currentperiod theyear
1. Basicendowment 182,767.82 6,957,144.82 7,081,396.47 58,516.17
insurance
2. Unemployment 6,239.62 227,397.62 233,022.80 614.44
insurance
Total 189,007.44 7,184,542.44 7,314,419.27 59,130.61
Other explanations:
There was no delinquency of employee remuneration payable in the Company at the end of the
reporting period.
40. Tax and fees payable
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Value-addedtax 22,304,709.86 40,202,978.00
Corporate incometax 69,887,770.68 53,355,863.46
Individual incometax 1,193,456.54 1,419,250.54
City constructionandmaintenance 1,487,174.33 1,943,704.81
tax
Education surcharges 710,553.71 998,926.69
Property tax 3,541,802.02 1,074,531.92
Stamp tax 560,403.47 561,017.55
Land usetax 771,971.10 796,430.83
Local educationsurcharges 473,702.47 665,951.12
Disabled securityfund 604,121.54 364,478.02
Resources tax 59,938.40 69,070.60
Environmental protectiontax 111,856.66 218,414.57
Total 101,707,460.78 101,670,618.11
Other explanation: None
41. Other payables
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Interest payable 41,625.00 173,259.89
Dividends payable 1,510,753.80 452,536.50
Other payables 711,270,057.51 635,208,714.66
Total 712,822,436.31 635,834,511.05
(1) Interest payable
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Interest oflong-termborrowings
with interestrepaymentby 85,143.46
installment andprincipalrepayment
upon maturity
Interest payableofshort-term 41,625.00 88,116.43
borrowings
Total 41,625.00 173,259.89
Important interest overdue but unpaid: None
(2) Dividends payable
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Dividends forrestrictedshares 1,510,753.80 452,536.50
Total 1,510,753.80 452,536.50
Other descriptions including important dividends payable exceeding one year, and the reasons for
non-payment that should be disclosed: None
(3) Other payables
(1) Other payables listed based on amount nature
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Deposits andmargins 21,458,020.28 15,743,185.19
Unpaid fees 611,140,212.63 502,706,478.59
Others 2,582,155.15 2,612,148.46
The repurchaseobligationof 76,038,959.88 104,792,649.00
restricted shares
Authorized collectionandpayment
of individualincometaxunderthe 50,709.57 9,354,253.42
equity incentive
Total 711,270,057.51 635,208,714.66
2) Other important accounts payable exceeding one year
Unit: RMB
Item Balanceattheendoftheyear Reasonfor unsettlementornot
carry-over
1st 6,323,465.21Notyetsettled
Total 6,323,465.21 --
Other explanation: None
42. Liabilities held for sale: None
43. Non-current liabilities due within one year
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Long-term borrowingsduewithin 32,400,000.00
one year
Total 32,400,000.00
Other explanation: None
44. Other current liabilities: None
45. Long-term borrowings
(1) Category of long-term borrowings
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Guaranteed borrowings 22,500,000.00
Total 22,500,000.00
Description of the category of long-term borrowings: None
Other descriptions including the interval of interest rate: None
46. Bonds payable
(1) Bonds payable: None
(2) Changes in the increase and decrease of the bonds payable (excluding other financial
instruments such as preference shares and perpetual bonds that are divided into financial
liabilities): None
(3) Descriptions of the conditions for converting bonds and converting time of convertible
bonds: None
(4) Descriptions of other financial instruments that are divided into financial liabilities
Basic information on other financial instruments in issue at the end of the reporting period, such as
the preference shares and perpetual bonds: None
Table of changes in other financial instruments in issue at the end of the reporting period, such as
the preference shares and perpetual bonds: None
Descriptions of the basis for other financial instruments to be divided into financial liabilities: None
Other explanation: None
47. Lease liabilities: None
48. Long-term payables: None
(1) Long-term payables listed based on amount nature: None
(2) Special payables: None
49. Long-term employee remuneration payable
(1) Table of long-term employee remuneration payable: None
(2) Changes of the defined benefit plan: None
50. Projected liabilities: None
51. Deferred income
Unit: RMB
Balance atthe Increaseof Decreasein Balanceatthe
Item beginningof currentperiod thecurrent endoftheyear Reasonsforformation
theyear period
Government 82,367,831.33 24,880,000.00 4,272,824.50 102,975,006.83Governmentgrantsrelatedto
grants assets
Total 82,367,831.33 24,880,000.00 4,272,824.50 102,975,006.83 --
Projects involving government grants:
Unit: RMB
The
amount Theamount
Increased included includedin Theamount
Balance atthe amountof in other ofoffset Other Balanceat Relatedto
Liabilities beginningof subsidiesin non-opera incomein costsinthe chang theendof assets/income
theyear thecurrent ting thecurrent current es theyear
period revenuein period period
thecurrent
period
Financial
support fund
for the
expansion 7,765,977.6Relatedto
project of 8,078,701.55 312,723.90 5assets
25,000 tonsof
high grade
household
paper
Subsidies for
the
infrastructure 31,607,370.32 535,718.16 31,071,652.Relatedto
construction of 16assets
new factoryin
Hubei
The ex-post
funds awarded 4,716,165.98 317,293.32 4,398,872.6Relatedto
to thefirst 6assets
batch ofthe
union
enterprises for
the technical
transformation
in 2017
Support funds
for the
construction of 3,351,587.39 159,523.80 3,192,063.5Relatedto
environmental 9assets
protection
facilities
Special funds
for thecapacity 2,108,333.2Relatedto
expansion 2,395,833.26 287,500.02 4assets
project of
25,000 tons
Discount
interest funds 2,633,468.75 96,937.50 2,536,531.2Relatedto
for imported 5assets
equipment
Support funds
for the
construction of 21,969,852.Relatedto
Automated 2,162,500.00 20,000,000.00 192,647.06 94assets
Storage &
Retrieval
System
Subsidies for
the production
expansion
project of 2,066,666.79 79,999.98 1,986,666.8Relatedto
25,000 tonsof 1assets
high grade
household
paper
Subsidies for
"water 1,447,400.6Relatedto
treatment" 1,524,940.00 77,539.32 8assets
project
construction
Support funds
for sewage
centralized 1,093,500.00 60,750.00 1,032,750.0Relatedto
water 0assets
treatment
project
Support funds
for the
technical 4,447,359.44 403,311.72 4,044,047.7Relatedto
transformation 2assets
of equipment
production line
Support funds
for equipment 11,438,819.16 985,624.08 10,453,195.Relatedto
of PhaseII 08assets
project
Support funds
for the 3,708,873.26 224,780.22 3,484,093.0Relatedto
transformation 4assets
of PhaseI
project
Subsidies for
sewage 3,142,045.43 238,636.38 2,903,409.0Relatedto
treatment 5assets
station
Funds for
technical 3,615,875.2Relatedto
transformation 3,880,000.00 264,124.76 4assets
of the
production line
Funds for
traditional Relatedto
enterprise 1,000,000.00 35,714.28 964,285.72assets
transformation
projects
Total 82,367,831.33 24,880,000.00 4,272,824.5 102,975,006
0 .83
Other explanation: None
52. Other non-current liabilities: None
53. Share capital
Unit: RMB
Increase anddecreaseofthischange(+and-)
Balance atthe Shares
beginning ofthe Issuanceof Bonus transferred Balanceatthe
year additional shares from Others Subtotal endoftheyear
shares surplus
reserve
Total
numberof 1,308,891,273.002,591,508.00 -802,722.001,788,786.001,310,680,059.00
shares
Other explanations:
Please refer to "Section XI III. Basic Information of the Company 1. Development history of the
company" for details about the changes in the share capital of the Company in the reporting period.
54. Other equity instruments
(1) Basic information on other financial instruments in issue at the end of the reporting period,
such as the preference shares and perpetual bonds: None
(2) Table of changes in other financial instruments in issue at the end of the reporting period,
such as the preference shares and perpetual bonds
Descriptions of changes and the reasons for changes of other equity instruments in the current
period, and the basis for relevant accounting processing: None
Other explanation: None
55. Capital reserve
Unit: RMB
Item Balanceatthe Increaseofcurrent Decreaseinthe Balanceattheendof
beginningofthe year period currentperiod theyear
Capital premium 595,936,687.24 22,940,029.30 2,673,064.26 616,203,652.28
(share premium)
Other capitalreserve 164,794,729.33 80,671,237.42 3,317,130.24 242,148,836.51
Total 760,731,416.57 103,611,266.72 5,990,194.50 858,352,488.79
Other descriptions, including changes of increase and decrease, and the reasons for changes in the
current period:
(1) The Company held the 23rd meeting of the fourth Board of Directors and the19th meeting of the
fourth Board of Supervisors, and approved the Proposal on the Achievement of Exercise Conditions
of the First Exercise Period of Stock Option for the First Time under the Company's 2018 Stock
Option and Restricted Stock Incentive Plan. In conformity with the regulations of the 2018 Stock
Option and Restricted Stock Incentive Plan (Draft), the Board of Directors considered that the
exercise conditions in the first exercise period of the equity options granted for the first time had
been met. There were 2,522 incentive recipients that met the exercise conditions, the number of
feasible equity options was 3,431,505, and the exercise price was RMB8.572 per share. The capital
reserve - share premium of option exercise in the reporting period was increased by
RMB22,940,029.30. The Company held the 23rd meeting of the fourth Board of Directors,
approved the Proposal on the Repurchase and Deregistration of Partial Restricted Stock for the
First Time under the Company's 2018 Stock Option and Restricted Stock Incentive Plan. Besides,
the Company convened the second extraordinary general meeting of Shareholders in 2020,
approved the Proposal on Reducing the Company's Registered Capital and Revising the Articles of
Association. When the Phase I of restricted stock granted for the first time under the Company's
2018 Stock Option and Restricted Stock Incentive Plan was unlocked, 241 incentive recipients lost
incentive qualification due to their dismission before unlocking, unqualified personal assessment,
and failure to get the full mark though qualified in the personal assessment, and they agreed to
repurchase and write off a total of 802,722 granted but not unlocked restricted stocks, and reduced
RMB2,673,064.26 of share reserve - share premium at the meantime.
(2) In accordance with relevant policies for stock payment, the cost in the reporting period was set
aside and RMB50,297,192.75 was included in "capital reserve - other capital reserve". In terms of
the future deductible amount before tax of the unlocked portion of the Company's stock incentive
plan exceeding the book recognition expense, the deferred income tax assets were confirmed and
RMB30,374,044.67 was included in the capital reserve. The capital reserve - other capital reserve of
option exercise in the reporting period was decreased by RMB3,317,130.24.
56. Treasury shares
Unit: RMB
Item Balanceatthe Increaseofcurrent Decreaseinthe Balanceattheendof
beginning ofthe year period currentperiod theyear
Restrictedshares 104,792,649.00 28,307,544.47 29,380,369.51 103,719,823.96
Total 104,792,649.00 28,307,544.47 29,380,369.51 103,719,823.96
Other descriptions, including changes of increase and decrease, and the reasons for changes in the
current period:
(1) The Company implemented the repurchase of shares by centralized bidding transactions through
repurchase special securities accounts. The number of shares repurchased was 1,895,900
accumulatively, accounting for 0.1448% of the Company's total share capital. The highest
transaction amount was RMB15 per share, the lowest one was RMB14.34 per share, the total
transaction amount was RMB27,680,721.76, and the treasury stocks increased by
RMB27,680,721.76.
(2) The cancellation of RMB78,666.82 of cash dividends originally held by the targets of the
repurchase and deregistration was included in the increase of the current period; RMB548,155.89 of
unlocked cash dividends in the first period is included in the increase of the current period.
(3) Under the policy related to share-based payments, 5,593,428 shares of restricted stocks were
unlocked at RMB4.33 per share during the reporting period, a decrease of RMB24,219,543.24 in
treasury shares.
(4) When the first phase of the first grant of restricted stock was unlocked, 241 incentive subjects
left the Company before the unlocking to lose their incentive qualifications, failed to meet the
standard in personal assessment, and met the personal assessment but less than a full score, agreed
to repurchase and cancel a total of 802,722 shares of restricted stock that had been granted but not
unlocked. Among them, 35 incentive recipients left the Company before unlocking and were
disqualified, and 705,000 restricted shares were granted but not unlocked. One incentive recipient
failed to meet the personal assessment, and 6,000 restricted shares were not unlocked. 205 incentive
subjects met the personal assessment but did not score full marks. They unlocked shares
proportionally based on their scores, and 91,722 restricted shares were not unlocked. Each share
valued RMB4.33, and a decrease of RMB3,475,786,26 occurred in treasury shares.
(5) Cash dividends paid to restricted stockholders within the waiting period were revocable. For
restricted stockholders who are expected to unlock their shares in the future, the distribution of cash
dividends during the reporting period reduced treasury shares by RMB1,685,040.01.
57. Other comprehensive income: None
58. Special reserves: None
59. Surplus reserve
Unit: RMB
Item Balanceatthe Increaseofcurrent Decreaseinthe Balanceattheendof
beginningofthe year period currentperiod theyear
Legal surplus 53,205,582.86 53,205,582.86
reserves
Total 53,205,582.86 53,205,582.86
Explanation of surplus reserves, including changes and the reasons for changes during the period:
None
60. Retained profit
Unit: RMB
Item Currentperiod Previousperiod
Undistributed profitsbeforeadjustmentat 2,058,968,835.80 1,490,758,189.02
the endofthelast period
Undistributed profitsatthebeginningof 2,058,968,835.80 1,490,758,189.02
the periodafteradjustment
Plus: Netprofitattributableto ownersof 452,699,484.61 274,874,634.43
the parentcompanyofthecurrentperiod
Dividends onordinarysharespayable 97,945,986.16 29,721,104.20
Undistributed profitsattheendofthe 2,413,722,334.25 1,735,911,719.25
period
Details of undistributed profits at the beginning of the period after adjustment:
(1) As a result of retrospective adjustments to the Accounting Standards for Business Enterprises
and its related new provisions, the impact on undistributed profits at the beginning of the period was
RMB0.00.
(2) Due to the changes in accounting policies, the impact on undistributed profits at the beginning
of the period was RMB0.00.
(3) Due to the correction of material accounting errors, the impact on undistributed profits at the
beginning of the period was RMB0.00.
(4) Due to the changes in the scope of combination caused by the same control, the impact on
undistributed profits at the beginning of the period was RMB0.00.
(5) Other adjustments affected undistributed profits at the beginning of the period by a total of
RMB0.00.
61. Operating income and operating cost
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Revenue Cost Revenue Cost
Principal business 3,600,704,841.94 1,918,216,266.98 3,117,772,177.10 1,957,532,407.94
Others 15,496,557.86 13,190,651.18 54,616,849.86 50,803,823.08
Total 3,616,201,399.80 1,931,406,918.16 3,172,389,026.96 2,008,336,231.02
Relevant information of income: None
Relevant information of performance obligation: None
Relevant information of the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executed
contract that is not performed or fully performed at the end of the reporting period is
RMB13,382,716.97, of which the income of RMB13,382,716.97 is expected to be confirmed in the
year of 2020.
Other explanation: None
62. Tax and surcharges
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
City constructionandmaintenance 9,361,201.41 5,017,119.18
tax
Education surcharges 4,706,053.57 2,808,844.72
Property tax 4,767,707.05 3,917,690.87
Land usetax 1,746,360.26 1,469,916.00
Vehicleandvesselusetax 12,360.00 10,335.00
Stamp tax 3,007,283.02 2,567,993.11
Environmental protectiontax 181,672.99 122,147.76
Local educationsurcharges 3,137,369.06 1,867,843.13
Total 26,920,007.36 17,781,889.77
Other explanation: None
63. Sales costs
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Employee remuneration 134,986,732.37 114,615,949.89
Advertising andpromotionexpenses 74,270,803.62 63,937,933.85
Product promotionfees 411,196,541.39 243,505,631.59
Shopping mallmanagementfees 48,753,624.04 35,493,967.64
Transportationexpenses 165,690,045.64 135,914,356.58
Traveling expenses 4,940,998.20 6,654,290.85
Business entertainmentexpenses 436,080.12 724,640.09
Rental fee 3,183,544.55 3,278,028.80
Others 4,612,712.67 3,644,482.20
Total 848,071,082.60 607,769,281.49
Other explanation: None
64. Administrative expenses
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Employee remuneration 70,379,157.38 56,321,695.78
Office allowance 10,475,476.21 7,182,089.19
Taxes andfees 321,431.07 277,958.56
Depreciation andamortizationfees 31,544,768.00 20,500,741.11
Rental fee 1,475,930.22 598,340.41
Traveling expenses 393,381.65 1,433,480.02
Business entertainmentexpenses 1,580,927.02 1,643,377.69
Consulting servicefees 4,773,171.55 4,100,346.82
Environmental protectionfees 1,251,298.69 1,011,018.14
Outsourcing warehousemanagement 5,349,303.92 5,341,198.77
fees
Equity incentivecost 52,983,211.08 24,554,780.00
Others 5,173,797.22 3,822,623.73
Total 185,701,854.01 126,787,650.22
Other explanation: None
65. R&D expenses
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Employee remuneration 17,174,899.12 11,550,920.19
Direct investment 59,534,214.24 43,435,750.19
Depreciation andamortizationfees 12,202,630.08 7,315,645.93
Others 1,949,084.80 1,738,338.56
Total 90,860,828.24 64,040,654.87
Other explanation: None
66. Financial expenses
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Interest fees 1,140,788.29 8,797,536.95
Less: interestincome 4,060,998.02 1,693,449.28
Exchange profitandloss -993,705.23 4,216,398.11
Plus: Transactionfeeandothers 2,891,912.73 3,503,937.63
Total -1,022,002.23 14,824,423.41
Other explanation: None
67. Other income
Unit: RMB
Sourcesofthereturnonotherincome Incurredinthecurrent Incurredinthepriorperiod
period
Financial supportfundsforindustrycollaboration 7,892,985.55 1,677,400.00
The rewardof2018supportpolicyofEconomicand 1,310,000.00
Information TechnologyBureauofPengzhou
Support fundsforequipmentofPhaseIIproject 985,624.08
Refund ofindividualincometax 696,845.15
Infrastructure constructionsubsidiesofthe newfactoryof 535,718.16
Hubei C&S
VATexemptionforretiredsoldiersandemploymentofthe 438,350.00
poor population
Support fundsforequipmentandtechnologyupgrading 403,311.72
The ex-postfundsawardedtothefirstbatchoftheunion 317,293.32 367,470.56
enterprises forthetechnicaltransformationin2017
Partial 2013-2017financialsupportfundsofManagement
Committee ofSichuanProvincePengzhouIndustrial 312,723.90 312,723.90
Development Zone
Awardforbreakthroughswithincreasesinbusinesses 300,000.00
The 25,000tonscapacityexpansionprojectofTangshan 287,500.02 287,500.02
Branch
Provincial supportfundsforenterprisetechnicalupgrading 264,124.76
Financial supportforthesewagetreatmentstationprojectof 238,636.38 119,318.19
TangshanBranch
Support fundsforthetransformationofPhaseIproject 224,780.22
Subsidies forphotovoltaicpowerrooftop 224,640.00
Support fundsfortheconstructionofAutomatedStorage& 192,647.06 75,000.00
Retrieval System
Support fundsfortheconstructionofenvironmental 159,523.80 159,523.80
protection facilities
Import interestdiscountsonimportedequipmentin2014 96,937.50 96,937.50
Increase ofspecialassetsmanagementplansofsubsidiesfor 79,999.98 79,999.98
25,000 tonshouseholdpaper
Subsidies forwatertreatmentproject 77,539.32 77,539.32
Financial supportforsewagecentralizedwatertreatment 60,750.00 60,750.00
project
Provincial fundsfortraditionalindustrytransformation 35,714.28
projects
2019 energyefficiencyspecialfundofBureauofScience, 20,000.00
Industry andCommerce(enterpriseswithcleanproduction)
2018 managementsystemcertificationrewardsofPengzhou 10,000.00
MunicipalAdministrationforMarketRegulation
Subsidies forpandemicpreventionsystembuildingof
enterprises ofEconomicandInformationTechnologyBureau 9,000.00
of Pengzhou
Subsidy fundsforhigh-techenterpriseevaluationand 800,000.00
certification (cultivation)
TechnicaltransformationfundsofFinancialDepartment, 392,857.14
Shuangshui Town,XinhuiDistrict,JiangmenCity
Subsidy fundsforapplicationsofhigh-techenterprises 50,000.00
Total 15,174,645.20 4,557,020.41
68. Income on investment
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Others 2,287,274.87 72,378.41
Total 2,287,274.87 72,378.41
Other explanations:
"Others" are returns on principal-protected wealth management products at maturity and reverse repo
of treasury bonds of the Company
69. Profit of net exposure hedging: None
70. Income from changes in fair value: None
71. Credit impairment losses
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Bad debtlossesfromother -1,502,718.88 -252,972.40
receivables
Impairment lossonaccounts 79,019.13 1,282,474.48
receivable
Total -1,423,699.75 1,029,502.08
Other explanation: None
72. Asset impairment loss
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
II. ImpairmentLossofInventories -850,381.40 -589,537.49
and ContractPerformanceCost
V.ImpairmentLossesofFixed -1,932,871.50
Assets
Total -850,381.40 -2,522,408.99
Other explanation: None
73. Return on disposal of assets
Unit: RMB
Sourcesofthereturnondisposalof Incurredinthecurrentperiod Incurredinthepriorperiod
assets
Return ondisposalofPP&E -896,870.05 -389,173.07
Total -896,870.05 -389,173.07
74. Non-operating revenue
Unit: RMB
Incurred inthecurrent Amountrecognizedas
Item period Incurredinthepriorperiod profitorlossforthecurrent
period
Government grants 1,997,067.57 1,651,393.00 1,997,067.57
Income fromfineand 640,155.42 588,849.92 640,155.42
compensation
Others 530,259.96 495,506.30 530,259.96
Profit fromdamageand
retirement ofnon-current 1,758.21 1,758.21
assets
Including: Fixedassets 1,758.21 1,758.21
Total 3,169,241.16 2,735,749.22 3,169,241.16
Government grants recognized as profit or loss for the current period:
Unit: RMB
The
subsidy Amount
affected Special incurredin Amount Relatedto
Grants Issuer Reason Natureandtype theprofit subsidy thecurrent incurredin assets/income
and loss ornot period thelastperiod
forthe
year ornot
Support fundsof Management Grantsreceivedasaresultof
Management Committeeof compliancewithlocalgovernment Relatedto
Committee of PengzhouCity Grants policiessuchasinvestmentattraction No No 1,295,600.00income
Development Zone Industrial andotherlocalsupportpolicies
DevelopmentZone
Laborand Subsidiesreceivedforthe
Subsidies forstable Employment performanceofthe State'sfunctionof Relatedto
employment Administrationof Grants ensuringthesupplyorpricecontrol No No 291,200.00 135,000.00income
XiaonanDistrict, ofa publicutilityorsocially
XiaoganCity necessaryproduct
The rewardof2017 Economic Grantsreceivedasaresultof
government supportof Technologyand compliancewithlocalgovernment Relatedto
Economic and Investment Rewards policiessuchasinvestmentattraction No No 100,000.00income
Information Technology PromotionBureauof andotherlocalsupportpolicies
Bureau ofPengzhou Pengzhou
HumanResources Subsidiesreceivedforthe
Subsidies forenterprise andSocialSecurity performanceoftheState'sfunctionof Relatedto
social insurance Departmentof Grants ensuringthesupplyorpricecontrol No No 44,000.00income
HubeiProvince ofa publicutilityorsocially
necessaryproduct
Subsidiesreceivedforthe
Special fundsfor ZhongshanBureau performanceoftheState'sfunctionof Relatedto
promoting thestable ofCommerce Rewards ensuringthesupplyorpricecontrol No No 41,093.00income
growth offoreigntrade ofa publicutilityorsocially
necessaryproduct
Subsidies forstable Laborand Subsidiesreceivedforthe Relatedto
employment Employment Grants performanceoftheState'sfunctionof No No 27,200.00 32,200.00income
Administrationof ensuringthesupplyorpricecontrol
XiaonanDistrict, ofa publicutilityorsocially
XiaoganCity necessaryproduct
Reward subsidyofthe HumanResources Subsidiesreceivedforthe
Labour and andSocialSecurity performanceoftheState'sfunctionof
Employment BureauofXiaonan Grants ensuringthesupplyorpricecontrol No No 2000,00Relatedto
Administration forthe District,Xiaogan ofa publicutilityorsocially income
employment ofpoor City necessaryproduct
people inenterprises
Unemployment HumanResources Subsidiesreceivedforthe
insurance and andSocialSecurity performanceoftheState'sfunctionof Relatedto
employment BureauofLuoding Grants ensuringthesupplyorpricecontrol No No 1,500.00income
stabilization subsidies City ofa publicutilityorsocially
necessaryproduct
Laborand Subsidiesreceivedforthe
Subsidies forenterprise Employment performanceoftheState'sfunctionof Relatedto
social insurance Administrationof Grants ensuringthesupplyorpricecontrol No No 37,332.00 income
XiaonanDistrict, ofa publicutilityorsocially
XiaoganCity necessaryproduct
TreasuryCentralized Grantsreceivedasaresultof
Special awardfundsfor Receiptand compliancewithlocalgovernment Relatedto
the restructuringof PaymentCenterof Rewards policiessuchasinvestmentattraction No No 410,000.00 income
industrial enterprises XiaonanDistrict, andotherlocalsupportpolicies
XiaoganCity
Employment Subsidiesreceivedforthe
Subsidies forstable Services performanceoftheState'sfunctionof Relatedto
employment ManagementBureau Grants ensuringthesupplyorpricecontrol No No 29,142.57 income
ofPengzhouCity ofa publicutilityorsocially
necessaryproduct
Unemployment Subsidiesreceivedforthe
insurance and EmploymentService performanceoftheState'sfunctionof Relatedto
employment CenterofHangzhou Grants ensuringthesupplyorpricecontrol No No 887.00 income
stabilization subsidies City ofa publicutilityorsocially
necessaryproduct
Unemployment Employment Subsidiesreceivedforthe
insurance and ManagementService performanceoftheState'sfunctionof Relatedto
employment Departmentof Grants ensuringthesupplyorpricecontrol No No 389,857.30 income
stabilization subsidies PinghuCity ofa publicutilityorsocially
necessaryproduct
Subsidies forstable SocialInsurance Grants Subsidiesreceivedforthe No No 245,515.30 Relatedto
employment CareerManagement performanceoftheState'sfunctionof income
BureauofChengdu ensuringthesupplyorpricecontrol
City ofa publicutilityorsocially
necessaryproduct
HumanResources Subsidiesreceivedforthe
One-time employment andSocialSecurity performanceoftheState'sfunctionof Relatedto
intake subsidy BureauofLuoding Grants ensuringthesupplyorpricecontrol No No 238,317.87 income
City ofa publicutilityorsocially
necessaryproduct
Subsidiesreceivedforthe
Subsidies forstable SocialInsurance performanceoftheState'sfunctionof Relatedto
employment CareerBureauof Grants ensuringthesupplyorpricecontrol No No 87,935.77 income
YutianCounty ofa publicutilityorsocially
necessaryproduct
Unemployment HumanResources Subsidiesreceivedforthe
insurance and andSocialSecurity performanceoftheState'sfunctionof Relatedto
employment BureauofYunfu Grants ensuringthesupplyorpricecontrol No No 72,684.00 income
stabilization subsidies City ofa publicutilityorsocially
necessaryproduct
Unemployment SocialInsurance Subsidiesreceivedforthe
insurance and FundManagement performanceoftheState'sfunctionof Relatedto
employment Bureauof Grants ensuringthesupplyorpricecontrol No No 50,801.57 income
stabilization subsidies ZhongshanCity ofa publicutilityorsocially
necessaryproduct
Subsidies foremployees DongshengBranch Subsidiesreceivedforthe
of enterpriseswiththe ofHumanResources performanceoftheState'sfunctionof Relatedto
resumption ofworkand andSocialSecurity Grants ensuringthesupplyorpricecontrol No No 40,400.00 income
production Bureauof ofa publicutilityorsocially
ZhongshanCity necessaryproduct
Subsidiesreceivedforthe
Subsidies ofenterprise XiaoganNo.4 performanceoftheState'sfunctionof Relatedto
training forXiaogan TechnicalSchool Grants ensuringthesupplyorpricecontrol No No 33,000.00 income
No. 4TechnicalSchool ofa publicutilityorsocially
necessaryproduct
Subsidiesreceivedforthe
Grants forpandemic FinancialPayment performanceoftheState'sfunctionof Relatedto
prevention (Accounting)Center Grants ensuringthesupplyorpricecontrol No No 19,750.00 income
ofJiaxingPortArea ofa publicutilityorsocially
necessaryproduct
Unemployment SocialInsurance Subsidiesreceivedforthe
insurance and FundManagement performanceoftheState'sfunctionof Relatedto
employment BureauofYunfu Grants ensuringthesupplyorpricecontrol No No 16,343.00 income
stabilization subsidies City ofa publicutilityorsocially
necessaryproduct
Management Grantsreceivedasaresultof
Committeeof compliancewithlocalgovernment Relatedto
Security socialservice Developmentand Grants policiessuchasinvestmentattraction No No 5,000.00 income
Constructionof andotherlocalsupportpolicies
JiaxingPortArea
Unemployment HumanResources Subsidiesreceivedforthe
insurance and andSocialSecurity performanceoftheState'sfunctionof Relatedto
employment BureauofLuoding Grants ensuringthesupplyorpricecontrol No No 1,500.00 income
stabilization subsidies City ofa publicutilityorsocially
necessaryproduct
Unemployment DongshengBranch Subsidiesreceivedforthe
insurance and ofHumanResources performanceoftheState'sfunctionof Relatedto
employment andSocialSecurity Grants ensuringthesupplyorpricecontrol No No 118.16 income
stabilization subsidies Bureauof ofa publicutilityorsocially
ZhongshanCity necessaryproduct
Grantsreceivedasaresultof
Funds ofpromotionof YunfuMunicipal Grants compliancewithlocalgovernment No No 83.03 Relatedto
enterprise development FinanceBureau policiessuchasinvestmentattraction income
andotherlocalsupportpolicies
Total 1,997,067.57 1,651,393.00
Other explanation: None
75. Non-operating expense
Unit: RMB
Incurred inthecurrent Amountrecognizedas
Item period Incurredinthepriorperiod profitorlossforthecurrent
period
External donations 11,952,705.59 91,000.00 11,952,705.59
Others 1,267,171.07 269,904.63 1,267,171.07
Loss fromthedamageand
abandonment of 20,306.50 50,463.95 20,306.50
non-current assets
Including: Fixedassets 20,306.50 50,463.95 20,306.50
Intangibleassets
Total 13,240,183.16 411,368.58 13,240,183.16
Other explanation: None
76. Income tax expenses
(1) Table of income tax expense
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Current incometaxexpense 76,953,980.75 55,947,416.55
Deferred incometaxexpense 8,829,273.17 7,098,544.68
Total 85,783,253.92 63,045,961.23
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
Item Incurredinthecurrentperiod
Total profit 538,482,738.53
Income taxexpensescalculatedatthe 134,620,684.63
statutory/applicable taxrate
Impacts ofdifferenttaxratesappliedtosubsidiaries -45,835,743.68
Impacts ofadjustmentstoincometaxes duringthe prior -10,592,048.77
period
Impacts ofnon-deductiblecosts,expensesandlosses 7,590,361.74
Income taxes 85,783,253.92
Other explanation: None
77. Other comprehensive income
See the Notes for details.
78. Items in the cash flow statement
(1) Cash received related to other operating activities
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Current accounts 12,564,390.63 10,530,072.51
Fiscal stimulus 36,365,077.82 11,722,281.47
Interest Income 4,060,998.02 1,693,449.28
Authorized collectionofindividual 17,943,967.78 11,950,663.10
income taxundertheequityincentive
Others 6,055,212.85 4,951,827.99
Total 76,989,647.10 40,848,294.35
Explanation of cash received related to other operating activities: None
(2) Cash payments related to other operating activities
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Expenses paid 316,942,453.60 290,074,941.89
Current accounts 2,335,741.67 11,920,797.49
Authorized paymentofindividual 28,191,169.72 20,737,285.80
income taxundertheequityincentive
Others 10,981,895.83 42,132.22
Total 358,451,260.82 322,775,157.40
Explanation of cash paid related to other operating activities: None
(3) Cash received related to other investing activities
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Principal repaymentonmaturityof 40,000,000.00
WM products
Principal repaymentonmaturityof 87,105,000.00
treasury bondsreverserepurchase
Total 127,105,000.00
Explanation of cash received related to other investment activities: None
(4) Cash payments related to other investing activities
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Purchasing WMproducts 212,400,000.00
Total 212,400,000.00
Explanation of cash paid related to other investment activities: None
(5) Cash received related to other financing activities
Explanation of cash received related to other financing activities: None
(6) Cash payments related to other financing activities
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Incentive, repurchaseand 3,475,786.26 460,054.74
deregistration ofequity
Share repurchase 27,680,721.76
Deposits ofbills,letterofguarantee 9,290,358.88 15,847,938.88
and marginofletterofcredit
Total 40,446,866.90 16,307,993.62
Explanation of cash paid related to other financing activities: None
79. Supplementary information to cash flow statement
(1) Supplementary information to cash flow statement
Unit: RMB
SupplementaryInformation Amountofthecurrent Amountoflastperiod
period
1. Reconciliationofnetprofittocashflowsfromoperating -- --
activities:
NetProfit 452,699,484.61 274,874,634.43
Plus:Provisionsforassetimpairment 2,274,081.15 1,492,906.91
ThedepreciationofPP&E,oilandgasassetsand 145,151,634.15 118,751,157.73
productive biologicalassets
Intangibleassetamortization 2,901,377.36 1,932,054.03
Long-termunamortizedexpenses 3,200,058.79 35,050.14
Lossesondisposaloffixedassets,intangible 896,870.05 389,173.07
assets andotherlong-termassets("-" indicatesincome)
Lossesoffixedassetswrite-off("-" indicates 18,548.29 50,463.95
income)
Financecosts("-" indicatesincome) -2,415,195.58 9,254,841.95
Investmentloss("-" indicatesincome) -2,287,274.87 -72,378.41
Decreaseindeferredincometaxassets("-" 1,306,113.02 1,938,062.68
indicates increase)
Increaseindeferredincometaxliabilities("-" 7,523,160.15 4,003,929.96
indicates decrease)
Decreaseininventory("-" indicatesincrease) -192,512,816.22 -31,434,851.67
Decreaseinoperatingreceivables("-" indicates -100,988,107.49 -25,015,343.48
increase)
Increaseinoperatingpayables("-" indicates 186,790,654.92 378,785,937.07
decrease)
Netcashflowsfromoperatingactivities 504,558,588.33 734,985,638.36
2. Significantinvestmentandfinancingactivitiesnot -- --
involving cash:
3. Netchangesincashandcashequivalents: -- --
Closingbalanceofcash 896,433,846.64 574,702,760.83
Less:Openingbalance ofcash 675,996,852.97 371,129,472.06
Netincreaseincashandcashequivalents 220,436,993.67 203,573,288.77
(2) Net cash paid to acquire subsidiaries during the period: None.
(3) Net cash received from the disposal of subsidiaries during the period: None
(4) Constitution of cash and cash equivalents
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
I. Cash 896,433,846.64 675,996,852.97
Including: Cashonhand 81,123.62 76,152.38
Bankdepositsalwaysavailable 892,229,613.53 675,589,471.75
for payment
Othermonetaryfundsalways 4,123,109.49 331,228.84
available forpayment
III. ClosingBalanceofCashandCash 896,433,846.64 675,996,852.97
Equivalents
Other explanation: None
80. Items notes in the statement of changes in owner's equity
Note of the item name and amount of "Other" after adjustment of the closing balance last year and
other issues: None
81. Assets with restricted right to use or ownership
Unit: RMB
Item Closingbookvalueoftheperiod Reasonforrestriction
Other monetaryfunds 37,040,130.33Marginsforletter ofcreditandnotes
were issued.
Total 37,040,130.33 --
Other explanation: None
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Item Closingbalanceof Convertedexchangerate Closingconvertedbalance
foreign currency ofRMB
Monetary funds -- -- 134,151,280.56
Including: USD 17,718,773.09 7.0825 125,493,210.41
EUR
HKD 9,474,769.82 0.9138 8,658,044.66
MOP 28.74 0.8870 25.49
Accounts receivable -- -- 5,770,571.91
Including: USD 148,630.497.0825 1,052,675.45
EUR
HKD 5,162,942.07 0.9138 4,717,896.46
Long-term Loans -- --
Including: USD
EUR
HKD
Other receivables 273,965.37
Including: HKD 299,808.900.9138 273,965.37
Accounts payable 210,981,113.83
Including: USD 29,476,438.24 7.0825 208,766,873.83
JPY 33,600,000.00 0.0659 2,214,240.00
Other payables 3,583,345.41
Including: HKD 3,916,523.14 0.9138 3,578,918.85
USD 625.00 7.0825 4,426.56
Prepaid accounts 1,564,934.84
Including: USD
EUR 196,400.007.9681 1,564,934.84
Contract liabilities 283,545.02
Including: HKD 235,420.850.9138 215,127.57
USD 9,660.077.0825 68,417.45
Other explanation: None
(2) Overseas business entities, especially important ones, shall disclose the main overseas
business address, the standard currency for accounting and selection basis. If there are
changes in the standard currency for accounting, reasons shall be also provided.
√ Applicable □ Inapplicable
Overseasbusinessentities Businessaddress Standardcurrencyforaccounting
Zhong ShunInternationalCo.,Ltd. HongKong RMB
C&S HongKongCo.,Ltd. HongKong RMB
C&S (Macao)Co.,Ltd. Macau RMB
83. Hedges
Disclosure of hedged items and related hedging instruments, qualitative and quantitative
information about hedged risk according to the types of hedging: None
84. Government grants
(1) Basic information on government grants
Unit: RMB
Amount recognizedas
Category Amount Reportingitems profitorlossforthecurrent
period
Relatedtoassets 24,880,000.00Deferredincome
Relatedtoassets 4,272,824.50Otherincome 4,272,824.50
Relatedtoincome 10,204,975.55Otherincome 10,204,975.55
Relatedtoincome 1,997,067.57Non-operatingincome 1,997,067.57
Total 41,354,867.62 16,474,867.62
(2) Return of government grants
□ Applicable √ Inapplicable
Other notes: See Note VII, 51, 67, 74
85. Others: None
VIII. Changes in the Combination
1. Business combinations not under common control
(1) Business combinations not under common control of the current period: None
(2) Combination costs and goodwill
Method of determining the fair value of combination costs and notes of contingent consideration
and its changes: None
Main reasons for the formation of huge goodwill: None
Other explanation: None
(3) Acquiree's identifiable assets and liabilities on the acquisition date
Method of determining the fair value of identifiable assets and liabilities: None
Acquiree's contingent liabilities assumed in a business combination: None
Other explanation: None
(4) Profit or loss recalculated according to the fair value of equity held before the acquisition
date
Whether there are transactions through which business combination is achieved in stages and that
obtain the control within the reporting period
□ Yes √ No
(5) Note of being unable to determine the consideration or the fair value of acquiree's
identifiable assets and liabilities on the acquisition date or at the end of the current period of
combination: None
(6) Other notes: None
2. Business combinations involving enterprises under common control
(1) Business combinations under common control of the current period: None
(2) Combination costs: None
(3) Book value of assets and liabilities of the combined party on the date of combination
Contingent liabilities of the combined party assumed in a business combination: None
Other explanation: None
3. Reverse purchase
Basic information of transactions, basis for transactions constituting reverse purchase, whether
assets and liabilities retained by listed companies constitute a business and its basis, determining of
combination costs, adjustment of equity amount and calculation when dealing with as equity
transactions: None
4. Disposal of subsidiaries
Whether the situation that one disposal of investment in a subsidiary results in a loss of control is
identified
□ Yes √ No
Whether the situation that the disposal of investment in a subsidiary is achieved in stages through
multiple transactions and lose the control within the reporting period is identified
□ Yes √ No
5. Changes in the scope of combination due to other reasons
Note of changes in the scope of combination due to other reasons (establishment, liquidation of
subsidiaries, etc.) and related situations: None
6. Others: None
IX. Equities in Other Entities
1. Equity in subsidiaries
(1) Composition of an enterprise group
Name ofthe Main Locationof Shareholding Obtaining
subsidiary business registration Principalactivities percentage method
address Direct Indirect
R&D, production,andsales(includingonlinesales):Householdpaper,maternalandinfant
Jiangmen products,cosmetics,wipes,non-wovenproducts,dailynecessities,andcleaningsupplies;and Capital
Zhongshun Jiangmen, Jiangmen, sales(includingonlinesales)ofClassIandIImedicaldevices.(Businessactivitiesaboveare 88.25% 11.75%contribution
Paper Co., Guangdong Guangdong notrestrictedbytheSpecialAdministrativeMeasuresfortheAccessofForeignInvestment) for
Ltd. (Businessactivitiessubjecttoapprovalinaccordancewithlawsshallnotbecarriedoutuntil establishment
approval fromcompetentauthoritieshasbeenobtained.))
General businessactivities:paperproductsmanufacturing;salesofpaperproducts;salesof
paper pulp;salesofpersonalhygieneproducts;salesofhygieneproductsanddisposable
medical products;sales ofdisinfectant(hazardouschemicalsexclusive);salesofclassI
medical devices;retailofclassImedicaldevices;salesofclassIImedicaldevices;retailof
Zhejiang classIImedicaldevices;wholesaleofmedicalfacemasks;retailofmedicalfacemasks;sales Capital
Zhongshun Jiaxing, Jiaxing, ofgeneralmerchandise;retail ofdailynecessities;salesofmaternalandchildsupplies; contribution
Paper Co., Zhejiang Zhejiang wholesaleofkitchenware,sanitarywareanddailysundries;wholesaleofcosmetics;retail of 75.00% 25.00%for
Ltd. cosmetics;wholesaleofneedletextilesandraw materials;salesofneedletextiles;salesof establishment
chemical industryproducts(licensedchemicalproductsexclusive);Internetsales(products
requiring licenseforsaleexclusive)(Exceptforbusinessactivitiessubjecttoapprovalin
accordance withlaws,otherbusinessactivitiesshallbecarriedoutbybusinesslicense.)
(Business activitiessubjecttoapprovalinaccordancewithlawsshallnotbecarriedoutuntil
approval fromcompetentauthoritieshasbeenobtained.)
C&S Hong Capital
Kong Co., HongKong HongKong Purchaseofpulp 100.00%contribution
Ltd. for
establishment
R&D, production,wholesale,retailandonlinesales:High-end householdpaperseries
products, hygieneproducts,maternalandinfantproducts,dailynecessities,cosmetics,
C&S medicaldevices,hygienematerials,non-wovenproducts,polymermaterialsandproducts, Capital
(Yunfu) Yunfu, Yunfu, dailygroceries,andsterilizationsupplies(excludinghazardouschemicals);importandexport contribution
Paper Co., Guangdong Guangdong ofgoodsortechnologies(excludingtheimportandexportofgoodsandtechnologies 100.00% for
Ltd. prohibitedbythecountryorsubjecttoadministrativeapproval);andwarehouseservices establishment
(limited towarehousesqualifiedinfireprotectionwithouthazardouschemicals).(Business
activities subjecttoapprovalinaccordancewithlawsshallnotbecarriedoutuntilapproval
from competentauthoritieshasbeenobtained.))
C&S Wholesale,retail,onlinesales:paper,woodpulp,hygieneproducts,maternalandchild Capital
(Yunfu) Yunfu, Yunfu, supplies,cosmetics,dailynecessities,medicaldevices,dailysundries,disinfectantproducts 100.00% contribution
TradingCo., Guangdong Guangdong (hazardouschemicalsexclusive).(Businessactivitiessubjecttoapprovalinaccordancewith for
Ltd. lawsshallnotbecarriedoutuntilapprovalfromcompetentauthoritieshasbeenobtained.)) establishment
C&S Capital
(Macao) Macau Macau Wholesaletrade 100.00%contribution
Co., Ltd. for
establishment
Business activitiescoverwholesale,retailandonlinesales(salesonlyonthethird-party
platform) ofpaperproducts(printingproductsexclusive),woodpulp,generalmerchandise, Business
Zhongshan hygieneproducts,cosmetics,nonwovenproducts,chemicalproductsfordailyuseandclassI combinations
Zhongshun Zhongshan,Zhongshan, medicaldevices;warehousing(hazardouschemicalsandprecursorchemicalsexclusive); involving
TradingCo., Guangdong Guangdong importandexportofgoodsandtechnology;operationsofclassIIandclassIIImedical 100.00% enterprises
Ltd. devices.(Businessactivitiesprohibitedbylawsandadministrativeregulationsareexclusive; under
business activitiesrestrictedbylawsandadministrativeregulationsshall notbecarriedout common
until permithasbeenobtained).(Businessactivitiessubjecttoapprovalinaccordancewith control
laws shallnotbecarriedoutuntilapprovalfromcompetentauthoritieshasbeenobtained.)
Business
Xiaogan Import,exportandsalesofpaperproducts,generalmerchandiseandpulpboards;salesof combinations
C&S Xiaogan, Xiaogan, cosmetics,shower gelandsanitarypads;salesofbabyproducts(foodexclusive)(Business involving
TradingCo., Hubei Hubei activitiessubjectto permitshallnotbecarriedoutuntilpermitofcompetentauthoritieshas 100.00%enterprises
Ltd. beenobtained) under
common
control
Business
Sales ofpaperproducts,dailynecessities,paperpulp,pulpboards;importandexportof combinations
Beijing goods.(TheCompanymayselectbusinessitemsandengageinbusinessactivitiesatitsown involving
C&S Paper Beijing Beijing discretionaccordingtolaws;businessitemssubjecttoapprovalinaccordancewithlawsshall 100.00%enterprises
Co., Ltd. beconductedwithintheapprovedscopeuponapprovalofrelevantauthorities;maynot under
engage inanybusinessactivitiesprohibitedorrestrictedbythecity'sindustrialpolicies.) common
control
Sales ofhouseholdpaper,cleaningproducts,generalmerchandise,hygieneproducts,baby Business
Chengdu products,cosmetics,nonwovenproducts,femininehygieneproducts,chemicalproductsfor combinations
Zhongshun Pengzhou, Pengzhou, dailyuse,dailynecessities,medicaldevices,medicalsuppliesanddisinfectantproducts involving
Paper Co., Sichuan Sichuan (hazardouschemicalsexclusive);electroniccommerce[Businessactivitiessubjectto 100.00%enterprises
Ltd. approvalinaccordancewithlawsshall notbecarriedoutuntilapprovalfromcompetent under
authorities hasbeenobtained]. common
control
Hangzhou Wholesale,retail:paperproducts,paperpulp,generalmerchandise;importandexportof Business
Jie Rou Hangzhou, Hangzhou, goodsandtechnology(Businessactivitiesprohibitedbynationallawsandadministrative combinations
TradingCo., Zhejiang Zhejiang regulationsareexclusive;businessactivitiesrestrictedbylawsandadministrativeregulations 100.00%involving
Ltd. shallnotbecarriedoutuntilpermithasbeenobtained);otherlegitimatebusinessactivities enterprises
not subjecttoapproval(Businessactivitiessubjecttoapprovalinaccordancewithlawsshall under
not becarriedoutuntilapprovalfromcompetentauthoritieshasbeenobtained) common
control
Business
Shanghai combinations
Huicong Householdpaper,paperpulp,pulpboards,importandexportofgoodsandtechnology. involving
Paper Co., Shanghai Shanghai [Businessactivitiessubjecttoapprovalinaccordancewithlawsshallnotbecarriedoutuntil 100.00%enterprises
Ltd. approvalfromcompetentauthoritieshasbeenobtained.] under
common
control
Production andsalesofhouseholdpaperproducts,generalmerchandise,chemicalproducts Business
for dailyuse(hazardouschemicalsexclusive),disinfectantproducts(hazardouschemicals combinations
C&S exclusive);R&D,productionandsalesofdailynecessitiesandhygieneproductssuchaswet involving
(Hubei) Xiaogan, Xiaogan, wipes,sanitarypads,pantstylesanitarypads,liners,adultdiapers,andbabyproducts(food 93.375% 6.625%enterprises
Paper Co., Hubei Hubei exclusive)suchasbabydiapersandcottontissues,makeupremoverwipes,cosmetics; under
Ltd. wholesaleandretail ofclassIandclassII medicaldevices.(Businessactivitiessubjectto common
approval inaccordancewithlawsshall notbecarriedoutuntilapprovalfromcompetent control
authorities hasbeenobtained)
Business
combinations
Zhong Shun Hong Hong involving
International Kong, Kong, Salesofpaperproducts 100.00%enterprises
Co., Ltd. China China under
common
control
R&D, production,processing,andsalesofhygieneproducts[tissues(paper)],babyproducts,
C&S dailynecessities,non-wovenproducts,andfemininehygieneproducts;exportof Business
(Sichuan) Pengzhou, Pengzhou, self-producedproductsandimport ofnecessarymechanicalequipment,partsandaccessories, combinations
Paper Co., Sichuan Sichuan andrawandauxiliarymaterials;andsalesofdailychemicalproducts,articlesofdailyuse, 100.00% notunder
Ltd. medicaldevices,medicalsupplies,andsterilizationsupplies(excludinghazardouschemicals) common
[Business activitiessubjecttoapprovalinaccordancewithlawsshallnotbecarriedoutuntil control
approval fromcompetentauthoritieshasbeenobtained.]]
Production, processingandsales:high-classhouseholdpaperproducts(printingprocess Business
C&S exclusive);importandexportofpulpboards(Businessactivitiesprohibitedbylawsand combinations
(Zhongshan) Zhongshan,Zhongshan, administrativeregulationsareexclusive;businessactivitiesrestrictedbylawsand 100.00% notunder
Paper Co., Guangdong Guangdong administrativeregulationsshallnotbecarriedoutuntilpermithasbeenobtained).(Business common
Ltd. activitiessubjecttoapprovalinaccordancewithlawsshallnotbecarriedoutuntilapproval control
from competentauthoritieshasbeenobtained.)
Sun Daily Yunfu, Yunfu, R&D,production,processing,andonlinesales:paperproducts,hygieneproducts,cosmetics, 50.00% 50.00%Capital
Necessities Guangdong Guangdong nonwovenproducts,plasticproductsfordailyuse,chemicalproductsfordailyuse,metalware contribution
Co., Ltd. fordailyuse,rubberproductsfordailyuse,andceramicsfordailyuse;importandexport of for
goods ortechnology(Importandexportofgoodsortechnologyprohibitedbythecountryor establishment
subject toadministrativeapprovalexclusive).(Businessactivitiessubjecttoapprovalin
accordance withlawsshall notbecarriedoutuntilapproval fromcompetentauthoritieshas
been obtained.))
R&D, production,processing,andsales(onlinesalesinclusive):householdpaper,tissue
boxes, hygieneproducts,cosmetics,non-wovenproducts,plasticproducts,metalware,rubber
products, ceramics,babyproducts,femininehygieneproductsanddailynecessities;bamboo
C&S andforesttreesplanting;acquisitionofraw materialsofbambooandwoodforpaper making; Capital
(Dazhou) Dazhou, Dazhou, R&D,productionandsalesofbamboopulp,woodpulp,bamboochipsandwoodchips; contribution
Paper Co., Sichuan Sichuan combinedheatandpowerandsales;warehouseleasing;processingandsalesoflimeand 100.00% for
Ltd. limestone;processingofindustrialwastewaterandgraywaterreuse;generalimportand establishment
export business;salesofconstructionmaterials,hardwareandelectricalproducts,chemical
products (hazardousproductsexclusive).(Businessactivitiessubjecttoapprovalin
accordance withlawsshall notbecarriedoutuntilapproval fromcompetentauthoritieshas
been obtained.)
Note of the difference between the percentage of shares held by minority shareholders in a
subsidiary and the percentage of their voting rights: None
Basis for holding 50% or less than of the voting rights but controlling the investee, or holding 50%
or more of the voting rights but not controlling the investee: None
Basis for controlling the important consolidated structured entities: None
Basis for determining whether the Company is an agent or a principal: None
Other notes: shares held indirectly belong to the shares held by wholly-owned subsidiaries of the
Company
(2) Important non-wholly-owned subsidiaries
Note that the percentage of shares held by minority shareholders in a subsidiary is different from the
percentage of their voting rights: None
Other notes: There are no important non-wholly-owned subsidiaries of the Company
(3) Main financial information of important non-wholly-owned subsidiaries: None
(4) Significant restrictions on the use of the assets and the repayment of the debts of the
enterprise group: None
(5) Financial or other support provided to consolidated structured entities: None
2. Transactions in which the share of owner's equity in a subsidiary changes and still controls
the subsidiary
(1) Description of changes in the share of owner’s equity in the subsidiary: None
(2) The impact of the transaction on minority shareholders’ equity and the equity attributable
to owners of the parent company
Other notes: There are no transactions of the Company in which the owner's equity share of a
subsidiary changes and still controls the subsidiary.
3. Interests in joint arrangements or associates
(1) Important joint ventures or associates
Note that the percentage of shares in joint ventures or associates is different from the percentage of
voting rights: None
Basis for holding less than 20% of the voting rights but with significant influence, or holding 20%
or more of the voting rights but without significant influence: None
(2) Main financial information of important joint ventures: None
(3) Main financial information of important associates: None
(4) Summary financial information of unimportant joint ventures and associates: None
(5) Description of significant restrictions on the ability of joint ventures or associates to
transfer funds to the Company: None
(6) Excess losses incurred by joint ventures or associates: None
(7) Unconfirmed commitments related to the investment in joint ventures: None
(8) Contingent liabilities related to the investment in joint ventures or associates: None
4. Important joint operation
Note that the percentage of shares is different from the percentage of voting rights in joint
operations:
Basis for joint operation as a separate entity but classified as joint operation:
Other descriptions
There was no important joint operation of the Company
5. Interests in unconsolidated structured entities
Description of unconsolidated structured entities:
There are no interests in unconsolidated structured entities of the Company.
6. Others: None
X. Risks Associated with Financial Instruments
The main financial instruments of the Company include monetary funds, notes receivable, accounts
receivable, notes payable, accounts payable, other payables and loans, etc. Please refer to relevant
items of "Note VII" for detailed information of all financial instruments. The risks associated with
these financial instruments and the risk management policies adopted by the Company to reduce
these risks are as follows. The management of the Company manages and monitors these risk
exposures to ensure that the above risks are kept within control.
The goal of the Company's risk management is to strike a proper balance between risks and gains
and minimize the negative impact of risks on the business performance of the Company while
maximizing the interests of shareholders and other equity investors. Based on this risk management
goal, the basic strategy of the Company’s risk management is to determine and analyze all kinds of
risks faced by the Company, clarify the minimum of risk acceptance and conduct risk management,
and monitor risks of all kinds in a timely and reliable manner to control risks within the limits.
1. Credit risk
Credit risk refers to the risk of financial losses of one party caused by the failure of the other party
to perform its obligations. The main risk facing the Company is customer credit risk caused by O/A.
In order to reduce credit risk, the Company only conducts transactions with recognized customers
with good credit status, and continuously monitors the accounts receivable through credit
monitoring of existing customers and aging analysis to ensure that the Company does not face the
risk of bad debts and keep the overall credit risk within control.
2. Interest rate risk
Interest rate risk refers to the risk of fluctuations of the fair value or future cash flow of financial
instruments due to changes in market interest rates. The interest rate risk faced by the Company
mainly comes from bank borrowing. By developing a good relationship with banks and carrying out
adaptive design of credit lines, types of credits, and credit terms, the Company ensures sufficient
bank credit lines to meet its various financing needs. The risk of interest rate fluctuation can be
reasonably reduced by shortening the term of a single loan and specially stipulating prepayment
terms.
3. Foreign exchange risk
Foreign exchange risk refers to the risk of fluctuations of the fair value or future cash flow of
financial instruments due to changes in foreign exchange rates. The Company tries its best to match
foreign currency income with foreign currency expenditure to reduce foreign exchange risks.
Foreign exchange risks borne by the Company are mainly related to US dollars. Except for
purchasing and selling in USD by its overseas subsidiaries, other major business activities of the
Company are priced and settled in RMB. See "Note VII, 82" for the conversion of foreign currency
financial assets and liabilities into RMB on June 30, 2020. During the reporting period, the
Company generated exchange profit and loss of -RMB993,705.23.
4. Liquidity risk
Liquidity risk refers to the risk of capital shortage when an enterprise fulfills its obligation to settle
accounts by delivering cash or other financial assets. The Company's policy is to ensure that it has
sufficient cash to repay mature debts. Liquidity risk is centrally controlled by the financial
departments of the Company. The financial departments monitor cash balances, negotiable
securities that can be cashed in at any time, and carry out rolling forecasts on cash flows in the next
six months to ensure that the Company has sufficient funds to repay debts under all reasonable
forecasts.
XI. Disclosure of Fair Value
1. Assets measured at fair value and the fair value of liabilities at the end of the reporting
period: None
2. Basis for determining the market price of recurring and non-recurring fair value
measurement items of Level 1: None
3. Qualitative and quantitative information on important parameters and valuation
techniques used for recurring and non-recurring fair value measurement items of Level 2:
None
4. Qualitative and quantitative information on important parameters and valuation
techniques used for recurring and non-recurring fair value measurement items of Level 3:
None
5. Adjustment information and analysis of sensitivity of unobservable parameters between
book values of recurring fair value measurement items of Level 3 at the beginning of the
reporting period and that at the end of the reporting period.
6. Recurring fair value measurement items with conversion between different levels, reasons
for such conversion and policies for determining the time of conversion: None
7. Changes in valuation techniques within the reporting period and reasons for such changes:
None
8. Financial assets not measured at fair value and the fair value of financial assets: None
9. Others: None
XII. Related Parties and Related Party Transactions
1. Information on the parent company of the Company
Shareholding Percentageof
Nameofparent Locationof Principalactivities Registered percentageof votingrightof
company registration capital parentcompanyto parentcompany
theCompany totheCompany
Guangdong Externalinvestment;consulting
Zhongshun Zhongshan, ofinformationoncommodities RMB30
Paper Group Guangdong circulation(exclusiveofreal million 28.64% 28.64%
Co., Ltd. estate,laborservices,financial
futures,andstudyingabroad)
Explanation of the information on the parent company of the Company
The ultimate controller of the Company is Mr. Deng Yingzhong, the father, Mr. Deng Guanbiao and
Mr. Deng Guanjie, whose two sons.
Other explanation: None
2. Information on the subsidiaries of the Company
See Note IX Equities in Other Entities for details of the information on the subsidiaries of the
Company.
3. Information on the joint ventures and associates of the Company
See Notes for details of the important joint ventures or associates of the Company.
Other descriptions
There are no interests in the arrangement of joint ventures or associates of the Company.
4. Information on other related parties
Name ofotherrelatedparties Relationshipbetween otherrelatedpartiesandtheCompany
(Hong Kong)ZhongshunCo., Ltd. Thesecond-largestshareholderoftheCompany,with20.32%
of theCompany'sshares
Guangzhou ZhongshunTradeCo., Ltd. TheCompanycontrolledbythenephewandthehusbandofthe
niece ofMr.DengYingzhong,theChairmanoftheCompany
Bama ZhongshunHealthProductsCo.,Ltd. TheCompanycontrolledbyGuangdongZhongshunPaper
Group Co.,Ltd.,theCompany'scontrollingshareholder
YantaiZhongshunNetworkTechnologyCo., Ltd. Thepartially-ownedsubsidiaryofBamaZhongshunHealth
ProductsCo.,Ltd.controlledbytheCompany'scontrolling
shareholders
Zhongshun IndustrialInvestment(Shenzhen)Co., TheCompanycontrolledby defactocontrollers,Mr.Deng
Ltd. Yingzhong,Mr.DengGuanbiaoandMr.DengGuanjie
Pengzhou LexiangshenghuoTradingCo.,Ltd. AcompanywheretheseniormanagerYueYong'sson holds
sharesandservesasasupervisor
Sichuan WestLexiangshenghuoTradingCo.,Ltd. AcompanywheretheseniormanagerYueYong'sson holds
sharesandservesasasupervisor
Chongqing QinyueTradingCo., Ltd. AcompanywheretheseniormanagerYueYong'sbrother holds
sharesandservesasasupervisor
Other descriptions
Note: The Company's directors, supervisors, senior managers and their close family members are
related to the Company.
5. Information on related party transactions
(1) Related party transactions for purchase and sale of merchandise, and provision and
acceptance of labor services
Purchase of Merchandise/Acceptance of Labor Services
Unit: RMB
Content of related Incurredin Approved Whetherto Incurredin
Related party partytransactions thecurrent transaction outstripthe theprior
period limit transactionlimit period
Bama ZhongshunHealth Others 0.00No 123,516.43
Products Co., Ltd.
Total 0.00 123,516.43
Sale of Merchandise/Provision of Labor Services
Unit: RMB
Related party Contentofrelated Incurredinthecurrent Incurredinthepriorperiod
partytransactions period
Pengzhou Lexiangshenghuo Saleofgoods 828,658.05 707,224.33
Trading Co.,Ltd.
Sichuan West
Lexiangshenghuo TradingCo., Saleofgoods 180,809.75 691,937.12
Ltd.
Chongqing QinyueTrading Saleofgoods 247,979.83 560,413.05
Co., Ltd.
Guangdong ZhongshunPaper Saleofgoods 56,637.17
Group Co.,Ltd.
Total 1,314,084.80 1,959,574.50
Explanation of the related party transaction for purchase and sale of merchandise, and provision and
acceptance of labor services: None
(2) Related entrusted management/contracting and entrusting management/contracting out
Explanation of related custody/contracting: None
Explanation of related management/contracting out: None
(3) Related lease
The Company as the lessee:
Unit: RMB
Name oflessor Typeofleasedassets Leasefeeconfirmedinthe Leasefeeconfirmedinthe
current period lastperiod
Mr. DengYingzhong,Mr.
Deng GuanbiaoandMr. Housinglease 1,474,047.18 593,421.30
Deng Guanjie
Explanation of related lease: None
(4) Related guarantee: None
(5) Interbank borrowing between related parties: None
(6) Assets transfer and debt reorganization between related parties: None
(7) Rewards for key managers
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Rewards forkeymanagers 8,140,753.70 2,860,477.56
(8) Other related party transactions
There were 16 key managers in the Company in the first half of 2020, 14 in the first half of 2019.
6. Receivables from and payables to related parties
(1) Receivables
Unit: RMB
Balanceattheendoftheyear Balanceatthebeginningoftheyear
Itemname Relatedparty Bookbalance Impairment Bookbalance Impairment
provision provision
Accounts ChongqingQinyue 166,513.67 3,330.27 130,446.49 2,608.93
receivable TradingCo.,Ltd.
(2) Payables
Unit: RMB
Itemname Relatedparty Bookbalanceattheendof Bookbalanceatthe
theperiod beginningofthe period
Contract liabilities PengzhouLexiangshenghuo 771.07 503.67
TradingCo.,Ltd.
SichuanWest
Contract liabilities LexiangshenghuoTrading 70,468.90 4,783.90
Co.,Ltd.
7. Commitments of related parties: None
8. Others: None
XIII. Share-based Payment
1. Overall information on share-based payment
√ Applicable □ Inapplicable
Unit: RMB
Company's totalamountofallequity 0.00
instruments grantedinthecurrentperiod
Company's totalamountofallequity
instruments exercisedinthecurrent 8,184,936.00
period
Company's totalamountofallequity
instruments expiringinthecurrent 802,722.00
period
Scope ofexercisepricesandRemaining TheinitialgrantpriceoftheCompany'sstockoptionsissuedattheend
term ofcontractsoftheCompany'stock ofthereportingperiodisRMB8.53pershare,andthatofreserved
options issuedattheendofthereporting onesisRMB14.04pershare.Thecontractswillbevalidfromthedate
period ofgrantingofthestockoptionstothedateofexerciseorinnovationof
allthestockoptions,whichshouldnotexceed60 months.
Other explanation: None
2. Equity-settled share-based payment
√ Applicable □ Inapplicable
Unit: RMB
1. Restrictedshares:thestockclosingpricesatthe
grant date
Method ofdeterminingthefairvalueofequityinstruments 2.Stockoptions:Black-Scholesmodelforoption
at thegrantdate pricing
3. Employeestockownershipplan:thestockclosing
pricesatthegrantdate
Basis fordeterminingthenumberofvestedequity Uponapprovalofthegeneralmeeting
instruments
Reasons forthemajordifferencebetweentheestimationof None
the currentperiodandthatofthelast period
The accumulatedamountofequity-settledshare-based 116,663,060.26
payments recognizedascapitalsurplus
Totalfeesconfirmedbytheequity-settledshare-based 52,983,211.08
payment inthecurrentperiod
Other explanation: None
3. Cash-settled share-based payment
□ Applicable √ Inapplicable
4. Revision and termination of share-based payment
There was no revision and termination of share-based payment of the Company during the reporting
period.
5. Others: None
XIV. Commitment and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date
As at June 30, 2020, the Company had no significant commitments that should have been disclosed
but are not been disclosed.
2. Contingencies
(1) Significant or contingent matters on the balance sheet date
As at June 30, 2020, the Company had no significant or contingent matters that should have been
disclosed but are not been disclosed.
(2) Explanations are also necessary if the Company has no significant or contingent matters to
be disclosed.
There are no significant or contingent matters to be disclosed in the Company.
3. Others: None
XV. Matters after Balance Sheet Date
1. Important non-adjustment: None
2. Profit distribution: None
3. Sales return: None
4. Explanation on other matters after balance sheet date: None
XVI. Other Significant Matters
1. Correction to previous accounting errors
(1) Retroactive restatement approach
(2) Prospective approach
2. Debt restructuring: None
3. Assets replacing
(1) Exchange of non-monetary assets: None
(2) Other assets replacing: None
4. Annuities plan: None
5. Discontinued operations
Other explanation: None
6. Segment information
(1) Determination basis and accounting policy of reporting segments.
The Company has no various business segments with different economic features and does not
determine the business segments according to internal organization structure, management
requirements and internal reporting policy. Therefore, there was no information on reporting
segments based on business segments to be disclosed.
(2) Financial information on reporting segments: None
(3) If the Company has no reporting segments or refuses to disclose the total assets and
liabilities of all the reporting segments, explanation on reasons is necessary: None
(4) Other explanations: None
7. Other important transactions and matters that may affect the decisions of investors: None
8. Others: None
XVII. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Accounts receivable disclosed by categories
Unit: RMB
Type Balanceattheendoftheyear Balanceatthebeginningofthe year
Bookbalance Impairment Bookbalance Impairmentprovision
provision Book Book
Amount Percentage Amount Provision value Amount Percentage Amount Provision value
ratio ratio
Wherein:
Accounts
receivable
for which
bad debts 88,905,031 100.00% 1,600,4 1.80% 87,304,5128,480,8 100.00% 1,277,442. 0.99% 127,203
reserve is .05 86.66 44.39 69.70 83 ,426.87
set aside
in
portfolios
Wherein:
Aging 61,915,074 69.64% 1,600,4 2.58% 60,314,544,573,10 34.69% 1,277,442. 2.87% 43,295,
portfolio .31 86.66 87.65 8.11 83 665.28
Related 26,989,956 26,989,983,907,76 83,907,
party .74 30.36% 56.74 1.59 65.31% 761.59
portfolio
Total 88,905,031 100.00% 1,600,4 1.80% 87,304,5128,480,8 100.00% 1,277,442. 0.99% 127,203
.05 86.66 44.39 69.70 83 ,426.87
Bad debts reserve set aside individually: None
Bad debts reserve set aside individually: None
Bad debts reserves set aside in portfolios: 1,600,486.66
Unit: RMB
Name Balanceattheendoftheyear
Bookbalance Impairmentprovision Provisionratio
Within thecreditperiod 50,696,422.08 1,013,928.45 2.00%
Credit period-oneyear 10,962,396.22 548,119.81 5.00%
One totwoyears 256,256.01 38,438.40 15.00%
Twotothreeyears 0.00 0.00 30.00%
Three tofive years 0.00 0.00 50.00%
Over fiveyears 0.00 0.00 100.00%
Total 61,915,074.31 1,600,486.66 --
Description of reason for the portfolio:
Accounts receivable with the same age have similar credit risk characteristics.
Bad debts reserves set aside in portfolios: None
Description of reason for the portfolio:
If the bad debts reserve of accounts receivable is set aside according to general model of expected
credit loss, please refer to the disclosure method of other receivables to disclose relevant
information on bad debts reserve:
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
Aging Balanceattheendoftheyear
Within oneyear(inclusive) 88,648,775.04
One totwoyears 256,256.01
Total 88,905,031.05
(2) Bad debts reserve that is set aside, recovered or transferred back
Provision of bad debts reserve of the reporting period:
Unit: RMB
Balance atthe Amountofchangeinthereportingperiod Balanceatthe
Type beginningof Provision Recoveryor Write-offs Others endoftheyear
theyear transferback
Accounts 1,277,442.83 323,043.83 0.00 0.00 0.00 1,600,486.66
receivable
Total 1,277,442.83 323,043.83 0.00 0.00 0.00 1,600,486.66
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period is
important: None
(3) The accounts receivable actually written off in the reporting period
Significant write-offs of accounts receivable wherein: None
Explanation on write-offs of accounts receivable:
The Company has no accounts receivable actually written off in the current period.
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
Balanceofaccounts Percentageoftotalbalance
Nameofinstitution receivableattheendofthe ofaccountsreceivableat Closingbalanceforbad
reportingperiod theendofthereporting debtsreserve
period
1st 23,675,211.68 26.63% 0.00
2nd 12,054,300.93 13.56% 241,086.02
3rd 8,198,702.86 9.22% 204,924.14
4th 6,601,029.89 7.42% 226,227.16
5th 5,470,556.64 6.15% 128,677.45
Total 55,999,802.00 62.98%
(5) Accounts receivable derecognized due to the transfer of financial assets
The Company has no accounts receivable derecognized due to the transfer of financial assets at the
end of the reporting period.
(6) Amount of assets and liabilities that are formed by the transfer and ongoing involvement
of accounts receivable
The Company has no amount of assets and liabilities that are formed by the transfer and ongoing
involvement of accounts receivable at the end of the reporting period.
Other explanation: None
2. Other accounts receivable
Unit: RMB
Item Balanceattheendoftheyear Balanceatthebeginningoftheyear
Other receivables 42,634,717.52 637,511,752.54
Total 42,634,717.52 637,511,752.54
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest
Other explanation: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Important dividends receivable exceeding one year: None
3) Provision of bad debts reserve
□ Applicable √ Inapplicable
Other explanation: None
(3) Other receivables
1) Classification by the nature of amount of other receivables
Unit: RMB
Natureofamount Bookbalanceatthe endoftheperiod Bookbalanceatthebeginningofthe
period
Margins anddeposits 99,401.05 31,500.00
Current accounts 20,531,470.60 636,793,035.80
Reserve 763,749.17 702,001.66
Others 22,446,389.81 44,314.48
Total 43,841,010.63 637,570,851.94
2) Provision of bad debts reserve
Unit: RMB
Phase I PhaseII PhaseIII
Expected credit Expectedcreditlosses Expectedcreditlosses
Impairment provision lossinthenext12 inthewholeduration inthewholeduration Total
months (withoutcredit (withcreditimpairment)
impairment)
As atJanuary1,2020 59,099.40 59,099.40
Balance asatJanuary
1, 2020inthe - - - -
reporting period
Provision inthe 1,154,782.82 1,154,782.82
reporting period
Write-offsinthe 7,589.11 7,589.11
reporting period
Balance asatJune30, 1,206,293.11 1,206,293.11
2020
Change of book balance whose change of amount of loss reserves is significant
□ Applicable √ Inapplicable
Disclose according to age
Unit: RMB
Aging Balanceattheendoftheyear
Within oneyear(inclusive) 43,809,656.58
One totwoyears 21,000.00
Twotothreeyears 0.00
Over threeyears 10,354.05
Three tofouryears 8,354.05
Over fiveyears 2000,00
Total 43,841,010.63
3) Bad debts reserve that is set aside, recovered or transferred back
Provision of bad debts reserve of the reporting period:
Unit: RMB
Balance atthe Amountofchangeinthereportingperiod Balanceatthe
Type beginningof Provision Recoveryor Write-offs Others endoftheyear
theyear transferback
Other 59,099.40 1,154,782.82 0.00 7,589.11 0.00 1,206,293.11
receivables
Total 59,099.40 1,154,782.82 0.00 7,589.11 0.00 1,206,293.11
The Company has actually written off other accounts receivable of RMB7,589.11 during this
reporting period.
Wherein, the amount of recovered or transferred back bad debts reserve of the reporting period is
important: None
4) Other receivables actually written off in the reporting period
Unit: RMB
Item Written-offamount
Other receivablesactuallywrittenoff 7,589.11
Wherein, write-offs of important other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
Balance atthe Percentageoftotal Closingbalance
Name ofinstitution Natureofamount endoftheyear Aging closingbalance of forbaddebts
other receivables reserve
1st Others 22,214,407.06Withinoneyear 50.67% 1,110,720.35
2nd Currentaccounts 18,866,710.02Withinoneyear 43.03%
3rd Currentaccounts 1,000,000.00Withinoneyear 2.28%
4th Others 348,626.21Withinoneyear 0.80% 17,431.31
5th Others 326,010.00Withinoneyear 0.74% 16,300.50
Total -- 42,755,753.29 -- 97.52% 1,144,452.16
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement of
other receivables: None
Other explanation: None
3. Long-term equity investment
Unit: RMB
Balanceattheendoftheyear Balanceatthebeginningoftheyear
Item Bookbalance Impairment Bookvalue Bookbalance Impairment Bookvalue
provision provision
Investment
in 1,918,835,099.92 1,918,835,099.921,231,245,128.96 1,231,245,128.96
subsidiaries
Total 1,918,835,099.92 1,918,835,099.921,231,245,128.96 1,231,245,128.96
(1) Investment in subsidiaries
Unit: RMB
Opening balance Increaseanddecreaseinthecurrentperiod Closingbalance Closing
Investee (bookvalue) Additional Decreased Provisionfor Others (bookvalue) balanceof
investment investment impairment impairment
Zhongshan
Zhongshun 91,611,393.55 6,255,970.62 97,867,364.17
Trading Co.,
Ltd.
C&S
(Sichuan) 161,228,847.04 6,427,368.42 167,656,215.46
Paper Co.,
Ltd.
Zhejiang
Zhongshun 51,259,117.44 3,019,010.34 54,278,127.78
Paper Co.,
Ltd.
C&S 12,683,100.00 0.00 12,683,100.00
(Zhongshan)
Paper Co.,
Ltd.
Jiangmen
Zhongshun 697,499,879.18 687,990.90 698,187,870.08
Paper Co.,
Ltd.
C&S (Hubei)
Paper Co., 43,037,008.50147,600,000.00 2,762,869.08 193,399,877.58
Ltd.
C&S (Yunfu)
Paper Co., 135,405,965.05518,000,000.00 2,468,898.78 655,874,863.83
Ltd.
C&S (Yunfu)
Trading Co., 30,200,274.51 0.00 30,200,274.51
Ltd.
Chengdu
Zhongshun 1,237,694.60 44,850.00 1,282,544.60
Paper Co.,
Ltd.
Xiaogan C&S
Trading Co., 539,220.62 9,510.00 548,730.62
Ltd.
Shanghai
Huicong 2,796.00 1,584.00 4,380.00
Paper Co.,
Ltd.
Hangzhou Jie
Rou Trading 58,048.00 23,772.00 81,820.00
Co., Ltd.
Zhong Shun
International 281,784.47 288,146.82 569,931.29
Co., Ltd.
Sun Daily
Necessities 200,000.00 0.00 200,000.00
Co., Ltd.
C&S
(Dazhou) 6,000,000.00 0.00 6,000,000.00
Paper Co.,
Ltd.
Total 1,231,245,128.96665,600,000.00 21,989,970.961,918,835,099.92
(2) Investment in associates and joint ventures: None
(3) Other explanation: None
4. Operating income and operating cost
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Revenue Cost Revenue Cost
Principal business 493,288,414.96 377,715,003.73 483,592,449.56 393,879,993.17
Others 360,602,849.07 334,899,974.01 80,021,531.04 74,363,879.79
Total 853,891,264.03 712,614,977.74 563,613,980.60 468,243,872.96
Relevant information of performance obligation: None
Relevant information of the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executed
contract that are not performed or fully performed at the end of the reporting period is
RMB748,564.49, of which the income of RMB748,564.49 is expected to be confirmed in the year
of 2020.
Other explanation: None
5. Income on investment
Unit: RMB
Item Incurredinthecurrentperiod Incurredinthepriorperiod
Income fromlong-termequity-based
investment accountedforusingthe 140,000,000.00
cost method
Others 2,109,515.77 72,378.41
Total 142,109,515.77 72,378.41
6. Others: None
XVIII. Supplementary Information
1. Statement of non-recurring profit and loss of the current period
√ Applicable □ Inapplicable
Unit: RMB
Item Amount Remarks
Profit andlossfromdisposalofnon-current -896,870.05
assets
Government grantsmeasuredatfairvalue
through profitandlossofthecurrentperiod
(except forthe governmentgrantsthatare 16,474,867.62
closely relatedtotheCompany'sbusinessand
distributed inafixquotaoramountin
accordance withunifiednationalstandards)
Profit andlossfromassetsentrustedto others Returnsonprincipal-protectedwealth
for investmentormanagement 2,287,274.87managementproductsat maturityand
reverse repo oftreasurybonds
Other non-operatingexpensesexcludingthe -11,371,164.42
above items
Less: Influenceofincometax 330,361.37
Total 6,163,746.65 --
The reasons why the Company defined certain items as non-recurring profit and loss in line with the
No. 1 Explanatory Announcement on Information Disclosure of Companies Offering Securities to
the Public—Non-recurring Profit and Loss and some items listed in the above announcement as
recurring profit and loss shall be specified.
□ Applicable √ Inapplicable
2. Return on net assets and earnings per share
Weightedaveragereturn onnet Earningspershare
Profit inthereportingperiod assets Basicearningsper Dilutedearningsper
share (RMB/share) share(RMB/share)
Net profitattributabletothe
ordinary shareholdersofthe 10.46% 0.3519 0.3462
Company
Net profitattributabletothe
ordinary shareholdersofthe 10.32% 0.3471 0.3415
Company afterexcluding
non-recurring profitandloss
3. Differences between accounting data disclosed under domestic and overseas accounting
standards
(1) Differences in net profit and net assets between the financial statements disclosed under
the IAS and the PRC GAAP in the same period.
□ Applicable √ Inapplicable
(2) Differences in net profit and net assets between the financial statements disclosed under
the overseas accounting standards and the PRC GAAP in the same period.
□ Applicable √ Inapplicable
(3) Explanation of reasons for the differences between accounting data disclosed under
domestic and overseas accounting standards. If differences in the data upon audit of overseas
audit institutions are adjusted, the name of the institution should be noted.
4. Others
Section XII Catalog of Documents for Reference
I. The 2020 Semi-annual Report with the signature of Mr. Deng Yingzhong, Chairman of the
Company.
II. The financial statements signed and sealed by Mr. Deng Yingzhong, legal representative,
Mr. Dong Ye, person in charge of accounting, and Ms. Xu Xianjing, person in charge of
accounting department of the Company.
III. The original manuscripts of all corporate documents and manuscripts of announcements
that were publicly disclosed on the newspapers designated by the China Securities Regulatory
Commission during the reporting period.
IV. Other relevant information.
V. Place where documents for reference can be obtained: Office of Board of Directors of the
Company.
In the event of any inconsistency between the Chinese and English versions of the report, the
Chinese version announced shall prevail.
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