Proya Cosmetics Co., Ltd. — Interim / Quarterly Report 2021

Oct 27, 2021

The Third Quarter Report in 2021

Stock Code: 603605 Short Name: PROYA

Proya Cosmetics Co., Ltd. The Third Quarter Report in 2021

The Board of Directors and all directors of the Company warrant that the contents herein are free from misrepresentations, misleading statements or material omissions, and they will be jointly and severally liable for the authenticity, accuracy and completeness thereof.

Important Note:

The Board of Directors, Board of Supervisors, directors, supervisors and officers of the Company warrant that the contents of the Quarterly Report are authentic, accurate and complete without any misrepresentations, misleading statements or material omissions, and they will be jointly and severally liable therefor.

The Chairman, the chief financial officer and the head of the accounting organization warrant that the financial statements herein is authentic, accurate and complete.

Whether the third quarter financial statements have been audited.

□Yes √No

I. Main Financial Data

(I) Main Accounting Data and Financial Indicators

			Unit: Yuan	Currency: RMB
Item	The Reporting Period	YOY change in the Reporting Period (%)	From the beginning of the year to the end of the Reporting Period	YOY change in the period from the beginning of the year to the end of the Reporting Period(%)
Operating income	1,094,533,358.54	20.71	3,012,251,856.14	31.48

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Net profit attributable to shareholders of the listed company	138,195,475.24	30.09	364,296,789.10	27.82
Net profit attributable to shareholders of the listed company after deducting non-recurring profit or loss	136,116,085.45	28.64	356,396,478.73	23.63
Net cash flows from operating activities	N/A	N/A	490,488,496.76	137.07
Basic earnings per share (RMB/share)	0.69	30.19	1.82	28.17
Diluted earnings per share (RMB/share)	0.69	30.19	1.81	27.46
Weighted average return on equity (%)	5.42	An increase of 0.49pptsyoy	14.50	An increase of 1.31pptsyoy
Item	End of the Reporting Period	End of prior year		change at the end of the Reporting Period over the end of prioryear(%)
Total assets	3,709,067,852.42	3,636,882,185.29		1.98
Owner’s equity attributable to shareholders of the listed company	2,614,643,878.27	2,391,535,435.94		9.33

Note: “The Reporting Period” shall refer to the 3-month period ended September 30, 2021, as follow.

(II) Items and Amounts of Non-recurring Profit or Loss

Unit: Yuan Currency: RMB

Item	Amount in the Reporting Period	Amount in the period from the beginning of the year to the end of the ReportingPeriod	Note
Gains or losses from disposal of non-current assets (including the write-off part of the provision for asset impairment)		-1,416.28
Unauthorized examination and approval, or lack of official approval documents, or

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occasional tax revenue return and abatement
Government grants recognized in profit or loss for the current period (excluding government grants that are closely related to the Company’s business operations and gained at a fixed amount or quantity according to national uniform standards)	2,455,332.50	11,825,652.31	The YOY increase was mainly due to the increase in government grants such as tax revenue returns received
Capital occupation fees charged to the non-financial enterprises and included in profit or loss for the current period
Gains when the investment cost of acquiring a subsidiary, an associate and a joint venture is less than the fair value of the identifiable net assets of the investee
Gains or losses from exchange of non-monetaryassets
Gains or losses from entrusting others with investment or asset management
Asset impairment provision made resulting from force majeure such as natural disasters
Gains or losses from debt restructuring
Enterprise restructuring fees, such as staffing expenses and integration fees
Gains or losses that exceeds the fair value in transaction with unfairprice
Current net gains or losses of subsidiaries established by business combination involving enterprises under common control from the

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beginning of the period to the combination date Gains or losses on contingencies that have no relation with the normal operation of the Company Gains or losses from change in fair value by held-for trading financial assets and liabilities, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities, and investment income from disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investments, excluding the effective hedging businesses related with normal operations of the Company Reversal of impairment provision of accounts receivable and contract assets that have undergone impairment test alone Gains or losses from outward entrusted loaning Gains or losses from changes in the fair values of investment properties that are subsequently measured using the fair value model Impact of a one-time adjustment on current profit and loss according to the requirements of tax and accounting laws and regulations Custody fees of entrusted

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operation
Other non-operating income and expenses besides the above items	28,377.44	546,155.51	The YOY increase was mainly due to the large amount of non-operating expenses such as external donations in the same period of 2020
Other items that conform to the definition of non-recurring profit or loss
Less: Effect of income tax	404,323.30	2,627,255.54
Effect of minority equity (after tax)	-3.15	1,842,825.63
Total	2,079,389.79	7,900,310.37

Descriptions on classifying non-recurring profit and loss items defined in the Explanatory Announcement No. 1 for Public Company Information Disclosures - Non-recurring Profit and Loss as recurring profit and loss items.

• Applicable √ N/A

(III) Changes in Main Accounting Data and Financial Indicators and Main Cause

• √ Applicable  N/A

Note: All figures on the table are on the YOY bases.

Item	Change ratio(%)	Primarycause
Net profit attributable to shareholders of the listed company (the Reporting Period)	30.09	July to September: 1. The operating income increased by 20.71% , of which the primary operating income online increased by 71.59%, and the overall consolidated gross profit margin was 66.10%, an increase of 1.61 ppts yoy; 2. The sales expense ratio was 41.56%, an increase of 1.73 ppts yoy; 3. The net profit margin was 12.65%, an increase of 1.36pptsyoy.
Basic earnings per share (RMB/share) (the ReportingPeriod)	30.19	The specific reasons are the same as above.

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Diluted earnings per share (RMB/share) (the ReportingPeriod)	30.19	The specific reasons are the same as above.
Operating income (from the beginning of the year to the end of the Reporting Period)	31.48	January to September: The operating income increased by 31.48% , of which the primary operating income increased by 31.29% : Online: an increase by 74.25%, accounting for 81.85%; Offline: a decrease by 37.83%, accounting for 18.15%.
Net cash flow from operating activities (from the beginning of the year to the end of the Reporting Period)	137.07	January to September: An increase of RMB 284 million, or 137.07%: 1. Cash receipts from the sale of goods and the rendering of services increased by RMB 999 million or 42.09% ; Of which, the operating income increased by 31.48% , and the accounts receivable and receivable financing decreased by RMB 84 million in comparison to the beginning of the year; 2. Cash payments for the purchase of goods and received taxable services increased by RMB 103 million or 10.92%； 3. Other cash payments relating to operating activities increased by RMB 502 million or 67.46%, mainly due to the increase in image publicity and promotion expenses.

II. Shareholders Information

(I) Total Number of Common Shareholders, Number of Preferred Shareholders with Voting Rights, and the Shareholding of Top Ten Shareholders

Unit: share

								Unit: share	Unit: share
Total number of common shareholders by the end of the Reporting Period		13,645		Total number of preferred shareholders with voting rights by the end of the Reporting Period (if any)				0
	Shareholding of top ten shareholders
Name of shareholder	Nature of shareholder		Number of shares held		Shareholding ratio (%)	Number of restricted shares	Pledge, marking or freezing
							Share status		Number

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HOU Juncheng	Domestic natural person	Domestic natural person	71,771,631	71,771,631	35.69	0	None
FANG Yuyou	Domestic natural person		40,566,691		20.17	0	Pledge	9,210,000
Hong Kong Securities Clearing Company Limited	Other		38,946,885		19.37	0	None
CAO Liangguo	Domestic natural person		3,769,938		1.87	0	None
XU Junqing	Domestic natural person		2,313,499		1.15	0	None
LI Xiaolin	Domestic natural person		2,188,310		1.09	0	None
Industrial and Commercial Bank of China Limited - Jingshun Changcheng Emerging Growth Hybrid Securities Investment Fund	Other		1,700,000		0.85	0	None
Industrial and Commercial Bank of China Limited - GF Multi-factor Flexible Allocation Hybrid Securities Investment Fund	Other		1,633,302		0.81	0	None
Aberdeen Standard Investment Management (Asia) Co., Ltd. - Aberdeen Standard - China A-share Equity Fund	Other		1,499,323		0.75	0	None
China Construction Bank Co., Ltd. - E Fund Vision Growth Hybrid Securities Investment Fund	Other		1,018,651		0.51	0	None
Shareholding of top ten unrestricted shareholders
Name of shareholder		Number of unrestricted outstanding shares held		Type and number			of shares
				Type			Number
HOU Juncheng		71,771,631		RMB common stock			71,771,631
FANG Yuyou		40,566,691		RMB common stock			40,566,691
Hong Kong Securities Clearing Company Limited		38,946,885		RMB common stock			38,946,885
CAO Liangguo		3,769,938		RMB common stock			3,769,938
XU Junqing		2,313,499		RMB common stock			2,313,499
LI Xiaolin		2,188,310		RMB common stock			2,188,310

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Industrial and Commercial Bank of China Limited - Jingshun Changcheng Emerging Growth Hybrid Securities Investment Fund	1,700,000	RMB common stock	1,700,000
Industrial and Commercial Bank of China Limited - GF Multi-factor Flexible Allocation Hybrid Securities Investment Fund	1,633,302	RMB common stock	1,633,302
Aberdeen Standard Investment Management (Asia) Co., Ltd. - Aberdeen Standard - China A-share Equity Fund	1,499,323	RMB common stock	1,499,323
China Construction Bank Co., Ltd. - E Fund Vision Growth Hybrid Securities Investment Fund	1,018,651	RMB common stock	1,018,651
Description of the association relationship or concerted action of the above shareholders	FANG Yuyou is the younger brother of HOU Juncheng’s spouse FANG Aiqin, so HOU Juncheng and FANG Yuyou are related.
Description of the participation of the top 10 shareholders and the top 10 unrestricted shareholders in the margin trading and refinancing business (if any)	None

III. Other Reminders

Other important information about the Company’s business during the Reporting Period for the attentions of investors

• Applicable √ N/A

IV. Quarterly Financial Statements

• (I) Type of Audit Opinion

• Applicable √ N/A

• (II) Financial Statements

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The Third Quarter Report in 2021

Consolidated Balance Sheet

September 30, 2021

Prepared by: Proya Cosmetics Co., Ltd.

Unit: Yuan Currency: RMB Audit Type: Unaudited

Item	September 30, 2021	December 31, 2020
Current assets:
Cash and bank balances	1,389,265,414.72	1,416,654,640.93
Balances with clearing agencies
Placements with banks and other financial institutions
Held-for-trading financial assets
Derivative financial assets
Notes receivable
Accounts receivable	203,098,599.96	284,878,419.58
Receivable financing	3,806,628.60	5,531,997.32
Prepayments	96,383,659.58	82,742,815.92
Premiums receivable
Amounts receivable under reinsurance contracts
Reinsurer’s share of insurance contract reserves
Other receivables	51,308,116.89	48,733,527.35
Including: Interest receivable
Dividends receivable
Financial assets purchased under resale agreements
Inventories	478,074,579.65	468,641,017.75
Contract assets
Held-for-sale assets
Non-current assets due within oneyear
Other current assets	40,301,160.54	35,235,811.27
Total current assets	2,262,238,159.94	2,342,418,230.12
Non-current assets:
Loans and advances to customers
Debt investments
Other debt investments

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Long-term receivables
Long-term equityinvestments	186,713,508.52	58,220,059.60
Other investments in equity instruments	20,580,000.00	20,580,000.00
Other non-current financial assets
Investmentproperties	71,099,928.39	72,237,610.10
Fixed assets	556,073,781.13	565,864,152.62
Construction inprogress	116,507,623.22	47,324,523.36
Bearer biological assets
Oil andgas assets
Right of use assets
Intangible assets	418,582,847.65	314,643,323.97
Development expenditure
Goodwill		31,034,161.20
Long-termprepaid expenses	32,417,009.92	50,576,793.53
Deferred income tax assets	39,406,469.63	46,660,550.76
Other non-current Assets	5,448,524.02	87,322,780.03
Total non-current assets	1,446,829,692.48	1,294,463,955.17
Total assets	3,709,067,852.42	3,636,882,185.29
Current liabilities:
Short-term borrowings	200,000,000.00	299,280,435.09
Loans from the central bank
Taking from banks and other financial institutions
Held-for-trading financial liabilities
Derivative financial liabilities
Notespayable	40,624,882.02	64,580,000.00
Accountspayable	562,255,365.84	515,832,031.27
Receipts in advance
Contract liabilities	49,240,151.14	30,618,778.99
Financial assets sold under repurchase agreements
Customer deposits and deposits from banks and other financial institutions
Funds from securities trading agency
Funds from underwriting securities agency
Employee benefitspayable	65,849,995.93	70,828,239.70

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Taxespayable	70,285,767.83	71,335,290.77
Otherpayables	73,347,099.26	75,546,323.32
Including: Interestpayable
Dividendspayable
Fees and commissions payable
Amounts payable under reinsurance contracts
Held-for-sale liabilities
Non-current liabilities due within oneyears
Other current liabilities	2,062,864.84	1,439,262.02
Total current liabilities	1,063,666,126.86	1,129,460,361.16
Non-current liabilities:
Insurance contract reserves
Long-term borrowings
Bondspayable
Including: Preferred stock
Perpetual bonds
Lease liabilities
Long-termpayables
Long-term employee benefits payable
Provisions	7,089,282.95	10,190,099.22
Deferred income	6,936,035.83	8,495,353.33
Deferred income tax liabilities	5,781,937.93	6,874,105.45
Other non-current liabilities
Total non-current liabilities	19,807,256.71	25,559,558.00
Total liabilities	1,083,473,383.57	1,155,019,919.16
Owner’s equity (or shareholders’ equity ):
Paid-in capital (or share capital)	201,116,925.00	201,116,925.00
Other equityinstruments
Including: Preferred stock
Perpetual bonds
Capital reserve	836,092,076.05	837,034,836.69
Less: Treasuryshares	7,361,933.60	12,653,905.25
Other comprehensive income	-1,002,437.91	-269,066.13
Special reserve
Surplus reserve	100,634,780.00	100,634,780.00
General risk reserve
Retainedprofits	1,485,164,468.73	1,265,671,865.63

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Total owners’ equity (or shareholders’ equity) attributable to equity holders of the parent company	2,614,643,878.27	2,391,535,435.94
Minorityinterests	10,950,590.58	90,326,830.19
Total owners’ equity (or shareholders’ equity)	2,625,594,468.85	2,481,862,266.13
Total liabilities and owners’ equity (shareholders’ equity)	3,709,067,852.42	3,636,882,185.29

Chairman: HOU Juncheng Chief Financial Officer: WANG Li Head of the Accounting Department: WANG Li

Consolidated Income Statement

January to September, 2021

Prepared by: Proya Cosmetics Co., Ltd.

Unit: Yuan Currency: RMB Audit Type: Unaudited

Item	First three quarters of 2021 (Jan. to Sep.)	First three quarters of 2020 (Jan. to Sep.)
I. Total operatingincome	3,012,251,856.14	2,291,070,947.47
Including: Operatingincome	3,012,251,856.14	2,291,070,947.47
Interest income
Premiums earned
Fee and commission income
II. Total operatingcosts	2,570,351,426.19	1,901,928,563.23
Including: Operatingcosts	1,066,572,027.42	877,111,667.51
Interest expenses
Fee and commission expenses
Surrenders
Claims and policyholder benefits (net of amounts recoverable from reinsurers)
Charges in insurance contract reserves(net of reinsurers’ share)
Insurancepolicyholder dividends
Expenses for reinsurance accepted

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Taxes and levies	26,755,664.49	21,237,762.78
Sellingexpenses	1,262,122,598.38	818,606,103.63
General and administrative expenses	165,503,097.12	140,638,551.57
Research and development expenses	52,455,578.02	53,653,016.11
Financial expenses	-3,057,539.24	-9,318,538.37
Including: Interest expenses	7,219,717.71	5,423,653.63
Interest income	17,843,073.35	13,995,639.90
Add: Other income	12,758,859.43	9,715,292.80
Investment income (Loss is indicated by“-”)	-5,257,778.42	1,575,595.65
Including: Income from investments in associates andjoint ventures	-5,254,232.18	-937,095.68
Income from derecognition of financial assets measured at amortized cost
Foreign exchange gains (Loss is indicated by“-”)
Net exposure hedging income (Loss is indicated by“-”)
Income from changes in fair value (Loss is indicated by“-”)
Impairment losses of credit (Loss is indicated by“-”)	-2,144,694.51	-22,446,199.48
Impairment losses of assets (Loss is indicated by“-”)	-20,365,487.85	-13,787,628.20
Income from disposal of assets (Loss is indicated by“-”)	-1,416.28	14,405.47
III. Operating profit(Loss is indicated by“-”)	426,889,912.32	364,213,850.48
Add: Non-operatingincome	144,171.60	581,866.88
Less: Non-operatingexpenses	63,373.82	16,183,979.14
IV. Totalprofit(Total loss is indicated by“-”)	426,970,710.10	348,611,738.22
Less: Income tax expenses	79,816,536.07	72,530,863.59
V. Netprofit(Net loss is indicated by“-”)	347,154,174.03	276,080,874.63
(I)Categorized bythe nature of continuingoperation
1. Net profit from continuing operations (Net loss is indicated by“-”)	347,154,174.03	276,080,874.63
2. Net profit from discontinued operations (Net loss is indicated by“-”)
(II)Categorized byownership
1. Net profit attributable to shareholders of theparent company (Net loss is indicated by“-”)	364,296,789.10	284,999,721.17
2. Profit or loss attributable to minority interests(Net loss is indicated by“-”)	-17,142,615.07	-8,918,846.54

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VI. Other comprehensive income, net of tax	-733,371.78	-337,434.36
(I) Other comprehensive income attributable to owners of theparent company, net of tax	-733,371.78	-337,434.36
1. Other comprehensive income that cannot be subsequentlyreclassified toprofit or loss
(1) Changes from re-measurement of defined benefitplans
(2) Other comprehensive income that cannot be reclassified to profit or loss under the equity method
(3) Changes in fair value of other investments in equityinstruments
(4) Changes in fair value of enterprises’ own credit risks
2. Other comprehensive income that will be reclassified toprofit or loss	-733,371.78	-337,434.36
(1) Other comprehensive income that will be reclassified to profit or loss under the equity method
(2) Changes in fair value of other debt investments
(3) Amounts of financial assets reclassified into other comprehensive income
(4) Provision for credit impairment of other debt investments
(5)Reserve for cash flow hedges
(6) Translation differences of financial statements denominated in foreign currencies	-733,371.78	-337,434.36
(7)Others
(II) Other comprehensive income attributable to minorityinterests, net of tax
VII. Total comprehensive income	346,420,802.25	275,743,440.27
(I) Total comprehensive income attributable to owners of theparent company	363,563,417.32	284,662,286.81
(II) Total comprehensive income attributable to minorityinterests	-17,142,615.07	-8,918,846.54
VIII. Earningsper share
(I)Basic earningsper share(RMB/share)	1.82	1.42
(II)Diluted earningsper share(RMB/share)	1.81	1.42

For business combinations involving enterprises under the common control in the current period, the net

profit realized by the acquirees before the combinations is: RMB0.00, and the net profit realized thereby in the prior period is: RMB0.00.

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Chairman: HOU Juncheng Chief Financial Officer: WANG Li Head of the Accounting Department: WANG Li

Consolidated Cash Flow Statement

January to September 2021

Prepared by: Proya Cosmetics Co., Ltd.

Unit: Yuan Currency: RMB Audit Type: Unaudited

Item	First three quarters of 2021 (Jan. to Sep.)	First three quarters of 2020 (Jan. to Sep.)
I. Cash flows from operating activities:
Cash receipts from the sale of goods and the renderingof services	3,372,200,521.00	2,373,276,017.51
Net increase in customer deposits and deposits from banks and other financial institutions
Net increase in loans from the central bank
Net increase in taking from other financial institutions
Cash payments for claims and policyholders’ benefits under direct insurance contracts
Net cash receipts from reinsurance business
Net cash receipts from policyholders’ deposits and investment contract liabilities
Cash receipts from interest, fees and commissions
Net increase in taking from banks and other financial institutions
Net increase in financial assets sold under repurchase arrangements
Net cash received from securities tradingagency
Receipts of tax refunds	18,501,241.84	5,905,584.80
Other cash receipts relating to operatingactivities	59,335,619.38	41,790,311.05

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Sub-total of cash inflows from operatingactivities	3,450,037,382.22	2,420,971,913.36
Cash payments for goods purchased and services received	1,046,478,917.19	943,473,030.33
Net increase in loans and advances to customers
Net increase in balance with the central bank and due from banks and other financial institution
Cash payments for claims and policyholders’ benefits under direct insurance contracts
Net increase in placements with banks and other financial institutions
Cash payments for interest, fees and commissions
Cash payments for insurance policyholder dividends
Cash payments to and on behalf of employees	329,997,403.51	265,981,057.75
Payments of various types of taxes	336,370,801.47	260,143,803.59
Other cash payments relating to operatingactivities	1,246,701,763.29	744,477,741.05
Sub-total of cash outflows from operatingactivities	2,959,548,885.46	2,214,075,632.72
Net cash flow from operating activities	490,488,496.76	206,896,280.64
II. Cash flows from investing activities:
Cash receipts from disposals and recoveryof investments		211,450,000.00
Cash receipts from investment income		4,145,309.14
Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets	1,000.00
Net cash receipts from disposals of subsidiaries and other business entities
Other cash receipts relating to investingactivities
Sub-total of cash inflows from investingactivities	1,000.00	215,595,309.14
Cash payments to acquire or construct fixed assets, intangible assets	163,266,984.07	61,017,722.22

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and other long-term assets
Cash payments to acquire investments	34,206,800.00	66,580,000.00
Net increase in pledged loans receivables
Net cash payments for acquisitions of subsidiaries and other business units
Other cash payments relating to investingactivities	61,087,857.19	1,579,710.89
Sub-total of cash outflows from investingactivities	258,561,641.26	129,177,433.11
Net cash flow from investing activities	-258,560,641.26	86,417,876.03
III. Cash flows from financing activities:
Cash receipts from capital contributions	450,000.00	1,466,300.00
Including: cash receipts from capital contributions from minority owners of subsidiaries	450,000.00	1,466,300.00
Cash receipts from borrowings	200,000,000.00	299,000,000.00
Other cash receipts relating to financingactivities
Sub-total of cash inflows from financingactivities	200,450,000.00	300,466,300.00
Cash repayments of borrowings	299,000,000.00	212,186,065.10
Cash payments for distribution of dividends or profits or settlement of interest expenses	151,549,422.10	126,023,183.02
Including: payments for distribution of dividends or profits to minority owners of subsidiaries
Other cash payments relating to financingactivities	1,647,883.50
Sub-total of cash outflows from financingactivities	452,197,305.60	338,209,248.12
Net cash flow from financing activities	-251,747,305.60	-37,742,948.12
IV. Impact of foreign exchange rate changes on cash and cash equivalents	-733,371.78	-337,434.36
V. Net increase in cash and cash equivalents	-20,552,821.88	255,233,774.19
Add: Opening balance of cash and cash equivalents	1,299,818,901.99	1,099,092,785.07

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VI. Closing balance of cash and cash equivalents	1,279,266,080.11	1,354,326,559.26

Chairman: HOU Juncheng Chief Financial Officer: WANG Li Head of the Accounting Department: WANG Li

(III) In 2021, the company restates financial statements for the beginning of the year due to the implementation of the new lease standards

• Applicable √N/A

Please be notified of above.

Board of Director of Proya Cosmetics Co., Ltd.

October 27, 2021

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