2014 Annual Report

Transcription

2014 Annual Report

Shanghai Jahwa 2014 Annual Report
2014 Annual Report
Shanghai Jahwa United Co., Ltd.
1
2
Helping people live a better life of beauty,
health and self-confidence.
3
4
Table of Contents
001
Section 1
Definition and Important Notice
005
Section 2
Company Profile
006
Section 3
Financial Highlights
008
Section 4
Report of the Board of Directors
011
Section 5
Significant Events
031
Section 6
Changes of Share Capital and Particulars of Shareholders
041
Section 7
Directors, Supervisors, Senior Management and Staff
046
Section 8
Company Governance
052
Section 9
Internal Control
056
Section 10
Financial Reports
058
Section 11
Document for Reference
157
Chairman's Statement
5
001
Chairman's Statement for Annual Report of
Shanghai Jahwa
In 2014, Shanghai Jahwa achieved two-digital growth in both
operating revenues and net profits at a two-digital rate.Shanghai
Jahwa maintained its leading position with the stable growth of
operating results in domestic market.
Shanghai Jahwa has experienced reform in 2014. The Company externally encountered the
adverse impact arising from the macro-economic slowdown in China and the increasingly
fierce competition in daily-use market; on the other hand, the Company internally encountered
many challenges in the process of corporate reform. In face of such challenges, Shanghai
Jahwa bravely carried out reform, continuously intensified the restructuring, implemented
optimization and innovation in the aspects of brand development, scientific research &
innovation, supply chain optimization, multiple channel construction and talent cultivation.
In details, the Company formulated the brand-new five-year strategy, defined the clear
development objectives and accomplishment schedule, reinforced the brand manager
accountability system, integrated the brand image and investment in all related channels, and
strengthened the core brand assets; the Company also performed many scientific research
and reform, encouraged the production innovation and accelerated the evolution of products;
completed the comprehensive upgrading and optimization of supply chain system and further
improved the capacity;the Company made great efforts to develop Internet channels and
specialized chain channel while adapted itself to the structural alteration of retail market and
the shopping habit of consumers; the Company implemented the competitive remuneration
and welfare program in order to attract external talents. As for the implementation of five-year
strategy, the Company foundation for reform was established well in 2014.
In the next ten years, with the progress of Chinese economy and the emerging of domestic
daily-use chemical brands, the daily-use chemical industry in China will come across the four
major trends of "accelerated development": 1. There is still big potential for development of
daily-use chemical industry in China, and as more and more domestic brands come out, the
huge international daily-use chemical enterprises will be greatly impacted by the domestic
brands; 2. With the increasing of income of Chinese residents, the potential of segment markets
such as oral heath, colored cosmetics and infant care products will be prominent; 3. As an
effective feature for differentiation, the Chinese elements will be followed by global market in
many consumption sectors; 4. The advance of mobile Internet big data era will impose the
subversive impact in the whole consumer industry.
In 2014, Shanghai Jahwa also positively demonstrated the corporate social responsibility. After
the earthquake in Ludian of Yunnan, Shanghai Jahwa made the rapid responses and donated
subsistence materials with total amount of RMB1.8 million to help the people rebuilding
their homestead. Shanghai Jahwa front debuted and sponsored the Shanghai International
Marathon, set up the Shanghai Jahwa Corporate Citizen Day and found the Shanghai Jahwa
Public Welfare Fund together with China Youth Development Foundation. In March, 2015,
Shanghai Jahwa formally launched a new"Care for Depression Patients", in cooperation with
psychologists and consulting institutes and set up a platform to provide the depression patients
and their families with professional assistance and services.
In such development trend, Shanghai Jahwa will stand on the basis of the competitive
advantage differentiation and consolidate four core-competitiveness in the future: 1.
Establishing the Chinese cultural system. Shanghai Jahwa will develop the products which are
the most suitable for Chinese consumers in the aspects of value & orientation, technology &
002
culture, esthetics & art and language & lettering; 2. Ability of covering and controlling channels.
While intensifying the existing channel advantages, the Company will continuously develop
and invest more in emerging channels including e-commercial business; 3.Making quick
response to the market. This is the competitive advantage of domestic enterprises represented
by Shanghai Jahwa; 4.Carrying out direct interaction with consumers in the big data era. The
Company will adopt the e-commercial platform to achieve direct interaction with consumers
with high-quality frequently, connect the online and offline channels, and experiment on the
new business mode throughout the country.
With respect to specific measures in detail, Shanghai Jahwa will make great efforts to forge "one
business innovation chain" and "two big engines" in the future to ensure the sustainable growth.
"One business innovation chain" means that Shanghai Jahwa will center on user experience,
accelerate the innovation throughout the whole business chain including R&D (research
and development), brand, marketing and sales. "Two big engines" means "accelerating the
launch of new products" and "actively exploring the opportunities for investment, merger and
acquisition". "Accelerating the launch of new products" means that we will continuously increase
the investment in scientific research, set up the open scientific research platform, and further
accelerate the launch of new products. "Actively seeking opportunities for investment, merger
and acquisition" means the future investment will center on the daily-use chemical business,
and seek for the mutual supplementation in the fields of category, variety and capacity.For
example, the infant brand which will be in mutual supplementation with Giving, the exclusive
channel brand, or the colored cosmetics and oral care sectors.
Shanghai Jahwa is the pioneer of domestic daily-use chemical industry. As its employees, we
are engaged in an industry which can realize the export of Chinese culture and impart "beauty,
health and self-confidence". The century evolution of Shanghai Jahwa has acknowledged us
with a deep understanding that, the sustainable development of company can be realized
only if we always adhere to "perseverance" and "innovation" and continuously create value for
customers. As a result, Shanghai Jahwa should never cease its reform. Since the important
task of innovation has been shouldered on every employee of Shanghai Jahwa, we should pull
together, and make concerted efforts for achieving the great goal: forge a worldclass daily-use
chemical enterprise".
Last but not least, on behalf of the board of directors, I would like to
extend our most sincere gratitude to all our customers, investors,
partners and public for their enduring support of Shanghai Jahwa!
I hope that we will witness the brighter future of Shanghai Jahwa
together!
Board Chairman & General Manager
Shanghai, China, March 2015
003
Important Note
1.
The board of directors, the board of supervisors, directors, supervisors and senior management
members of the Company warrant that the information in this report is authentic, accurate and
complete, contains no false record, misleading statement or significant material omission and
will bear the joint and several liabilities for the information in this report.
2.
All the directors of the Company attended the board meetings.
3.
PricewaterhouseCoopers Zhong Tian LLP issued an unqualified opinion audit report for the
Company.
4.
Legal representative of the Company Xie Wenjian, accounting function responsible person Xie
Wenjian, and accounting structure responsible person Huang Jian warrant the authenticity,
accuracy and completeness of the financial statements in this report.
5.
The plan for profit distribution and surplus converted to share capital during the reporting
period discussed by the board as follows:
The Company plans to distribute a cash dividend of RMB 6.10 (tax inclusive) to every 10
shares held by all shareholders on the basis of total share capital on the record date for profit
distribution.
6.
Prospective risk statement
This report may contain forward looking plans and development strategies and these do not
constitute as a commitment by the Company to its investors. Investors should be aware of the
investment risks.
7.
Is there any misappropriation of the Company's funds by controlling shareholder or other
related parties for non-operating purposes?
No.
8.
Is there any material guarantee business that violated the applicable regulations and
procedures?
No.
This report is published in both Chinese and English. Should there be any inconsistencies
between the two versions, the Chinese version shall prevail.
9.
004
2014 Annual Report
Section1 Definition and Important Notice
I Definition
In this report, unless the context otherwise stated, the following terms shall have the following meaning:
Interpretations of general terms
CSRC
means
China Securities Regulatory Commission
CSRC Shanghai Office
means
Shanghai Office of China Securities Regulatory
Commission
Company, The Company
means
The Group
means
Shanghai Jahwa United Co., Ltd. and its
subsidiaries
Jahwa Group
means
Shanghai Jahwa (Group) Co., Ltd.
China Ping An
means
Ping An Insurance (Group) Company of China,Ltd.
II Important Notice
The existing industry, marketing and operational risks has been described by the Company in details in this report.
Please refer to Section 4 of this report on discussion and analysis of the board of directors on the risks that the company
may potentially encounter in future developments.
005
2014 Annual Report
Section2 Corporate Profile
I Company Information
Registered Name in Chinese
上海家化联合股份有限公司
Abbreviation for Registered Name in Chinese
上海家化
Registered Name in English
Abbreviation for Registered Name in English
Shanghai Jahwa
Company's Legal Representative
Xie Wenjian
II Contact Persons and Contact Details
Secretary to the Company's Board of
Directors
Securities Representative
Name
Feng Jun
Zeng Wei
Contact Address
No.527 Baoding Road, Shanghai
No.527 Baoding Road, Shanghai
Telephone
021-25016000
021-25254991
Fax
021-65129748
021-65129748
E-mail
[email protected]
[email protected]
III Basic Information
Registered address
No.527,Baoding Road, Shanghai
Postal code of the registered address
200082
Office address
Postal code of office address
200082
Company's website
http: //www.jahwa.com.cn
E-mail
[email protected]
Newspaper designated by the Company for information disclosure
China Securities Journal, Shanghai Securities News
Website designated by the CSRC for the publication of the
annual report
www.sse.com.cn
Address to where Company's annual report can be obtained
The Board Secretary Office, No.527 Baoding Road, Shanghai
IV Information Disclosure and Venue for Preparation and Storage
V Stock Information
Summary of Company's Stock
Stock Type
Stock Exchange
Stock Abbreviation
Stock Code
A Share
Shanghai Stock Exchange
Shanghai Jahwa
600315
Abbreviation before Alterations
006
2014 Annual Report
Section2 Corporate Profile
VI Alterations of Registration of the Company in the Reporting Period
(1) Basic information
Date of Company's registration change
September 28, 2014
Address after Company's registration change
Registration Number of Business License of a Legal Entity
310000000040592
Tax Registration Number
310229607334939
Organization Code
60733493-9
(2) Relevant query index of the initial registration of the company
Please refer to the Basic Information of the Company section in the 2011 Annual Report for details.
(3) The changes of business scope since listing
Since the Company is listed, there are no changes of the principal business scope.
(4) The changes of the controlling shareholders since listing
From March 15, 2001, when the Company was listed, to June 8, 2006, the controlling shareholders of the Company
were Shanghai Jahwa (Group) Co., Ltd. and Shang Shi Daily Chemical Co., Ltd.;
From June 9, 2006 till the end of this reporting period, the controlling shareholder of the Company is Shanghai Jahwa
(Group) Co., Ltd.
VII Other Relevant Information
Accounting Firm hired by the
Company (domestic)
007
Name
PricewaterhouseCoopers Zhong Tian LLP
Office Address
Floor 11, PricewaterhouseCoopers Center, 2# Building, Corporate
Avenue, No.202, Hubin Road, Huangpu District, Shanghai, China
Names of Signing
Auditor
Zhang Jin, Ye Sheng
2014 Annual Report
Section3 Financial Highlights
I Main Accounting Data and Financial Index of the Past Three Years at the End of
Reporting Period
(1) Key accounting data
Monetary unit: Yuan; Currency: RMB
2013
Main accounting data
2014
Adjusted
Unadjusted
5,334,659,318.10
4,468,503,687.01
4,468,503,687.01
Net profit attributable to
the shareholders of the
listed Company
897,920,847.31
800,154,088.52
Net profit after
deducting nonrecurring gain/loss
attributable to the
shareholders of the
listed Company
873,600,251.92
Net cach flow from
operating activities
1,129,569,111.86
Revenue
Increase /
decrease
compared
to previous
year (%)
2012
Adjusted
Unadjusted
19.38
3,998,901,455.25
3,998,901,455.25
800,154,088.52
12.22
575,654,531.51
621,435,187.18
782,200,495.07
782,200,495.07
11.68
558,830,796.64
558,830,796.64
1,028,774,337.48
1,028,774,337.48
9.80
832,913,797.85
832,913,797.85
End of 2013
End of 2014
Adjusted
Unadjusted
Increase /
decrease
compared
to previous
year (%)
End of 2012
to previous year
Unadjusted
Net assets attributable
to the shareholders of
the listed Company
3,804,904,626.49
3,076,264,819.36
3,325,319,389.36
23.69
2,240,363,094.86
2,656,356,594.86
Total assets
5,533,633,656.92
4,520,218,917.21
4,520,218,917.21
22.42
3,665,835,660.35
3,665,835,660.35
(2) Main financial index
Main financial index
2014
2013
Adjusted
Unadjusted
Increase / decrease
compared
to previous year (%)
2012
Adjusted
Unadjusted
1.34
1.19
1.19
12.61
0.88
0.95
Diluted earnings per share (Yuan/share)
1.34
1.19
1.19
12.61
0.88
0.95
Basic earnings per share after deducting nonrecurring profit/loss (Yuan/share)
1.30
1.16
1.16
12.07
0.86
0.86
Weighted average of ROE(%)
26.53
30.62
24.89
-4.09
29.55
28.82
Weighted average ROE after non-recurring
gain/loss(%)
25.81
29.93
24.33
-4.12
28.69
25.92
Basic earnings per share (Yuan/share)
Explanatory notes on main accounting data and financial index of the Company for the past three years at the end of the
reporting period
1.The Company retrospectively adjusted financial statements due to the adoption of new accounting standards. For
details, please refer to Item 13 "Effect on consolidated financial statements by adoption of new accounting standards" in
Section 5 "Significant Events".
2.In this year, the Company recognized deferred income tax expense of RMB 75.16 million due to the intention change
of equity investment for Jiangyin Tianjiang Pharmaceutical Co., Ltd. Without considering this impact, the net profit of the
Company increased by 21.61% this year compared with last year.
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2014 Annual Report
II Difference of Accounting Data under Domestic and Overseas Accounting Standards
(I) The difference of net profit and net assets attributed to shareholders in the financial report
according to international accounting standards and PRC accounting standards simultaneously.
□ Applicable √ Not applicable
(II) The difference of net profit and net assets attribute to shareholders in the financial report
according to foreign accounting standards and PRC accounting standards simultaneously
III Non-Recurring Gain/ Loss Items and Corresponding Amounts
√ Applicable □ Not applicable
Non-recurring gain/ loss items
Gain/loss from disposal of non-current assets
Note
(if applicable)
2014
2013
2012
9,427,004.49
-862,644.98
9,324,107.15
24,133,553.59
26,823,572.03
7,796,674.06
Tax refund or reduction due to ultra vires approval or granted
without formal approval document or is incidental
Government grants recognized in profit or loss for the current
period (except for the government grants closely related to
the business of the Company and determined based on a
fixed amount or quantity in accordance to the National unified
standards)
Fund occupation fee charged on non-financial enterprises and
recognized into current Gain/loss
Gains from acquiring subsidiaries, associates or joint ventures
when the investment cost less than the fair value of identifiable
net assets attributable to the company
Gain/loss from exchange of non-monetary assets
Gain/loss from entrusted investment or asset management
Provisions for asset impairment withdraw due to force majeure
events (such as natural disaster)
Gain/loss from debt restructuring
Corporate restructuring costs, such as employee settlement
costs and expenses for consolidation
Gain/loss from transaction price of unfair transaction exceeding
the fair value
Net profit/loss for the current period produced by the subsidiary
between the beginning of the period and the merger date due
to the merger of entities under common control
Gain/loss from matters not related to normal operating business
of the Company
009
2014 Annual Report
III Non-recurring Gain/ Loss Items and Amounts (Continued)
Note
(if applicable)
Non-recurring gain / loss items
2014
Except for effective hedging business related to normal
business operations of the Company, gain/loss from the
change in the fair value of held-for-trading financial assets
and liabilities, as well as investment gain/loss produced from
the disposal of held-for-trading financial assets and liabilities
available-for-sale financial assets
2013
-
2012
357,736.89
377,010.27
Reversal of specific bad debt provision
Gain/loss from external entrusted loan
Gain/loss from change in fair value of investment-purpose
property subsequently measured at fair value
Effect on current gain/loss by once off adjustment to current
gain/loss in accordance with the requirements of tax and
accounting laws and regulations
Income from trustee fee for entrusted operation
Other non-operating income and expenses except abovementioned items
-4,948,866.68
-1,252,685.32
6,477,963.84
Other non-recurring gain/loss items
Impact on minority Interests
-791,232.39
-829,551.88
-3,173,443.68
Impact on income tax expenses
-3,499,863.62
-6,282,833.29
-3,978,576.77
Total
24,320,595.39
17,953,593.45
16,823,734.87
IV Items Measured at Fair Value
Item
Balance at the
beginning of year
Balance at the end
of year
Changes in the year
Effect on profit of
the year
381,979,984.19
54,857,435.81
-327,122,548.38
34,159,052.79
Structured deposit
303,383,143.83
-
-303,383,143.83
9,020,900.31
Bank wealth management
-
461,438,157.53
461,438,157.53
2,237,589.03
Restricted stock and stock appreciation
right payable
-
11,823,960.22
11,823,960.22
-11,823,960.22
685,363,128.02
528,119,553.56
-157,243,574.46
33,593,581.91
Total
Funds specialized wealth management
010
2014 Annual Report
Section4 Report of the Board of Directors
I Management Discussion and Analysis
Within the reporting period, the Company achieved operating revenue of RMB 5.335 billion, a year-on-year increase of
19.38%, in which revenue from product sales gained a year-on-year increase of 20.16%, whilst sales and distribution
expenses increased by 21.48% year-on-year, general administrative expenses increased by 6.89% year-onyear, net financial income of RMB 24.53 million, the operating profit increased by 20% year-on-year, and the net
profit attributable to shareholders of the Company is RMB 898 million, a year-on-year increase of 12.22%. This year,
the Company recognized deferred income tax expense of RMB 75.16 million due to the intention change of equity
investment for Jiangyin Tianjiang Pharmaceutical Co., Ltd. Without considering this impact, the net profit of the Company
increased by 21.61% this year compared with last year.
2014 is the year of reformation for Shanghai Jahwa. When faced with a slowed growth market environment and
disturbance caused by replacement of the management team, the Company actively performed management reforms in
all aspects of the business, abandoned policies which were restrictive to the development of the Company, introduced
and adopted an advanced managerial approach. This is the concrete foundation for a long-term, sound and rapid
growth of the Company. While steadily enforcing various management reforms, the Company overcame several
challenges and achieved growth target for sales and profits which was set at the beginning of the year.
With regards to external economic environment, the macro economic outlook for 2014 in China was not optimistic,
and economic structure adjustments definitely affected the economic growth and household consumption, which
was reduced by 7.4% and 12% respectively. According to the latest data from Nielsen, growth rate of personal care
industry in 2014 was also reduced by 7%. The channel structure of personal care and cosmetics industry in China
experienced fast and profound transformations, with the rapid development of electronic commerce and cosmetics
franchised stores, resulted in a decrease of growth and market share of the two major traditional channels: department
stores and supermarkets. On one hand, this proves to be a sales challenge for traditional personal care and household
care enterprises, including Shanghai Jahwa. On the other hand, this change proves to be a good opportunity for the
development of emerging privately owned cosmetics enterprises in China. Thus, the competition in the cosmetics
industry is becoming increasingly fierce. Aside from competition from the traditional multinational enterprises, we should
also be vigilant of those rapidly growing privately owned domestic personal care and household care enterprises.
The Company also encountered great challenges in internal management. At the end of 2013, the Company was
investigated by CSRC for failure to comply with the regulations on information disclosure of related party transactions,
this influenced employees' spirit and morale. At the beginning of 2014, the auditors issued an adverse opinion on
internal controls of the company, which led to much media coverage on the subsequent replacement of the executive
management levels. In addition, adjustment of Electronic Commerce team, channel adjustment for the brand GF,
changes in processing model and adjustment of lists of OEM suppliers all contributed to the unprecedented challenge
to the Company.
However, Company management team seized the opportunities of reform, not afraid by the challenges, implemented
effective measures in all aspects of the reform, including strategy formulation, brand development, channel construction,
supply chain optimization, scientific research and innovation, personnel management and back office construction, and
achieved primary success. This transformation is a firm foundation basis for the Company's future development.
2014 Key Work Review:
Formulation of development strategy: At the beginning of 2014, the Company engaged with Bain & Company to
assist the executive management of the Company with formulating a five-year development strategy, setting a clear
development target, effective competition means and a clear implementation plan were devised. The Company strive
to achieve operating revenue of RMB 12 billion in 2018 and forward its market rank from No. 10 to No. 5. The Company
will focus mainly on three major sectors, skincare, personal care and household care. And Company resources will
be invested in the five major brands, including Herborist, Liushen, Maxam, GF and Giving. These five brands target
011
2014 Annual Report
I Management Discussion and Analysis (Continued)
2014 Key Work Review (Continued):
five major market categories, which are mid/high end ladies' skincare, general personal care, general ladies' skincare,
men's skincare, and babies & children care. To achieve the strategic objective of development by improving four core
capabilities: 1) systematically and effectively utilize Chinese culture, 2) strengthen distribution management and field
execution, 3) respond efficiently and effectively to Chinese market demands, 4) use new innovations to close up and
lock consumers.
Brand development: The Company has employed a brand managers' accountability system whereby the brand
managers is responsible for meeting the needs of customers, it can integrate all channel's brand image and investment,
as to reinforces the core assets of brands and clarify the communication with consumers. Herborist increased
investment in media coverage, and continued to have marketing strategies rooted in Chinese culture, and combined
with Chinese Lunar holidays, for example, for Chinese Valentine's Day, event marketing and limited edition gift packs
with Chinese cultural characteristics were launched. Liushen maintained its powerful position in the floral water market
and focus had been placed on the usage and promotion of the younger generations. This year, Yao Cheng who has
high popularity among younger generations, was chosen to be endorsed for floral water products, this improved
Liushen's popularity in the summer personal care products in young generations. The new brand Giving made a quick
entry into the mother & baby stores of department stores & supermarket system in target cities, with TV advertisements
and large-scale promotional activations during the peak season, the brand Giving gained popularity among consumers
and greatly increased terminal sales volume month by month.
Optimization of supply chain: With regards to optimization of the supply chain, for the purpose of supporting the 5-year
strategic development of the Company, the Company run a full diagnose of the supply chain system, completed the
market benchmarking, designed the direction of improvement, and formulated the implementation plan. As a part of
the project, the project team formulated the corresponding planning for the removal of Qingpu Central Factory. The site
selection for new factory was completed, and the design work was also in full momentum, with objective set to meet
the Company development needs in the following ten years and to ensure that the production process and efficiency
of the new factory will reach a world class level. Additionally in 2014, the Company successfully transformed the
outsourcing model and ended the cooperation with the largest OEM supplier Wujiang Factory. Since January 2014, all
production bases changed the production model from purchase of finished products to sole processing, and under
the precondition that the supply of products was not affected; the preset objectives of product quality and outsourcing
management were achieved. While the product bases were integrated and adjusted, some products which were
previously outsourced were produced in the central factory, this increased the production capacity utilization rate of the
central factory. In 2014, the production output of central factory exceeded 70 million pieces, a year-on-year increase of
43%. In addition, through the application of dual purchase model, the locking of purchase costs for bulk materials and
the analysis on purchase cost model, the Supply Chain Division ultimately reduced the purchase costs by approximately
Channel construction: In light of the structural changes in the retail market and the shopping habits of consumers,
the Company made great efforts to develop the online channel and specialized chain channels such as cosmetics
franchised stores, Watsons system, and mother & baby stores. The restructuring of Electronic Commerce team gave the
Company an opportunity for re-development, and the Company optimized and adjusted the organizational structure
and staffing, strengthened the interaction and cooperation between Electronic Commerce team and Brand team, and
clarified that Electronic commerce is not only a sales channel, but also a platform for communication and construction
of brands. In 2014, Herborist strengthened the development of various channels as to offset the adverse impact
from weakening department store channel, piloted experience orientated franchised store model, and completed
the construction of the new CRM system. The capabilities of the Consumer Product Division to control the channels
had become gradually mature, with increasing number of department stores and supermarkets, distribution is also
improved. While improving the traditional department stores & supermarket channels, the Company also made great
efforts to develop the franchised store system, increasing the number of controlled stores from 900 to 3,800. More than
4,700 mother & baby stores were also developed over the recent years.
012
2014 Annual Report
2014 Key Work Review (Continued):
RMB 70 million, successfully achieving the annual target.
Scientific research & innovation: In order to meet the needs of 5-year rapid development strategy of the Company, the
Scientific Research Division implemented several reforms in 2014, to encourage product innovation and accelerate
the product development process. Firstly, the Scientific Research Division established a Technical Cooperation &
Development Department, to make use of external resources for product development, and release internal valuable
development resources and accelerate the entry into new categories. Secondly, the R&D Division fully optimized the
staffing and organizational structure, and brought in professional management personnel such as senior director,
and packing research & development director of R&D Division. The R&D Division established a Consumer Research
Department, to strengthen the interaction between consumers and the research on products. Thirdly, the R&D Division
diagnosed and solved existing issues in the development of new products, adjusted and optimized the decisionmaking points, management mechanism and development procedure for new products. The R&D Division, together with
the Marketing Division, formulated a rolling product development plan for the next eight quarters, to clarify the rhythm
and progress of product development and thus greatly support the cooperation among concerned parties and the
decision making by executive management. Finally, in the product development process, the Company preliminarily set
up Brand Liaison and Project Technical Manager positions, definition and training were given to job responsibilities and
management mechanism.
HR management: In 2014, with the assistance of a consulting firm, the mid and senior level of management personnel of
the Company jointly formulated the new corporate culture of "openness & transparency, defined reward & punishment,
innovation driven, client satisfaction, integrity and mutually helpful", and adopted the talent competence model. The
Company reviewed its talents, and identified shortage of certain talents. The Company actively attracted talents from
the market, and introduced 11 directors and above senior level management personnel, including Chief Executive
Officer and Chief Human Resource Officer. At the end of 2014, the Company initiated the first campus recruitment event
in top universities and colleges throughout the country, included marketing, sales and scientific research positions, to
build a management talent team for Jahwa. In addition, the Company designed a competitive remuneration program
and welfare system, which is expected to be implemented in the first quarter of 2015. HR related administrative and
personnel work changed to automated management, improved from the previously time consuming and ineffective
manual labor.
Back-office construction: In 2014, the Company strengthened system construction, established the centralized and
systematic policy management platform, and developed the online approval & issuance system. The Company also
implemented the standard management on important policies and processes, including improved and established
crisis management system; setting up the Indirect Purchase Department, defined the new policies and procedures, and
standardized the purchase of non-productive materials; established the information security system, and deployed the
infrastructure in accordance with requirements; reviewed the equity of subsidiaries, separated non-core businesses
of subsidiaries, and eliminated the shareholding by employees in subsidiaries; initiated Shanghai Jahwa public welfare
projects, sponsoring Shanghai Marathon, and established the Shanghai Jahwa Public Welfare Fund.
013
2014 Annual Report
(I) Main Business Analysis
1. Income Statement and Cash Flow Statement Analysis
Item
2014
2013
Variance (%)
Revenue
5,334,659,318.10
4,468,503,687.01
19.38
Cost of Sales
2,036,991,589.78
1,655,189,245.20
23.07
Sales and distribution expenses
1,747,278,260.32
1,438,307,206.55
21.48
General administrative expenses
611,824,015.36
572,366,023.17
6.89
Financial expenses-net
-24,529,666.41
-22,654,080.36
-8.28
Net cash flows from operating activities
1,129,569,111.86
1,028,774,337.48
9.80
Net cash flows from investing activities
144,391,837.56
-313,277,268.32
146.09
Net cash flows from financing activities
-373,362,826.52
-310,793,943.77
-20.13
139,701,213.58
133,445,152.57
4.69
R&D expenditures
2. Revenues
(1) Analysis on Factors Driving Revenue Change
In 2014, the Company achieved operating revenues of RMB 5,334,659,318.10, a year-on-year increase of RMB
4,468,503,687.01 or 19.38%. The revenue of sales of product increased by 20.16%, with the proportion increase from
98.11% last year to 98.74% this year, mainly attributable to the increase in revenues from five self-owned brands:
Liushen, Herborist, Maxam, GF and Giving, as well as the brand KAO.
(2) Analysis on Factors Affecting the Company Revenue of Sales of Product
In 2014, the operating revenue amounted to RMB 5,334,659,318.10, a year-on-year increase of 19.38%. The main operating
revenues amounted to RMB 5,323,254,846.50, a year-on-year increase of 19.54%. For details on revenue by industry and
location, please refer to the analysis on operations by industry, by product and by region as given in this Section.
Benefited from the increasing investment in R&D, more than 500 product development projects have been completed
in 2014, including more than 100 new products, and the corresponding products revenue were RMB 923,029,278.84,
accounting for 17.30% of the total operating revenue.
(4) Information on Main Customers
The aggregate amount of revenue from top 5 customers of the Company in the reporting period accounts for 11.07% of
the annual revenue.
(3) Analysis on Influences from New Products and New Services
014
2014 Annual Report
3. Costs
(1) Cost Analysis
By Industry
Industry
1. Personal
Care and
Cosmetics
Industry
Cost Structure
2014
Proportion of
Total Assets
(%)
2013
Proportion
of Total Cost
(%)
Variance
(%)
Raw materials
1,050,159,230.16
52.07
973,441,881.99
60.00
7.88
Labor and
manufacturing
expenses
183,349,561.24
9.09
172,205,765.59
10.61
6.47
Outsourcing
783,150,351.28
38.83
476,868,726.37
29.39
64.23
2,016,659,142.68
100.00
1,622,516,373.95
100.00
24.29
11,885,676.13
100.00
21,726,681.78
100.00
-45.29
Subtotal
2. Other
Total
2,028,544,818.82
1,644,243,055.73
Remarks
23.37
By Product
Industry
1. Cosmetics
2. Personal
Care products
Cost Structure
Proportion of
Total Assets
(%)
2013
Proportion of
Total Cost (%)
Variance
(%)
Raw materials
247,931,982.62
85.08
205,185,740.05
82.95
20.83
Labor and
manufacturing
expenses
41,441,424.75
14.22
39,179,329.31
15.84
5.77
Outsourcing
2,042,112.51
0.70
3,005,161.14
1.21
-32.05
Subtotal
291,415,519.88
100.00
247,370,230.50
100.00
17.81
Raw materials
782,561,832.80
46.15
753,724,324.72
55.85
3.83
Labor and
manufacturing
expenses
135,674,275.23
8.00
127,813,211.58
9.47
6.15
Outsourcing
777,613,754.68
45.85
468,099,663.78
34.68
66.12
1,695,849,862.71
100.00
1,349,637,200.08
100.00
25.65
Raw materials
19,665,414.74
66.90
14,531,817.23
56.97
35.33
Labor and
manufacturing
expenses
6,233,861.26
21.21
5,213,224.69
20.44
19.58
Outsourcing
3,494,484.09
11.89
5,763,901.45
22.59
-39.37
29,393,760.10
100.00
25,508,943.37
100.00
15.23
11,885,676.13
100.00
21,726,681.78
100.00
-45.29
Subtotal
3. Household
Care products
2014
Subtotal
4. Other
Total
2,028,544,818.82
1,644,243,055.73
Remarks
23.37
(2) Main Suppliers
The total purchase amount of the top-5 suppliers combined within the Reporting Period accounts for 36.61% of the
annual purchase amount of the Company.
015
2014 Annual Report
(I) Main Business Analysis (Continued)
4. Expenses
In this period, the income tax expenses increased by 66% year-on-year, mainly attributable to the Company signed
the Agreement for Transfer of Equity in Jiangyin Tianjiang Pharmaceutical Co., Ltd. with Guangdong Keda Clean Energy
Co., Ltd., Tan Dengping, Wuxi Guolian Zhuocheng Venture Capital Co., Ltd. and China National Traditional Chinese
Medicine Corporation on December 31, 2014. Whereby, the Company intended to sell 23.8378% of equity held in
Tianjiang Pharmaceutical to China National Traditional Chinese Medicine Corporation. Since the purpose for holding
this equity investment changed, the Company estimated that such equity investment income would not be recovered by
dividends, therefore deferred income tax liabilities were recognized this year. It is expected that the deferred income tax
liabilities therefrom will amount to RMB 75,159,045.19, and the income tax expenses were withdrawn for this period and
will be paid upon completion of such transaction.
Without considering the above effect, income tax expense increased by 13% year-on-year for this period.
5. Expenditures on R&D
(1) Details of expenditures on R&D
R&D expenditures expense for this period
R&D expenditures capitalized for this period
Total amount of R&D expenditures
139,701,213.58
139,701,213.58
Proportion of R&D expenditures accounting for net assets (%)
3.67
Proportion of R&D expenditures accounting for revenue (%)
2.62
(2) Explanations
Research and innovation is the power for the Company's development. In respect of research and innovation, Shanghai Jahwa
Technology Center was certified in 1999 by State Economic and Trade Commission as a State level enterprise technology
center and was approved in 2000 as post-doctoral R&D workstation by the Ministry of Personnel of PRC. Since 2000, the
Company has been recognized as a hi-tech corporation by Science and Technology Commission of Shanghai Municipality
(STCSM), Shanghai Financial Bureau, Shanghai State Taxation Bureau and Local Taxation Bureau.
In 2014, the Technology Center completed more than 500 product development projects, including more than 100 new
product development projects. In 2014, the Company submitted 53 patent applications, consisting of 4 international patents
and 19 invention patents; in 2014, the Company was granted 40 patents, including 1 patent granted by other country/region
and 6 invention patents. Currently, the Company owns 55 invention patents, among which 14 patents are international invention
patents and one patent is obtained through transfer.
In 2014, the Company formulated the 5-year strategic plan. In order to support the strategic development of the Company and
enhance the R&D force, the technology Center adjusted the organizational structure in 2014, introducing 7 talents including 3
persons in senior management.
The Technology Center continually intensified product inventory and applied fundamental research, and actively conducted
innovations on technologies and products through the combination of industries, universities and research institutes and
international cooperation. In The year of 2014, the Company's involved in 33 projects, including applied fundamental
researches and international cooperative researches.
While strengthening innovations on technologies and products to enhance the core competitiveness of the Company, it also
actively participated in efforts to boost the technology development of the industry. In 2014, the Technology Center of the
Company was involved in the formulation of national standards Exfoliating Gel and Shaving Cream and Shaving Gel, which
contributed to industry development.
016
2014 Annual Report
(I) Main Business Analysis (Continued)
6. Cash Flow
Monetary unit: Yuan; Currency:RMB
Item
2014
2013
1,129,569,111.86
1,028,774,337.48
9.8
Net cash flows from investing activities
144,391,837.56
-313,277,268.32
-146.09
Net cash flows from financing activities
-373,362,826.52
-310,793,943.77
20.13
Cash paid to and for employees
458,681,872.70
341,008,579.77
34.51
Due to increase in remuneration
expenses
Cash received from disposal of investment
799,533,439.70
282,000,000.00
183.52
Wealth management withdrawn
Cash received from returns on investments
74,855,379.86
35,284,739.47
112.15
Due to increase in gains from wealth
management products and dividends
from associates
Net cash received from disposal of fixed
assets, intangible assets and other longterm assets
2,087,548.19
786,350.02
165.47
Gains from disposal of fixed assets
Net cash received from disposal of
subsidiaries and other business units
7,204,267.39
-
99,288,797.58
157,657,564.67
-37.02
640,000,000.00
473,690,793.14
35.11
7,608,692.20
902,550.00
743.02
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets
Cash paid for investment
Other cash paid in relation to financing
activities
Variance
Explanations
No transaction last year
Hainan Factory Project will be
completed soon and the investment
reduces
Due to increase in expenditures for
purchase of wealth management
products
Cash paid in this period is mainly
used to repurchase the minority
shareholders' equity in subsidiary
7. Others
(1) Detailed Descriptions of Significant Changes in Compositions or Sources of Profits of the Company
There were no significant changes in the compositions or sources of profits of the Company.
(2) Analysis and Explanation on Progress of Major Financing and Asset Reorganization Activities of the Company
Not applicable
(3) Explanation on Development Strategy and Operational plan
The operational plan for 2014 as disclosed by the Company 2013 annual report is "In 2014, the executive management of
the Company will realize the operating revenues of no less than RMB 5.1 billion, increase the product sales revenues by no
less than 15% and maintain the growth of net profit attributable to parent company at a two-digit rate, so as to ensure the
sustainable growth of operating results". This operation plan was achieved by the Company in 2014.
017
2014 Annual Report
(II) Analysis of Operating Conditions by Industry, Products and Region
1.Analysis of Main Operations by Industry and Product
By Industry
Industry
1. Personal
Care and
Cosmetics
Industry
Revenues
YoY Change of
Revenues (%)
YoY Change
of Cost of
Sales (%)
YoY Change of
Gross Margin (%)
5,267,600,609.53
2,016,659,142.69
61.72
20.16
24.29
-1.27
55,654,236.97
11,885,676.13
78.64
-19.42
-45.29
10.10
5,323,254,846.50
2,028,544,818.82
61.89
19.54
23.37
-1.18
2. Other
Total
Profit Margin
(%)
Cost of Sales
By Product
Industry
Revenues
Profit Margin
(%)
Cost of Sales
YoY Change of
Revenues (%)
YoY Change
of Cost of
Sales (%)
YoY Change of
Gross Margin (%)
1. Cosmetics
2,038,302,180.35
291,415,519.88
85.70
20.28
17.81
0.30
2. Personal
Care products
3,148,334,751.18
1,695,849,862.71
46.14
20.34
25.65
-2.28
3. Household
Care products
80,963,678.00
29,393,760.10
63.70
10.89
15.23
-1.37
4. Other
55,654,236.97
11,885,676.13
78.64
-19.42
-45.29
10.10
5,323,254,846.50
2,028,544,818.82
61.89
19.54
23.37
-1.18
Total
Explanation on main operations by industry and product
2. Analysis of Main Operations by Region
South China
Revenue
YoY Change of Operating Revenue (%)
4,481,371,560.15
17.98
Southwest China
280,837,664.15
25.69
North China
168,680,258.82
55.17
Northeast China
130,632,896.12
21.83
South China
102,818,423.11
16.29
Central China
93,830,525.09
23.24
Northwest China
50,024,262.27
69.28
Hong Kong, Macau, Taiwan and overseas
15,059,256.79
-28.82
5,323,254,846.50
19.54
Total
Region
Explanation on main operations by region
018
2014 Annual Report
(III) Analysis of the Assets and Liabilities
a) Analysis of the Assets and Liabilities
Item
31 December
2014
Proportion
of Total
Assets
(%)
31 December
2013
Proportion
of Total
Assets
(%)
Variance
(%)
Remarks
516,295,593.34
9.33
635,744,535.67
14.06
-18.79
Decrease due to wealth management
products at the end of previous year are
matured and redeemed in this reporting
period
Available-forsale financial
assets
64,500,000.00
1.17
114,118,592.35
2.52
-43.48
Decrease due to wealth management
products mature within one year and their
fair value are converted into other current
assets.
Construction in
progress
28,548,849.52
0.52
45,997,096.36
1.02
-37.93
Decrease due to construction in progress
at the end of previous year is completed
during this reporting period.
Deferred tax
assets
59,576,125.15
1.08
88,770,744.24
1.96
-32.89
Due to mutual offset between deferred
income tax assets and liabilities
Employee
remuneration
payable
57,586,070.06
1.04
34,745,259.47
0.77
65.74
Dividends
payable
14,300,820.00
0.26
16,694,700.00
0.37
-14.34
Long-term
employee
remuneration
payable
11,823,960.22
0.21
-
-
Other current
assets
Deferred tax
liabilities
Other
comprehensive
income
Minority
interests
Due to increase in Employee remuneration
that are yet to be paid
Change in cash dividends to restricted
shareholders
Increase in stock appreciation rights in this
reporting period
Due to the accrual of deferred income tax
expense for the change of management
intention of equity investment hold in
Jiangyin Tianjiang Pharmaceutical Co.,
Ltd., as well as the mutual offset between
deferred income tax assets and liabilities
54,605,298.76
0.99
10,153,406.70
0.22
437.8
1,764,554.80
0.03
9,736,194.01
0.22
-81.88
Mainly due to change in fair value of
available-for-sales is confirmed into profit/
loss in this reporting period.
301,834.08
0.01
40,071,776.88
0.89
-99.25
Due to repurchase of minority shareholders'
equity in this report period
b) Explanation on Changes of Assets Measured at Fair Value and Measurement Attributes of Major assets
31 December 2013
Purchase in current
period
Fund wealth
managment
381,979,984.19
-
319,533,439.70
7,589,108.68
54,857,435.81
Structured
deposit
303,383,143.83
-
300,000,000.00
3,383,143.83
-
-
640,000,000.00
180,000,000.00
-1,438,157.53
461,438,157.53
685,363,128.02
640,000,000.00
799,533,439.70
9,534,094.98
516,295,593.34
Item
Bank wealth
management
Total
019
Redemption in
current period
Change in fair value
in current period
31 December 2014
2014 Annual Report
(IV) Analysis of Core Competence
The Company's core competitiveness is primarily reflected in four aspects: firstly, systematically and effectively
utilize Chinese culture; secondly, strengthen distribution management and field execution; thirdly, respond efficiently
and effectively to decision making and establishment of decision-driven organization; Finally, direct interaction with
consumers under the new economic model.
1. Systematically and effectively utilize Chinese culture
Over the recent years, a revival of Chinese culture trend is evident in the consumption sector, the Chinese element has
become an effective variation in many consumption sectors. "The more national, the more global" and "the integration
between traditional and modern elements" has been interpreted as the effective variation from international brands.
As the pioneering company independently and systematically developed cosmetics based on Chinese herbal medicine
in China, Jahwa is well insightful into the needs of Chinese consumers, integrating Chinese culture and cosmetics,
developing products that are most suitable for Chinese consumers from multiple dimensions, considering philosophical
and religion, value and orientation, technical and material culture, aesthetics and art, language and use of words, this
enables Jahwa to effectively positioning of the differential orientation. Herborist is the best example for this kind of
implementation of end-to-end differentiation based on Chinese cultural element in Jahwa. Herborist systematically
defines and reflects the differentiation based on Chinese cultural elements from various aspects, and gains initial
success. In the Market Performance Report for Department Store Channel as published by China Market Monitor,
Herborist ranked seventh place, and is the only Chinese national brand among top-20 brands. Additionally, Herborist
ranked first place in the sub-market category Natural (Tables 1-1 and Table 1-2).
Other brands of the Company also introduced the Chinese cultural elements, as to establish their own advantage
position in the market. By using the core components of Liushen Pill stated in "Compendium of Materia Medica" such as
argyi leaf, borneol and liquorice, Liushen steadily occupied 70% market share in floral water product category, ranking
fourth place in body wash product category and ranking first place in refreshing function product sub-category (Source:
Retail Research Database of Nielsen, January-December 2014)
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020
2014 Annual Report
2. Strengthen distribution management and field execution
Channel distribution had always been one of the advantages of Jahwa. While fully utilizing traditional sales channels,
such as shopping malls, supermarkets, department stores and brand stores, the Company also focused on new
channels construction, such as cosmetics franchised stores and electronic commerce channels. Using example
of Herborist, channel construction for franchised stores has covered all important cities across the country, also
implemented the mature and effective self-operated + franchised model, to build a multi-dimensional terminals to
reach wide spread and extensive consumers.
While expanding the channels, Jahwa is focused on terminal controls, and strengthen and refining of the field execution,
to increase the output per store of Jahwa products. The Company has employed corresponding measures in aspects
of logistics model, allocation of sales personnel, sales execution, complementary sale, shelf display, and price and
promotion management.
3. Respond efficiently and effectively to decision making and establishment of decision-driven organization
The Company has improved the speed of decision-making, and is more adaptable to the fast changing Chinese
market. While ensuring high decision-making speed, the Company does not sacrifice the quality and implementation
effect of decision-making. As a local enterprise, Jahwa has advantages over international competitors in aspects of
decision-making speed and decision-making quality: Due to their globalized organizational structure, the response
speed of international competitors towards Chinese market is relatively slow, and their approval procedure is relatively
complicated. The advantages towards domestic competitors include: decision-making of most domestic competitors
rely on a few leaders, and the overall team capabilities is uneven, resulting in unstable decision-making quality.
The Company clarified the key elements to quick decision-making, which is to define allocation of delegation and
responsibilities under key decisions, and to establish supporting polices for key decisions.
4. Direct interaction with consumers under the new economic model
The extensive popularization of new technologies such as smartphones has changed the behaviors of consumers, and
the new technologies enable the manufacturers more approaches, settings, and direct interactions with the consumers.
Under the new economic and new media environment, the manufacturers is able to get closer to the consumers and
lock-in the consumers, as well as recognize more interaction with consumers, therefore the delivery of information is
more directly and accurately, and gain understanding into consumers preferences and feedback, and thus directly
facilitate the sales transaction. In 2014, Jahwa followed the trend, and gain solid initial success in this sector: On the
Double Eleventh Online Shopping Carnival in 2014, the sales volume of Herborist Tmall Flagship Store achieved a
year-on-year increase of 50%, ranked No. 16. The sales volume of GF Tmall Flagship Store achieved a year-on-year
increase of 117%, ranking second in men's skincare product category. The sales volume of other brands of Jahwa in
electronic commerce channel also achieved a year-on-year increase of 50%.
021
2014 Annual Report
(V) Details for the Investments of the Company
1. Overall analysis for the equity investment
The equity interest held by the Company in Guotai Junan Securities Co., Ltd. and other wealth management products
are detailed in the table below.
Equity interest of unlisted financial institution held by the Company
Name of
invested
entity
Guotai
Junan
Securities
Co., Ltd.
Initial
investment
(Yuan)
64,500,000.00
Number of
shares held
(Shares)
Share
holding (%)
5,000,000.00
0.082
Ending book
value (yuan)
Profit/
loss
within the
reporting
period
(Yuan)
Change
in owners
equity
within the
reporting
period
(Yuan)
64,500,000.00
Account
Source of
shares
Availablefor-sale
financial
assets
Delisting after
electronic
bidding at
Shanghai
United Assets
and Equity
Exchange
Explanation on shareholding of unlisted financial institution
Not applicable
2. Details for entrusted financing and derivatives investment of non-financial companies
Other investments in financial products and derivatives
Type of investment
Fund
source
Counter Party
Signatory
Investment
share
Investment
period
Type of
product
Expected
income
Investment
gains/losses
Litigation
Selfowned
capital
EFund Management
Co., Ltd.
100,000,000
2 years
Bond
6.50%
13,020,943.16
No
Harvest bond
portfolio NO.2
Selfowned
capital
Harvest Fund
Management Co., Ltd.
100,000,000
2 years
Bond
6.50%
9,916,984.22
No
XingquanBubugao
Selfowned
capital
Aegon -Industrial
Fund Management
Co., Ltd.
3 years
Graded,
Convertible
bond type
4.5%
+20% in
earnings
in excess
of 4.5%
6,319,505.37
No
48,000,000
Explanation on other investments in financial products and derivatives:
Yifangda bond
portfolio
In accordance with the resolution of the 21st Meeting of 4th Board of Directors and the 2nd Interim Shareholders' Meeting
of the Company in 2012, the Company implemented the special-account wealth management projects. As at the
reporting date, the principal and investment income of the above mentioned three special-account wealth management
projects have been recovered.
022
2014 Annual Report
(V) Details for the Investments of the Company
3. Details for usage of raised fund
(1) Overall Details for Usage of Raised Fund
(2) Project Commitment Details of Raised Fund
(3) Project Change Details of Raised Fund
4. Business operation and performance of principal subsidiaries and invested companies
Monetary unit: Ten thousand Yuan; Currency: RMB
Company
Nature of
business
Main products or
services
Shanghai Jahwa Sales Co., Ltd.
Cosmetics
sales
Liushen Maxam
Home Aegis, etc
Shanghai Jahwa (Hainan)
Daily Chemicals Co., Ltd.
Cosmetic
production
Shanghai Herborist
Cosmestics Co., Ltd.
Registered
Capital
Asset
Size
Net
assets
Net profit
Controlling or
Participating
22,000
73,920
-94
-3,429
Controlling
Liushen FloraWater
3,000
62,462
57,879
4,750
Controlling
Cosmetic
sales
Herborist cosmetics
20,016
52,223
14,257
-2,692
Controlling
Jiangyin Tianjiang
Pharmaceutical Co., Ltd.
Industry
TCM formula
particles
9,456
335,488
249,797
67,492
Participating
Sanya Jahwa Resort
Development Co., Ltd.
Service
Industry
Hotel Services
24,000
45,273
41,165
3,868
Participating
Income from investment in participating companies accounts for more than 10% in net profit
Company
Jiangyin Tianjiang
Revenue
314,242.57
Operating
profit
78,522.08
Net profit
67,491.81
5. Information on Projects Using Funds Other than Raised Fund
(VI) Special-purpose Controlled Entities by the Company
Not applicable
023
Profit contributed by
Associate Company
16,088.54
Weighting to net profit of
the Group (%)
17.92
2014 Annual Report
II. Board of Directors' Discussion and Analysis on Future Development of the
Company
(I) Industry Competition Pattern and Development Trend
1. Industry development trend
The predictions given by Euroasia for sales of personal care and cosmetics industry in China shows that there
exits huge development expansion of personal care and household care market in China. The compounded
average growth rate (CAGR) remains to be at 11.9% for the period 2014-2018, and the market scale will reach
RMB 475.9 billion in 2018.
Personal care and household care market in China
Skincare products
Cosmetics
Body wash products
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024
2014 Annual Report
Company (Continued)
(I) Industry Competition Pattern and Development Trend (Continued)
2. Competition pattern/industrial concentration
Overall, personal care and household care enterprises are not highly concentrated, the industry is still in sound
development stage, and the industrial reshuffling is in progress.
Proportion of sales volume of top 4 enterprises and top 8 enterprises in personal care and household care industry in
China (Source: Euro monitor C&T China 2014)
2010 (%)
2011 (%)
2012 (%)
2013 (%)
Top 4
30.9
30.9
30.5
29.8
Top 8
39.9
39.7
39.4
39.0
Remarks: In the table above, the industrial concentration is indicated in the form of percentage. For example, in 2013, in the personal care and household
care industry, the total sales volume of top 4 enterprises account for 29.8% of total sales volume of the country, and the total sales volume of top-8
enterprises account for 39.0% of total sales volume of the country.
3. Analysis on opportunities and challenges:
Opportunities:
The personal care and household care industry in China is a huge fast-growing market with low concentration;
All functional sub categories of personal care and household care market show a trend of consumption development,
this means that high-end and refined skincare will be the development trend;
The modern channels have not fully penetrated into second and third-tier cities and towns, therefore there is huge
growth potential;
Blooming of various channels with unique characteristics: The growth of traditional department store channel
slows down; whereas growth for cosmetics franchised stores expand quickly but it have to be integrated; and the
electronic commerce also grows rapidly. There exists great opportunities in these channels, to utilize all channels
and to their best advantages is the key to success;
The performance of traditional international brands reduces slightly, while there are significant growth in Chinese
brands that adopted Chinese cultural approach.
Challenges:
China's economic downturn and consumption growth slowdown exacerbated;
Consumers, retailers and distributors continuously demanding higher requirements, which pose a serious challenge
to the Company's operation management;
As the contribution from new products to market growth reduces, the expectation for innovation on product category
will be higher;
Fiercer competition: The large foreign funded enterprises begin to develop into the mid/low-end market, while their
investment continuously increase; the local cosmetics brands also expand rapidly through two emerging channels
(franchised stores and electronic commerce).
025
2014 Annual Report
Company (Continued)
(II) Development Strategy of the Company
The Company mission is to help people live a more healthy, beautiful and confident life, and its strategic objective is to
be a sustainable world class personal care and household care enterprise which continually develop and create new
values, and brings rewards to our customers, employees, shareholders and the society as a whole.
In 2015, the strategic mindset of the Company is to give all efforts to build our 5 major brands, so it cover 5 core subcategory markets. Through rapidly improving four core capabilities, the Company will achieve growth rate higher than
that of the market, and continuously increase the market share in the 5 core sub-category markets. The Company will
ensure that sales goal of RMB 12 billion and increase of profits will be achieved in 2018.
(III) Operation Plan
In 2015, Company executive management will strive to increase the operating revenues by no less than 18%, and
maintain the growth of net profits attributable to parent company at a double-digit growth, and to ensure sustainable
growth of operating business.
The Company will conduct various work centering around 6 major issues, to ensure well and fast development for the
business:
Increase the investment in marketing, formulate different investment strategies for the 5 brands in light of different
stages of brand development, formulate and use new innovative communication method in conjunction to Chinese
culture, and increase return on investment in marketing;
Adjust the channel structure in light of changing trend of the channels, further strengthen the full coverage on all
channels, and improve the control on retail terminals by increasing the execution capabilities of the sales team;
Dig deeper into consumers demands, respond quickly to the changing trend of market and channels,
comprehensively utilize the Chinese cultural elements, and improve the ability to create excellent product concepts;
optimize the existing product development process, set plans for development of new products, good coordination
of internal and external development sources, and improve the product development efficiency; create more star
products by continuously investing in communication and channels;
Further optimize the client/consumer oriented work processes and awareness, while continuously reducing the
overall end-to-end supply chain costs, also improve the service level for both internal and external clients, and to
improve the competitiveness of products on the market;
Introducing outstanding talents; continuously improve the competence and professional skills of employees of the
Company, establishing a learning environment organization; enhance cohesion among employees by establishing
a new corporate culture; implement the remuneration system based on excellent culture and shareholders' culture,
and improve the stability of the core team and employees' working passion.
Find new growth opportunities in line with the strategic direction of the Company (mainly including oral care,
cosmetics, differential skincare, baby & children and orally-taken products) through increased investment, M&A and
extension of existing brands;
026
2014 Annual Report
Company (Continued)
(IV) Fund Demand to Maintain Current Business and Investment in Ongoing Construction Projects
In accordance with the relevant resolution of the 22nd Meeting of 5th Board of Directors and the 1st Interim Shareholders'
Meeting in 2015, the Company plans to invest in Qingpu Base Relocation Project. As estimated, the total investment
for this project will be around RMB 1.355 billion. Part of the fund needed for the project shall be financed by the
compensation (RMB 666 million) of removal of existing factory, and the remainder shall be financed by the self-owned
capital of the Company.
(V) Potential Risks
1. Slow of Chinese economy and growth rate of consumption
In 2014, as the economic growth slowed down, the growth rate of fast moving consumer goods also reduced. Currently, the
forecast GDP for the following years is around 7%, and as the government proposed the "economic new norm ", the economy
enters into an unsettling period of structural adjustment. The reduction of growth rate of consumer product sector will become
the "norm", the competition in this industry will become extremely fierce, and the industry improvement will also be further
intensified. The consumers' consumption willingness and capabilities will not grow as fast as before, rather enter into a more
rational but slowed growth phase. All these contribute to a higher demand on quality of operation and management of the
Company, and this will definitely affect the overall growth rate of the Company.
2. The brand competition pattern is quickly changing, and the high-end brands, foreign herbal brands and similar
domestic brands are casting anxious glances to the market.
In previous year, the high-end competitors actively launched attack. They continuously penetrated their channels
downwards and continuously upgraded their products, so as to effectively realize the upgrading of consumers. As a
result, the market share of almost all tier-1 high-end brands was increased in 2014. It is expected that in the future, as
the high-end brands further sink down, the tier-2/3 consumers' need on consumption upgrading will increase, and the
high-end brands will impose great threat.
The foreign herbal brands have successively entered into Chinese market and made good achievements. The segment
market for natural herbal product is becoming a hotly contested spot, and the position of Jahwa in this market is facing
unprecedented challenge. Jahwa has to maintain and reinforce its advantageous position in natural sector, and firmly
seizes the consumption upgrading trend driven by natural concept.
3. Risks and challenges under new economic mode
The Internet not only brings about a new sales channel, but also causes the full change in consumption philosophy for
consumers, marketing mode for brand owners and sales mode for retailers.
On the Internet, the consumers have gradually changed from passively accepting information to actively searching or
communicating information, the market with information barrier market has been replaced by the transparent market
with information symmetry, and the random consumption has been replaced by rational consumption. The decision
of consumers are made in light of function, efficacy, reputation and price of products rather than brand; the media on
Internet has gradually become the place where the consumers make purchase decision, the path from the point when
the consumers get the purchase desire to the point when the consumers make the final purchase decision has been
greatly shortened; the Internet has made it possible to carry out the precise marketing and consumer survey based on
data analysis. Even an enterprise which has been founded for one hundred years has to face the risks, opportunities
and challenges under new economic mode. Jahwa has to form its own advantages on new channels other than
traditional channels, and establish the effective new media communication mechanism.
027
2014 Annual Report
Company (Continued)
(V) Potential Risks (Continued)
4. The new cosmetics regulations will continuously constitute the product pattern and development risks
The regulations on whitening cosmetics enacted by China at the end of 2013 which contain the requirements for
administration on freckle-removing cosmetics as well as the informative filing system for domestically-manufactured
general-purpose cosmetics affected the launch time of new products of the Company as well as the assertion or name
of whitening products of the Company in 2014. In the following years, the adverse effect will still exist.
On the other hand, the new regulations for supervision and administration on labeling of cosmetics which are being
prepared will also affect the assertion and label of products of Jahwa, and thus affect the launch time of new products
and the packing of existing products.
5. Counterfeit or unfair competition risk
The products of the Company are also exposed to the risk of counterfeit or even malicious attack. The products of
the Company may be counterfeited, which will adversely affect the brand image and interests of the Company; the
competitors may also use unfair competition means to maliciously attack the brands of the Company, which will affect
consumers' confidence on the brands and products of the Company, and thus adversely affect the operating results
of the Company. If the brands and registered trademarks of the Company are infringed upon or the reputation of the
Company is maliciously attacked, the Company will protect its rights and interests in accordance with laws.
6. Talent loss risk
The Daily-use Chemical industry is an industry wherein fierce competition exists, and the long-term stable development
of enterprises depends on excellent management team, core technical talents and core marketing talents. Though the
Company is using the effective remuneration system and incentive policies to attract and retain excellent talents, in the
future development, as the competition among enterprises and regions over talents becomes increasingly fierce, the
Company will be exposed to the talent loss risk.
III. Explanation for Accounting Firm's "Non-standard Audit Report" by Board of
Directors
(II) Explanation for Causes and Effects of Changes of Accounting Policies, Accounting Estimates or
Accounting Methods by Board of Directors
(I) Explanation for Accounting Firm's "Non-standard Audit Report" by Board of Directors and Board
of Supervisors
In accordance with the relevant regulatory given by the Ministry of Finance in 2014, the Company changed the
accounting policies accordingly, so as to comply with the Accounting Standards for Business Enterprises and relevant
provisions. For details, please refer to Item 12 "Effect on consolidated financial statements by implementation of new
accounting standards" in Section 5 "Important Events" of this Report.
028
2014 Annual Report
III. Explanation for Accounting Firm's "Non-standard Audit Report" by Board of
Directors (Continued)
(III) Analytic Explanation for Causes and Effects of Important Corrections of Prior Period by Board
of Directors
IV. Pre-arranged Plan for Profit Distribution or Capital Reserve Converted into
Share Capital
(I) Formulation, Implementation or Adjustment of Cash Dividend Policies
1. On September 26, 2012, the Company convened a shareholders' meeting, examining and approving the amendment
to the articles of association. In the articles of association, the Company made definite the procedures, mechanisms,
criteria, etc. for profit distribution plan and the policy as follows:
Decision-making procedures and mechanisms of the profit distribution plan
The profit distribution plan was intended by the comprehensive consideration of operating and cash flow situation by the
Board of Directors. Independent Directors and the Board of Supervisors expressed definite opinions. The distribution plan was
submitted to shareholder's general meeting after being examined and approved by the Board of the Directors.
When formulating the specific profit distribution plan, the Board of Directors should seriously consider and demonstrate the
timing, conditions, lowest proportion, adjustment condition and the requirements of decision procedure, etc. Independent
Directors and the Board of Supervisors expressed definite opinions. When reviewing the profit distribution plan, the
shareholders' meeting could interact and communicate with shareholders via telephone, fax, letter, e-mail, investor relations on
the Company's website interactive platform and other channels to take the initiative with shareholders, and to fully listen to the
views and aspirations of the shareholders, and gives timely responses to minority shareholders' concerns.
2. Profit distribution policy revision procedures and mechanisms
Due to the changes of the Company's operating environment and operating conditions, the profit distribution policy
revision should be based on the interests of shareholders. The policy revision should be submitted to the shareholders'
meeting for approval after detailed demonstration by the Board of Directors.
3. For the Company that gained profit but the Board of Directors did not make pre-arranged plan for annual profit
distribution plan, should seed the views of the Board of supervisors, and disclose the reason and the usage of reserved
dividends in periodic reports. Independent Directors should express independent opinion.
4. After the resolution of profit distribution plan made by shareholders' general meeting, the Company should complete
the payment of dividends (or shares) in 2 months after the shareholders' meeting.
5. Profit distribution
The profit after taxation will be allocated in the following order:
1) Make up for last year's loss
2) 10% of the statutory reserve
3) Discretionary reserve
4) Payment of dividends to shareholders
Form of profit distribution:
The Company's profit distribution could be in the form of cash, stock or a combination of cash and stock. In accordance with
029
2014 Annual Report
IV. Pre-arranged Plan for Profit Distribution or Capital Reserve Converted into
Share Capital (Continued)
(I) Formulation, Implementation or Adjustment of Cash Dividend Policies (Continued)
5. Profit distribution (Continued)
The Company's profit distribution could be in the form of cash, stock or a combination of cash and stock. In accordance with
the conditions for distribution of cash dividends as specified in the articles of association of the Company, the form of cash
dividends will take precedence for profit distribution.
The conditions and proportions of profit distribution:
Under the conditions that current earnings, undistributed profit at 31 December 2014 is positive and cash flow could fulfill the
needs of daily operations and sustainable development, the Company could adopt the form of cash to distribute dividends.
The cash dividends distributed by the Company should not be less than 30% of the current net profit attributable to listed
companies' shareholders.
When the profits available for distribution is positive, the stock dividend distribution pre-arranged plan could be considered on
the comprehensive basis of equity scale, financial condition and prospects for development and other factors.
6. Intervals of profit distribution
When in line with the conditions of profit distribution, the Company shall conduct profit distribution and cash dividend
annually, and shall also conduct an interim cash dividend.
The implementation of cash dividend policy:
Since 2009, the annual cash dividend distributed by the Company consists of 30% and above of the net profit
attributable to listed companies'shareholders.
(II) Within the Reporting Period, the Company Gained Profit and Undistributed Profit of the Parent
Company is Positive, but the Cash Dividend Pre-arranged Plan was not Proposed, and the
Company shall Disclose the Reasons and the Plan and Usage of Reserved Dividends in Details.
Year
Dividend
shares
allotted per
10 shares
Dividends
paid per 10
shares (Yuan)
(inclusive tax)
Shares
transferred
per 10
shares
Cash
distribution
(inclusive tax)
Net profit attributable to
shareholders of listed company
as stated in consolidated
statement
Proportion to net profit
attributable to shareholders of
listed company as stated in
consolidated statement (%)
2014
6.1
41,014
89,792
45.68
2013
5.1
34,295
80,015
42.86
7
31,385
57,565
54.52
2012
5
(III) Plans or Pre-arranged Plans for Profit Distribution and Capital Reserve Converted into Share
Capital in the Past Three Years (Including the Reporting Period)
V. Fulfillment of Social Responsibility
(I) Social Responsibility
The Company shall not disclose social responsibility report in this reporting period.
(II) Explanation on Environmental Protection by the Listed Company in the Highly Pollution Industry
as Specified by the Environmental Protection Agency and its Subsidiaries
Not applicable
030
2014 Annual Report
Section5 Significant Events
I Significant Litigation, Arbitrations and Other General Matters in Questioned by Media
Litigation, arbitration or media-questioned matters disclosed in interim announcements but without
subsequent progress
Summary of events
Reference index
Announcement for clarifying the media report that
Ping An Trust may cash in its investment in Shanghai
Jahwa in the following year
www.sse.com.cn, China Securities Journal, Shanghai Securities News on
May 28, 2014
Announcement for clarifying the media report that
Shanghai Jahwa has concealed the profit of more
than RMB 1 billion in the investment sector
www.sse.com.cn, China Securities Journal, Shanghai Securities News on
June 17, 2014
II. Fund Appropriations and Clearing Progress within the Reporting Period
III. Asset Transactions and Enterprise Consolidation
Situations not disclosed in interim announcement or subsequent progress
1. Sales of Assets
Counterpart
Shanghai
Jiaheng
Daily
Chemicals
Co., Ltd.
Assets
sold
Date of
sales
Selling price
Proportion
of net
Whether it
Whether
profit
is a related
Whether
the
made for
party
the rights
Related
Profit/loss
ownership
the listed
transaction Pricing
and debts
party
arising
of assets
company
(if yes,
principle
involved
relation
from sales
involved
through
please state
has been
-ship
has been
sales of
the pricing
transferred
transferred
asset
principle)
in total
profits (%)
Shanghai
Chengyi
Plastic
2014.9.1 8,738,446.33 8,791,674.27 229,157.14 No
Cement
Products
Co., Ltd.
Explanation on sales of assets
031
Net profit
contribute
from the
asset to
the listed
company
from
beginning of
this year to
the date of
sales
Yes
Yes
2014 Annual Report
IV Condition and Impact of Company's Equity Incentive
Related matters of equity incentive disclosed in the provisional announcement with no subsequent
progress or change
Summary of events
Reference Index
The second unlocking and listing of restricted shares of
2012 stock incentive plan
www.sse.com.cn, China Securities Journal, Shanghai Securities News
on June 4, 2014
V Significant Related Party Transactions
Related party transactions in association with daily operations
Related party transactions announced on the interim announcements and lacks subsequent
progress or change on implementation.
Summary of events
Reference index
www.sse.com.cn, China
Securities Journal,
Shanghai Securities News
on February 14, 2014
The proposal on the Company's implementation of its related party transactions in 2013 and forecast
of its related party transactions for 2014 was deliberated and adopted at the 11th Meeting of 5th Board
of Directors of the Company. The Company disclosed its related party transactions with Ping An Bank
and the expected situation in 2014 (Lin 2014-009).
Securities Journal,
on March 13, 2014
The proposal on daily related party transactions of the Company was deliberated and adopted at the
11th Meeting of 5th Board of Directors of the Company. The Company disclosed its related party with
Shanghai Takasago Flavors Co., Ltd. and the expected situation in 2014 (Lin 2014-011).
Securities Journal,
on March 13, 2014
The proposal on daily related party transactions of the Company was deliberated and adopted at the
23rd Meeting of 5th Board of Directors of the Company. The Company disclosed related party with
Shanghai Lotus Supermarket Co., Ltd. and the expected situation in 2014 (Lin 2015-011).
Securities Journal,
on March 19, 2015
VI Significant Contracts and Fulfillment of Contracts
1. Trusteeship, Contracting and Leasing
The proposal on implementation of rectification measures for related party transaction between the
Company and Wujiang Lili Hujiang Daily Chemical Factory was deliberated and adopted at the 10th
Meeting of 5th Board of Directors of the Company, and the remediation work was completed. For
details, please refer to the Announcement of Resolution of 10th Meeting of 5th Board of Directors of
Shanghai Jahwa United Co., Ltd. (Lin 2014-004).
2. Events on Guarantee
032
2014 Annual Report
VII Fulfillment of Commitments
(I) Commitment items of listed company by shareholders over 5% of shares, controlling shareholders
and substantial controller during the reporting period or continue to the reporting period
Background
Type of
commitment
Commitment
party
Ping An
Solve intra(Group)
industry
of China,
competition
Ltd.
Commitment
in
acquisition
report or
equity
changing
report
Date of
commitment
and time limit
Whether
there is
time limit for
performance
Whether
strictly
fulfilled in
time
"(1) As an actual controller of Shanghai Jahwa, we
guarantee not to be engaged in the business in
competition or may in competition with Shanghai
Jahwa; And also not to participate in the same
or similar or other business that may constitute
competition through indirect operating or investment.
If we or the enterprise we invested encounter
horizontal competition with Shanghai Jahwa or its
affiliated companies in further business expansion,
we and the enterprise we invested will avoid the
horizontal competition by stopping the operation, or
bringing the competitive business into the operation
of Shanghai Jahwa, or transferring the business to
non-affiliated third parties.
(2) We guarantee that we strictly complies with
the provisions of the China Securities Regulatory
Commission, the relevant provisions of the Stock
Exchange, the Articles of Association of the listed
Company and the Company's internal management
system, exercise shareholders' rights and fulfill
obligations the same as other shareholders, do not
take advantage of the shareholder's status to gain
unjust enrichment, and do not harm the legitimate
interests of Shanghai Jahwa and other shareholders.
(3) If any loss is caused to Shanghai Jahwa, we
shall bear the liability due to the violation of the
commitment by our company."
Note: The term "we" or "our company" means Ping An
(Group) of China, Ltd.
Ping An
Solve
(Group)
related party
of China,
transaction
Ltd
033
Content
"After the completion of the acquisition, in the
period as the actual controller of Shanghai Ping Pu
Investment Co,. Ltd., we shall strictly abide by the
relevant laws, regulation, regulatory documents
and the relevant provisions of the Articles of the
Association of Shanghai Jahwa, reduce and regulate
the affiliated transaction with Shanghai Jahwa as
much as possible. When it comes to the realted
partytransaction that is necessary and cannot be
circumvented, we guarantee to ensure fairness
according to the marketing principles and fair price,
and to sign the relevant agreement, contract, or
other legal documents, and will fulfill the relevant
decision, approval procedure and information
disclosure obligation. We guarantee that we do not
take advantage of our social status to gain unjust
enrichment, and do not harm the legitimate interests
of Shanghai Jahwa and other shareholders through
affiliated transactions."
November
No
18, 2011
Yes
Reasons
for failure
to fulfill in
time
Following
steps if
failed to
fulfill
2014 Annual Report
VII Fulfillment of Commitments (Continued)
and substantial controller during the reporting period or continue to the reporting period(Continued)
Background
Type of Commitment
commitment
party
Solve
Ping An
related
(Group) of
party
China, Ltd
transaction
Content
Note: The term "we" means Ping An (Group) of
China, Ltd.; the term "acquisition" means the
acquisition of 100% shares of Shanghai Jahwa
(Group) Co., Ltd. by Shanghai Ping Pu investment
Co., Ltd.
Date of
Whether
commitment
there is
and time time limit for
limit
performance
Whether Reasons Following
strictly for failure steps if
fulfilled to fulfill in failed to
time
fulfill
in time
November
No
18, 2011
Yes
November
No
18, 2011
Yes
"(1) Guarantee independence and integrity of
Shanghai Jahwa's assets.
1. We guarantee that Shanghai Jahwa will enjoy the
independent and complete ownership on all of its
assets, and the assets of Shanghai Jahwa will be
strictly separated from the assets of our company
and the companies/enterprises controlled by us
and be independently managed.
2. We guarantee that our company and the
companies/enterprises controlled by us will not
in any manner occupy the funds and assets of
Shanghai Jahwa.
(2) Guarantee personnel independence of
Shanghai Jahwa.
Commitment
in acquisition
report or equity
changing
report
1. We guarantee that Shanghai Jahwa will continue
to have the independent and complete labor,
personnel affair, salary and social insurance
management systems, and such systems are fully
independent from those of our company and the
companies/enterprises controlled by us.
Others
2. We guarantee that our company will appoint the
directors, supervisors and managers to Shanghai
Jahwa through lawful procedures, and will not
interfere with the appointment and dismissal
made by the board of directors and shareholders'
meeting of Shanghai Jahwa.
3. We guarantee that the officers such as general
manager, deputy general manager, chief financial
officer and secretay of board of directors of
Shanghai Jahwa will work with Shanghai Jahwa in
a full-time manner and receive remuneration from
Shanghai Jahwa, and will not assume any post
other than director or supervisor in our company
and the companies/enterprises controlled by us.
(3) Guarantee financial independence of Shanghai
Jahwa.
1. We guarantee that Shanghai Jahwa will set
up the independent financial and accounting
departments, and have the normalized and
independent financial and accounting systems and
financial management regulations.
Shanghai
Ping Pu
Investment
Co., Ltd.
and Ping
An (Group)
of China,
Ltd.
2. We guarantee that the financial personnel of
Shanghai Jahwa will keep independent, and will
not concurrently assume any post in our company
or the companies/enterprises controlled by us and
receive remunerations.
3. We guarantee that Shanghai Jahwa will
034
2014 Annual Report
Background
Type of
commitment
Commitment
party
Content
Date of
Whether
commitment
there is
limit
performance
time
fulfill
in time
"(1) Guarantee independence and integrity of
Shanghai Jahwa's assets.
1. We guarantee that Shanghai Jahwa will enjoy
the independent and complete ownership on
all of its assets, and the assets of Shanghai
Jahwa will be strictly separated from the assets
of our company and the companies/enterprises
controlled by us and be independently
managed.
2. We guarantee that our company and the
companies/enterprises controlled by us will not
in any manner occupy the funds and assets of
Shanghai Jahwa.
(2) Guarantee personnel independence of
Shanghai Jahwa.
continue to have the independent and complete
labor, personnel affair, salary and social
insurance management systems, and such
systems are fully independent from those of
our company and the companies/enterprises
controlled by us.
Commitment
in acquisition
report or equity
changing
report
Others
Shanghai
Ping Pu
Investment
Co., Ltd.
and Ping An
(Group) of
China, Ltd.
2. We guarantee that our company will appoint
the directors, supervisors and managers to
Shanghai Jahwa through lawful procedures,
and will not interfere with the appointment and
dismissal made by the board of directors and
shareholders' meeting of Shanghai Jahwa.
3. We guarantee that the officers such as
general manager, deputy general manager,
chief financial officer and secretay of board
of directors of Shanghai Jahwa will work with
Shanghai Jahwa in a full-time manner and
receive remuneration from Shanghai Jahwa,
and will not assume any post other than
director or supervisor in our company and the
companies/enterprises controlled by us.
(3) Guarantee financial independence of
Shanghai Jahwa.
1. We guarantee that Shanghai Jahwa will set
up the independent financial and accounting
departments, and have the normalized and
independent financial and accounting systems
and financial management regulations.
2. We guarantee that the financial personnel
of Shanghai Jahwa will keep independent,
and will not concurrently assume any post in
our company or the companies/enterprises
controlled by us and receive remunerations.
independently open the bank account, and
will not use the same bank account with our
company and the companies/enterprises
controlled by us.
4. We guarantee that Shanghai Jahwa will pay
taxes independently in accordance with laws.
5. Our company and the companies/enterprises
controlled by us will exercise the rights and
perform the obligations of shareholder in
accordance with the articles of association, will
035
November
18, 2011
No
Yes
2014 Annual Report
Background
Type of
commitment
Commitment
party
Content
Date of
Whether
commitment
there is
limit
performance
time
fulfill
in time
allow Shanghai Jahwa to independently allocate
the internal funds, carry out examination and
approval and make financial decisions, and will
not illegally interfere with the use of funds by
Shanghai Jahwa.
(4) Guarantee business independence of
Shanghai Jahwa.
have the independent operation management
system, have the assets, personnel, qualification
and ability for independent implementation
of operating activities, and have the ability to
independently maintain the on-going operation.
Commitment
in acquisition
report or equity
changing
report
Others
Shanghai
Ping Pu
Investment
Co., Ltd.
and Ping An
(Group) of
China, Ltd.
2. We guarantee that, except for legal exercise
of shareholder's rights, our company will not
interfere with the normal operating activities of
Shanghai Jahwa.
(5) Guarantee institutional independence of
Shanghai Jahwa.
continue to maintain the sound corporate
governance structure, have the independent
and complete institutions, and get its institutions
fully separated from those of our company and
the companies/enterprises controlled by us.
November
18, 2011
No
Yes
2. We guarantee that the shareholders' meeting,
board of directors, independent director,
board of supervisors and officers of Shanghai
Jahwa will independently perform their duties in
accordance with laws, regulations and articles
of associations of Shanghai Jahwa.
Note: The term "we" or "our company" means
Shanghai Ping Pu Investment Co., Ltd. and Ping
An (Group) of China, Ltd.
VIII Appointment and Demission of Auditor
Changed the auditors? (Y/N)
No
The previous CPA
Domestic CPA Firm's Name
Domestic CPA Firm's Fee
Terms of domestic CPA audit
Monetary unit: Ten Thousand Yuan; Currency: RMB
3. We guarantee that Shanghai Jahwa as well
as our company and the companies/enterprises
controlled by us will have their independent
office and production sites respectively, and
will not implement office or production in same
place. "
The Current CPA
203
2
Foreign CPA Firm's Name
Foreign CPA Firm's Fee
Terms of foreign CPA audit
036
2014 Annual Report
VIII Appointment and Demission of Auditor (Continued)
Name
Internal audit control CPA Firm
Remuneration
130
Financial consultant
Sponsor
Explanation:
1. This year, the Company additionally appointed PricewaterhouseCoopers Zhong Tian LLP to issue the audit report for
main subsidiaries, and the audit fee amounts to RMB 380,000;
2. This Year, PricewaterhouseCoopers Taxation Consulting (Shanghai) Co., Ltd. provided the taxation consulting service
for the Company, and the consulting fee amounts to RMB 50,000;
3. The fee above is exclusive of tax and travel expenses.
Explanation on appointment and demission of accounting firm
In accordance with the resolution of shareholders' meeting of the Company in 2013, the Company continued to appoint
PricewaterhouseCoopers Zhong Tian LLP as the Company's financial auditor in 2014. In accordance with the resolution
of the 1st Interim Shareholders' Meeting in 2015, the Company appointed PricewaterhouseCoopers Zhong Tian LLP as
the Company's internal control auditor in 2014.
Explanation on replacement of accounting firm within audit term
Not applicable
IX Punishment and Correction situation of the Company, Its Directors,Supervisors,
Senior Management, Shareholders Holding More Than 5%, and Actual Controller
On December 23, 2014, the Company received the Prior Notice on Administration Punishment (Hu Zhen Jian Chu Fa Zi
[2014] No. 10) issued by Shanghai Office of China Securities Regulatory Commission, which stated that CSRC Shanghai
Office had completed the investigation on the information disclose case of Shanghai Jahwa and planned to impose the
administrative penalty on the Company and relevant persons in accordance with the laws. Based on the facts, nature,
circumstance and social harm of illegal acts and in accordance with the provisions of Article 193 of the Securities Law,
Shanghai SCRC is planning to make the following decisions:
1.Issue Shanghai Jahwa with a warning and fine RMB 300,000;
2.Issue Ge Wenyao with a waring and fine RMB 150,000;
3.Issue Xuan Ping, Qu Jianning, Ding Yuqing and Wu Yinghua with warnings and fine RMB 100,000 respectively;
4.Issue Feng Jun, Guan YIming, Zhang Chun, Tong Kai, Zhou Qingye, Su Yong, Zhu Yijiang, Liu Dengzhong, Hu Dahui,
Wang Jianning, Huang Yue, Wang Zhu and Fang Hua with warnings, and fine RMB 30,000 respectively.
The above information was disclosed on www.sse.com.cn, China Securities Journal and Shanghai Securities News by
the Company on December 24, 2014 (Announcement No.: Lin 2014-051).
By the reporting date, this case is still in process of representation, averment and hearing of evidence.
037
2014 Annual Report
X Information about Listing Suspension and Delisting Risk
(I) Reason for Listing Suspension or Delisting, and Measures Taken by the Company for Eliminating
Listing Suspension or Delisting Risk
On November 20, 2013, the Company received Notice of Investigation (Hu Diao Cha Tong Zi 2013-1-64) from China
Securities Regulatory Commission, which stated that, due to the Company's suspected failure to disclose information
according to applicable provisions, China Securities Regulatory Commission decided to investigate into the Company
pursuant to relevant provisions of the Securities Law of the People's Republic of China. The Company disclosed the
above information on www.sse.com.cn, China Securities Journal and Shanghai Securities News on November 21, 2013
(Number of announcement: Lin 2013-026).
On December 23, 2014, the Company received the Prior Notice on Administration Punishment (Hu Zhen Jian Chu Fa Zi
[2014] No. 10) issued by Shanghai Office of China Securities Regulatory Commission, which stated that CSRC Shanghai
Office had completed the investigation on the information disclose case of Shanghai Jahwa and planned to impose the
administrative penalty on the Company and relevant persons in accordance with the laws. The Company disclosed the
above information on www.sse.com.cn, China Securities Journal and Shanghai Securities News on December 24, 2014
(Number of announcement: Lin 2014-051).
This case is still in the process of representation, averment and hearing of evidence.
If the Company is finally subjected to administrative penalty imposed by CSRC in such case, and owing to the
seriousness nature, circumstance and market impact, such illegal act is held as significant illegal act in the decision of
administrative penalty, then the Company will be given the delisting risk warning, and its stocks will be suspended. The
Company disclosed the above information on www.sse.com.cn, China Securities Journal and Shanghai Securities News.
(II) Detailed Arrangement and Plan for Investor Relationship Management Work after Delisting
If the investigation proves the Company to be acting the illegal act of information disclosure or fraudulent act in
issuance as specified in Article 13.2.1 of the Rules of Shanghai Stock Exchange for Listing of Stocks (2014 revision), the
Company will be given the delisting risk warning, and thereafter, the stocks of the Company will be allowed to trade for
30 trading days. After the trading period expires, the stocks of the Company will be suspended, and Shanghai Stock
Exchange will, within 15 trading days, make the decision to suspend the listing of stocks of the Company.
XI Information on Convertible Bond of the Company
If it is not concluded in the decision of administrative penalty that the Company has conducted serious illegal act in
information disclosure or fraudulent act in issuance, the Company shall be deemed as no violation of regulations leading
to delisting situation , which specified in Article 13.2.1 of the Rules of Shanghai Stock Exchange for Listing of Stocks (2014
revision), and the stocks of the Company will not be suspended or delisted owing to the illegal act stated in the decision
of administrative penalty.
XII Effect on Consolidated Financial Statement by Implementation of New
Accounting Standards
In 2014, the Ministry of Finance issued the Accounting Standards for Business Enterprises No. 39- Measurement of
Fair Value, the Accounting Standards for Business Enterprises No. 40 - Joint Venture Arrangement, and the Accounting
Standards for Business Enterprises No. 41 - Disclosure of Interests in other Entities, as well as the revised Accounting
Standards for Business Enterprises No. 2 - Long-term Equity Investment, Accounting Standards for Business
Enterprises No. 9 - Employee Remuneration, Accounting Standards for Business Enterprises No. 30 - Presentation of
Financial Statements, Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements
038
2014 Annual Report
Accounting Standards (Continued)
Enterprises No. 9 - Employee Remuneration, Accounting Standards for Business Enterprises No. 30 - Presentation
of Financial Statements, Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements
and Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments. Except for the
Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments which should be
implemented in preparation of financial statements for 2014, all the standards were effictive as of July 1, 2014.
The Company has adopted the above standards in preparation of 2014 annual financial statements, presented some
items in financial statements in accordance with the above standards, adjusted the financial information in comparison
period accordingly, and presented the balance sheet as at January 1, 2013 in accordance with the Guideline for
Application of Accounting Standards for Business Enterprises No. 30 - Presentation of Financial Statements.
1.Effects on Consolidated Financial Statement by Changes in Long-term Equity Investment
Standards (I)
Monetary Unit: Yuan; Currency: RMB
Basic information
on transaction
Invested entity
Equity
attributable to
shareholders of
parent company
as at January 1,
2013 (+/-)
December 31. 2013
Longterm equity
investment
(+/-)
Available-for-sales
financial assets
(+/-)
Guotai Junan Securities
Co., Ltd.
Shareholding
proportion <1%
(64,500,000.00)
64,500,000.00
SEPHORA (Beijing)
Cosmetics Sales Co., Ltd.
Shareholding
proportion 19%
(12,358,968.00)
12,358,968.00
SEPHORA (Shanghai)
Cosmetics Sales Co., Ltd.
Shareholding
proportion 19%
(42,726,212.00)
42,726,212.00
Ever Bright Town Co., Ltd.
Shareholding
proportion <5%
(70,000.00)
70,000.00
Wuhan Jiutong Industry
(Group) Co., Ltd.
Shareholding
proportion <5%
(281,455.28)
281,455.28
Harbin First Department
Store Co., Ltd.
Shareholding
proportion <5%
(90,000.00)
90,000.00
Provision for asset
impairment
Provision for
impairment has
been accruedfor
other long-term
equity investment
55,526,635.28
(55,526,635.28)
Total
/
(64,500,000.00)
64,500,000.00
Equity attributable
to shareholders of
parent company
(+/-)
Explanation for effects on consolidated financial statement by changes in long-term equity
investment standards (I)
SEPHORA (Beijing) Cosmetics Co., Ltd., SEPHORA (Shanghai) cosmetics Co., Ltd., Ever Bright Town Co., Ltd., Wuhan
Jiutong Industry (Group) Co., Ltd. and Harbin First Department Store Co., Ltd. have fully accrued the provision for asset
impairment, thus the influence on book valueis 0.
039
2014 Annual Report
Accounting Standards (Continued)
2. Effects on Consolidated Financial Statement by Changes in Long-term Equity Investment
Standards (II)
January 1, 2013
Invested entity
Jiangyin Tianjiang
Basic information on
transaction
Capital surplus
(+/-)
Equity dilution
caused by increased
contribution from other
shareholders
46,489,287.10
December 31, 2013
Capital surplus
Retained
earnings (+/-)
Retained earnings
(+/-)
(+/-)
-46,489,287.10
46,489,287.10
-46,489,287.10
Explanation for effects on consolidated financial statement by changes in long-term equity
investment standards (II)
3. Effects of Other Changes in Standards
Standard
for Business Enterprises
No. 37-Presentation of
Financial Instruments
Item
Issued restricted
shares
Decmber 31,2013
Increase (+) /decrease (-)
Increase (+) /decrease (-)
Other payables
415,993,500.00
249,054,570.00
Treasury stocks
415,993,500.00
249,054,570.00
Other payables
-9,647,814.53
-11,051,081.03
-
-56,167,287.91
Other non-current
liabilities
-2,638,330.00
-15,161,744.57
Presentation of
items of financial
statement
Deferred revenue
12,286,144.53
82,380,113.51
Capital surplus
-7,839,540.88
-12,038,742.04
Conversion difference
of foreign currency
statement
2,000,405.47
2,302,548.03
Other comprehensive
income
5,839,135.41
9,736,194.01
Except for the above change, the Accounting Standards for Business Enterprises No. 9 - Employee Benefit, Accounting
Standards for Business Enterprises No. 33 - Consolidated Financial Statements, Accounting Standards for Business
Enterprises No. 39- Measurement of Fair Value, Accounting Standards for Business Enterprises No. 40 - Joint Venture
Arrangement and Accounting Standards for Business Enterprises No. 41 - Disclosure of Interests in other Entities have
no material impact on the financial statements of the Company.
January 1,2013
Statement item
Other current liabilities
for Business Enterprises
No. 30 - Presentation of
Financial Statements
Monetary Unit: Yuan; Currency: RMB
XIII Explanation on Other Significant Events
040
2014 Annual Report
Section6 Change of Share Capital and
Particulars of Shareholders
I. Changes of Share Capital
(I) Summary of Share Changes
1. Summary of share changes
Unit: share
Before
Sharesdividend
New Allot
stock
Percentage share
transferred
(%)
ment
issued
from
contributed
capital
Quantity
I.Restricted tradable shares
Change for the period(+,-)
Others
After
Sub-total
Perce
ntage
(%)
Quantity
22,765,500
3.39
-11,263,500 -11,263,500
11,502,000
1.71
22,765,500
3.39
(11,263,500) (11,263,500)
11,502,000
1.71
22,765,500
3.39
(11,263,500) (11,263,500)
11,502,000
1.71
II. Tradable shares
649,677,711
96.61
11,187,000
11,187,000 660,864,711 98.29
1. Ordinary shares
denominated in RMB
649,677,711
96.61
11,187,000
11,187,000 660,864,711 98.29
672,443,211
100
(76,500)
1. State-owned shares
2. State-owned legal person
shares
3. Other domestic shares
Including: Non State-owned
legal person shares
Domestic person shares
4. Other foreign shares
Including: Overseas Legal
Representative shares
Overseas person shares
2. Foreign capital shares listed
domestically
3. Foreign capital shares listed
overseas
4. Others
III. Total shares
(76,500) 672,366,711
100
2.Explanation for shareholding changes
In accordance with the resolution of the 11th Meeting of 5th Board of Directors of the Company, 11,187,000 restricted
stocks under the 2012 equity incentive plan were unlocked and circulated; in accordance with the resolution of the
11th Meeting of 5th Board of Directors and the resolution of the Annual Shareholders' Meeting in 2013, the Company
repurchased and deregistered 76,500 shares of equity incentive stocks.
(II) Change of Shares with limitations
Name of shareholder
041
Number of
shares at the
beginning of
the year
Unit: share
The number
of restricted
shares lifted
The number
of increasing
restricted
shares
Shares
repurchased
Number of
shares at
the end of
year
Restricted reason
Unit: share
Lift restrictions
on sale date
Equity incentive targets
11,382,750
11,187,000
-
(38,250)
157,500 Equity incentive locked June 9, 2014
Equity incentive targets
11,382,750
-
-
(38,250) 11,344,500 Equity incentive locked June 7, 2015
Total
22,765,500
11,187,000
-
(76,500) 11,502,000 /
/
2014 Annual Report
Section6 Change of Share Capital and Particulars of
Shareholders
II Securities Issuance and Listing
Previous issuance of securities for the past 3 years at the end of the reporting period
Description of previous issuance of securities for the past 3 years at the end of the reporting period (please explain the
duration of the different interest rate bonds):
As of the end of the reporting period for the past 3 years, there were no securities issued and listed.
III Particulars of Shareholders and the Substantial Controller
(I) Total number of shareholders:
Total number of shareholders (households) at the end of reporting period
28,527
Total shareholders prior to the annual report of the disclosure at the end of
the fifth trading day (households)
24,651
Total number of preferred shareholders voting rights restored (households)
at the end of reporting period
0
The total number of preferred shareholders annual reports before the end
of the fifth day of voting rights restored (households)
0
(II) The top ten shareholders at the end of the reporting period, the top ten shareholders' (or
tradable shareholders') shares information table
Unit: share
Shareholding of the top10 shareholders
Number of
restricted
tradable
shares
2,358,951
Shanghai Jiushi Co., Ltd.
Hong Kong Securities Clearing Co., Ltd.
Closing pledged
or frozen
Percentage
(%)
The
number
of
restricted
shares
182,449,233
27.14
0
None
Domestic nonstate-owned Legal
Representative
14,661,225
31,092,899
4.62
0
None
State-owned Legal
Representative
18,885,416
18,885,416
2.81
0
None
Others
2,849,674
17,519,603
2.61
0
None
Others
Portfolio 604 of National Social Security Fund
173,878
10,356,000
1.54
0
None
Others
CITIGROUP GLOBAL MARKETS LIMITED
7,345,422
7,345,422
1.09
0
None
Overseas Legal
Representative
UBS AG
7,070,580
7,070,580
1.05
0
None
Overseas Legal
Representative
Name of shareholders (full name)
BoshiXinxingChengzhang Stock Type
Securities Investment Fund
Shares
status
Amount
Nature of
shareholder
Increase/
decrease
during the
reporting
period
042
2014 Annual Report
Shareholders
III Particulars of Shareholders and the Substantial Controller (Continued)
(II) The top ten shareholders at the end of the reporting period, the top ten shareholders' (or tradable
shareholders') shares information table (Continued)
Name of shareholders (full name)
Shareholding of the top10 shareholders
Increase/ Number of
The
decrease
Percentage number of
during the restricted
tradable
(%)
restricted
reporting
shares
shares
period
Closing pledged
or frozen
Shares Amount
status
Nature of shareholder
Newhuadu Industrial Group Co., Ltd.
6,903,990
6,903,990
1.03
0 None
XuLiushen
HuashangCelueJingxuan Flexible
Mixed Securities Investment Fund
6,200,000
6,200,000
0.92
0 None
Domestic nonstate-owned Legal
Representative
Domestic natural person
6,000,133
6,000,133
0.89
0 None
Others
Top 10 unrestricted tradable share shareholders' information
Numbers of
The category and amount of shares
Name of shareholders
unrestricted tradable
Category
Amount
shares
Shanghai Jiushi Co., Ltd.
Hong Kong Securities Clearing Co., Ltd.
BoshiXinxingChengzhang Stock Type Securities Investment Fund
Portfolio 604 of National Social Security Fund
CITIGROUP GLOBAL MARKETS LIMITED
UBS AG
Newhuadu Industrial Group Co., Ltd.
XuLiusheng
HuashangCelueJingxuan Flexible Mixed Securities Investment Fund
Explanation on associated relationship among the top 10 shareholders
or acting-in-concert
The instructions on restoring voting rights and number of shares of
preferred stockholders
182,449,233 RMB common share
182,449,233
31,092,899
18,885,416
17,519,603
10,356,000
7,920,155
7,652,674
7,345,422
7,070,580
6,903,990
To the knowledge of the Company, there is neither associated
relationship nor acting-in-concert among the above shareholders
Not applicable
IV. Brief Introduction to the Holding Shareholder and the Substantial Controller
(I) Particulars of the holding shareholder
1. Legal Representative
Name
Responsible person or Legal Representative
Date of Establishment
National Organization Code
Registered capital
Primary Business
Future development strategy
Monetary unit: 100 Million Yuan; Currency: RMB
Xie Wenjian
1995-05-05
133162572
2.68
Personal care and household care products, raw and supplementary
materials, fragrances and essences
The strategic objective of Jahwa Group is to gather resources to enlarge
and strengthen the Personal care and household care business.
Other domestic and oversea holding and shareholding None
equity of listed companies within the reporting period
Other explanations
043
2014 Annual Report
Shareholders
IV. Brief Introduction to the Holding Shareholder and the Substantial Controller(Continued)
(II) Particulars of Substantial Controller
1. Special explanation of company with no substantial controller
The controlling shareholder of the Company is Shanghai (Jahwa) Group Co., Ltd., which is a subsidiary of China Ping
An (Group) Co., Ltd. In accordance with the 2013 annual report published by China Ping An (Group) Co., Ltd., as at
December 31, 2013, China Ping An (Group) Co., Ltd. has relatively decentralized share structure, and has neither
controlling shareholder nor substantial controller.
2. Framework for the property right and governance relationship between the Company and its holding shareholder and
the substantial controller
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Note: All the above-mentioned data relating to China Ping An comes from the 2013 annual report of China Ping An.
044
2014 Annual Report
Shareholders
IV. Brief Introduction to the Holding Shareholder and the Substantial Controller(Continued)
(III) Other Information about Controlling Shareholder and Substantial Controller
In accordance with the 2013 annual report published by China Ping An (Group) Co., Ltd., the share structure of
China Ping An (Group) Co., Ltd. is relatively decentralized, and the company has neither controlling shareholder nor
substantial controller.
Shareholders which hold more than 10% of shares of China Ping An:
In accordance with the 2013 annual report published by China Ping An (Group) Co., Ltd., by December 31, 2013,
Pokphand Group Co., Ltd. indirectly hold 930, 153, 318 H shares of China Ping An, accounting for 11.75% of 7.916
billion shares issued; and hold via Gongbo'gyamda Jiangnan Industry Development Co., Ltd. 1.76% A shares of China
Ping An. Pokphand Group Co., Ltd. hold 13.51% of the shares of China Ping An in total.
Pokphand Group founded in Bangkok, Thailand in 1921 by Xie Yichu and Xie Shaofei. Originally engaged in agricultural
and livestock husbandry, Pokphand Group is now engaged in feedstuff, seafood, food, retail, telecommunication,
medicine, real estate, international trade, logistics, financial, medium, Internet, education and industrial sectors. At
present, Pokphand Group has investment in more than 15 countries around the world, and its operation covering
more than 20 countries and regions, with more than 400 subsidiaries, and over 200 thousand employees. The main
shareholders of Pokphand Group are the Xie family, which holds more than 51% of shares. Pokphand Group controls
the diversified operations through Pokphand Group Co., Ltd.
Established in Thailand on September 23, 1976, Pokphand Group Co., Ltd. is the flagship company established by
Pokphand Group in Thailand, with the registered capital of THB 17, 616, 500, 000, the registered address is 313 Silom
Road CP Tower Bangrak Bangkok 10500, Thailand, and the organizational code is 0105519010951. Its core operations
include agriculture, livestock husbandry, food, retail, telecommunication, pharmaceutics, motorcycle, real estate,
international trade, financial, media and other industries. Pokphand Group Co., Ltd. is also the actual controller of
Tongying Trade Co., Ltd., Rongfu Group Co., Ltd., Shangfa Holding Co., Ltd. and Yisheng Development Co., Ltd.
045
2014 Annual Report
Section7 Directors, Supervisors, Senior
Management and Staff
I Changes in Shareholding and Remuneration
(I) Changes in shareholding and remuneration of current and resigned directors, supervisors and
senior management within the reporting period
Unit: share
Name
Xie Wenjian
Position
Chairman of
the Board,
and general
manager
Gender
Age
Start date of term
of office
End date of
term of office
Total amount of
remunerations
received from
the Company
within the
reporting period
(RMB 10,000)
(before-tax)
Remuneration
from other
related entities
in the reporting
period
Shares held
at beginning
of this Year
Shares
held at
end of
this Year
Change
in shares
during the
period
0
0
0
371,253 371,253
0
Yes
0
0
Yes
0
Reason for
change
Male
53
2013-11-15 2015-12-18
Wu Yinghua Director
Female
58
2012-12-18 2015-12-18
Tong Kai
Director
Male
43
2012-12-18 2015-12-18
Qu Jianning
Director
and chief
technology
officer
Male
51
2013-11-15 2015-12-18
324,000 324,000
Feng Jun
Director and
secretary of
Board
Female
47
2012-12-18 2015-12-18
436,000 336,100
Zhang
Chun
Independent
director
Female
51
2012-12-18 2015-12-18
0
0
0
12.06 No
Su Yong
Independent
director
Male
59
2012-12-18 2015-12-18
0
0
0
12.06 No
Fu
Dingsheng
Independent
director
Male
61
2014-03-03 2015-12-18
0
0
0
10.07 No
Zhu Yijiang
Chief
Supervisor
Female
43
2012-12-18 2015-12-18
0
0
0
Zhang
Baodi
Supervisor
Female
51
2014-07-14 2015-12-18
109,000 109,000
0
35.76 No
Wang
Jianning
Supervisor
Female
52
2012-12-18 2015-12-18
0
0
16.20 No
Fang Hua
Deputy general
Male
manager
35
2012-12-18 2015-12-18
360,000 360,000
0
65.98 No
Ye Weimin
Deputy general
manager,
and general
manager of
Male
Consumer
Product
Division
48
2014-05-30 2015-12-18
Huang
Zhen
Deputy general
manager,
and general
Male
manager of
Herborist
Division
43
2014-05-30 2015-12-18
0
106.8 No
Sales on
-99,900 secondary
market
45.11 No
Yes
243,002 258,302
Purchase
on
15,300
secondary
market
103.71 No
268,200 283,700
15,500
Purchase
on
secondary
market
101.97 No
0
400.1 No
046
2014 Annual Report
Section7 Directors, Supervisors, Senior Management and Staff
I Changes in Shareholding and Remuneration (Continued)
senior management within the reporting period (Continued)
Name
Wang Zhuo
Zhou Qinye
Position
Quitted director
and general
manager
Quitted
independent
director
Gender
Age
Shares
Shares
Shares held change
held at
held
at end of
beginning
this Year during the
of this Year
period
The termination
date of term of
office
The start date of
term of office
Sales on
-82,500 secondary
market
31.97 (JanuaryNo
May)
Male
46
2012-12-18
2014-05-12
607,500
525,000
Male
62
2012-12-18
2014-03-03
0
0
0
1.98 (JanuaryFebruary)
0
23.94 (JanuaryNo
August)
Liu Dengzhong
Quitted supervisor
Male
60
2012-12-18
2014-07-13
28,877
28,877
Ding Yujing
Quitted financial
director
Female
39
2012-12-18
2014-06-12
435,000
121,500
Total
/
/
/
/
/
3,182,832
2,717,732
Name
Reason for
change
Total amount of
remunerations
Receipt of
received from
remuneration
the Company
from other
within the
related entities
Reporting
in the reporting
Period (RMB
period
10,000)
(before-tax)
Sales on
-313,500 secondary
market
-465,100 /
No
26.57 (JanuaryNo
June)
994.28
Main working experience from the last 5 years
Xie Wenjian
A master's degree holder, previous job included General Manager of Johnson & Johnson Medical China and President of Johnson &
Johnson Medical China, now serving as the Board Chairman of Shanghai Jahwa United Co., Ltd. and Shanghai Jahwa (Group) Co.,
Ltd. Mr. Xie Wenjian is also Vice President of China Association for Medical Devices Industry and executive member of China Entry-Exit
Inspection and Quarantine Association.
Wu Yinghua
A doctorate holder and a Chinese certified public accountant, previously served as the Treasurer of Shanghai Yuejin Aluminum Product
Plant and the Directors of the Audit Office and Legal Office of Huali Art Paper Plant of Shanghai Papermaking Company, the Chief Auditor
of Shanghai Jahwa (Group) Co., Ltd. and Chief Supervisor of the 3rd and 4th session of Board of supervisors of Shanghai Jahwa United
Co., Ltd. Now she acts as the Director and the Deputy General Manager of Shanghai Jahwa (Group) Co., Ltd.
Tong Kai
Master degree holder. Previously served as a Commercial Analyst of McKinsey, the Financial Institutions Group Manager of the
investment banking division of Goldman Sachs (Asia) LLC, the Executive Director of the Investment Banking Division/Asia Pacific financial
institutions group insurance business, and the Chairman and CEO of Ping An Trust Co., Ltd. Now he is the Director of the Company, the
Co-Chief Investment Officer of China Ping An (Group) Co., Ltd., and the Director of Investment Management Committee
Qu Jianning
A doctorate holder. Previously served as the Senior Product Development Manager of the Family Protection Products of Unilever Japan
Branch, the Vice General Manager, Director, General Manager, and Scientific Advisor of Chairman of Shanghai Jahwa United Co., Ltd.,
and the vice president of China Association of Fragrance Flavor and Cosmetic Industries. Now he is the Director and Chief Technology
Officer of the Company.
Feng Jun
A master degree holder. Previously served as the Trader of Yamaichi Securities at Shanghai Stock Exchange, the Senior Manager of the
Investment Banking Head Office of United Securities Co., Ltd. and the Manager of the Investment Department of Shanghai Jahwa (Group) Co.,
Ltd. Now she is the Director and Secretary of the Board of Shanghai Jahwa United Co., Ltd.
Zhang Chun
Doctor and professor of accounting, certificated public valuer and certificated real estate appraiser. Previous work experiences
included Teaching Assistant, Lecturer, Associate Professor/Supervisor of Master's degree students at Shanghai University of Finance
and Economics. Her current positions include professor and Supervisor of doctoral candidates at Shanghai University of Finance and
Economics, and Independent Director of the Company.
Su Yong
A doctorate holder, professor and PhD supervisor. Currently he is the Director of Enterprise Management Department of Fudan University,
Deputy Director of Oriental Management Research Center of Fudan University, responsible for Oriental Management Institute of Fudan
University, and the Company's independent director. He also serves as the executive vice president of the China Enterprise Management
Association, the Vice President of the Shanghai Association of Productivity Science, member of Japan East Asia Economic and
International Society, meanwhile the member of American Management Association.
A bachelor degree holder and professor. He is the Professor and Doctoral Supervisor of East China University of Political Science and
Law, and an Independent Director of the Company. He is also the Editor in Chief of the Oriental Law Journal, Vice President of China Law
Journal Research Society, Executive Director of China Civil Law Society, Vice President of Shanghai Law Journal Research Society, and
Fu Dingsheng Vice President of Shanghai Civil Law Society. He is also serving as Arbitrator of Shanghai Arbitration Commission, Arbitrator of Shanghai
International Economic and Trade Arbitration Commission (Shanghai International Arbitration center), and part-time lawyer of Shanghai
Zhongxin Law Firm.
Zhu Yijiang
047
A bachelor degree holder. Previously served as the Deputy Finance Director of Nortel Communications Engineering Co., Ltd., Director
and Chief Financial Officer of XJ Group Limited. She is the General Manager of Shanghai Jahwa United Co., Ltd. within the reporting
period. Currently she serves as the Chief Supervisor of Shanghai Jahwa United Co., Ltd. and General Manager of Comprehensive
Financial Department of Ping An Trust Co., Ltd.
2014 Annual Report
I Changes in Shareholding and Remuneration (Continued)
senior management within the reporting period (Continued)
Name
Main working experience in last 5 years
Zhang Baodi
A bachelor degree holder. Previously served as Secretary of League Committee of Shanghai Household Chemical Factory, executive
office director of Shanghai Jahwa United Real Estate Co., Ltd., Labor Union Chairman of Shanghai Jahwa United Co., Ltd., Supervisor
of 1st and 2nd Board of Supervisors of Shanghai Jahwa United Co., Ltd., Deputy General Manager of Shanghai Jahwa Property
Co., Ltd., and General Manager of Shanghai Hanxin Industrial Co., Ltd. She serves as Labor Union Chairman, Comprehensive Affair
Director and Supervisor of Shanghai Jahwa United Co., Ltd.
Wang
Jianning
Secondary degree. Former Deputy Director of Market Service Department of Shanghai Jahwa United Co., Ltd. Currently the Company's
Audit Director.
Fang Hua
MBA of Harvard University. Previously served as the Senior Commercial Analyst of A.T. Kearney, Senior Sales Manager of Siemens
(China) Co., Ltd. Shanghai Branch, Deputy President of Government of Singapore Investment Consulting (Beijing) Co., Ltd. (GIC).
Currently is the Deputy General Manager of the Company.
Ye Weimin
A master degree holder. Previously served as the Sales Manager of Unilever China Co., Ltd., General Manager of division of
Yangshengtang Co., Ltd., General Manager of Sanitary Product Division of Goodbaby Group, and General Manager Assistant,
Manager of No. 1 Business Department and Manager of No. 3 Business Department of the Company. He serves as deputy General
Manager of the Company and General Manager of Consumer Product Division.
Huang Zhen
A master degree holder. Previously served as the Brand Assistant, Brand Manager, Director Assistant and Herborist Division Manager
of the Company, General Manager Assistant and Manager of No. 2 Business Department of the Company, and General Manager of
Shanghai Herborist Cosmetics Co., Ltd. He serves as Deputy General Manager of the Company and General Manager of Herborist
Division.
Wang Zhuo
Master degree. Previously served as the Brand Manager and the Manager of the Brand Management Department of the Company,
the Market and Business Strategy Consultant of Gartner Group, Inc., the Market Director of US MDY Advanced Technologies, Inc, the
Director and General Manager of Shanghai Jahwa United Co., Ltd. Now he has resigned.
Zhou Qinye
A master degree holder, accounting science professor, certified public accountant, and doctoral supervisor. Previously served as the
Deputy Dean of Accounting Department of Shanghai University of Finance and Economics, the Director of Development Research
Center, Director of Listing Department, Deputy General Manager and Chief Accountant of Shanghai Stock Exchange, and the
Independent Director of the Company. Now he has resigned.
Liu
Dengzhong
Junior College degree. Former Deputy Secretary of the Communist Youth League, Administrative Manager, Sales Manager, Director of
the Office of the Party Committee and Administrative Director of Shanghai Jahwa United Co., Ltd. Now he has resigned.
Ding Yijin
A master degree holder and CPA. Once worked as Accountant, Assistant Manager, Manager, Vice Financial Officer of Financial
Department of Shanghai Jahwa United Co., Ltd., and Chief Accountant and Chief Financial Officer of Shanghai Jahwa United Co., Ltd.
Now she has resigned.
Other explanation
None
II Position Assumed of Current and Resigned Directors, Supervisors and Senior
Management in the Reporting Period
(II) Equity incentive shares granted to directors, supervisors and senior management during the
reporting period
(I) Position assumed in shareholding entities
048
2014 Annual Report
II Position Assumed of Current and Resigned Directors, Supervisors and Senior
Management in the Reporting Period (Continued)
(I) Position assumed in shareholding entities (Continued)
Name of person
Name of shareholder
Positions in shareholder
Xie Wenjian
Shanghai Jahwa (Group) Co., Ltd. Chairman
Wu Yinghua
Shanghai Jahwa (Group) Co., Ltd. Deputy General Manager
Tong Kai
China Ping An (Group) Co., Ltd.
Co-Chief Investment
Officer; Director of
Investment Management
Committee
Zhu Yijiang
Ping An Trust Co., Ltd.
General Manager of
Comprehensive Financial
Department
Start date of office
term
End date of office
term
Explanation
on positions in
shareholder
(II) Position assumed in other entities
Name of person
Name of other entity
Positions in other entity
Shanghai University of
Finance and Economics
Professor, and Doctoral Supervisor
Su Yong
Fudan University
Professor, Doctoral Supervisor,
Dean of Enterprise Management
Department in School of Management,
and President of Orient Management
Research Institute
Fu Dingsheng
East China University of
Political Science and Law
Professor, and Doctoral Supervisor
Zhang Chun
Starting date
End date
Explanation on
positions in other
entity
III Particulars of Remuneration of Directors, Supervisors and Senior Management
049
Decision-making process of
remuneration of directors, supervisors
and senior management
The remuneration of directors and supervisors received from the Company is based
on resolution of general meeting of shareholders, and the remuneration of senior
management is decided by the Board of Directors.
Basis for determination of remuneration
of directors, supervisors and senior
management
The annual remuneration of directors, supervisors and officers from the Company are
given on the basis of the results of performance assessment carried out by the Company
Payment of remuneration of director,
supervisors and senior management
The salary and allowance payable to directors and supervisors from the Company has
been paid in full, and the bonus will be paid after performance assessment.
Total amount of remuneration actually
obtained by all directors, supervisors
and senior management by the end of
the reporting period
The remuneration actually obtained by the directors and supervisors from the Company
within the reporting period amounts to RMB 9.9428 million.
2014 Annual Report
IV Change in Directors, Supervisors and Senior Management of the Company
Name
Title
Change
Reason for change
Fu Dingsheng
Independent Director
Additional election of
Appointment
Zhou Qinye
Resigned
Zhang Baodi
Supervisor
Appointment New election of supervisor
Ye Weimin
Deputy General Manager of the Company, and General Manager of
Consumer Product Division
Appointment Appointment
Huang Zhen
Deputy General Manager of the Company, and General Manager of
Herborist Division
Appointment Appointment
Wang Zhuo
Director and General Manager
Dismissal
Removal
Ding Yijing
Financial Director
Resigned
Resignation
Resigned
Retirement
Liu Dengzhong Supervisor
Resignation
V Core Technical Team or Key Technical Personnel of the Company
In 2014, the Company formulated the 5-year strategic plan. In order to support the strategic development of the
Company and enhance the R&D force, the technology Center adjusted the organizational structure in 2014, introducing
seven talents, three of whom are in senior management.
VI Information on Employees in Parent Company and Main Subsidiaries
(I) Employees
Number(Person)
Number of current employees in parent company
686
Number of current employees in main subsidiaries
837
Total number of current employees
1,523
Number of retired employees the parent company and main subsidiaries shall bear expenses to
0
Professional composition
Classification of Profession
Number (person)
253
Sales personnel
826
Technical personnel
211
Financial personnel
62
Administrative personnel
171
Total
1,523
Education Levels
Degree of education
Number (persons)
Doctor
11
Master
133
Bachelor
600
College
527
Below college
252
Total
Number (persons)
1523
050
2014 Annual Report
VI Information about Employees in Parent Company and Main Subsidiaries (Continued)
(II) Remuneration Policies
In 2014, the Company fully reviewed the professional title
and remuneration systems, and formulated the performance
orientated remuneration strategy for pursuing excellency. The
Company will, in light of the value of positions and the capabilities
of employees, provide a comprehensive remuneration which
is competitive in the marketplace, as to attract and retain the
excellent talents. The remuneration level of employees is closely
linked with their personal performance and the operating results
of the Company. In addition, the Company also have various
incentive plans, to encourage employees to pursue excellence,
achieve higher performance targets, and thus share the
development results with the Company.
(III) Training Plan
In 2014, on the basis of the new strategic development
objectives, the Company determined four core capabilities
and new talent development strategies, to fully transform
the corporate culture, values and competence model, and
accelerate the construction and development of organizational
and employee capabilities.
The development of four core capabilities were completed by the
senior management of the Company. They prepared 10 strategic
measures to improve the organizational capabilities, employed
surveys on a regular basis, and continuously monitored the
improvement of organizational capabilities.
were done by internal trainers of the Company. The training on
management personnel was done in the form of external study
in business schools, this allowed for the mastering of modern
management methods; the development of professional skills
was done by centering around the marketing and R&D teaching
systems; the training on business development was done by
means of external training, to understand the latest industrial
trend; the training on front-line employees was done by targeted
sales, production and safety training, this allowed for the overall
improvement on skills of employees.
With respect to improvement of employee capabilities, the
Company established the study map for improving the leadership
force and professional skills of employees at various levels.
With regards to the internal transmission and generalization of
knowledge, the Company further optimized the internal trainer
team, and developed the internal training courses. In 2014, the
Company developed 30 internal training courses. In 2014, the
Company organized more than 140 training events, including
more than 6,000 internal training classes, 40% of the classes
(IV) Statistical Chart of Professional Composition
051
(V) Statistical Chart for educational background
2014 Annual Report
Section8 Company Governance
I Governance of the Company and Insider Registration Management
During the reporting period, the Company continuously improved company governance structure and standardized its business
operations in compliance with laws and regulations including the Company Law , the Securities Law , the Code of Corporate
Governance for Listed Companies in China, the Rules Governing the Listing of Stocks on Shanghai Stock Exchange . The Company's
corporate governance conformed to regulatory documents including the Code of Corporate Governance for Listed Companies in China
issued by China Securities Regulatory Commission (CSRC).
In the appraisal for "Listed Companies with Good Reputation in China in 2014" organized by National Business Daily together with
securities companies, fund companies and private equity companies, the Company was awarded the prize "List Company with Highest
Competitive Advantages". As the Company develops, it will further amend the internal control system timeously, to ensure that the
system continuously meets the needs of development of the Company. In future, the Company will continuously review and learn
from the advanced corporate governance practices, summarize experiences, strengthen the corporate governance, and improve the
management quality of the Company, thus improve overall competitiveness of the Company.
1. About shareholders and shareholders' general meeting: the Company established the Rules of Procedure of Shareholders'
General Meeting. The Company convened and held shareholders' general meetings in full conformity with the opinions on the
standardization of shareholders' general meeting and encourage more shareholders to attend shareholders' general meeting
and exercise their voting rights in respect to selection of meeting venue. The Company treated all shareholders equally and
ensured all shareholders exercised their rights.
2. About the relations between controlling shareholders and listed Company: the controlling shareholders behaved accordingly
and did not overstep shareholders' general meeting to directly or indirectly interfere with the decisions and operating activities of
the Company. The Company was independent of the controlling shareholders in terms of personnel, assets, finance, department
and business and the Board of Directors, the Board of Supervisors and the internal departments of the Company operated
independently. For the related party transactions, the procedures were legal, prices were fair and the Company performed the
obligation for information disclosure.
3. About directors and the Board of Directors: the Directors were elected according to the director election procedures specified
in the Articles of Association. The number of the members of the Board of Directors and their composition complied with legal
and statutory requirements. The Board of Directors established the Rules of Procedure of the Board of Directors. All Directors
conscientiously attended Board meetings and shareholders' general meetings, were familiar with relevant laws and regulations
and are aware of their rights, liabilities and responsibilities conferred upon them.
5. About performance assessment and incentive/restraint mechanism: the Company established impartial and transparent
performance evaluation standards and incentive/restraint mechanism for Directors, supervisors and managers. The appointment
of managers were open and transparent and complied with laws and regulations.
6. About stakeholders: the Company fully respected and preserved the legal rights and interests of banks, creditors, employees,
consumers and other stakeholders, in an effort to facilitate sustained and healthy development of the Company.
7. About information disclosure and transparency: the Company established the information disclosure management system,
investor relationship management system and designated the Secretary of the Board to be in charge of information disclosure
and investor relationship management. In order to ensure the quality and fairness of the Company's information disclosure, the
Company established the system of ascertaining the responsibility for the major errors in information disclosure of annual report
as well as the management system for the persons using outside information. In full accordance with laws, regulations and the
Articles of Association, the Company disclosed relevant information in a truthful, accurate, complete and timely manner and
provided all shareholders with an equal access to information.
4. About supervisors and the Board of Supervisors: the supervisors of the Company fully performed the relevant provisions of the
Company Law and the Articles of Association. The number of the members of the Board of Supervisors and their composition
complied with legal and statutory requirements. The Board of Supervisors established the Rules of Procedure of the Board of
Supervisors. The supervisors of the Company conscientiously performed their duties and supervised the regulatory compliance
of the duty performance of the financial personnel, Directors, managers and other senior executives of the Company by following
the principle of accountability towards shareholders.
052
2014 Annual Report
I Governance of the Company and Insider Registration Management (Continued)
The sixteenth meeting of fourth session of Board of Directors of the Company revised the System of Shanghai Jahwa
United Co., Ltd. for Managing Persons Who Have Knowledge of Insider Information adopted at third meeting of fourth
session of Board of Directors of the Company on April 27, 2010 according to the Provisions for the Establishment of
Management Systems for the Registration of Persons Who Have Knowledge of Insider Information by Listed Companies
issued by China Securities Regulatory Commission. In accordance with the requirements of the system, the Company
recorded a registration of the relevant personnel involved in insider information of the periodic report of the Company
and significant matters of the Company such as Qingpu Base Relocation Project.
The Company will further standardize its systems, continuously improve its governance structure and effectively
safeguard the interests of all shareholders in accordance with the requirements of the Company Law, Securities Law
and other relevant laws and regulations.
Discrepancies between the corporate governance of the Company and the Company Law and the relevant provisions of
CSRC; if there are any discrepancies, the reason shall be stated.
Not applicable
II Brief Introduction to Shareholders' Meeting
Conferences
Convening
Date
Resolutions
Resolution published
in designated
website inquiries
Disclosure date
of resolution
published
March 3,
2014
1. Proposal on additional election of
independent director; 2. Proposal on
remuneration of chairman; 3. Proposal on
allowance for acting chairman
Approved
http: //www.sse.
com.cn/sseportal/
webapp/datapresent
March 4, 2014
Annual
Shareholders'
Meeting of 2013
April 10,
2014
1. 2013 work report of Board of Directors; 2.
2013 work report of Board of Supervisors;
3. 2013 annual report of the Company;
4. 2013 financial accounting report of the
Company; 5. 2013 profit distribution plan of
the Company; 6. Proposal on appointment of
financial auditor of the Company for 2014; 7.
Proposal on repurchase and deregistration
of equity incentive stocks granted (special
proposal); 8. Listening to 2013 work report of
independent directors of the Company.
Approved
http: //www.sse.
com.cn/sseportal/
webapp/datapresent
April 11, 2014
2nd Interim
Shareholders'
Meeting in 2014
April 28,
2014
Proposal on Long-term Incentive Program
for Chairman of Shanghai Jahwa United Co.,
Ltd.in 2014
Approved
http: //www.sse.
com.cn/sseportal/
webapp/datapresent
May 29, 2014
3rd Interim
Shareholders'
Meeting in 2014
June 12,
2014
Proposal on removing Mr.Wang Zhuo from
director office
Approved
http: //www.sse.
com.cn/sseportal/
webapp/datapresent
June 13, 2014
1st Interim
Shareholders'
Meeting in 2014
Explanation on shareholders' meeting
053
The proposal of meeting
2014 Annual Report
III Fulfillment of Duties by Directors
(I) Presence of Directors at Board Meetings and Shareholders' Meetings
Attendance
general meeting
of shareholders
Presence of Board meetings
Name of director
Independent
Expected
director or
Consecutively
Attendance
attendance Attendance
Entrusted
not
Participation by
Times of
absent from frequency at the
frequency frequency
attendance
communications
absence two meetings in general meeting
in Board
in person
frequency
person
of shareholders
meetings
Xie Wenjian
No
14
14
5
0
0 No
4
Wu Yinghua
No
14
14
5
0
0 No
4
Tong Kai
No
14
13
5
1
0 No
3
Qu Jianning
No
14
14
5
0
0 No
4
Feng Jun
No
14
14
5
0
0 No
4
Zhang Chun
Yes
14
14
5
0
0 No
4
Su Yong
Yes
14
13
5
1
0 No
3
Fu Dingsheng
Yes
13
13
5
1
0 No
3
Explanation on absence from meeting of Board of Directors for two consecutive times
Not applicable
Number of Board meetings held during this year
14
Including: number of meetings requiring personal presence
9
Number of meetings held by correspondence
5
Number of meetings held combining both on site and
correspondence
0
(II) Objections by Independent Directors to Relevant Matters of the Company
Explanation on objections by independent directors to relevant matters of the Company
IV. Important Recommendations by the Special Committees under the Board of
Directors in the Performance of their Duties during the Reporting Period
Within the reporting period, the special committees under the Board of Directors approved all proposals under their
deliberation and raised no other opinions or suggestions for their job performance.
Within this reporting period, the Independent Directors of the Company did not raise any objections to the proposals of
the Board of Directors and other matters.
V. Rejection by Supervisory Committee on the Company risk
Within the reporting period, the Company's Board of Supervisors did not raise any objections.
054
2014 Annual Report
VI. Explanation for not able to Ensure Independence and Maintain Independent
Operating in the Aspects of Business, Personnel, Asset, Institution, and Finance,
etc., by the Company and its Controlling Shareholders.
The Company and its controlling shareholders are completely independent in respect to the business, personnel, asset,
institution, and finance, etc.
Measures, work progress and subsequent work plan for horizontal competition owing to share system reform, industrial
characteristics, and policies of the State or M&A.
Not applicable
VII. Evaluation Mechanism for Senior Management, as well as Establishment and
Implementation of Incentives within the Reporting Period
According to the regulations of 2014 key performance indicators assessment methods, the Company assesses
those directors, supervisors and senior managements who receive remuneration from the Company, and issues the
remuneration and performance incentives based on the Company's economic efficiency and assessment indicators.
055
2014 Annual Report
Section9 Internal Control
I. Construction and Responsibility Statement of Internal Control
Pursuant to the provisions of specifications for internal control of enterprises, establishing perfect internal controls, effectively
implementing the internal controls, evaluating the effectiveness thereof and truthfully disclosing the evaluation report for internal
control are the responsibilities of Board of Directors of the Company. The Board of Supervisors shall supervise the establishment
and implementation of internal control by Board of Directors. The executive management is responsible for organizing the daily
operation of internal control of the Company. The Board of Directors and the Board of Supervisors of the Company as well
as its directors, supervisors and senior management are collectively and individually liable for the truthfulness, accuracy and
completeness of the information as disclosed in this Annual Report, and undertake that no major events have been omitted and
that there are no misstatements and no material misleading information in this Annual Report.
The Company's internal control objectives are: reasonable assurance that the operation and management of compliance,
security of assets, financial reports and related information is true and complete, to improve operational efficiency and
effectiveness, and promote the realization of the development strategy. Since internal control involves inherent limitation, it can
only provide the reasonable guarantee for the achievement of above-mentioned objectives. In addition, since the change in
situations may affect internal control to be inappropriate or reduce the compliance with control policies and procedures, to
estimate the future effectiveness of internal control based on the result of evaluation on internal control involves certain risks.
The Company established the system for internal control of financial reports according to the requirements of applicable laws
and regulations including Accounting Law, Accounting Standards for Business Enterprises, Basic Standard for Enterprise
Internal Control, Supporting Guidelines for Enterprise Internal Control and Guidelines of Shanghai Stock Exchange for the
Internal Control of Listed Companies.
In order to implement the Basic Standard for Enterprise Internal Control and relevant supporting guidelines, to further regulate
the Company's internal control, comprehensively boost its operational management levels and risk control capabilities and
safeguard legal interests and claims of stockholders, the Company proactively pushed forward internal control management,
continually accumulate experiences from internal control work, improved its operational level and risk prevention capabilities and
continually enhanced the Company's competitiveness.
Targeting the significant internal control defects as disclosed in the internal control audit report dated March 11, 2014 and the
internal control evaluation report, the Company actively implemented the corresponding measures, and continuously improved
the internal controls relating to the defects.
Considering some subsidiaries have not established the internal control for total amount of sales rebate and transportation
expenses payable but unpaid at the end of accounting period of end 2013, the Company updated the provisions in financial
manual relating to calculation and withholding of sales rebate and transportation expenses in subsidiaries. All subsidiaries,
in accordance with the provisions of financial manual and in light of their own business model,performed the calculation and
withholding of sales rebate and transportation expenses. Subsidiaries accountants considered the above in preparation of
quarterly and annual financial statements, to prevent omission.
With respect to management on affiliated transactions, in order to define persons in charge of management on affiliated
transactions and provide the more practicable control methods for reporting, approval and disclosure of affiliated transactions,
the Company issued the Detailed Rules for Management of Affiliated Transactions in 2014. All business departments performed
operations in accordance with the Detailed Rules, including actively reporting the affiliated transactions, updating the list of
affiliates timeously, developing a statement for affiliated transactions, performed the internal examination on affiliated transaction
management on a regular basis, and strengthening the review and control on financial statements at end of important
accounting periods.
In consideration of the situation existing at the end of 2013 that the specialized training on financial personnel was insufficient, the
financial personnel failed to fully master the latest accounting standards and the examination in financial reporting and disclosure
procedures was partially ineffective, the Company arranged trainings for the financial personnel. In addition to the further
education in accordance with the provisions of the State, extra training plan for financial personnel in 2014 was formulated,
and the training enabled the financial personnel to study and master the latest accounting standards, accurately complete the
056
2014 Annual Report
Section9 Internal Control
I. Construction and Responsibility Statement of Internal Control (Continued)
examination in financial reporting and disclosure procedures and prevent significant errors in accounting dealings. Targeting
accounting errors discovered in previous years, the financial department of the Company organized discussions among key
financial personnel, and implemented relevant corrective measures, to avoid the recurrence of similar errors.
According to the confirmation on significant defects in internal control for financial reporting, on December 31, 2014, the
reference date for evaluation report for internal control, there was no significant defect in internal control for financial reporting.
The Board of Directors believe that, the Company has maintained in all significant aspects the effective internal control on
financial reporting in accordance with the specifications for internal control of enterprises and relevant provisions. According to
the confirmation on significant defects in internal control other than for financial reporting, on December 31, 2014, the reference
date for evaluation report for internal control, there was no significant defect in such internal control.
From the reference date of internal control evaluation report to the date on which the internal control evaluation report is issued,
no significant changes occurred to internal control for financial reporting which would materially affect the evaluation conclusion.
The self-evaluation report for internal control could be retrieved from Shanghai Stock Exchange website.
Is the internal control self-assessment report disclosed: Yes
II. Internal Control Audit Reports Note
In the opinion of PricewaterhouseCoopers Zhong Tian LLP, at 31 December 2014, the Company maintained all
significant aspects of the effective internal control for financial reporting in accordance with the Basic Specifications for
Internal Control of Enterprises and relevant provisions. The opinion given by PricewaterhouseCoopers Zhong Tian LLP
in internal control audit report is consistent with that given in the self-evaluation report of the Board of Directors.
For the audit report on internal control, please refer to the website of Shanghai Stock Exchange.
Is the internal control audit report disclosed: Yes
III. Description of the Accountability System and the Implementation of the Annual
Report Material Errors
The Company strictly implemented the system of accountability for material errors in annual report. On March 10, 2010, the
Second Meeting of the Fourth Board of Directors of the Company deliberated and adopted the Shanghai Jahwa United
Co., Ltd.'s System of Accountability for Material Errors in Annual Report Information Disclosure, in which the accountability
and penalty system is clearly defined that the relevant personnel shall bear significant economic losses or adverse social
impacts caused to the Company due to non-performance or fail to properly perform duties, obligations, or other personal
reasons resulting in the significant errors occurring in the annual report. Since the investigation by China Securities Regulatory
Commission of the Company's suspected failure to conduct information disclosure in accordance to relevant provisions is still
on going, the Company shall strictly perform the Shanghai Jahwa United Co., Ltd.'s System of Accountability for Material Errors
in Annual Report Information Disclosure after the end of the above mentioned investigation by China Securities Regulatory
Commission. No significant error in disclosure of annual report in the reporting period.
057
2014 Annual Report
Section10 Financial Report
(1).Auditor Report
PWC ZTShen Zi (2015) No. 10032
To the shareholders of Shanghai Jahwa United Co., Ltd.:
We have audited the accompanying financial statements of Shanghai Jahwa United Co., Ltd., ("the Company"), which
comprise the consolidated and company balance sheets as at 31 December 2014, and the consolidated and company
income statements, the consolidated and company statements of changes in shareholders' equity and the consolidated
and company cash flow statements for the year then ended, and the notes to the financial statements.
1. Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements. This responsibility
includes:
(1) Preparing the financial statements in accordance with the Accounting Standards for Business Enterprises to achieve
fair presentation of the financial statements;
(2) Designing, implementing and maintaining internal control that is necessary to enable the financial statements are
free from material misstatement whether due to fraud or error.
2. Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with China Standards on Auditing . Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment , including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control Note. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
3. Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and
company's financial position of Jahwa United Co., Ltd. as at 31 December 2014, and their financial performance
and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business
Enterprises.
Chinese Certified Public Accountant
ZhangJin
Shanghai,the People's Republic of China
Chinese Certified Public Accountant
Ye Sheng
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
17 March 2015
058
2014 Annual Report
(2).Financial Statement
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2014
(All amounts in RMB unless otherwise stated)
[English translation for reference only]
Asset
Note
31 December 2014
31 December 2013
1January 2013
Consolidated
Consolidated
Consolidated
Current assets:
Cash at bank and on hand
IV(1)
2,633,560,561.48
1,733,026,803.09
1,328,500,030.21
Notes receivable
IV(2)
12,663,861.80
8,093,647.86
11,037,773.05
Accounts receivable
IV(3)
530,098,698.44
429,072,458.14
428,395,165.35
Advances to supplies
IV(5)
21,201,490.51
18,980,395.70
12,242,805.84
-
-
-
Interest receivable
Other receivables
IV(4)
24,957,170.74
22,797,949.78
37,102,505.99
Inventories
IV(6)
524,448,318.06
436,564,132.48
396,488,986.87
Other current assets
IV(7)
516,295,593.34
635,744,535.67
289,329,271.86
4,263,225,694.37
3,284,279,922.72
2,503,096,539.17
Total current assets
Non-current assets:
Available-for-sale financial
assets
IV(8)
64,500,000.00
114,118,592.35
266,755,185.80
Long-term equity
investments
IV(9)
703,752,772.44
569,368,921.78
443,298,192.56
Fixed assets
IV(10)
215,581,175.35
216,466,934.61
217,467,104.56
Construction in progress
IV(11)
28,548,849.52
45,997,096.36
9,904,261.57
149,892.70
141,605.47
-
Fixed assets pending
disposal
Intangible assets
IV(12)
135,620,626.42
136,559,113.96
115,357,637.83
Long-term prepaid
expenses
IV(13)
62,678,520.97
64,515,985.72
54,774,691.41
Deferred tax assets
IV(14)
59,576,125.15
88,770,744.24
47,182,047.45
-
-
8,000,000.00
1,270,407,962.55
1,235,938,994.49
1,162,739,121.18
5,533,633,656.92
4,520,218,917.21
3,665,835,660.35
Other non-current assets
Total Non-current assets
Total assets
059
2014 Annual Report
(2).Financial Statement (Continued)
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2014 (Continued)
Liability &
Note
Shareholder's Equity
31 December 2014
31 December 2013
1January 2013
Consolidated
Consolidated
Consolidated
Current liabilities:
Accounts payable
IV(16)
495,068,514.02
372,896,753.17
333,567,608.26
Advances from customers
IV(17)
91,430,054.24
88,255,114.85
67,909,348.22
Employee benefits payable
IV(18)
57,586,070.06
34,745,259.47
33,186,661.74
Taxes payable
IV(19)
169,589,110.95
119,213,427.01
120,100,595.09
Dividends payable
IV(20)
14,300,820.00
16,694,700.00
10,140,000.00
Other payables
IV(21)
758,139,036.21
679,543,546.26
818,780,633.87
1,586,113,605.48
1,311,348,800.76
1,383,684,847.18
Total current liabilities
Non-current liabilities:
Deferred revenue
IV(22)
75,884,331.89
82,380,113.51
12,286,144.53
Long-term employee
benefits payable
IV(23)
11,823,960.22
-
-
Deferred tax liabilities
IV(14)
54,605,298.76
10,153,406.70
8,073,937.50
142,313,590.87
92,533,520.21
20,360,082.03
1,728,427,196.35
1,403,882,320.97
1,404,044,929.21
Total non-current liabilities
Total liabilities
Shareholders' equity
Share Capital
IV(24)
672,366,711.00
672,443,211.00
448,350,474.00
Capital surplus
IV(25)
1,144,435,560.73
1,085,945,114.09
907,105,634.91
(125,831,880.00)
(249,054,570.00)
(415,993,500.00)
Less: treasury stocks
IV(26)
1,764,554.80
9,736,194.01
5,839,135.41
Surplus reserve
IV(27)
392,410,127.08
298,914,129.50
220,855,306.89
Undistributed profit
IV(28)
1,719,759,552.88
1,258,280,740.76
1,074,206,043.65
3,804,904,626.49
3,076,264,819.36
2,240,363,094.86
301,834.08
40,071,776.88
21,427,636.28
Total shareholders'equity
3,805,206,460.57
3,116,336,596.24
2,261,790,731.14
Total liabilities and
shareholders'equity
5,533,633,656.92
4,520,218,917.21
3,665,835,660.35
Total shareholders'equity
attributable to the parent
company
Minority interest
Other comprehensive
income
The attached notes to financial statements in the back is a part of the financial statement.
Legal representative: Xie Wenjian
Person in charge of accounting work: Xie Wenjian
Person in charge of Accounting Department: Huang Jian
060
2014 Annual Report
COMPANY BALANCE SHEET AS AT 31 DECEMBER 2014
31 December 2014
31 December 2013
1 January 2013
Company
Company
Company
2,108,353,731.23
1,357,833,403.97
1,007,768,480.47
280,891,070.77
234,075,153.12
289,580,058.01
3,333,409.84
8,057,965.33
4,678,841.07
72,707,882.83
59,157,199.95
43,014,867.72
Inventories
307,365,351.58
253,241,275.73
222,247,003.93
Other current assets
516,295,593.34
635,744,535.67
289,329,271.86
3,288,947,039.59
2,548,109,533.77
1,856,618,523.06
64,500,000.00
114,118,592.35
266,755,185.80
1,616,421,977.61
1,448,423,783.99
1,319,564,289.37
157,745,979.91
158,378,048.38
160,007,832.59
2,349,963.21
11,403,970.41
4,285,461.57
149,892.70
141,605.47
-
31,016,909.13
28,324,772.29
24,543,336.37
-
31,204,632.21
9,741,769.55
1,872,184,722.56
1,791,995,405.10
1,784,897,875.25
5,161,131,762.15
4,340,104,938.87
3,641,516,398.31
Asset
Note
Current assets:
Cash at bank and on hand
Accounts receivable
XIV(1)
Advances to supplies
Other receivables
XIV(2)
Total current assets
Non-current assets:
assets
Long-term equity
investment
Fixed assets
Construction in progress
Fixed assets pending
disposal
Intangible assets
Deferred income tax assets
Non-current assets Total
Total assets
061
XIV(3)
2014 Annual Report
COMPANY BALANCE SHEET AS AT 31 DECEMBER 2014 (Continued)
Liability & Shareholder's
Equity
Note
31 December 2014
31 December 2013
1 January 2013
Company
Company
Company
Current liabilities:
Account payable
780,205,638.06
701,412,717.92
700,234,389.39
483.00
10,610,719.76
312.39
24,544,788.00
11,904,295.00
10,960,000.00
120,964,472.00
75,325,033.62
55,901,888.72
14,300,820.00
16,694,700.00
10,140,000.00
323,684,007.32
449,444,462.04
616,483,142.95
1,263,700,208.38
1,265,391,928.34
1,393,719,733.45
Deferred revenue
13,174,799.03
13,609,026.03
11,360,759.53
Long-term employee
benefits payable
11,823,960.22
-
-
54,605,298.76
10,153,406.70
8,073,937.50
79,604,058.01
23,762,432.73
19,434,697.03
1,343,304,266.39
1,289,154,361.07
1,413,154,430.48
672,366,711.00
672,443,211.00
448,350,474.00
Capital surplus
1,153,323,441.64
1,093,502,671.14
908,712,586.64
Less: treasury stock
(125,831,880.00)
(249,054,570.00)
(415,993,500.00)
3,934,761.30
12,038,742.04
7,839,540.88
392,410,127.08
298,914,129.50
220,855,306.89
1,721,624,334.74
1,223,106,394.12
1,058,597,559.42
3,817,827,495.76
3,050,950,577.80
2,228,361,967.83
5,161,131,762.15
4,340,104,938.87
3,641,516,398.31
Taxes payable
Dividends payable
Other payables
Total current liabilities
Non-current liabilities:
Total Non-current liabilities
Total liabilities
Shareholders' equity:
Share Capital
Surplus reserve
Total shareholders' equity
Total liabilities and
shareholders' equity
Other comprehensive
income
062
2014 Annual Report
CONSOLIDATED AND COMPANY INCOME STATEMENT FOR THE YEAR
ENDED 31 DECEMBER 2014
Item
I. Revenue
Less: Operating costs
Note
2014
Consolidated
2013
Consolidated
2014
Company
2013
Company
IV(29)、XIV(4)
5,334,659,318.10
4,468,503,687.01
2,823,191,915.84
2,658,066,613.92
IV(29)、XIV(4)
(2,036,991,589.78)
(1,655,189,245.20)
(1,476,369,728.47)
(1,387,205,383.60)
Tax and surcharge
IV(30)
(49,016,624.95)
(42,391,244.02)
(15,389,524.24)
(14,831,783.58)
Selling and distribution
expenses
IV(31)
(1,747,278,260.32)
(1,438,307,206.55)
(141,331,294.31)
(191,778,572.34)
General and
administrative expenses
IV(32)
(611,824,015.36)
(572,366,023.17)
(357,691,475.70)
(366,786,500.96)
Financial expenses net
IV(33)
24,529,666.41
22,654,080.36
20,143,203.92
19,345,560.31
Asset impairment losses
IV(36)
(16,639,525.10)
(8,766,809.07)
(29,159,431.24)
(8,747,016.95)
IV(35)、XIV(5)
225,663,112.29
161,796,923.97
307,099,769.46
174,324,234.09
180,202,438.43
141,164,887.14
170,354,782.85
140,512,197.26
1,123,102,081.29
935,934,163.33
1,130,493,435.26
882,387,150.89
27,656,603.04
29,059,265.06
8,497,491.04
2,645,882.55
825,860.95
349,518.34
278,600.21
Add: Investment income
Including: Share of
profits of associates
II. Operating profit
Add: Non-operating income
IV(37)
Including: Gains on
disposal of non-current
assets
Less: Non-operating
expenses
IV(38)
Including: Loss on
disposal of non-current
assets
III. Total profit
Less: Income tax expenses
(4,351,023.33)
(6,649,916.38)
(1,566,030.59)
(1,010,643.43)
(1,212,163.32)
(510,986.78)
(22,401.51)
960,642,405.06
1,132,341,009.92
883,467,002.85
(234,569,186.66)
(140,942,726.15)
(197,381,034.11)
(102,878,776.74)
907,532,799.06
819,699,678.91
934,959,975.81
780,588,226.11
Shareholder's net profit
attributable to the parent
company
897,920,847.31
800,154,088.52
934,959,975.81
Profit/loss of the minority
9,611,951.75
19,545,590.39
-
IV. Net profit
063
(8,656,698.61)
1,142,101,985.72
IV(39)
37,747.27
780,588,226.11
-
2014 Annual Report
CONSOLIDATED AND COMPANY INCOME STATEMENT FOR THE YEAR
ENDED 31 DECEMBER 2014 (Continued)
Item
Note
2014
Consolidated
2013
Consolidated
2014
Company
2013
Company
V. After-tax net amount of
other comprehensive income
(7,971,639.21)
3,897,058.60
(8,103,980.74)
4,199,201.16
After-tax net profit of other
comprehensive income
attributable to shareholders
of parent company
(7,971,639.21)
3,897,058.60
(8,103,980.74)
4,199,201.16
Other comprehensive
income to be reclassified
into gains and losses
(7,971,639.21)
3,897,058.60
(8,103,980.74)
4,199,201.16
assets Change of fair value
(8,103,980.74)
4,199,201.16
(8,103,980.74)
4,199,201.16
Conversion difference of
foreign currency financial
statement
132,341.53
VI. Total comprehensive
income
Total amount of
attributable to shareholders
of parent company
Total amount of
attributable to minorities
(302,142.56)
-
-
899,561,159.85
823,596,737.51
926,855,995.07
784,787,427.27
889,949,208.10
804,051,147.12
926,855,995.07
784,787,427.27
9,611,951.75
19,545,590.39
-
-
-
-
-
-
VII. Earnings per share:
IV(40)(a)
1.34
Diluted earnings per share
(Yuan/share)
IV(40)(b)
1.34
1.19
1.19
Basic earnings per share
(Yuan/share)
064
2014 Annual Report
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT FOR THE YEAR
ENDED 31 DECEMBER 2014
Item
Note
2014
Consolidated
2013
Consolidated
2014
Company
2013
Company
I. Cash flow from operating
activities:
Cash received from sales of
goods or rendering of service
Cash received relating to other
IV(41)(a)
6,122,649,185.15
6,059,629,166.08
3,291,768,762.14
3,782,299,654.22
67,995,122.27
85,899,421.05
121,196,911.35
55,172,408.84
Sub-total of cash inflow
6,190,644,307.42
6,145,528,587.13
3,412,965,673.49
3,837,472,063.06
Cash paid for goods and
services
(2,374,345,099.62)
(2,760,917,220.73)
(1,740,412,623.86)
(2,250,409,781.65)
Cash paid to and on behalf of
employees
(341,008,579.77)
(141,864,898.44)
(115,234,488.64)
Payments of taxes and
surcharges
(728,890,941.77)
(316,566,539.36)
(317,769,845.36)
Cash paid relating to other
IV(41)(b)
(1,590,657,256.68)
(1,285,937,507.38)
(394,860,668.78)
(303,194,344.47)
Sub-total of cash outflow
(5,061,075,195.56)
(5,116,754,249.65)
(2,593,704,730.44)
(2,986,608,460.12)
Net cash flow from operating
activities
1,129,569,111.86
1,028,774,337.48
819,260,943.05
850,863,602.94
282,000,000.00
799,533,439.70
282,000,000.00
35,284,739.47
159,344,378.01
786,350.02
632,990.38
47,594.11
-
8,738,446.33
-
318,071,089.49
968,249,254.42
330,162,333.58
(157,657,564.67)
(21,926,909.10)
(50,678,331.22)
(473,690,793.14)
(668,981,248.50)
(472,150,000.00)
(631,348,357.81)
(690,908,157.60)
(522,828,331.22)
(313,277,268.32)
277,341,096.82
(192,665,997.64)
(458,681,872.70)
(637,390,966.56)
II. Cash flow from investment
activities
Cash received from disposal of
investments
Cash received from returns on
investments
Net cash received from disposal
of fixed assets and other longterm assets
Net cash received from disposal
of subsidiaries and other
business units
IV(42)(b)
Sub-total of cash inflow
065
Cash paid to acquire fixed
assets, intangible assets and
other long term assets
Cash paid to acquire
investments
Net cash flows from investing
activities
799,533,439.70
74,855,379.86
2,087,548.19
7,204,267.39
883,680,635.14
(99,288,797.58)
(640,000,000.00)
(739,288,797.58)
144,391,837.56
48,114,739.47
2014 Annual Report
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT FOR THE YEAR
ENDED 31 DECEMBER 2014 (Continued)
Item
Note
2014
Consolidated
2013
Consolidated
2014
Company
2013
Company
III. Cash flow from financing activities:
Cash payments for interest
expenses and distribution of
dividends or profits
Including: Cash payments for
dividends or profit to minority
shareholders of subsidiaries
(365,754,134.32)
(309,891,393.77)
(20,509,331.71)
(1,491,261.97)
IV(41)(c)
(7,608,692.20)
(902,550.00)
(836,910.00)
(902,550.00)
(373,362,826.52)
(310,793,943.77)
(346,081,712.61)
(308,132,681.80)
IV. Effect of foreign exchange
rate changes on cash and cash
equivalents
(64,364.51)
(176,352.51)
V. Net increase of cash and cash
equivalents
900,533,758.39
Cash paid relating to other financing
activities
Add: Cash and cash equivalents at
beginning of this year
VI. Cash and cash equivalent at end
of this year
(345,244,802.61)
(307,230,131.80)
-
-
-
-
404,526,772.88
750,520,327.26
350,064,923.50
1,733,026,803.09
1,328,500,030.21
1,357,833,403.97
1,007,768,480.47
2,633,560,561.48
1,733,026,803.09
2,108,353,731.23
1,357,833,403.97
066
2014 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR
THE YEAR ENDED 31 DECEMBER 2014
Attributable to equity of shareholders of the parent company
Item
Note
I. Balance at end of
2012
Changes in accounting
II(32)
policies
II. Balance at
beginning of 2013
III. Increase and
decrease in 2013
(I) Total
comprehensive
income
21,427,636.28
2,677,784,231.14
-
(46,489,287.10)
-
(415,993,500.00)
5,839,135.41
220,855,306.89
1,074,206,043.65
21,427,636.28
2,261,790,731.14
166,938,930.00
3,897,058.60
78,058,822.61
184,074,697.11
18,644,140.60
854,545,865.10
-
-
3,897,058.60
-
800,154,088.52
19,545,590.39
823,596,737.51
-
-
-
-
-
800,154,088.52
19,545,590.39
819,699,678.91
-
-
-
3,897,058.60
-
-
-
3,897,058.60
(82,500.00)
178,839,479.18
(166,938,930.00)
-
-
1,759,812.19
347,455,721.37
V(24)
(82,500.00)
(820,050.00)
902,550.00
-
-
-
-
-
IV(25)
-
185,610,134.50
166,036,380.00
-
-
-
-
351,646,514.50
IV(25)
-
(5,950,605.32)
-
-
-
-
1,759,812.19
(4,190,793.13)
224,175,237.00
-
-
78,058,822.61
(616,079,391.41)
(2,661,261.98)
(316,506,593.78)
V(27)
-
-
-
-
78,058,822.61
(78,058,822.61)
-
-
V(28)
224,175,237.00
-
-
-
-
(538,020,568.80)
(2,661,261.98)
(316,506,593.78)
672,443,211.00
1,085,945,114.09
(249,054,570.00)
9,736,194.01
298,914,129.50
1,258,280,740.76
40,071,776.88
3,116,336,596.24
V(26)
(III) Distribution of profit
1. Withdrawal of
surplus reserve
2. Distribution to
shareholders
IV. Balance at the end
of 2013
067
Total shareholers'
Other
Minority interests
equity
comprehensive Surplus reserve Undistributed profit
income
Less: treasury
stocks
Capital surplus
1,120,695,330.75
Net profit
Other comprehensive
income
(II) Capital invested
and decreased by
shareholders
1. Capital invested by
shareholders
2. Amount of sharebased payment
included into
3. Purchase of minority
shareholders' equity in
subsidiary
Share capital
448,350,474.00
868,455,888.69
-
(2,000,405.47) 220,855,306.89
-
38,649,746.22
(415,993,500.00)
7,839,540.88
448,350,474.00
907,105,634.91 （415,993,500.00)
224,092,737.00
178,839,479.18
-
-
-
2014 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR
THE YEAR ENDED 31 DECEMBER 2014 (Continued)
Attributable to equity of shareholders of the parent company
Item
V. Balance at
beginning of 2014
VI. Increase and
decrease in 2014
(I) Total
comprehensive
income
Net profit
Other comprehensive
income
and decreased by
shareholders
shareholders
included into
3. Purchase of
minority shareholders'
equity in subsidiary
(III) Distribution of
profit
1. Withdrawal of
surplus reserve
2. Distribution to
shareholders
Share capital
672,443,211.00
Other
comprehensive
income
Capital surplus
Less: treasury
stocks
1,085,945,114.09
(249,054,570.00)
9,736,194.01
298,914,129.50
Surplus reserve Undistributed profit
(76,500.00)
58,490,446.64
123,222,690.00
(7,971,639.21)
93,495,997.58
-
-
-
(7,971,639.21)
-
-
-
IV(26)
-
-
(76,500.00)
IV(24)
1,258,280,740.76
Minority interests
Total shareholers'
equity
40,071,776.88 3,116,336,596.24
461,478,812.12 (39,769,942.80)
688,869,864.33
-
897,920,847.31
9,611,951.75
899,561,159.85
-
-
897,920,847.31
9,611,951.75
907,532,799.06
-
(7,971,639.21)
-
-
-
(7,971,639.21)
58,490,446.64
123,222,690.00
-
-
- (12,122,722.02)
169,513,914.62
(76,500.00)
(760,410.00)
836,910.00
-
-
-
-
-
IV(25)
-
60,581,180.50
122,385,780.00
-
-
-
-
182,966,960.50
IV(25)
-
(1,330,323.86)
-
-
-
- (12,122,722.02)
(13,453,045.88)
-
-
-
-
93,495,997.58
(436,442,035.19) (37,259,172.53)
(380,205,210.14)
IV(27)
-
-
-
-
93,495,997.58
IV(28)
-
-
-
-
-
672,366,711.00
1,144,435,560.73
1,764,554.80
392,410,127.08
(125,831,880.00)
(93,495,997.58)
-
-
(342,946,037.61) (37,259,172.53)
(380,205,210.14)
1,719,759,552.88
301,834.08 3,805,206,460.57
VII. Balance at end of
2014
Note
068
2014 Annual Report
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE
YEAR ENDED 31 DECEMBER 2014
Item
I.Balance at end of
2012
Changes in
accounting policies
II. Balance at
beginning of 2013
III.Increase and
decrease in 2013
(I) Total
comprehensive
income
Net profit
Other comprehensive
income
and decreased by
Note
Share capital
Less: treasury
stocks
Capital surplus
Other
comprehensive
income
Surplus reserve
Total shareholders'
equity
448,350,474.00
870,062,840.42
-
-
220,855,306.89
1,105,086,846.52
2,644,355,467.83
-
38,649,746.22
(415,993,500.00)
7,839,540.88
-
(46,489,287.10)
(415,993,500.00)
448,350,474.00
908,712,586.64
(415,993,500.00)
7,839,540.88
220,855,306.89
1,058,597,559.42
2,228,361,967.83
224,092,737.00
184,790,084.50
166,938,930.00
4,199,201.16
78,058,822.61
164,508,834.70
822,588,609.97
-
-
-
4,199,201.16
-
780,588,226.11
784,787,427.27
-
-
-
-
-
780,588,226.11
780,588,226.11
-
-
-
4,199,201.16
-
-
4,199,201.16
(82,500.00)
184,790,084.50
166,938,930.00
-
-
-
351,646,514.50
(82,500.00)
(820,050.00)
902,550.00
-
-
-
-
-
185,610,134.50
166,036,380.00
-
-
-
351,646,514.50
224,175,237.00
-
-
-
78,058,822.61
(616,079,391.41)
(313,845,331.80)
-
-
-
-
78,058,822.61
(78,058,822.61)
-
224,175,237.00
-
-
-
-
(538,020,568.80)
(313,845,331.80)
672,443,211.00
1,093,502,671.14
(249,054,570.00)
12,038,742.04
298,914,129.50
1,223,106,394.12
3,050,950,577.80
shareholders
shareholders
included into
profit
1. Withdrawal of
surplus reserve
2. Distribution to
shareholders
IV. Balance at end of
2013
069
2014 Annual Report
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE
YEAR ENDED 31 DECEMBER 2014 (Continued)
Item
V. Balance at
beginning of 2014
VI.Increase and
decrease in 2014
(I) Total
comprehensive
income
Note
Share capital
672,443,211.00 1,093,502,671.14
Other
comprehensive
income
Less: treasury
stocks
Surplus reserve
Total shareholders'
equity
(249,054,570.00)
12,038,742.04
298,914,129.50
1,223,106,394.12
3,050,950,577.80
59,820,770.50
123,222,690.00
(8,103,980.74)
93,495,997.58
498,517,940.62
766,876,917.96
-
-
(8,103,980.74)
-
934,959,975.81
926,855,995.07
-
-
-
-
934,959,975.81
934,959,975.81
-
-
(8,103,980.74)
-
-
(8,103,980.74)
(76,500.00)
59,820,770.50
123,222,690.00
-
-
-
182,966,960.50
(76,500.00)
(760,410.00)
836,910.00
-
-
-
-
-
60,581,180.50
122,385,780.00
-
-
-
182,966,960.50
-
-
-
-
93,495,997.58
(436,442,035.19)
(342,946,037.61)
-
-
-
93,495,997.58
(93,495,997.58)
-
-
-
-
-
(342,946,037.61)
(342,946,037.61)
672,366,711.00 1,153,323,441.64
(125,831,880.00)
3,934,761.30
392,410,127.08
1,721,624,334.74
3,817,827,495.76
(76,500.00)
-
Net profit
Other
comprehensive
income
(II) Capital
invested and
decreased by
Capital surplus
-
shareholders
1. Capital invested
by shareholders
2. Amount of
share-based
payment included
into shareholders'
equity
profit
1. Withdrawal of
surplus reserve
2. Distribution to
shareholders
VII. Balance at end
-
of 2014
-
070
2014 Annual Report
(3).Notes to Financial Statements
I General Information
Shanghai Jahwa United Co., Ltd. ("Company") is a limited liability company incorporated in Shanghai of the People's
Republic of China. The headquarter of the company is located at No.527 Baoding Road, Shanghai. The Company and
its subsidiaries ("Group") mainly engages in the development, production and sale of cosmetics and daily chemicals.
The Group mainly produces bath, skin care, hair care and beauty products with the brands of Liushen, HERBORIST,
MAXAM, GLF, Home Aegis, and Giving etc., as well as provides daily chemicals and cosmetics technology services.
The industry in which the Group operates is chemical raw materials and chemicals manufacturing.
The predecessor of the Company was Shanghai Jahwa Co., Ltd. On 10 October 1999, with the approval, namely
HuFuTiGaiShen (1999) No.019 "Approval of Incorporation of Shanghai Jahwa United Co., Ltd." by Shanghai Municipal
People's Government, Shanghai Jahwa Co., Ltd was restructured into a joint stock company limited, and was ratified
and registered with a business license numbered 310000000040592 by Shanghai Administration of Industry. On 6
February 2001, China Securities Regulatory Commission issued the Notice, ZhengJianFaXingZi (2001) No.20 approving
the Initial Public Offering of Shanghai Jahwa United Co., Ltd. the Company issued RMB 80 million common shares, and
got listed in Shanghai Stock Exchange on 15 March 2001.
On 16 May 2013, the Company held the shareholders' meeting, resolving to allot 224,175,237 shares as dividends,
and resolving to repurchase and deregister 82,500 equity incentive shares. The industrial & commercial modification
registration for allotment of dividends was completed on 10 September 2013. The industrial & commercial modification
registration for repurchase of shares was completed on 27 September 2013. After the allotment of dividend shares and
repurchase of shares, the total number of shares of the Company was increased to 672,443,211 shares.
On 11 April 2014, the Company held the shareholders' meeting, resolving to repurchase and deregister 76,500 equity
incentive shares granted. The industrial & commercial modification registration for repurchase of shares was completed
on 28 September 2014. After the repurchase and deregistration was completed, the total number of shares of the
Company was 672,366,711 shares.
As at 31 December 2014, the Company issued a total share capital of 672,366,711 shares, with a par value of RMB 1
per share, amounting to RMB 672,366,711.00 (Note IV (24)).
The business scope of the Company: development and manufacturing of cosmetics, articles for cosmetics, ornaments,
raw/auxiliary materials of daily chemicals, packaging containers, spices, essences, cooling oil, cleaning products,
sanitary products, sterilizing and washing products, articles for oral hygiene, paper products and wet paper towels,
wax products, insect expelling and killing products, electric insect expelling and killing devices, facial care/hair care
products and services as well as technical services related to daily chemicals and cosmetics; medicine R & D and
technology transfer; selling of self-produced products and import & export of goods and technologies (subject to
licenses if administrative licenses are involved).
The parent company of the Company is Shanghai Jahwa (Group) Co., Ltd. On 18 Feb 2012, the contributor of Shanghai
Jahwa (Group) Co., Ltd. was changed to Shanghai Pingpu Investment Co., Ltd. by the State-owned Assets Supervision
and Administration Commission of Shanghai Municipal Government. After this change, the ultimate controller of the
Company is Ping An Insurance (Group) Co. of China Ltd.
In this year, the main subsidiaries included in the consolidation scope are listed in Note VI (1). In this year, the
subsidiaries not included in the consolidation scope mainly include Shanghai Chengyi Plastic Cement Products Co.,
Ltd., Shanghai Jiabo Daily Chemicals Co., Ltd., Shanghai Jahwa Hongyuan Real Estate Development Co., Ltd. and
Shanghai Herborist cosmetics sales Co., Ltd. For details, please refer to Note V.
These financial statements were approved by the Board of Directors of the Company on 17 March 2015. In accordance
with the articles of association of the Company, these financial statements will be submitted to the shareholders' meeting
for deliberation.
071
2014 Annual Report
(3).Notes to Financial Statements (Continued)
II Principal Accounting Policies and Accounting Estimates
The Group determines the specific accounting policies and accounting estimates in light of the characteristics of
production and operation, mainly reflected in withdrawal method for provision for bad debts for receivables (Note II (10)),
pricing method of inventories (Note II (11)), depreciation of fixed assets and amortization of intangible assets (Note II (13),
(16)), and time point for recognition of revenues (Note II (24)).
The key judgments used by the Group in formulation of important accounting policies are set forth in Note II (33).
(1) Basis of Preparation
The financial statements are prepared in accordance with the Accounting Standard for Business Enterprise - Basic
Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on
15 February 2006 and in subsequence periods(hereafter collectively referred to as "Accounting Standards for Business
Enterprises" or "CAS") and the disclosure requirements in the Preparation Convention of Information Disclosure by
Companies Offering Securities to the Public No.15 – General Rules on Financial Reporting issued by the China
Securities Regulatory Commission.
The financial statements are prepared on a going concern basis.
In preparing these financial statements, historical cost principle is adopted except for certain financial instruments. If an
asset is impaired, relevant impairment provision is made according to relevant regulations.
(2) Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2014 are in compliance with the Accounting
Standards for Business Enterprises, and truly and completely present the financial position of the Consolidated and the
Company as of 31 December 2014 and of their financial performance, cash flows and other information for the year then
ended.
(3) Accounting Year
(4) Recording Currency
Renminbi is the recording currency of the Company and the currency used in preparing the financial statements. Unless
otherwise stated, all amounts are denominated in Renminbi.
The subsidiaries and associated companies of the Company decide their respective recording currencies according to
their main economic environments. And the recording currencies are translated into Renminbi in preparing the financial
statements.
The Company's accounting year starts on 1 January and ends on 31 December.
(5) Business Combinations
The term "business combination" refers to a transaction or event bringing together two or more separate enterprises into
one reporting entity. The business combination is classified as the combinations involving enterprises under common
control and not under common control.
072
2014 Annual Report
II Principal Accounting Policies and Accounting Estimates (Continued)
(5) Business Combinations (Continued)
(a) Business combinations involving enterprises under common control
The enterprises in a combination are ultimately controlled by the same party or the same parties before and after
such combination while such control is not temporary, and such combination is the business combination involving
enterprises under common control. As for the combination under common control, the enterprise acquiring the right of
control over the other enterprise in a combination on the combination date is called an absorbing party while the other
enterprise in a combination is called an absorbed party. The combination date refers to the date when the absorbing
party actually acquires the right of control over the absorbed party.
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at
the carrying amount. The difference between the carrying amount of the net assets obtained from the combination and
the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus (share
premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is
adjusted against retained earnings.
Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred.
Transaction costs associated with the issue of equity or debt securities for the business combination are included in the
initially recognized amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
If the enterprises in a merger are not ultimately controlled by the same party or the same parties before or after such
merger, such combination is the business combination involving enterprises not under common control. As for the business
combination involving enterprises not under common control, the party acquiring the right of control over the other enterprise
in a combination on the acquisition date is called as the acquirer while the other enterprise is called as the acquiree. The
acquisition date refers to the day when the acquirer actually acquires the right of control over the acquiree.
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair
value at the acquisition date.
If the sum of the fair value of the paid merger consideration (or the fair value of the issued equity securities) and the fair value
of the equity of the acquiree obtained before the acquisition date is larger than the share of the fair value of the identifiable
net assets of the acquiree obtained in the merger, their balance can be confirmed as goodwill. The costs are subtracted from
the accumulative impairment losses and then the subsequent measurement can be carried out. If the sum of the fair value of
the paid merger considerations (or the fair value of the issued equity securities) and the fair value of the equity of the acquiree
obtained before the acquisition date is less than the share of the fair value of the identifiable net asset of the acquiree obtained
in the course of the merger, the fair value of the identifiable assets, liabilities and contingent liabilities. The fair value of the paid
merger consideration (or the fair value of the issued equity securities) and the fair value of the equity of the acquiree obtained
before the acquisition date should firstly be measured and the measurement should be re-checked. If the sum of the fair value
of the paid merger consideration (or the fair value of the issued equity securities) and the fair value of the equity of the acquire
obtained before the acquisition date is still less than the share of the fair value of the identifiable net assets of the acquire
obtained in the merger after the re-checking, the balance shall be included into the current profits and losses.
Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction
costs associated with the issue of equity or debt securities for the business combination are included in the initially recognized
amounts of the equity or debt securities.
073
2014 Annual Report
(6) Preparation of Consolidated Financial Statements
The scope of consolidated financial statements is determined based on control, which comprise the financial statements
of the Company and all of its subsidiaries as at the ended of 31 December 2014.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the
date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises
under common control, it is included in the consolidated financial statements from the date when it, together with the
Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before
the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, the accounting period and accounting policies of the company
and subsidiaries should be consistent. Where the accounting policies and the accounting periods of the Company
and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the
accounting policies and the accounting period of the Company. For subsidiaries acquired from business combination
involving enterprises not under common control, the financial statements are adjusted based on the recognizable fair
value of net assets as at the date of purchase.
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated
financial statements. The portion of subsidiaries' equity and the portion of a subsidiaries' net profits and losses and
comprehensive income for the period not attributable to Company are recognized as minority interests and presented
separately in the consolidated financial statements under equity and net profits and comprehensive income respectively.
The unrealized internal transaction profit/loss arising from the sales of assets by the Company to a subsidiary fully
offsets the net profits attributable to shareholders of parent company; the unrealized internal transaction profit/loss
arising from the sales of assets by a subsidiary to the Group offsets the net profits attributable to shareholders of parent
company and minority shareholders' profit/loss on the basis of the amortization ratio determined by the Company for
such subsidiary. The unrealized internal transaction profit/loss arising from the sales of assets between subsidiaries
offsets the net profits attributable to shareholders of parent company and minority shareholders' profit/loss on the basis
of the amortization ratio determined by the parent company for the subsidiary which sells the assets.
If the recognition of a transaction by taking the Group as accounting subject is different from the recognition of such
transaction by taking the subsidiary as accounting subject, such transaction is adjusted from the viewpoint of the Group.
For subsidiaries acquired from business combination involving enterprises not under common control, operating
results and cash flows of the acquired entity will be included in consolidated financial statements from the date when
the Groups acquires the right of control until the date when the Group loses the right of control over that entity. In
preparation of consolidated financial statements, financial statements of that subsidiary will be adjusted according to
fair value of all identifiable assets, liabilities or contingent liabilities determined on the date of acquisition.
If the portion of current loss attributable to minority shareholders of a subsidiary exceeds the portion of the subsidiary's
beginning shareholder equity attributable to minority shareholders, the corresponding balance will be used to offset
minority interest. Without loss of right of control, any change in minority interest will be regarded as equity transaction.
For subsidiaries acquired from business combination involving enterprises under common control, operating results and
cash flows of the merged entity will be included in consolidated financial statements at the beginning of the period of
amalgamation. In preparation of consolidated financial statements, relevant items of its previous financial statements will
be adjusted and the reporting entity formed after such amalgamation will be deemed to always exist as from the time
when the ultimate controller exercises control.
074
2014 Annual Report
(7)Cash and Cash Equivalent
Cash comprises cash on hand and deposits that can be readily drawn on demand. Cash equivalents comprise shortterm and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
(8)Conversion of Foreign Currency Business and Foreign Currency Statements
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions.
When a foreign currency transaction is initially recognized, its foreign currency amount is translated into the amount of
functional currency at the spot exchange rate on the transaction day. At the balance sheet date, monetary items denominated
in foreign currencies are translated into RMB using the spot exchange rates on the balance sheet date. Exchange differences
arising from these translations are recognized in profit or loss for the current period, except for those attributable to foreign
currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are
capitalized as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at
historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The
effect of exchange rate changes on cash is presented separately in the cash flow statement. The foreign-currency nonmonetary items measured at fair value are converted by using the spot exchange rate on the date on which the fair value is
determined, and the difference arising therefrom is included into the current profit/loss or other comprehensive income on the
basis of the nature of such non-monetary items.
For overseas operations, the Group translates its recording currency to RMB when preparing financial statements: The
asset and liability items in the balance sheets are translated at the spot exchange rates on the balance sheet date. Among
the shareholders' equity items, the items other than "undistributed profits" are translated at the spot exchange rates of the
transaction dates. The income and expense items in the income statements of overseas operations are translated at the
spot exchange rates of the transaction dates. The differences arising from the above translation are recognized as other
comprehensive income and presented separately in the shareholders' equity of the balance sheet. When disposing any
overseas operation, other comprehensive income relating to such overseas operation is included into current profit/loss, and
the calculation is carried out on the basis of treatment proportion if it is partially treated.
The foreign-currency cash flow and the cash flow of overseas subsidiaries are converted by using the average exchange rate
in the period wherein the cash flow occurs. The effect on cash by change in exchange rate is regarded as adjustment item,
and is separately stated in cash flow statement.
(9)Financial Instrument
The financial instruments are the contracts forming the financial asset of an enterprise and the financial liabilities or
equity instruments of other units.
(a)Recognition and Derecognition of financial instrument
Financial assets and financial liabilities are recognized at fair value on the balance sheet when the Group becomes a
party to the contractual provisions of the financial instrument.
A financial asset is derecognized when any of the below criteria is met(or part of the financial asset or a part similar to a
group of financial asset):
(i) the contractual right to receive the cash flows from the financial assets expires;
075
2014 Annual Report
(9)Financial Instrument (Continued)
(a)Recognition and Derecognition of financial instrument (Continued)
(ii) the right to receive the cash flows from financial assets is transferred, or the obligation that the received cash flow is fully
paid to a third party in time is undertaken under the pass-through agreement; furthermore (a) nearly all the risks and rewards
of the ownership of financial assets are substantially transferred; or (b) the financial asset has been transferred and the Group
has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and
rewards of ownership of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received
and the cumulative changes in fair value that had been recognized directly in equity, is recognized in profit or loss.
A financial liability is derecognized when the current obligation is fulfilled, discharged or expired. The difference between
the carrying amount of the financial liability or the derecognized part of the financial liability and the consideration paid is
recognized in profit or loss. If an existing financial liability is replaced by the same creditor at another financial liability with
nearly fully different clauses, or if nearly all the clauses of an existing liability are substantially modified, such replacement or
modification will be treated in a manner that the original liability is de-recognized and the new liability is recognized and the
difference is included into current profit and loss.
Financial assets bought or sold in conventional ways are recognized and de-recognized according to the transaction day
accounting. These financial assets are collected or delivered according to the agreements of the contract clauses within the
deadline specified in the regulations or common practices. The transaction day refers to the date when the financial assets are
to be bought or sold, as undertaken by the Group.
(b)Classification and measurement of financial assets
The subsequent measurement of financial assets depends on their classifications:
Financial assets at fair value through profit or loss
The financial assets which are measured at fair value through profit and loss comprise trading financial assets and the financial
assets designated at initial recognition as the financial assets which are measured at fair values through profit and loss. The
trading financial assets are those which should meet one of the following conditions: held for the purpose of selling in short
term; one part of the identifiable financial instrument portfolio, and there are objective evidences showing that the enterprise
will manage the portfolio with the short-term profit-making method in the near future; the financial assets belong to derivative
instruments, however, the derivative instruments, which are designated as effective hedging instruments, belong to financial
guarantee contracts, are linked with equity instrument without quotations in active markets and with the fair values which
cannot be reliably measured, or must be settled through the equity instruments, are excepted. As for such financial assets.
Their subsequent measurement should be carried out with fair values. Gains or losses arising from change in the fair value of
financial assets at fair value through profit or loss are recognized in profit or loss. Interests and cash dividends received during
the period in which such financial assets are held, as well as the gains or losses arising from disposal of these assets are
recognized in profit or loss for the current period.
Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or
loss, held-to-maturity investments, receivables, available-for-sale financial assets and the derivative instruments designated
as effective hedging instruments. The Group determines the classification of financial assets at initial recognition. The financial
assets are measured at fair values at initial recognition. As for the financial assets at fair value through profit or loss, the relevant
expenses are directly included in current profit and loss and the relevant expenses of the other kind of financial assets are
included in initially recognized amount.
076
2014 Annual Report
(b)Classification and measurement of financial assets (Continued)
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed maturity and fixed or determinable
payments that management has the positive intention and ability to hold to maturity. Held-to-maturity investments
with maturities over 12 months when the investments were made but are due within 12 months (12 months included)
at the balance sheet date are included in the current portion of non-current assets; held-to maturity investments with
maturities no more than 12 months (12 months included) when the investments were made are included in other current
assets. Such financial assets are subsequently measured at amortized costs using the effective interest method and the
gains and losses resulting from amortizations or impairment and derecognition are included in current profit and loss.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Such financial assets are subsequently measured at amortized costs using the effective interest method and the
gains or losses resulting from amortizations or impairment are included in current profit and loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not
classified in any of the other categories at initial recognition. Available-for-sale financial assets are included in other
current assets on the balance sheet if management intends to dispose of them within 12 months after the balance sheet
date. Such financial asset are subsequently measured at fair values. Their discounts or premiums are amortized using
actual interest rate method and then recognized as interest income or expenses. Gains or losses arising from change
in fair value of available-for-sale financial assets are recognized directly in equity, except for impairment losses and
foreign exchange gains and losses arising from translation of monetary financial assets. When such financial assets are
derecognized, the cumulative gains or losses previously recognized directly into equity is reclassed into profit or loss
for the current period. Interests and income on available-for-sale investments are recognized in profit or loss for the
period.
Investments in equity instruments are measured at cost when they do not have a quoted market price in an active
market and whose fair value cannot be reliably measured.
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(c)Classification and measurement of financial liabilities
Financial liabilities are classified into the following categories at initial recognition: financial liabilities at fair value through
profit or loss and other financial liabilities, and the derivative instruments designated as effective hedging instruments.
The Group determines the classification of financial assets at initial recognition. The financial liabilities are measured at
fair values at initial recognition. As for the financial liabilities at fair value through profit or loss, the relevant expenses are
directly included in current profit and loss and the relevant expenses of the other kind of financial assets are included in
initially recognized amount.
The subsequent measurement of the financial liabilities depends on their classifications:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss comprise transactions financial liabilities and the financial liabilities
which are measured at fair values and of which the changes are include in the current profits and losses when they are
initially confirmed. Financial liabilities at fair value through profit or loss are those which should meet one of the following
conditions: to obtain the financial liabilities is to sell them in short term; the financial liabilities belong to one part of the
identifiable financial instrument portfolio, and there are objective evidences showing that the enterprise will manage
the portfolio with the short-term profit-making method in the near future; the financial liabilities belong to derivative
instruments, however, the derivative instruments, which are designated as effective hedging instruments, belong to
financial guarantee contracts, are linked with equity instrument without quotations in active markets and with the fair
values which cannot be reliably measured, or must be settled through the equity instruments, are excepted. As for such
financial liabilities, their subsequent measurement should be carried out with fair values. All interest incomes, being
relevant to the financial liabilities which are measured at fair value and of which the change is included in current profits
and losses, should be included in current profits and losses.
Other financial liabilities
Other financial liabilities of the Group mainly include payables, etc.
Other financial liabilities with maturities no more than one year are classified as current liabilities. Other financial liabilities
with maturities over one year but are due within one year at the balance sheet date are classified as the current portion
of non-current liabilities. Others are classified as non-current liabilities.
(d)Fair value of financial instruments
Payables, including accounts payable and other payables, are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method.
If the financial assets or financial liabilities have active markets, their fair values are confirmed based on the quotations
in the active markets. If the financial assets or financial liabilities have no active markets, their fair values are confirmed
with estimation technology by the Group. The estimation technology comprises the reference for the prices used for the
voluntary market transactions carried out recently by each party being familiar with the situations, the reference for the
present fair values of the other financial instruments being actually the dame, the discount method of the cash flow, the
pricing model of share options, etc. When the valuation technique is adopted, the use of observable market parameters
is maximized, and the use of parameters relating to the Group is minimized.
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(e)Impairment of financial assets
The Group assesses the carrying amounts of financial assets other than those at fair value through profit or loss at each
balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided.
These evidences represent the item which actually occur after the financial assets are confirmed initially and have effect
on the estimated future cash flow of the financial assets. In addition, the Group can reliably measure the effect.
Financial assets measured at amortized cost
If there are evidences showing that the financial assets are impaired, the book value of the financial assets should
be written down in the present value of the estimated future cash flows (it does note included future credit loss which
does not occur), and the written-down amount should be included in current profit and loss. The present values of the
expected future cash flows are discounted and confirmed based on original and actual interest rate (that is, the actual
interest rate which are confirmed when they are initial recognized) of the financial assets, with the consideration the
value of relevant guaranty. The current actual interests rate specified in the contract are regarded as discount rate when
the present values of the future cash flow are calculated, and then the floating interest rate can be obtained.
The financial assets with huge individual amount are carries out with impairment tests. If there are objective evidences
showing that these financial assets have been impaired, the impairment losses should be recognized and included
in current profit and loss. The financial assets with low individual amounts should be comprised in the financial asset
portfolio and then are carries out with impairment test. The financial assets (including the financial assets with huge
individual amount and those with low individual amount), which have not impairment and are tested individually, should
be comprised in the financial asset portfolio with similar risk features to be carries out with impairment tests again. The
financial assets, which are individually recognized to suffer from impairment losses, are not comprised in the financial
assets portfolio to be carries out with impairment tests.
After the Group has recognized that the financial assets measured at amortized costs have been impaired, if there are
evidences showing that the values of the financial assets has been recovered, and the values are objectively recognized
to be relevant to the items after impairments occur, the impairment losses originally recognized should be reversed and
be included in current profits and losses. However, the book values after the reversion should not exceed the amortized
cost on the reversing date under the premise that the impairment provisions are not allotted.
If there are objective evidences showing that the financial assets are impaired, the accumulated losses, which
are originally included in other comprehensive income and formed because of the lowing of fair values, should be
transferred and included in current profits and losses. The transferred and accumulated losses are the balance which
the retired principals, the amortized amounts current faire values and the impairment losses originally included in profits
and losses subtracted from the acquisition cost of available-for-sale financial assets.
The objective evidences for impairment of the investments in equity instruments available for sale include serious or
non-temporary drop in fair value. Judgments need to be made in determining "serious" or "non-temporary". "Serious" is
judged according to the extent of fair value being lower than cost; "non-temporary" is judged according to the duration
of fair value being lower than cost. For the investments in equity instruments available for sale, the quantitative standard
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(e) Impairment of financial assets (Continued)
for "serious" drop is: drop is above 30%; the quantitative standard for "non-temporary" drop is: drop continues for more
than one year.
The impairment loss on investments in equity instruments available for sale is not reversed through profit and loss and
additions in fair value after impairment are directly recognized in other comprehensive income.
As for the debt instruments available for sale for which impairment loss has been recognized, if their fair value increases
in subsequent fiscal periods and such increase is objectively relevant to the matters occurring after the recognition of
original impairment loss, originally recognized impairment loss is reversed and included in current profit and loss.
(f) Transfer of financial assets
If the Group has transferred nearly all the risks and rewards arising from ownership of financial assets to the transferred
party, such financial assets are de-recognized. If the Group retains nearly all the risks and rewards of ownership of
financial assets, such financial assets are not de-recognized.
If the Group neither transfers nor reverse almost all of risks and rewards arising from ownership of financial assets, the
financial assets are treated as follows respectively: if the control of such financial assets is given up, such financial
assets are de-recognized and the resulting assets and liabilities are recognized; if the control of such financial assets
is not given up, relevant financial assets are recognized based on the degree of being further involved in the transferred
financial assets and relevant liabilities are confirmed accordingly.
(10) Receivables
Receivables comprise accounts receivable and other receivables. Accounts receivable arising from sale of goods
or rendering of services are initially recognized at fair value of the contractual payments from the buyers or service
recipients.
At the end of each year, receivables with amounts that are individually significant are subject to assessment for
impairment on the individual basis by the Company. If there are objective evidences showing that the receivables are
impaired, the impairment losses should be recognized and the a provision for impairment of that receivable is made
according to the balance of the pressent calues of their furure cash floows and their book value. If the receivables
are not impaired according to individual testing, their aging is taken as credit risk feature and the bad debts is made
according to the aging analysis method.
(a) Individually significant receivables that are individually evaluated for impairment
Individually significant receivables refer to top-5 receivables in the aspect of balance.
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(10) Receivables (Continued)
(b) Receivables being grouped evaluated for impairment:
Recognition of the provision for impairment of the receivable being grouped evaluated for impairment (aging analysis
method, balance percentage and other methods)
Ratio of bad debt provision for accounts receivable
Ratio of bad debt provision for other receivable
Within 1 year
5%
0.5%
1 to 2 years
30%
30%
2 to 3 years
60%
60%
over 3 years
100%
100%
(c) Individually insignificant receivables that are individually evaluated for impairment:
Reason: Have objective evidence that the Group will be unable to recover the amount in accordance with the original
terms and conditions of receivables
Method: Do the impairment test separately, and use the difference between fair value of future cash flow and its book
value to record in the current profits and losse
(d) When the Group transfers the accounts receivable to the financial institutions without recourse, the difference between
the proceeds received from the transaction and their carrying amounts and the related taxes is recognized in profit or loss
for the current period.
(11) Inventory
Inventories include raw materials, work in progress, finished goods, and turnover materials and consigned processing
material.
Inventories are initially measured at costs. Inventory costs include purchase cost, processing cost and other costs. Raw
materials are priced at moving weighted average cost; finished goods are priced at standard cost; for requisitioned or
sent-out goods, their cost difference is carried forward at end of month and standard cost is adjusted to actual cost;
low-value consumables are amortized with one-off amortization method; molds (with a unit price of more than 2,000/
set) are averagely amortized averagely within 12 months from the month in which they are used.
The Group adopts the perpetual inventory system.
For the finished goods within 6 months away from quality guarantee period, provision for decline in the value of
inventories is made at 100% of their book values on balance sheet date. The inventories, which are more than 6 months
away from quality guarantee period, are measured according to the lower of cost and net realizable value. If the cost is
higher than net realizable value, provision for decline in the value of inventories is made and included in current profit
and loss. If the influencing factors of previous provision for decline in the value of inventories have disappeared and
thus, the net realizable values of the inventories are higher than their book values, the previous written-down amount
are recovered and the reversed amount which is within the amount of original made inventory impairments is included in
current profit and loss.
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(11) Inventory (Continued)
The net realizable value refers to the amount which inventory estimated price subtracted from the cost to be occurred
when project is completed, estimated selling expenses and relevant taxes gives. When the net realizable values are
accrued by inventory impairment provisions, they should be accrued according to individual inventory item. However,
the inventories in various categories and with relatively low individual price should be accrued according to the
categories of the inventories. As for the inventories which are relevant to the product lines produced and sold in the
same area, have the same or similar final uses or purposes and are difficult to be separated from other items to be
measured, the inventory impairment provisions are made together.
(12) Long-term Equity Investment
Long-term equity investment includes: the long-term equity investment made by the Company in subsidiaries; longterm equity investment made by the Group in associate.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investees that the
Group has significant influence on their financial and operating policies.
The investment in subsidiaries is stated in the financial statements of the Company at the amount determined under cost
method, and is consolidated at the amount as adjusted under equity method in the consolidated financial statement; the
investment in associates is calculated by suing the equity method.
(a) Determination of investment costs
For long-term equity investments acquired through a business combination: for a long-term equity investment acquired
through a business combination involving enterprises under common control, the initial investment cost of the long-term
equity investment is the attributable share of the carrying amount of the shareholders' equity of the acquire at the date of
combination in the consolidated financial statements of the ultimate controlling party. For a long-term equity investment
acquired through business combination not involving enterprises under common control, the initial investment cost of
the long-term equity investment is the cost of acquisition at the date of combination.
(b) Subsequent measurement and recognition of related profit and loss
Under the cost method, a long-term equity investment is measured at initial investment cost. Investment income is
recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared by the
investee.
For long-term equity investments acquired not through a business combination acquired by payment in cash, the initial
investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity
securities, the initial investment cost shall be the fair value of the equity securities issued.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's
share of the fair value of the investee's identifiable net assets at the time of acquisition, no adjustment is made to the
initial investment cost. Where the initial investment cost is less than the Group's share of the fair value of the investee's
identifiable net assets at the time of acquisition, the difference is recognised in profit or loss for the period, and the cost of
the long-term equity investment is adjusted accordingly.
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(12) Long-term Equity Investment (Continued)
(b) Subsequent measurement and recognition of related profit and loss (Continued)
Under the equity method, the Group recognizes its share of the net profit or loss made by the investee as investment
income. The Group discontinues recognizing its share of net losses of the investee after the carrying amount of the longterm equity investment together with any long-term interests that in substance form part of its net investment in the
investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee, a provision
is recognised according to the expected obligation, and recorded as investment loss for the period. The share of changes
in owners' equity of the investee other than those arising from net profit or loss, other comprehensive income and profit
distribution are recognized in the capital reserve the carrying amount of the long-term equity investment is adjusted
accordingly. The carrying amount of the investment is reduced by the portion of any profit distributions or cash dividends
declared by the investee that is distributed to the Group. For the Group's transactions with investees, unrealised intragroup profits or losses are recognised as investment income or loss to the extent that those attributable to the Group's
proportionate share of interest are eliminated. However, unrealised losses resulting from the Group's transactions with its
associates and joint ventures which represent impairment losses on the transferred assets are not eliminated.
(c) Basis for determination of control, joint control and significant influence on invested entity
Control exists when the investor has power over the investee; is exposed to, or has rights, to variable returns from its
involvements with the investee; and has the ability to use its power over the investee to affect its returns.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about
the relevant activities require the unanimous consent of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries and associates are reduced to the recoverable
amounts when the recoverable amounts are below their carrying amounts (Note II (18))
(13) Fixed Assets
(a) Recognition and Initial Measurement
Fixed assets comprise buildings and machinery, motor vehicles, electronic equipment, other equipment, fixed asset
decorations, etc.
A fixed asset is recognised only when it is probable that economic benefits associated with the asset will flow to the
Group and the cost of the asset can be measured reliably. Fixed assets are initially measured at cost. The purchasing
cost of fixed assets includes purchase price, related taxes as well as other expenses directly attributable to such asset
until the assets are ready for their intended use.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset when the fixed asset
is recognised as mentioned above. Meanwhile the carrying amount of the replaced part is derecognised. Other
subsequent expenditures except for above expenditures that included in the cost of fixed asset are recognised in profit
or loss in the period in which they are incurred.
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(13) Fixed Assets (Continued)
(b) Depreciation Method
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual
values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related
depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful
lives.
The estimated useful lives, the estimated residual values and the annual depreciation rates of fixed assets are as
follows:
Estimated useful life
Building
Estimated net residual rate
Annual depreciation rates
20-40 years
4% to 10%
4.80% to 2.25%
Machine and equipment
5-10 years
0% to 4%
20.00% to 9.60%
Transportation vehicle
5-10 years
4% to 10%
19.20% to 9.00%
Electronic equipment and other equipment
3-5 years
0% to 4%
33.33% to 19.20%
Decoration of fixed assets
2-5 years
0%
50.00% to 20.00%
At least at the end of each year, the Group reviews the estimated useful lives, estimated net residual values and
depreciation methods of fixed assets and if necessary, makes adjustments.
(c) The carrying amount of a fixed asset is reduced to the recoverable amount when the recoverable amount is below the
carrying amount (Note II (18)).
(d) Disposal of Fixed Assets
(14) Construction in Progress
Construction in progress is measured at actual cost. The actual costs include various construction expenditures
during the construction period, borrowing costs capitalised before it is ready for intended use and other relevant costs.
Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation
begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount
when the recoverable amount is below the carrying amount (Note II (18)).
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal.
When a fixed asset is sold, transferred, retired or damaged, the Group recognises the amount of any proceeds on
disposal of the asset net of the carrying amount and related taxes in profit or loss for the current period.
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(15) Borrowing Costs
The borrowing costs refer to the interests and other relevant costs occurred when the Group borrowed money. It
comprises interests, amortization of discount or premium, auxiliary expenses, the exchange balance arising from foreign
currency loans, etc.
The construction which can directly belong to the assets confirming to capitalization conditions or the borrowing costs
of production should be capitalized. Other borrowing costs should be included in current profits and losses. The assets
meeting capitalization conditions represent the fixed assets investment real estates and inventories which can meet the
expected conditions for use or for sale only after they have constructed or have carries our production activities for very
long time.
The borrowing costs may be capitalized only meet the following conditions synchronously:
(i) The asset expenses have occurred;
(ii) The borrowing costs have occurred;
(iii) The construction or production activities which are needed for the assets to meet excepted conditions for use or for
sale have begun.
When the construction or production activities meeting capitalization conditions reach expected conditions for use or
for sale, the borrowing costs stops capitalization. And then the borrowing costs occurred later are included in current
profits and losses.
During capitalization period, the interest in each fiscal period should be confirmed as follows:
(i) The interest expenses actually occurred in current period subtracted from temporary deposit interest expense or
investment income gives specifically borrowed loan;
(ii) The general occupied borrowings are confirmed through the method that the weighted average of the asset is
multiplied by the weighted average interests of the general occupied borrowings. The effective interest rate is the rate
at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter
period are discounted to the initial amount of the borrowings.
During the construction or production of the assets meeting the capitalization conditions, if there is improper disruption
(except the procedures necessary to reaching the excepted conditions for use or sale) and the disruption lasts more
than 3 months, the capitalization of the borrowing costs is suspended. The borrowing costs occurred in the disruption
period are recognized as expenses and are included in current profits and losses until the asset construction or
production activities begin again.
(16) Intangible Assets
(a) Recognition and Initial Measurement
Intangible assets include land use right, computer software, trademark, patent, etc.
An intangible asset is recognized only when the economic benefits relevant to such asset are very likely to flow into the
Group and its costs can be reliably measured, and it is initially measured at its cost. However, if an intangible asset
is acquired from the business combination, and its fair value can be reliably measured, it is separately recognized as
intangible asset and measured at its fair value.
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2014 Annual Report
(16) Intangible Assets (Continued)
(b) Useful life and Amortization Method
The period when an intangible asset can bring economic benefits to the Group is confirmed as its useful life. If the
intangible assets cannot be expected to bring economic interests to the Group, they should be regarded as the
intangible asset with uncertain useful life.
The estimated useful lives of various intangible assets are as follows:
stimated useful life
Land use right
Computer software
Trademark
Patent
30-50 years
2-10 years
10 years
5-20 years
The land use rights acquired by the Group are generally accounted as intangible assets. As for an intangible assets
with a limited useful life, it is amortized over the useful life with the straight-line method. At least at the end of each year,
the useful lives of intangible assets with limited useful lives and their amortization methods should be re-checked and
even adjusted if necessary.
(c)Accounting Policies for Internal R&D Expenditures
The expenditure on an internal research and development project is classified into expenditure on the research phase
and expenditure on the development phase based on its nature and whether there is material uncertainty that the
research and development activities can form an intangible asset at end of the project.
Other development expenditures that do not meet the conditions above are recognized in profit or loss in the period
in which they are incurred. Development costs previously recognized as expenses are not recognized as an asset in
a subsequent period. Capitalized expenditure on the development phase is presented as development costs in the
balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
Expenditure on the research phase is recognized in profit or loss in the period in which it is incurred. Expenditure on the
development phase is capitalized only if all of the following conditions are satisfied: it is technically feasible to complete
the intangible asset so that it will be available for use or sale; intends to complete the intangible asset, and to use or
sell it; it processes the method producing economic interests, which guarantees that there are markets for the products
produced by the intangible assets or the intangible assets have their own market. If the intangible assets can be used
internally, their usefulness can be guaranteed; there are adequate technical, financial and other resources to complete
the development and the ability to use or sell the intangible asset; and the expenditure attributable to the intangible
asset during its development phase can be reliably measured.
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2014 Annual Report
(16)Intangible Assets (Continued)
(d)Impairment of Intangible Assets
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is below
the carrying amount (Note II (18)).
(17)Long-term Prepaid Expenses
Long-term prepaid expenses include prepaid rental for fixed assets acquired under operating leases, counter making
expenses, improvements to fixed assets held under operating leases and other expenses that have been incurred but
should be recognized as expenses over more than one year in the current and subsequent periods. Long-term prepaid
expenses are amortized on the straight-line basis over the expected beneficial period and are presented at actual
expenditure net of accumulated amortization.
The prepaid rental for the fixed assets acquired under operating leases is averagely amortized according to the
regulations of lease contract. Counter making expenses and improvements to fixed assets held under operating leases
are averagely amortized over the shorter one of the remaining lease period and the remaining useful life.
(18)Impairment of Long-term Assets
For impairments of assets other than inventories, deferred tax and financial assets, the Group will recognize them as
follows:
On the balance sheet date, the Group will determine whether there are indications of impairment on certain assets. If
indications of impairment exist, the Group will estimate the recoverable amount of the assets and conduct an impairment
test. Goodwill resulting from business combination and intangible assets with uncertain useful life, shall be subject to
at least one impairment test at the end of each year. Intangible assets which have not yet reached their serviceable
conditions shall undergo annual impairment test.
Recoverable amount is recognized as the higher of the net amount of the fair value of the assets minus the disposal
expenses and the present value of future cash flow of the assets. The Group estimates the recoverable amount of
the assets based on that of individual assets; If it is difficult to estimate recoverable amount of individual assets, the
recoverable amount of the asset group will be determined on the basis of the asset group to which the assets belong.
The basis for recognition of a certain asset group is whether the cash inflow of the asset group is independent of cash
inflow of other assets or asset groups.
When the recoverable amount of an asset or asset group is below its book value, the Group will write down that
book value to the corresponding recoverable amount, include the amount of write down in current profits and losses,
meanwhile make provision for asset impairment accordingly.
For goodwill impairment test, the book value of goodwill resulting from business combination will be allocated within the
relevant asset group using a reasonable method as from the date of acquisition; If any goodwill cannot be allocated
within the relevant asset group, it will be allocated with the relevant combination of asset groups. The relevant asset
group or combination of asset groups is an asset group or combination of asset groups that can benefit from the
synergy of business combination and may not be greater than reporting segment determined by the Group.
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2014 Annual Report
(18)Impairment of Long-term Assets (Continued)
During impairment test of relevant asset group or combination of asset groups that contains goodwill, if there are
indications of impairment on goodwill related asset group or combination of asset group, an asset group or combination
of asset groups that do not contain goodwill will first undergo impairment test, where recoverable amount is calculated
and corresponding impairment loss is recognized. Then, asset groups or combinations of asset groups that contain
goodwill will undergo impairment test, in which their book value and recoverable amount are compared. For any asset
group or combination of asset groups whose recoverable amount is below its book value, the amount of impairment loss
shall offset the book value of goodwill allocated to the asset groups or combination of asset groups before offsetting the
book value of assets other than goodwill in the asset group or combination of asset group according to the proportion of
book value of all those assets.
Once recognized, the above asset impairment losses will not be reversed in subsequent accounting periods.
(19)Employees Benefits
Employee benefits include short-term employee benefits, post-employment benefits, remuneration benefits and other
long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees
or compensations for the termination of employment relationship.
(a)Short-term Employee Benefits
Short-term employee benefits include salaries, bonus, allowance and subsidies, employee welfare, premiums or
contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running
cost and employee education costs, short term paid absences. The employee benefit liabilities are recognised in the
accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss
for the current period or the cost of relevant assets. Employee benefits which are non-monetary benefits are measured
at fair value.
(b) Accounting Treatment Method for Post-separation Welfare
Basic pensions
The Group's employees participate in the basic pension plan set up and administered by local authorities of Ministry of
Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according
to prescribed basis and percentage by the relevant local authorities when employees retire, the relevant local authorities
are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as
liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding
charge to the profit or loss for the period or the costs of relevant assets in the accounting period in which employees
provide services.
The Group classifies post-employment benefit plans as either defined contribution plan or defined benefit plans.
Defined contribution plans are post-employment benefit plans under which the Group pays contributions into a
separate fund and will have no obligation to pay further contributions; and Defined benefit plans are post-employment
benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits
mainly include basic and supplementary pensions and unemployment insurance, both of which belong to the defined
contribution plans.
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2014 Annual Report
(19)Employees Benefits (Continued)
(c) Accounting treatment of welfare termination
When the Group provides termination benefits to employees, employee benefit liabilities are recognised for termination
benefits, with a corresponding charge to the profit or loss for the period at the earlier of: (1) when the Group cannot
unilaterally withdraw the offer of termination benefits because of the termination plan or a curtailment proposal; and (2)
when the Group recognises costs or expenses related to restructuring that involves the payment of termination benefits.
Internal retirement welfare
The Group provides the employees who accept the internal retirement arrangement with the internal retirement
welfare. The internal retirement welfare means the salary paid to those employees who don't reach the legally specified
retirement age and voluntarily retire from working posts as approved by the executive management of the Group,
as well as the social security contributions made for such employees. From the date on which the internal retirement
arrangement commences to the date on which the employees reach the normal retirement age, the Group will pay
the internal retirement welfare to such employees. As for the internal retirement welfare, the Group implements the
accounting treatment by reference to dismissal welfare, and when the conditions for recognition of dismissal welfare are
satisfied, recognizes the salary paid to and social security contribution paid for such employees during the period from
the date on which such employees cease the provision of service to the normal retirement date as liabilities and include
them into current profit/loss. The difference arising from the change in actuarial assumptions for internal retirement
welfare or the adjustment to welfare standard is included into current profit/loss upon occurrence.
The dismissal welfare which, as expected, will be paid within one year from the balance sheet date, is stated as current
liabilities.
(20) Distribution of Dividends
The cash dividends are recognized as liability in the period when such dividends are approved by the shareholders
meeting.
(21)Estimated Liabilities
Besides the contingent consideration in the enterprise merger or the contingent liabilities assumed, when the obligations
relevant to the contingent items meet the following conditions, the Group will confirm them as estimated liabilities:
(i)
The obligation is the present obligation assumed by the Group;
(ii) The implementation of the obligation may cause the economic interests to flow out of the Group;
(iii) The amount of the obligation can be reliably measured.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and
time value of money. Where the effect of the time value of money is material, the amount of the provision is determined
by discounting the related future cash outflows. The book values of the estimated liabilities should be re-checked on
each balance sheet date. If there are concrete evidences showing that the book values cannot reflect the present best
estimate, the book values are adjusted according to the best estimate.
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2014 Annual Report
(22)Share-based Payments
The share-based payments are divided into the share-based payment settled with equity and the share-based payment
settled with cash. The share-based payment settled represents the transactions which the Group settles to take the shares or
other equity instruments as considerations to obtain service.
If the share-based payment settled with equity is exchanged for the service provided by workers, it should be measured
according to the fair values of the equity instruments granted to workers. If the exercise can be carried out immediately after the
grant, the share-based payment is included in relevant costs or expenses according to their fair values on the granting day,
and the capital reserve is added correspondingly. If the exercise can be carried out only after the service with waiting period
is completed or formulated performance conditions are met, on each balance sheet date within the waiting period, the Group
carries out the best estimate for the number of the exercisable equity instruments according to the subsequent information,
such as the change of the number of the workers newly obtaining the exercise, whether the formulated performance conditions
are met or not, etc. Based on the abovementioned and according to the fair values on the granting day, the service obtained
currently is included in relevant costs or expenses and the capital reserve is added correspondingly. The fair value of equity
instruments is measured under Black Scholes Option Pricing Model (Note XIII).
During the period that the performance conditions and service life conditions are met, the costs or expenses of share-based
payment settled with equity should be confirmed, and the capital reserve is added correspondingly. Before the exercise day, the
accumulating amount confirmed with the share-base payment settled with equity each balance sheet date reflects the expired
part within waiting period and the best estimate for the number of equity instrument of final exercise carried out by the Group.
If the share-based payment cannot be exercised finally, its costs or expenses are not confirmed unless the exercise condition
is market conditions or is non-exercise conditions. Then, no matter whether the market conditions or non-exercise conditions
are met or not, the exercise can be carried out only when non-market conditions among all of the exercise conditions are met.
If the provisions of the share-based payment settled with equity are revised, the obtained service is confirmed at least
according to the provisions which are not revised. In addition, any revision newly added with the fair value of the granted equity
instruments or the changes being in favor of workers on the revision day should be confirmed as service addition.
If the share-based payment settled with equity is cancelled, it should be processed as accelerated exercise on the cancelled
day and the amount which is not confirmed should be immediately confirmed, If the workers and other parties can select to
meet non-exercise conditions but they do not meet the conditions within waiting period, the share-based payment settled
with equity is cancelled. However, if new equity instruments are granted, and the new instruments are used for replacing the
cancelled equity instruments on the granting day, the granted and replaced equity instruments should be processed in the
same method that the provisions of the original equity instruments are processed and the conditions are revised.
090
2014 Annual Report
(22) Share-based Payments (Continued)
As for the financial instruments for which whether the settlement will be carried out by delivering cash or other financial
assets depends on the occurrence of future event (such as change in stock price index or consumption price index)
beyond the control of both issuer and holder (namely the financial instruments with contingent settlement clause), the
issuer shall recognize them as financial liabilities and then recognize the treasury stocks.
Share-based payment settled with cash means the transaction wherein the enterprise undertakes the obligation to
deliver cash or other assets calculated on the basis of share or other's equity instrument.
Share-based payment settled with cash shall be measured at the fair value of liabilities undertaken by the enterprise
which is calculated on the basis of share or other equity instrument. As for the share-based payment settled with
cash which can be exercised immediately after being granted, the fair value of liabilities undertaken on the grant date
will be included into relevant costs or expenses, and the liabilities will be increased accordingly. As for the sharebased payment settled with cash which can be exercised only after the service in waiting period is performed or the
specified operating results are achieved, on every balance sheet date within the waiting period, on the basis of the
optimal estimation on exercisable situation and in accordance with the fair value of liabilities undertaken, the service
obtained will be included into costs or expenses and liabilities. If on the balance sheet date, the subsequent information
indicates that the fair value of liabilities undertaken is different from prior estimation, the adjustment will be made; on the
exercisable date, it will be adjusted to the actually exercisable level. The enterprise shall, on every balance sheet date
and settlement date before the settlement of relevant liabilities, re-measure the fair value of liabilities, and include the
change thereof into current profit/loss.
(23) Repurchase of Shares
The consideration and the transaction expenses paid with the own equity instruments are repurchased. The
shareholders' equity is reduced. Except the share-based payments, if the own equity instruments are issued,
repurchased, sold or cancelled, any profits and losses will not be recognized.
(24) Revenues
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for
the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of discounts and
returns.
Revenue is recognized when the economic benefits associated with the transaction will flow to the Group, the related
revenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of the
Group's activities as described below:
(a) Revenues from sales of goods
If the Group has transferred the main risk and rewards in the product ownership to the purchase party, do not reserve
the continuous management right generally relevant to the ownership and do not carry out any effective control, and the
relevant costs realized or unrealized can be reliably measured, the incomes should be recognized. The income amount
of selling product is confirmed according to the contracts or agreements which have received or need to be received
from the purchase party, except the conditions that the contracts and agreement charges which have received or need
to be received are unfair. The deferral method is adopted for the collection of the contracts or agreement charges.
If there actual financing property, the contracts or agreement charges are confirmed according to the fair values of
contract receivable or agreement charges.
091
2014 Annual Report
(24) Revenues (Continued)
(b) Revenues from provision of services
Under the condition that the results of the provided service transaction can be reliably estimated on the balance sheet
date, the provided service incomes are recognized according to percentage-of-completion method. Otherwise, the
incomes are recognized according to the labor-cost amount which has occurred and predicted to be compensated. If the
results of he provided service transaction can be reliably estimated, it should meet the following conditions: the income
amount can be reliably measured; the relevant economic interests may flow into the Group; the progress of the completion
of the transaction can be reliably determined and the costs which have occurred and will occur can be reliably measured.
The Group determines the completion progress of the provided service transaction based on the measurement of the
completed work. The total amount of provided service income is determined according to the contracts or agreement
charges of the service-receiving party, except the condition that the contract or agreement charges are unfair.
When the contracts or agreements signed between the Group and other enterprises comprise goods selling and service
rendering, if the part of the goods selling and the part of service provided can be measured separately, the two parts
should be processed respectively. If the two parts cannot be divided or they can be divided but cannot be measured
separately, the whole contract is taken as goods selling.
(c) Interest revenue
Interest revenue is determined by using the effective interest method, based on the length of time for which the Group's
cash is used by others.
(d) Income from operating leases
Income from an operating lease is recognized on a straight-line basis over the period of the lease. Contingent rental is
included in current profits and losses when it actually occurs.
(25) Government Grants
A government grant is recognized when the conditions attached to it can be complied with and the government grant
can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the amount
received or receivable. For a government grant in the form of transfer of non-monetary assets, it is measured at fair
value; if the fair value is not reliably determinable; the grant is measured at nominal amount.
The government grants relating to asset shall mean the government grants obtained by the Group for acquiring or
otherwise forming long-term assets. The government grants relating to income shall mean all government grants other
than the government grants relating to asset.
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil
consideration, including refund of taxes and financial subsidies, etc.
A government grant related to an asset is recognized as deferred revenue, and evenly amortised to profit or loss over
the useful life of the related asset. Government grants measured at nominal amounts are recognized immediately in
profit or loss for the current period.
For government grants related to income, where the grant is a compensation for related expenses or losses to be
incurred by the Group in the subsequent periods, the grant is recognized as deferred revenue, and included in profit or
loss over the periods in which the related costs are recognized; where the grant is a compensation for related expenses
or losses already incurred by the Group, the grant is recognized immediately in profit or loss for the current period.
092
2014 Annual Report
(26) Income Tax
Income tax includes current income tax expenses and deferred taxes. Income taxes are included in current profits and
losses as income tax expenses or benefits, except for the adjustment made for goodwill in a business combination and
income tax from transactions or items that are directly related to shareholders' equity.
The Group measures the current income tax liabilities or assets formed in the current period and previous periods
according to the income tax amount which is required to pay or return expectedly under the regulations of tax law.
According to the temporary difference between the book values of the assets and liabilities on the balance sheet date
and the tax base, as well as according to the temporary difference between the book values of the items which are not
recognized as assets and liabilities but of which the tax base can be confirmed according to the regulations of tax laws
and the tax base, the Group accrue deferred income tax with the adoption of liability method of the balance sheet.
The deferred income tax liabilities are recognized according to the temporary differences between various taxes payable unless:
( i )The temporary difference between taxes payable occur in the following transactions: the initial recognition of
goodwill or the initial recognition of the assets or liabilities produced in the transactions with the following features: the
transactions are not enterprise recognition, furthermore, the occurrence of the transactions neither influences accounting
profits nor influences the taxable income or deductible losses.
(ii)As for the taxable temporary difference of taxes payable relevant to the subsidiaries and associates, the reversing
time of the temporary difference can be controlled and it may be reversed in the foreseeable future.
As for deductible temporary differences, the deductible loss which can be carry forward the following years, and tax
credits, the Group may well take the future income taxes payable, which are used for deducting the deductible temporary
difference, deductible losses and tax credits, as limit, the deferred tax income assets are hence confirmed, unless:
( i )The deductible temporary differences occur in the following transactions: the transactions are not business
combination; furthermore, these transactions neither influence accounting profits nor the amount of income taxes
payables or deductible losses;
(ii)As for the deductible temporary difference relevant to its subsidiaries and associates, if they can meet the following
conditions simultaneously, the corresponding deferred tax assets can be confirmed: the temporary difference may well
be reversed in foreseeable future; furthermore, the amount of income taxes payable may well be obtained to deduct the
deductible temporary difference in the future.
On the balance sheet date, the Group measures the deferred tax assets and deferred tax liabilities according to tax
laws and regulations and based on applicable tax rate occurred in the period when the assets are repossessed or the
liabilities are liquidated expectedly, which reflects the influence of the income tax on expectedly repossessed assets or
liquidated liabilities on the balance sheet date.
On the balance sheet date, the Group re-checks the book value of the deferred tax assets. If the amount of taxable
income is insufficient to deduct the interests of the deferred tax assets in the future, the book values of deferred taxable
income tax payable are written down. On the balance sheet date, the Group re-estimate non-recognized deferred tax
assets and recognizes deferred tax assets within the limit that the amount of income tax payable is sufficient to reverse
all of or part of deferred tax assets.
If the Group has the legal right to settle current tax assets and current tax liabilities through net amount, and the deferred
tax is relevant to the same taxpayer and the same tax collection and administration department, the net amount,
obtained after the deferred income tax assets and the deferred income tax liabilities are offset, is listed.
093
2014 Annual Report
(27) Leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. An
operating lease is a lease other than a finance lease.
(a) Accounting Treatment Method for Operating Lease
Lease payments under an operating lease are recognized on a straight-line basis over the period of the lease, and are
either capitalized as part of the cost of related assets, or charged as an expense for the current period. The contingent
rental is included in current profits and losses when it occurs actually.
(b) Lessor of operating leases
Lease income under an operating lease are recognized on a straight-line basis over the period of the lease, and are
charged as an expense for the current period. The contingent rental is included in current profit and loss when it occurs
actually (Note II (24) (d)).
(28) Affiliate
If a part controls the other party, has common control on the other party, can exert significant influence on the other
party, or under the same control with the other party, then such two parties shall constitute affiliates.
(29) Acquisition of Minority Interest of a Subsidiary
After owning the right of control over a subsidiary through acquiring all or part of minority interest from minority
shareholders, assets and liabilities of subsidiary in consolidated financial statements will be reflected by the amounts
which are constantly calculated from the date of acquisition or merger. The difference between the newly increased
Long-term equity investment from purchasing minority interest and the net assets continuously calculated according to
the newly increased rate of share from the date of acquisition or merge is treated as an adjustment to capital surplus. If
the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against
retained earnings.
A non-current asset or disposal groups which satisfies all the following conditions is classified as held-for-sale: (1)
Under its current conditions, such non-current asset or disposal group can be sold immediately only in accordance
with the customary clauses for sales of such type of asset or disposal group; (2) the Group has made the resolution on
disposal of such non-current asset or disposal group and got such resolution duly approved; (3) the Group has signed
the irrevocable transfer agreement with the transferee; (4) such transfer will be completed within one year.
The non-current assets which meet the held-for-sale conditions (exclusive of financial assets and deferred income tax
assets) are measured at the book value minus disposal expenses or fair value minus disposal expenses (whichever is less);
if the fair value minus disposal expenses is lower than the original book value, the loss from asset impairment is recognized.
(30) Held-for-sale and Operation Termination
The assets and liabilities in held-for-sale non-current assets and disposal groups are classified into current assets and
current liabilities.
Operation termination shall mean the component which meets any of the following conditions, has been disposed of or
been classified as held-for-sale, and can be separately divided in the Group with respect to operation or preparation
of financial statement: (1) such component represents an independent main operation or a main place of operation; (2)
such component is a part of the disposal plan for an independent main operation or a main place of operation; (3) such
component is the subsidiary acquired only for the purpose of re-sales.
094
2014 Annual Report
(31) Segment Information
The Group identifies operating segments based on the internal organization structure, management requirements and
internal reporting system, and discloses segment information of reportable segments which is determined on the basis
of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is
able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed
by the Group's management to make decisions about resources to be allocated to the segment and to assess its
performance, and (3) for which the information on financial position, operating results and cash flows is available to the
Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are
aggregated into one single operating segment.
The Group identifies the Group business as one operating segment for analysis and assessment according to the
internal organization structure, management requirements and internal reporting system.
(32) Significant Accounting Policies
Enterprises No. 9 - Employee Remuneration, Accounting Standards for Business Enterprises No. 30 - Presentation
of Financial Statements, Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements
and Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments. Except for the
Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments which should be
implemented in preparation of financial statements for 2014, all the standards came into effect as of 1 July 2014.
Statement items affected by change in first accounting policy above and amount:
Contents and reason of change in accounting policies
095
Approval procedures
Remarks
Several items in financial statements have been presented in
accordance with the above standards, the financial information
in comparison period has been adjusted accordingly, and
the balance sheet as at 1 January 2013 has been presented
in accordance with the Detailed Guideline for Application
of Accounting Standards for Business Enterprises No. 30 Presentation of Financial Statements
Approved by Board of
Directors
See the table below for
details
Several disclosures relating to fair value have been prepared
in accordance with the Accounting Standards for Business
Enterprises No. 39- Measurement of Fair Value, and the relevant
information in comparative financial statements has not been
adjusted in accordance with such standards.
Directors
Not applicable
Several disclosures relating to the equity in other entities
held by the Group have been prepared in accordance with
the Accounting Standards for Business Enterprises No. 41 Disclosure of Interests in other Entities. Except for the disclosure
about structured entities not included in consolidated financial
statements, the information in comparative financial statements
has been adjusted accordingly.
Directors
Not applicable
2014 Annual Report
(32) Significant Accounting Policies (Continued)
Statement items affected by change in first accounting policy above and amount:
Item
31 December 2013
1 January 2013
64,500,000.00
64,500,000.00
Long-term equity investment
(64,500,000.00)
(64,500,000.00)
(238,003,488.97)
(406,345,685.47)
Other payables
Other current liabilities
56,167,287.91
-
Other non-current liabilities
15,161,744.57
2,638,330.00
(82,380,113.51)
(12,286,144.53)
Deferred income
Treasury stocks
249,054,570.00
Capital surplus
(34,450,545.06)
(38,649,746.22)
(9,736,194.01)
(5,839,135.41)
Other comprehensive income
415,993,500.00
46,489,287.10
46,489,287.10
Conversion difference of foreign-currency
statement
(2,302,548.03)
(2,000,405.47)
(33) Critical Accounting Estimates and Assumptions
The Group continuously evaluates the critical accounting estimates and key judgments applied based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
(a) Critical accounting estimates and judgments
( i ) Provision for bad debts for receivables
The Group takes aging as the credit feature for determining receivable group, and uses the aging analysis method to
withdraw the provision for bad debts for receivables. This requires the executive management to reasonably estimate
the aging period of receivables with the same credit risk feature as well as the proportion of bad debts in every period
(Note II (10)).
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within the next financial year are outlined as below:
(ii) Provision for price drop of inventories
On the date of balance sheet, the inventories are measured at costs or realizable net value (whichever is less). As
for the inventories of which the costs are higher than realizable net value, the provision for price drop of inventories is
withdrawn and included into current profit/loss. This requires the executive management to analyze the estimated sale
price of inventories, the costs to accrue till completion of construction, the estimated sales expenses and the relevant
taxes, so as to judge whether the realizable net value is lower than costs (Note II (11)).
096
2014 Annual Report
(33) Critical Accounting Estimates and Assumptions (Continued)
(a) Critical accounting estimates and judgments (Continued)
(iii) Income tax and deferred income tax assets
The Company was granted once again as a high and new technological enterprise in 2014 and the income taxes are
calculated and paid at the applicable tax rate of 15% according to the relevant income tax laws. According to the relevant
regulations, one of the qualifications for a new and high technological enterprise is that the ratio of expenditure of research
and development to its sales income must not be below the stipulated ratio. For the enterprises whose annual revenue is
RMB200 million or more, the stipulated ratio is 3%. During implementation of preferential tax policy, if the competent tax
authority finds the enterprise fails to meet the qualifications for new and high technological enterprise, it should submit the
case to the corresponding certification authority for review. During the review, tax preference for the relevant enterprise
may be suspended. The expenditures of research and development actually incurred by the Company through 2014 met
the qualifications of new and high technology enterprises and it calculated and paid its income tax according to the 15%
preferential rate. In addition, according to relevant tax laws, the Company conducted weighted deduction of research and
development expenses while calculating its income tax for 2014. The amount of the weighted deduction of research and
development expenses and the applicable preferential tax rate are subject to confirmation by competent tax authority in
upcoming settlement and payment of the Company's income tax. Should the result of final confirmation by competent tax
authority differ from the Company's confirmation, the difference will impact on the Company's income tax expenses for
current year.
The Group calculates income tax and deferred tax according to current tax regulations and the applicable income tax
stipulations and tax preferences are taken into consideration. In general operating activities, final tax treatment of many
transactions and events involved remains uncertain. While allocating income tax expenses, the Group needs to make
major judgments. The Group shall determine whether additional tax is required for tax adjustment items expected in the
future and recognize corresponding tax liabilities on this basis. In addition, the Group should recognize deferred income
tax assets in the limit of unused deductible losses by taking into account all unused deductible losses. This requires the
management to make many judgments to estimate the time and amount of taxable income to be achieved in the future and
take into consideration tax planning strategies to determine the amount of recognizable deferred income tax assets (Note
II (26)). If the results of final confirmation of the tax issues differ from the initially entered amounts, the difference will impact
the amounts of income tax expenses and deferred tax.
The Group has already allocated income tax liabilities and deferred income tax for current year based on the provisions of
current tax law and current best estimates and assumptions. It may adjust income tax liabilities and deferred income tax in
line with any change in tax regulations or relevant conditions in the future.
097
2014 Annual Report
(33) Critical Accounting Estimates and Assumptions (Continued)
(a) Critical accounting estimates and judgments (Continued)
(iv) Share-based payment
On every date of balance sheet, as for the equity instruments which can be exercised only after the service in waiting
period is performed or the specified operating results are achieved, the Group will, on the basis of the change in
number of employees who are entitled to exercise such equity instruments and the information about whether the
specified operating results are achieved, make the optimal estimation on number of exercisable equity instruments and
make the optimal judgment on some specific situations (for example, whether the restricted stocks can't be unlocked
owing to administrative punishment caused by serious illegal act).
III Tax
(1) Main Tax Category and Tax Rate of the Group
Tax category
Tax basis
Corporate income tax
Amount of income taxable
Value added tax (a)
Amount of added value taxable (The amount of tax payable shall be
calculated by multiplying the sales amount taxable by the applicable
tax rate and then deducting the deductible incoming taxes)
Business tax (a)
Amount of operating revenue taxable
Consumption tax
Sales amount taxable
Urban maintenance and construction tax
Amount of value added tax, business tax and consumption tax paid
Tax rate
15% and 25%
17%
5%
30%
1% and 7%
(2) Preferential Tax Treatments
( i ) The Company has obtained in 2014 the Certificate of the High and New Technological Enterprise issued by the
Shanghai Municipal Science and Technology Commission, Shanghai Municipal Finance Bureau, Shanghai State
Taxation Bureau and Shanghai Local Taxation Bureau and the term of validity is three years. Under Income Tax Law of
the Peoples Republic of China, the income tax rate applicable to the Company is 15% for three years starting from 2014.
(a) In accordance with the Circular on Issuance of Program for Experimental Implementation of Change from Business
Tax to Value Added Tax (Cai Shui [2011] No. 110) issued by the Ministry of Finance and the State Administration of
Taxation, as well as the Circular on Experimental Implementation of Tax Policies for Change from Business Tax to Value
Added Tax in Traffic & Transportation Industry and Some Modern Service Industries (Cai Shui [2013] No. 37) issued
by the Ministry of Finance and State Administration of Taxation, the policies are not applicable to the Group and its
subsidiaries.
(ii) Shanghai Hanli Paper Co., Ltd, is subject to verification and collection for corporate income tax according to the
verification of the fifth tax collection office of the State Taxation Bureau of Qingpu District. The actually verified taxable
income rate is 5%. The calculation formula is: The Taxable Income Amount = Total Revenue X Taxable Income Rate (5%)
X Applicable Tax Rate (25%).
098
2014 Annual Report
IV Notes to Items in Consolidated Financial Statements
(1) Cash at bank and on hand
31 December 2014
Cash in hand
Bank deposit (a)
Other monetary fund
31 December 2013
151,823.62
190,174.81
2,633,355,628.73
1,732,783,519.15
53,109.13
53,109.13
2,633,560,561.48
1,733,026,803.09
(a) As at 31December 2014, the balance of fixed deposit in bank deposit was RMB 900,000,000.00(31 December 2013:
RMB 180,000,000.00), which will be mature within 6 months and for which the annual interest rate is 2.86%-3.06% (2013:
2.86%).
(2) Notes Receivable
31 December 2014
Bank acceptance notes
12,663,861.80
31 December 2013
8,093,647.86
(a) Notes Receivable which have been Endorsed by the Company by the End of this Period or have not Become Mature
by the Balance Sheet Date:
Ending amount of notes receivable
derecognized
Bank acceptance notes
Ending amount of notes receivable not
derecognized
73,389,301.92
-
(3) Accounts Receivable
31 December 2014
Accounts receivable
560,028,560.22
Less: Provision for bad debts
(29,929,861.78)
530,098,698.44
31 December 2013
454,421,728.56
(25,349,270.42)
429,072,458.14
(a) The Aging of accounts receivable are analyzed below:
31 December 2014
Within 1 year
099
31 December 2013
556,928,158.43
449,656,515.55
1 to 2 years
2,303,513.86
2,432,124.04
2 to 3 years
672,091.21
490,703.85
Over 3 years
124,796.72
1,842,385.12
560,028,560.22
454,421,728.56
2014 Annual Report
IV Notes to Items in Consolidated Financial Statements (Continued)
(3) Accounts Receivable (Continued)
(b) Disclosure of Account Receivable by Categories
31 December 2014
Book value
Amount
% of total
amount
-
-
Individually significant
accounts receivable
and bad debt provision
recognized individually
Accounts receivable
558,580,516.79
recognized by credit risk
Individually insignificant
accounts receivable
but bad debt provision
1,448,043.43
560,028,560.22
31 December 2013
Bad debt provision
% of total
Amount proportion
-
-
99.74% (28,481,818.35)
0.26%
Book value
-
100%
100% (29,929,861.78)
% of total
Amount proportion
-
5.10% 454,421,728.56
(1,448,043.43)
Bad debt provision
of total
Amount %amount
-
-
100% (25,349,270.42)
5.58%
-
-
5.34% 454,421,728.56
-
-
100% (25,349,270.42)
5.58%
(c) No Individually significant accounts receivable or bad debt provision recognized individually by 31 December 2014
(31 December 2013: Nil).
(d) Bad debt provision of the Group's accounts receivable that recognized by aging analysis:
31 December 2014
Booking value
Bad debt provision
Amount
Within 1 year
31 December 2013
Amount
Booking value
% of total
proportion
Bad debt provision
Amount
Amount
5%
449,656,515.55
(22,482,825.78)
% of total
proportion
556,881,836.17
(27,844,091.80)
1 to 2 years
1,438,001.68
(431,400.50)
30%
2,432,124.04
(729,637.21)
30%
2 to 3 years
135,882.22
(81,529.33)
60%
490,703.85
(294,422.31)
60%
Over 3 years
5%
(124,796.72)
100%
1,842,385.12
(1,842,385.12)
100%
(28,481,818.35)
5.10%
454,421,728.56
(25,349,270.42)
5.58%
(e) The Provision for Bad Debts in the Reporting Period Amounted to RMB 5,388,716.74 (2013: RMB 435,989.29).
(f) The actually written-off accounts receivable in the reporting period amounted to RMB 614,039.61.
Information about important accounts receivable write-off are listed as below:
Nature of
account
receivable
Written-off
amount
Reason for
write-off
Write-off procedure performed
Whether the amount
arises from affiliated
transaction
Guangdong Wanning
Chain Commerce Co., Ltd.
Loan
281,529.34
Unrecovered
Approved by executive
management
No
Xiamen Xinshidai Laiya
Department Store Co., Ltd.
Loan
126,059.45
Unrecovered
management
No
other
Loan
206,450.82
Unrecovered
management
No
124,796.72
558,580,516.79
614,039.61
100
2014 Annual Report
(g) Top five entities with the largest balances of accounts receivable:
Bad debt provision
amount
Amount
Total amount of top-5 accounts receivable
96,459,066.57
Proportion of the amount of the
total accounts receivable
(4,822,953.33)
17.22%
31 December 2014
16,509,204.68
6,901,324.07
4,823,804.13
3,243,329.77
1,545,307.46
3,798,076.43
36,821,046.54
(11,863,875.80)
24,957,170.74
31 December 2013
13,397,081.13
3,411,366.90
5,028,752.07
1,493,984.52
1,621,954.00
9,503,764.20
34,456,902.82
(11,658,953.04)
22,797,949.78
31 December 2014
22,242,693.41
2,419,992.24
2,829,240.57
9,329,120.32
36,821,046.54
31 December 2013
19,775,436.13
4,384,045.90
2,355,792.52
7,941,628.27
34,456,902.82
(4) Other Receivables
Guarantee deposit receivable
Temporary payment receivable
Petty cash receivable
Receivable payment on behalf of others
Deposit paid
Others
Less: Provision for impairment
(a) The aging of other receivables is analyzed below:
Within 1 year
1 to 2 years
2 to 3 years
Over 3 years
(b) The information on the category of other receivables is as follow:
31 December 2014
Book value
Bad debt provision
Amount
Portion
Amount
Ratio
other receivable and
bad debt provision
Other receivable and
bad debt provision
other receivable but
bad debt provision
-
-
-
-
36,549,963.24 99.26% (11,592,792.50) 31.72%
271,083.30
36,821,046.54
0.74%
(271,083.30)
100%
31 December 2013
Booking value
Bad debt provision
Amount
Portion
Amount
Ratio
-
-
-
-
33,185,819.52 96.31%
(10,387,869.74)
31.30%
1,271,083.30
100% (11,863,875.80) 32.22% 34,456,902.82
3.69%
(1,271,083.30) 100.00%
100% (11,658,953.04)
33.84%
(c) No Individually significant accounts receivable or bad debt provision recognized individually as at 31 December 2014
101
2014 Annual Report
(4) Other Receivables (Continued)
(d) Bad debt provision of the Group's other receivables that recognized by aging analysis is as follows:
31 December 2014
Bad debt
provision
Book Value
Within 1 year
31 December 2013
22,242,693.41
Ratio
(111,213.47)
Bad debt
provision
Book Value
0.5%
19,775,436.13
Ratio
(98,877.18)
0.5%
1 to 2 years
2,419,992.24
(725,997.67)
30%
3,112,962.60
(933,888.78)
30%
2 to 3 years
2,829,240.57
(1,697,544.34)
60%
2,355,792.52
(1,413,475.51)
60%
Over 3 years
9,058,037.02
(9,058,037.02)
100%
7,941,628.27
(7,941,628.27)
100%
36,549,963.24
(11,592,792.50)
31.72%
33,185,819.52
(10,387,869.74)
31.30%
(e) For the year ended 31 December 2014, the Group recognized provision for bad debts amounting to RMB 1,206,182.32, and
reversed provision for bad debts amounting to RMB 163,748.48. Important provision for bad debts reversed is listed as below:
Shanghai Lumei Commerce
and Trade Co., Ltd.
Reason for reversal
Basis and justification of
original amount of provision for
bad debts
Amount
Collection method
Winding up of the company,
and recovery of partial
payment made on behalf of
the company
Announcement for winding up
of the company
163,748.48
cash
(f) Other receivables actually written off in this period amounted to RMB 836,751.52. Information about important other
receivables written-off:
Nature of other
receivable
Amount paid on
behalf of the entity
Reason for
write-off
836,251.52
Winding up of
company
Write-off procedure
performed
Approval by
executive
management
Whether the
amount arises
from affiliated
transaction
No
(g) As at 31 December 2014，The balances of other receivables due from top five debtors are as follows:
Nature
Ditai Development Co., Ltd.
Shanghai Meiluocheng Commerce
management Co., Ltd.
Deposit
31 December 2014
1,368,262.00
Deposit
982,655.60
Aging
Ratio
Bad debt provision
Within 1 year
3.71%
(6,841.31)
Within 1 year /
Over 3 years
2.67%
(792,461.71)
KAO (Shanghai) products service Co., Ltd.
Others
696,492.65
Within 1 year
1.89%
(3,482.46)
Shanghai Huier Logistics Co., Ltd.
Others
588,309.76
Within 1 year
1.60%
(2,941.55)
Zhengjia Enterprise Group Co., Ltd.
Deposit
569,741.00
Within 1 year /
1 to 2 years /
2 to 3 years /
Over 3 years
1.55%
(427,573.35)
11.42%
(1,233,300.38)
4,205,461.01
Shanghai Lumei Commerce
and Trade Co., Ltd.
Write-off
amount
102
2014 Annual Report
(5) Advances to suppliers
(a) The aging of advances to suppliers is analyzed below:
31 December 2014
Amount
Within 1 year
31 December 2013
% of total amount
Amount
% of total amount
21,201,490.51
100.00%
18,727,720.40
98.67%
-
-
252,675.30
1.33%
21,201,490.51
100.00%
18,980,395.70
100%
1 to 2 years
As at 31 December 2014, there is no advances to suppliers of which the aging exceeds one year (31 December 2013: RMB 252,675.30).
(b) As at 31 December 2014, the balances of advances to suppliers due from top five debtors are as follows:
Proportion of the amount of the total
amount of advances to suppliers
Amount
Total amount of advances to top 5 debtors
8,601,719.55
40.57%
(6) Inventories
(a) Categories of Inventories:
31 December 2014
Book value
Provision for the
decline in value
31 December 2013
Net book value
Provision for the
decline in value
Book value
Net book value
Materials under
entrusted
processing
42,060,109.29
-
42,060,109.29
28,697,591.76
-
28,697,591.76
Raw materials
55,789,701.55
(381,972.47)
55,407,729.08
75,765,337.99
(601,097.80)
75,164,240.19
3,675,643.98
-
3,675,643.98
3,074,800.19
-
3,074,800.19
430,993,997.45
(12,204,159.09)
418,789,838.36
332,806,216.36
(8,903,686.84)
323,902,529.52
4,514,997.35
-
4,514,997.35
5,724,970.82
-
5,724,970.82
537,034,449.62
(12,586,131.56)
524,448,318.06
446,068,917.12
(9,504,784.64)
436,564,132.48
Work in progress
Finished goods
Circulating
materials
(b) Provision for the decline in value of inventories:
31 December 2013
Raw materials
Finished goods
103
601,097.80
Current year (reversal)/
accrual
(219,125.33)
Current year decrease
31 December 2014
-
381,972.47
8,903,686.84
10,427,499.85
(7,127,027.60)
12,204,159.09
9,504,784.64
10,208,374.52
(7,127,027.60)
12,586,131.56
2014 Annual Report
(6) Inventories (Continued)
(c) Information about Provision for the Decline in Value of Inventories:
Specific basis for determination
of net realizable value
Reason for write-off of provision for
the decline in value of inventories
Raw materials
Market price
Not applicable
Finished goods
Market price
Already sold
(7) Other Current Assets
31 December 2014
Available-for-sale financial assets (Note IV (8))
31 December 2013
516,295,593.34
635,744,535.67
(8) Available-for-sale Financial Assets
31 December 2014
31 December 2013
Measured at fair value
-- Bank wealth management
--Fund special-account wealth
management
461,438,157.53
-
54,857,435.81
381,979,984.19
-
303,383,143.83
516,295,593.34
685,363,128.02
-- Available-for-sale Equity Instruments
120,026,635.28
120,026,635.28
Less: impairment provision
(55,526,635.28)
(55,526,635.28)
580,795,593.34
749,863,128.02
(516,295,593.34)
(635,744,535.67)
64,500,000.00
114,118,592.35
-- Structured deposit
Measured at Costs
Less: Available-for-sale financial assets
listed as other current assets
104
2014 Annual Report
(8) Available-for-sale Financial Assets (Continued)
(a) Information of Available-for-sale Financial Assets is analysed as below:
Available-for-Sales Financial Assets Measured at Fair Value:
31 December 2014
31 December 2013
—Fair value
461,438,157.53
-
460,000,000.00
-
1,438,157.53
-
—Fair value
54,857,435.81
381,979,984.19
—Costs
51,966,560.30
371,500,000.00
2,890,875.51
10,479,984.19
—Fair value
-
303,383,143.83
—Costs
-
300,000,000.00
—Total changes in fair value of
recognized in other comprehensive
income
-
3,383,143.83
—Fair value
516,295,593.34
685,363,128.02
—Costs
511,966,560.30
671,500,000.00
4,329,033.04
13,863,128.02
—Costs
income
Fund special-account wealth
management
income
Structured Deposit
Total amount
income
105
2014 Annual Report
(a) Information of Available-for-sale Financial Assets is analysed as below (Continued):
Available-for-sale Financial Assets Measured at Costs:
31 December
2013
Addition for
the year
Deduction
for the year
31 December
2014
Shareholding
ratio (%)
Cash
dividend for
the year
Available-for-sale equity
instrument
— cost
Guotai Junan Securities
Co., Ltd.
64,500,000.00
-
-
64,500,000.00
<1.00%
250,000.00
SEPHORA (Shanghai)
Cosmetics Co., Ltd.
42,726,212.00
-
-
42,726,212.00
19.00%
-
SEPHORA (Beijing)
Cosmetics Co., Ltd.
12,358,968.00
-
-
12,358,968.00
19.00%
-
(Group) Co., Ltd.
281,455.28
-
-
281,455.28
<5.00%
-
Store Co., Ltd.
90,000.00
-
-
90,000.00
<5.00%
-
70,000.00
-
-
70,000.00
<5.00%
-
120,026,635.28
-
-
120,026,635.28
250,000.00
Available-for-sale equity
instrument
— impairment provision
(42,726,212.00)
-
-
(42,726,212.00)
SEPHORA (Beijing)
Cosmetics Co., Ltd.
(12,358,968.00)
-
-
(12,358,968.00)
(Group) Co., Ltd.
(281,455.28)
-
-
(281,455.28)
Store Co., Ltd.
(90,000.00)
-
-
(90,000.00)
(70,000.00)
-
-
(70,000.00)
(55,526,635.28)
-
-
(55,526,635.28)
SEPHORA (Shanghai)
Cosmetics Co., Ltd.
106
2014 Annual Report
(b) Information of impairment provision of available-for-sale financial assets is analysed as below:
Available-for-sale equity instruments
31 December 2013
(55,526,635.28)
Addition
-
Deduction
-
31 December 2014
(55,526,635.28)
(c) Most of the available-for-sales financial assets measured at costs are the unlisted equity investment held by the
Group. As for such investment, there is no quotation on active market, the reasonable estimate of fair value varies to a
relatively large extent, and the probability used to determine the estimated fair value can't be reasonably determined.
Therefore, the fair value can't be reliably measured. The Group has no plan for disposal of such investment.
31 December 2014
Associates (a)
31 December 2013
703,752,772.44
569,368,921.78
-
-
703,752,772.44
569,368,921.78
Less: Provision for impairment of longterm equity investment
(a) Associates
Changes for the year
31 December
2013
Jiangyin
Tianjiang
Pharmaceutical
Co., Ltd.
Net profit/(loss)
using equity
method
Deduction
investment
Cash dividends
Provision for
or profit
31 December Impairment
impairment
distribution
2014
loss
loss
declared
458,414,571.65
-
- 160,885,414.56 (23,837,837.73)
- 595,462,148.48
-
98,442,873.72
-
-
- 102,912,242.01
-
Shanghai Jahwa
Import & Export
Co., Ltd.
5,699,381.61
-
-
29,000.34
(350,000.00)
-
5,378,381.95
-
Shanghai Lizhi
Yule Operation
Management
Co., Ltd.
6,812,094.80
- (6,812,094.80)
-
-
-
-
-
- 703,752,772.44
-
Sanya Jahwa
Tourism Co.,
Ltd.
569,368,921.78
107
Addition
investment
9,469,368.29 (5,000,000.00)
- (6,812,094.80) 170,383,783.19 (29,187,837.73)
2014 Annual Report
(10) Fixed Assets
Book value:
Machinery and
equipment
Buildings
Electronic
equipment and
others
Vehicles
Total
Cost:
31 December 2013
341,978,617.98
178,691,261.59
23,215,496.16
66,313,731.87
610,199,107.60
158,883.08
13,714,802.68
5,403,541.06
4,914,274.42
24,191,501.24
5,258,669.00
18,197,056.45
-
2,997,247.71
26,452,973.16
-
52,257.95
-
-
52,257.95
Addition for the year
Purchase
Transfer from
Construction in
progress
Others
Deduction for the year
Disposal
Others
31 December 2014
(922,232.63)
(8,524,408.09)
(5,922,093.61)
(6,801,649.77)
(22,170,384.10)
-
(18,768,894.42)
(666,683.00)
(168,060.21)
(19,603,637.63)
346,473,937.43
183,362,076.16
22,030,260.61
67,255,544.02
619,121,818.22
(207,419,604.24)
(119,751,216.19)
(15,280,623.84)
(51,280,728.72)
(393,732,172.99)
(12,431,026.99)
(14,759,216.81)
(2,149,184.28)
(8,336,890.75)
(37,676,318.83)
704,102.25
7,858,884.26
4,838,020.34
6,784,057.79
20,185,064.64
-
7,123,154.80
486,518.14
73,111.37
7,682,784.31
Accumulated
depreciation
31 December 2013
Charge for the year
Deduction
Disposal
Others
(219,146,528.98)
(119,528,393.94)
(12,105,269.64)
(52,760,450.31)
(403,540,642.87)
31 December 2014
127,327,408.45
63,833,682.22
9,924,990.97
14,495,093.71
215,581,175.35
31 December 2013
134,559,013.74
58,940,045.40
7,934,872.32
15,033,003.15
216,466,934.61
Net Book value
In 2014, the amount of depreciation expense totaling RMB 37,676,318.83 (2013: RMB 37,348,026.71) charged to cost of goods sold, selling and
distribution expenses, general and administrative expenses were RMB 13,380,847.79, RMB 1,222,868.61 and RMB 23,072,602.43 respectively (2013: the
amounts were RMB 12,135,120.92, RMB 1,520,274.83 and RMB 23,692,630.96 respectively).
31 December 2014
The book value of construction in progress transferred into fixed assets is RMB 26,452,973.16 (2013: RMB 2,694,052.65).
108
2014 Annual Report
(11) Construction in Progress
31 December 2014
Book value
31 December 2013
Provision for
impairment loss
Net book value
Book value
Provision for
impairment loss
Net book value
Counter making and other
renovation
551,939.14
-
551,939.14
5,128,309.77
-
5,128,309.77
Equipment to be installed
401,850.00
-
401,850.00
7,061,360.38
-
7,061,360.38
-
-
-
4,342,610.03
-
4,342,610.03
25,646,947.17
-
25,646,947.17
29,464,816.18
-
29,464,816.18
1,948,113.21
-
1,948,113.21
-
-
-
28,548,849.52
-
28,548,849.52
45,997,096.36
-
45,997,096.36
Proportion
31 December
of budget Progress
2014
(%)
Cumulative
amount
Source
of interest of fund
capitalization
Baoding Road Project
Hainan New Factory
Project
Qingpu Factory Project
(a) Movement of Significant Construction in Progress
Project
Budget
31 December
2013
Transfer to
fixed assets
Addition
Deduction
(Note1)
Executive
counter
making
and other
renovation
56,312,947.17 5,128,309.77 50,574,501.20 (4,033,669.00) (51,117,202.83)
551,939.14
98.92% 98.92%
-
Selffinancing
Equipment
to be
installed
17,489,708.73 7,061,360.38 8,315,442.80
401,850.00
87.92%
87.92%
-
Selffinancing
- 100.00% 100.00%
-
Selffinancing
-
Selffinancing
-
Selffinancing
Baoding
Road
Project
Hainan
New
Factory
Project
Qingpu
Factory
Project
4,342,610.03 4,342,610.03
-
(7,424,897.13) (7,550,056.05)
(250,101.03) (4,092,509.00)
43,209,920.56 29,464,816.18 11,010,292.89 (14,744,306.00)
1,354,830,000.00
-
1,948,113.21
-
(83,855.90) 25,646,947.17
-
1,948,113.21
93.67% 93.67%
0.14%
45,997,096.36 71,848,350.10 (26,452,973.16) (62,843,623.78) 28,548,849.52
0.14%
-
Note 1: Other decrease in construction in progress in 2014 mainly includes:
( i )T
he executive counter making expenses and other expenditures transferred from construction in progress into long-term prepaid expenses amount to RMB 51,117,202.82 (2013: RMB 53,974,934.47);
( ii ) The computer software transferred from construction in progress into intangible assets amounts to RMB 7,309,531.05 (2013: RMB 6,459,181.63);
(iii) The construction in progress transferred into current expenses amounts to RMB 4,416,889.91(2013: RMB 3,833,457.71).
109
2014 Annual Report
(12) Intangible Assets
Land use right
Trademark licenses
Computer software
Patents
Total
149,127,719.47
21,175,308.00
18,617,121.44
4,000,000.00
192,920,148.91
Transfer from
Construction in
progress
-
-
7,309,531.05
-
7,309,531.05
Purchase
-
-
37,066.67
-
37,066.67
149,127,719.47
21,175,308.00
25,963,719.16
4,000,000.00
200,266,746.63
31 December 2013
(21,921,509.10)
(20,945,308.01)
(12,027,551.17)
(1,466,666.67)
(56,361,034.95)
Charge for the year
(4,523,938.09)
(229,999.99)
(2,731,147.18)
(800,000.00)
(8,285,085.26)
31 December 2014
(26,445,447.19)
(21,175,308.00)
(14,758,698.35)
(2,266,666.67)
(64,646,120.21)
Book value
31 December 2013
31 December 2014
Accumulated
amortization
Net book value
31 December 2014
122,682,272.28
-
11,205,020.81
1,733,333.33
135,620,626.42
31 December 2013
127,206,210.37
229,999.99
6,589,570.27
2,533,333.33
136,559,113.96
In 2014, the amortization of intangible assets amounts to RMB 8,285,085.26 (2013: RMB 6,058,648.02).
As at 31December 2014, there is no intangible asset with ownership restricted (31 December 2013: Nil).
(13) Long-term Prepaid Expenses
Amortization for the year
Other deduction
31 December 2014
Executive counter
making expenses
49,828,825.72
51,117,202.82
(48,050,361.52)
(766,487.42)
52,129,179.60
Improvement of
fixed assets leased
10,981,521.00
1,802,920.15
(4,670,233.98)
-
8,114,207.17
3,705,639.00
-
(1,270,504.80)
-
2,435,134.20
64,515,985.72
52,920,122.97
(53,991,100.30)
(766,487.42)
62,678,520.97
Others
31 December 2013
110
2014 Annual Report
(14) Deferred Tax Assets and Liabilities
(a) Deferred Tax Assets before Offsetting
31 December 2014
31 December 2013
Deductible
temporary difference
and deductible
losses
Deferred tax assets
Deductible
temporary
difference and
deductible losses
122,472,952.56
29,124,834.00
94,867,017.43
23,280,427.97
Accrued expenses
79,101,199.46
19,562,709.23
68,619,305.47
15,821,434.18
Restricted stock and stock appreciation right
99,704,769.47
14,955,715.42
136,498,143.73
20,474,721.56
Deferred revenue on membership points
50,207,930.81
12,551,982.70
56,167,287.91
14,041,821.98
Provision for asset impairment
28,730,027.04
6,773,268.45
28,868,776.59
6,245,310.83
36,407,119.16
6,365,757.35
19,610,488.40
3,622,015.90
72,290.72
18,072.68
21,140,047.28
5,285,011.82
416,696,289.22
89,352,339.83
425,771,066.81
88,770,744.24
Unrealized gross profit of internal
transactions
Sales in transit
Deferred tax
assets
Including:
Expected to reverse within (with) 1 year
Expected to reverse after 1 year
87,578,745.80
84,675,799.93
1,773,594.03
4,094,944.31
89,352,339.83
88,770,744.24
(b) Deferred Tax Liabilities before Offsetting
31 December 2014
Taxable temporary
difference
Transfer of Tianjiang equity held
Deferred tax
liabilities
31 December 2013
Taxable temporary
difference
Deferred tax
liabilities
501,060,301.25
75,159,045.19
-
-
53,826,250.00
8,073,937.50
53,826,250.00
8,073,937.50
Changes in fair value of available-for-sale
financial assets
4,329,033.07
649,354.96
13,863,128.02
2,079,469.20
Accelerated depreciation of fixed assets
3,327,838.59
499,175.79
-
-
562,543,422.91
84,381,513.44
67,689,378.02
10,153,406.70
Gains from change in equity in associates
Including:
Expected to reverse within (with) 1 year
Expected to reverse after 1 year
111
84,048,729.58
2,079,469.20
332,783.86
8,073,937.50
84,381,513.44
10,153,406.70
2014 Annual Report
(14) Deferred Tax Assets and Liabilities (Continued)
(c) Deductible temporary difference and deductible losses of unrecognized as deferred tax assets are analysed as below:
31 December 2014
31 December 2013
Deductible temporary difference
248,567,855.03
272,533,458.87
Deductible losses
220,992,968.87
185,909,503.84
469,560,823.90
458,442,962.71
(d)Deductible losses which are not recognised as deferred tax assets will expire in following years:
31 December 2014
31 December 2013
2014
-
17,082,207.05
2015
19,640,737.33
20,687,343.49
2016
55,594,351.27
55,599,691.99
2017
37,898,186.73
37,932,594.70
2018
52,769,378.22
54,607,666.61
2019
55,090,315.32
-
220,992,968.87
185,909,503.84
(e) The net value of deferred tax assets and liabilities after offsetting is listed as follows:
31 December 2014
Deferred tax assets
31 December 2013
Offsetting Amount
Balance after offsetting
Offsetting Amount
Balance after offsetting
(29,776,214.68)
59,576,125.15
-
88,770,744.24
29,776,214.68
54,605,298.76
-
10,153,406.70
(15) Provision for Asset Impairment
Deduction
Addition
Reversal
Write-off
31 December
2014
Others
Provision for bad debts
37,008,223.46
6,594,899.06
(163,748.48)
(1,450,791.13)
(194,845.33)
41,793,737.58
Including: Provision for bad
debtsof accounts
receivable
25,349,270.42
5,388,716.74
-
(614,039.61)
(194,085.77)
29,929,861.78
11,658,953.04
1,206,182.32
(163,748.48)
(836,751.52)
(759.56)
11,863,875.80
Provision for impairment loss
of inventories
9,504,784.64
10,208,374.52
-
(7,127,027.60)
-
12,586,131.56
Provision for impairment of
available-for-sale
financial assets
55,526,635.28
-
-
-
-
55,526,635.28
102,039,643.38
16,803,273.58
(163,748.48)
(8,577,818.73)
(194,845.33)
109,906,504.42
Provision for bad
debts of other
receivables
Total
31 December
2013
112
2014 Annual Report
(16) Accounts Payable
31 December 2014
Payable for goods
31 December 2013
495,068,514.02
372,896,753.17
(a) As at 31 December 2014, the accounts payable of which the aging exceeds one year amount to RMB 2,079,978.14
(17) Advances From Customers
Advances From Customers
31 December 2014
31 December 2013
91,430,054.24
88,255,114.85
(a)As at 31 December 2014, advances from customers which the aging exceeds one year amounts to RMB
24,294,808.46 (31 December 2013: RMB 35,567,486.93), mainly including advances from customers for beauty service.
Since the service is in progress, the amount is not settled.
(18) Employee Benefits Payable
31 December 2014
31 December 2013
Short-term employee benefits
55,257,161.36
33,519,685.05
Defined contribution plans payable
2,328,908.70
25,574.42
-
1,200,000.00
57,586,070.06
34,745,259.47
Dismissal welfare
(a) Short-term Employee Benefits Payable
31 December 2013
Wages and salaries, bonuses
Deduction
31 December 2014
33,449,226.39
314,517,665.86
(294,033,813.72)
53,933,078.53
-
17,207,144.13
(17,207,144.13)
-
Social security contributions
70,458.66
27,133,065.97
(25,879,441.80)
1,324,082.83
Including: Medical insurance
60,469.08
20,590,609.72
(19,480,804.67)
1,170,274.13
Injury insurance
307.10
1,033,975.52
(982,880.92)
51,401.70
Maternity insurance
605.89
1,752,477.75
(1,651,971.45)
101,112.19
9,076.59
3,756,002.98
(3,763,784.76)
1,294.81
Housing fund
-
18,162,325.77
(18,162,325.77)
-
Labor union fund and education fund
-
4,086,100.46
(4,086,100.46)
-
33,519,685.05
381,106,302.19
(359,368,825.88)
55,257,161.36
Employees welfare
Others
113
Addition
2014 Annual Report
(18) Employee Benefits Payable (Continued)
(b) Defined Contribution Plans Payable
31 December 2013
Basic pensions
Unemployment insurance
Addition
Deduction
31 December 2014
24,646.42
41,894,274.87
(39,742,325.19)
2,176,596.10
928.00
2,831,051.74
(2,679,667.14)
152,312.60
25,574.42
44,725,326.61
(42,421,992.33)
2,328,908.70
(c) Dismissal Welfare
31 December 2014
Dismissal Welfare Payable
31 December 2013
-
1,200,000.00
(19) Taxes Payable
31 December 2014
VAT payable
31 December 2013
6,687,738.76
Consumption tax payable
532,601.68
107,294.57
Business tax payable
209,070.42
239,042.46
Enterprise income tax payable
91,087,311.04
108,531,975.75
Individual income tax payable
1,440,168.88
762,615.99
City maintenance and construction tax
payable
2,906,194.56
953,711.94
Education surcharges payable
4,770,753.36
1,436,158.47
Others
1,706,798.97
494,889.07
169,589,110.95
119,213,427.01
(20) Dividends Payable
31 December 2014
Payable to restricted stock holders
14,300,820.00
66,936,212.04
31 December 2013
16,694,700.00
114
2014 Annual Report
(21) Other Payables
31 December 2014
Marketing expenses payable
31 December 2013
451,551,129.01
327,573,986.72
Restricted stocks before unlocking
125,831,880.00
249,054,570.00
Transportation expenses and other
operating expenses payable
81,750,163.71
37,107,035.94
Temporary receipt
33,005,527.91
27,584,494.41
Construction costs
21,990,415.65
11,442,188.44
Provision for goods returned
15,893,221.73
10,543,931.10
Others
28,116,698.20
16,237,339.65
758,139,036.21
679,543,546.26
(a)As at 31 December 2014, other payables aging over one year amount to RMB 34,342,769.02 (31 December 2013:
RMB 30,273,691.77), mainly including joining deposits. Since the cooperation is in normal progress, the deposits are
not settled.
(22) Deferred Revenue
31 December
2013
Membership points
Government grants (a)
Addition
Deduction
31 December 2014
Reason
56,167,287.91
46,369,186.96
(52,328,544.06)
50,207,930.81
Sales of goods
26,212,825.60
7,549,423.42
(8,085,847.94)
25,676,401.08
Government grant
82,380,113.51
53,918,610.38
(60,414,392.00)
75,884,331.89
(a) Items involving government grants
Items involving
government grants
115
31 December
2013
Addition
Charge to nonoperating income
31 December 2014
Related to assets /
Related to income
Funds granted by
local finance to
support industrial
development
15,161,744.57
6,390,000.00
(2,400,197.52)
19,151,547.05
Related to assets /
Related to income
Funds granted by
local governments
to support
technological
transformation of
enterprises
11,051,081.03
1,159,423.42
(5,685,650.42)
6,524,854.03
Related to income
26,212,825.60
7,549,423.42
(8,085,847.94)
25,676,401.08
2014 Annual Report
(23)Long-term Employee Benefits Payable:
31 December 2014
Stock appreciation right for employee benefits payable (Note 8)
31 December 2013
11,823,960.22
-
(24)Share Capital
31 December
2013
Equity incentive
Equity incentive
stocks
Bonus issue stocks unlocked and
repurchased and
circulated (a)
deregistered (b)
Shares with selling
conditions
-shares held by
domestic natural
persons
22,765,500.00
-
(11,187,000.00)
Shares without selling
conditions
-ordinary shares
denominated in RMB
649,677,711.00
-
11,187,000.00
672,443,211.00
-
-
Subtotal
(76,500.00) (11,263,500.00)
-
11,187,000.00
(76,500.00)
(76,500.00)
31 December
2014
11,502,000.00
660,864,711.00
672,366,711.00
(a)In accordance with the Announcement of Shanghai Jahwa United Co., Ltd. for 2 nd Unlocking and Listing of Restricted
Stocks under 2012 Equity Incentive Plan published by the Company on 4 June 2014, 11,187,000 restricted stocks under
2012 equity incentive plan were unlocked on 9 June 2014 and listed on A stock market of Shanghai Stock Exchange.
31 December
2012
Shares with selling
conditions
-shares held by
domestic natural
persons
Shares without selling
conditions
-ordinary shares
denominated in RMB
Bonus issue
Equity incentive
Equity incentive stocks
stocks unlocked and
repurchased and
circulated
deregistered
25,350,000.00 12,675,000.00
(15,177,000.00)
423,000,474.00 211,500,237.00
15,177,000.00
448,350,474.00 224,175,237.00
-
(82,500.00)
Subtotal
31 December
2013
(b)In accordance with the resolution of the 11th Meeting of 5th Board of Directors held on 11 March 2014, the Company
repurchased and deregistered 76,500 equity incentive stocks par value of RMB 1.00, so that the share capital was
decreased by RMB 76,500.00. The change in share capital has been verified by PricewaterhouseCoopers Zhong Tian
LLP, which has issued the Capital Verification Report PWC ZTYan Zi (2015) No. 155.
(2,584,500.00) 22,765,500.00
- 226,677,237.00
649,677,711.00
(82,500.00) 224,092,737.00 672,443,211.00
116
2014 Annual Report
(25)Capital Surplus
31 December 2013
Share premium (a)
Addition
Deduction
31 December 2014
901,353,590.84
109,198,515.00
(2,090,733.86)
1,008,461,371.98
136,480,879.95
60,581,180.50
(109,198,515.00)
87,863,545.45
48,110,643.30
-
-
48,110,643.30
1,085,945,114.09
169,779,695.50
(111,289,248.86)
1,144,435,560.73
Addition
Deduction
Other capital surplus (b)
-share-based payment
-others
31 December 2012
Share premium (a)
31 December 2013
762,526,226.16
145,598,020.00
(6,770,655.32)
901,353,590.84
-share-based payment
96,468,765.45
185,610,134.50
(145,598,020.00)
136,480,879.95
-others
48,110,643.30
-
-
48,110,643.30
907,105,634.91
331,208,154.50
(152,368,675.32)
1,085,945,114.09
Other capital surplus-
( a)The reason for increase in share premium under the capital surplus of the Company in 2014 is that: under the 2012
restricted stock incentive plan, 11,187,000 shares are unlocked in this year, and accordingly the share-based payment
amounting to RMB 109,198,515.00 which was originally included in other capital surplus is converted into share premium.
The reason for decrease in share premium under the capital surplus of the Company in 2014 is that:
(i) Under the 2012 restricted stock incentive plan, 76,500 shares are repurchase and deregistered in this year, so that
the share premium is decreased by RMB 760,410.00 (2013: 82,500 shares repurchased and deregistered, and share
premium decreased by RMB 820,050.00) ;
(ii) In this year, the Company purchased the minority shareholders' equity in subsidiaries, so that the share premium is
decreased by RMB 1,330,323.86 (2013: RMB 5,950,605.32).
On 26 November 2014, Shanghai Jahwa Industrial Management Co., Ltd., a subsidiary of the Company, purchased
from individual shareholders 10% shares of Shanghai Hanli Paper Co., Ltd., another subsidiary of the Company. The
transaction date of this transaction is 26 November 2014, and after this transaction was completed, the Company held
100% shares of Shanghai Hanli Paper Co., Ltd. The adjustment to capital reserve caused by the transaction is detailed
as follows:
Purchase costs Consideration paid
Less: The share of the identifiable net assets of a subsidiary computed on ongoing basis from
consolidation day as determined at the percentage of newly acquired equity
Adjustment of capital surplus
117
1,629,090.81
(310,493.86)
1,318,596.95
2014 Annual Report
(25)Capital Surplus (Continued)
On 26 June 2014, Dalian Shanghai Jahwa Co., Ltd., a subsidiary of the Company, purchased from individual shareholders
25% shares of Dalian Shanghai Jahwa Daily Chemicals Co., Ltd., another subsidiary of the Company. The transaction date
is 26 June 2014, and after this transaction was completed, the Company held 100% shares of Dalian Shanghai Jahwa Daily
Chemicals Co., Ltd. The adjustment to capital reserve caused by the transaction is detailed as follows:
Purchase costs Consideration paid
1,322,432.23
Less: The share of the identifiable net assets of a subsidiary computed on ongoing basis from
consolidation day as determined at the percentage of newly acquired equity
(1,310,705.32)
Adjustment of capital surplus
11,726.91
(b) The reason for increase in other capital surplus under the capital surplus of the Company in 2014 is that: the equity
incentive expenses in this year are charged to other capital surplus, amounting to RMB 60,581,180.50 (2013: RMB
185,610,314.50).
The reason for decrease in other capital surplus under the capital surplus of the Company in 2014 is that: Under the
equity incentive plan of the Company, 11,187,000 shares are unlocked in this year, and accordingly the share-based
payment amounting to RMB 109,198,515.00 which was originally included in other capital surplus is converted into share
premium.
(26)Other Comprehensive Income
Other Comprehensive Income in Balance Sheet
Other Comprehensive Income in 2014 Income Statement
Amount
Attributable to
shareholders
of the parent
after tax
Amount
Attributable
to
shareholders
of the
minority after
tax
-
-
-
(12,244,535.67)
1,430,114.24
(8,103,980.74)
-
132,341.53
-
-
132,341.53
-
2,842,782.22
(12,244,535.67)
1,430,114.24
(7,971,639.21)
-
31 December
2013
31 December
2014
255,083.22
-
255,083.22
-
-
Fair value changes
on available-for-sale
financial assets
11,783,658.82
(8,103,980.74)
3,679,678.08
2,710,440.69
Translation difference
of foreign-currency
financial statement
(2,302,548.03)
132,341.53
(2,170,206.50)
9,736,194.01
(7,971,639.21)
1,764,554.80
Including: Change
under equity method in
other comprehensive
income that will be
reclassified into gain
and loss
Amount
before
income tax
for the year
Deduction:
income tax
Deduction:
previously
recognized
as other
comprehensive
income and
transferred to
gain and loss in
the current year
Amount
Attributable to
shareholders
of the parent
after tax
118
2014 Annual Report
(26)Other Comprehensive Income (Continued)
Other Comprehensive Income in Balance Sheet
31 December
2012
Amount
Attributable to
shareholders
of the parent
after tax
Other Comprehensive Income in 2013 Income Statement
31 December
2013
Amount before
income tax for
the year
Deduction:
previously
recognized
as other
comprehensive
income and
transferred to
gain and loss in
the current year
-
Including: Change
under equity
method in other
comprehensive
income that will be
reclassified into gain
and loss
255,083.22
-
255,083.22
-
Fair value changes
on available-for-sale
financial assets
7,584,457.66
4,199,201.16
11,783,658.82
11,607,942.22
Translation difference
of foreign-currency
financial statement
(2,000,405.47)
5,839,135.41
(302,142.56)
3,897,058.60
(2,302,548.03)
9,736,194.01
-
(5,329,271.86)
(2,079,469.20)
-
-
(5,329,271.86)
(2,079,469.20)
(302,142.56)
11,305,799.66
Deduction:
income tax
Amount
Attributable to
shareholders
of the parent
after tax
Amount
Attributable
to
shareholders
of the
minority after
tax
-
-
4,199,201.16
(302,142.56)
3,897,058.60
-
-
(27)Surplus Reserve
Statutory surplus reserve
Statutory surplus reserve
31 December 2013
Addition of the period
Deduction of the period
31 December 2014
298,914,129.50
93,495,997.58
-
392,410,127.08
31 December 2012
Addition of the period
Deduction of the period
31 December 2013
220,855,306.89
78,058,822.61
-
298,914,129.50
Pursuant to the PRC Company Law and Article of association, the Company appropriates 10% of net profit for the
year as statutory surplus reserve. When the balance of such reserve reaches 50% of the Company's registered share
capital, any further appropriation is optional. The statutory surplus reserve can be utilized to offset prior years' losses or
capitalized into share capital upon approval. As resolved by the Board of Directors, the Company, at 10% of net profit,
withdrew the statutory surplus reserve amounting to RMB 93,495,997.58 in 2014 (2013: at 10% of net profit, amounting
to RMB 78,058,822.61).
119
2014 Annual Report
(28)Undistributed Profit
2014
Undistributed profit at the beginning of the
year (before adjustment)
2013
1,258,280,740.76
Changes in accounting policies (Note II(32))
1,120,695,330.75
-
Undistributed profit at the beginning of the
year (after adjustment)
(46,489,287.10)
1,258,280,740.76
1,074,206,043.65
Add: Net profit attributable to shareholders of
the parent for the year
897,920,847.31
800,154,088.52
Less: Appropriation to statutory surplus
reserve
(93,495,997.58)
(78,058,822.61)
Dividends payable for ordinary shares
(342,946,037.61)
(313,845,331.80)
Ordinary shares' dividends converted
into share capital
-
(224,175,237.00)
Undistributed profit at the end of the year
1,719,759,552.88
1,258,280,740.76
(a)In accordance with the resolution of the 2013 annual shareholders' meeting held on 10 April 2014, the Company
will pay the dividends at RMB 5.1 per 10 shares (including tax) to all the shareholder on the basis of numbers of
the total shares (672,443,211 shares) registered on 31 December 2013, and the dividends paid amounted to RMB
342,946,037.61.
(29)Revenue and Cost of Sales
2014
2013
5,323,254,846.50
4,452,963,761.80
Revenue from other operations
11,404,471.60
15,539,925.21
5,334,659,318.10
4,468,503,687.01
2014
2013
Cost from main operations
2,028,544,818.82
1,644,243,055.73
Cost from other operations
8,446,770.96
10,946,189.47
2,036,991,589.78
1,655,189,245.20
Revenue from main operations
120
2014 Annual Report
(29)Revenue and Cost of Sales (Continued)
(a)Revenue and cost from main operations
2014
Revenue from main
operations
Cosmetics
2013
Cost from main
operations
Revenue from main
operations
Cost from main
operations
2,038,302,180.35
291,415,519.88
1,694,672,767.30
247,370,230.50
3,148,334,751.18
1,695,849,862.71
2,616,213,056.35
1,349,637,200.08
Household care products
80,963,678.00
29,393,760.10
73,010,606.19
25,508,943.37
Others
55,654,236.97
11,885,676.13
69,067,331.96
21,726,681.78
5,323,254,846.50
2,028,544,818.82
4,452,963,761.80
1,644,243,055.73
Personal care products
(b)Revenue and cost from other operations
2013
2014
Revenue from other
operations
Cost from other
operations
Revenue from other
operations
Cost from other
operations
Sales of materials
7,436,322.13
6,936,156.94
9,927,010.13
8,480,386.58
Service revenues
1,761,850.77
942,434.98
4,406,356.75
1,545,517.18
Others
2,206,298.70
568,179.04
1,206,558.33
920,285.71
11,404,471.60
8,446,770.96
15,539,925.21
10,946,189.47
(30)Tax and Surcharges
2014
121
2013
Standard
Consumption tax
2,118,523.35
2,595,274.08
30%
Business tax
1,882,102.80
1,962,045.34
5%
City maintenance and construction tax
20,594,908.90
16,863,067.24
1%、7%
Educational surcharge
24,421,089.90
20,970,857.36
2%、3%
49,016,624.95
42,391,244.02
2014 Annual Report
(31)Selling and Distribution Expenses
2014
Marketing expenses
2013
1,166,751,765.05
891,108,515.35
Service expenses
216,865,821.19
210,797,126.66
Salary and welfare expenses
151,601,439.60
115,671,483.46
Rent
88,504,394.24
82,763,884.60
Depreciation and amortization expenses
53,783,961.00
53,849,692.03
Travel expenses
23,554,293.73
21,465,501.21
Share-based payment expenses
12,214,430.54
37,422,877.48
Others
34,002,154.97
25,228,125.76
1,747,278,260.32
1,438,307,206.55
(32)General and Administrative Expenses
2014
Salary and welfare expenses
2013
191,644,452.06
Office and travel expenses
65,741,507.03
55,071,144.66
60,190,710.18
148,187,257.02
Service expenses
40,158,507.12
36,817,838.72
Depreciation and amortization expenses
32,793,007.53
34,875,379.71
Meeting expenses
31,148,190.48
9,467,304.33
R&D project expenses
30,892,069.87
27,106,979.46
Audit and consulting fees
25,764,423.37
9,140,105.81
Taxes
15,748,922.06
9,199,375.53
Others
70,531,839.52
50,856,185.87
611,824,015.36
572,366,023.17
238,854,838.20
122
2014 Annual Report
(33)Financial Expenses
2014
Interest income
2013
(26,600,690.32)
Exchange losses /(gains)
(24,591,620.98)
33,240.78
Others
(223,292.98)
2,037,783.13
2,160,833.60
(24,529,666.41)
(22,654,080.36)
(34)Expenses by Nature
Cost of sales, selling and distribution expenses and general and administrative expenses are listed as follows by nature:
2014
Variance of finished goods and work in progress
Consumption of raw materials and low-value
consumables
2013
(112,151,142.41)
(52,271,493.78)
1,161,949,586.78
1,056,249,960.28
904,762,938.29
531,446,630.25
1,166,751,765.05
891,108,515.35
Employee Benefits expenses
437,655,589.02
339,437,167.29
Service expenses
278,066,597.72
260,991,187.87
Processing expenses
138,298,820.75
140,826,246.00
Depreciation expenses and amortization
expenses
99,952,504.39
101,411,118.25
Rental fees
92,359,152.47
86,850,788.11
72,405,140.72
185,610,134.50
Taxes
15,748,922.06
9,199,375.53
140,293,990.62
115,002,845.27
4,396,093,865.46
3,665,862,474.92
Purchase of finished goods
Marketing expenses
Others
(35)Investment Income
2014
Investment income from long-term equity investments under equity method (a)
Investment income on disposal of long-term equity investments
Investment losses on disposal of subsidiaries
Investment income from holding available-for-sale financial assets
Investment income on disposal of available-for-sale financial assets
123
2013
170,383,783.19
141,164,887.14
9,818,655.24
-
(206,868.27)
-
45,667,542.13
20,274,299.94
-
357,736.89
225,663,112.29
161,796,923.97
2014 Annual Report
(35)Investment Income (Continued)
(a)Invested entity from which the investment income accounts for more than 5% of total profits:
2014
Jiangyin Tianjiang Pharmaceutical Co., Ltd.
2013
160,885,414.56
131,794,963.06
The Group is not subject to any significant restriction for transfer of investment income.
(36)Asset Impairment Losses
2014
Impairment loss of bad debt (Note IV (15))
2013
6,431,150.58
2,942,896.59
Impairment loss of inventories(Note IV (15))
10,208,374.52
5,382,457.20
Impairment provision of available-for-sale
financial assets
-
441,455.28
16,639,525.10
8,766,809.07
(37)Non-operating Income
2014
2013
Recognized as current nonrecurring profit and loss
825,860.95
349,518.34
825,860.95
Including: Gains from disposal of fixed assets
825,860.95
349,518.34
825,860.95
24,133,553.59
26,823,572.03
24,133,553.59
2,697,188.50
1,886,174.69
2,697,188.50
27,656,603.04
29,059,265.06
27,656,603.04
Government grants (a)
Others
(a)Government Grants
2014
Funds granted by local finance to support
industrial development
Funds granted by local governments to
support technological transformation of
enterprises
2013
21,349,553.59
23,467,572.03
2,784,000.00
3,356,000.00
24,133,553.59
26,823,572.03
Related to assets /Related to
income
Related to assets /Related to
income
Gains from disposal of non-current assets
Related to assets
124
2014 Annual Report
(38)Non-operating Expenses
2014
Recognized as current nonrecurring profit and loss
2013
Losses on disposal of non-current assets
1,010,643.43
1,212,163.32
1,010,643.43
Including: Losses from disposal of fixed
assets
1,010,643.43
1,212,163.32
1,010,643.43
Donations
6,110,000.00
1,540,885.02
6,110,000.00
Penalty and overdue fine expenses
1,414,093.31
1,483,369.43
1,414,093.31
121,961.87
114,605.56
121,961.87
8,656,698.61
4,351,023.33
8,656,698.61
Others
(39)Income Tax Expenses
2014
Current income tax calculated according to
tax laws and relevant regulations
Deferred income tax expense
2013
159,492,561.27
182,531,422.94
75,076,625.39
(41,588,696.79)
234,569,186.66
140,942,726.15
The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the
consolidated financial statements to the income tax expenses is listed below:
2014
Accounting profit
1,142,101,985.72
960,642,405.06
Income tax expenses calculated at applicable tax rate 25% (2013: 25%)
285,525,496.43
240,160,601.27
Effect of different tax rates of subsidiaries
(116,012,740.98)
(102,634,534.77)
Effect of adjustment of income tax in previous periods
Profit/loss attributable to associates
1,277,655.22
(166,063.62)
(25,590,467.51)
(21,240,002.06)
Effect of non-taxable income
(6,476,401.67)
(3,041,144.99)
Costs, expenses and losses not deductible for tax purposes
3,382,291.44
1,646,953.33
Effect of using previously unrecognised deductible losses
(6,191,018.19)
(21,040,287.18)
Effect of unrecognised deductible losses and deductible temporary
differences for tax purposes
28,184,575.58
51,639,658.49
R&D expenses plus deduction
(4,689,248.85)
(4,382,454.32)
Others (a)
75,159,045.19
-
234,569,186.66
140,942,726.15
Income tax expenses
125
2013
2014 Annual Report
(39) Income Tax Expenses (Continued)
(a)The Company signed the Agreement for Transfer of Equity in Jiangyin Tianjiang Pharmaceutical Co.,Ltd. with
Guangdong Keda Clean Energy Co., Ltd., Tan Dengping, Wuxi Guolian Zhuocheng Venture Capital Co., Ltd. and China
National Traditional Chinese Medicine Corporation on 31 December 2014, whereby, the Company intended to sell
23.8378% equity held by it in Tianjiang Pharmaceutical to China National Traditional Chinese Medicine Corporation.
Since the purpose of holding of this equity investment changed, the Company anticipated that such equity investment
income could not be recovered by means of dividends, so that the deferred income tax liabilities were recognized in this
year. It is expected that the deferred income tax liabilities arising therefrom will amount to RMB 75,159,045.19, and the
income tax expenses were withdrawn in this Period and will be paid upon completion of such transaction.
(40) Earnings Per Share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing consolidated net profit attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares outstanding:
2014
2013
Consolidated net profits attributable to ordinary shareholders of
parent company (Yuan)
897,920,847.31
800,154,088.52
Weighted average number of ordinary shares outstanding (Share)
672,424,086.00
672,491,336.00
1.34
1.19
1.34
1.19
-
-
Basic earnings per share (Yuan/Share)
Including:
-Basic earnings per share from continuing operations:
-Basic earnings per share from discontinued operations:
Diluted earnings per share is calculated by dividing net profit attributable to ordinary shareholders of the Company
adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of ordinary shares
outstanding. As there were no dilutive potential ordinary shares in 2014 (2013: nil), the diluted earnings per share equal
to basic earnings per share.
(b) Diluted earnings per share
126
2014 Annual Report
(41) Notes to the Cash Flow Statement
(a) Cash Received Relating to Other Operating Activities:
2014
2013
Interest income
26,600,690.32
24,591,620.98
Government grants and others
41,394,431.95
61,307,800.07
67,995,122.27
85,899,421.05
(b) Cash Paid Relating to Other Operating Activities:
2014
Sales, management and other expenses
2013
1,583,011,201.50
1,282,798,647.37
7,646,055.18
3,138,860.01
1,590,657,256.68
1,285,937,507.38
Non-operating expense
(c) Cash Paid Relating to other Financing Activities
2014
Amount paid for purchase of minority equity in subsidiary
Repurchase of share for paying capital withdrawn
2013
6,771,782.20
-
836,910.00
902,550.00
7,608,692.20
902,550.00
(42) Supplymentary information to consolidated Cash Flow Statement
(a) Supplymentary information to consolidated Cash Flow Statement
Net profit adjusted to cash flow of operating activities:
2014
Net profit
Add: Provision for asset impairment
Depreciation of fixed assets
Amortization of intangible assets
Amortization of long-term prepaid expenses
Losses on disposal of fixed assets and other long-term assets
Investment income
Decrease/(Increase) in deferred tax assets
8,766,809.07
37,676,318.83
37,348,026.71
8,285,085.26
6,058,648.02
53,991,100.30
58,004,443.52
184,782.48
862,644.98
(225,663,112.29)
(161,796,923.97)
29,194,619.09
(41,588,696.79)
Increase in deferred tax liabilities
45,882,006.30
(98,092,560.10)
Increase in operating payables
Others
819,699,678.91
16,639,525.10
Increase in inventories
(Increase)/Decrease in operating receivables
127
2013
907,532,799.06
(85,244,889.41)
(45,457,602.81)
17,119,329.76
366,778,296.52
144,147,845.58
72,405,140.72
185,610,134.50
1,129,569,111.86
1,028,774,337.48
2014 Annual Report
(42) Supplymentary information to consolidated Cash Flow Statement (Continued)
Net changes in cash and cash equivalents
2014
2013
Cash and cash equivalents at end of year
2,633,560,561.48
1,733,026,803.09
Less: Cash and cash equivalents at
beginning of year
(1,733,026,803.09)
(1,328,500,030.21)
Net increase in cash and cash equivalents
900,533,758.39
404,526,772.88
(b) Disposal of subsidiaries
2014
Cash received from disposal of subsidiaries for the year
11,493,246.67
Including: Shanghai Chengyi Plastic Cement Products Co., Ltd.
8,738,446.33
Shanghai Jiabo Daily Chemicals Co., Ltd.
2,754,800.34
Less: Cash held by subsidiary on the date when the control is lost
(20,919,729.29)
Including: Shanghai Chengyi Plastic Cement Products Co., Ltd.
(15,442,959.87)
Shanghai Jiabo Daily Chemicals Co.,Ltd.
(5,476,769.42)
Net cash paid on disposal of subsidiaries
(9,426,482.62)
Consideration for subsidiaries disposed in 2014
Shanghai Chengyi Plastic Cement Products Co., Ltd.
8,738,446.33
Shanghai Jiabo Daily Chemicals Co., Ltd.
2,754,800.34
11,493,246.67
Net assets of subsidiaries disposed
2014
Current assets
39,244,977.24
12,117,409.46
Current liabilities
(27,962,156.84)
23,400,229.86
(c) Cash and cash equivalents
31 December 2014
Cash
Including: Cash in hand
Bank deposits that can be readily
Other cash balance used for
payment
Closing balance of cash and cash equivalent
31 December 2013
2,633,560,561.48
1,733,026,803.09
151,823.62
190,174.81
2,633,355,628.73
1,732,783,519.15
53,109.13
53,109.13
2,633,560,561.48
1,733,026,803.09
Non-current assets
128
2014 Annual Report
(43) Foreign-currency Monetary Items
31 December 2014
Amount in original currency
Exchange rate
Amount in RMB
Bank and cash
Including: USD
395,510.95
6.1532
2,433,669.62
EURO
227,367.35
7.4556
1,695,160.01
HKD
541,071.93
0.7889
426,835.41
NTD
116,248.00
0.1932
22,454.46
MOP
100,084.79
0.7659
76,654.27
AUD
0.36
5.4444
1.96
Including: HKD
3,960,677.34
0.7889
3,124,459.53
NTD
8,677,314.00
0.1932
1,676,109.97
Including: HKD
1,792,715.60
0.7889
1,414,219.56
NTD
1,879,986.00
0.1932
363,138.10
150,714.00
7.4556
1,123,663.30
3,003,919.21
0.7889
2,369,701.75
807.19
7.4556
6,018.09
Including: HKD
4,188,883.48
0.7889
3,304,484.51
NTD
11,722,135.00
0.1932
2,264,247.60
Including: HKD
84,563.70
0.7889
66,709.77
NTD
4,072,445.00
0.1932
786,633.48
1,286.25
7.4556
9,589.77
Accounts receivable
Other receivables
EURO
Advances to suppliers
Including: HKD
EURO
Accounts payable
Other payables
EURO
V Change in Consolidation Scope
(1) Disposal of Subsidiaries
(a) Information of disposal of subsidiaries for the year is listed as below:
Name of subsidiary
129
Price of
disposal
Proportion
of equity
disposed
Equity
disposal
mode
Time when
the control is
lost
Basis for determination
of time point when the
control is lost
Difference between
disposal price and
share in net assets
of subsidiary at level
of consolidated
financial statement
Amount of other
relating to equity
investment in subsidiary
and converted into
investment profit/loss
Shanghai Chengy
Plastic Cement
Products Co., Ltd.
8,738,446.33
50%
Transfer
September
2014
Resolution of Board
of Directors/articles
of association of the
Company
229,157.14
-
Shanghai Jiabo
Daily Chemicals
Co., Ltd.
2,754,800.34
50%
Withdrawal
of capital
August 2014
Resolution of Board
of Directors/articles
of association of the
Company
(436,025.41)
-
2014 Annual Report
V Change in Consolidation Scope (Continued)
(1) Disposal of Subsidiaries (Continued)
(b) Profit/loss from disposal and related cash flow is calculated as follows:
(i) Shanghai Chengyi Plastic Cement Products Co., Ltd.
Profit/loss from disposal is calculated as follows:
Amount
Disposal price
8,738,446.33
Less: Share in net assets of the Company at level of consolidated financial statement
(8,509,289.19)
Other comprehensive income converted into current profit/loss
-
Investment income from disposal
229,157.14
(ii) Shanghai Jiabo Daily Chemicals Co., Ltd.
Profit/loss from disposal is calculated as follows:
Amount
Disposal price
2,754,800.34
Less: Share in net assets of the Company at level of
consolidated financial statement
(3,190,825.75)
Other comprehensive income converted into current profit/loss
Investment losses from disposal
(436,025.41)
(2) Changes in consolidation scope on other reasons
The Company deregistered wholly-owned subsidiaries Shanghai Herborist Cosmetics Sales Co., Ltd. and Shanghai
Jahwa Hongyuan Real Estate Development Co., Ltd. respectively in May and June 2014.
130
2014 Annual Report
VI Equity in Other Entities
(1) Equity in Subsidiaries
(a) Composition of the Group
131
Nature of
business
Shareholding
proportion
Principal place
of business
Registered
place
Shanghai Jahwa sales Co., Ltd.
Shanghai
Shanghai
Commerce
90%
10%
Establishment or
investment
Shanghai GF cosmetics Co., Ltd. (former
name: Shanghai Qingfei Cosmetics Co., Ltd.)
Shanghai
Shanghai
Commerce
90%
10%
Establishment or
investment
Shanghai Herborist cosmetics Co., Ltd.
Shanghai
Shanghai
Commerce
100%
-
Establishment or
investment
Shanghai Herborist Beauty Investment
Management Co., Ltd.
Shanghai
Shanghai
Service
industry
5.52%
94.48%
Establishment or
investment
Shanghai Herborist Hanfang Beauty Service
Co., Ltd.
Shanghai
Shanghai
Commerce
-
100%
Establishment or
investment
Shanghai Jahwa International Commerce and
Trade Co., Ltd.
Shanghai
Shanghai
Commerce
90%
10%
Establishment or
investment
Shanghai Jahwa Commercial Sales Co., Ltd.
Shanghai
Shanghai
Commerce
100%
-
Establishment or
investment
Dalian Shanghai Jahwa Daily Chemicals Co.,
Ltd.
DaLian
DaLian
Industry
-
100%
Establishment or
investment
Shanghai Dalian Jahwa Daily Product Sales
Co., Ltd.
DaLian
DaLian
Commerce
-
100%
Establishment or
investment
Chengdu Shanghai Jahwa Co., Ltd.
Chengdu
Chengdu
Commerce
95%
5%
Establishment or
investment
Hainan Shanghai Jahwa Co., Ltd.
Hainan
Hainan
Industry
90%
10%
Establishment or
investment
Shanghai Jahwa Hainan Daily Chemicals
Co., Ltd.
Hainan
Hainan
Industry
97.33%
2.67%
Establishment or
investment
Hainan Jahwa sales Co., Ltd.
Hainan
Hainan
Commerce
18%
82%
Establishment or
investment
Hong Kong Herborist Co., Ltd.
HongKong
HongKong
Commerce
100%
-
Establishment or
investment
Shanghai Jahwa Hengyan Cosmetics Co., Ltd.
(former name: Shanghai Keke Cosmetics Co., Ltd.)
Shanghai
Shanghai
Commerce
53%
47%
Establishment or
investment
Shanghai Hanli Paper Co., Ltd.
Shanghai
Shanghai
Industry
-
100%
Establishment or
investment
Shanghai Hanya Packing Material Co., Ltd.
Shanghai
Shanghai
Industry
-
95%
Establishment or
investment
Shanghai Ruby Beauty Salon Co., Ltd.
Shanghai
Shanghai
Service
industry
90%
10%
Establishment or
investment
Shanghai Jahwa Medicine Science &
Technology Co., Ltd.
Shanghai
Shanghai
Service
industry
100%
-
Establishment or
investment
Name of subsidiary
Direct
Indirect
Methods of
acquisition
2014 Annual Report
VI Equity in Other Entities (Continued)
(1) Equity in Subsidiaries (Continued)
(a) Composition of the Group (Continued)
Name of subsidiary
Principal
place of
business
Registered
place
Nature of
business
Shareholding
proportion
Direct
Indirect
Methods of
acquisition
Shanghai
Shanghai
Investment
100%
-
Establishment
or investment
Shanghai Linbi Beverage Sales Co., Ltd.
Shanghai
Shanghai
Commerce
-
100%
Establishment
or investment
Hainan Linbi Beverage Co., Ltd.
Hainan
Hainan
Industry
-
100%
Establishment
or investment
Dalian Shanghai Jahwa Sales Co., Ltd.
DaLian
DaLian
Commerce
-
100%
Establishment
or investment
Shanghai Jahwa Harbin Sales Co., Ltd.
Harbin
Harbin
Commerce
-
100%
Establishment
or investment
Zhenzhou Shanghai Jahwa Sales Co., Ltd.
Zhenzhou
Zhenzhou
Commerce
-
100%
Establishment
or investment
Suzhou Shanghai Jahwa Sales Co., Ltd.
Suzhou
Suzhou
Commerce
-
100%
Establishment
or investment
Tianjin Shanghai Jahwa Sales Co., Ltd.
Tianjin
Tianjin
Commerce
-
100%
Establishment
or investment
Chengdu Shanghai Jahwa Sales Co., Ltd.
Chengdu
Chengdu
Commerce
-
100%
Establishment
or investment
Beijing Shanghai Jahwa Sales Co., Ltd.
Beijing
Bejing
Commerce
-
100%
Establishment
or investment
Kunming Shanghai Jahwa Sales Co., Ltd.
Kunming
Kunming
Commerce
-
100%
Establishment
or investment
Qingdao Shanghai Jahwa Sales Co., Ltd.
Qingdao
Qingdao
Commerce
-
100%
Establishment
or investment
Xiamen Shanghai Jahwa Sales Co., Ltd.
Xiamen
Xiamen
Commerce
-
100%
Establishment
or investment
Hangzhou Shanghai Jahwa Sales Co., Ltd.
Hangzhou
Hangzhou
Commerce
-
100%
Establishment
or investment
Nanchang Shanghai Jahwa Sales Co., Ltd.
Nanchang
Nanchang
Commerce
-
100%
Establishment
or investment
Wuhan Shanghai Jahwa Sales Co., Ltd.
Wuhan
Wuhan
Commerce
-
100%
Establishment
or investment
Hefei Shanghai Jahwa Sales Co., Ltd.
Hefei
Hefei
Commerce
-
100%
Establishment
or investment
Shaanxi Shanghai Jahwa Sales Co., Ltd.
Shaanxi
Shaanxi
Commerce
-
100%
Establishment
or investment
Jinan Shanghai Jahwa Sales Co., Ltd.
Jinan
Jinan
Commerce
-
100%
Establishment
or investment
Shanghai Jahwa Industrial Management Co., Ltd.
132
2014 Annual Report
(a) Composition of the Group (Continued)
Name of subsidiary
133
Principal
place of
business
Registered
place
Nature of
business
Shareholding
proportion
Direct
Indirect
Methods of
acquisition
Nanjing Shanghai Jahwa Sales Co., Ltd.
Nanjing
Nanjing
Commerce
-
100%
Establishment or
investment
Guangzhou Shanghai Jahwa Sales Co., Ltd.
Guang
zhou
Guang
zhou
Commerce
-
100%
Establishment or
investment
Xinjiang Shanghai Jahwa Sales Co., Ltd.
Urumchi
Urumchi
Commerce
-
100%
Establishment or
investment
Fuzhou Jahwa sales Co., Ltd.
Fuzhou
Fuzhou
Commerce
-
100%
Establishment or
investment
Shanghai Shuangmei Industry Co., Ltd.
Shanghai
Shanghai
Commerce
90%
10%
Establishment or
investment
Shanghai Jahwa electronic commerce Co.,Ltd.
(former name: Shanghai Jahwa Information
Technology Co., Ltd.)
Shanghai
Shanghai
Commerce
70%
30%
Establishment or
investment
France Herborist Co., Ltd.
France
France
Commerce
-
100%
Establishment or
investment
Shanghai Jahwa Biological technology Co., Ltd.
Shanghai
Shanghai
Industry
10%
90%
Establishment or
investment
Beijing Herborist Cosmetics Co., Ltd.
Beijing
Beijing
Commerce
-
100%
Establishment or
investment
Tea Beauty (Shanghai) Industrial Co., Ltd.
Shanghai
Shanghai
Commerce
-
100%
Establishment or
investment
Dalian Shanghai Jahwa Co., Ltd.
DaLian
DaLian
Industry
90%
10%
Business combination
involving enterprises
not under common
control
Shanghai Hanxin Industrial Co., Ltd.
Shanghai
Shanghai
Industry
95%
5%
not under common
control
Ningbo Economic & Technical Development Zone
Jahwa Economic & Trade Co., Ltd.
Ningbo
Ningbo
Commerce
-
100%
not under common
control
Changsha (Shanghai) Jahwa sales Co., Ltd.
Changsha
Changsha
Commerce
-
100%
not under common
control
Shanghai Jahwa Hongyuan Cultural
Communication Co., Ltd. (former name: Shanghai
Brewage Science Research Institute Co., Ltd.)
Shanghai
Shanghai
Service
industry
100%
-
not under common
control
2014 Annual Report
(b) Subsidiaries with important minority interests
Name of subsidiary
minority shareholding
Current year gain and
loss attributable to
minority shareholders in
2014
Current year declaration
of dividends to minority
shareholders in 2014
Equity balance
of minority
shareholders at the
end of year
5%
4,399.50
150,000.00
301,834.08
Shanghai Hanya Packing
Material Co., Ltd.
Main Financial Information
of Important but Not whollyowned Subsidiaries:
Material Co., Ltd.
31 December 2014
Current assets
Non-current
assets
6,036,681.61
Current
liabilities
Total assets
-
6,036,681.61
Non-current
liabilities
-
Total
liabilities
-
-
31 December 2013
Name of subsidiary
Material Co., Ltd.
Current assets
Non-current
assets
19,247,050.33
492,383.48
Total assets
Current
liabilities
Non-current
liabilities
19,739,433.81
10,790,742.26
Total liabilities
-
10,790,742.26
2014
Name of subsidiary
Operating revenues
Material Co., Ltd.
Total comprehensive
income
Net profit
601,890.11
87,990.06
87,990.06
Cash flows from
2,957,200.93
2013
Name of subsidiary
Operating revenues
46,929,500.76
3,115,428.05
3,115,428.05
Cash flows from
5,736,487.53
(2) Equity in Joint Venture and Associates
(a) Important Associates
Name of associate
Principal
place of
business
Registered
place
Nature of
business
Whether it is
strategic for
activities of
the Group
Direct
Shareholding
proportion
Indirect
Jiangyin Tianjiang Pharmaceutical Co.,
Ltd.
Jiangyin
Jiangyin
Industry
No
23.84%
-
Sanya Jahwa Tourism Co., Ltd.
Sanya
Sanya
Service
industry
No
25.00%
-
Shanghai Jahwa Import & Export Co., Ltd.
Shanghai
Shanghai
Commerce
No
25.00%
-
Material Co., Ltd.
Total comprehensive
income
Net profit
The above-mentioned equity investment is calculated using equity method by the group.
134
2014 Annual Report
(2) Equity in Joint Venture and Associates(Continued)
(b) Main Financial Information of Important Associates
31 December 2014
Jiangyin Tianjiang
Pharmaceutical Co.,
Ltd.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
2,420,214,475.73
54,659,198.43
Share of net assets calculated on the basis of
shareholding proportion (i)
Shanghai Jahwa
Import & Export Co.,
Ltd.
41,183,080.96
934,663,319.33
398,072,955.43
7,924,912.38
3,354,877,795.06
452,732,153.86
49,107,993.34
772,203,096.35
41,083,185.81
27,594,465.59
84,700,269.50
-
-
856,903,365.85
41,083,185.81
27,594,465.59
Minority shareholders' equity
Equity attributable to shareholders of parent company
Sanya Jahwa Tourism
Co., Ltd.
-
-
-
2,497,974,429.21
411,648,968.05
21,513,527.75
595,462,148.48
102,912,242.01
5,378,381.94
31 December 2014
Jiangyin Tianjiang
Pharmaceutical Co.,
Ltd.
Book value of equity investment in associates
Operating revenues
Net profit
Total comprehensive income
Dividends received from associates for the year
Sanya Jahwa Tourism
Co., Ltd.
Shanghai Jahwa Import
& Export Co., Ltd.
595,462,148.48
102,912,242.01
5,378,381.94
3,142,425,654.79
233,131,544.83
234,139,531.35
674,918,084.33
38,677,473.16
116,001.31
-
-
-
674,918,084.33
38,677,473.16
116,001.31
23,837,837.73
5,000,000.00
350,000.00
31 December 2013
Jiangyin Tianjiang
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Minority shareholders' equity
Equity attributable to shareholders of parent company
Share of net assets calculated on the basis of
shareholding proportion (i)
135
Sanya Jahwa Tourism
Co., Ltd.
& Export Co., Ltd.
1,910,386,518.04
53,137,984.59
62,974,832.68
617,437,890.59
399,668,786.87
7,698,354.31
2,527,824,408.63
452,806,771.46
70,673,186.99
555,689,030.66
39,835,276.57
47,875,660.55
49,078,000.00
20,000,000.00
-
604,767,030.66
59,835,276.57
47,875,660.55
-
-
-
1,923,057,377.97
392,971,494.89
22,797,526.44
458,414,571.65
98,242,873.72
5,699,381.61
2014 Annual Report
(2) Equity in Joint Venture and Associates (Continued)
(b) Main Financial Information of Important Associates (Continued)
31 December 2013
Jiangyin Tianjiang
Book value of equity investment in associates
Operating revenues
Sanya Jahwa Tourism
Co., Ltd.
& Export Co., Ltd.
458,414,571.65
98,242,873.72
5,699,381.61
2,508,048,233.02
226,570,144.27
215,092,049.97
545,514,860.40
36,068,936.80
2,469,076.03
-
-
-
545,514,860.40
36,068,936.80
2,469,076.03
14,302,702.64
-
350,000.00
Net profit
Total comprehensive income
Dividends received from associates for the year
(i) The Group calculates the share in assets on the basis of the amount attributable to parent company as stated in
consolidated financial statements of associates and in accordance with the shareholding proportion. The amount in
consolidated financial statement of associates has considered the fair value of recognizable net assets and liabilities of
associates upon acquisition of investment as well as the effect of accounting policies.
VII Related Parties and Related Party Transactions
(1) Information of the Parent Company
(a) General Information of the Parent Company
Place of registration
Nature of business
Shanghai
Industry
The ultimate controller of the Company is China Ping An (Group) Co., Ltd. (hereinafter referred to as "Ping An Group").
31 December 2013
Addition
268,261,000.00
Deduction
-
31 December 2014
-
268,261,000.00
(c) The proportions of equity interests and voting rights in the company held by the parent company:
31 December 2014
interest held
Shanghai Jahwa
(Group) Co., Ltd.
27.86%
31 December 2014
voting rights
27.94%
interest held
27.51%
(b) Registered capital and changes in registered capital of the parent company:
voting rights
27.59%
The above-mentioned shareholding proportion and voting right proportion include the 0.81% shares of the Company held by Shanghai Jahwa (Group)
Co., Ltd. via its wholly-owned subsidiary Shanghai Huisheng Industry Co., Ltd.
136
2014 Annual Report
VII Related Parties and Related Party Transactions (Continued)
(2) Information about Subsidiaries of the Company
The information about subsidiaries of the Company is detailed in Note VI.
(3) Information about associates
The information about associates is detailed in Note VI.
(4) Information about Other Related Parties
Relationship with the Group
Ping An assets management Co., Ltd.
Controlled by the Ultimate Holding Company
Shenzhen Ping An Financial Technical Consulting Co., Ltd.
Shenzhen Wanlitong Network Information Technology Co., Ltd.
Ping An Bank Co., Ltd.
China Ping An Property Insurance Co., Ltd.
Shanghai Huping Investment Management Co., Ltd.
Shanghai Takasago Flavors Co., Ltd.
Subsidiary of Parent Company's Associate
Shanghai Jahwa Property Management Co., Ltd.
Subsidiary Controlled by Parent Company
Subsidiary controlled by parent company/Parent Company's
Associate
Shanghai Jingyi Construction Decoration Co., Ltd.
Parent Company's Associate
Shanghai Mingte Furniture Co., Ltd.
Parent Company's Associate
NewHeight Information Technology (Shanghai) Co., Ltd.
Others
Shanghai Lotus Supermarket Co.,Ltd. (a)
Others
Beijing Lotus Supermarket Co., Ltd. (a)
Others
Xi'an Lotus Supermarket Co., Ltd. (a)
Others
Changsha Lotus Supermarket Co.,Ltd. (a)
Others
(a) These affiliates are the affiliates identified by the Company in this year. The transactions, receivables and payables
between the Company and such affiliates within the comparative period have been disclosed again in accordance with
the disclosure mode for financial statement of this year.
137
2014 Annual Report
(5) Related Party Transactions
(a) Purchase/Sales of Goods and Rendering/Acceptance of Services
Purchase of goods/acceptance of services:
Related party
Transaction type
Pricing Policy of related
party transactions
2014
2013
46,626,871.45
38,047,100.84
Purchase of raw
materials
Under negotiation
in reference to market
price
Shanghai Lotus Supermarket Co., Ltd.
Acceptance of
services
Under negotiation in
reference to market price
3,893,829.87
2,504,744.65
Shenzhen Ping An Financial Technical Consulting
Co., Ltd.
Acceptance of
information service
2,800,000.00
-
Purchase of cruise
ship
1,941,400.00
-
Purchase of products
and raw materials
1,697,501.57
6,059,690.15
Shenzhen Ping An Financial Technical Consulting
Co., Ltd.
Purchase of goods
1,050,000.00
-
Beijing Lotus Supermarket Co., Ltd.
Acceptance of
services
486,507.84
406,163.42
Decoration services
434,040.60
15,447,869.80
Hotel service (meeting)
354,534.40
170,330.50
Jiangyin Tianjiang Pharmaceutical Co., Ltd.
Purchase of products
271,650.60
-
Xi'an Lotus Supermarket Co., Ltd.
Acceptance of
services
147,798.13
51,740.90
Property management
108,190.52
408,165.84
China Ping An Property Insurance Co., Ltd.
Procurement of
insurance
41,124.23
-
Counter making
service
-
3,943,332.03
Agency service
-
689,276.53
Changsha Lotus Supermarket Co., Ltd.
Acceptance of
services
-
34,531.44
59,853,449.21
67,762,946.10
138
2014 Annual Report
(5) Related Party Transactions (Continued)
(a) Purchase/Sales of Goods and Rendering/Acceptance of Services (Continued)
Sales of goods/rendering of services:
Related party
Transaction
type
Pricing Policy of related
party transactions
2014
2013
negotiation in
Sales of goods Under
reference to market price 15,645,372.16
7,706,365.16
negotiation in
6,690,080.97
7,797,975.03
negotiation in
3,171,044.95
-
negotiation in
2,532,400.84
1,360,372.83
Shenzhen Decheng Investment Development Co., Ltd. (a)
negotiation in
1,287,606.84
-
Xi'an Lotus Supermarket Co., Ltd.
negotiation in
1,010,954.05
481,883.47
Shenzhen Wanlitong Network Information Technology Co., Ltd.
negotiation in
566,923.06
-
negotiation in
294,913.78
-
negotiation in
262,349.57
548,673.16
negotiation in
167,036.27
-
negotiation in
83,470.38
-
negotiation in
54,670.88
-
Ping An assets management Co., Ltd.
negotiation in
22,499.99
-
Rendering of
services
-
488,244.00
Changsha Lotus Supermarket Co., Ltd.
negotiation in
-
148,641.01
31,789,323.74 18,532,154.66
(a) Shenzhen Decheng Investment Development Co., Ltd. is not the affiliate of the Company. In the transaction, a
subsidiary of Ping An Group entrusted such company with purchasing goods from the Company. The Company regards
the transaction as an affiliated transaction on the basis of its nature.
139
2014 Annual Report
(5) Related Party Transactions (Continued)
(b) Payment Made on Behalf for Others
Related party
Transaction type
Water and electricity expenses paid on behalf of others
Water and electricity expenses paid on behalf of others
2014
23,142.85
10,218.92
33,361.77
2013
19,612.93
19,612.93
(c) Interest Income
Related party
Transaction type
Interest income
2014
2013
214,918.51
5,725,172.88
(d) Salaries and Compensation for Key Management Personnel
2014
2013
Salaries and compensation for key management personnel
994.28
469.70
The above amount does not include the remuneration of key management personnel involved in 2012 restricted stock share-based payment plan and
2014 stock appreciation right incentive plan.
(6) Receivables from and Payables to Related Parties
Receivables
31 December 2014
Booking value
Cash at bank
and on hand
Booking value
Provision for
bad debts
146,109,967.92
-
150,956.23
-
4,372,493.61
(218,624.68)
5,422,607.20
(281,823.64)
4,285,320.34
(214,266.02)
3,051,219.65
(152,662.36)
838,428.33
(41,921.42)
858,226.17
(56,149.52)
Xi an Lotus Supermarket Co., Ltd.
349,456.41
(17,472.82)
346,687.58
(17,334.38)
37,548.07
(1,877.40)
-
-
9,823.97
(491.20)
-
-
7,868.53
(393.42)
445.49
(22.27)
-
-
117,160.00
(5,858.00)
9,900,939.26
(495,046.96)
9,796,346.09
(513,850.17)
200,000.00
-
-
-
160,000.00
-
5,261,570.00
-
360,000.00
-
5,261,570.00
-
Advances to
suppliers
Provision for
bad debts
Accounts
receivable
31 December 2013
140
2014 Annual Report
(6) Receivables from and Payables to Related Parties (Continued)
Payables:
31 December 2014
Accounts payable
4,415,330.00
13,684.91
-
10,958,202.60
4,415,330.00
404,551.00
-
140,940.99
3,129,827.99
-
30,000.00
Other payables
31 December 2013
10,944,517.69
-
313.10
545,491.99
3,160,141.09
55,958.13
-
(7) Commitments of Related Parties
The following are the commitments of related parties which have been signed by the Group till balance sheet date but not
stated in the balance sheet:
Purchase of goods
Related Parties
31 December 2014
31 December 2013
-
159,828.82
-
55,897.44
-
215,726.26
Acceptance of services
Related Parties
141
31 December 2014
31 December 2013
-
2,740,070.00
2014 Annual Report
VIII Share-based Payment
(1) Share-based Payment Settled with Equity
(a) Overview of 2012 restricted stock share-based payment
2014
Total amount of share-based payment instruments granted in 2012
2013
364,786,500.00
364,786,500.00
16.41
16.41
109,198,515.00
145,598,020.00
3,516,196.50
791,450.00
6 months
18 months
Financial liabilities recognized at end of this year
125,831,880.00
249,054,570.00
Treasury stocks recognized at the end of this year
125,831,880.00
249,054,570.00
360,478,853.50
363,995,050.00
60,581,180.50
185,610,134.50
Grant price
Total amount of share-based payment instruments exercised in this year
Total amount of share-based payment instruments expired in this year
Remaining term of contract for outstanding restricted stocks at the end of this year
Explanation on share-based payment:
Total amount of employee service exchanged with share-based payment
Share-based payment settled with equity:
Total expenses recognized for share-based payment settled with equity
(b) 2012 restricted stock share-based payment plan
In accordance with "Restricted Shares Incentive Plan of Shanghai Jahwa United Co., Ltd. (Draft revised)" (hereinafter referred
to as "Incentive Plan") approved by the shareholders general meeting of the Company on 29 May 2012, the Company granted
accumulatively 25,350,000 restricted shares to the incentive targets with a price of 16.41 RMB per share. The accumulated
capital raised from issuing restricted stocks was RMB415,993,500.00. The fair value of restricted shares issued by the
Company is determined as per the fair value of shares on the granting day of restricted shares and is calculated by the BlackScholes option pricing model. Total fair value of equity instruments issued by the Company in 2012 on the date of grant was
RMB364,786,500.00 and was included in period expense and capital surplus. Within this Reporting Period, the total expenses
confirmed due to stock payment by equity settlement are RMB 60,581,180.50 (2013: 185,610,134.50).
Estimated volatility (%)
Risk-free rate (%)
Estimated selling period (years)
Share price (Yuan)
33.80~35.15
3.19~3.40
1~3
The fair value of restricted stocks granted this time on grant date is estimated with Black Scholes Option Pricing Model
and on the basis of the terms and conditions of granted share options. The following table lists the input variables of used
model:
31.50
Volatility is the volatility of the Company s historical share prices. Estimated selling period is estimated on the basis of the annual transfer percentage of
the shares held by senior executives, but may not be the actual result.
The fair value does not consider the other characteristics of the restricted stocks granted.
142
2014 Annual Report
VIII Share-based Payment(Continued)
(1) Share-based Payment Settled with Equity (Continued)
(b) 2012 restricted stock share-based payment plan (Continued)
According to this plan, the issued and outstanding restricted stocks are as follows:
2014
Grant price Yuan/share
Number of restricted stocksThousand
31 December 2013
Repurchase
Unlocking
31 December 2014
16.41
22,765.50
-
(76.50)
-
(11,187.00)
16.41
11,502.00
Pursuant to the resolution of the 11th Meeting of 5th Board of Directors of the Company held on 11 March 2014, the Company
unlocked its second batch of restricted stocks and the total number of restricted stocks unlocked was 11,187,000. In
accordance with the resolution of the shareholders' meeting held by the Company on 10 April 2014, the Company repurchased
and deregistered 76,500 incentive stocks. Such unlocking did not involve the stocks held by persons who had already
resigned before. As at 31 December 2014, the number of the Company's restricted stocks were 11,502,000.
It is specified in the Incentive Plan that "the effective period of the restricted stock incentive plan is 4 years with 1 year lockup
period and 3 year unlocking period. Within the lockup period, restricted stocks granted to the incentive targets under this Plan
will be locked up and may not be transferred. The unlocking period of restricted stocks thus granted shall be 12~48 months
following the date of grant. Within the unlocking period, if the unlocking conditions stipulated by the incentive plan are met,
the upper limits of unlock stocks within 3 unlock days by incentive targets are 40%, 30% and 30% of total number of granted
stocks in the incentive plan." Since the first unlock date is the next working day after end of the lock period, so the amortization
period is 36 months (1,096 days), in which the first, second and third amortization periods of restricted stock expenses are 12
months, 24 months and 36 months, respectively. The amortization rates are as follows:
Contents
First 12 months
Second 12 months
Third 12 months
Total
1st unlocked restricted stocks
40.00%
-
-
40.00%
2nd unlocked restricted stocks
15.00%
15.00%
-
30.00%
3rd unlocked restricted stocks
10.00%
10.00%
10.00%
30.00%
Total
65.00%
25.00%
10.00%
100.00%
On 17 March 2015, Board of Directors of the Company decided to apply for the 3rd unlocking of restricted stocks during the period from 36 months to 48
months after the grant date (6 June 2012), namely from 7 June 2015 to 7 June 2016.
(2) Share-based Payment Settled with Cash
(a) Overview of stock appreciation rights in 2014
2014
Number of stock appreciation rights granted in this Period
484,653.00
Number of stock appreciation rights exercised in this Period
-
Number of stock appreciation right expired in this Period
-
Number of outstanding stock appreciation rights at the end of this year
Remaining term of contract for outstanding stock appreciation rights at the end of this Reporting Period
484,653.00
64 months
Share-based payment settled with cash:
143
Total amount of employee service exchanged with stock appreciation rights
17,314,506.55
Expenses recognized for share-based payment settled with cash
11,823,960.22
2014 Annual Report
VIII Share-based Payment (Continued)
(2) Share-based Payment Settled with Cash (Continued)
(b) 2014 stock appreciation right incentive plan
In accordance with the 2014 Long-term Incentive Program for Chairman of Shanghai Jahwa United Co., Ltd. adopted
at shareholders meeting on 18 April 2014 (hereinafter referred to as "Incentive Program"), the Company implemented
the stock appreciation right incentive for the chairman Mr. Xie Wenjian (hereinafter referred to as "Incentive Object"). In
accordance with the Black Scholes Option Pricing Model, the stock appreciation rights will be linked with the A stocks
of the Company, and will be granted in three batches in three years. 484,653 stock appreciation rights will be granted in
the first batch. The number of rights to be granted in the second batch and third batch will be determined by the Board
of Directors, and the total value of virtual stocks with respect to the stock appreciation rights granted in every batch will
not be less than the total value of virtual stocks with respect to the stock appreciation rights granted in the first batch.
It is specified in the Incentive Program that, the effective date of stock appreciation rights shall be the date on which
the meeting of Board of Directors for deliberating the 2014, 2015 or 2016 annual report respectively. Only if the
Incentive Object achieves the performance examination target will the stock appreciation rights obtained by him in the
corresponding year come into effect.
The exercisable period for the first batch of stock appreciation rights shall be the period from the first trading day in
36th month after the first-batch grant date to the last trading day in 72 months after the first-batch grant date; the
exercisable period for the second batch of stock appreciation rights shall be the period from the first trading day in
24th month after the second-batch grant date to the last trading day in 72 months after the first-batch grant date; the
exercisable period for the third batch of stock appreciation rights shall be the period from the first trading day in 12th
month after third-batch grant date or after the third-batch effective date (whichever is later) to the last trading day in
72 months after the first-batch grant date. Except for the circumstances listed in the Incentive Program under which the
rights may not be exercised, the Incentive Object shall have the right to apply for exercise of effective stock appreciation
rights within the exercisable period.
In accordance with the resolution of the 14th Meeting of 5th Board of Directors held by the Company on 12 May 2014,
the Company granted to the Incentive Object the first batch of 484,653 stock appreciation rights on 12 May 2014, with
the exercise price being RMB 33.89 per right.
The fair value of stock appreciation rights granted this time on the grant date is estimated with Black Scholes Option
Pricing Model and on the basis of the terms and conditions of granted share options. The following table lists the input
variables of used model:
31 December 2014
Exercise price (Yuan)
Validity period (year)
33.89
3.87
Current price of subject shares (Yuan)
34.32
Estimated volatility (%)
34.60
Risk-free rate (%)
3.43
Estimated dividend rate (%)
1.06
The exercise price of second batch and third batch of appreciation rights is the average closing price of stocks of
Shanghai Jahwa during 30 trading days prior to the holding of board meeting at which the second batch and third batch
of appreciation rights are granted. The validity period of stock appreciation rights is 6 years starting from 12 May 2014.
144
2014 Annual Report
IX Contingent Matters
As at 31December 2014, the Group has no significant contingencies that need to be disclosed.
X Commitments
(1) Capital expenditure commitments
The capital expenditures contracted for but not yet necessary to be recognized on the balance sheet are summarized as follows:
31 December 2014
Building, machinery and equipment
10,891,109.49
31 December 2013
14,039,464.27
(2) Operating lease commitments
The future minimum lease payments due under non-cancellable operating leases contracts are summarized as follows:
31 December 2014
31 December 2013
Within 1 year
39,650,973.85
46,987,469.73
1 to 2 years
21,326,161.93
29,602,465.07
2 to 3 years
5,988,112.90
15,883,896.10
Over 3 years
9,471,041.65
28,778,502.45
76,436,290.33
121,252,333.35
XI Other Important Matters
In addition to the matters disclosed in these financial statements, the Board of Directors of the Company have also
considered other significant matters till the date on which these financial statements were approved as well as their
impact on these financial statements, which are disclosed as follows:
(1) Compensation Agreement for Non-residential Housing to be signed by the Company
In accordance with the overall planning of urban development of Qingpu District, owing to the needs of public interests, the
Xu Jing Town the Housing & Land Expropriation and Compensation Work Office in Qingpu District has to expropriate the land
of Qingpu Production Base of the Company at No. 1118, YInggang East Road, Xu Jing Town. Both parties planned to sign
the Compensation Agreement for Non-residential Housing in December 2014 through negotiation. Xu Jing Town Housing &
Land Expropriation and Compensation Work Office will pay to the Company the compensation amounting to RMB 666 million.
As at 31 December 2014, the Company has not paid any significant expense relating to relocation, and has not received the
relocation compensation.
This removal is the total removal of Qingpu Production Base of the Company. In order not to affect the production and
operation of the Company, after receiving the expropriation notice from Qingpu District People's Government, the Company
immediately carried out the site selection for new production base. At present, the preliminary survey and evaluation for site
of new factory of Shanghai Jahwa has been completed, which is located at the northwest corner of junction between Beiying
Road and Qingzhao Road in Plot E-01-02 in Qingpu Industrial Park and occupies an area of about 216mu. It is estimated that
the total investment for this project will reach about RMB 1.35483 billion (including the net book value of equipment removable
from original factory), including the construction & installation expenses amounting to RMB 764.88 million, other construction
expenses amounting to RMB 51.29 million, preparatory expenses amounting to RMB 122.43 million, new equipment expenses
amounting to RMB 195 million, net book value of equipment removable from original factory amounting to about RMB 5.23
million and land expenses amounting to RMB 2.16003 billion. A part of the fund necessary for the project will come from the
compensation (RMB 666 million) for removal of existing factory, and other parts will be the self-owned funds of the Company.
As at 31 December 2014, the Company has not paid any significant purchase expenditure relating to relocation, and has not
signed any significant asset purchase contract relating to relocation.
145
2014 Annual Report
XI Other Important Matters (Continued)
(2) Planned sales of assets
the Company signed the Agreement for Transfer of Equity in Jiangyin Tianjiang Pharmaceutical Co., Ltd. with Guangdong
Keda Clean Energy Co., Ltd., Tan Dengping, Wuxi Guolian Zhuocheng Venture Capital Co., Ltd. and China National
Traditional Chinese Medicine Corporation on December 31, 2014, whereby, the Company intended to sell 23.8378% equity
held by it in Tianjiang Pharmaceutical to China National Traditional Chinese Medicine Corporation. The estimated value of all
equity of Tianjiang Pharmaceutical is the audited net profit of Tianjiang Pharmaceutical in 2014 minus non-operating profit/
loss, multiplied by 15, provided the estimated value may not be less than RMB 9.2 billion or more than RMB 10.2 billion. The
price for transfer of equity by the Company is determined by multiplying the estimated value of Tianjiang Pharmaceutical
by shareholding proportion of the Company in Tianjiang Pharmaceutical. This transaction does not constitute an affiliated
transaction of the Company, and does not constitute a significant asset reorganization. On December 31, 2014, the transaction
was to be approved by the board of directors and shareholders' meeting of concerned parties through internal decision
making procedures and the corresponding external approval formalities, and the relevant matters were uncertain.
(3) Receipt of Prior Notice on Administration Punishment issued by CSRC Shanghai Office
On 20 November 2013, the Company received from China Securities Regulatory Commission the Notice of Investigation (Hu
Diao Cha Tong Zi 2013-1-64), which stated that, due to the Company's suspected failure to disclose information according to
applicable provisions, China Securities Regulatory Commission decided to investigate into the Company pursuant to relevant
provisions of the Securities Law of the People's Republic of China.
On 23 December 2014, the Company received the Prior Notice on Administration Punishment (Hu Zhen Jian Chu Fa Zi [2014]
No. 10) issued by Shanghai Office of China Securities Regulatory Commission, which stated that CSRC Shanghai Office had
completed the investigation on the information disclose case of Shanghai Jahwa and planned to impose the administrative
punishment on the Company and relevant persons in accordance with laws. At present, this case is still in the stage of
representation, averment and hearing of evidence.
XII Matters after Balance Sheet Date
(1) Distribution of Profits
On 17 March 2015, the Proposal on Distribution of Profits in 2014 was adopted at the 23rd Meeting of 5th Board of Directors of
the Company, whereby the Company will, on the basis of the total share capital as at the record date for profit distribution, pay
the dividends at RMB 6.1 per 10 shares (including tax) to every shareholder registered on the record date.
The Group's activities expose it to a variety of financial risks: market risk (primarily foreign currency risk), credit risk and
liquidity risk. The overall risk management plan of the Group aims at the unpredictability of financial market, so as to
minimize the adverse impact on financial results of the Group.
(1) Market Risk
(a) Foreign Exchange Risk
XII Financial Risk
The Group's major operational activities are carried out in mainland China and a majority of the transactions are
denominated in RMB. The Group is exposed to foreign exchange risk arising from the recognized assets and liabilities,
and future transactions denominated in foreign currencies, primarily with respect to HKD and Euro. The Group's finance
department is responsible for monitoring the amount of assets and liabilities, and transactions denominated in foreign
currencies to mitigate the foreign exchange risk.
As at 31 December 2014 and 2013, the carrying amounts in RMB equivalent of the Group's assets and liabilities
denominated in foreign currencies are summarized below:
146
2014 Annual Report
XII Financial Risk(Continued)
(1) Market Risk(Continued)
(a) Foreign Exchange Risk (Continued)
31 December 2014 (equivalent RMB)
Other foreign
HKD item
EURO item
currency items
Financial assets denominated in foreign currency - Cash at book
and on hand
Accounts receivable
Other receivables
Financial liabilities denominated in foreign currency - Accounts
payable
Other payables
Total
426,835.41
1,695,160.01
2,532,780.31
4,654,775.73
3,124,459.53
1,414,219.56
4,965,514.50
1,123,663.30
2,818,823.31
1,676,109.97 4,800,569.50
363,138.10 2,901,020.96
4,572,028.38 12,356,366.19
3,304,484.51
-
2,264,247.60
5,568,732.11
66,709.77
3,371,194.28
9,589.77
9,589.77
786,633.48
3,050,881.08
862,933.02
6,431,665.13
31 December 2013 (equivalent RMB)
EURO item
Other foreign
currency
items
747,197.61
2,475,204.24
1,096,235.68
4,318,637.53
Accounts receivable
6,088,956.05
-
762,855.25
6,851,811.30
Other receivables
1,166,994.26
12,015.38
61,746.83
1,240,756.47
8,003,147.92
2,487,219.62
1,920,837.76
12,411,205.30
5,383,863.27
-
205,525.28
5,589,388.55
HKD item
Financial assets denominated in foreign currency - Cash at book
and on hand
Financial assets denominated in foreign currency - Accounts payable
Total
As at 31 December 2014, if the currency had strengthened/weakened by 10% against the HKD while all other variables
have been held constant, the Group's net profit for the year would have been approximately RMB 159,432.02 (2013:
approximately RMB 261,928.47) higher/lower for various financial assets and liabilities denominated in HKD.
As at 31 December 2014, if the currency had strengthened/weakened by 10% against the Euro while all other variables
have been held constant, the Group's net profit for the year would have been approximately RMB 280,923.35 (2013:
approximately RMB 248,721.96) higher/lower for various financial assets and liabilities denominated in Euro.
(2) Credit risk
Credit risk is managed on a group basis. Credit risk mainly arises from cash at bank and on hand, accounts receivable,
other receivables, notes receivable etc.
The Group expects that there is no significant credit risk associated with cash at bank since they are deposited at
state-owned banks and other medium or large size listed banks. Management does not expect that there will be any
significant losses from non-performance by these counterparties.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and notes
receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their
financial position, the availability of guarantee from third parties, their credit history and other factors such as current
market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with
a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the
overall credit risk of the Group is limited to a controllable extent.
As at 31 December 2014, the Group has no significant overdue receivable (31 December 2013: Nil).
147
2014 Annual Report
XII Financial Risk(Continued)
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group's finance department
in its headquarters. The Group's finance department at its headquarters monitors rolling forecasts of the Group's shortterm and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to
cash to meet operational needs.
The financial assets and liabilities of the Group at the balance sheet date are analyzed by their maturity date below at
their undiscounted contractual cash flows:
31 December 2014
Within 1 year
Accounts payable
495,068,514.02
Other payables
758,139,036.21
Dividends payable
14,300,820.00
1,267,508,370.23
31 December 2013
Within 1 year
Accounts payable
372,896,753.17
Other payables
679,543,546.26
Dividends payable
16,694,700.00
1,069,134,999.43
XIII Fair Value Estimation
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value hierarchy has
the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(1) Financial Instruments Measured at Fair Value
As at 31 December 2014, The financial instrument measured at fair value are listed as follows based on the abovementioned levels:
Level 1
Level 2
Level 3
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices).
Total
Continuous measurement of fair value
Fund special-account wealth management products
Total of Financial Asset
-
54,857,435.81
-
54,857,435.81
-
461,438,157.53
-
461,438,157.53
-
516,295,593.34
-
516,295,593.34
148
2014 Annual Report
XIII Fair Value Estimation (Continued)
(1) Financial Instruments Measured at Fair Value (Continued)
As at 31 December 2013, The financial instrument measured at fair value are listed as follows based on the abovementioned levels:
Level 1
Level 2
Level 3
Total
Continuous measurement of fair value
Fund special-account wealth management products
-
381,979,984.19
-
381,979,984.19
-
303,383,143.83
-
303,383,143.83
-
685,363,128.02
-
685,363,128.02
Total of Financial Asset
The Group takes the date on which the matter causing conversion between different tiers occurs as the time point for
recognizing the conversion between different tiers. In this year, there was no conversion between level 1 and level 2.
As for the financial instruments traded on active market, the Group determines their fair value on the basis of the
quotation on active market; as for the financial instruments which are not traded on active market, the Group determines
their fair value by using valuation techniques. The fair value of above-mentioned fund special-account wealth
management products is determined in accordance with the balance-sheet-date net value report provided by the
fund company; the fair value of above-mentioned bank wealth management products is determined as principal plus
expected returns till balance sheet date.
XIV Notes to the Company's Financial Statements
(1) Accounts Receivable
31 December 2014
Balance of accounts receivable
31 December 2013
300,889,297.81
248,280,014.61
(19,998,227.04)
(14,204,861.49)
280,891,070.77
234,075,153.12
(a) The Aging of Accounts Receivable are Analysed below:
31 December 2014
Within 1 year
289,427,984.25
241,974,122.57
1 to 2 years
5,452,702.14
5,591,266.21
2 to 3 years
5,293,985.59
714,625.83
714,625.83
-
300,889,297.81
248,280,014.61
Over 3 years
149
31 December 2013
2014 Annual Report
XIV Notes to the Company's Financial Statements (Continued)
(b) Disclosure accounts:
31 December 2014
Book value
Amount
accounts receivable
Accounts receivable
31 December 2013
Bad debt provision
Portion
Amount
Book balance
Ratio
Amount
Bad debt provision
Portion
Amount
Ratio
-
-
-
-
-
-
-
-
300,889,297.81
100%
(19,998,227.04)
6.65%
248,280,014.61
100%
(14,204,861.49)
5.72%
-
-
-
-
-
-
-
-
300,889,297.81
100%
(19,998,227.04)
6.65%
248,280,014.61
100%
(14,204,861.49)
5.72%
accounts receivable
but bad debt provision
(c) As at 31 December 2014, the company has no individually significant accounts receivable or bad debt provision
recognized individually (31 December 2013:Nil).
(d) Bad debt provision of the Company's accounts receivable that recognized by aging analysis:
31 December 2014
Book balance
31 December 2013
Bad debt provision
Book balance
Amount
289,427,984.25
(14,471,399.22)
5%
241,974,122.57
(12,098,706.13)
5%
1 to 2 years
5,452,702.14
(1,635,810.64)
30%
5,591,266.21
(1,677,379.86)
30%
2 to 3 years
5,293,985.59
(3,176,391.35)
60%
714,625.83
(428,775.50)
60%
714,625.83
(714,625.83)
100%
-
-
-
300,889,297.81
(19,998,227.04)
6.65%
248,280,014.61
(14,204,861.49)
5.72%
Over 3 years
Amount
Amount
Ratio
(e) As at 31 December 2014, the Balances of accounts Receivable due from Top Five Debtors are as follows:
Total of Balances of Other Receivables due from Top Five Debtors
Book Balance Amount
Bad Debt Provision Amount
275,977,869.73
(18,654,221.11)
Amount
Within 1 year
Ratio
Bad debt provision
Portion
91.72%
150
2014 Annual Report
(2)Other Receivables
31 December 2014
Amount incoming from and outgoing to subsidiaries
31 December 2013
116,208,482.93
80,135,435.44
586,832.91
-
Receivable imprest fund for employees
52,673.00
20,015.60
Receivable temporarily-paid amount
20,000.00
567,547.91
1,594,632.94
2,689,688.24
118,462,621.78
83,412,687.19
(45,754,738.95)
(24,255,487.24)
72,707,882.83
59,157,199.95
Receivable payment made on behalf of others
Others
(a) The Aging of Other Receivable are Analysed below:
31 December 2014
31 December 2013
Within 1 year
38,034,716.19
40,858,708.19
1 to 2 years
40,373,926.59
19,003,979.00
2 to 3 years
16,503,979.00
13,000,000.00
Over 3 years
23,550,000.00
10,550,000.00
118,462,621.78
83,412,687.19
(b) Disclosure of Other Receivables by Categories:
31 December 2014
Book balance
Amount
other receivable and bad
debt provision recognized
individually
Other receivable and
bad debt provision
other receivable but bad
debt provision recognized
individually
31 December 2013
Bad debt provision
Portion
Amount
Book balance
Ratio
Amount
Bad debt provision
Portion
Amount
Ratio
-
-
-
-
-
-
-
-
118,462,621.78
100%
(45,754,738.95)
38.62%
83,412,687.19
100%
(24,255,487.24)
29.08%
-
-
-
-
-
-
-
-
118,462,621.78
100%
(45,754,738.95)
38.62%
83,412,687.19
100%
(24,255,487.24)
29.08%
(c) As at 31 December 2014, no individually significant other receivables or bad debt provision recognized individually (31
December 2013: Nil).
151
2014 Annual Report
(2)Other Receivables
(d) Bad debt provision of the Company's other receivable that recognized by aging analysis:
31 December 2014
Book balance
31 December 2013
Bad debt provision
Amount
Amount
Book balance
Ratio
Bad debt provision
Amount
Amount
Ratio
Within 1 year
38,034,716.19
(190,173.58)
0.50%
40,858,708.19
(204,293.54)
0.50%
1 to 2 years
40,373,926.59
(12,112,177.97)
30%
19,003,979.00
(5,701,193.70)
30%
2 to 3 years
16,503,979.00
(9,902,387.40)
60%
13,000,000.00
(7,800,000.00)
60%
Over 3 years
23,550,000.00
(23,550,000.00)
100%
10,550,000.00
(10,550,000.00)
100%
118,462,621.78
(45,754,738.95)
38.62%
83,412,687.19
(24,255,487.24)
29.08%
(e) As at 31 December 2014, the Balances of Other Receivables due from Top Five Debtors are as follows:
Amount
Aging
Ratio
Bad debt
provision
Incoming
and outgoing
amount
64,000,000.00
Within 1 year/
1 to 2 years/
2 to 3 years/
Over 3 years
54.03%
28,825,000.00
Shanghai Herborist Beauty Investment Management Co., Ltd.
Incoming
and outgoing
amount
35,500,000.00
Within 1 year/
1 to 2 years
29.97%
6,225,000.00
Shanghai Jahwa Medicine Science & Technology Co., Ltd.
Incoming
and outgoing
amount
10,000,000.00
Over 3 years
8.44%
10,000,000.00
Incoming
and outgoing
amount
4,000,000.00
Within 1 year
3.38%
20,000.00
Shanghai Linbi Beverage Sales Co., Ltd.
Incoming
and outgoing
amount
1,545,852.45
Within 1 year
1.30%
7,729.26
97.12%
45,077,729.26
115,045,852.45
31 December 2014
31 December 2013
Subsidiaries (a)
963,170,192.53
936,688,944.03
Associates (b)
698,374,390.49
556,857,445.37
1,661,544,583.02
1,493,546,389.40
(45,122,605.41)
(45,122,605.41)
1,616,421,977.61
1,448,423,783.99
Deduction: Impairment provision of long-term equity investment
Nature of
amount
The Company is not subject to any significant restriction on realization of long-term investment.
152
2014 Annual Report
(a) Subsidiaries
Change (+, -)
31 December
2013
31 December
2014
Deduction
Cash
Provision for
dividends
impairment loss declared in this
year
Shanghai Jahwa Sales Co., Ltd.
198,000,000.00
-
-
198,000,000.00
-
-
Shanghai Herborist Cosmetics Co., Ltd.
197,160,000.00
3,000,000.00
-
200,160,000.00
-
-
Shanghai Hongyuan Cultural Communication Co.,
Ltd. (former name: Shanghai Brewage Science
Research Institute Co., Ltd.)
127,300,000.00
-
-
127,300,000.00
-
-
Shanghai Jahwa Industrial Management Co., Ltd.
110,000,000.00
-
-
110,000,000.00
-
-
Shanghai Hanxin Industrial Co., Ltd.
86,350,000.00
-
-
86,350,000.00 (36,422,605.41)
-
Shanghai Jahwa Commercial Sales Co., Ltd.
65,000,000.00
-
-
65,000,000.00
-
-
Shanghai Jahwa Medicine Science & Technology
Co., Ltd.
64,000,000.00
-
-
64,000,000.00
-
-
Shanghai Jahwa Hainan Daily Chemical Co., Ltd.
29,200,000.00
-
-
29,200,000.00
-
-
Dalian Shanghai Jahwa Co., Ltd.
13,800,000.00
-
-
13,800,000.00
(3,000,000.00)
-
9,000,000.00
-
-
9,000,000.00
-
-
Chengdu Shanghai Jahwa Co., Ltd.
8,882,408.92
-
-
8,882,408.92
-
11,400,000.00
Hong Kong Herborist cosmetics Co., Ltd.
8,515,535.11
6,199,362.80
-
14,714,897.91
-
-
Shanghai GF cosmetics Co., Ltd. (former name:
Shanghai Qingfei Cosmetics Co., Ltd.)
5,700,000.00
1.00
-
5,700,001.00
(5,700,000.00)
-
Shanghai Jahwa electronic commerce Co.,
Ltd. (former name: Shanghai Jahwa Information
Technology Co., Ltd.)
3,500,000.00
-
-
3,500,000.00
-
21,000,000.00
Shanghai Chengyi Plastic Cement Products Co.,
Ltd.
2,500,000.00
- (2,500,000.00)
-
-
21,463,938.45
Hainan Shanghai Jahwa Co., Ltd.
1,881,000.00
-
-
1,881,000.00
-
30,975,059.69
Shanghai Ruby Beauty Salon Co., Ltd.
1,350,000.00
-
-
1,350,000.00
-
-
Shanghai Jahwa Biological technology Co., Ltd.
1,000,000.00
-
-
1,000,000.00
-
-
900,000.00
-
-
900,000.00
-
-
2,650,000.00
-
-
2,650,000.00
-
-
- 19,781,883.70
-
19,781,883.70
-
-
-
-
1.00
-
-
936,688,944.03 28,981,248.50 (2,500,000.00)
963,170,192.53
Hainan Jahwa Sales Co., Ltd.
Shanghai Herborist Beauty Investment Management
Co., Ltd.
Shanghai International Commerce and Trade Co.,
Ltd.
153
Addition
1.00
(45,122,605.41) 84,838,998.14
2014 Annual Report
(b) Associates
Change (+, -)
31 December 2013
Jiangyin Tianjiang
Net profit/losses
using equity method
Cash dividends or profit
distribution declared
Impairment loss
provided for the
year
31 December 2014
458,414,571.65
160,885,414.56
(23,837,837.73)
595,462,148.48
-
98,442,873.72
9,469,368.29
(5,000,000.00)
102,912,242.01
-
556,857,445.37
170,354,782.85
(28,837,837.73)
698,374,390.49
-
(4) Revenues and Cost of Sales
2014
Main operations revenue
Other operations revenue
2013
2,760,031,859.80
2,600,597,811.58
63,160,056.04
57,468,802.34
2,823,191,915.84
2,658,066,613.92
2014
Main operations cost
2013
1,434,212,242.43
1,339,482,349.00
42,157,486.04
47,723,034.60
1,476,369,728.47
1,387,205,383.60
Other operations cost
2014
Revenues from main
operations
2013
Costs of main
operations
Revenues from main
operations
Costs of main
operations
Personal care products
1,567,893,947.40
1,038,610,668.80
1,387,822,839.93
970,908,094.87
cosmetics
1,133,712,319.47
359,811,502.03
1,158,862,477.68
337,450,732.54
54,058,297.38
31,579,094.08
49,495,522.00
26,706,612.03
4,367,295.55
4,210,977.52
4,416,971.97
4,416,909.56
2,760,031,859.80
1,434,212,242.43
2,600,597,811.58
1,339,482,349.00
Household care products
other
(a) Revenue and cost from main operations
154
2014 Annual Report
(4) Revenues and Cost of Sales (Continued)
(b) Revenue and cost from other operations
2014
Revenues from other
operations
2013
Costs of other
operations
Revenues from other
operation
Costs of other
operations
Sales of Materials
61,663,180.09
41,234,131.06
53,708,825.30
46,079,777.46
Services revenues
1,488,991.95
923,354.98
3,645,737.04
1,487,747.26
7,884.00
-
114,240.00
155,509.88
63,160,056.04
42,157,486.04
57,468,802.34
47,723,034.60
Others
(5) Investment Income
2014
Investment income from long-term equity investments under cost method
84,838,998.14
13,180,000.00
170,354,782.85
140,512,197.26
Investment income from disposal of long-term equity investment
6,238,446.34
-
Investment income from available-for-sale financial assets
45,667,542.13
20,274,299.94
-
357,736.89
307,099,769.46
174,324,234.09
Investment income from long-term equity investments under equity method
Investment income from disposal of available-for-sale financial assets
The Company is not subject to any significant restriction for transfer of investment income.
155
2013
2014 Annual Report
Supplymentary Information to Financial Statement 2014
I Extraordinary Gain and Losses
2014
Profit/loss on disposal of non-current assets
Government grants recognised in profit and loss for the current year
2013
9,427,004.49
(862,644.98)
24,133,553.59
26,823,572.03
-
357,736.89
(4,948,866.68)
(1,252,685.32)
28,611,691.40
25,065,978.62
(3,499,863.62)
(6,282,833.29)
(791,232.39)
(829,551.88)
24,320,595.39
17,953,593.45
Investment income from disposal of available-for-sale financial assets
Other non-operating profit and loss aside from the above-mentioned items
Tax effect of non-recurring profit or loss
Net profit attributable to minority interest (after tax)
Preparation basis of extraordinary gains and losses:
According to "Explanatory notice No. 1 of information disclosure for public offering securities - Extraordinary gain and
losses [2008]" issued by China Securities Regulatory Commission, extraordinary gain and losses is arising from the
transactions or events that is not directly related to daily operations, or the transactions or events associated with normal
operations but may affect the investors' proper judgments on the performance and profitability of the Company for
because special and incidental nature.
II ROE and Earnings per Share
Weighted average
ROE (%)
2014
2013
Earnings per share
Basic earnings
per share
2014
Diluted earnings
per share
2013
2014
2013
26.53
30.62
1.34
1.19
1.34
1.19
Calculated based on net profit
attributable to ordinary equity holders
after extraordinary gain and losses
25.81
29.93
1.30
1.16
1.30
1.16
III Supplementary Information of Changes in Accounting Policies
According to "the Accounting Standard for Business Enterprises No. 2-Long-term Investment" and other eight
adjustments of accounting standards issued by the Ministry of Finance, the Company changed related accounting
policies and restated comparative financial statements of 2013 Financial Report (See Note II (32)), meanwhile restating
the Consolidated and Company Balance Sheet as at 1 January 2013.
Calculated based on net profit
attributable to ordinary equity holders
156
2014 Annual Report
Section11 Documents for Reference
Documents for reference
2014 annual report bearing the signature of the Board Chairman.
Financial report bearing the signature and seals of the responsible person of the Company, person in
charge of accounting work and responsible person of accounting institution.
All the documents disclosed at the newspapers and periodicals designated by the China Securities
Regulatory Commission during this reporting period.
Board Chairman: Xie Wenjian
Authorized Report Date by the Board of Directors: March 19th, 2015
Revision History:
Version No.
157
Issue Date of Report Rectification and
Updates
Content of Report Rectification and
Updates
Signature Page of 2014 Annual Report
The directors and senior management personnel of the Company are individually and collectively liable for the
truthfulness, accuracy and completeness of the information as disclosed in this Report and undertake that no major
events have been omitted and that there are no misstatements or misleading statements in this Report.
Signed by:
March 17th, 2015
159
160
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161

2014 Annual Report

Transcription

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