Luzhou Laojiao Co., Ltd.
2018 Annual Report
April 2019
Section I Important Statements, Contents and
Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and seniormanagement guarantee that the information presented in this report is free of any falserecords, misleading statements or material omissions, and shall Individually and togetherbe legally liable for truthfulness, accuracy and completeness of its contents.
Mr. Liu Miao, responsible person for the Company, Ms. Xie Hong, responsible person foraccounting work and Mr. Yan Li, responsible person for the Company’s financial affairs(Accounting Supervisor) have warranted that the financial statements in this report aretrue and complete.
Other directors attended the board meeting to deliberate this report by themselves exceptthe following directors.
Name of directors who did notattend the meeting in person
Name of directors who did not attend the meeting in person | Position of directors who did not attend the meeting in person | Reason for not attending the meeting in person | Name of deputies |
Liu Miao | Chairman of the Board | work | Lin Feng |
Shen Caihong | Director | work | Jiang Yuhui |
Affected by risks, uncertainties and assumptions, the forward-looking statementsconcerning business objectives and future plans made in this report based on thesubjective assumptions and judgments of the future policies and economic conditions maybe significantly different from the actual results. Such statements shall not be consideredas virtual promises of the Company to investors, and the investors and relevant personsshall maintain adequate risk awareness and shall understand the differences betweenplans, forecasts and commitments.
In the annual report, the potential risks in the operation of the Company have beendisclosed. Investors are kindly reminded to pay attention to possible investment risks.
The profit distribution plan approved by the board of directors: based on 1,464,752,476shares, a cash dividend of CNY 15.50 (tax inclusive) will be distributed for every 10existing shares held, 0 shares of bonus shares (tax inclusive), and reserves would not beconverted into share capital.
Contents
Section I Important Statements, Contents and Definitions 2Section II Company Profile and Key Financial Results ...... 5
Section III Business Profile ...... 10
Section IV Performance Discussion and Analysis ...... 12
Section V Significant Events ...... 33Section VI Changes in Shares and Information aboutShareholders ...... 50
Section VII Preference Shares ...... 60Section VIII Profiles of Directors, Supervisory, SeniorManagement and Employees ...... 61
Section IX Corporate Governance ...... 73
Section X Information about Corporate Bond ...... 79
Section XI Financial Report ...... 80
Section XII Documents Available for Preference ...... 211
Definitions
Term
Term | Reference | Definition |
Company, the Company, Luzhou Laojiao | Refer to | Luzhou Laojiao Co.,Ltd. |
Laojiao Group | Refer to | Luzhou Laojiao Group Co., Ltd. |
Xinglu Group | Refer to | Luzhou Xinglu Touzi Jituan Co., Ltd. |
SASAC of Luzhou | Refer to | State-owned Assets Supervision and Administration Commission of Luzhou |
Huaxi Securities | Refer to | Huaxi Securities Co.,Ltd. |
CICC | Refer to | China International Capital Corporation Limited |
Luzhou Bank | Refer to | Luzhou City Commercial Bank |
Sales Company | Refer to | Sales Company of Luzhou Laojiao Co., Ltd. |
Brewing Company | Refer to | Luzhou Laojiao Brewing Co., Ltd. |
Section II Company Profile and Key Financial Results
1. Corporate information
Stock abbreviation
Stock abbreviation | Luzhou Laojiao | Stock code | 000568 |
Stock exchange where the shares of the Company are listed | Shenzhen Stock Exchange | ||
Name of the Company in Chinese | 泸州老窖股份有限公司 | ||
Abbr. of the Company name in Chinese | 泸州老窖 | ||
Name of the Company in English (if any) | Luzhou Laojiao Co.,Ltd. | ||
Abbr. of the Company name in English (if any) | LZLJ | ||
Legal representative | Liu Miao | ||
Registered address | Guojiao Square,Luzhou City, Sichuan Province, China | ||
Postal code | 646000 | ||
Business address | Luzhou Laojiao Marketing Network Command Center, Nanguang Road, Luzhou City, Sichuan Province, China | ||
Postal code | 646000 | ||
Company website | http://www.lzlj.com | ||
lzlj@lzlj.com |
2. Contact us
Secretary of the board | Representative for securities affairs | |
Name | Wang Hongbo | Wang Chuan |
Address | Luzhou Laojiao Marketing Network Command Center, Nanguang Road, Luzhou City, Sichuan Province, China | |
Tel. | (0830)2398826 | (0830)2398826 |
Fax | (0830)2398864 | (0830)2398864 |
dsb@lzlj.com | dsb@lzlj.com |
3. Information disclosure and place where the annual report is
kept
Newspaper designated by the Company for information disclosure | China Securities Journal, Securities Times, Securities Daily |
Website designated by the ChinaSecurities Regulatory Commission(CSRC) for the publication of theAnnual Report
Website designated by the China Securities Regulatory Commission (CSRC) for the publication of the Annual Report | http://www. cninfo.com.cn |
Place where the annual report of the Company is kept | Board office |
4. Company registration and alteration
Organization code | 91510500204706718H |
Changes in main business activities since the Company was listed (if any) | None |
Changes of controlling shareholders of the Company (if any) | Before September 2009, the controlling shareholder was the SASAC of Luzhou. After the equity transfer in September 2009, the controlling shareholder was changed to Laojiao Group, but the actual controller is still the SASAC of Luzhou. |
5. Other relevant information
Accounting firm engaged by the Company
Name of the accounting firm | Sichuan Huaxin (Group) CPA Firm |
Business address of the accounting firm | 28/F., South Jinmaolidu, NO.18 Ximianqiao Street, Chengdu City, Sichuan Province. |
Name of accountants for writing signature | Feng Yuan, He Shoufu |
Sponsors engaged by the Company to continuously perform its supervisory functionduring the reporting period√ Applicable ? N/A
Name of sponsor | Sponsor office address | Name of sponsor representative | Continuous supervision period |
China International Capital Corporation Limited | 27-28/F., China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | Liu Zhiyang, Yu Yan | 14 September 2017 to 31 December 2018 |
Huaxi Securities Co.,Ltd. | No.198, Tianfu 2nd Street, High-tech Zone, Chengdu | Wan Jiayou, Wang Yuxiang | 14 September 2017 to 31 December 2018 |
Financial adviser engaged by the Company to continuously perform its supervisoryfunction during the reporting period.? Applicable √ N/A?
6. Key accounting data and financial indicators
Whether the Company performed a retroactive adjustment to or restatement of accountingdata due to changes of accounting policies and correction of accounting errors.? Yes √ No
2018 | 2017 | YoY Change | 2016 | |
Operating revenues (CNY) | 13,055,465,761.55 | 10,394,867,493.46 | 25.60% | 8,626,696,462.91 |
Net profits attributable to shareholders of the Company (CNY) | 3,485,643,008.98 | 2,557,944,598.97 | 36.27% | 1,957,193,264.50 |
Net profits attributable to shareholders of the Company before non-recurring gains and losses (CNY) | 3,483,173,302.46 | 2,539,601,364.06 | 37.15% | 1,937,347,061.00 |
Net cash flows from operating activities (CNY) | 4,297,916,018.24 | 3,703,734,061.89 | 16.04% | 2,749,562,800.75 |
Basic earnings per share (CNY/share) | 2.380 | 1.798 | 32.37% | 1.396 |
Diluted earnings per share (CNY/share) | 2.380 | 1.798 | 32.37% | 1.396 |
Weighted average ROE | 21.81% | 20.30% | 1.51% | 18.12% |
At the end of 2018 | At the end of 2017 | YoY Change | At the end of 2016 | |
Total assets (CNY) | 22,604,929,596.42 | 19,755,761,074.20 | 14.42% | 13,965,550,665.32 |
Net assets attributable to shareholders of the Company (CNY) | 16,964,671,475.96 | 15,171,448,756.68 | 11.82% | 11,009,813,755.50 |
7. Differences in accounting data under domestic and
overseas accounting standards
7.1. Differences in the net profits and net assets disclosed in the financialreports prepared under the international and China accountingstandards
? Applicable √ N/A?No such differences for the reporting period.
7.2. Differences in the net profits and net assets disclosed in the financialreports prepared under the overseas and China accounting standards
? Applicable √ N/A?No such differences for the reporting period.
8. Key financial results by quarter
Unit:CNY
Q1 | Q2 | Q3 | Q4 | |
Operating revenues | 3,369,965,694.45 | 3,050,367,825.98 | 2,842,562,257.01 | 3,792,569,984.11 |
Net profits attributable to shareholders of the Company | 1,058,558,935.72 | 908,416,686.04 | 771,586,329.98 | 747,081,057.24 |
Net profits attributable to shareholders of the Company before non-recurring gains and losses | 1,053,576,596.46 | 915,518,134.14 | 761,785,406.41 | 752,293,165.45 |
Net cash flows from operating activities | 348,487,394.03 | 61,433,161.33 | 1,852,622,168.94 | 2,035,373,293.94 |
Whether there are any material differences between the financial indicators above or theirsummations and those which have been disclosed in quarterly or semi-annual reports? Yes √ No
9. Non-recurring profits and losses
√ Applicable ? N/A
Unit:CNY
Item | 2018 | 2017 | 2016 | Note |
Profit or loss from disposal of non-current assets(including the write-off portion of the impairment provision) | -13,885,991.18 | -4,256,543.78 | -18,725,437.47 | See "Section XI Note 7.35, 7.37" for details. |
Government grants accounted for, in the profit or loss for the current period (except for the government grants closely related to the business of the Company and given at a fixed amount or quantity in accordance with the national uniform standards) | 22,342,598.30 | 27,087,985.92 | 23,093,620.00 | See "Section XI Note 7.33" for details. |
Net profit and loss of subsidiaries arising from business combination under the common control from the beginning of the period to the date of merger | -269,195.68 | 28,973,078.45 | ||
Other non-operating income and expenditure except above-mentioned items | -4,902,369.83 | 5,512,918.43 | -14,466,203.67 | See "Section IX Note 7.36, 7.37" for details. |
Less: Corporate income tax | 316,133.32 | 5,357,931.72 | -3,386,951.90 | |
Minority interests (after tax) | 768,397.45 | 4,373,998.26 | 2,415,805.71 | |
Total | 2,469,706.52 | 18,343,234.91 | 19,846,203.50 | -- |
Explain the reasons if the Company classifies an item as a non-recurring profit/lossaccording to the definition in the Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering Their Securities to the Public-Non-Recurring Profitsand Losses, or classifies any non-recurring profit/loss item mentioned in the saidexplanatory announcement as a recurring profit/loss item.? Applicable √ N/A?No such cases for the reporting period.
Section III Business Profile
1. Business scope in the reporting period
Whether the Company needs to comply with the required disclosure of special industry.No
The Company stands on liquor subdivision industry which belongs to liquor, beverage andrefined tea manufacturing industry with the specialized liquor product design, productionand sales as the main business model. The main business is the research anddevelopment, production and sales of liquor series such as "National Cellar 1573" and"Luzhou Laojiao", and the main comprehensive performance indicators rank high in theliquor industry.
Since 2018, the domestic liquor market has presented the characteristics of "intensifyingcompetition, significant concentration and industry growth slowing down". Facing suchindustry development trends, the Company insisted on building the "Four Pillars" systemincluding "Big brand", "Big innovation", "Big project" and "Big expansion" to promote thesolid and rapid development. During the reporting period, the Company made newachievements in brand building, and firmly occupied the brand commanding heights ofstrong-flavor originator, strong-flavor national liquor and strong-flavor authentic brand. Thescale of the Company has reached a new level. The sales scale, total assets andshareholders' equity have all exceeded the historical best level. New breakthroughs havebeen made in innovation and development. Progress has been made in the building ofscience and technology platforms in quality and product innovation, and in theconstruction of major projects. Corporate governance and team building have taken on anew look, and the fine style of "one team, one department, one staff" has been wellmaintained and carried forward. At the same time of accelerating development, theCompany takes the initiative to shoulder the social responsibility of listed companies, andcontinues to make outstanding contributions to poverty alleviation and economic andsocial development.
2. Significant changes in the main assets
2.1. Significant changes in the main assets
Main assets
Main assets | Reasons for any significant change |
Equity assets | N/A |
Fixed assets | N/A |
Intangible assets | N/A |
Main assets
Main assets | Reasons for any significant change |
Construction in progress | The closing balance increased by CNY 1,433,225,253.91 compared to opening balance, indicating an increase of 91.45 percent. It was mainly due to the construction of technical renovation project of brewing industry according to the plan and the project input increases year by year. |
2.2. Main assets overseas
? Applicable √ N/A
3. Analysis of core competitiveness
Whether the Company needs to comply with the required disclosure of special industry.NoThe core competitiveness of the company has not changed during the reporting period.
Section IV Performance Discussion and Analysis
1. Overview
In 2018, the Company insisted on Xi Jinping Thought on Socialism with ChineseCharacteristics for a New Era as the guidance and took determination and courage of"reform and opening up and starting again" to implement the development theme of"firmness, scale, innovation, efficiency, implementation". The Company forged ahead,strove to sprint, kept the solid and rapid development, and realized operating revenue ofCNY 13.055 billion, up 25.60% year on year. The net profit attributable to the shareholdersof the listed company reached CNY 3.486 billion, up 36.27% year on year, exceeding theannual development target and achieving a record high sales performance! Over the pastyear, the Company's main work and performance included:
A. Quality-oriented and accelerated technical innovation
The Company fully implements the development concept of "Ten years' brand relieson marketing. Hundred years' brand relies on quality. Thousand years' brand relies onculture". The Company carried out implementation of “Product Shelf-life Managementabove Tequ” and continuous improvement of the whole process of production qualitysupervision system. It takes the lead in publishing the domestic first white paper onproduct quality and safety, which leads the development direction of Chinese liquorquality. Meanwhile, the Company has made great progress in the technicalrenovation project of brewing. The construction of various supporting facilities suchas automatic brewing group and semi-open warehouse have been promoted orderly.The core production area of solid grain brewing in China is about to be built.
B. Brand revival and value return
The Company firmly promotes the dual brand operation of "National Cellar 1573" and"Luzhou Laojiao". "National Cellar 1573" occupies the position of "Luzhou NationalLiquor" and "Luzhou Laojiao" launches the campaign of "brand revival". TheCompany carried out a series of publicity activities such as "sealing ceremony","national tour and appraisal meeting of bottle-storage liquor", "internationalpoetry-liquor culture conference" and "sorghum is red". The promotion activities inBRICS Business Forum, World Cup in Russia and Australian open were successful.To further promote the brand "slimming down", the barcode of products has beenreduced by more than 90%. "Luzhou Laojiao”brand has been highly recognized by itspartners and consumers.
C. Focus on single product and upgrade marketing
The Company firmly implements the competitive marketing strategy and big singleproduct strategy, and“National Cellar 1573” achieved the solid growth of sell-throughand profits. “Luzhou Laojiao Tequ” and “Jiaolingjiu” maintained the rapiddevelopment momentum, and “Touqu” and “Erqu” achieved recovery successfully.The Company resolutely pushes forward the "Double 124" project, effectively controls
the core network, comprehensively consolidates the traditional "grain-warehousemarket", and implements the "east to south" project. The Company has established adistribution network in more than 50 countries and regions in the world, realized therapid expansion of overseas markets, and achieved a record high sales performance.
D. Technological innovation driven by intelligence
The Company promotes the liquor production technology revolution. The intelligentprojects in aspect of qu-making, brewing and packaging achieved positive progress.It fully relies on scientific and technological innovation platforms such as nationalsolid state fermentation engineering technology research center and national industrydesign center. The Company continues to deepen the cooperation with ChineseAcademy of Sciences, Jiangnan University and other colleges and universities andresearch institutes. The Company undertook dozens of national and provincialprojects, and obtained hundreds of patents for invention and utility model patents, andwon science and technology innovation award awarded by the Chinese Institute ofFood Science and Technology. The Company was selected into the first batch of topten tourism demonstration base of science and technology in Sichuan. TheCompany’s industry influence was improved greatly.
E. Top-level design and efficiency improvement
The Company firmly maintains the leading role of the party committee in politicalconstruction, ideological construction, organizational construction, style constructionand management decision-making, and organizes the management to carry outactivities such as "Big study, Big research and Big implementation". It helps maintainthe strong cohesion and combat effectiveness of the team. The Company gives fullplay to the strategic decision-making mechanism of the general office meeting,marketing joint meeting and production and operation dispatch meeting so as toensure scientific, democratic and efficient decision-making. The Company activelypromotes special audit, internal audit and supervision and inspection work,strengthens financial vertical management and comprehensive budget management,carries out process cleaning and optimization, and builds the "five flows" mechanismof order flow, capital flow, logistics, administrative flow and information flow.
F. Talent cultivation and scientific motivation
The Company has built a "dual channel" career promotion mechanism for bothprofessional and administrative staff, and formed a human resource managementmodel of fixed posts, classification, regular inventory, smooth promotion, orderly exit,and matching income with value contribution, thus releasing the Company'sdevelopment vitality. The "Commander Plan" training project was launched tostrengthen the reserve talent team, and the Company took the lead in exploring theimplementation of enterprise annuity, bonus sharing and other reform measures inthe industry to further strengthen the care for employees.
G. Taking responsibilities and giving back to the society
The Company carried out targeted poverty alleviation work in more than 10 poorvillages such as Gullin county, Xuyong county and Hongyuan county, Aba prefecture,which effectively helps the local people get rid of poverty to become rich. TheCompany won widespread praise from all walks of life as a result of “Pillar Project ofDonation", establishment of "Luzhou Laojiao Scholarship" , "Luzhou Laojiao GoldenPointer Award" and "Luzhou Laojiao Golden Shield Award", and sponsoring "Lookingfor the best doctor" and "Looking for most beautiful teacher" activities, and acharitable subscription of "Children Love Growth Plan", which boosts the local healthcare and education career development. During the reporting period, the Companywon the annual poverty alleviation award of the people's enterprise, and the title of"advanced unit of pillar project donation for education" and other honors.
2. Analysis of main business
2.1. Overview
Same with the contents presented in “1.Overview” of this section.
2.2. Revenues and cost of sales2.2.1. Breakdown of operating revenues
Unit:CNY
2018 | 2017 | YoY Change | |||
Amount | As a percentage of operating revenues | Amount | As a percentage of operating revenues | ||
Total | 13,055,465,761.55 | 100% | 10,394,867,493.46 | 100% | 25.60% |
By business segment | |||||
Liquor | 12,859,523,825.56 | 98.50% | 10,114,600,585.81 | 97.30% | 27.14% |
Other | 195,941,935.99 | 1.50% | 280,266,907.65 | 2.70% | -30.09% |
By product | |||||
High-grade | 6,377,822,866.84 | 48.85% | 4,648,164,314.50 | 44.72% | 37.21% |
Mid-grade | 3,674,967,125.89 | 28.15% | 2,874,921,442.63 | 27.66% | 27.83% |
Low-grade | 2,806,733,832.83 | 21.50% | 2,591,514,828.68 | 24.93% | 8.30% |
Other | 195,941,935.99 | 1.50% | 280,266,907.65 | 2.70% | -30.09% |
By geographical segment | |||||
Domestic | 12,950,439,919.30 | 99.20% | 10,330,659,791.50 | 99.38% | 25.36% |
Overseas | 105,025,842.25 | 0.80% | 64,207,701.96 | 0.62% | 63.57% |
2.2.2. Business segment, products or geographical segmentscontributing over 10% of the operating revenues or profits
√ Applicable ? N/AWhether the Company needs to comply with disclosure requirements of special industryNo
Unit:CNY
Operating Revenue | Cost of sales | Gross profit margin | YoY change of operating revenue | YoY change of cost of sales | YoY change of gross profit margin | |
By business segment | ||||||
Liquor | 12,859,523,825.56 | 2,878,994,470.11 | 77.61% | 27.14% | 0.67% | 5.89% |
By product | ||||||
High-end liquor | 6,377,822,866.84 | 519,910,461.52 | 91.85% | 37.21% | 15.98% | 0.62% |
Mid-end liquor | 3,674,967,125.89 | 745,485,548.38 | 79.71% | 27.83% | 4.29% | 7.29% |
Low-end liquor | 2,806,733,832.83 | 1,613,598,460.21 | 42.51% | 8.30% | -4.90% | 21.96% |
By geographical segment | ||||||
Domestic | 12,950,439,919.30 | 2,893,588,473.22 | 77.66% | 25.36% | 0.40% | 5.55% |
Under the circumstances that the statistical standards for the Company’s main businessdata adjusted in the reporting period, the Company’s main business data in the currentyear is calculated based on adjusted statistical standards at the end of the reportingperiod√ Applicable □N/A
Unit:CNY
Operating Revenue | Cost of sales | Gross profit margin | YoY change of operating revenue | YoY change of cost of sales | YoY change of gross profit margin | |
By business segment | ||||||
By product | ||||||
By geographical segment | ||||||
Domestic | 10,330,659,791.50 | 2,881,974,733.24 | 72.10% | 29.30% | -4.56% | 9.90% |
Overseas | 64,207,701.96 | 35,840,323.28 | 44.18% | -23.20% | -41.44% | 17.39% |
Reason for changeThe Company expanded the international market. In order to clearly report the situation ofinternational market, the Company adjusted the geographical segment.
2.2.3. Whether revenue from sales of goods is higher than revenue ofrendering services
√ Yes ? No
By business segment | Item | Unit | 2018 | 2017 | YoY Change |
Liquor | Sales volume | ton | 146,426.14 | 154,120.92 | -4.99% |
Output volume | ton | 156,750.50 | 160,760.38 | -2.49% | |
Stock | ton | 50,169.95 | 39,845.59 | 25.91% |
Reason for any over 30% YoY movements in the data above? Applicable √ N/A
2.2.4. Execution of significant sales contracts in the reporting period
? Applicable √ N/A
2.2.5. Breakdown of cost of sales
By business and product segment
Unit:CNY
Bybusinesssegment
By business segment | Item | 2018 | 2017 | YoY Change | ||
Amount | As a percentage of cost of sales | Amount | As a percentage of cost of sales | |||
Liquor | Raw materials | 2,493,466,778.30 | 84.99% | 2,465,720,490.49 | 84.51% | 1.13% |
Liquor | Labor costs | 176,446,424.13 | 6.01% | 184,843,134.82 | 6.33% | -4.54% |
Liquor | Manufacturing overhead | 263,794,683.61 | 8.99% | 265,781,739.82 | 9.11% | -0.75% |
2.2.6. Change in the scope of the consolidated financial statements forthe reporting period
√ Yes ? No
On 12 September 2017, the 21
st
meeting of the eighth board of directors reviewed andapproved the “Proposal about establishment of Luzhou Laojiao fruit wine industry Co., Ltd.invested by subsidiary”. The joint investment establishment of Luzhou Laojiao fruit wineindustry Co., Ltd. was about to be implemented by Sales Company, a wholly ownedsubsidiary of the Company, and Sichuan Meihe wine Co., Ltd. and Luzhou Juhe winedevelopment Co., Ltd.. In January 2018, the fruit wine industry was registered andestablished with a registered capital of CNY 50 million. Sales Company, a wholly-ownedsubsidiary of the Company, subscribed CNY 20.5 million of investment and held 41% ofthe shares. Although the shareholding ratio of the Company is less than 51%, among thefive members of the board of directors, the Company has sent three members, and thechairman (legal representative) is the director sent by the Company. The Company hasthe actual control over the company, so it is included in the scope of consolidation.
On 12 September 2017, the 21
st
meeting of the eighth board of directors of the Companyreviewed and approved the "Proposal on the establishment of Mingjiang Co., Ltd. bysubsidiary investment", and Sales Company, a wholly-owned subsidiary of the Company,planned to establish Mingjiang company in the United States with Luzhou Jiutai LiquorSales Co., Ltd.. In January 2018, Mingjiang company was registered and established witha registered capital of USD 6 million. Sales Company, a wholly-owned subsidiary of theCompany, subscribed USD 3.24 million and held 54% of the shares. In addition, amongthe five members of the board of directors, the Company has sent three people to haveactual control over the company, so it is included in the scope of consolidation.
Guibin company is a controlling subsidiary of Boda Marketing. The Company has decidedto cancel Guibin company due to the increasingly prominent limitations of the special
circulation channel model of single product. Guibin company has obtained the notice ofapproval of cancellation registration on 12 March 2018.
2.2.7. Major changes in the business, products or services in thereporting period
? Applicable √ N/A
2.2.8. Main customers and suppliers
Sales to major customers of the Company
Total sales from top five customers(CNY)
Total sales from top five customers(CNY) | 8,721,259,517.26 |
Total sales from top five customers as a percentage of the total sales | 66.80% |
Total sales from related parties among top five customers as a percentage of the total sales | 0.00% |
Information on top five customers
No. | Customer | Sales amount(CNY) | As a percentage of the total sales for the year |
1 | Customer A | 5,475,737,368.50 | 41.94% |
2 | Customer B | 1,814,384,710.30 | 13.90% |
3 | Customer C | 915,402,066.09 | 7.01% |
4 | Customer D | 418,166,236.17 | 3.20% |
5 | Customer E | 97,569,136.20 | 0.75% |
Total | -- | 8,721,259,517.26 | 66.80% |
Other information on major customers? Applicable √ N/A
Major suppliers of the Company
Total sales from top five suppliers(CNY) | 1,295,485,397.83 |
Total sales from top five suppliers as a percentage of the total sales | 35.55% |
Total sales from related parties among top five suppliers as a percentage of the total purchase | 0.00% |
Information on top five suppliers
No. | Supplier | Purchases(CNY) | As a percentage of the total purchase for the year |
1 | Supplier A | 434,092,654.87 | 11.91% |
2 | Supplier B | 316,331,999.00 | 8.68% |
3 | Supplier C | 223,761,979.53 | 6.14% |
4 | Supplier D | 174,468,718.17 | 4.79% |
5 | Supplier E | 146,830,046.26 | 4.03% |
Total | -- | 1,295,485,397.83 | 35.55% |
Other information on major suppliers
? Applicable √ N/A
2.3. Expenses
Unit:CNY
2018 | 2017 | YoY Change | Reason for any significant change | |
Selling and distribution expenses | 3,392,721,432.33 | 2,411,884,522.31 | 40.67% | Mainly due to increase advertising and marketing promotion to improve brand influence. |
General and administrative expenses | 722,448,972.80 | 518,463,705.99 | 39.34% | Mainly due to scale expansion and increase in the number of employees, leading to increased accrued salary and bonus. |
Finance expenses | -215,066,482.79 | -106,898,022.70 | Mainly due to increased savings in the current period, leading to increased deposit interest income. | |
R&D expenses | 62,172,210.70 | 50,990,507.33 | 21.93% |
2.4. R&D expenses
√ Applicable ? N/AIn 2018, the Company's research and development direction: research on raw grainbreeding and standardized cultivation, development of new health liquor products,research and application of liquor food safety prevention and control technology, researchon fermentation mechanism and application of brewing microorganisms, and research onproduction technology of different styles of base liquor, etc.. The Company has completedthe application of 10 government science and technology projects, the appraisal andacceptance of 9 government science and technology projects, and won 6 scientificresearch achievements awards, including 1 second prize for scientific and technologicalprogress of Sichuan province in 2018, 3 technical progress awards of China liquorindustry association, and 2 technical progress awards of China food science andtechnology association. After the promotion and application of relevant technicalachievements in the Company, it has played a role in enriching the Company's productcategories, which ensures product quality, improves the rate of alcohol and high-qualityalcohol, saving labor force and lays a technical foundation for the benign and scientificdevelopment of the Company.
Information about R&D input
2018 | 2017 | YoY Change | |
Number of R&D personnel | 452 | 449 | 0.67% |
R&D personnel as a percentage in total employees | 15.69% | 18.32% | -2.63% |
2018 | 2017 | YoY Change | |
R&D input(CNY) | 85,334,100.70 | 84,810,942.37 | 0.62% |
R&D personnel as a percentage in operating revenues | 0.65% | 0.82% | -0.17% |
Capitalized R&D input(CNY) | 0.00 | 0.00 | 0.00% |
Capitalized R&D input percentage in total R&D input | 0.00% | 0.00% | 0.00% |
Note: R&D expenses include that recorded in cost of production and salary ofresearchers.Reason for any significant YoY change in the percentage of the R&D input in the operatingrevenues? Applicable √ N/A
Reason for any sharp variation in the percentage of the capitalized R&D input andrationale? Applicable √ N/A
2.5. Cash flows
Unit:CNY
Item | 2018 | 2017 | YoY Change |
Subtotal of cash inflows from operating activities | 15,316,815,981.72 | 12,675,841,810.22 | 20.83% |
Subtotal of cash outflows from operating activities | 11,018,899,963.48 | 8,972,107,748.33 | 22.81% |
Net cash flows from operating activities | 4,297,916,018.24 | 3,703,734,061.89 | 16.04% |
Subtotal of cash inflows from investing activities | 19,702,964.73 | 19,963,102.88 | -1.30% |
Subtotal of cash outflows from investing activities | 1,485,118,936.65 | 1,426,727,363.84 | 4.09% |
Net cash flows from investing activities | -1,465,415,971.92 | -1,406,764,260.96 | 4.17% |
Subtotal of cash inflows from financing activities | 4,482,764.00 | 2,957,910,377.36 | -99.85% |
Subtotal of cash outflows from financing activities | 1,921,149,867.51 | 1,631,555,816.61 | 17.75% |
Net cash flows from financing activities | -1,916,667,103.51 | 1,326,354,560.75 | -244.51% |
Net increase in cash and cash equivalents | 916,564,472.77 | 3,623,174,123.17 | -74.70% |
Explanation of why the data above varied significantly√ Applicable ? N/ANet cash flows from financing activities and net increase in cash and cash equivalentdecreased 244.51% and 74.70% separately year-on-year, mainly due to receipt of
non-public offering fund last year.
Explanation of main reasons leading to the material difference between net cash flowsfrom operating activities during the reporting period and net profit for the year? Applicable √ N/A
3. Analysis of non-core business
? Applicable √ N/A
4.Assets and liabilities
4.1 Significant change of asset items
Unit:CNY
At the end of 2018 | At the end of 2017 | Change in percentage | Explanation about any material change | |||
Amount | As a percentage of total assets | Amount | As a percentage of total assets | |||
Cash and cash equivalents | 9,367,386,627.68 | 41.44% | 8,449,622,154.91 | 42.77% | -1.33% | |
Accounts receivable | 10,333,728.87 | 0.05% | 8,008,857.20 | 0.04% | 0.01% | |
Inventories | 3,230,415,749.95 | 14.29% | 2,811,866,523.26 | 14.23% | 0.06% | |
Long-term equity investments | 2,091,103,348.61 | 9.25% | 1,824,893,972.85 | 9.24% | 0.01% | |
Fixed assets | 1,029,666,915.47 | 4.56% | 1,129,894,772.60 | 5.72% | -1.16% | |
Construction in progress | 3,000,489,249.86 | 13.27% | 1,567,263,995.95 | 7.93% | 5.34% | Mainly due to the construction of technical renovation project of brewing industry according to the plan and the project input increases year by year. |
4.2 Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit:CNY
Item | Opening balance | Changes in fair value through profit or loss | Changes in cumulative fair value recorded into equity | Provision for impairment | Amount of purchase | Amount of sale | Closing balance |
Financial asset | |||||||
3.Available-for-sale | 237,513,702.02 | -46,755,009.43 | 177,009,535.83 | 0.00 | 0.00 | 0.00 | 190,758,692.59 |
Item
Item | Opening balance | Changes in fair value through profit or loss | Changes in cumulative fair value recorded into equity | Provision for impairment | Amount of purchase | Amount of sale | Closing balance |
financial assets | |||||||
Total | 237,513,702.02 | -46,755,009.43 | 177,009,535.83 | 0.00 | 0.00 | 0.00 | 190,758,692.59 |
Financial liability | 0.00 | 0.00 |
Whether measurement attribution of main assets changes significantly in this year?Yes √ No
4.3 Restricted asset rights as of the end of this reporting period
Item | Closing Balance | Reason |
Other cash and cash equivalents | 1,400,000.00 | According to regulations of Tourism Bureau, the travel service deposit was deposited in a designated bank |
Total | 1,400,000.00 |
5. Investment
5.1. Total investment
√ Applicable ? N/A
Investment made in the reporting period (CNY) | Investment made in the prior year (CNY) | YoY change |
1,527,400,090.76 | 1,503,709,847.70 | 1.58% |
5.2. Significant equity investment made in the reporting period
? Applicable √ N/A
5.3. Significant ongoing non-equity investment in the reporting period
√ Applicable □ N/A
Unit:CNY
Item
Item | Investment form | Whether it is a fixed asset investment | Industry of the investment project | Amount of input in the reporting period | Accumulated actual input amount by the end of the reporting period | Capital source | Project progress | Projected income | Accumulated actual income by the end of the reporting period | Reasons for not meeting the schedule and projected income | Date of disclosure (if any) | Disclosure index (if any) |
Technical renovation project of brewing | Self-built | Yes | Liquor | 1,203,223,850.04 | 2,362,483,702.39 | Fund-raising+self-finance | 40.00% | 0.00 | 0.00 | N/A | April 28 2016 | Announcement of About subsidiary technical renovation project of brewing No:2016-12(http://www.cninfo.com.cn/) |
Total | -- | -- | -- | 1,203,223,850.04 | 2,362,483,702.39 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
5.4. Financial assets investment
√ Applicable □ N/A
5.4.1. Securities investment
√ Applicable □ N/A
Unit: CNY
Category of
securities
Category of securities | Stock code | Abbreviation of securities | Initial investment cost | Accounting measurement model | Beginning book balance | Changes in fair value recognized in profit or loss | Changes in the cumulative fair value recorded into equity | Amount of purchase | Amount of sale | Profit and loss during the reporting period | Closing book balance | Accounting item | Capital source |
Domestic and foreign stock | 601211 | GTJA | 12,719,156.76 | Fair value measurement | 218,109,984.47 | -37,686,390.43 | 167,704,437.28 | 0.00 | 0.00 | 4,710,798.80 | 180,423,594.04 | Available-for-sale financial asset | Owned fund |
Domestic and foreign stock | 01983.HK | LZBANK | 51,120,000.00 | Cost method measurement | 51,120,000.00 | N/A | N/A | 0.00 | 0.00 | 4,339,200.00 | 51,120,000.00 | Available-for-sale financial asset | Owned fund |
Domestic and foreign stock | 002246 | SNC | 1,030,000.00 | Fair value measurement | 19,403,717.55 | -9,068,619.00 | 9,305,098.55 | 0.00 | 0.00 | 62,542.20 | 10,335,098.55 | Available-for-sale financial asset | Owned fund |
Total | 64,869,156.76 | 288,633,702.02 | -46,755,009.43 | 177,009,535.83 | 0.00 | 0.00 | 9,112,541.00 | 241,878,692.59 | -- | -- |
5.4.2. Derivative investment
□Applicable √ N/ANo such cases in the reporting period
5.5. Use of fund-raising
√ Applicable ? N/A
5.5.1. General use of fund-raising
√ Applicable □ N/A
Unit:CNY 10,000
Year
Year | Method | Total amount of fund-raising | Total amount of used fund-raising in the reporting period | Total amount of accumulated used fund-raising | Total amount of re-purposed fund-raising in the reporting period | Total amount of accumulated re-purposed fund-raising | Accumulated re-purposed fund-raising as a percentage in total fund-raising | Total amount of unused fund-raising | Purpose and direction of unused fund-raising | Amount of fund-raising idle for more than two years |
2012, 2013 | Stock option incentive | 10,240.61 | 6,361.29 | 10,713.85 | 0 | 6,152.06 | 60.08% | 0 | N/A | 0 |
2017 | Non-public offering | 295,273.5 | 78,712.87 | 138,027.47 | 0 | 0 | 0.00% | 167,649.07 | Deposited in special account of fund-raising and purchase of structured deposit products | 0 |
Total | -- | 305,514.11 | 85,074.16 | 148,741.32 | 0 | 6,152.06 | 2.01% | 167,649.07 | -- | 0 |
Notes for general use of fund-raising | ||||||||||
1. The amount of fund-raising used for stock option incentive is more than the difference of total amount of fund-raising, mainly due to the input including interest income deducting commission charge. 2. The total amount of unused fund-raising used for non-public offering includes funds interests. |
5.5.2. fund-raising for committed projects
√ Applicable □ N/A
Unit:CNY
Committedinvestment projects
and direction ofover-raised funds
Committed investment projects and direction of over-raised funds | Whether the project has been changed (including partial change) | Total amount of fund-raising for committed investment | Adjusted Investment total amount (1) | Investment amount in the reporting period | Accumulated input by the end of the reporting period (2) | Investment progress by the end of reporting period (3)=(2)/(1) | Date of the projects reach the working condition for their intended use | Realized benefits during the reporting period | Whether the expected benefits have been achieved | Whether the feasibility of the project has changed significantly |
Committed investment projects | ||||||||||
China Liquor City Laojiu Town Phrase I | Yes | 10,240.61 | 4,088.55 | 0 | 4,088.55 | 100.00% | 22 June 2016 | 108.26 | Yes | Yes |
Cellar Construction Project | No | 6,152.06 | 6,152.06 | 6,361.29 | 6,625.3 | 107.69% | 0 | N/A | No | |
Technical Renovation Project of Brewing Phrase I | No | 295,273.5 | 295,273.5 | 78,712.87 | 138,027.47 | 46.75% | 31 December 2020 | 0 | N/A | No |
Subtotal of committed investment projects | -- | 311,666.17 | 305,514.11 | 85,074.16 | 148,741.32 | -- | -- | 108.26 | -- | -- |
Direction of over-raised funds | ||||||||||
None | ||||||||||
Total | -- | 311,666.17 | 305,514.11 | 85,074.16 | 148,741.32 | -- | -- | 108.26 | -- | -- |
Situation and reason for not reaching plan progress or expected | 1. China Liquor City Laojiu Town Phrase I:According to the resolution of the general meeting of shareholders in 2015, the Company changed the purpose of fund-raising for stock option incentive. See details in the Announcement About Purpose Change of fund-raising (No: 2016-11 http://www.cninfo.com.cn/) issued on 28 April 2016. 2. Cellar Construction Project:The project is used for brand publicity and improving liquor storage capacity. It cannot generate economic benefit directly and |
benefits (by specificitems)
benefits (by specific items) | individually. The Company cannot account for the realized economic benefits individually and promise the economic benefits. |
Significant changes of project feasibility | China Liquor City Laojiu Town Phrase I:The reason for feasibility changed significantly as described in the Announcement About Purpose Change of fund-raising (No:2016-11 http://www.cninfo.com.cn/) issued on 28 April 2016. |
Amount, propose and progress of over-raised funds | N/A |
Change of implementation site of investment projects | N/A |
Adjustment of the implementation mode of raised funds investment projects | N/A |
Situation of prior-period investment and replacement of the projects | Applicable |
On 30 November 2017, the 24th meeting of the eighth board of directors reviewed and approved the Proposal About fund-raising Used for Replacement of Prior-period Investment. The Company decided to use fund-raising used for non-public offering amounted CNY 581,774,996.30 to replace the self-financed funds invested at earlier stage in the Technical Renovation Project of Brewing Phrase I. | |
Idle fund-raising used for temporary supplementary liquidity | N/A |
Amount and reason for surplus of | N/A |
fund-raising
fund-raising | |
Propose and direction of unused fund-raising | Idle fund-raising deposited in special accounts, namely the account (account number: 606036135) opened in CMSC Chengdu Branch and the account (account number: 028900178710606) opened in CMBC Xiti North Road Branch. |
Problems and other situation when fund-raising is used and disclosed | N/A |
5.5.3. Change the use for fund-raising
? Applicable √ N/ANo such cases in the reporting period
6. Sale of major assets and equity interests
6.1. Sale of major assets
? Applicable √ N/ANo such cases in the reporting period
6.2. Sale of major equity interests
? Applicable √ N/A
7. Analysis of major subsidiaries
√ Applicable ? N/AMain subsidiaries and joint companies with an over 10% influence on the Company’s net profit
Unit:CNY
Company name
Company name | Company type | Business scope | Registered capital | Total assets | Net assets | Operating Revenue | Operating profit | Net profit |
Sales Company of Luzhou Laojiao Co.,Ltd. | Subsidiary | Luzhou Laojiao series unified package liquor sales | 100,000,000.00 | 5,148,402,191.56 | 1,458,990,115.71 | 12,743,309,108.03 | 3,702,880,002.83 | 2,770,784,102.55 |
Acquisition and disposal of subsidiaries during the reporting period√ Applicable ? N/A
Subsidiary name | How subsidiary was acquired or disposed during the reporting period | Impact on overall operation and results |
Luzhou Laojiao fruit wine industry Co., Ltd. | Establishment | No significant impact |
Mingjiang Co., Ltd. | Establishment | No significant impact |
Luzhou Laojiao Guibin Service Co.,Ltd. | Liquidation and cancellation | No significant impact |
Notes for major holding companies and joint stock companiesThe operating profit and net profit of Sales Company increased 38.41% and 37.96% year on year, mainly due to increased sale revenue during thereporting period.
8. Structured entities controlled by the Company
? Applicable √ N/A
9. Outlook for the future development of the Company
9.1 Industry pattern and trends
In recent years, China's liquor industry has sped up the transformation from an expandingmarket to a competitive market. "Matthew effect" highlights “the strong gets stronger, theweak gets weaker, with diversified recovery”. We believe that the adjustment ofliquor-making industry will continue in the next five years trend with "Four Focus" and"Four Directions" as the main characteristics. “Four Focus” refer to focus on brand, quality,culture, and origin. “Four Directions” refer to the directions of youth, fashion, health andinternational development. Chinese liquor industry will gradually enter the era of"oligarchs".
9.2 Company’s development strategy9.2.1. Development opportunities in the future
A. Luzhou Laojiao, as one of China's most ancient "four famous liquor", has a long history,profound culture, superior quality and strong brand. In recent years, as the continuousoptimization and improvement of scientific decision-making, internal management, teambuilding, product quality control, competitive sales system construction, the Company’scompetitiveness has been further enhanced.
B. China has been implementing a proactive fiscal policy, increasing opening-up,improving the business environment, and implementing tax cuts and fee reductions, whichare good for economic development in the medium and long term. The industry is facingmultiple development opportunities such as the rise of the middle class, overall povertyalleviation, industrial upgrading and accelerated urbanization.
C. With the continuous adjustment of liquor industry and the significantly acceleratedconcentration, the Company ushers into the expansion of the proportion and strength andfaces the historical opportunity.
9.2.2. Possible challenges and risks in the future
A. In 2019, the international political and economic situation is complex and contradictory.The process of economic globalization and international trade division of labor willcontinue to undergo major adjustments.
B. The domestic macro-economy has entered a relatively long period of medium andlow-speed development, and faced multiple pressures, including financial risks,supply-side reform, conversion of old and new drivers of growth, ecological andenvironmental protection, and Sino-US trade frictions.
C. In a long period, the aging population in the liquor industry may lead to a decline in thedemand, thus affecting the market sales scale and intensifying competition.
9.2.3. The Company's "13th five-year" development strategy
During the Company's "13th five-year" period, the overall plan is "12345" strategy, namelythe clear return to China's liquor industry "top three" as one goal; adhering to "professionand strength" and "harmonious coexistence" as two principles; thoroughly carrying out the"three strengthening" including strengthening sales, strengthening management andstrengthening talent team construction; Grasping the four key development steps ofstability period, adjustment period, sprint period and achievement period between 2015and 2020; Achieving the leading in China's liquor industry market, corporate governance,brand culture, quality and technology, and talent resources.
9.3 Completion of the business plan in 2018
In 2018, the Company achieved an operating revenue of CNY 13.055 billion and 100.35%of the target. The net profit attributable to shareholders of the listed company reachedCNY 3.486 billion and 104.91% of the planned amount. Targets set at the beginning of theyear was successfully achieved.
9.4 Business plan in 2019
In 2019, it is a deciding year for the Company's “13th Five-Year Plan” strategy. In the thirdyear of sprint period, it will have a profound and significant influence on the futuredevelopment of Luzhou Laojiao. The Company will be closely around the developmenttheme of "firmness, management, scale", firmly determined to win, and adhere toindependent development, seize the development opportunity, sprint to realizing leapingdevelopment. According to the "Outline of Production and Operation in 2019" reviewedand approved by the board of directors, the Company will strive to achieve a year-on-yearincrease in operating revenue of 15%-25%. (2019 business plan is prepared based on“13th Five-Year Plan” strategy combined with the Company's ability, not presenting theearning forecast for 2019, nor the company promise. Whether it can be realized, itdepends on market conditions change, the management team effort, and many otherfactors. There are a lot of uncertainties and investors should pay special attention to it.)
The main measures are as follows:
1. Keep five resolutionsFirst, adhering to the development orientation of “profession and strength”. The Companywill focus on the development of liquor industry without distractions, concentrate on"double brands", and build "three lines" and "five single products". Second, adhering to aforward-looking pragmatic strategic vision. The Company will focus on strengthening thedynamic analysis of external competition and internal work, keeping strategic decisionsforward-looking, systematic and scientific, and following through with the blueprint. Third,adhering to a scientific and efficient governance model. The Company will constantlyimprove the decision-making authorization system, adhere to scientific and democraticdecision-making, and apply advanced management concepts, mechanisms and tools.Fourth, adhering to the path of innovation-driven development. The Company will promotehigh-quality development through scientific and technological innovation, adapt toconsumption upgrading and the rise of the new generation of consumers with productinnovation, empower the brand with concept innovation, and realize channel innovation
and service innovation through cross-border integration. Fifth, adhering to take aresponsibility for harmonious coexistence. The Company will take the initiative to fulfill thesocial responsibility of large-scale backbone brewing enterprises, and continue to makecontributions to targeted poverty alleviation, social public welfare, corporate tax andemployment expansion. The Company also should strictly abide by the bottom line ofenvironmental protection and safety red line, and maintain the unity and harmony of theindustry, and the healthy development of the upstream and downstream industrial chain.
2. Strengthen the five-item managementFirst, strengthening strategic management. The consistent strategy execution system isconstructed based on the principles of "strategy and corporate culture integration,matching with organizational functions, correlation with assessment and incentive,correspondence with distribution of rights and responsibilities, and linkage with resourceallocation". Second, strengthening system management. The Company will accelerate theestablishment of a management system with clear responsibilities, clear levels, andclosed-loop management, and a management chain that goes horizontally to the edgeand vertically to the end, so as to enhance synergy. Third, strengthening accuratemanagement. According to the requirements of standardization, specialization,digitalization and refinement, the management refinement project should be implementedto establish and enhance the authority, guidance and practical operation of management.Fourth, strengthening risk management. The Company will guard against decision-making,market, management, business and integrity risks. Fifth, strengthening people-orientedmanagement. The Company will enhance employees’ sense of belonging, implement goalmotivation and growth motivation, and stimulate employees’ subjective initiative of activeperformance and happy growth.
3. Expand the five scalesFirst, expanding market scale. The Company will deepen push forward to developingoverall region-oriented markets, and accelerate the nationwide distribution, attack andseize blank markets, and consolidate mature markets. Second, expanding the scale ofresources. The Company will give full play to the core competitive advantages of LuzhouLaojiao culture, quality and technology and the overall advantages of the Company'sbrand pyramid, so that it can be transformed into brand resources and marketingresources, and corporate influence can be used to gather social resources. Third,expanding production scale. Technical renovation projects will be promoted with all efforts,and quality traceability management will be implemented. Quality management will beextended to the upstream and downstream of the industrial chain. Fourth, expandingenterprise scale. The Company should do a good job in major strategic investment andfinancing research and market value management, strengthen investor relationshipmanagement, constantly consolidate and improve Luzhou Laojiao's good image in thecapital market, and timely promote the Company's expansion and development. Fifth,expanding the scale of talent. The Company should plan and build a “talent team pyramid”with enterprise leaders, industry experts and other high-level talents as the top;management, marketing and production composite talents and professional technical
backbone as the tower; and front-line basic business professionals as the base.
10. Visits paid to the Company for purposes of research,communication, interview, etc.
10.1 In the reporting period
√ Applicable ? N/A
Date of visit
Date of visit | Way of visit | Type of visitor | Index to main inquiry information |
31 January 2018 | Field survey | Institution | Production and Business Operation (http://www.cninfo.com.cn/) |
27 June 2018 | Field survey | Institution | Industry Trends and Company Performance(http://www.cninfo.com.cn/) |
25 September 2018 | Field survey | Institution | Production and Business Operation(http://www.cninfo.com.cn/) |
31 October 2018 | Field survey | Institution | Industry Trends and Company Performance(http://www.cninfo.com.cn/) |
6 November 2018 | Field survey | Institution | Industry Trends and Company Performance(http://www.cninfo.com.cn/) |
7 November 2018 | Field survey | Institution | Industry Trends and Company Performance(http://www.cninfo.com.cn/) |
29 November 2018 | Field survey | Institution | Production and Business Operation(http://www.cninfo.com.cn/) |
19 December 2018 | Field survey | Institution | Industry Trends and Company Performance(http://www.cninfo.com.cn/) |
Number of reception | 8 | ||
Number of reception of institutions | 261 | ||
Number of reception of individuals | 5 | ||
Number of reception of others | 7 | ||
Whether to disclose or divulge material information that has not been made public | NO |
Section V Significant Events
10. Profit distribution and converting capital reserves into
share capital for common shareholders
Formulation, execution or adjustments of profit distribution policy, especially cashdividend policy, for common shareholders in the reporting period.√ Applicable ? N/A
According to the plan for profit distribution for 2017 was deliberated and approved by 2017annual shareholders' meeting. Based on its total of 1,464,752,476 shares, the Companydistributed a cash dividend of CNY 12.50 (tax inclusive) per 10 shares to all shareholders.The distribution plan was implemented on 16 July 2018.
A special statement of the policy of cash dividends
A special statement of the policy of cash dividends | |
Whether it meets the requirements of the articles of corporation or the resolution of shareholders' meeting: | Yes |
Whether the standard and proportion of dividends are clear: | Yes |
Whether the relevant decision-making process and systems are complete: | Yes |
Whether non-executive directors perform their duties and play their due role: | Yes |
Whether the minority shareholders have the opportunity to fully express their opinions and appeals and whether their legitimate rights and interests have been adequately protected: | Yes |
Whether the conditions and procedures are compliant and transparent and whether the cash dividend policy is adjusted or changed: | The Company's cash dividend policy has not been adjusted or changed in the reporting period |
Plans (or preliminary plans) for profit distribution and converting capital reserves intoshare capital for common shareholders for the recent three years (including the reportingperiod) are as following:
Preliminary plan for profit distribution for 2018: Based on its total shares , the Company isto distribute a cash dividend of CNY 15.50 (tax inclusive) per 10 shares to allshareholders.Plan for profit distribution for 2017: Based on its total shares, the Company distributed acash dividend of CNY 12.50 (tax inclusive) per 10 shares to all shareholders.
Plan for profit distribution for 2016: Based on its total shares, the Company distributed acash dividend of CNY 9.60 (tax inclusive) per 10 shares to all shareholders.
Cash dividend distribution over the recent three years (including the reporting period)
Unit: CNY
Year
Year | Cash dividends (tax included) | Net profit attributable to common shareholders in the consolidated statement in the year | Ratio to net profit attributable to common shareholders in the consolidated statement in the year | Cash dividends in other forms | Ratio of cash dividends in other forms | Total cash dividends (including other forms) | Ratio of cash dividends (including other forms) |
2018 | 2,270,366,337.80 | 3,485,643,008.98 | 65.13% | 0.00 | 0.00% | 2,270,366,337.80 | 65.13% |
2017 | 1,830,940,595.00 | 2,557,944,598.97 | 71.58% | 0.00 | 0.00% | 1,830,940,595.00 | 71.58% |
2016 | 1,346,162,376.96 | 1,957,193,264.50 | 68.78% | 0.00 | 0.00% | 1,346,162,376.96 | 68.78% |
The Company made a profit in the reporting period and the profit distributed to commonshareholders of the Company was positive, but it did not put forward a preliminary plan forcash dividend distribution to common shareholders.? Applicable √ N/A
11. Preliminary plan for profit distribution and converting
capital reserves into share capital for the reporting period
√ Applicable ? N/A
Bonus shares for every 10 shares (share) | 0 |
Dividends for every 10 shares (CNY) (tax included) | 15.50 |
Total shares as the basis for the preliminary plan for profit distribution (share) | 1,464,752,476 |
Total cash dividends (CNY) (tax included) | 2,270,366,337.80 |
Cash dividends in other forms (e.g. repurchase share) | 0.00 |
Total cash dividends (CNY) (including other forms) | 2,270,366,337.80 |
Distributable profit (CNY) | 10,181,899,224.84 |
Percentage of cash dividends in the total distributed profit (including other forms) | 100% |
Information of the cash dividends | |
The development stage of the Company is mature and the Company has major fund expenditure arrangement. When the profit distribution is carried out, the proportion of cash dividends in this profit distribution should at least reach 40%. |
Details of preliminary plan for profit distribution and converting capital reserves into share capital
Details of preliminary plan for profit distribution and converting capital reserves into share capital |
After taking minority shareholders’ advice, the board of directors plans to distribute a cash dividend of CNY 15.50 (tax inclusive) per 10 shares to all shareholders based on its total of 1,464,752,476 shares, according to the Company's actual conditions. The remaining undistributed profit shall be carried forward for future distribution. |
3. Performance of undertakings
3.1. Undertakings of the Company's actual controller, shareholders,related parties and acquirer, as well as the Company and othercommitment makers fulfilled in the reporting period or ongoing by theend of this reporting period
√ Applicable ? N/A
Undertaking reasons | Undertaking giver | Type of undertakings | Details of undertakings | Undertaking date | Term | Particulars on the performance |
Stock reform undertaking | ||||||
Undertaking made in the report of acquisition or change of interest | ||||||
Undertaking made in the reorganization of assets | ||||||
Undertakings given in time of IPO or refinancing | E Fund Management Co., Ltd.,China Universal Asset Management Company Limited, Bosera Asset Management Co., Limited,Ping An Asset Management Co. Ltd., Caitong Fund Management Co.,Ltd., Minsheng Royal Fund Management Co.,Ltd. | Restricted shares | For the shares of Luzhou Laojiao by non-public offering purchased, I/The unit undertakes that the shares will be not transferred within 12 months from new shares offering, including but not limited to public transfer and negotiating transfer. If laws and regulations have other rules on restricted period, it follows the rules. | 2017.09.14 | 12 months | Fulfilled |
Luzhou Liquor | Restricted | For the shares of | 2017.09.14 | 36 months | In progress |
Undertakingreasons
Undertaking reasons | Undertaking giver | Type of undertakings | Details of undertakings | Undertaking date | Term | Particulars on the performance |
Industry Investment Co.,Ltd. | shares | Luzhou Laojiao by non-public offering purchased, I/The unit undertakes that the shares will be not transferred within 12 months from new shares offering, including but not limited to public transfer and negotiating transfer. If laws and regulations have other rules on restricted period, it follows the rules. | ||||
SASAC of Luzhou, Laojiao Group | Other undertaking | 1. Don’t interfere in the Company’s operation and management activities beyond its authority, and don’t encroach on the Company’s interests. 2. If any party violates this commitment and causes losses to the company or other shareholders, it shall be liable according to law. 3. This commitment is irrevocable. | 2016.05.11 | 2018.12.31 | Fulfilled | |
Liu Miao, Lin Feng, Wang Hongbo, Jiang Yuhui, Shen Caihong, Zhang Ling, Du Shenlun, Xu Guoxiang, Tan Lili, Qian Xu, Ying Hanjie, He Cheng, Zhang Suyi, Xie Hong | Other undertaking | 1. Promise not to transfer benefits to other units or individuals free of charge or under unfair conditions, nor to damage the interests of the Company in any other way. 2. Commitment to restrain the | 2016.05.11 | 2018.12.31 | Fulfilled |
Undertakingreasons
Undertaking reasons | Undertaking giver | Type of undertakings | Details of undertakings | Undertaking date | Term | Particulars on the performance |
position-related consumption behavior of directors and senior managers. 3. Promise not to use the Company’s assets to engage in investment and consumption activities unrelated to its performance of duties. 4. Commit that the compensation system established by the board directors or the compensation committee will be linked to the implementation of the Company’s compensation measures. 5. Promise that if the Company implements the equity incentive plan in the future, the exercise conditions of the Company’s equity incentive will be linked to the implementation of the Company’s compensation measures. 6. If any party violates this commitment and causes losses to the Company or shareholders, it shall be liable according to law. 7. This commitment is irrevocable. | ||||||
Equity incentive |
Undertakingreasons
Undertaking reasons | Undertaking giver | Type of undertakings | Details of undertakings | Undertaking date | Term | Particulars on the performance |
commitment | ||||||
Other undertakings to non-controlling shareholders | ||||||
Whether the undertaking is fulfilled on time | Yes | |||||
Specific reasons for failing to fulfill any undertakings and plan for the next step | None |
3.2. Where any earnings forecast was made for any of the Company'sassets or projects and the reporting period is still within the forecastperiod, the Company shall explain whether the performance of the assetor project reaches the earnings forecast and reasons
? Applicable √ N/A
4. Occupation of the Company's fund by the controllingshareholder or its related parties for non-operating purposes
? Applicable √ N/A?No such cases in the reporting period.
5. Explanation of the board of directors, the supervisorycommittee and non-executive directors (If Any) regarding the"Non-standard audit opinion" for the reporting period
? Applicable √ N/A
6. Reason for changes in accounting policies, accountingestimates and accounting methods compared to the financialreport for the prior year
? Applicable √ N/A
7. Reason for retrospective restatement of major accountingerrors during the reporting period
? Applicable √ N/A?
No such cases in the reporting period.
8. Reason for changes in scope of the consolidated financialstatements compared to the financial report for the prior year
√ Applicable ? N/ANewly incorporated subsidiaries in this period
Name
Name | Reason for change |
Luzhou Laojiao Fruit Wine Industry Co., Ltd. | Establishment |
Mingjiang Co., Ltd. | Establishment |
Liquidation and cancellation for subsidiaries in this period
Name | Reason for change |
Luzhou Laojiao Guibin Service Co.,Ltd. | Liquidation and cancellation |
On 12 September 2017, the 21
st
meeting of the eighth board of directors reviewed andapproved the “Proposal about establishment of Luzhou Laojiao fruit wine industry Co., Ltd.invested by subsidiary”. The joint investment establishment of Luzhou Laojiao fruit wineindustry Co., Ltd. was about to be implemented by Sales Company, a wholly ownedsubsidiary of the Company, and Sichuan Meihe wine Co., Ltd. and Luzhou Juhe winedevelopment Co., Ltd.. In January 2018, the fruit wine industry was registered andestablished with a registered capital of CNY 50 million. Sales Company, a wholly-ownedsubsidiary of the Company, subscribed CNY 20.5 million of investment and held 41% ofthe shares. Although the shareholding ratio of the Company is less than 51%, among thefive members of the board of directors, the Company has sent three members, and thechairman of the board (legal representative) is the director sent by the Company. TheCompany has the actual control over the company, so it is included in the scope ofconsolidation.
On 12 September 2017, the 21
st
meeting of the eighth board of directors of the Companyreviewed and approved the "Proposal on the establishment of Mingjiang Co., Ltd. Bysubsidiary investment", and Sales Company, a wholly-owned subsidiary of the Company,planned to establish Mingjiang company in the United States with Luzhou Jiutai LiquorSales Co., Ltd.. In January 2018, Mingjiang company was registered and established witha registered capital of USD 6 million. Sales Company, a wholly-owned subsidiary of theCompany, subscribed USD 3.24 million and held 54% of the shares. In addition, amongthe five members of the board of directors, the Company has sent three people to haveactual control over the company, so it is included in the scope of consolidation.
Guibin company is a controlling subsidiary of Boda Marketing. The Company has decidedto cancel Guibin company due to the increasingly prominent limitations of the specialcirculation channel model of single product. Guibin company has obtained the notice ofapproval of cancellation registration on 12 March 2018.
9. Engagement and disengagement of CPAs firm
CPAs firm at present
Name of the domestic CPAs firm
Name of the domestic CPAs firm | Sichuan Huaxin (Group) CPA Firm |
The Company’s payment for the domestic CPAs firm (CNY’0,000) | 80 |
Consecutive years of the audit service provided by the domestic CPAs firm | 20 |
Names of the certified public accountants from the domestic CPAs firm | Feng Yuan, He Fushou |
Consecutive years of the audit service provided by the certified public accountants | 1 |
Whether the CPAs firm was changed in the current period?? Yes √ No?Engagement of any CPAs firm for internal control audit, financial advisor or sponsor√ Applicable ? N/AThe Company appointed Sichuan Huaxin (Group) CPA Firm as the internal control auditorfor this year. The remuneration of audit in total paid by the Company was CNY 400thousand.?
10. Possibility of listing suspension and termination afterdisclosure of this annual report
? Applicable √ N/A
11. Bankruptcy and reorganization
? Applicable √ N/A?No such cases in the reporting period.
12. Material litigation and arbitration
√ Applicable ? N/A?
Profile of litigation (arbitration) | Amount involved in the case (CNY’ 0,000) | Whether it forms an estimate liability | Progress in litigation (arbitration) | Trial results and impacts of litigation (arbitration) | Execution of judgment of litigation (arbitration) | Date of disclosure | Disclosure index |
The Company filed a lawsuit with ABC Changsha Yingxin Branch over a deposit dispute, and the case has been transferred to Hunan | 14,942.5 | No | Abatement of action | Abatement of action | Abatement of action | 15 October 2014 | See Section V “Other significant events” |
Profile of litigation
(arbitration)
Profile of litigation (arbitration) | Amount involved in the case (CNY’ 0,000) | Whether it forms an estimate liability | Progress in litigation (arbitration) | Trial results and impacts of litigation (arbitration) | Execution of judgment of litigation (arbitration) | Date of disclosure | Disclosure index |
Province Higher People’s Court. | |||||||
The Company filed a lawsuit with ICBC Nanyang Zhongzhou Branch over a deposit dispute, and the case has been transferred to Henan Province Higher People’s Court. | 15,000 | No | Abatement of action | Abatement of action | Abatement of action | 10 January 2015 | See Section V “Other significant events” |
13. Punishments and rectifications
? Applicable √ N/A?No such cases in the reporting period.
14. Credit conditions of the Company as well as its controllingshareholder and actual controller
? Applicable √ N/A?
15. Implementation of any equity incentive plan, employeestock ownership plan or other incentive measures foremployees
? Applicable √ N/A?No such cases in the reporting period.
16. Significant related party transactions
16.1. Related party transactions arising from routine operation
? Applicable √ N/A?During the reporting period, the Company does not have any related party transactionswith a total of more than CNY 30 million and accounting for more than 5% of theCompany’s audited net assets in the latest period.The Company’s 2018 daily affiliated transactions shall be implemented in accordance withthe “Proposal on the estimated 2018 annual daily affiliated transactions” reviewed and
approved at the 26th meeting of the eighth board of directors. For details, please refer toSection XI “12. Related parties and related party transactions”
16.2. Related party transactions regarding purchase or sales of assets orequity interests
? Applicable √ N/A?No such cases in the reporting period.
16.3. Related party transitions arising from joint investments in externalparties
? Applicable √ N/A?No such cases in the reporting period.
16.4. Credits and liabilities with related parties
? Applicable √ N/A?No such cases in the reporting period.
16.5. Other significant related party transactions
? Applicable √ N/A?No such cases in the reporting period.
17. Significant contracts and their execution
17.1. Trusteeship, contracting and leasing17.1.1. Trusteeship
? Applicable √ N/ANo such cases in the reporting period.
17.1.2. Contracting
? Applicable √ N/ANo such cases in the reporting period.
17.1.3. Leasing
? Applicable √ N/ANo such cases in the reporting period.
17.2. Major guarantees
? Applicable √ N/ANo such cases in the reporting period.
17.3. Entrusted cash asset management17.3.1. Entrust assets management
□ Applicable √ N/A
17.3.2 Entrust loans
? Applicable √ N/ANo such cases in the reporting period.
17.4 Other significant contracts
? Applicable √ N/ANo such cases in the reporting period.
18. Social Responsibilities
18.1 Information about taking social responsibilities
See details in 2018 Annual Social Responsibilities Report on the same date of theannouncement.
18.2 Information about targeted poverty alleviation18.2.1 Targeted poverty alleviation plan
Overall goals: the Company adheres to the enterprise concept of "heaven and earth withliquor, living symbiosis". In the anti-poverty battle, the Company strengthens the politicalresponsibility and social responsibility, actively support three poverty-stricken countiesand eleven poverty-stricken villages successively in two national poverty-stricken areas,namely Wumengshan District and Yi area and Tibetan area of Sichuan province. Itfocuses on precise poverty alleviation in Xiangtian village, Gulin county and Guntangvillage, Hongyuan county, Aba prefecture. The Company gives comprehensive support onmanpower, material resources and financial resources in aspect of the industrialdevelopment, infrastructure construction, education and health and other key projects. Inthe process of work, it is necessary to highlight precise assistance and precise povertyalleviation, pay attention to improving the quality of poverty alleviation and consolidatingthe achievements of poverty alleviation, and earnestly implement policies, measures,funds, projects and responsibilities to ensure real poverty alleviation, and ensure theacceptance of poverty alleviation in whole by the end of 2018.
Main task: (1) poverty households out of poverty. According to the poverty alleviationstandard of CNY 3,600 per capita per year per family, the cultivation and breeding industryare developed to ensure and improve industrial achievements. Focusing on the standardof "three guarantees", the poor households with safe housing are upgraded to improvetheir living conditions. Around the "three have" standard, cooperating with the partycommittee and government of Maiwa town in Hongyuan county and Longshan town inGulin county, the Company realized the full coverage of water grid in two villages, andensured the standard of living water, safe electricity and agricultural network signals. (2)The poor village out of poverty. Centering on the standard of "four good new villages", the
peripheral environment of Xiangtian village and Wentang village is upgraded to cultivategood habits of farmers and form a good atmosphere. The Company guides and supportsthe village collective economy, consolidates and improves the village collective economyby means of donation and collective management, share dividends, asset leasing andother forms, and ensures that the income is up to the standard. The Company supportsthe construction of village-to-village highways, production roadways and motor-plowroadbeds, and improves the working and living conditions of poor households.
Safeguard measures: the Company gives strong support to the two villages in terms oftechnical guidance, project funds, skill training and industrial development. Members ofthe Company's leadership team focus on helping poor villages out of poverty once everytwo months to solve practical difficulties and problems. The Company, together with thevillage working group, the first secretary and agricultural technicians, conducts quarterlyanalysis, research and implementation of poverty alleviation projects, livelihood projectsand infrastructure construction in the two villages. The Company organizes partymembers and cadres to participate in pairing assistance, "one-to-one" establishment ofpairing assistance ledger. In this year, they helped contact poor households to solve 2-3specific problems. If it is not out of poverty, they will not quit.
18.2.2 Outline of annual targeted poverty alleviation
In 2018, targeted poverty alleviation work has entered the phase of the sprint of "solvingtough issue and assaulting fortified positions" . The Company’s counterparts in targetedpoverty alleviation are Longshan town, Gulin county and Guntang village, Hongyuancounty, Aba prefecture. It has entered the years of poverty alleviation acceptance. TheCompany further clears thinking, strengthens the responsibility, and takes bigger, stronger,more directly, more efficient and more sustainable measures in targeted povertyalleviation work. The Company solves the difficult problem as an emphasis andbreakthrough of poverty alleviation work with actively planning and vigorouslyimplementation. The two key villages have been out of poverty, and the poverty alleviationefforts have achieved remarkable results.
18.2.3 Poverty alleviation achievement
Indicator
Indicator | Unit | Amount/Implementation situation |
A. Overall situation | —— | —— |
Including:1.Fund | CNY 100,000 | 2,072.21 |
3.Number of establishing card for archives of poor people out of poverty | Person | 437 |
B. Input by project | —— | —— |
1.Industrial development | —— | —— |
Including:1.1 Type of poverty alleviation projects for industrial development | —— | Poverty alleviation through agriculture and forestry |
1.2Number of poverty alleviation projects for industrial development | Item | 7 |
1.3Amount invested in poverty alleviation | CNY 100,000 | 303 |
Indicator
Indicator | Unit | Amount/Implementation situation |
projects for industrial development | ||
1.4 Number of establishing card for archives of poor people out of poverty | Person | 437 |
2.Transfer and employment | —— | —— |
3.Removal and relocation | —— | —— |
4.Educational poverty alleviation | —— | —— |
Including:4.1 Input of aiding poor students | CNY 100,000 | 40 |
4.2 Number of aiding poor students | Person | 22 |
5.Health poverty alleviation | —— | —— |
Including:5.1 Input of medical and health resources in poverty-stricken area | CNY 100,000 | 1,600 |
6.Ecological protection | —— | —— |
7.Basic guarantee | —— | —— |
8.Social poverty alleviation | —— | —— |
9.Other project | —— | —— |
Including:9.1.Item | Item | 3 |
9.2.Input amount | CNY 100,000 | 129.21 |
C. Awards(content and level) | —— | —— |
National level | “Poverty alleviation of the year award” awarded by people.com.cn | |
Provincial level | Advanced Unit of "Five One" Poverty Alleviation awarded by Sichuan provincial party committee and provincial government | |
Municipal level | Advanced Unit of Donation awarded by Luzhou poverty alleviation and development association |
18.2.4 Fellow-up poverty alleviation plan
In 2019, comprehensive rectification and improvement will be made based on the twovillages out of poverty. The Company regards “"Civilized new village" and "Four good newvillage” as goals. It focuses on consolidating the results of poverty alleviation work andfurther improve the infrastructure and villagers’ quality, optimize the village environment,enhance the hard power of growing rich and help to achieve the leaping and high-qualitydevelopment of the village, guided by Xi Jinping Thought on Socialism with ChineseCharacteristics for a New Era and “Rural Revitalization Strategy”.
Key work: the Company adheres to “Real Poverty Alleviation” and works with “1573”poverty alleviation plan, namely adhering to one goal, carrying out five support teams,refining seven supporting measures and ultimately achieving three great results. The
Company pushes forward poverty alleviation according to the sustainable developmentconcept and the slogan that “what you lack, I will supply. What you need, I will help”.
Safeguard measures: the Company adheres to policy implementation as the basicguarantee and industrial development as the main path. Fostering the will and wisdom isthe fundamental measure, and the building of a new civilized village is a booster. TheCompany gives strong support to these two villages in aspect of technical guidance,project funds, skill training, industrial development and quality education.
18.3 Information about environment protection
Whether the listed company and its subsidiaries belong to heavy polluting industriesprescribed by the environmental protection departmentYes
Company name
Company name | Name of main pollutant and particular pollutant | Discharge type | Number of discharge outlet | Distribution of discharge outlet | Emission concentration | Pollution discharge standard | Total emission | Approved total emission | Excessive discharge |
Luzhou Laojiao Co.,Ltd. | COD | Continuous discharge | 1 | Luohan Base | 23.999 | 100mg/L | 5.978t | 50t | No |
Luzhou Laojiao Co.,Ltd. | Ammonia nitrogen | Continuous discharge | 2 | Luohan Base | 1.36 | 10mg/L | 0.401t | 3t | No |
Luzhou Laojiao Co.,Ltd. | Sulfur dioxide | Continuous discharge | 2 | Luohan Base | 344 | 550mg/m? | 15.513t | 125t | No |
Luzhou Laojiao Co.,Ltd. | Oxynitride | Continuous discharge | 2 | Luohan Base | 275 | 400mg/m? | 39.695t | 50t | No |
Luzhou Laojiao Co.,Ltd. | Smoke | Continuous discharge | 2 | Luohan Base | 57.9 | 80mg/m? | 1.326 | 20t | No |
Information about construction and operation of anti-pollution installationsWaste water: The Company has a sewage treatment station in Luohan Base, which is equipped with an automatic online monitoring instrument forCOD, ammonia nitrogen, total phosphorus, total nitrogen and flow. The real-time monitoring data is connected with the superior environmentalprotection department for operation. The pollution treatment facilities are in normal operation, and the waste water discharge indexes are up to thestandard. All production areas of the Company have implemented the rainwater and sewage diversion, and the high-concentration waste-water fromthe old brewery workshops in the urban area has been treated by the truck transportation to the Luohan sewage station for discharge up to thestandard.
Waste gas: The Company's old brewery in the urban area adopts clean fuel and natural gas for brewing. In view of the Luohan brewery base, naturalgas fuel is adopted after the technical transformation from coal to gas for boilers. The online automatic monitoring instrument for waste gas is installedand the dust remover facilities are in normal operation.
All construction projects are in accordance with the requirements of the stateenvironmental protection laws and regulations. The Company carries out environmentalimpact assessment and obtains the environmental protection administrative permission,such as the brewing engineering technical upgrading project, Luzhou Laojiao intelligentpackaging center technological upgrading project, sewage station technical upgradingproject, boiler upgrading project, and application of new model of solid-state method liquorproduction workshop. These projects were carried out environment impact assessmentand the Company obtained environmental protection administrative permission.
Emergency plan for environmental emergenciesThe Company has prepared the "Emergency plan for environmental emergencies" andreported it to Luzhou environmental emergency center for the record. The Companyorganizes all departments (units) to study the emergency plan, and carries out acomprehensive emergency plan drill every year to improve the emergency handlingcapacity of all staff.
Environmental self-monitoring programThe Company has developed an environmental self-monitoring program and reported it tothe superior environmental protection department for the record. The automaticmonitoring data will be connected with the superior environmental protection departmentfor operation. Relevant self-monitoring information will be disclosed on the "pollutionsource monitoring information disclosure platform of key monitoring enterprises inSichuan province" as required to receive social supervision.
There is no other environmental information that should be disclosed, in accordance withthe requirements of environmental protection timely and truthfully.
Other information about environment protectionN/A
19. Other significant events
√ Applicable ? N/AThe Company’s three savings deposits of CNY 500 million, including ABC ChangshaYingxin Branch and ICBC Nanyang Zhongzhou Branch are involved in contract disputes.The Company has reported to the public security authorities for intervention with theassets preservation measure and filed civil claims for two contract disputes among thethree cases. Combined with the assets preservation situation of the public securityauthorities and professional legal advice issued by lawyers, the Company has made aprovision of CNY 200 million for bad debts for the deposit of CNY 500 million for contractdisputes. As of December 31, 2018, the Company has collected a total of CNY192,543,724.75 related to three deposit contract disputes. Due to the criminal case
involved, the case is still in the state of suspension of civil litigation. As the caseprogresses, the amount of bad provision may be adjusted.
See details in the Company’s announcements:
Date of announcement
Date of announcement | No. | Catalogue | Official website |
15 October 2014 | 2014-35 | Announcement of significant litigation | http://www.cninfo.com.cn/ |
12 November 2014 | 2014-41 | Announcement of significant litigation progress | |
6 December 2014 | 2014-43 | Announcement of significant litigation progress part II | |
10 January 2015 | 2015-1 | Announcement of significant events | |
4 February 2015 | 2015-4 | Announcement of significant events progress | |
25 March 2015 | 2015-11 | Announcement of significant litigation progress part III | |
18 April 2015 | 2015-20 | Announcement of significant litigation progress part IV | |
22 April 2015 | 2015-21 | Announcement of significant events progress part II | |
24 April 2015 | 2015-25 | Announcement of significant litigation progress part V | |
15 July 2015 | 2015-44 | Announcement of significant litigation progress part VI | |
22 July 2015 | 2015-45 | Announcement of significant litigation progress part VII | |
6 June 2018 | 2018-17 | Announcement of significant litigation progress part VIII |
20. Significant events of subsidiaries
√ Applicable □ N/AThe Company disclosed the technical renovation project of brewing invested by BrewingCompany, a subsidiary of the Company. The total investment amount is CNY 741,428.See details in the announcement About subsidiary technical renovation project of brewing ,No:2016-12(http://www.cninfo.com.cn/). At present, this project is under constructionand the progress refers to Section IV 5. Investment.
Section VI Changes in Shares and Information about Shareholders
1. Changes in shares
1.1 Changes in shares
Unit:Share
Before | Changes in this year (+,-) | After | |||||||
Number | Proportion | Issuance of new shares | Bonus shares | Capitalization of capital reserves | Other | Subtotal | Number | Proportion | |
I.Restricted shares | 62,980,515 | 4.30% | -58,333,334 | -58,333,334 | 4,647,181 | 0.32% | |||
2.Shares held by state-owned corporations | 4,166,666 | 0.28% | 4,166,666 | 0.28% | |||||
3.Shares held by other domestic investors | 58,813,849 | 4.02% | -58,333,334 | -58,333,334 | 480,515 | 0.03% | |||
Including:shares held by domestic corporations | 58,333,334 | 3.98% | -58,333,334 | -58,333,334 | |||||
Shares held by domestic individuals | 480,515 | 0.03% | 480,515 | 0.03% | |||||
II.Non-restricted shares | 1,401,771,961 | 95.70% | 58,333,334 | 58,333,334 | 1,460,105,295 | 99.68% | |||
1.CNY common shares | 1,401,771,961 | 95.70% | 58,333,334 | 58,333,334 | 1,460,105,295 | 99.68% | |||
III.Total shares | 1,464,752,476 | 100.00% | 0 | 0 | 1,464,752,476 | 100.00% |
Reasons for the change in shares√ Applicable ? N/AThe Company's 2016 non-public offering of shares issuance objects are E Fund Management Co., Ltd., China Universal Asset Management Co., Ltd.,Bosera Asset Management Co., Ltd., Ping An Asset Management Limited, Caitong Fund Management Co., Ltd. and Minsheng Royal FundManagement Co., Ltd.. They held a total amount of 58,333,334 shares and the restricted shares can be unlocked on 14 September 2018.
Approval of share changes? Applicable √ N/ATransfer of share ownership? Applicable √ N/AImplementation progress of shares repurchases□ Applicable √ N/AImplementation progress of share buyback reduction through centralized bidding□ Applicable √ N/AEffects of changes in shares on the basic EPS, diluted EPS, net assets per shareattributable to common shareholders of the Company and other financial indexes over thelast year and the last reporting period? Applicable √ N/AOther contents that the Company considers it necessary or required by the securitiesregulatory authorities to disclose? Applicable √ N/A
1.2 Changes in restricted shares
√ Applicable ? N/A
Unit:Share
Name of shareholder
Name of shareholder | Opening balance of restricted shares | Unlocked in current period | Increased in current period | Closing balance of restricted shares | Reason for restriction | Date of unlocking |
E Fund Management Co., Ltd. | 21,874,999 | 21,874,999 | 0 | 0 | Non-public offering of new shares | 2018-09-14 |
China Universal Asset Management Co., Ltd. | 6,666,666 | 6,666,666 | 0 | 0 | Non-public offering of new shares | 2018-09-14 |
Bosera Asset Management Co., Ltd. | 9,583,333 | 9,583,333 | 0 | 0 | Non-public offering of new shares | 2018-09-14 |
Ping An Asset Management Limited | 6,666,666 | 6,666,666 | 0 | 0 | Non-public offering of new shares | 2018-09-14 |
Caitong Fund Management Co., Ltd. | 7,083,333 | 7,083,333 | 0 | 0 | Non-public offering of new shares | 2018-09-14 |
Minsheng Royal Fund Management Co., Ltd. | 6,458,337 | 6,458,337 | 0 | 0 | Non-public offering of new shares | 2018-09-14 |
Total | 58,333,334 | 58,333,334 | 0 | 0 | -- | -- |
2. Issuance and listing of securities
2.1 Securities(excluding preference shares) issued in the reportingperiod
? Applicable √ N/A
2.2 Changes in total shares of the Company and the shareholderstructure, as well as the asset and liability structure
? Applicable √ N/A
2.3 Existing staff-held shares
? Applicable √ N/A
3. Shareholders and actual controller
3.1 Total number of shareholders and their shareholdings
Unit:Share
Total number ofcommon shareholdersat the end of thereporting period
Total number of common shareholders at the end of the reporting period | 70,896 | Total number of common shareholders at the prior month-end before the disclosure date of the annual report | 57,427 | Total number of preference shareholders with resumed voting rights by the end of the reporting period (if any)(see Note 8) | 0 | Total number of preference shareholders with resumed voting rights by the end of the reporting period (if any)(see Note 8) | 0 | |||
Shareholdings of shareholders with a shareholding percentage over 5% or the top 10 shareholders | ||||||||||
Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held by the end of the reporting period | Increase/decrease during the reporting period | Number of holding restricted shares | Number of holding non-restricted shares | Pledged or frozen shares | |||
Status of shares | Number of shares | |||||||||
Luzhou Laojiao Group Co.,Ltd. | State-owned corporation | 26.02% | 381,088,389 | 0 | 381,088,389 | |||||
Luzhou Xinglu Touzi Jituan Co., Ltd. | State-owned corporation | 24.99% | 365,971,142 | 0 | 365,971,142 | Pledged | 165,980,000 | |||
Hong Kong Securitues Clearing Company Limited | Outbound corporation | 3.27% | 47,941,180 | 24,241,380 | 47,941,180 | |||||
China Securities Finance Corporation limited | State-owned corporation | 2.31% | 33,842,059 | 8,628,402 | 33,842,059 | |||||
Agricultural Bank of China Co.,Ltd. - Consumption industry | Other | 1.69% | 24,704,591 | 8,518,928 | 24,704,591 |
stock - based securitiesinvestment fund by Efund
stock - based securities investment fund by E fund | ||||||||
Central Huijin Asset Management Co.,Ltd. | State-owned | 1.43% | 20,937,500 | 0 | 20,937,500 | |||
Bank of China Co.,Ltd. – Middle and small capital stock s hybrid securities investment fund by E fund | Other | 1.40% | 20,458,383 | 13,790,017 | 20,458,383 | |||
Bank of China Co.,Ltd. – Liquor index classification securities investment fund by China Merchants Fund | Other | 1.37% | 20,132,357 | 8,463,715 | 20,132,357 | |||
China Life Insurance Co.,Ltd. - Traditional - general insurance products -005L-CT001 SHEN | Other | 1.08% | 15,853,102 | 12,821,436 | 15,853,102 | |||
National Social Security Fund-109 portfolio | Other | 0.71% | 10,457,657 | 6,088,803 | 10,457,657 | |||
Strategic investors or general corporations become the top-ten shareholders due to placing of new shares(if any)(see note 3) | N/A |
Related parties or acting-in-concert
Related parties or acting-in-concert | 1. Laojiao Group and Xinglu Group are both wholly state-owned companies under the jurisdiction of SASAC of Luzhou. The two companies signed the agreement of persons acting in concert on 31 December 31 2015. For details, please refer to the announcement of the Company on 5 January 2016 - Announcement on the agreement of persons acting in concert signed by shareholders. The announcement number is 2016-1 (http://www.cninfo. com.cn/) 2. During the reporting period, Sichuan Jintuo Investment Co., Ltd., a wholly-owned subsidiary of Laojiao Group, reduced its shares of the Company by 5,574,478 shares. By the end of the reporting period, Sichuan Jintuo investment Co., Ltd. no longer held shares of the Company. 3. In addition, whether there is an association between the remaining shareholders or they belong to persons acting in concert is unknown. | ||
Shareholdings of the top 10 non-restricted shareholders | |||
Name of shareholder | Number of non-restricted shares held in by the end of the reporting period | Type of shares | |
Type | Number | ||
Luzhou Laojiao Group Co.,Ltd. | 381,088,389 | CNY common shares | 381,088,389 |
Luzhou Xinglu Touzi Jituan Co., Ltd. | 365,971,142 | CNY common shares | 365,971,142 |
Hong Kong Securitues Clearing Company Limited | 47,941,180 | CNY common shares | 47,941,180 |
China Securities Finance Corporation limited | 33,842,059 | CNY common shares | 33,842,059 |
Agricultural bank of China Co.,Ltd. - Consumption industry stock - based securities investment fund by E fund | 24,704,591 | CNY common shares | 24,704,591 |
Central Huijin Asset Management Co.,Ltd. | 20,937,500 | CNY common shares | 20,937,500 |
Bank of China Co.,Ltd. – Middle and small capital stock s hybrid securities investment fund by E fund | 20,458,383 | CNY common shares | 20,458,383 |
Bank of China Co.,Ltd. – Liquor index classification securities investment fund by China Merchants Fund | 20,132,357 | CNY common shares | 20,132,357 |
China Life Insurance Co.,Ltd. -Traditional - general insurance products-005L-CT001 SHEN
China Life Insurance Co.,Ltd. - Traditional - general insurance products -005L-CT001 SHEN | 15,853,102 | CNY common shares | 15,853,102 |
National Social Security Fund 109 portfolio | 10,457,657 | CNY common shares | 10,457,657 |
The statement of association or acting-in-concert between the top 10 shareholders of unrestricted shares and between the top 10 shareholders of unrestricted shares and top 10 shareholders | See the table above | ||
Explanation on the top 10 common shareholders participating in the securities margin trading(if any)(see Note 4) | During the reporting period, Xinglu Group took its 57,000,000 shares of our company as collateral to participate in financing business through Citic Securities Company Limited |
Did any of the top 10 common shareholders or the top non-restricted common shareholders of the Company conduct any promissory repurchase duringthe reporting period.? Yes √ No
The top 10 non-restricted common shareholders, the top10 common shareholders did not conduct any promissory repurchase during the reportingperiod.
3.2 Controlling shareholder
Nature of controlling shareholder:Local state-ownedType of controlling shareholder:Corporation
Name of controlling
shareholder
Name of controlling shareholder | Legal representative/Company principal | Date of establishment | Credibility code | Main business scope |
Luzhou Laojiao Group Co.,Ltd. | Zhang Liang | 2000-12-21 | 91510500723203346U | Investment and asset management; Investment in wine, food, finance, trade, logistics, education, medical and health care, cultural tourism and Internet industries; Holding company services; Social and economic consulting, enterprise management consulting, enterprise management services; Supply chain management services; Import and export business and trade agents; Food production and sales (including online); Crop cultivation and marketing services (including online). |
Shareholdings of the controlling shareholder in other controlled or non-controlled listed companies at home or abroad during the reporting period | 1. As of 30 June 2018, Laojiao Group holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 8.19% of the total issued shares. 2. As of 19 November 2018, Laojiao Group holds 191,604,159 shares of Hongli Zhihui Group Co., Ltd. (300219.SZ) through its wholly-owned subsidiary, Sichuan Jintuo investment Co., Ltd., accounting for 26.88% of the total issued shares. 3. As of 31 December 2018, Laojiao Group holds 475,940,143 shares of Huaxi Securities Co., Ltd. (002926.SZ), accounting for 18.13% of the total issued shares. 4. As of 31 December 2018, Laojiao Group holds 325,440,000 shares of Luzhou Bank (01983.HK), accounting for 14.91% of the total issued shares. |
Change of the controlling shareholder during the reporting period?Applicable √N/ANo such cases in the reporting period
3.3 Actual controller and its persons acting in concert
Nature of actual controller:Local State-owned Assets Supervision and AdministrationCommissionType of actual controller:Corporation
Name of actual controller | Legal representative/Company principal | Date of establishment | Credibility code | Main business scope |
SASAC of Luzhou | Yu Zhiqiang | 2005-03-01 | 11510400771686813T | State-owned assets supervision and administration department |
Share holdings of the controlling | 1. As of 30 June 2018, Luzhou Group, a wholly-owned subsidiary of SASAC of Luzhou, holds 511,654,127 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 59.52% of |
shareholder in othercontrolled ornon-controlled listedcompanies at home orabroad during thereporting period.
shareholder in other controlled or non-controlled listed companies at home or abroad during the reporting period. | the total issued shares. Luzhou Infrastructure Construction Investment Co., Ltd., a holding subsidiary of Luzhou Group, holds 62,709,563 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), and accounting for 7.29% of the total issued shares. Laojiao Group, a wholly-owned subsidiary under SASAC of Luzhou, holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 8.19% of the total issued shares. 2. As of 19 November 2018, Laojiao Group holds 191,604,159 shares of Hongli Zhihui Group Co., Ltd. (300219.SZ) through its wholly-owned subsidiary, Sichuan Jintuo investment Co., Ltd., accounting for 26.88% of the total shares issued. 3. As of 31 December 2018, Luzhou Industrial Investment Group Co.,Ltd., a holding Company under the jurisdiction of SASAC of Luzhou, holds 115,064,610 shares of Sichuan Lutianhua Company Limited (000912.SZ), accounting for 7.34% of the total shares issued. Sichuan Lutianhua Company Limited, a wholly-owned subsidiary of Luzhou Industrial Investment Group Co., Ltd., holds 286,000,000 shares of Sichuan Lutianhua Company Limited (000912.SZ), and accounting for 18.24% of the total issued shares. 4. As of 31 December 2018, Laojiao Group, a wholly-owned subsidiary under SASAC of Luzhou, holds 475,940,143 shares of Huaxi Securities Co., Ltd. (002926.SZ), accounting for 18.13% of the total issued shares. |
Change of the actual controller during the reporting period?Applicable √N/AThe actual controller of the Company has not changed during the reporting period.Ownership and control relations between the actual controller and the Company
The actual controller control the company through a trust or other ways of assetsmanagement?Applicable √ N/A
3.4 Other corporate shareholders with a shareholding proportion over10%
√Applicable ? N/A
Luzhou Laojiao Group Co., Ltd. | Luzhou Xinglu Touzi Jituan Co., Ltd. |
100%
State-owned Assets Supervision and Administration
Commission of Luzhou
State-owned Assets Supervision and Administration
Commission of Luzhou
100%
100%
Luzhou Laojiao Co., Ltd.
Luzhou Laojiao Co., Ltd.26.02%
26.02%
0.08%
0.08%24.99%
24.99%
Luzhou Laojiao Group Co., Ltd.
Luzhou Laojiao Group Co., Ltd.State-owned Assets Supervision and Administration
Commission of Luzhou
Name of actual
controller
Name of actual controller | Legal representative/Company principal | Date of establishment | Registered capital (CNY) | Main business scope |
Luzhou Xinglu Touzi Jituan Co., Ltd. | Yuan Douquan | 2003-01-28 | 4,934,049,244 | Investment and asset management; Project management services; Self-fiance real estate business activities; Investment advisory services, financial advisory services |
3.5 Limits on reduction of the Company’s shares held by its controllingshareholder, actual controller, restructuring party and other commitmententities.
?Applicable √ N/A
Section VII Preference Shares
? Applicable √ N/ANo preferred stock in the Company during the reporting period.
Section VIII Profiles of Directors, Supervisory, Senior Management and Employees1. Changes in shares held by directors, supervisors, and senior management
Name
Name | Title | Incumbent/ Former | Gender | Age | Period of service | Shares held by the beginning of the reporting period (share) | Shares increased during the reporting period (share) | Shares decreased during the reporting period (share) | Other increase/ decrease (share) | Shares held by the end of the reporting period (share) |
Liu Miao | Chairman of the board, Secretary of the party committee | Incumbent | Male | 49 | 2015.6.30-2021.6.27 | 192,187 | 0 | 0 | 0 | 192,187 |
Lin Feng | Director, general manager, Deputy secretary of the party committee | Incumbent | Male | 45 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Wang Hongbo | Director, Deputy general manager, Deputy secretary of the party committee, Secretary of the board | Incumbent | Male | 55 | 2015.3.06-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Jiang Yuhui | Director, Deputy secretary of the party committee, Secretary of committee for discipline Inspection, chairman of the labor union | Incumbent | Female | 56 | 2009.5.20-2021.6.27 | 254,000 | 0 | 0 | 0 | 254,000 |
Shen Caihong | Director, Deputy general manager | Incumbent | Male | 53 | 2002.6.30-2021.6.27 | 184,500 | 0 | 0 | 0 | 184,500 |
Du Kunlun | Non-executive director | Incumbent | Male | 50 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Xu Guoxiang | Non-executive director | Incumbent | Male | 59 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Tan Lili | Non-executive director | Incumbent | Female | 64 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Liu Junhai | Non-executive director | Incumbent | Male | 49 | 2018.6.27-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Qian Xu | External director | Incumbent | Male | 55 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Name
Name | Title | Incumbent/ Former | Gender | Age | Period of service | Shares held by the beginning of the reporting period (share) | Shares increased during the reporting period (share) | Shares decreased during the reporting period (share) | Other increase/ decrease (share) | Shares held by the end of the reporting period (share) |
Ying Hanjie | External director | Incumbent | Male | 49 | 2016.9.13-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Zhang Ling | Non-executive director | Former | Male | 63 | 2012.6.30-2018.6.27 | 0 | 0 | 0 | 0 | 0 |
Wu Qin | Chairman of supervisory committee | Incumbent | Male | 57 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Lian Jing | Supervisor | Incumbent | Male | 49 | 2012.6.27-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Yang Benhong | Supervisor | Incumbent | Female | 52 | 2009.5.20-2021.6.27 | 10,000 | 0 | 0 | 0 | 10,000 |
Cao Cong | Supervisor | Incumbent | Male | 34 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Li Guangjie | Supervisor | Incumbent | Male | 49 | 2018.6.27-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Yang Jiaping | Supervisor | Former | Male | 35 | 2011.7.19-2018.6.27 | 0 | 0 | 0 | 0 | 0 |
Xie Hong | CFO | Incumbent | Female | 49 | 2015.3.06-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
He Cheng | Deputy general manager | Incumbent | Male | 52 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Zhang Suyi | Deputy general manager | Incumbent | Male | 47 | 2015.6.30-2021.6.27 | 0 | 0 | 0 | 0 | 0 |
Total | 640,687 | 0 | 0 | 0 | 640,687 |
2. Changes in directors, supervisors, and senior management
√ Applicable □ N/A
Name | Title | Type | Date | Reason |
Zhang Ling | Non-executive director | Stepped down and leave | 2018.06.27 | General Election |
Yang Jiaping | Supervisor | Stepped down and leave | 2018.06.27 | General Election |
3. Employment information
Professional background, work experience and major duties of current directors,supervisors and senior management.
Mr. Liu Miao, Male, born in 1969, MBA of Wright State University in the USA, Craft Masterof Chinese liquor, senior marketing specialist. He used to serve as planning minister,general manager of Sales Company, general manager assistant, and deputy generalmanager of the Company. At present, he is chairman of the board and secretary of theparty committee in the Company.
Mr. Lin Feng, Male, born in 1973, Master degree, senior marketing specialist. He wasdeputy general manager and general manager of Sales Company, director of marketing,director of human resources, chief dispatcher, deputy general manager of the Company.At present, he is director, deputy secretary of the party committee, general manager of theCompany and general manager of Sales Company.
Mr. Wang Hongbo, Male, born in 1964, Master degree. He was director and secretary ofparty committee of Luzhou Commerce Bureau, director of Luzhou Liquor IndustryDevelopment Bureau, director of Luzhou branch of China council for the promotion ofinternational trade, deputy secretary general and office director of Luzhou Municipal PartyCommittee. At present, he is director, deputy general manager, deputy secretary of theparty committee, secretary of the board of the Company and chairman of the board ofLuzhou Laojiao International Development(Hong Kong)Co.,Ltd.
Ms. Jiang Yuhui, Female, born in 1962, Master degree, senior political engineer. She usedto serve as head of personnel education management section of the Company, deputydirector and director of party committee office, deputy secretary of commission fordiscipline inspection, chairman of board of supervisors. At present, she is director, deputysecretary of the party committee, secretary of committee for discipline inspection,chairman of the labor union of the Company.
Mr. Shen Caihong, Male, born in 1966, Master degree, professor-level senior engineer,one of the first batch of representative inheritors of national intangible cultural heritage,one of the first batch of "Sichuan craftsmen". He was manager of the Company’squ-making branch, manager of base liquor company, general manager assistant anddirector of production department. At present, he is director, deputy general manager,chief engineer, director of national solid brewing engineering technology research centerand chairman of the board of Luzhou Pinchuang Technology Co.,Ltd..
Mr. Du Kunlun, Male, born in 1969, Doctor of Economic, senior accountant, CPA, CPV. Hewas the investigator of CSRC Sichuan Supervision Bureau, member of the 12th and 13thmainboard committee of CSRC, deputy director of the Sichuan Province Institute ofFinance and Trade Economics of Social Sciences Academy, non-executive director of
Sichuan Chengfei Integration Technology Co.,Ltd., Aecc Aero Science And TechnologyCo., Ltd and Tianfu (Sichuan) United Equity Exchange Center Co., Ltd. At present, he isresearcher, Master supervisor of Finance and Trade Economics Institute of SocialSciences Academy in Sichuan Province, non-executive director of Tongwei Co., Ltd,Sichuan Tianqi Lithium Industries Co.,Ltd. and Chengdu Jule Food Co., Ltd. He hasserved as a non-executive director of the Company since June 2015.
Mr. Xu Guoxiang, Male, born in 1960, Doctor of Economic, National Second-levelProfessor, Doctoral supervisor. He used to be the director of statistics department ofShanghai University of Finance and Economics. At present, he is the director of ShanghaiUniversity of Finance and Economics Applied Statistics Research Center, professor ofStatistics and Management College of Shanghai University of Finance and Economicsand deputy director of the teaching steering committee for statistics majors in institutionsof higher learning of Ministry of Education, expert of the discipline planning evaluationgroup of national social science fund, executive director of China Statistical Society,member of Shanghai Stock Exchange Index Expert Committee, member of Index ExpertCommittee of China Securities Index Co. Ltd, director of the Branch Center of ShanghaiUniversity of Finance and Economics, supervisor of Shanghai Xintonglian PackagingCo.,Ltd. and Dazhong Transportation(Group)Co.,Ltd., non-executive director of OrientSecurities Co., Ltd.. He has served as a non-executive director of the Company sinceJune 2015.
Ms. Tan Lili, Female, born in 1954, Bachelor degree, professor-level senior accountant,professor-level senior engineer, senior auditor. She was director of audit department andfinancial department, leader of enterprise management consulting and guidance group ofWuhan Iron and Steel Co., Ltd.; deputy general manager, deputy chairman of the board ofsupervisors of Sany Heavy Industry Co., Ltd., non-executive director of Zhejiang TiantieIndustry Co.,Ltd.. At present, she is deputy director of Business School of EnterpriseFinancial Management Association of China and non-executive director of GuangzhouMetro Design Institute. She has served as a non-executive director of the Company sinceJune 2015.
Mr. Liu Junhai, Male, born in 1969, PhD, Doctoral supervisor. He was director assistant,office director and researcher of Law School of Chinese Academy of Social Sciences. Atpresent, he is professor of Renmin University of China, director of the institute ofcommercial law, and non-executive director of Tus-Sound Environmental Resources Co.,Ltd., China Resources Double-Crane Pharmaceutical Co., Ltd., Landocean EnergyServices Co., Ltd., and China Investment Securities Co., Ltd. He has served as anon-executive director of the Company since June 2018.
Mr. Qin Xu, Male, born in 1963, EMBA. He was deputy general manager of Hong KongJingtai industrial Group, director and general manager of Beijing Enterprises Real-EstateGroup Co.,Ltd.. At present, he is chairman of the board of Beijing Enterprises Real-EstateGroup Co.,Ltd., chairman of the board of Beijing Properties (Holdings) Limited (Listed
on the Hong Kong Stock Exchange), non-executive director of CAQ Holdings Limited(Listed on the Australian Stock Exchange), executive director of MillenMin Ventures Inc.(Listed on the Toronto Stock Exchange). He has served as a non-executive director of theCompany since June 2015.
Mr. Yinghanjie, Male, born in 1969, Doctor of Biochemistry, and professor. He was deputydirector of Pharmacy and Life Sciences School of Nanjing University of Technology. Atpresent, he is deputy director of National Biochemical Engineering Technology ResearchCenter of Nanjing Tech University, chairman of the board of Nanjing Biotogether Co., Ltd.and director of Nanjing High Tech University Biological Technology Research Institute Co.,Ltd. He has served as a non-executive director of the Company since September 2016.
Mr. Wu Qin, Male, born in 1962, Bachelor degree. He was deputy director of LuzhouEconomic Commission, deputy director of Luzhou Economic and Information TechnologyCommission, deputy director of Luzhou Development and Reform Commission anddirector of Luzhou Railway Construction Office. At present, he is the chairman of theCompany’s supervisory committee.
Mr. Lian Jing, Male, born in 1969, Bachelor degree. He was director of EconomicInformation Publicity Department of Luzhou Economic and Trade Commission; director ofFixed Assets Investment Department of Luzhou Development Planning Committee;director of Fixed Assets Investment Department of Luzhou Development and ReformCommittee; chairman of the board and general manager of Luzhou State-ownedGongfang Operation Management Co., Ltd.; chairman of the board and general managerof Luzhou State-Owned Assets Management Co.,Ltd.; director, deputy general manager,general manager of Luzhou Hongyang State-Owned Assets Management Co.,Ltd; deputysecretary of the party committee, director, general manager of Luzhou IndustrialInvestment Group Co.,Ltd. At present, he is chairman of the supervisory committee ofLuzhou State-Owned Capital operation and management Co. Ltd; executive director andgeneral manager of Luzhou Guoxin Asset Management Co. Ltd; external director ofLuzhou Xinglu Touzi Jituan Co., Ltd., Luzhou Liquor Industrial Park Development andInvestment Co. Ltd., Luzhou Public Transportation Group Co. Ltd., Luzhou AviationDevelopment Investment Co. Ltd., Luzhou Culture Tourism Development InvestmentGroup Co. Ltd. and Sichuan Rongtong Security Investment Group Co. Ltd. He has servedas a supervisor of the Company since June 2012.
Ms. Yang Benhong, Female, born in 1966, Bachelor degree, senior political engineer. Shewas head of publicity section, director of education department and deputy director,director of human resources department of the Company. At present, she is supervisorand deputy chairman of labour union in the Company.
Mr. Cao Cong, Male, born in 1984, Bachelor degree. He was deputy manager ofaccounting department of Luzhou Winery Industry Jizhong Development District Co., Ltd.,financial executive of Luzhou Red Sorghum Modern Agricultural Development Co., Ltd.,
and deputy director of audit department of the Company. At present, he is supervisor anddirector of audit department of the Company.
Mr. Li Guangjie, Male, born in 1969, Master degree, economist. He was manager ofPlanning department of the Company, deputy director of Sales Company, manager ofImport and Export company, general manager assistant of Sales Company. At present, heis supervisor and deputy general manager of Sales Company.
Ms. Xie Hong, Female, born in 1969, Master degree, senior economist. She was sectionchief of Treasury Section of the Finance Bureau, section chief of Non-tax RevenueCollection Management Section, director of Luzhou Municipal Finance Treasury PaymentCenter, chief accountant of Luzhou Finance Bureau. At present, she is CFO of theCompany.
Mr. He Cheng, Male, born in 1966, Master of Management Economics of NanyangTechnological University, senior engineer. He was director of business administrationdepartment, director of human resources department, general manager of BrewingCompany, chief despatcher and director of quality department of the Company. At present,he is deputy general manager and chief quality officer.
Mr. Zhang Suyi, Male, born in 1971, PhD, professor-level senior engineer, representativeinheritor of Sichuan Intangible Cultural Heritage. He was director of Gouchu Center,deputy chief engineer, deputy general manager of Brewing Company and director ofLiquor Body Design Center. At present, he is deputy general manager and director ofsafety and environmental protection of the Company.
Position in shareholder-holding companies√ Applicable ? N/A
Name
Name | Name of shareholder-holding companies | Position in shareholder-holding companies | Beginning date of term | Ending date of term | Any remunerations received from shareholder-holding companies |
Lian Jing | Laojiao Group | Chairman of the supervisory committee | No | ||
Lian Jing | Xinglu Group | Outsider director | No |
Position in other companies√ Applicable ? N/A
Name | Name of other companies | Position in other companies | Beginning date of term | Ending date of term | Any remunerations received from other companies |
Du Kunlun | Tongwei Co., Ltd, Sichuan Tianqi Lithium Industries Co.,Ltd. and | Non-executive director |
Name
Name | Name of other companies | Position in other companies | Beginning date of term | Ending date of term | Any remunerations received from other companies |
Chengdu Jule Food Co., Ltd. | |||||
Du Kunlun | Sichuan Province Institute of Finance and Trade Economics of Social Sciences Academy | Researcher | |||
Xu Guoxiang | Shanghai University of Finance and Economics Applied Statistics Research Center | Director | |||
Xu Guoxiang | Shanghai Xintonglian Packaging Co.,Ltd. and Dazhong Transportation(Group)Co.,Ltd. | Supervisor | |||
Xu Guoxiang | Orient Securities Co.,Ltd. | Non-executive director | |||
Tan lili | Guangzhou Metro Design Institute | Non-executive director | |||
Liu Junhai | Institute of Commercial Law of Renmin University of China | Director | |||
Liu Junhai | Tus-Sound Environmental Resources Co., Ltd., China Resources Double-Crane Pharmaceutical Co., Ltd., Landocean Energy Services Co., Ltd., China Investment Securities Co., Ltd | Non-executive director | |||
Qian Xu | Beijing Enterprises Real-Estate Group Co.,Ltd. | Chairman of the board | |||
Qian Xu | Beijing Properties (Holdings) Limited | Chairman of the board | |||
Qian Xu | CAQ Holdings Limited. | Non-executive director | |||
Qian Xu | MillenMin Ventures Inc. | Executive Director | |||
Ying Hanjie | National Biochemical Engineering Technology Research Center of Nanjing University of Technology | Director | |||
Ying Hanjie | Nanjing Biotogether Co., Ltd. | Chairman of the board | |||
Ying Hanjie | Nanjing High Tech University Biological Technology Research Institute Co., Ltd. | Director | |||
Lian Jing | Luzhou State-Owned Capital Operation and Management Co. Ltd | Chairman of the supervisory committee | |||
Lian Jing | Luzhou Guoxin Asset Management Co. Ltd. | Executive director, general manager | |||
Lian Jing | Luzhou Liquor Industrial Park Development and Investment Co. Ltd., | External director |
Name
Name | Name of other companies | Position in other companies | Beginning date of term | Ending date of term | Any remunerations received from other companies |
Luzhou Public Transportation Group Co. Ltd., Luzhou Aviation Development Investment Co. Ltd., Luzhou Culture Tourism Development Investment Group Co. Ltd., Sichuan Rongtong Security Investment Group Co. Ltd |
Punishments imposed in the recent three years by the securities regulators on theincumbent directors, supervisors and senior management as well as those who left in thereporting period? Applicable √ N/A
4. Remuneration of directors, supervisors and seniormanagement
The following describes the decision-making procedures, grounds on which decisions aremade and actual remuneration payment of directors, supervisors and seniormanagement.
Decision-making procedures for directors, supervisors and senior management | The remuneration of non-executive directors, external directors and external supervisors shall be determined by the general meeting of shareholders, and the remuneration of directors, supervisors and senior management who hold positions within the Company shall be determined by relevant rules of SASAC of Luzhou and relevant rules of the Company |
Grounds on which decisions are made of directors, supervisors and senior management | Calculate according to the assessment index and weight established at the beginning of the year. |
Actual remuneration payment of directors, supervisors and senior management | Details refer to “Remuneration of directors, supervisors and senior management during the reporting period”. |
Remuneration of directors, supervisors and senior management during the reportingperiod
Unit CNY 100,000
Name
Name | Position | Gender | Age | Incumbent/ Former | Total before-tax remuneration from the Company | Remuneration from related parties of the Company |
Liu Miao | Chairman of the board, secretary of the party committee | Male | 49 | Incumbent | 60 | No |
Lin Feng | Director, General manager, Deputy secretary of the party committee | Male | 45 | Incumbent | 60 | No |
Wang Hongbo | Director, Deputy general manager, Deputy secretary of the party committee, Secretary of the board | Male | 55 | Incumbent | 48 | No |
Jiang Yuhui | Director, Deputy secretary of the party committee, Secretary of committee for discipline inspection, Chairman of the labor union | Female | 56 | Incumbent | 48 | No |
Shen Caihong | Director, Deputy general manager | Male | 53 | Incumbent | 48 | No |
Du Kunlun | Non-executive director | Male | 50 | Incumbent | 9.52 | No |
Xu Guoxiang | Non-executive director | Male | 59 | Incumbent | 9.52 | No |
Tan Lili | Non-executive director | Female | 64 | Incumbent | 9.52 | No |
Liu Junhai | Non-executive director | Male | 49 | Incumbent | 6.35 | No |
Qian Xu | External director | Male | 55 | Incumbent | 9.52 | No |
Ying Hanjie | External director | Male | 49 | Incumbent | 9.52 | No |
Wu Qin | Chairman of supervisory committee | Male | 57 | Incumbent | 48 | No |
Lian Jing | Supervisor | Male | 49 | Incumbent | 0 | No |
Yang Benhong | Supervisor | Female | 52 | Incumbent | 38.2 | No |
Cao Cong | Supervisor | Male | 34 | Incumbent | 35.73 | No |
Li Guangjie | Supervisor | Male | 49 | Incumbent | 83.63 | No |
Xie Hong | CFO | Female | 49 | Incumbent | 48 | No |
He Cheng | Deputy general manager | Male | 52 | Incumbent | 48 | No |
Zhang Suyi | Deputy general manager | Male | 47 | Incumbent | 48 | No |
Name
Name | Position | Gender | Age | Incumbent/ Former | Total before-tax remuneration from the Company | Remuneration from related parties of the Company |
Zhang Ling | Non-executive director | Male | 63 | Former | 4.76 | No |
Yang Jiaping | Supervisor | Male | 35 | Former | 25.45 | No |
Total | 697.72 |
Share incentives for directors, supervisors and senior executives in the reporting period? Applicable √ N/A
5. Staff in the Company
5.1 Number, functions and educational backgrounds of the staff
Number of in-service staff of the parent company | 1,042 |
Number of in-service staff of main subsidiaries | 1,838 |
Total number of in-service staff | 2,880 |
Total number of staff with remuneration in the period | 2,880 |
Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension | 840 |
Functions | |
Function by category | Number of staff |
Production staff | 1,017 |
Sales staff | 738 |
R&D staff | 584 |
Financial staff | 108 |
Administrative staff | 433 |
Total | 2,880 |
Educational backgrounds | |
Educational background by category | Number of staff |
Senior high school and below | 616 |
Junior college | 944 |
Bachelor | 1,109 |
Master | 204 |
Doctor | 7 |
Total | 2,880 |
5.2 Staff remuneration policy
In 2018, the Company established the distribution policy of "sharing benefits, paying forlosses, classification and setting, and long-term policy effects", strengthened the digitalassessment, linked individual performance with organizational performance, andhighlighted the distribution according to performance. The Company further optimized thesalary structure, implemented the post rating wage system and strengthened theperformance management of all employees in 2018. According to the following principles:
Link individual performance with organizational performance: The increase of wages islinked to the increase of the Company's operating performance; Under the same caliber,the proportion of increase in salaries shall not exceed the proportion of increase inperformance.
Performance orientation, bonus and forfeit: Performance assessment is conductedaccording to the actual contributions of employees, and the salary distribution is inclinedto the employees with excellent performance.
Salary and its changes based on position, ability and performance: The salary ofemployee shall be determined by position and the depth of their expertise. The salaryshall be adjusted accordingly when the position, ability and performance change.The principle of equal wage negotiation: Abide by the principles that both sides of laborand capital agrees in collective negotiation, so as to realize the unity of benefit andfairness.
5.3 Staff training plans
In 2018, based on the qualification standards and competency model, the Companyadheres to the business orientation and performance orientation, and conductshierarchical training for employees of different posts and ranks.
In terms of new employee training, first is the campus recruitment and new employeetraining, which is divided into four stages: general ability training, marketing training,business improvement training and career planning. Second is the training of newemployees form social recruitment, which takes half a year as a cycle. The trainingcontents mainly include enterprise culture, brewing skills and operation management.
In terms of backbone staff training, first is willing to study program, and it carries outprofessional upgrading training according to the needs of different professional staff. Thecourse topics cover micro-course development, project management, budgetmanagement, supply chain management and so on, which helps employees consolidateprofessional knowledge and strengthen business skills. Second is the craftsman program.For special training for production and management reserve talents, it adapts to intelligent,mechanized and automated production reform.In terms of middle-level cadre training, for newly promoted middle-level cadres, theCompany organizes and carries out advanced management training of "road toexcellence" to improve the ability of self-management, business management and teammanagement; At the same time, it supports the middle and senior cadres to expand thepattern and refresh the vision through short-term abroad training and benchmarkinglearning.
In terms of professional talents training, in combination with the strategic needs of talentdevelopment and relevant policies of provinces and cities, the Company actively carries
out the work of staff title appraisal, skill appraisal, recommendation and assessment andso on.
5.4 Labor outsourcing
? Applicable √ N/A
Section IX Corporate Governance
1. Basic situation of corporate governance
Since it was listed, in accordance with the Corporate Law, the Securities Law, The ListedCompany Governance Standards and other laws, administrative regulations anddepartmental rules and normative documents, the Company has constantly perfectedcorporate governance structure, standardized its operation, established the rules andsystem on the basis of the Company's articles of association whose main framework isthe rules of procedure of the shareholders' general meeting, rules of procedure of theboard of directors and rules of procedure of the board of supervisors, which is formed themanagement system whose main structure is the shareholders meeting, board ofdirectors, board of supervisors and management. In 2018, the Company won the awardfor "the Ninth Tianma - The Best Board of Directors for Investor Relations of China MainBoard Listed Companies", "the 12th China's Listed Company Value Selection -- Top 10 ofChina's Listed Companies on the Main Board, Top 10 Management Teams of China'sListed Companies on the Main Board", "2017 Golden Bull Most Valuable InvestmentAward, Enterprise Leader Award" and so on.
Any incompliance with the regulatory documents related to the governance of listedcompanies issued by the CSRC?Yes√ No
There is no incompliance with the regulatory documents related to the governance oflisted companies issued by the CSRC
2. Independency of businesses, personnel, assets,organizations and finance which are separated from thecontrolling shareholder
The Company has an independent and complete production and operation system andindependent decision-making ability. There is no horizontal competition between theCompany and the controlling shareholders and its subsidiaries. The Company has dailyaffiliated transactions with the controlling shareholders and its subsidiaries. Such dailyaffiliated transactions belong to the need of rational allocation of resources and do notaffect the independence of the Company. For affiliated transactions, the Company hasstrictly fulfilled the relevant decision-making procedures and information disclosureobligations, and implemented the system of Non-executive directors' prior examinationand avoidance system of related directors (shareholders).
2.1 In the aspect of assets
Asset integrity.There are clear ownership and independency of the Company's assetsinvested by controlling shareholders. The Company has an independent and completeproduction, supply, sales system and auxiliary production system and supporting facilities.
The industrial property rights, trademarks and non-patented technology and otherintangible assets are owned by the Company. There is no situation that the controllingshareholders occupy and transfer the assets of the company.
2.2. In the aspect of business
Business apart.The Company is totally independent in the operation, production and salesof liquor series of “Luzhou Laojiao” and “National Cellar 1573”. It has the ability to operateindependently in the market. The board of directors and the management canindependently make production and operation decisions within the correspondingauthority.
2.3 In the aspect of personnel
The Company has built independent labor management, personnel management andsalary management. The Company has established a relatively complete labormanagement system and post responsibility system. Meanwhile, the Company's seniormanagement personnel all receive salary in the Company, but not at the controllingshareholders.
2.4 In the aspect of organization
Organization independence.The Company has independent production managementorganization and system, independent office and production management place, andindependent management organization, functional organization and branch.
2.5 In the aspect of finance
Financial independence.The Company has completed and independent financialdepartment. Independent accounting system and financial management are established.The Company separately sets bank accountants, conducts external settlement and paystaxes according to law.
3. Horizontal competition
?Applicable √N/A
4. Annual meeting of shareholders and special meetings ofshareholders convened during the reporting period
4.1. Meetings of shareholders convened during the reporting period
Meeting
Meeting | Type | Investor participation ratio | Convened date | Disclosure date | Disclosure index |
2017 Annual General Meeting of Shareholders | General Meeting of Shareholders | 60.66% | 2018-06-27 | 2018-06-28 | “Luzhou Lao Jiao Co.,Ltd. 2017 Annual General Meeting Resolution Announcement” Announcement No:2018-20, (http://www.cninfo.com.cn/) |
4.2. Special meetings of shareholders convened at the request ofpreference shareholders with resumed voting rights
?Applicable √ N/A
5. Performance of non-executive directors during the reportingperiod
5.1. Attendance of non-executive directors in board meeting and meetingof shareholders
Attendance of non-executive director in board meeting
Attendance of non-executive director in board meeting | |||||||
Non-executive director | Attendance due in the reporting period (times) | Attendance on site or video (times) | Attendance by telecommunication (times) | Attendance through a proxy (times) | Absence (times) | Absence for two consecutive times | Attendance (times) |
Du Kunlun | 10 | 6 | 4 | 0 | 0 | No | 1 |
Xu Guoxiang | 10 | 6 | 4 | 0 | 0 | No | 1 |
Tan Lili | 10 | 6 | 4 | 0 | 0 | No | 1 |
Liu Junhai | 5 | 3 | 2 | 0 | 0 | No | 1 |
Zhang Ling | 5 | 2 | 3 | 0 | 0 | No | 0 |
Explanation of absence of non-executive directors in meetings of the board for twiceN/A
5.2. Objections from non-executive in related issues of the Company
Were there any objections on related issues of the Company from non-executive director? Yes √ NoNon-executive director has no objection on related issues of the Company during thereporting period.
5.3. Other details about the performance of duties by non-executivedirectors
Was there any advice from non-executive directors adopted by the Company?√ Yes ? NoExplanation about advice of non-executive directors is adopted or not adopted by theCompany or notThe Company adopted the advice of non-executive directors in respect of safe production,system improvement, internal control construction.
6. Performance of duties by special committees under thebroad during the reporting period
The board of directors of the Company has four special committees including the StrategicCommittee, the Remuneration and Appraisal Committee, the Nominations Committee andthe Audit Committee. Each committee has a clear division of labor, clear responsibilitiesand effective operation. During the reporting period, the Strategic Committee held 5meeting, the Audit Committee held 2 meetings, the Nominations Committee and the
Remuneration and Appraisal Committee held 1 meeting respectively. These meetingsreviewed and made resolutions on the Company's external investment, audit, internalcontrol, directors' qualifications and remuneration, and provided scientific andprofessional opinions for major decisions of the board of directors.
7. Performance of duties by the supervisory committee
Were there any risks to the Company identified by supervisory committee whenperforming its duties during the reporting period? Yes √ NoThe supervisory committee has no objection during the reporting period.
8. Evaluation and motivation mechanism for the seniormanagement
Remuneration and evaluation for the senior management can be found in section VIII:
Profiles of Directors, Members of Supervisory Committee, Senior Management andEmployees.
9. Internal control
9.1. Significant internal control deficiencies found in the reporting period
? Yes √ No
9.2. Internal control self-assessment report
Disclosure date of the internalcontrol self-assessment report
Disclosure date of the internal control self-assessment report | 2019-04-26 | |
Disclosure index of the internal control self-assessment report | 2018 Internal Control Self-assessment Report (http://www.cninfo.com.cn/) | |
Ratio of the total assets of the appraised entitles to the consolidated total assets | 90.00% | |
Ratio of the operating revenues of the appraised entitles to the consolidated operating revenue | 90.00% | |
deficiencies identification standard | ||
Type | Financial report | Non-financial report |
Qualitative standard | Significant deficiencies:(1)Correction of material errors in financial reports that have been announced (except retroactive adjustment of previous years due to changes in policies or other objective factors);(2) | Significant deficiencies:(1)violate national regulations and laws;(2)The Company suffer from lake of major decision-making procedures or unscientific procedures;if there is a decision-making misplay, it will result in significant deal failure(3) |
Material misstatement of currentfinancial report which wasunrecognized but found by theauditor;(3) Corrupt transactionof senior management;(4)Auditcommittee and internal auditdepartment are not effective tothe internal control supervision .
Material misstatement of current financial report which was unrecognized but found by the auditor;(3) Corrupt transaction of senior management;(4)Audit committee and internal audit department are not effective to the internal control supervision . | The substantial loss of managerial or technical staff;(4)Important business lacks system control or system failure, important economic business has internal control system guidance, but with no effective operation;(5)significant deficiencies of internal control cannot be rectified in time. | |
Quantitative standard | 1. Significant deficiencies:Misstatement ≥ 5% of total profits;Misstatement ≥ 1% of total assets;Misstatement ≥ 5% of total operating revenue;Misstatement ≥5% of owner's equity 2. Material deficiencies:3% of gross profits≤Misstatement<5% of gross profits;0.5% of total assets≤Misstatement<1% of total assets;3% of total operating revenue≤Misstatement<5% of total operating revenue;3% of owner's equity≤Misstatement<5% of owner's equity. 3. General deficiencies:Misstatement<3% of gross profits;Misstatement<0.5% of total assets;Misstatement<3% of total operating revenue;Misstatement<3% of owner's equity. | 1. Significant deficiencies:ratio of loss of net profits≥5%. 2. Material deficiencies:3%≤ratio of loss of net profits<5%. 3. General deficiencies:ratio of loss of net profits<3% |
Number of financial-report significant deficiencies | 0 | |
Number of non-financial-report significant deficiencies | 0 | |
Number of important financial-report related deficiencies | 0 | |
Number of important Non-financial-report related deficiencies | 0 |
10. Internal control auditor report
√ Applicable ? N/A
Deliberation opinion section in the internal control audit report
Deliberation opinion section in the internal control audit report | |
The Company has maintained effective internal control of financial reports in accordance with the Basic Rules for Internal Control of Enterprises and relevant regulations. | |
Disclosure of internal control audit report | Disclosed |
Disclosure date of the internal control audit report | 2019-04-26 |
Disclosure index of the internal control audit report | 2018 Internal Control Auditor Report (http://www.cninfo.com.cn/) |
Type of the audit’s opinion | Standard without reserved opinion |
Significant deficiencies found in the non-financial report | No |
The accounting firm issued the internal control audit report of non-standard opinions? Yes √ No
Whether the internal control audit report issued by the accounting firm is consistent withthe self-assessment report issued by the board of directors.√ Yes ? No
Section X Information about Corporate Bond
Whether there exists a public issue and listing of corporate bond that is not yet due orfailed to be redeemed at the date of the financial report authorized.No
Section XI Financial Report
1. Auditor’s report
Type of audit report
Type of audit report | Standard without reserved opinion |
Signing date of auditor’s report | 2019-04-25 |
Name of Audit | Sichuan Huaxin (Group) CPA Firm |
No. of auditor’s report | Chuan Huaxin Audit [2019] No.22 |
Names of auditors | Feng Yuan, He Shoufu |
Auditor’s Report
To the shareholders of Luzhou Laojiao Co., Ltd.:
Opinion
We have audited the financial statements of Luzhou Laojiao Co., Ltd. (hereinafter referredto as the “Company”), which comprise the consolidated balance sheet and balance sheetas at 31 December 2018, consolidated income statement and income statement,consolidated cash flow statement and cash flow statement, consolidated statement ofchanges in owners' equity and statement of changes in owners' equity for the year thenended; and notes to the financial statements.In our opinion, the attached financial statements are prepared, in all material respects, inaccordance with Accounting Standards for Business Enterprises and present fairly thefinancial position of the company as at 31
December 2018 and its operating results andcash flow for the year then ended.
Basis for opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”) forCertified Public Accountants. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statements sectionof our report. We are independent of the Company in accordance with the Code ofprofessional ethics for Certified Public Accountants in China (“the Code”), and we havefulfilled our other ethical responsibilities in accordance with the Code. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the consolidated financial statements of the current period.These matters were addressed in the context of our audit of the consolidated financialstatements as a whole and, in forming our opinion thereon, and we do not provide aseparate opinion on these matters. Key audit matters identified in our audit are
summarized as follows:
1.Key audit matters-Recognition of domestic liquor sales revenue
1.Key audit matters-Recognition of domestic liquor sales revenue | |
Key audit matters | How our audit addressed the Key Audit Matter |
In 2018, the Company's total operating revenue is CNY 13 billion, including CNY 12.8 billion of domestic liquor sales revenue, accounting for 98% of the total operating revenue. Considering the significant amount of the Company's domestic liquor sales revenue, we pay attention to it as a key audit matter. | Our procedures in relation to recognition of domestic liquor sales revenue included: 1. Understood, evaluated and tested the reasonableness and effectiveness of the internal control design related to the Company's revenue. Particular attention was paid to the appropriateness of specific conditions for recognition of revenue. 2. Compared the key indicators such as sales volume, revenue cost and gross profit rate of the Company in the current period with those in the previous period, so as to identify the rationality of changes in key indicators and reasons for changes. 3. The income of the top five customers totaled CNY 8.721 billion, accounting for 66.8% of the total business income. For the top five customers, we carried out the following audit procedures to verify the occurrence, completeness and accuracy of the revenue recognized by the management: (1) obtained the sales contract signed by the Company and the customer, carefully read the key terms of the contract, and understand the implementation of the contract; (2) Performed the confirmation procedure. We sent confirmation letters to verify the amount of sales revenue in the reporting period and the closing balance of accounts receivables or advance from customer during the reporting period. For local customers in Luzhou, we went to their office to carry out confirmation procedure and obtained the situation of purchase, sales and storage of Luzhou Laojiao brand liquor during the reporting period, so as to analyze and judge whether there are abnormal fluctuations in its inventory and its rationality; For customers outside Luzhou, we mailed confirmation letters and controlled the whole process of reply letter |
by ourselves.
(3) Inquired the customer's businessinformation and key personnel information, andchecked whether they are related party of theCompany.4. For other customers, randomly checked salescontracts, customers' purchase orders, shippingdocuments, transport documents, accountingvouchers, payment receipts, customer signaturerecords and other materials to verify theoccurrence, completeness and accuracy of therevenue recognized by the management.5. Selected the confirmation voucher of largeamount of sales before and after the balancesheet date, paid attention to the date of salesinvoice and customer receipt, and paid attentionto whether there is a large amount of return afterthe period, so as to verify whether thecorresponding revenue is included in theappropriate accounting period.The evidence obtained from the above auditprocedures can support the Company'smanagement's recognition of domestic liquorsales revenue.
by ourselves.
(3) Inquired the customer's businessinformation and key personnel information, andchecked whether they are related party of theCompany.4. For other customers, randomly checked salescontracts, customers' purchase orders, shippingdocuments, transport documents, accountingvouchers, payment receipts, customer signaturerecords and other materials to verify theoccurrence, completeness and accuracy of therevenue recognized by the management.5. Selected the confirmation voucher of largeamount of sales before and after the balancesheet date, paid attention to the date of salesinvoice and customer receipt, and paid attentionto whether there is a large amount of return afterthe period, so as to verify whether thecorresponding revenue is included in theappropriate accounting period.The evidence obtained from the above auditprocedures can support the Company'smanagement's recognition of domestic liquorsales revenue.2.Key audit matters-Existence of bank deposits
2.Key audit matters-Existence of bank deposits | |
Key audit matters | How our audit addressed the Key Audit Matter |
As of December 31, 2018, the bank balance of the Company is CNY 9.365 billion, accounting for 41.43% of the total assets. Bank deposits are high-risk assets. Therefore, we pay attention to the existence of bank deposits as a key audit matter. | Our procedures in relation to existence of bank deposits included: 1. Understood and tested the design and implementation of key internal controls related to the funds management cycle to confirm the effectiveness of relevant internal controls. 2. Accompanied by relevant personnel of the Company, auditors went to the bank by themselves where the Company opens a basic bank account to print the account opening list of the Company and check the account opening information individually. 3. Checked the carrying amount of all bank accounts with the original amount of bank statements and certificates of deposit, and obtained all copies. 4. Based on the results of checking the amount |
of bank statements, obtained the balancereconciliation of all bank accounts compiled bythe Company, and check all the outstandingitems, whether there are any important overdueoverdue items that are not booked in time.5. Implemented the confirmation procedure forthe Company's bank deposits, in which the localdeposit accounts in Luzhou were confirmed byauditors and the Company's cashier in the bank;The confirmation letters of deposit accountsoutside Luzhou were sent out by mailing afterauditors checked the address and the receiverthrough telephone, network and other publicinformation, and we controlled the whole replyletter process by ourselves.6. Obtained and reviewed time deposits orstructured deposit agreements, identified thetypes of relevant bank deposits, analyzed theprincipal and interest recovery risks, and judgedthe adequacy of the disclosure.7. Inquired the management and relevantpersonnel about the purpose of all bank accountson the Company's books and analyzed whetherthere are abnormal use or bank accounts openedfor unknown reasons.The evidence obtained from the above auditprocedures can support the Company'smanagement's assertion of the existence of bankdeposits.
of bank statements, obtained the balance reconciliation of all bank accounts compiled by the Company, and check all the outstanding items, whether there are any important overdue overdue items that are not booked in time. 5. Implemented the confirmation procedure for the Company's bank deposits, in which the local deposit accounts in Luzhou were confirmed by auditors and the Company's cashier in the bank; The confirmation letters of deposit accounts outside Luzhou were sent out by mailing after auditors checked the address and the receiver through telephone, network and other public information, and we controlled the whole reply letter process by ourselves. 6. Obtained and reviewed time deposits or structured deposit agreements, identified the types of relevant bank deposits, analyzed the principal and interest recovery risks, and judged the adequacy of the disclosure. 7. Inquired the management and relevant personnel about the purpose of all bank accounts on the Company's books and analyzed whether there are abnormal use or bank accounts opened for unknown reasons. The evidence obtained from the above audit procedures can support the Company's management's assertion of the existence of bank deposits. | |
3.Key audit matters-Sufficiency of provision for bad debts of receivable bank deposits involving contract disputes | |
Key audit matters | How our audit addressed the Key Audit Matter |
As of December 31, 2018, the Company'sreceivable bank deposits involving contractdisputes is CNY 307 million.Themanagement made a full analysis andjudgment on the bad debt risk of thereceivables on the balance sheet date,taking into account the progress of thejudicial procedures related to receivablebank deposits involving contract disputesand the key information currently availablefrom lawyers. The key information include:
progress of relevant case investigation andasset preservation work conducted by thepublic security authorities, progress ofrelevant civil proceedings and professionallegal advice issued by relevant professionallawyers. According to analysis andjudgment, the Company has maintained inrecognizing CNY 200 million of bad debtprovision in the consolidated balance sheet.
As the bad debt provision amount of bankdeposits involving contract disputes issignificant, and it is a significant judgment toanalyze the bad debt risk of the receivablesand determine the bad debt provisionamount, we pay attention to it as a key auditmatter.
As of December 31, 2018, the Company's receivable bank deposits involving contract disputes is CNY 307 million.The management made a full analysis and judgment on the bad debt risk of the receivables on the balance sheet date, taking into account the progress of the judicial procedures related to receivable bank deposits involving contract disputes and the key information currently available from lawyers. The key information include: progress of relevant case investigation and asset preservation work conducted by the public security authorities, progress of relevant civil proceedings and professional legal advice issued by relevant professional lawyers. According to analysis and judgment, the Company has maintained in recognizing CNY 200 million of bad debt provision in the consolidated balance sheet. As the bad debt provision amount of bank deposits involving contract disputes is significant, and it is a significant judgment to analyze the bad debt risk of the receivables and determine the bad debt provision amount, we pay attention to it as a key audit matter. | Our procedures in relation to sufficiency of provision for bad debts of receivable bank deposits involving contract disputes included: 1. We communicate with the management to understand the basis for its accounting judgment and estimation on this matter. 2. Obtained legal opinions on Luzhou Laojiao Co.,Ltd.'s provision of bad debts for abnormal deposits in Changsha, Nanyang and another place issued by relevant law firms. 3. Telephone interview with the lawyer who issues the above legal opinions, to understand the progress of the case and the basis for making relevant legal opinions, and to evaluate the appropriateness of the relevant estimates made by the management. The evidence obtained from the above audit procedures can support the Company's management's estimation of the provision for bad debts of receivable bank deposits involving contract disputes. |
Other informationThe directors of the Company are responsible for the other information. The otherinformation comprises the information included in the annual report, but does not includethe financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a materialmisstatement of this other information, we are required to report that fact. We havenothing to report in this regard.
Responsibilities of directors and those charged with governance for the financialstatementsThe directors of the Company are responsible for the preparation of the financialstatements that give a true and fair view in accordance with the disclosure requirements ofAccounting Standards for Business Enterprises, and designing, implementing andmaintaining internal control that is necessary to ensure the financial statements are freefrom material misstatement, whether due to fraud or error.In preparing the financial statements, the directors are responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unless thedirectors either intend to liquidate the Company or to cease operations, or have norealistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financialreporting process.Auditor's responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Reasonable assurance is a high levelof assurance, but is not a guarantee that an audit conducted in accordance with CSAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basisof these financial statements.As part of an audit in accordance with CSAs, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the directors.
(4) Conclude on the appropriateness of the directors’ use of the going concern basisof accounting and, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, weare required to draw attention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Company to cease to continueas a going concern.
(5) Evaluate the overall presentation, structure and content of the financialstatements, including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financialinformation of the entities or business activities within the Company to express an opinionon the financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that we identify during our audit.We also provide the governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.From the matters communicated with the governance, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
2. Financial statements
Prepared by: Luzhou Laojiao Co.,Ltd.
Consolidated balance sheet
As at December 31, 2018
Monetary Unit: CNY
Item
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Current assets: | ||
Cash and cash equivalents | 9,367,386,627.68 | 8,449,622,154.91 |
Settlement reserves | ||
Lending funds | ||
Financial assets measured at fair value through current profit or loss | ||
Derivative financial assets | ||
Notes and accounts receivables | 2,398,660,205.02 | 2,500,822,714.85 |
Including:Notes receivables | 2,388,326,476.15 | 2,492,813,857.65 |
Accounts receivables | 10,333,728.87 | 8,008,857.20 |
Item
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Prepayment | 137,243,573.66 | 197,835,516.46 |
Premiums receivable | ||
Reinsurance accounts receivable | ||
Reinsurance contract reserve | ||
Other receivables | 166,525,010.16 | 235,725,944.12 |
Including:Interests receivable | 29,970,944.44 | 14,546,875.69 |
Dividends receivable | ||
Buying back the sale of financial assets | ||
Inventories | 3,230,415,749.95 | 2,811,866,523.26 |
Assets held for sale | ||
Non-current assets due within one year | ||
Other current assets | 194,237,237.02 | 72,856,419.60 |
Total current assets | 15,494,468,403.49 | 14,268,729,273.20 |
Non-current assets: | ||
Disbursement of loans and advances | ||
Available-for-sale financial assets | 275,819,448.46 | 322,574,457.89 |
Held-to-maturity investments | ||
Long-term receivables | ||
Long-term equity investments | 2,091,103,348.61 | 1,824,893,972.85 |
Investment property | ||
Fixed assets | 1,029,666,915.47 | 1,129,894,772.60 |
Construction in progress | 3,000,489,249.86 | 1,567,263,995.95 |
Productive biological assets | ||
Oil and gas assets | ||
Intangible assets | 231,967,372.88 | 231,039,145.33 |
Development expenses | ||
Goodwill | ||
Long-term deferred expenses | ||
Deferred tax assets | 436,434,961.24 | 411,361,142.33 |
Other non-current assets | 44,979,896.41 | 4,314.05 |
Total non-current assets | 7,110,461,192.93 | 5,487,031,801.00 |
Total assets | 22,604,929,596.42 | 19,755,761,074.20 |
Current liabilities: | ||
Short-term loans | ||
Borrowings from the central bank | ||
Deposits from customers and inter-bank | ||
Loans from other banks | ||
Financial liabilities measured at fair value through current profit or loss |
Item
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Derivative financial liabilities | ||
Notes and accounts payable | 1,292,050,954.06 | 740,700,050.76 |
Advance from customer | 1,604,425,189.96 | 1,957,404,019.89 |
Financial assets sold for repurchase | ||
Handling charges and commissions payable | ||
Employee benefits payable | 268,092,193.50 | 137,700,533.18 |
Taxes payable | 1,648,028,076.07 | 988,228,028.52 |
Other payable | 602,887,024.88 | 543,192,435.55 |
Including:Interests payable | ||
Dividends payable | 4,500,000.00 | |
Reinsurance accounts payable | ||
Insurance contract reserves | ||
Customer brokerage deposits | ||
Securities underwriting brokerage deposits | ||
Liabilities held for sale | ||
Non-current liabilities due within one year | ||
Other current liabilities | ||
Total current liabilities | 5,415,483,438.47 | 4,367,225,067.90 |
Non-current liabilities: | ||
Long-term loans | ||
Bonds payable | ||
Including:Preference shares | ||
Perpetual bonds | ||
Long-term payables | ||
Long-term payroll payables | 7,929.00 | |
Accrued liabilities | ||
Deferred income | 20,981,155.00 | 19,992,728.85 |
Deferred tax liabilities | 44,252,383.96 | 55,941,136.35 |
Other non-current liabilities | ||
Total non-current liabilities | 65,233,538.96 | 75,941,794.20 |
Total liabilities | 5,480,716,977.43 | 4,443,166,862.10 |
Shareholders' equity | ||
Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
Other equity instruments | ||
Including: preference shares | ||
Perpetual bonds | ||
Capital reserves | 3,716,675,022.48 | 3,543,519,701.63 |
Less: treasury stock | ||
Other comprehensive income | 136,592,276.64 | 171,227,292.19 |
Special reserves |
Item
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
General risk reserve | ||
Undistributed profits | 10,181,899,224.84 | 8,527,196,810.86 |
Total equity attributable to owners of the parent company | 16,964,671,475.96 | 15,171,448,756.68 |
Non-controlling interests | 159,541,143.03 | 141,145,455.42 |
Total owners' equity | 17,124,212,618.99 | 15,312,594,212.10 |
Total liabilities and owners' equity | 22,604,929,596.42 | 19,755,761,074.20 |
Legal representative:Liu MiaoPerson in charge of accounting affairs:Xie HongPerson in charge of accounting department:Yan Li
Balance sheet of parent company
As at December 31, 2018
Monetary Unit: CNY
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Current assets: | ||
Cash and cash equivalents | 6,189,473,157.83 | 3,631,052,399.90 |
Financial assets measured at fair value through current profit or loss | ||
Derivative financial assets | ||
Notes and accounts receivables | 67,698.43 | 86,250.43 |
Including:Notes receivables | ||
Accounts receivables | 67,698.43 | 86,250.43 |
Prepayment | 7,212,512.57 | 1,992,501.42 |
Other receivables | 4,657,727,046.02 | 5,615,683,624.57 |
Including:Interests receivable | 29,970,944.44 | 11,167,975.69 |
Dividends receivable | ||
Inventories | 383,404.53 | 418,804.08 |
Assets held for sale | ||
Non-current assets due within one year | ||
Other current assets | 1,761,708.33 | 8,492,739.48 |
Total current assets | 10,856,625,527.71 | 9,257,726,319.88 |
Non-current assets: | ||
Available-for-sale financial assets | 275,490,526.83 | 322,245,536.26 |
Held-to-maturity investments | ||
Long-term receivables | ||
Long-term equity investments | 5,494,914,376.71 | 5,219,100,200.96 |
Investment property | ||
Fixed assets | 701,870,689.02 | 792,161,331.71 |
Construction in progress | 511,528,278.96 | 388,025,765.87 |
Item
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Productive biological assets | ||
Oil and gas assets | ||
Intangible assets | 224,039,846.61 | 222,713,898.06 |
Development expenses | ||
Goodwill | ||
Long-term deferred expenses | ||
Deferred tax assets | 71,119,598.96 | 65,501,243.66 |
Other non-current assets | ||
Total non-current assets | 7,278,963,317.09 | 7,009,747,976.52 |
Total assets | 18,135,588,844.80 | 16,267,474,296.40 |
Current liabilities: | ||
Short-term loans | ||
Financial liabilities measured at fair value through current profit or loss | ||
Derivative financial liabilities | ||
Notes and accounts payables | 38,984,611.48 | 16,277,092.39 |
Advance from customer | 12,229,153.62 | 8,355,217.23 |
Employee benefits payable | 67,383,911.98 | 40,076,625.13 |
Taxes payable | 115,424,262.03 | 82,923,469.40 |
Other payables | 1,788,068,491.88 | 856,791,713.36 |
Including:Interests payable | ||
Dividends payable | ||
Liabilities held for sale | ||
Non-current liabilities due within one year | ||
Other current liabilities | ||
Total current liabilities | 2,022,090,430.99 | 1,004,424,117.51 |
Non-current liabilities: | ||
Long-term loans | ||
Bonds payable | ||
Including:Preference shares | ||
Perpetual bonds | ||
Long-term payables | ||
Long-term payroll payables | 7,929.00 | |
Accrued liabilities | ||
Deferred income | 12,593,640.12 | 13,483,984.61 |
Deferred tax liabilities | 44,252,383.96 | 55,941,136.35 |
Other non-current liabilities | ||
Total non-current liabilities | 56,846,024.08 | 69,433,049.96 |
Total liabilities | 2,078,936,455.07 | 1,073,857,167.47 |
Shareholders' equity |
Item
Item | Balance as at 31 December 2018 | Balance as at 31 December 2017 |
Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
Other equity instruments | ||
Including: preference shares | ||
Perpetual bonds | ||
Capital reserves | 3,706,816,950.12 | 3,535,397,623.93 |
Less: treasury stock | ||
Other comprehensive income | 134,386,305.26 | 169,812,111.20 |
Special reserves | ||
Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
Undistributed profits | 9,285,944,182.35 | 8,558,902,441.80 |
Total owners' equity | 16,056,652,389.73 | 15,193,617,128.93 |
Total liabilities and owners' equity | 18,135,588,844.80 | 16,267,474,296.40 |
Consolidated income statement
Monetary Unit: CNY
Item | Year 2018 | Year 2017 |
1. Total operating revenue | 13,055,465,761.55 | 10,394,867,493.46 |
Including: Operating revenue | 13,055,465,761.55 | 10,394,867,493.46 |
Interest income | ||
Earned premium | ||
Fee and commission income | ||
2. Total operating costs | 8,500,077,705.30 | 7,127,810,215.67 |
Including: Cost of sales | 2,934,001,858.91 | 2,917,815,056.52 |
Interest expense | ||
Handling charges and commission expenses | ||
Refunded premiums | ||
Net payments for insurance claims | ||
Net provision for insurance contracts | ||
Bond insurance expense | ||
Reinsurance Expenses | ||
Taxes and surcharges | 1,605,835,052.97 | 1,335,106,291.77 |
Selling and distribution expenses | 3,392,721,432.33 | 2,411,884,522.31 |
General and administrative expenses | 722,448,972.80 | 518,463,705.99 |
Research and Development expenses | 62,172,210.70 | 50,990,507.33 |
Financial expenses | -215,066,482.79 | -106,898,022.70 |
Including:Interest expenses | 64,698,037.12 | 34,356,638.97 |
Interest income | 280,805,447.66 | 145,682,879.58 |
Impairment losses | -2,035,339.62 | 448,154.45 |
Plus: Other income | 24,092,326.81 | 27,144,859.57 |
Investment income ("-" for losses) | 97,993,563.50 | 138,316,397.04 |
Including: income from investment in associates | 88,881,022.50 | 132,404,279.33 |
Item
Item | Year 2018 | Year 2017 |
and joint ventures | ||
Gains from the changes in fair values(“-“ for losses) | ||
Foreign exchange gains ("-" for losses) | ||
Gains from disposal of assets("-" for losses) | -492,389.13 | -4,256,543.78 |
3. Operating profits ("-" for losses) | 4,676,981,557.43 | 3,428,261,990.62 |
Plus: non-operating income | 31,232,477.21 | 25,836,921.37 |
Less: non-operating expenses | 49,528,449.09 | 20,380,876.59 |
4. Total profits before tax ("-" for total losses) | 4,658,685,585.55 | 3,433,718,035.40 |
Less: income tax expenses | 1,148,219,697.12 | 831,693,750.31 |
5. Net profit ("-" for net loss) | 3,510,465,888.43 | 2,602,024,285.09 |
5.1 Net profit from continuing operation ("-" for losses) | 3,510,465,888.43 | 2,602,024,285.09 |
5.2 Net profit from discontinued operation ("-" for losses) | ||
Attributable to owners of the parent company | 3,485,643,008.98 | 2,557,944,598.97 |
Attributable to non-controlling interests | 24,822,879.45 | 44,079,686.12 |
6.Net of tax from other comprehensive income | -33,987,321.62 | -5,121,775.76 |
Net of tax from other comprehensive income to the owner of the parent company | -34,635,015.55 | -5,557,598.19 |
6.1 Other comprehensive income cannot reclassified into the profit and loss: | ||
1) Remeasure the variation of net indebtedness or net asset of defined benefit plans | ||
2) Share in other comprehensive income that cannot be classified into profit and loss under equity method | ||
6.2 Other comprehensive income that will be reclassified into the profit and loss | -34,635,015.55 | -5,557,598.19 |
1) Share in other comprehensive income that will be classified into profit and loss under equity method | -359,548.90 | -6,023,130.81 |
2) Changes in fair value of available-for-sale financial assets | -35,066,257.04 | -67,139.23 |
3) Held-to-maturity investment reclassified into available-for sale financial assets | ||
4) Effective part of cash-flow hedge profit and loss | ||
5) Balance arising from the translation of foreign currency financial statements | 790,790.39 | 532,671.85 |
6) Others | ||
Net of tax from other comprehensive income to non-controlling interests | 647,693.93 | 435,822.43 |
7. Total comprehensive income | 3,476,478,566.81 | 2,596,902,509.33 |
Total comprehensive income attributable to owners of the parent company | 3,451,007,993.43 | 2,552,387,000.78 |
Total comprehensive income attributable to non-controlling interests | 25,470,573.38 | 44,515,508.55 |
8. Earnings per share | ||
(1)Basic earnings per share | 2.380 | 1.798 |
(2)Diluted earnings per share | 2.380 | 1.798 |
Legal representative:Liu MiaoPerson in charge of accounting affairs:Xie Hong
Person in charge of accounting department:Yan Li
Income statement of parent company
Monetary Unit: CNY
Item
Item | Year 2018 | Year 2017 |
1. Operating revenue | 3,361,304,739.27 | 2,855,282,389.57 |
Less: Cost of sales | 2,268,904,672.24 | 2,090,027,989.80 |
Taxes and surcharges | 37,365,858.48 | 24,781,271.41 |
Selling and distribution expenses | ||
General and administrative expenses | 581,921,594.90 | 433,118,239.53 |
Research and Development expenses | 21,001,230.12 | 10,075,920.70 |
Financial expenses | -129,471,683.37 | -80,000,670.62 |
Including:Interest expenses | 7,971,444.41 | |
Interest income | 138,532,722.84 | 83,033,115.75 |
Impairment losses | -2,965,798.28 | 686,324.28 |
Plus: Other income | 17,701,808.96 | 15,125,736.71 |
Investment income ("-" for losses) | 2,113,902,599.28 | 1,970,639,408.69 |
Including: income from investment in associates and joint ventures | 88,881,022.50 | 132,404,279.33 |
Gains from the changes in fair values(“-“ for losses) | ||
Gains from disposal of assets("-" for losses) | -492,389.13 | -1,775,397.64 |
2. Operating profits ("-" for losses) | 2,715,660,884.29 | 2,360,583,062.23 |
Plus: non-operating income | 21,778,771.14 | 11,315,507.68 |
Less: non-operating expenses | 39,292,792.61 | 14,640,415.00 |
3. Total profits before tax ("-" for total losses) | 2,698,146,862.82 | 2,357,258,154.91 |
Less: income tax expenses | 140,164,527.27 | 104,757,613.28 |
4. Net profit ("-" for net loss) | 2,557,982,335.55 | 2,252,500,541.63 |
4.1 Net profit from continuing operation ("-" for losses) | 2,557,982,335.55 | 2,252,500,541.63 |
4.2 Net profit from discontinued operation ("-" for losses) | ||
5.Net of tax from other comprehensive income | -35,425,805.94 | -6,090,270.04 |
5.1 Other comprehensive income cannot reclassified into the profit and loss: | ||
1) Remeasure the variation of net indebtedness or net asset of defined benefit plans | ||
2) Share in other comprehensive income that cannot be classified into profit and loss under equity method | ||
5.2 Other comprehensive income that will be reclassified into the profit and loss | -35,425,805.94 | -6,090,270.04 |
1) Share in other comprehensive income that will be classified into profit and loss under equity method | -359,548.90 | -6,023,130.81 |
2) Changes in fair value of available-for-sale financial assets | -35,066,257.04 | -67,139.23 |
3) Held-to-maturity investment reclassified into available-for sale financial assets | ||
4) Effective part of cash-flow hedge profit and loss | ||
5) Balance arising from the translation of foreign currency financial statements | ||
6) Others |
Item
Item | Year 2018 | Year 2017 |
6. Total comprehensive income | 2,522,556,529.61 | 2,246,410,271.59 |
7. Earnings per share | ||
(1) Basic earnings per share | ||
(2) Diluted earnings per share |
Consolidated statement of cash flows
Monetary Unit: CNY
Item | Year 2018 | Year 2017 |
1. Cash flows from operating activities | ||
Cash received from sale of goods and rendering of services | 14,828,436,081.11 | 12,421,322,558.16 |
Net increase in customer bank deposits and placement from banks and other financial institutions | ||
Net increase in loans from central bank | ||
Net increase in loans from other financial institutions | ||
Premiums received from original insurance contracts | ||
Net cash received from reinsurance business | ||
Net increase in deposits and investments from policyholders | ||
Net increase for disposal of financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | ||
Cash received from interest, handling charges and commissions | ||
Net increase in placements from other financial institutions | ||
Net capital increase in repurchase business | ||
Refunds of taxes and surcharges | 5,786,338.67 | |
Cash received from other operating activities | 482,593,561.94 | 254,519,252.06 |
Subtotal of cash inflows from operating activities | 15,316,815,981.72 | 12,675,841,810.22 |
Cash paid for goods purchased and services received | 3,826,697,226.55 | 3,779,045,426.70 |
Net increase in loans and advances to customers | ||
Net increase in deposits in central bank and other banks and financial institutions | ||
Cash paid for original insurance contract claims | ||
Cash paid for interests, handling charges and commissions | ||
Cash paid for policy dividends | ||
Cash paid to and on behalf of employees | 569,194,842.30 | 403,853,839.86 |
Cash paid for taxes and surcharges | 3,545,440,004.11 | 2,544,604,491.76 |
Cash paid for other operating activities | 3,077,567,890.52 | 2,244,603,990.01 |
Subtotal of cash outflows from operating activities | 11,018,899,963.48 | 8,972,107,748.33 |
Item
Item | Year 2018 | Year 2017 |
Net cash flows from operating activities | 4,297,916,018.24 | 3,703,734,061.89 |
2. Cash flows from investing activities | ||
Cash received from disposal of investments | ||
Cash received from returns on investments | 19,480,124.47 | 19,553,674.91 |
Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 222,840.26 | 409,427.97 |
Net cash received from disposal of subsidiaries and other business units | ||
Cash received from other investing activities | ||
Subtotal of cash inflows from investing activities | 19,702,964.73 | 19,963,102.88 |
Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 1,468,482,777.22 | 1,415,996,563.84 |
Cash paid for investments | 16,636,159.43 | |
Net increase in pledge loans | ||
Net cash paid to acquire subsidiaries and other business units | 10,730,800.00 | |
Cash paid for other investing activities | ||
Subtotal of cash outflows from investing activities | 1,485,118,936.65 | 1,426,727,363.84 |
Net cash flows from investing activities | -1,465,415,971.92 | -1,406,764,260.96 |
3. Cash flows from financing activities | ||
Cash received from investors | 4,482,764.00 | 2,957,910,377.36 |
Including: cash received by subsidiaries from investments by minority shareholders | ||
Cash received from borrowings | ||
Cash received from bonds issue | ||
Cash received from other financing activities | ||
Subtotal of cash inflows from financing activities | 4,482,764.00 | 2,957,910,377.36 |
Cash paid for debt repayments | ||
Cash paid for distribution of dividends and profits or payment of interest | 1,911,545,067.51 | 1,387,430,813.08 |
Including: dividends and profits paid to minority shareholders by subsidiaries | 216,855.11 | |
Cash paid for other financing activities | 9,604,800.00 | 244,125,003.53 |
Subtotal of cash outflows from financing activities | 1,921,149,867.51 | 1,631,555,816.61 |
Net cash flows from financing activities | -1,916,667,103.51 | 1,326,354,560.75 |
4. Effect of fluctuation in exchange rate on cash and cash equivalents | 731,529.96 | -150,238.51 |
5. Net increase in cash and cash equivalents | 916,564,472.77 | 3,623,174,123.17 |
Plus: balance of cash and cash equivalents at the beginning of the period | 8,449,422,154.91 | 4,826,248,031.74 |
6. Balance of cash and cash equivalents at the end of the period | 9,365,986,627.68 | 8,449,422,154.91 |
Cash flow statements of parent company
Monetary Unit: CNY
Item
Item | Year 2018 | Year 2017 |
1. Cash flows from operating activities | ||
Cash received from sale of goods and rendering of services | 3,872,690,184.06 | 3,297,762,941.75 |
Refunds of taxes and surcharges | ||
Cash received from other operating activities | 285,339,299.49 | 147,608,021.28 |
Subtotal of cash inflows from operating activities | 4,158,029,483.55 | 3,445,370,963.03 |
Cash paid for goods purchased and services received | 2,706,797,292.39 | 2,520,043,439.60 |
Cash paid to and on behalf of employees | 253,037,938.15 | 174,203,813.30 |
Cash paid for taxes and surcharges | 304,535,780.73 | 74,139,478.90 |
Cash paid for other operating activities | 179,745,316.75 | 188,997,162.43 |
Subtotal of cash outflows from operating activities | 3,444,116,328.02 | 2,957,383,894.23 |
Net cash flows from operating activities | 713,913,155.53 | 487,987,068.80 |
2. Cash flows from investing activities | ||
Cash received from disposal of investments | ||
Cash received from returns on investments | 2,035,389,160.25 | 1,858,764,413.56 |
Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 92,898.13 | 245,811.04 |
Net cash received from disposal of subsidiaries and other business units | ||
Cash received from other investing activities | 3,173,258.16 | |
Subtotal of cash inflows from investing activities | 2,035,482,058.38 | 1,862,183,482.76 |
Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 150,107,386.59 | 446,683,321.51 |
Cash paid for investments | 26,240,959.43 | 2,980,558,607.72 |
Net cash paid to acquire subsidiaries and other business units | ||
Cash paid for other investing activities | ||
Subtotal of cash outflows from investing activities | 176,348,346.02 | 3,427,241,929.23 |
Net cash flows from investing activities | 1,859,133,712.36 | -1,565,058,446.47 |
3. Cash flows from financing activities | ||
Cash received from investors | 2,955,410,377.36 | |
Cash received from loans | ||
Cash received from bonds issue | ||
Cash received from other financing activities | 1,830,167,429.42 | 560,244,910.34 |
Subtotal of cash inflows from financing activities | 1,830,167,429.42 | 3,515,655,287.70 |
Cash paid for debt repayments | ||
Cash paid for distribution of dividends and profits or payment of interest | 1,844,793,539.38 | 1,346,162,376.96 |
Cash paid for other financing activities | ||
Subtotal of cash outflows from financing activities | 1,844,793,539.38 | 1,346,162,376.96 |
Net cash flows from financing activities | -14,626,109.96 | 2,169,492,910.74 |
Item
Item | Year 2018 | Year 2017 |
4. Effect of fluctuation in exchange rate on cash and cash equivalents | -69,685.00 | |
5. Net increase in cash and cash equivalents | 2,558,420,757.93 | 1,092,351,848.07 |
Plus: balance of cash and cash equivalents at the beginning of the period | 3,631,052,399.90 | 2,538,700,551.83 |
6. Balance of cash and cash equivalents at the end of the period | 6,189,473,157.83 | 3,631,052,399.90 |
Consolidated statement of changes in shareholders' equity
For the year ended 31 December 2018
Monetary Unit: CNY
Item
Item | Year 2018 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,543,519,701.63 | 171,227,292.19 | 1,464,752,476.00 | 8,527,196,810.86 | 141,145,455.42 | 15,312,594,212.10 | ||||||
Plus: adjustments for changes in accounting policies | |||||||||||||
Adjustments for correction of accounting errors in prior year | |||||||||||||
Business combinations under common control | |||||||||||||
Others | |||||||||||||
2. Balance as at 1 January of the current year | 1,464,752,476.00 | 3,543,519,701.63 | 171,227,292.19 | 1,464,752,476.00 | 8,527,196,810.86 | 141,145,455.42 | 15,312,594,212.10 | ||||||
3.Increases/decreases in the | 173,155,320.85 | -34,635,015.55 | 1,654,702,413.98 | 18,395,687.61 | 1,811,618,406.89 |
Item
Item | Year 2018 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
current year (“-” for decreases) | |||||||||||||
(1) Total comprehensive income | -34,635,015.55 | 3,485,643,008.98 | 25,470,573.38 | 3,476,478,566.81 | |||||||||
(2) Capital contributed or reduced by owners | 4,237,764.00 | 4,237,764.00 | |||||||||||
Capital contributions by owners | 4,237,764.00 | 4,237,764.00 | |||||||||||
Capital contributions by other equity instruments holders | |||||||||||||
Amounts of share-based payments recognized in owners' equity | |||||||||||||
Others | |||||||||||||
(3) Profit distribution | -1,830,940,595.00 | 28,144.89 | -1,830,912,450.11 |
Item
Item | Year 2018 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
Withdrawal of surplus reserves | |||||||||||||
Withdrawal of general risk reserve | |||||||||||||
Profit distributed to owners (or shareholders) | -1,830,940,595.00 | 28,144.89 | -1,830,912,450.11 | ||||||||||
Others | |||||||||||||
(4) Internal carry-forward of owners' equity | |||||||||||||
Conversion of capital reserves into paid-in capital | |||||||||||||
Conversion of surplus reserves into paid-in capital | |||||||||||||
Surplus reserves offsetting losses | |||||||||||||
Carry-forward of retained earnings from changes in |
Item
Item | Year 2018 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
defined benefit plans | |||||||||||||
Others | |||||||||||||
(5) Special reserves | |||||||||||||
Withdrawal for the period | |||||||||||||
Use for the period | |||||||||||||
(6) Others | 173,155,320.85 | -11,340,794.66 | 161,814,526.19 | ||||||||||
4. Balance as at 31 December of the current year | 1,464,752,476.00 | 3,716,675,022.48 | 136,592,276.64 | 1,464,752,476.00 | 10,181,899,224.84 | 159,541,143.03 | 17,124,212,618.99 |
For the year ended 31 December 2017
Monetary Unit: CNY
Item
Item | Year 2017 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
1. Balance as at 31 December of last year | 1,402,252,476.00 | 650,609,324.27 | 176,784,890.38 | 1,402,252,476.00 | 7,377,914,588.85 | 94,129,946.87 | 11,103,943,702.37 | ||||||
Plus: adjustments for changes in accounting policies | |||||||||||||
Adjustments for correction of accounting errors in prior year | |||||||||||||
Business combinations under common control | |||||||||||||
Others | |||||||||||||
2. Balance as at January 1 of the current year | 1,402,252,476.00 | 650,609,324.27 | 176,784,890.38 | 1,402,252,476.00 | 7,377,914,588.85 | 94,129,946.87 | 11,103,943,702.37 | ||||||
3.Increases/decreases in the | 62,500,000.00 | 2,892,910,377.36 | -5,557,598.19 | 62,500,000.00 | 1,149,282,222.01 | 47,015,508.55 | 4,208,650,509.73 |
Item
Item | Year 2017 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
current year (“-” for decreases) | |||||||||||||
(1) Total comprehensive income | -5,557,598.19 | 2,557,944,598.97 | 44,515,508.55 | 2,596,902,509.33 | |||||||||
(2) Capital contributed or reduced by owners | 62,500,000.00 | 2,892,910,377.36 | 2,500,000.00 | 2,957,910,377.36 | |||||||||
Capital contributions by owners | 62,500,000.00 | 2,892,910,377.36 | 2,500,000.00 | 2,957,910,377.36 | |||||||||
Capital contributions by other equity instruments holders | |||||||||||||
Amounts of share-based payments recognized in owners' equity | |||||||||||||
Others | |||||||||||||
(3) Profit distribution | 62,500,000.00 | -1,408,662,376.96 | -1,346,162,376.96 |
Item
Item | Year 2017 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
Withdrawal of surplus reserves | 62,500,000.00 | -62,500,000.00 | |||||||||||
Withdrawal of general risk reserve | |||||||||||||
Profit distributed to owners (or shareholders) | -1,346,162,376.96 | -1,346,162,376.96 | |||||||||||
Others | |||||||||||||
(4) Internal carry-forward of owners' equity | |||||||||||||
Conversion of capital reserves into paid-in capital | |||||||||||||
Conversion of surplus reserves into paid-in capital | |||||||||||||
Surplus reserves offsetting losses | |||||||||||||
Carry-forward of retained earnings from changes in |
Item
Item | Year 2017 | ||||||||||||
Equity attributable to owners of the parent company | Non-controlling interests | Total shareholders' equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | |||||
Preferred stock | Perpetual bond | Other | |||||||||||
defined benefit plans | |||||||||||||
Others | |||||||||||||
(5) Special reserves | |||||||||||||
Withdrawal for the period | |||||||||||||
Use for the period | |||||||||||||
(6) Others | |||||||||||||
4. Balance as at 31 December of the current year | 1,464,752,476.00 | 3,543,519,701.63 | 171,227,292.19 | 1,464,752,476.00 | 8,527,196,810.86 | 141,145,455.42 | 15,312,594,212.10 |
Statement of changes in shareholders' equity of parent company
For the year ended 31 December 2018
Monetary Unit: CNY
Item
Item | Year 2018 | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Total shareholders' equity | |||
Preferred stock | Perpetual bond | Other | |||||||||
1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,535,397,623.93 | 169,812,111.20 | 1,464,752,476.00 | 8,558,902,441.80 | 15,193,617,128.93 | |||||
Plus: adjustments for changes in accounting policies | |||||||||||
Adjustments for correction of accounting errors in prior year | |||||||||||
Others | |||||||||||
2. Balance as at January 1 of the current year | 1,464,752,476.00 | 3,535,397,623.93 | 169,812,111.20 | 1,464,752,476.00 | 8,558,902,441.80 | 15,193,617,128.93 | |||||
3.Increases/decreases in the current year (“-” for decreases) | 171,419,326.19 | -35,425,805.94 | 727,041,740.55 | 863,035,260.80 | |||||||
(1) Other comprehensive income | -35,425,805.94 | 2,557,982,335.55 | 2,522,556,529.61 | ||||||||
(2)Capital contributed or reduced by owners | |||||||||||
Capital contributions by owners | |||||||||||
Capital contributions by other equity instruments holders |
Item
Item | Year 2018 | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Total shareholders' equity | |||
Preferred stock | Perpetual bond | Other | |||||||||
Amounts of share-based payments recognized in owners' equity | |||||||||||
Others | |||||||||||
(3)Profit distribution | -1,830,940,595.00 | -1,830,940,595.00 | |||||||||
Withdrawal of surplus reserves | |||||||||||
Profit distributed to owners (or shareholders) | -1,830,940,595.00 | -1,830,940,595.00 | |||||||||
Others | |||||||||||
(4) Internal carry-forward of owners' equity | |||||||||||
Conversion of capital reserves into paid-in capital | |||||||||||
Conversion of surplus reserves into paid-in capital | |||||||||||
Surplus reserves offsetting losses | |||||||||||
Carry-forward of retained earnings from changes in defined benefit plans | |||||||||||
Others | |||||||||||
(5) Special reserves |
Item
Item | Year 2018 | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Total shareholders' equity | |||
Preferred stock | Perpetual bond | Other | |||||||||
Withdrawal for the period | |||||||||||
Use for the period | |||||||||||
(6) Others | 171,419,326.19 | 171,419,326.19 | |||||||||
4. Balance as at 31 December of the current year | 1,464,752,476.00 | 3,706,816,950.12 | 134,386,305.26 | 1,464,752,476.00 | 9,285,944,182.35 | 16,056,652,389.73 |
For the year ended 31 December 2017
Monetary Unit: CNY
Item | Year 2017 | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Total shareholders' equity | |||
Preferred stock | Perpetual bond | Other | |||||||||
1. Balance as at 31 December of last year | 1,402,252,476.00 | 653,218,046.57 | 175,902,381.24 | 1,402,252,476.00 | 7,715,064,277.13 | 11,348,689,656.94 | |||||
Plus: adjustments for changes in accounting policies | |||||||||||
Adjustments for correction of accounting errors in prior year | |||||||||||
Others | |||||||||||
2. Balance as at January 1 of the current year | 1,402,252,476.00 | 653,218,046.57 | 175,902,381.24 | 1,402,252,476.00 | 7,715,064,277.13 | 11,348,689,656.94 |
Item
Item | Year 2017 | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Total shareholders' equity | |||
Preferred stock | Perpetual bond | Other | |||||||||
3.Increases/decreases in the current year (“-” for decreases) | 62,500,000.00 | 2,882,179,577.36 | -6,090,270.04 | 62,500,000.00 | 843,838,164.67 | 3,844,927,471.99 | |||||
(1) Other comprehensive income | -6,090,270.04 | 2,252,500,541.63 | 2,246,410,271.59 | ||||||||
(2)Capital contributed or reduced by owners | 62,500,000.00 | 2,882,179,577.36 | 2,944,679,577.36 | ||||||||
Capital contributions by owners | 62,500,000.00 | 2,882,179,577.36 | 2,944,679,577.36 | ||||||||
Capital contributions by other equity instruments holders | |||||||||||
Amounts of share-based payments recognized in owners' equity | |||||||||||
Others | |||||||||||
(3)Profit distribution | 62,500,000.00 | -1,408,662,376.96 | -1,346,162,376.96 | ||||||||
Withdrawal of surplus reserves | 62,500,000.00 | -62,500,000.00 | |||||||||
Profit distributed to owners (or shareholders) | -1,346,162,376.96 | -1,346,162,376.96 | |||||||||
Others | |||||||||||
(4) Internal carry-forward of owners' equity | |||||||||||
Conversion of capital reserves into paid-in |
Item
Item | Year 2017 | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less:Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Total shareholders' equity | |||
Preferred stock | Perpetual bond | Other | |||||||||
capital | |||||||||||
Conversion of surplus reserves into paid-in capital | |||||||||||
Surplus reserves offsetting losses | |||||||||||
Carry-forward of retained earnings from changes in defined benefit plans | |||||||||||
Others | |||||||||||
(5) Special reserves | |||||||||||
Withdrawal for the period | |||||||||||
Use for the period | |||||||||||
(6) Others | |||||||||||
4. Balance as at 31 December of the current year | 1,464,752,476.00 | 3,535,397,623.93 | 169,812,111.20 | 1,464,752,476.00 | 8,558,902,441.80 | 15,193,617,128.93 |
3. Company Profile
3.1 Company Overview
Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Company" or "the Company"),formerly known as Luzhou Laojiao Brewery, was established in March 1950. On 20September 1993, Luzhou Laojiao brewery established a joint-stock limited company withfund-raising exclusively from its operational assets. On 25 October 1993, the publicoffering of shares was approved by Sichuan Provincial People's Government and CSRCwith two documents of ChuanFuHan (1993) No.673 and FaShenZi (1993) No.108. Afterthe offering, the total share capital was 86,880,000 shares, which were listed and traded inShenzhen stock exchange on 9 May 1994.As the end of 31 December 2004, the Company's total share capital reached 841,399,673shares after multiple rights issues, among which the controlling shareholder, State AssetsManagement Bureau of Luzhou (later renamed as State-owned Assets Supervision andAdministration Commission of Luzhou, hereinafter referred to as "SASAC of Luzhou")held 585,280,800 shares of the Company, with a shareholding ratio of 69.56%.On 27 October 2005, the Company implemented the non-tradable share reform. After theimplementation, the total share capital remained unchanged, and the shareholding ratio ofSASAC of Luzhou decreased from 69.56% to 60.43%.In November 2006, the Company implemented private placement, and the total sharecapital increased from 841,399,673 shares to 871,399,673 shares. The shareholding ratioof SASAC of Luzhou decreased from 60.43% to 58.35%.As the end of 27 February 2007, SASAC of Luzhou sold 42,069,983 shares of theCompany, and after the sale, it still held 466,375,156 shares of the Company, with itsshareholding ratio reduced to 53.52%.On 19 May 2008, the Company increased 522,839,803 shares of capital stock resultingfrom capital reserve and undistributed profits transferred to increase capital stock. Afterthe implementation, the total share capital reached 1,394,239,476 shares, among which,SASAC of Luzhou held 746,200,250 shares of the Company, and the shareholding ratiowas still 53.52%.On 3 September 2009, the 300,000,000 shares and the 280,000,000 shares held bySASAC of Luzhou were separately transferred to Luzhou Laojiao Group Co., Ltd.(hereinafter referred to as the "Laojiao Group") and Luzhou Xinglu Touzi Jituan Co., Ltd.(hereinafter referred to as the "Xinglu Group"). After the transfer, Laojiao Group, XingluGroup, and SASAC of Luzhou respectively held 300,000,000 shares, 280,000,000 sharesand 166,200,250 shares. So far, Laojiao Group became the first majority shareholder andSASAC of Luzhou was the actual controller.From 6 June 2012 to 20 November 2013, the first and second phases of the Company'sequity incentive plan were exercised. After the exercise, the total share capital of theCompany was changed to 1,402,252,476 shares.
On 10 April 2014 and 18 July 2016, SASAC of Luzhou transferred 81,088,300 shares and84,000,000 shares to Laojiao Group and Xinglu Group respectively. In addition, LaojiaoGroup has increased its equity stake through the secondary market of 13,137,100 shares.So far, Laojiao Group, Xinglu Group and SASAC of Luzhou held 394,225,489 shares,365,971,142 shares and 1,111,930 shares respectively, with the shareholding ratios of28.11%, 26.10% and 0.08% respectively.On 23 August 2017, the Company issued CNY 62,500,000 ordinary shares (A shares)privately, raising a total capital of CNY 3,000,000,000. After the additional issuance, thetotal capital stock of the Company was changed to 1,464,752,476 shares. In addition,from 2017 to 2018, Laojiao Group decreased 13,137,100 shares that were increasedthrough the secondary market from April 2014 to December 2015. After share reduction,Laojiao Group, Xinglu Group and SASAC of Luzhou held 381,088,389 shares,365,971,142 shares and 1,111,930 shares respectively, with the shareholding ratios of26.02%, 24.99% and 0.08% respectively. Laojiao Group still was the first majorityshareholder and SASAC of Luzhou still was the actual controller.
3.2 Registered address of the Company, company type, and headquarteraddress
Registered address and headquarter address of the Company are located in SichuanLuzhou Laojiao Square and company type is other incorporated company (Listed).
3.3 Business nature of the Company and main business activity
Industry of the Company is food and beverage manufacturing industry.The main activity are research and development, production and sales of “National Cellar1573”,”Luzhou Laojiao” and other liquor series.The main products are: “National Cellar 1573 Series”,”Century-old Luzhou LaojiaoJiaoling Series” ,”Luzhou Laojiao Tequ”,”Touqu”,”Erqu” and other liquor series.
3.4 The name of the controlling shareholder and the ultimate substantivecontroller
The controlling shareholder is Luzhou Laojiao Group Co., Ltd.; the ultimate substantivecontrol is SASAC of Luzhou.
3.5 Approval and submission of the financial report and its date
The financial report is approved and submitted by the board of directors of the Companyon 25 April 2019.
3.6 Consolidated financial statement scope and their changes
(1) The 24 subsidiaries included in the consolidated financial statements for the currentperiod are listed as follows:
Name of subsidiary
Name of subsidiary | Abbreviation | Type of subsidiary | Shareholding proportion(%) | Voting rights (%) |
Luzhou Laojiao Brewing Co., Ltd. | Brewing company | A wholly-owned subsidiary | 100.00 | 100.00 |
Name of subsidiary
Name of subsidiary | Abbreviation | Type of subsidiary | Shareholding proportion(%) | Voting rights (%) |
Luzhou Boda Brewing Co., Ltd. | Boda brewing | A wholly-owned subsidiary of Brewing company | 100.00 | 100.00 |
Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Red sorghum company | A controlling subsidiary of Brewing company | 60.00 | 60.00 |
Sales Company of Luzhou Laojiao Co., Ltd. | Sales company | A wholly-owned subsidiary | 100.00 | 100.00 |
Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Nostalgic company | A wholly-owned subsidiary of Sales company | 100.00 | 100.00 |
Luzhou Laojiao Custom Liquor Co., Ltd. Note1 | Custom liquor company | A controlling subsidiary of Sales company | 15.00 | 15.00 |
Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Selected company | A wholly-owned subsidiary of Sales company | 100.00 | 100.00 |
Luzhou Dingli Liquor Industry Co., Ltd. | Dingli company | A wholly-owned subsidiary of Sales company | 100.00 | 100.00 |
Luzhou Dingyi Liquor Industry Sales Co., Ltd. | Dingyi company | A wholly-owned subsidiary of Sales company | 100.00 | 100.00 |
Luzhou Dinghao Liquor Industry Sales Co., Ltd. | Dinghao company | A wholly-owned subsidiary of Sales company | 100.00 | 100.00 |
Luzhou Laojiao Import and Export trade Co., Ltd. | Import and export company | A wholly-owned subsidiary of Sales company | 100.00 | 100.00 |
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Boda marketing | A controlling subsidiary of Sales company | 75.00 | 75.00 |
Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. | Bosheng Hengxiang | A wholly-owned subsidiary of Boda marketing | 75.00 | 75.00 |
Luzhou Laojiao Guibin Service Co.,Ltd. Note2 | Guibin company | A controlling subsidiary of Boda marketing | 95.00 | 95.00 |
Luzhou Laojiao fruit wine industry Co., Ltd. Note3 | Fruit wine industry | A controlling subsidiary of Sales company | 41.00 | 41.00 |
Mingjiang Co., Ltd. Note4 | Mingjiang company | A controlling subsidiary of Sales company | 54.00 | 54.00 |
Luzhou Pinchuang Technology Co., Ltd. | Pinchuang company | A controlling subsidiary | 95.00 | 95.00 |
Luzhou Laojiao Tourism Culture Co., Ltd. | Tourism culture | A wholly-owned subsidiary | 100.00 | 100.00 |
Luzhou Laojiao International Development(Hong Kong)Co., Ltd. | Hong Kong company | A controlling subsidiary | 55.00 | 55.00 |
Luzhou Laojiao Electronic Commerce Co., Ltd. Note5 | Electronic commerce | A controlling subsidiary | 90.00 | 90.00 |
Luzhou Laojiao Baitiao Liquor | Baitiao liquor industry | A controlling subsidiary of | 35.00 | 35.00 |
Name of subsidiary
Name of subsidiary | Abbreviation | Type of subsidiary | Shareholding proportion(%) | Voting rights (%) |
Industry Co., Ltd. Note6 | Electronic commerce | |||
Luzhou Baonuo Biotechnology Co., Ltd. | Baonuo biotechnology | A wholly-owned subsidiary | 100.00 | 100.00 |
Luzhou Laojiao Health Liquor Industry Co.,Ltd. | Health Liquor Industry | A wholly-owned subsidiary | 100.00 | 100.00 |
Luzhou Laojiao Health Sales Co., Ltd. | Health sales | A wholly-owned subsidiary of Health Liquor Industry | 100.00 | 100.00 |
Note 1: Although the Company holds less than 51% of the equity of Custom liquor company, among thefive members of the board of directors, the Company has sent three people, and the chairman of theboard (legal representative) is the director sent by the Company. The Company has actual control overCustom liquor company, so it is included in the scope of consolidation.Note 2: Guibin company is a controlling subsidiary of Boda Marketing. The Company has decided tocancel Guibin company due to the increasingly prominent limitations of the special circulation channelmodel of single product. Guibin company has obtained the notice of approval of cancellation registrationon 12 March 2018.Note 3: 1.On 12 September 2017, the 21
st
meeting of the eighth board of directors reviewed andapproved the “Proposal about establishment of Luzhou Laojiao fruit wine industry Co., Ltd. invested bysubsidiary”. The joint investment establishment of Luzhou Laojiao fruit wine industry Co., Ltd. was aboutto be implemented by Sales Company, a wholly owned subsidiary of the Company, and Sichuan Meihewine Co., Ltd. and Luzhou Juhe wine development Co., Ltd.. In January 2018, the fruit wine industry wasregistered and established with a registered capital of CNY 50 million. Sales Company, a wholly-ownedsubsidiary of the Company, subscribed CNY 20.5 million of investment and held 41% of the shares.Although the shareholding ratio of the Company is less than 51%, among the five members of the boardof directors, the Company has sent three members, and the chairman of the board (legal representative)is the director sent by the Company. The Company has the actual control over the company, so it isincluded in the scope of consolidation.Note 4: 2.On 12 September 2017, the 21
st
meeting of the eighth board of directors of the Companyreviewed and approved the "Proposal on the establishment of Mingjiang Co., Ltd. By subsidiaryinvestment", and Sales Company, a wholly-owned subsidiary of the Company, planned to establishMingjiang company in the United States with Luzhou Jiutai Liquor Sales Co., Ltd.. In January 2018,Mingjiang company was registered and established with a registered capital of USD 6 million. SalesCompany, a wholly-owned subsidiary of the Company, subscribed USD 3.24 million and held 54% of theshares. In addition, among the five members of the board of directors, the Company has sent threepeople to have actual control over the company, so it is included in the scope of consolidation.Note 5: On 29 May 2018, the 28
st
meeting of the eighth board of directors of the Company reviewed andapproved the “Proposal on partial equity acquisition of Luzhou Laojiao Electronic Commerce Co., Ltd.”.The Company decided to use self-financed fund to purchase the subscription right of minorityshareholders of Electronic commerce based on evaluated price. By December 31, 2018, the part of thepurchase has been completed.Note 6: Although the Company holds less than 51% of the equity in Baitiao liquor industry, among thefive members of the board of directors, the Company has sent three people and the Company has actualcontrol over Baitiao liquor industry, so it is included in the scope of consolidation.
Details of the subsidiaries incorporated into the consolidated financial statements show on“7. Interests in subsidiaries”
(2) Subsidiaries that are newly incorporated into the scope of consolidation in this period
Name
Name | Reason |
Luzhou Laojiao Fruit Wine Industry Co., Ltd. | Establishment |
Mingjiang Co., Ltd. | Establishment |
(3) Liquidation and cancellation for subsidiaries in this period
Name | Reason |
Luzhou Laojiao Guibin Service Co.,Ltd. | Liquidation and cancellation |
Details of changes in the scope of consolidation show on “6. Changes in consolidatedscope”.
4. Basis of preparation of financial statements
4.1. Basis of preparation of financial statements
The Company has prepared its financial statements on a going concern basis, and thepreparation is based on actual transactions and events in compliance with AccountingStandards for Business Enterprises and relevant guidance and explanation (the followingcalled the ASBE) issued by Ministry of Finance, and Rules on Company InformationDisclosure and Preparation of Publicly Issued Securities No.15- General Rules onFinancial Reporting Rules (2014 Revision) issued by CSRC.
4.2. Going concern
The Company’s business activities have adequate financial support. Based on the currentinformation obtained by the Company, comprehensively considering factors such asmacro-policy risk, market operation risk, current or long-term profitability, debt repaymentability of the Company, as well as its resource of financial support, the Company believesthat it is reasonable to prepare the financial statements on a going concern basis andthere are no events or situations resulting in significant doubts over going concern for atleast 12 months.
5. Significant accounting policies and accounting estimates
Whether the Company needs to comply with the requirement of special industryNoThe notes of detailed accounting policies and accounting estimates:
No
5.1 The declaration about compliance with ASBE
The financial statements of the Company have been prepared in accordance with ASBE,and present truly and completely, the financial position as of 31st December 2018, and theCompany’s and results of operations and cash flows for the year then ended. In addition,
in all material respects, the financial statements of the Company comply with disclosurerequirements of the financial statements and their notes in accordance with Rules onCompany Information Disclosure and Preparation of Publicly Issued Securities No.15-General Rules on Financial Reporting Rules revised by CSRC in 2014.
5.2 Accounting period
The Company adopts the calendar year as its accounting year, i.e. from 1st January to31st December.
5.3 Business Cycle
The Company’s business cycle is 12 months.
5.4 Functional currency
The Company has adopted China Yuan (CNY) as functional currency.
5.5 The accounting treatment of business combinations involvingenterprises under common control and business combinations notinvolving enterprises under common control
(1) Business combination under common controlAssets and liabilities obtained by the Company from the combine through businesscombination under common control shall be measured at the book value as stated in theconsolidated financial statements of ultimate controlling party at the combination date.
The share of the book value of the merged party’s owner’s equity in the consolidatedfinancial statements is taken as the initial investment cost of long-term equity investmentsin individual financial statements. The capital reserve (stock premium or capital premium)
is adjusted according to the difference between the book value of net asset acquiredthrough combination and the book value of consideration paid for the combination (or totalpar value of shares issued). If the capital reserve (stock premium or capital premium) isinsufficient to offset, the retained earnings shall be adjusted.
(2) Business combination not under common controlAssets paid, liabilities incurred or assumed and the equity securities issued asconsideration for combination shall be measured based on fair value on the acquisitiondate, the difference between fair value and its book value shall be included in current profitand loss. The Company shall recognize the difference of the combination costs in excessof the fair value of the net identifiable asset acquired from the acquiree throughcombination as goodwill. After the review, if the combination costs are still in short of thefair value of the net identifiable asset acquired from the acquiree through combination,include the difference in the current profit and loss.Fees, commissions, and other transaction expenses paid on issuance of equity securitiesas combination consideration in the business combination shall be included in the initialmeasurement amount of equity securities.
5.6 Preparation of consolidated financial statements
(1) Consolidated Financial Statement ScopeThe scope of the Company’s consolidated financial statements is based on control, and allsubsidiaries controlled are included in the consolidation scope of the consolidatedfinancial statements.
(2) Consolidation proceduresThe consolidated financial statements are based on the financial statements of theCompany and its subsidiaries, and are prepared by the parent company with otherrelevant information. When preparing consolidated financial statement, the Companyconsiders the Group as a accounting entity, adopts unified accounting policies, andapplies the requirements of ASBE related to recognition, measurement and presentationto reflect the Group’s financial position, operating results and cash flows.
All the subsidiaries within the consolidation scope of consolidated financial statementsshall adopt the same accounting policies and accounting periods as those of theCompany. If the accounting policies or accounting periods of a subsidiary are differentfrom those of the Company, the financial statements of the subsidiary, upon preparation ofconsolidated financial statements, shall be made necessary adjustment based on its ownaccounting policies and accounting periods of the Company.
For subsidiaries acquired from the business combination not under common control, thefinancial statements shall be adjusted on the basis of the fair value of identifiable netassets on the date of purchase. For the subsidiary acquired from the businesscombination under common control, its assets and liabilities (including the goodwill formedby the acquisition of the subsidiary by the ultimate controlling party) shall be adjusted onthe basis of the book value in the consolidated statements of the ultimate controlling party.
The portion of a subsidiary’s equity, the current net profit and loss of subsidiaries, and thecurrent comprehensive income attributable to non-controlling interests shall be separatelypresented as non-controlling interests in consolidated balance sheet within owners' equity,below the net profit line item and below the total comprehensive income line item in theconsolidated income statement respectively. When the amount of current loss attributableto non-controlling shareholders of a subsidiary exceeds the balance of the non-controllingshareholders’ portion in the opening balance of owner's equity of the subsidiary, theexcess shall be allocated against the non-controlling interests.
Acquisition of subsidiaries or businessDuring the reporting period, if the Company acquires subsidiaries from the businesscombination under common control, the opening balance in the consolidated balancesheet shall be adjusted. The income, expenses and profits of the newly acquiredsubsidiaries from the beginning to the end of the reporting period shall be included in theconsolidated income statement. The cash flows of the newly acquired subsidiaries fromthe beginning to the end of the reporting period shall be included in the consolidated
statement of cash flows. At the same time, the relevant items of the comparativeinformation shall be adjusted as the combined entity existed since the control point of theultimate controlling party.
If the Company can control the investee from the business combination under commoncontrol due to additional investment or other reasons, the parties involved in the combineshall be deemed to adjust in the current state when the ultimate controlling party starts tocontrol them. For the equity investment before obtaining control of the investee, therecognized relevant profit or loss and other comprehensive income and other changes innet assets between the later of acquisition date of previous equity and the date on whichboth the investor and the investee are under common control and the combination dateshall respectively write-down the beginning retained earnings or current profits and lossesduring the period of comparative information.
During the reporting period, if the Company acquires subsidiaries from the businesscombination not under common control, the opening balance in the consolidated balancesheet shall not be adjusted. The income, expenses and profits of the newly acquiredsubsidiaries from the acquisition date to the end of the reporting period shall be includedin the consolidated income statement. The cash flows of the newly acquired subsidiariesfrom the acquisition date to the end of the reporting period shall be included in theconsolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee not undercommon control due to additional investment or other reasons, the Company shallre-measure the previously held equity interests to its fair value on the acquisition date,and the difference shall be recognized as investment income.
When the previously held equity investment is accounted for under equity method, anyother comprehensive income previously recognized and other equity changes(excluding other comprehensive, net profit and loss and profit distribution ) in relation tothe acquiree’s equity changes shall be transferred to profit and loss for the current periodwhen acquisition took place, except for other comprehensive income resulting fromchanges in net liabilities or net assets due to re-measurement of defined benefit plan byinvestee.
Disposal of subsidiaries and businessGeneral treatmentsDuring the reporting period, if the Company disposes subsidiaries, the income, expensesand profits of the newly disposed subsidiaries from the beginning to the disposal dateshall be included in the consolidated income statement. The cash flows from thebeginning to the disposal date shall be included in the consolidated statement of cashflows.
In case of loss of control over the investee due to partial disposal of the equity investment
or other reasons, the Company shall re-measure the remaining equity investment at itsfair value at the date of loss of control. The amount of the consideration obtained from thedisposal of the equity and the fair value of the remaining equity, minus the net assetshares calculated continuously from the acquisition date based on the previousshareholding proportion and the goodwill, the difference shall be included in theinvestment income of the period when the control is lost.
Other comprehensive income related to the former subsidiary’s equity investment of orother changes in owners' equity excluding net profit and loss, other comprehensiveincome and profit distribution shall be transferred to investment income for the currentperiod when control is lost. Other comprehensive income resulting from changes in netliabilities or net assets due to re-measurement of defined benefit plan by investee isexcluded.
Disposal of subsidiaries by stepIf the Company loses control of a subsidiary is through multiple transactions by steps, theterms, conditions and economic impact of the disposal transaction shall be considered.When one or more of the following conditions may indicate that multiple transactionsshould be treated as a package of transactions for accounting treatment:
a.These arrangements were entered into at the same time or in contemplation ofeach other;b.These arrangements work together to achieve an overall commercial effect;c.The occurrence of one arrangement depends on the occurrence of at least oneother arrangement;d.One arrangement alone is not economically justified, but it is economically justifiedwhen considered together with other arrangements
If the transactions of the disposal of the equity investment of the subsidiary until the loss ofcontrol belong to a package transaction, the Company shall account for as a transaction;However, the difference between each disposal consideration received and thecorresponding proportion of the subsidiary’s net assets before the loss of control shall berecognized as other comprehensive income in the consolidated financial statements andtransferred into the profit and loss of the current period when the control is lost.
If the transactions from the disposal of the equity investment of the subsidiary to the lossof control are not considered as a package transactions, the accounting treatment shall beconducted according to the relevant policies on the partial disposal of the equityinvestment of the subsidiary where control is retained before the loss of control. When thecontrol is lost, the disposal shall be accounted for according to the general treatment.
Purchase of non-controlling interestsThe difference between the increase in the cost of long-term equity investment result fromacquisition of non-controlling shareholders and the share of net assets of the subsidiarycalculated continuously from the acquisition date or combination date based on newly
shareholding proportion shall be adjusted to equity (share) premium of capital reserves inthe consolidated balance sheet. If the capital reserve is insufficient, any excess shall beadjusted against retained earnings.
Partial disposals of equity investment in subsidiaries without loss of controlWhen the Company disposes of a portion of a long-term equity investment in a subsidiarywithout loss of control, the difference between disposal consideration and net assets ofthe subsidiary calculated continuously since the acquisition date or the combination daterelated to the disposal of long-term equity investment shall be adjusted to equity (share)premium of capital reserves in the consolidated balance sheet. If the capital reserve isinsufficient, any excess shall be adjusted against retained earnings.
5.7 Classification of joint venture arrangements and the accountingtreatment method of common operation
(1) Classification of joint venture arrangementsA joint arrangement is classified as either a joint operation or a joint venture according tothe structure, legal form, agreed terms and other facts and conditions of a jointarrangement.A joint arrangement that is structured through a separate vehicle is usuallyclassified as a joint venture. However, when a joint arrangement provides clear evidencethat it meets any of the following requirements and complies with applicable laws andregulations as a joint operation:
a. The legal form of the joint arrangement indicates that the parties that have jointcontrol have rights to the assets, and obligations for the liabilities, relating to thearrangement.b. The terms of the joint arrangement specify that the parties that have joint controlhave the rights to the assets, and the obligations for the liabilities, relating to thearrangement.c. Other facts and circumstances indicate that the parties that have joint control haverights to the assets, and the obligations for the liabilities, relating to the arrangement.The parties that have joint control have rights to substantially all of the output of thearrangement, and the arrangement depends on the parties that have joint control on acontinuous basis for settling the liabilities of the arrangement.
A joint arrangement that is not structured through a separate vehicle shall be classified asa joint operation. A separate vehicle refers to a separately identifiable financial structure,including separate legal entities or entities without a legal personality but recognized bystatute.
(2) Accounting by parties of a joint operatorA joint operator shall recognize the following items in relation to its interest in a jointoperation, and account for them in accordance with relevant accounting standards:
a. Its solely-held assets, and its share of any assets held jointly;b. Its solely-assumed liabilities, and its share of any liabilities incurred jointly;c. Its revenue from the sale of its share of the output arising from the joint operation;
d. Its share of the revenue from sale of the output by the joint operation; ande. Its solely-incurred expenses and its share of any expenses incurred jointly.
The Company shall only recognize the portion of the profit and loss attributable to otherparticipants in the joint venture, resulting from investment or sale of assets to the jointventure by the Company (excluding those assets constituting the business), prior to thesale of such assets to a third party. The Company shall fully recognize impairment losswhen there are any impairment loss of invested or sold assets occurring in accordancewith the ASBE No.8-Asset Impairment. The Company shall only recognize the part of theprofit and loss attributable to other participants in the joint venture before selling theassets and other assets purchased from the joint venture (excluding those assetsconstituting the business) to a third party. When the impairment loss of the purchasedassets is in accordance with the ASBE No.8-Asset Impairment, the Company shallrecognize such losses according to its share. When the Company does not have commoncontrol over the joint venture, if the Company enjoys the assets related to the joint ventureand assumes the liabilities related to the joint venture, the accounting treatment shall beconducted according to the above principles. Otherwise, the accounting treatment shall beconducted in accordance with the relevant accounting standards.
5.8 Cash and cash equivalents
When preparing the cash flow statement, the Company recognizes cash on hand anddeposits that can be readily withdrawn on demand as cash. Cash equivalents are theCompany’s short-term (due within 3 months from purchase date), highly liquidinvestments that are readily convertible to known amounts of cash and which are subjectto an insignificant risk of changes in value. Restricted bank deposits are not recognized ascash and cash equivalents in the cash flow statement.
5.9 Foreign currency transactions and translation of foreign currencystatements
(1) Foreign currency transactionsAt the time of initial recognition of a foreign currency transaction of the Company, theamount in the foreign currency shall be translated into the amount in CNY currency at thespot exchange rate of the transaction date. For the monetary items of foreign currencies,the translation is done according to spot rate of the balance sheet date. The exchangedifference generated from the difference of spot rate of the current balance sheet date andthe time of initial recognition of a foreign currency or the previous balance sheet date ischarged to the profit or loss of the current period except that the exchange differencegenerated from foreign currency borrowings relating to assets of which the acquisition orproduction satisfies the capitalization conditions is capitalized. Non-monetary itemsmeasured at fair value that is reflected in foreign currency at the end of the period, theCompany shall firstly translate the foreign currency into the amount in functional currencyat the spot exchange rate on the date when the fair value is determined, and thencompare it with the original functional currency amount. Difference between the translatedfunctional currency amount and the original functional currency amount is treated as profit
or loss from changes in fair value (including changes in exchange rate) and is recognizedin current profit and loss. If there is a non-monetary item of available-for-sale financialassets, the differences are recorded into other comprehensive income.
(2) Translation of foreign currency statementsAssets and liabilities in the balance sheets shall be translated at the spot exchange rateson balance sheet date. Shareholders’ equity items, except for the item of "undistributedprofits", are translated at the spot exchange rates on the dates when the transactionsoccur. Revenue and expense items in the income statement are translated at the spotexchange rates on the dates when the transactions occur or at the exchange ratedetermined in a systematical and reasonable method and similar to the spot exchangerate on the day when the transactions occur. Differences arising from the abovetranslations of foreign currency financial statements are separately listed under othercomprehensive income in the consolidated balance sheet. If the overseas business ispartly disposed of, the foreign currency financial statements exchange difference shall becalculated in proportion to the percentage of disposal and transferred to gain or loss ondisposal for the current period. Foreign currency cash flow and cash flow of foreignsubsidiaries shall be translated at approximate exchange rate of spot rate on the date ofcash flow.
5.10 Financial instruments
(1) Classification of financial assets and financial liabilitiesAt the time of initial recognition, financial assets shall be classified into the following fourcategories:
Financial assets measured at fair value through current profit or loss;Held-to-maturity investments;Loans and receivables; andAvailable-for-sale financial assets.
At the time of initial recognition, financial liabilities shall be classified into the following twocategories:
Financial liabilities measured at fair value through current profit and loss (includingfinancial liabilities held for trading and financial liabilities directly designated to bemeasured at fair value through current profit and loss); andOther financial liabilities.
(2) Recognition basis and measurement method of financial instrumentsWhen the Company becomes a party to a financial instrument, it shall recognize afinancial asset or financial liability.At the time of initial recognition of financial assets shall be measured at fair value whiletheir subsequent measurement of the four categories are different.
For financial assets or financial liabilities measured at fair value through current profitand loss, they are initially measured at the amount of fair value upon acquisition, andrelevant transaction expenses are included in the current profit and loss when
incurred. Cash dividends or bond interest gained during the holding period shall berecognized as investment income. On the balance sheet date, they shall bemeasured at fair values and the changes in their fair values shall be included incurrent profit or loss. When disposing of a financial asset held for trading, theCompany recognizes the difference between the payment actually received and thebook value of the financial asset held for trading on the disposal date, and transfersthe accumulative amount previously included in profit or loss on changes in fair valueto the investment income.
For available-for-sale financial assets, they are initially recognized at the sum of fairvalue upon acquisition and relevant transaction expenses. Cash dividends or bondinterest gained during the holding period shall be recognized as investment income.On the balance sheet date, the available-for-sale financial assets are measured atfair values and the changes in their fair values are included in other comprehensiveincome. Upon disposal, the difference between the payment actually received andthe book value of an available-for-sale financial asset shall be included in investmentincome; and meanwhile, the amount arising from the accumulated changes in fairvalue, which have been previously included in other comprehensive income, shall betransferred out and included in the investment profit or loss. However, if there is aequity instrument investment that cannot be reliably measured at fair value in anactive market without quotation and a derivative financial assets linked with the equityinstrument investment and settled with it, they shall be measured at their costs.
For receivables arising from external sales of goods or rendering of service according,their initial recognition amounts shall be the contract price or agreement price. Uponrecovery or disposal, the difference between the price received and the book value ofloans and receivables are included in the current profit and loss.
For held-to-maturity investments, they are initially measured at the total amount oftheir fair values upon acquisition and related transaction expenses. Interest income iscalculated and recognized during the holding period according to the amortized costand effective interest rates, and included in the investment income. Upon disposal,the difference between the actual proceeds and the book value of the held-to-maturityinvestment is recognized as investment income.
Financial liabilities measured at fair value through current profit and loss are measured atfair when they are acquired. Relevant transaction costs are directly included in the currentprofit and loss. It shall be subsequently measured at the fair value during the holdingperiod. For other financial liabilities, the sum of the fair value and relevant transactioncosts shall be taken as the initial amount of recognition at the time of acquisition. It shallbe subsequently measured at amortized cost with effective interest rate method during theholding period.
(3) The determination of the fair value of financial assets and financial liabilities
For financial assets or financial liabilities in an active market, the fair value shall bedetermined by quotation in the active market; Where there is no active market, the fairvalue shall be determined by adopting valuation technology; The fair value of the initiallyacquired or derived financial assets or the assumed financial liabilities shall be determinedbased on the market transaction price.
(4) Test and extraction method of impairment provision of financial assetsOn the balance sheet date, the Company shall check the book values of its financialassets (excluding the financial assets measured at fair value through current profit andloss), and recognize impairment losses on the financial assets with objective evidence ofimpairment, and provide reserves for the impairment.
The impairment test can be conducted separately for the individually significant financialassets and individually insignificant financial assets, or the impairment test can beincluded in the financial asset portfolio with similar credit risk characteristics.
For loans and receivables and held-to-maturity investments, the impairment loss isrecognized at the difference between its book value and its present value of estimatedfuture cash flows. If there is objective evidence to show that its value has been reversed,the previously recognized impairment loss can be reversed into the current profit and loss.
When the impairment of the available-for-sale financial asset occurs, even if the financialasset is not derecognized, the accumulated loss caused by the decrease of fair valuepreviously directly included in the owner's equity shall be transferred out and included inthe current profit and loss. For the available-for-sale debt instrument, the previousimpairment provision can be reversed into the current profit and loss when the fair valuerises subsequently. For available-for-sale equity instrument investment, the impairmentprovision shall not be reversed through the profit and loss.
(5) Recognition and measurement of transfer of financial assetsIf nearly all of the risks and rewards of ownership of the financial assets have beentransferred to the transferee, the Company derecognizes the financial assets; If nearly allof the risks and rewards of ownership of the financial assets are retained, the Companyshall not derecognize the financial assets. When the Company neither transfers norretains nearly all of the risks and rewards of ownership of the financial assets, if theCompany gives up control of the financial asset, the Company derecognizes the financialassets; if not, the relevant financial assets shall be recognized according to the degree ofcontinuing involvement in the transferred financial assets, and the relevant liabilities shallbe recognized accordingly.
If the transfer of financial asset satisfies the criteria of derecognition, the differencebetween the amounts of the following two items shall be included in the current profit andloss: The book value of the transferred financial asset; The sum of the considerationreceived from the transfer and the accumulated amount of the changes in fair value
originally and directly included in other comprehensive income (the situation where thefinancial asset transferred is an available-for-sale financial asset is involved in).
If the partial transfer of financial asset satisfies the criteria of derecognition, the entirebook value of the transferred financial asset shall be divided between the derecognizedand recognized parts according to their respective fair values and the difference betweenthe amounts of the following two items shall be included in the current profit and loss: Thebook value of derecognized part; The sum of the consideration for the derecognized partand the portion of derecognition corresponding to the accumulated amount of the changesin fair value originally and directly included in other comprehensive income (the situationwhere the financial asset transferred is an available-for-sale financial asset is involved in).
5.11 Notes and accounts receivables
(1) Recognition criteria and provision method of bad debts of individually significantreceivables
Recognition criteria of individuallysignificant receivables
Recognition criteria of individually significant receivables | Individually significant receivables refer to accounts receivable, its closing balances are over CNY 5 million, other receivable, its closing balances are over CNY 3 million, and Individually overdue notes receivable, repayments and long-term receivables, its closing balances are over CNY 5 million. |
Provision method of individually significant receivables | The Company obtains the debtor's solvency information to analyze the possible bad debt loss; the Company separately conducts impairment tests on the individually significant receivables that relevant debtor's solvency information cannot be obtained (or cost is too high). These receivables shall be divided into several portfolios according to similar credit risk characteristics, and then the impairment loss is recognized according to the closing balances of the portfolio on the balance sheet date in accordance with a certain proportion, and the bad debt provision is recognized. |
(2) Receivables whose bad debt provisions are made by portfolio
Portfolio name | Provision method of bad debt |
Receivables that are not individually significant but whose risk is significant according to the portfolio of credit risk characteristics | Aging analysis method |
Other non-significant receivables | Aging analysis method |
Among portfolios, adopting aging analysis method:
√ Applicable ? N/A
Aging | Proportion of provision for accounts receivable | Proportion of provision for other receivables |
Within 1 Year (Inclusive) | 5.00% | 5.00% |
1-2 years | 10.00% | 10.00% |
Aging
Aging | Proportion of provision for accounts receivable | Proportion of provision for other receivables |
2-3 Years | 20.00% | 20.00% |
3-4 Years | 40.00% | 40.00% |
4-5 Years | 80.00% | 80.00% |
Over 5 Years | 100.00% | 100.00% |
Among portfolios, adopting percentage of balance method:
? Applicable √ N/A
Among portfolios, adopting other method:
?Applicable √ N/A
(3) Accounts receivable that are individually insignificant but separately accruedbad debt provisions
Reason for making provision for bad debt separately | The bad debt provision made by portfolio is obviously lower than the possible loss of this receivable. |
Provision method of bad debt | Impairment loss is recognized by the difference between the present value of its future cash flow and its book value. |
5.12 Inventory
Whether the Company needs to comply with the disclosure requirement of specialindustry.No(1) Classification of inventoryInventories are classified as: raw materials, goods in progress, semi-finished goods, stockcommodities, dispatched inventories, revolving materials (including packing materials andlow-cost consumables).
(2) Measurement method of dispatched inventoriesThe standard cost is used for daily accounting of raw materials, and the difference ofmaterial cost should be carried forward on a monthly basis to adjust the standard cost intothe actual cost;The goods in progress and semi-finished goods shall be accountedaccording to the actual cost, and the weighted average method shall be used when theyare received and delivered. The actual cost of the inventory at the end of the month aboveshall be taken as the standard cost, and the delivery shall be priced according to thestandard cost. At the end of the month, the standard cost of the inventory at the end of themonth shall be adjusted into the actual cost through the cost-sharing difference.
(3) Basis to determine net realizable values of inventories and method of provision forstock obsolescenceAt the end of the period, inventory is measured according to the lower of cost and netrealizable value. The difference between inventory cost and net realizable value is higher
than the provision for stock obsolescence , which is recorded into current profit and loss.For inventories that are related to product ranges produced and sold in the same district orused for the same or similar ultimate purpose and are difficult to be measured separatelyfrom other inventories, the Company provides for stock obsolescence as a whole. Forinventories that have large quantities but low value, the Company provides for stockobsolescence on a category basis.The materials held for production shall be measured at cost if the net realizable value ofthe finished products is higher than the cost. If a decline in the value of materials showsthat the net realizable value of the finished products is lower than the cost, the materialsshall be measured at the net realizable value.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization method of packing materials and low-cost consumablesIt is amortized in full at once.
5.13 Assets held for sale
(1) Classification of non-current assets held for sale or disposal groupsThe Company shall classify the non-current assets or disposal group meeting thefollowing conditions into the held-for-sale category: The assets (or disposal group) mustbe available for immediate sale in its present condition subject only to terms that are usualand customary for sales of such assets (or disposal groups); Its sale must be highlyprobable.; The Company has already made a decision to dispose the component and hasa commitment from the purchaser, the transfer will be completed within one year.
The non-current assets or disposal group acquired by the Company for resale shall bedivided into the held-for-sale category on the acquisition date if it meets the condition that"the sale is expected to be completed within one year" and if it is likely to meet otherconditions for the held-for-sale category within a short period (usually three months).
Due to one of the following reasons that the Company is unable to control, leading to thetransactions uncompleted with non-related party within one year, and the Company stillcommits to sale non-current assets or disposal groups, it can continue to account fornon-current assets or disposal groups as held-for-sale: the buyer or any other partyaccidentally set sale extension condition. The Company has to take action in timeaccording to these conditions and the extension problem is expected to be solved withinone year; In rare cases, the Company has taken the necessary steps and re-satisfy thehold for sale category condition within the first year for the new circumstances whichcaused it unable to complete the sale of the non-current assets or disposal group withinone year.
(2) Measurement of non-current assets or disposal groups held for sale
a. Initial measurement and subsequent measurement
When the Company measure a non-current asset or disposal group held for saleinitially or re-measure at balance sheet date subsequently, the impairment lossshould be recognized if the book value is higher than fair value less costs to sell at theamount of the difference of these two in profit and loss, the provision for assets heldfor sale need to be recognized at the same time.
For the non-current assets or disposal groups divided into held-for-sale category onthe acquisition date, they shall be measured as the lower of the initial measurementamount and the net amount after deducting the selling expenses from the fair valueunder the assumption that it is not divided into held-for-sale categories at the initialmeasurement.Except for the non-current assets or the disposal groups obtained inthe enterprise merger, the difference caused by the non-current assets or thedisposal groups taking the net amount after the fair value minus the selling expensesas the initial measurement amount shall be recorded into the current profit and loss.
For the impairment of disposal group, it should write off goodwill if existing, and thenwrite down the related assets proportionally. Depreciation or amortization shouldcease for the non-current asset held for sale. Interest and other charges on liabilitiesin the disposal groups held for sale continue to be recognized.
b. Accounting treatment of reversal of impairment lossIf the net amount of the non-current assets held for sale on the subsequent balancesheet date increases after the fair value minus the selling expenses, the amountpreviously written down shall be reversed, and the amount of the impairment lossrecognized after being classified as the held-for-sale shall be reversed, and thereversed amount shall be included in the current profit and loss. The impairment lossrecognized before the classification of the held-for-sale shall not be reversed.
If the net amount of the disposal groups held for sale on the subsequent balancesheet date increases after the fair value deducting the selling expenses, the amountpreviously written down shall be reversed, and the amount of the impairment lossrecognized as non-current assets after being classified as the held-for-sale shall bereversed, and the reversed amount shall be included in the current profit and loss.The book value of the goodwill that has been written down and the impairment lossesrecognized before the classification of the held-for-sale shall not be reversed.
The subsequent reversed amount of the impairment loss recognized by the disposalgroups held for sale shall be increased in proportion to the book value of non-currentassets except goodwill in the disposal groups.
c. The accounting treatment that does not continue to be classified as held-for-saleand the termination of recognitionNon-current assets or disposal groups that are no longer divided into held-for-salecategory or non-current assets are removed from disposal groups held for sale
because of no longer meeting the condition of classification of held-for-sale, they aremeasured at lower of the following two: book value before being classified as theheld-for-sale considering depreciation, amortization or impairment that should havebeen recognized under the assumption that it is not divided into held-for-salecategories; and recoverable amount.
When terminating the recognition of the non-current assets held for sale or thedisposal groups, the unrecognized gains or losses shall be recorded into the currentprofit and loss.
5.14 Long-term equity investment
(1) Judgment criteria of common control and significant influenceCommon control on an agreement with other participants refers to the Company sharecontrol with other participants on an arrangement according to relevant conventions,which exists only when decisions about the relevant activities require the unanimousconsent of the parties sharing control. This arrangement belongs to joint venture. Wherethe joint venture arrangement is made by a separate entity and the Company is judged tohave rights to the net assets of such a separate entity according to the relevantconventions. Such a separate entity shall be regarded as a joint venture and accounted bythe equity method. If the Company is judged to be not entitled to the net assets of theseparate entity according to relevant conventions, the separate entity shall be regarded asa joint venture and the Company shall recognize the items related to the shares of thejoint venture and perform accounting treatment in accordance with relevant accountingstandards.The term ‘significant influence’ refers to the power to participate in decision-making on thefinancial and operating policies of the investee, but with no control or joint control over theformulation of these policies. The Company judges that it has a significant impact on theinvested entity through one or more of the following situations and taking all the facts andcircumstances into consideration:
Dispatch representatives to the board of directors or similar authorities of theinvestee.To participate in the financial and business policy making process of the investee.Significant transactions with the investee.Dispatch management personnel to the investee.To provide key technical data to the investee.
(2) Determination of the initial investment cost
a. Long-term equity investment resulting from combinationBusiness combination under common control:
For the long-term equity investments obtained by cash paid, non-monetary assetspaid or assumed liabilities and the equity securities issued by the acquirer, on themerger date, the initial investment cost of long-term equity investment shall be takenas the share of the owner's equity of the investee in the book value of the final controlparty's consolidated financial statements. If the investee under business combination
under common control can be controlled due to additional investment or otherreasons, the initial investment cost of long-term equity investment shall bedetermined on the merger date according to the share of the net assets of theinvestee in the book value of the final control party's consolidated financialstatements. The difference between the initial investment cost of the long-term equityinvestment on the merger date and sum of the book value of the long-term equityinvestment before the merger and the new consideration of acquiring shares on themerger date shall be recorded to adjust the equity premium. If the equity premium isinsufficient to be written down, the retained earnings shall be written down.
Business combination not under common control:The Company takes the initialinvestment cost of long-term equity investment as the merger cost determined on thepurchase date. If the investee can be controlled under business combination notunder common control due to additional investment or other reasons, the previousbook value of the equity investment held plus the sum of the newly added investmentcost shall be taken as the initial investment cost calculated according to the costmethod.
b. Long-term equity investment obtained by other meansFor the long-term equity investments obtained by cash paid, the Company recognizestheir fair value as the initial investment costs.
For the long-term equity investments acquired by the issue of equity securities, theinitial investment cost shall be the fair value of the equity securities issued.
For long-term equity investments obtained by non-monetary assets exchange, underthe condition that an exchange of non-monetary assets is of commerce nature andthe fair value of assets exchanged can be reliably measured, non-monetary assetstraded in is initially stated at the fair value of the assets traded out, unless there isconclusive evidence indicating that the fair value of the assets traded in is morereliable; if the above conditions are not satisfied, initial investment costs of long-termequity investments traded in shall be recognized at the book value of the assetstraded out and the relevant taxes and surcharges payable.
For long-term equity investments obtained by debt restructuring, the Companyrecognizes the fair value of shares of debt-for-equity swap as the initial investmentcosts.
(3) Subsequent measurement and recognition of profit and loss
a. Long-term equity investments measured under the cost methodLong-term equity investments that can control the investee are measured under thecost method. For long-term equity investments accounted at the cost method, exceptcash dividends or profits declared but not yet distributed which are included in theactual payments or the consideration actually paid for the investment, the cash
dividends or profits declared by the investee shall be recognized as the investmentincome irrespective of net profits realized by the investee before investment or afterinvestment.
b. Long-term equity investments measured under the equity methodFor the long-term equity investment which has joint control or significant influenceover the investee, the equity method is adopted for accounting. For long-term equityinvestments measured at the equity method, if the initial investment costs are higherthan the investor’s attributable share of the fair value of the investee’s identifiable netassets, no adjustment will be made to the initial costs of the long-term equityinvestments; if the initial investment costs are lower than the investor’s attributableshare of the fair value of the investee’s identifiable net assets, the difference shall berecognized in current profit and loss.
The Company shall, according to the shares of net profits and other comprehensiveincome realized by the investee that shall be enjoyed or borne by the Company,recognize the profit and loss on the investments and adjust the book value of thelong-term equity investments. When recognizing the net profits and losses and othercomprehensive income of the investee that the Company shall enjoy or bear, theCompany shall make a recognition and calculation based on the net book profits andlosses of the investee after appropriate adjustments. However, where the Company isunable to obtain the relevant information due to failure to reasonably determine thefair value of the investee’s identifiable assets, minor difference between theinvestee’s identifiable assets and the book value thereof or other reasons, the profitsor losses on the investments shall be directly calculated and recognized based on thenet book profits and losses of the investee. The Company shall calculate the partdistributed from cash dividends or profits declared by the investee andcorrespondingly reduce the book value of the long-term equity investments.
When recognizing the income from investments in associates and joint ventures, theCompany shall write off the part of incomes from internal unrealized transactionsbetween the Company and associates and joint ventures which are attributable to theCompany and recognize the profit and loss on investments on such basis. Where thelosses on internal transactions between the Company and the investee areimpairment of related assets, full amounts of such losses shall be recognized. Profitand loss from internal unrealized transactions between the Company’s subsidiariesincluded into the combination scope and associates and joint ventures shall bewritten off according to the above principles and the profit and loss on investmentsthereafter shall be recognized on such basis.
When the share of net loss of the investee attributable to the Company is recognized,it is treated in the following sequence: Firstly, write off the book value of the long-termequity investments; where the book value of the long-term equity investments isinsufficient to cover the loss, investment losses are recognized to the extent that book
value of long-term equity which form net investment in the investee in othersubstances and the book value of long-term receivables shall be written off; after allthe above treatments, if the Company still assumes additional obligation according toinvestment contracts or agreements, the obligation expected to be assumed shouldbe recognized as provision and included into the investment loss in the current period.If the investee is profitable in subsequent accounting periods, the Company shall treatthe loss in reverse order against that described above after deducting unrecognizedshare of loss: i.e. write down the book value of the recognized provision, then restorethe book value of long-term interests which substantially form net investments in theinvestee, then restore the book value of long-term investments, and recognizeinvestment income at the same time.
5.15 Investment property
Measurement model of investment propertyCost modelMethod of depreciation or amortizationInvestment property is the property that is held to earn rent or capital appreciation or bothand can be measured and sold separately. The Company’s investment property includesland use right already rent, land use right held for appreciation and then sold, andbuildings already rent.
(1) Initial Recognition
When the Company can obtain the rental income or value-added income related to theinvestment property and the cost of the investment property that can be measured reliably,the Company will initially measure it according to the actual expenditure of purchase orconstruction:
The cost of the purchased investment property includes the purchase price and relatedtaxes directly attributable to the asset;The cost of self-built investment property consists of the necessary expenses incurredbefore the asset reaches the intended use condition;The cost of the investment property obtained by other means shall be recognized inaccordance with relevant accounting standards.
(2) Subsequent measurement
In general, the Company adopts the cost model to measure the follow-up expenditure ofinvestment property. The depreciation or amortization of investment property shall becarried out in accordance with the accounting policies for the Company's fixed assets orintangible assets.
If there is solid evidence suggests that the investment property acquired can be measuredat fair value continuously and reliably, the Company can use fair value model forsubsequent measurement. For the investment property measured at fair value model, theCompany does not provide depreciation or amortization and adjusts its book value basedon the fair value of investment property at the balance sheet date. The difference between
the fair value and book value is recorded into current profit or loss.
(3) When the Company changes the use of investment property, the relevant investmentproperty will be transferred to other assets.
5.16 Fixed assets
(1) Recognition of fixed assetsFixed assets refer to tangible assets held for the purpose of producing commodities,providing services, renting or business management with useful life exceeding oneaccounting year. Fixed assets are recognized when the following criteria are satisfiedsimultaneously: It is probable that the economic benefits relating to the fixed assets willflow into the Company; The cost of the fixed assets can be measured reliably.
(2) Depreciation of fixed assets
Category
Category | Depreciation method | Estimated useful life (Years) | Estimated residual value rate (%) | Annual depreciation rate(%) |
Buildings and Constructions | Straight-line method | 10-35 | 5 | 9.50-2.71 |
Special equipment | Straight-line method | 5-30 | 5 | 19.00-3.17 |
Universal equipment | Straight-line method | 4-15 | 5 | 23.75-6.33 |
Transportation equipment | Straight-line method | 6 | 5 | 15.83 |
Other equipment | Straight-line method | 4-16 | 5 | 23.75-5.94 |
(3) Recognition standard, valuation method and depreciation method for fixed assetsacquired under financing leaseIf the purchase price of a fixed asset exceeds the normal credit conditions and thepayment is delayed, which has a financing nature, the cost of the fixed asset shall bedetermined on the basis of the present value of the purchase price. The differencebetween the actual price paid and the present value of the purchase price, unless it shouldbe capitalized, shall be recorded into the current profit and loss in the credit period. Forfixed assets acquired under financing lease, at the inception of the lease, the Companyshall recognizes it at the lower of the fair value of the leased assets or the present value ofthe minimum lease payments.Adapt the same depreciation method as the one used onother fixed assets owned by the Company. If there is reasonable assurance that theCompany will obtain the ownership of the leased assets when the lease term expires, theleased assets should be depreciated over its useful life; if there is no reasonableassurance that the Company will obtain the ownership of the leased assets when thelease term expires, the leased assets should be depreciated over the shorter of the leaseterm or the useful life of the leased assets.
5.17 Construction in progress
Whether the Company needs to comply with the disclosure requirement of specialindustry.No
(1) Construction in progress refers to various construction and installation works carriedout for the construction or repair of fixed assets, including the actual expenditure incurredin new construction, reconstruction and expansion, and the net value of fixed assetstransferred from the reconstruction and expansion projects.(2) Construction in progress is accounted on an individual project basis with actual costvaluation method. The borrowing costs incurred before the projects reach the intendeduse condition shall be included in the project cost. The fixed assets shall be carriedforward in the month when the project is qualified for acceptance and delivery for use. Forthose that have reached the intended use condition but have not yet completed the finalaccount, from the date of reaching the intended use condition, according to the projectbudget, construction cost or the actual cost of the project, the cost transferred to the fixedassets shall be determined according to the estimated value, and the depreciation shall berecognized; After the completion of the final account, the original provisional value shall beadjusted according to the actual cost, but the amount of depreciation accrued shall not beadjusted.(3) The loan interest and related expenses incurred during the construction period shall becapitalized into the cost of the construction in Progress.(4) On the balance sheet date, the construction in progress is recognized at the lower ofbook value and recoverable amount.
5.18 Borrowing costs
(1) Scope of borrowing costs and its capitalization conditionsThe Company’s borrowing costs capitalized during period of capitalization are relevantloan expenses directly attributable to the assets eligible for capitalization, includinginterest thereon, amortization of discounts or premiums, ancillary expenses and exchangedifferences incurred from foreign currency loan, etc.Borrowing costs are capitalized when the following three conditions are metsimultaneously: (1) the asset expenditure has occurred, (2) the borrowing costs haveoccurred, (3) the purchase and construction activities necessary to make the assets reachthe intended use condition have started.
(2) Recognition of capitalized amountsThe capitalized amount of borrowing expenses is calculated as follows:
As for special loan borrowed for acquiring and constructing or producing assets eligible forcapitalization, borrowing costs of special loan actually incurred in the current period lessthe interest income of the loans unused and deposited in bank or return on temporaryinvestment should be recognized as the capitalization amount of borrowing costs. As forgeneral loans used for acquiring and constructing or producing assets eligible forcapitalization, the interest of general loans to be capitalized should be calculated bymultiplying the weighted average of asset disbursements of the part of accumulated assetdisbursements in excess of special loans by the capitalization rate of used general loans.During the period of capitalization, the capitalized amount of interest of each accountingperiod shall not exceed the current actual interest of the relevant loans. Where there are
discounts or premiums on loans, the amounts of interest for each accounting periodshould be adjusted taking account of amortizable discount or premium amounts for theperiod by effective interest method. Auxiliary expenses incurred from special loans beforethe acquired or constructed assets eligible for capitalization reach the working conditionfor their intended use or sale should be capitalized when they incur and charged to thecosts of assets eligible for capitalization; those incurred after the acquired or constructedassets eligible for capitalization reach the working condition for their intended use or saleshould be recognized as costs according to the amounts incurred when they incur andcharged to the current profit or loss.
(3) Recognition of capitalization rateFor a special loan for the purchase and construction of fixed assets, the capitalization rateis the interest rate of the loan;For more than one special loan for the acquisition and construction of fixed assets, thecapitalization rate is a weighted average interest rate of these loans.
(4) Capitalization suspension of borrowing costsIf the acquisition and construction or production activities of assets eligible forcapitalization are interrupted abnormally and this condition lasts for more than threemonths, the capitalization of borrowing costs should be suspended. The borrowing costsincurred during interruption are charged to profit or loss for the current period, and thecapitalization of borrowing costs continues when the acquisition and construction orproduction activities of the asset resume.
(5) Capitalization cessation of borrowing costsCapitalization of borrowing costs should cease when the acquired and constructed orproduced assets eligible for capitalization have reached the working condition for theirintended use or sale. Borrowing costs incurred after the assets eligible for capitalizationhave reached the working condition for their intended use or sale should be recognized asthe current profit and loss when they incur. If parts of the acquired and constructed orproduced assets are completed separately but the assets cannot be used or soldexternally until overall completion, the capitalization of borrowing costs should cease atthe time of overall completion of the said assets.
5.19 Intangible assets
(1) Measurement method, useful life, impairment testMeasurement method
a. Costs of intangible assets purchased include purchase price, related tax andexpenses and other expenditure that can be distributed to the asset directly to reachits expected use.b. Intangible assets invested by investors shall be valued at the value agreed upon inthe investment contract or agreement;c. Expenses on the research phase of internally researched and developed intangibleassets shall be included in the current profit and loss when they incur; The
expenditures incurred in the development stage of the internal research anddevelopment projects shall be recognized as intangible assets when the followingconditions are met; otherwise, they shall be recorded into the current profit and losswhen they incur.
i.It is technically feasible to finish intangible assets for use or sale;ii. It is intended to finish and use or sell the intangible assets;iii. The usefulness of methods for intangible assets to generate economicbenefits shall be proved, including being able to prove that there is a potentialmarket for the products manufactured by applying the intangible assets or thereis a potential market for the intangible assets themselves or the intangible assetswill be used internally;iv. It is able to finish the development of the intangible assets, and able to use orsell the intangible assets, with the support of sufficient technologies, financialresources and other resources.v. The expenditure attributable to the intangible asset during its developmentphase can be measured reliably.d. If payment of the purchase price of intangible assets can be deferred and exceedsnormal credit conditions, the purchase has the nature of finance in fact and cost of theintangible asset shall be determined on the basis of present value of the purchaseprice.The difference between the amount actually paid and the present value of thepurchase price should be recorded into current profit or loss other than those shouldbe capitalized during the credit period.
Useful life and amortization methodFor intangible assets with limited useful life, amortization shall be carried out according tothe straight-line method within the period that brings economic benefits to the enterprise.At the end of each period, the useful life and amortization method of intangible assets withlimited service life shall be reviewed. If there are differences with the original estimates,corresponding adjustments shall be made.Intangible assets whose useful life is uncertain shall be regarded as intangible assets if itis impossible to foresee the term in which intangible assets bring economic benefits to theenterprise. Intangible assets with uncertain useful life shall not be amortized during theholding period, and the life of intangible assets shall be reviewed at the end of each period.If it is still uncertain after the review at the end of the period, the impairment test shallcontinue during each accounting period. At the end of each period, the useful life ofintangible assets with uncertain service life shall be reviewed.
Impairment testOn the balance sheet date, intangible assets are valued at the lower of book value andrecoverable amount.
(2) Internal research and development expenditure accounting policyThe expenditures incurred in the development stage of the internal research anddevelopment projects shall be recognized as intangible assets when the following
conditions are met; otherwise, they shall be recorded into the current profit and loss whenthey occur.
a.It is technically feasible to finish intangible assets for use or sale;b.It is intended to finish and use or sell the intangible assets;c.The usefulness of methods for intangible assets to generate economic benefitsshall be proved, including being able to prove that there is a potential market for theproducts manufactured by applying the intangible assets or there is a potential marketfor the intangible assets themselves or the intangible assets will be used internally;d.It is able to finish the development of the intangible assets, and able to use or sellthe intangible assets, with the support of sufficient technologies, financial resourcesand other resources.e.The expenditure attributable to the intangible asset during its development phasecan be measured reliably.
Development expenditures that have been recorded into profit and loss in previous periodsare not recognized as assets in subsequent periods. The capitalized expenditure in thedevelopment stage is listed as development expenditure in the balance sheet, and it will berecorded into intangible assets from the date when the project reaches its intendedpurpose.
5.20 Non-current assets impairment
On the balance sheet date, the Company makes a judgment on whether there are signs ofpossible impairment of long-term assets. If there are impairment indicators of non-currentassets, the Company estimates the recoverable amount based on individual asset. Ifrecoverable amount of individual asset is difficult to be estimated, the Company shouldrecognize the recoverable amount of the asset group which the individual asset belongs to.The recoverable amount is the higher of fair values less costs of disposal and the presentvalues of the future cash flows expected to be derived from the asset.If the measurement result of recoverable amount shows that recoverable amount of thenon-current assets is less than its book value, the book value shall be written down to therecoverable amount, and the amount written down shall be recognized as the impairmentloss of assets, recorded into the current profit and loss, and the corresponding impairmentprovision of assets shall be made at the same time. Once impairment loss stated above isrecognized, reversal is not allowed in the subsequent accounting periods.
After the recognition of the impairment loss, the depreciation or amortization expense ofthe impairment asset shall be adjusted accordingly in the future period so as tosystematically apportion the adjusted book value of the asset (deducting the expected netsalvage value) within the remaining service life of the asset.
The Company should perform impairment test for goodwill and intangible assets withindefinite life at least at each year end, no matter whether there is impairment indicator.
Goodwill shall be combined with its related asset group or asset group portfolio so as to
perform an impairment test. When the Company performs an impairment test on relevantasset group or asset group portfolio including goodwill, if there are signs of impairment,the Company shall firstly perform an impairment test on asset group or asset groupportfolio excluding goodwill and calculate the recoverable amount, and compare with therelated book value, recognize the corresponding impairment loss. Then, the Companyperforms an impairment test on relevant asset group or asset group portfolio includinggoodwill, and compares the book value of the relevant asset groups or asset groupportfolio (including proportional book value of goodwill) with its recoverable amount. If therecoverable amount of relevant asset group or asset group portfolio is less than its bookvalue, the Company shall recognize impairment loss of goodwill.
5.21 Long-term deferred expenses
Long-term deferred expenses shall be initially measured according to the actual costsincurred. It is amortized using the straight-line method over the beneficial period. If itcannot benefit the following accounting period, the amortized value of the item that hasnot been amortized will be transferred to the current profit and loss.
5.22 Employee benefits
(1) Accounting treatment method of short-term benefitsShort-term benefits are the benefits that the Company expects to pay in full within 12months after the reporting period in which the employee provided relevant services,excluding the compensation for employment termination.
Accrued short term benefits will be recognized as liability during the accounting period inwhich the employee is providing the relevant service to the Company. The liability will beincluded in the current profit and loss or the relevant assets cost .
(2) Accounting treatment method of post-employment benefitsDefined contribution planThe defined contribution plan of the Company includes payments of basic pension andunemployment insurance calculated according to the local payment base and proportion.The amount shall be included into the profit and loss or the relevant assets cost for theaccounting period in which the employee provides the service to the Company.
Defined benefit planAccording to the formula determined by the expected accumulative projected unit creditmethod, the Company will record the benefit obligation generated by the defined benefitplan belonging to the period during in which the employee provides the service into thecurrent profit and loss or the relevant assets cost.
The deficit or surplus resulting from the present value minus the fair value of the assets ofa defined benefit plan is recognized as a net liability or net asset of a defined benefit plan.If there is surplus in the defined benefit plan, the net assets of the defined benefit plan shallbe measured at the lower of the surplus and the upper limit of assets of the defined benefit
plan.
All defined benefit plan obligations, including those expected to be paid within the twelvemonths following the end of the annual reporting period in which the employee provides theservice, are discounted based on the market yield and high quality corporate bonds in anactive market that match the duration and currency of defined benefit plan obligations onthe balance sheet date.
The service costs generated by the defined benefit plan and the net interest on netliabilities or net assets of the defined benefit plan are included in the current profit and lossor relevant assets cost; Changes in net liabilities or net assets generated by there-measurement of the defined benefit plan are included in other comprehensive incomeand are not reversed to profit and loss in subsequent accounting periods.
At the time of settlement of the defined benefit plan, the settlement gains or losses shall berecognized according to the difference between the present value of the obligations of thedefined benefit plan and the settlement price determined on the settlement date.
(3) Accounting treatment method of termination benefitsEmployee benefits liabilities shall be recognized and included into profit or loss for thecurrent period on the earlier date of the two following circumstances:
a. When the Company is not able to withdraw the benefits from termination ofemployment or resignation persuasion unilaterally;b. When the Company recognizes costs and fees relevant to reforming the terminationbenefits payment.As for the termination benefits that cannot be fully paid within 12 months after the end ofthe annual report period, the Company shall choose an appropriate discount rate andrecord it into current profit and loss based on it.
(4) Accounting treatment method of other long-term employee benefitsOther long-term employee benefits are all employee benefits other than short-termbenefits, post-employment benefits and termination benefits. Other long-term employeebenefits provided by the Company to the employee that meet the conditions of the definedcontribution plan shall be treated in accordance with the same principles of the definedcontribution plan; If the conditions for defined benefits are met, net liabilities or net assetsof other long-term employee benefits shall be recognized and measured in accordancewith the relevant principles of the defined benefits plan.
5.23 Estimated liabilities
(1) Recognition criteria of estimated liabilitiesIf the contingent obligations meet the following conditions simultaneously, the Companyshall recognize it as an estimated liability :
This obligation is the Company's current obligation; The performance of this obligation ishighly likely to result in an outflow of economic benefits from the Company; The amount of
the obligation can be measured reliably.
(2) Measurement method of estimated liabilitiesThe Company's estimated liabilities are initially measured in terms of the best estimate ofthe expenditure of fulfilling the relevant current obligations.
For determining the best estimate, the Company takes various factors into account suchas the risk, uncertainty and time value of money related to contingencies. If the time valueof money has a significant impact, the best estimate is determined by discounting therelevant future cash outflows.The best estimate is processed as follows:
Where there is a continuous range (or range) of required expenditures and the probabilityof the occurrence of various results within the range is same, the best estimate isdetermined according to the mean of the middle value of the range, namely the meanvalue of the upper and lower limits.
Where there is no continuous range (or range) of required expenditures, or where there isa continuous range but the possibility of various outcomes within the range is different, ifthe contingencies involve a single item, the best estimate is determined according to themost likely amount; If the contingencies involve more than one item, the best estimate iscalculated and determined according to various possible results and relevant probabilities.
Where all or part of the expenses required for the liquidation of the estimated liabilities ofthe Company are expected to be compensated by a third party, the amount ofcompensation shall be recognized as an asset when it is basically confirmed that it can bereceived, and the confirmed amount of compensation shall not exceed the book value ofthe estimated liabilities.
5.24 Share-based payment
(1) The type of share-based paymentShare-based payment is classified as equity-settled share-based payment and cash-settled share-based payment.
(2) The method of determining the fair value of equity instrumentsFor equity-settled share-based payment related with employees, the equity instrument ismeasured at fair value. The cash-settled share-based payment shall be measuredaccording to the fair value of the liabilities calculated and determined on the basis ofshares or other equity instruments undertaken by the Company.
For the fair value of the stock option granted, the fair value is determined by using thestock option pricing model, and the following factors are taken into account: the currentprice of the underlying shares, the exercise price of the option, the risk-free interest ratewithin the period of the option, the option life, and the expected volatility of the stock price.
(3) Recognition of the best estimate basis of instrument that can be exercisedFor the equity-settled share-based payment settled immediately after the grant, the fairvalue of the equity instrument shall be included in the relevant costs or expenses on thegrant date, and the capital reserve shall be increased accordingly. Grant date means thedate on which the share-payment agreement is approved.
For the equity-settled share-based payment, in which the services during waiting periodare completed and the performance conditions are met, in return for services ofemployees, on each balance sheet date during waiting period, the current obtainedservice shall be included in the relevant costs or expenses and the capital reserves inaccordance with the fair value of the equity instruments on the grant date, based on bestestimate of the number of vested equity instruments, and the subsequent changes in fairvalue shall not be recognized. On each balance sheet date during waiting period, theCompany makes the best estimate based on the latest available employee numberchange and other subsequent information, and modifies the number of equity instrumentsfor the estimated vesting. On the vesting date, the final expected number of vestinginstruments is the same as the actual number of vesting instruments.
(4) Relevant accounting treatment of implement, modification and termination ofshare-based payment planFor equity-settled share-based payment, no adjustments will be made to the recognizedcosts and total owners' equity after the vesting date. On the vesting date, the Companyshall recognize the share capital and the equity premium according to the exercisesituation, and carry forward the capital reserve recognized in the waiting period.
No matter how it modifies the terms and conditions of the granted equity instruments or itcancels the granted equity instruments or its settlement, the equity instruments granted bythe Company shall be recognized at fair value on the grant date and it measures obtainedthe corresponding services, unless it cannot be vested because it cannot meet the vestingconditions of equity instruments (except market conditions).
5.25 Revenue
Whether the Company is required to comply with special industry disclosure requirementsNo(1) Recognition of revenue from sales of goodsRevenue is recognized when the following conditions can be met: it has transferredsignificant risks and rewards of ownership of the goods to the purchaser; the Companyretains neither continuing managerial involvement usually related to the ownership noreffective control over the sold goods; the relevant economic benefits are highly likely toflow into the Company; relevant revenues and the costs can be measured reliably.
(2) Recognition principals of revenue from transfer of asset use right.The specific conditions of the Company’s recognition of revenue: for domestic sales, itshall specify the sales items and rights and obligations of both parties according to the
signed sales contract or agreement. The Company shall take the receipt of the payment orthe receipt voucher as the basis and recognize the revenue after the customer signs forthe receipt of the goods. For export commodities, the revenue shall be recognized whenthe Company receives the customs declaration form of export goods (export tax rebatecopy) and issues export invoices after certifying an agent export certificate in tax bureau.
(3) Revenues of rendering of servicesIf the service is commenced and completed within the same fiscal year, the Companyrecognizes revenue from rendering of service when the service is completed. If thecommencement and completion of services are in separate fiscal years, the Companyrecognizes revenue from rendering of service using the percentage-of-completion methodon the balance sheet date when the outcome of service transactions can be estimatedreliably. When the outcome of service transactions cannot be estimated reliably, theCompany recognizes and measures revenue according to the principle of prudence.
(4) Revenue from transfer of asset use rightRevenue is recognized when the following conditions can be met: the relevant economicbenefits can flow into the Company; relevant revenues can be measured reliably.
5.26 Government grants
Government grants are monetary assets and non-monetary assets acquired free ofcharge by the Company from the government like fiscal subsidies.(1) Judgment basis and accounting treatment method of government grants related toassetsGovernment grants related to assets are government grants that are acquired by theCompany and used for forming long-term assets through purchasing and constructing orother ways. If the government documents do not clearly specify the target of the subsidy,the Company shall separately explain judgment basis of classifying the governmentgrants into the government grants related to assets or income.
Accounting method: it shall be recognized as deferred income allocated evenly over theuseful lives (the period of depreciation and amortization) of the relevant assets from themonth of commence of depreciation or amortization when the relevant assets reachingthe intended use condition, and included in the current profit or loss. However,government grants measured at the nominal amount shall be directly included in currentprofit and loss.
(2) Judgment basis and accounting treatment method of government grants related toincomeGovernment grants related to income are government grants other than governmentgrants related to assets.
Accounting method:
a. If it is used to compensate the Company’s relevant expenses or losses in future
periods, it should be recognized as deferred income and included into the currentprofit and loss or written off of the related costs when the relevant expenses, lossesare recognized.b. If it is used to compensate the Company’s relevant expenses or losses incurred, itis directly included into the current profit and loss on acquisition or written off of therelated costs.c. Recognition time-point of government grantsGovernment grants are recognized when the Company can meet the attachedconditions for the government grants and the Company can receive the grants.d. Measurement of government grantsIf a government grant is a monetary asset, it shall be measured in the light of thereceived or receivable amount. If a government grant is a non-monetary asset, it shallbe measured at its fair value; and if its fair value cannot be obtained in a reliable way,it shall be measured at a nominal amount.
5.27 Deferred tax assets or deferred tax liabilities
The Company adopts the balance sheet liability method to account for income tax.The Company recognizes deferred tax assets when the following conditions are metsimultaneously
i. temporary differences are highly likely to be reversed in the foreseeable future;ii. taxable income that may be used to offset the deductible temporary difference islikely to be obtained in the future and is limited to the amount of taxable income that islikely to be obtained.
On each balance sheet date, the current income tax liabilities (or assets) incurred in thecurrent period or prior periods shall be measured by the Company in light of the expectedpayable (refundable) amount of income taxes according to the tax law; The deferredincome tax assets and deferred income tax liabilities shall be measured at the tax rateapplicable to the period during which the assets are expected to be recovered or theliabilities are expected to be settled.
The Company shall review the carrying amount of deferred income tax assets on eachbalance sheet date. The current income tax and deferred income tax shall be recordedinto the current profit and loss as income tax expense or income, except for the incometax generated from the enterprise merger, transactions or events directly recognized in theowner's equity.
5.28 Lease
(1) Accounting treatment of operating lease
a. The Company records rents of leased assets into current expense using straightline method in each period of the lease term including rent-free period. Initial directexpenses incurred are recorded into current expense. Contingent rents are recordedinto current profit or loss when occur. When the lessor bears the leasehold expenseswhich shall be borne by the Company, the expenses shall be deducted from total
rents and the residual rent is recognized into current profit or loss in each period ofthe lease term.
b. The rents arsing from leasing assets shall be recorded into rent revenue usingstraight line method in each period of the lease term including rent-free period. Initialdirect expenses incurred are recorded into current expense. If the amount is large, itshall be capitalized and recorded into current income in installment in the period oflease term according to the same recognition base of rent revenue. When the lesseebears the leasehold expenses which shall be borne by the Company, the expensesshall be deducted from total rents and the residual rent is amortized in each period ofthe lease term.
(2)Accounting treatment of finance lease
a. As the lessee, it recognizes the lower of fair value of lease asset and minimumlease payment at the beginning day of the lease as the initial value of the assetleased in and the minimum lease payment as long-term payable, the difference asunrealized finance expense. Unrealized finance expense is amortized in the periodduring the lease term and recognized as current finance expenses using actualeffective rate method.
b. As the lessor, it recognizes the difference between the total of minimum leaseamount received and residual amount not guaranteed and present value of that asunrealized finance income. It recognizes unrealized finance income as rent revenuein the period of lease term when the Company receives rent. The initial directexpense related to the lease transaction shall be recorded in the initial recognition offinance lease receivable and be deducted from recognized income in the period oflease term.
5.29 Changes in significant accounting policies and accountingestimates
(1) Changes in significant accounting policies? Applicable √ N/A(2) Changes in significant accounting estimates? Applicable √ N/A
6. Taxes
6.1. Major tax types and rates
Tax type
Tax type | Tax base | Tax rate |
Value-added tax | Taxable sales income | 17%、16%、11%、10%、6% |
Urban maintenance and construction tax | Taxable turnover tax | 7% |
Corporate income tax | Taxable income | 25%、15%、16.5%、0% |
Consumption tax(based on price) | Liquor tax price or ex-factory price | 20% |
Tax type
Tax type | Tax base | Tax rate |
Consumption tax(based on quantity) | Quantity of wine | CNY 1.00/kg |
Education surcharge | Taxable turnover tax | 3% |
Local education surcharge | Taxable turnover tax | 2% |
Property tax | Original value of the property×70%;house rent | 1.2%、12% |
Land use tax | Land area | CNY 5-18.00/m2 |
Others | According to national regulation |
Tax payment subject using different corporate income tax rates, the corporate income taxrates are as follows:
Company name | Corporate income tax rate |
Luzhou Pinchuang Technology Co., Ltd. | 15% |
Luzhou Laojiao International Development(Hong Kong)Co., Ltd. | 16.5% |
Mingjiang Co., Ltd. | 21%-40% |
Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Exempted from corporate income tax |
6.2. Tax preferences
(1) According to Announcement of the State Administration of Taxation on CorporateIncome Tax Questions Concerning the Further Implementation of the WesternDevelopment Strategy (State Administration of Taxation Announcement No.12 of 2012),from 1 January 2011 to 31 December 2020, companies are located in the western regionwhose primary business is listed in the Catalogue of Encouraged Industries in theWestern Region, and the annual primary business income accounting for over 70% of thetotal enterprise income. These companies can be subject to the corporate income tax at areduced rate of 15%. The Company's holding subsidiary, Luzhou Pinchuang TechnologyCo., Ltd., whose primary business income meet the requirements of scope and amount ofthe Catalogue of Encouraged Industries in the Western Region, is paid at the rate of 15%for corporate income tax.
(2) The Company's holding subsidiary, Luzhou Laojiao International Development(HongKong)Co., Ltd., is paid at the rate of 16.5% for corporate income tax according to HongKong tax rate standard.
(3) Corporate income tax in the USA is a kind of income tax levied on the global income ofAmerican resident companies and the income of non-USA resident companies derivedfrom the USA, which is divided into federal, state and local levels. In addition, the regularfederal corporate income tax adopts a progressive tax rate system. The holding subsidiaryof the Company, Mingjiang Co., Ltd., pays corporate income tax at the rate of 21% to 40%,according to the tax rate standard in the USA.
(4) According to Article 27 of the Corporate Income Tax Law of the People's Republic of
China and Article 86, Item 3 of the Implementation Regulations of the Corporate IncomeTax Law, companies are exempted from enterprise income tax when they engage inagricultural, forestry, animal husbandry and fishery industries. The holding subsidiary ofthe Company, Luzhou Red Sorghum Modern Agricultural Development Co., Ltd., isengaged in the cultivation and sale of organic sorghum and enjoys the reduction ofcorporate income tax preferences.
(6) According to the Article 15, Item 1 of the Provisional Regulations on Value-Added Tax,agricultural producers sell self-produced agricultural products exempt from value-addedtax. The holding subsidiary of the Company, Luzhou Red Sorghum Modern AgriculturalDevelopment Co., Ltd., is engaged in the cultivation and sale of organic sorghum andenjoys the value-added tax exemption.
7. Notes to the main items of the consolidated financialstatements (All currency unit is CNY, except other statements)
7.1. Cash and cash equivalents
Item
Item | Closing Balance | Opening Balance |
Cash | 4,420.76 | 10,907.81 |
Bank deposit | 9,364,716,075.36 | 8,449,228,764.98 |
Other cash and cash equivalents | 2,666,131.56 | 382,482.12 |
Total | 9,367,386,627.68 | 8,449,622,154.91 |
Including: total deposit outbound | 57,439,384.10 | 27,106,540.20 |
Other statements:
1. The total amount of funds deposited outbound is CNY 57,439,384.10, including: LuzhouLaojiao International Development (Hong Kong) Co., Ltd., the holding subsidiary of theCompany, with a total amount of CNY 56,937,446.51 in cash and bank deposits, and CNY501,937.59 in bank deposits of Mingjiang Co., Ltd., the holding subsidiary of theCompany.2. The closing balance of other cash and cash equivalents is the travel service deposit ofCNY 1,400,000.00 deposited by the Company's wholly-owned subsidiary, Luzhou LaojiaoTourism Culture Co., Ltd., in the designated bank according to the regulations of thetourism bureau, and balance of CNY 1,266,131.56 deposited by the Company's holdingsubsidiary, Luzhou Laojiao Electronic Commerce Co., Ltd. on the third-party e-commerceplatform.
7.2. Notes and accounts receivable
Item | Closing Balance | Opening Balance |
Notes receivable | 2,388,326,476.15 | 2,492,813,857.65 |
Accounts receivable | 10,333,728.87 | 8,008,857.20 |
Total | 2,398,660,205.02 | 2,500,822,714.85 |
7.2.1. Notes receivable7.2.1.1. Classification of notes receivable
Item
Item | Closing Balance | Opening Balance |
Bank acceptance bill | 2,388,326,476.15 | 2,492,813,857.65 |
Total | 2,388,326,476.15 | 2,492,813,857.65 |
7.2.1.2. Notes receivable that have been endorsed to other parties by the Companybut have not expired at the end of year
Item | Derecognition at period end | Not derecognition at period end |
Bank acceptance bill | 2,850,597,353.261 | |
Total | 2,850,597,353.26 |
Note: 1. The acceptor of the bank acceptance bill is a commercial bank. The probability ofnot being paid due is very low, and the possibility of being recourse is very low, so theconfirmation has been terminated. However, if the bill expires without payment, theCompany will still bear joint liability to the holder in accordance with the provisions of theNegotiable Instruments Law.
7.2.1.3. Notes transferred to the accounts receivable due to the non-performance ofthe agreements by the issuersThere are no notes transferred to accounts receivable due to the non-performance of theagreements by the issuers.
7.2.2. Accounts receivable7.2.2.1. Analysis by categories
Type
Type | Closing Balance | Opening Balance | ||||||||
Book balance | Provision for bad debt | Book Value | Book balance | Provision for bad debt | Book Value | |||||
Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
Accounts receivable tested for impairment on the portfolio with characteristics of credit risk | 10,922,591.46 | 100.00% | 588,862.59 | 5.39% | 10,333,728.87 | 8,431,442.86 | 100.00% | 422,585.66 | 5.01% | 8,008,857.20 |
Total | 10,922,591.46 | 100.00% | 588,862.59 | 5.39% | 10,333,728.87 | 8,431,442.86 | 100.00% | 422,585.66 | 5.01% | 8,008,857.20 |
Accounts receivable with significant single amount and tested for impairment individually:
? Applicable √ N/A
An analysis of provision under the aging analysis method:
√ Applicable ? N/A
Aging | Closing Balance | ||
Accounts receivable | Provision for bad debt | Proportion | |
Classification of within 1 year | |||
Risk free | 1,526.40 | ||
Within 1 year | 10,064,878.25 | 503,243.91 | 5.00% |
Sub-total | 10,066,404.65 | 503,243.91 | 5.00% |
1-2 years | 856,186.81 | 85,618.68 | 10.00% |
Total | 10,922,591.46 | 588,862.59 | 5.39% |
Statements for determining the portfolio:
Accounts receivables using balance percentage method to provide bad debt:
? Applicable √ N/A
7.2.2.2. Provision and recovery for bad and doubtful debt in the current periodThe provision allowance of current period is CNY 166,276.93. The recovery of currentperiod is CNY 0.00.
7.2.2.3. Accounts receivable actually written off during the reporting periodStatements for accounts receivable written off:
There is no accounts receivable actually written off during the reporting period.
7.2.2.4. Top five entities with the largest balances of accounts receivable
Company name
Company name | Relationship with the Company | Closing Balance | Provision Amount | Proportion in the total (%) |
Zhejiang Tmall Technology Co., Ltd. | Client | 4,642,740.20 | 232,137.01 | 42.51 |
Shanghai Shengdayuan Information Technology Co., Ltd. | Client | 2,757,743.93 | 137,887.20 | 25.25 |
Horgos Kunhui Co., Ltd. | Client | 766,403.15 | 76,549.29 | 7.02 |
Beijing Jiuxian Network Technology Co., Ltd. | Client | 454,022.86 | 22,701.14 | 4.16 |
Luzhou Happiness Setting Sailing E-commerce Co., Ltd. | Client | 441,140.91 | 22,057.05 | 4.04 |
Total | 9,062,051.05 | 491,331.69 | 82.97 |
7.2.2.5. Derecognition of accounts receivable due to transfer of financial assetsThere is no derecognition of accounts receivable due to transfer of financial assets duringthe reporting period.
7.2.2.6. Amount of assets and liabilities resulting from transfer of accountsreceivable and continuing involvementThere are no assets and liabilities resulting from transfer of accounts receivable andcontinuing involvement during the reporting period.
7.3. Prepayment
7.3.1. Aging analysis
Aging | Closing Balance | Opening Balance | ||
Amount | Proportion | Amount | Proportion | |
Within 1 year | 130,442,246.83 | 95.04% | 192,495,796.28 | 97.31% |
1-2 years | 6,801,326.83 | 4.96% | 245,864.97 | 0.12% |
Over 3 years | 5,093,855.21 | 2.57% | ||
Total | 137,243,573.66 | -- | 197,835,516.461 | -- |
Note: The closing balance decreased CNY 60,591,942.80 compared with the openingbalance,with a decrease by 30.63%, which was mainly due to the prepaid part ofadvertising fee in the previous period that has been settled in the current period.
Statements for significant prepayment whose aging longer than 1 year and unsettled intime:
There is no significant prepayment whose aging is longer than 1 year.
7.3.2. Top five entities with the largest balances of prepayment
Company name
Company name | Relationship with the Company | Closing balance | Proportion in the total |
Shanghai Merlot Advertising Co., Ltd. | Supplier | 55,999,806.00 | 40.80 |
New Shottes Brook Private Company | Supplier | 18,086,370.77 | 13.18 |
Australian Tennis Co., Ltd. | Supplier | 8,631,875.00 | 6.29 |
Sass Diva Bion Co., Ltd. | Supplier | 4,396,975.53 | 3.20 |
Luzhou Super Value Trading Co., Ltd. | Supplier | 4,204,100.00 | 3.06 |
Total | 91,319,127.30 | 66.54 |
7.4. Other receivables
Item | Closing Balance | Opening Balance |
Interest receivable | 29,970,944.44 | 14,546,875.69 |
Other receivables | 136,554,065.72 | 221,179,068.43 |
Total | 166,525,010.16 | 235,725,944.12 |
7.4.1. Interest receivable7.4.1.1. Classification of interest receivable
Item | Closing Balance | Opening Balance |
Fixed deposits | 29,970,944.44 | 14,546,875.69 |
Total | 29,970,944.44 | 14,546,875.691 |
Note: 1.The closing balance increased CNY 15,424,068.75 compared with openingbalance, with an increase by 106.03%, mainly due to the increase of interest income onfixed deposit resulting from stock funds in the current period.
7.4.1.2. Significant interest receivable overdueThere is no significant interest receivable overdue at end of the period.
7.4.2. Other receivables7.4.2.1. Other receivables disclosed by categories
Type
Type | Closing Balance | Opening Balance | ||||||||
Book balance | Provision for bad debt | Book Value | Book balance | Provision for bad debt | Book Value | |||||
Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
Other receivables with significant single amount and tested for impairment individually | 307,456,275.25 | 89.50% | 200,000,000.00 | 65.05% | 107,456,275.25 | 400,000,000.00 | 92.86% | 200,000,000.00 | 50.00% | 200,000,000.00 |
Other receivables tested for impairment on the portfolio with characteristics of credit risk | 36,069,225.42 | 10.50% | 6,971,434.95 | 19.33% | 29,097,790.47 | 30,765,253.79 | 7.14% | 9,586,185.36 | 31.16% | 21,179,068.43 |
Total | 343,525,500.67 | 100.00% | 206,971,434.95 | 60.25% | 136,554,065.72 | 430,765,253.79 | 100.00% | 209,586,185.36 | 48.65% | 221,179,068.43 |
Other receivables with significant single amount and tested for impairment individually:
√ Applicable ? N/A
Company Name
Company Name | Closing balance | |||
Other receivables | Provision for bad debt | Proportion of provision | Reason | |
Agricultural Bank of China Changsha Yingxin Branch, Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou Branch and another bank. | 307,456,275.25 | 200,000,000.00 | 65.05% | The annual report of the Company in 2014 disclosed that the three savings deposits in the Agricultural Bank of China Changsha Yingxin branch, Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou branch and another bank, a total of CNY 500,000,000.00. Due to the contract disputes, it loses the nature of cash and cash equivalents, and it is transferred to “other receivables”. As the end of 31 December 2018, the Company has recovered CNY 182,163,803.24 of another deposit among CNY 200,000,000.00 mentioned in the Notice of Important Matters No. 2015-1 and CNY 10,379,921.51 of the deposit of Agricultural Bank of China Changsha Yingxin branch. So far, the unrecovered amount of deposits involving contract disputes was CNY 307,456,275.25. On 6 January 2019, the lawyers of Beijing Weiheng (Chengdu) Law Firm issued the Legal Opinion of Luzhou Laojiao Co., Ltd. on the provision for bad debt on abnormal deposits in Changsha, Nanyang and another place, which indicated that "since 25 March 2016, to the date issuing legal opinion on the proportion of provision for bad debt, there was no event that can affect the change of provision for bad debt, so the judgment on the provision for bad debt of CNY 200 million was still maintained”. For details please see Note 12.2. |
Total | 307,456,275.25 | 200,000,000.00 | -- | -- |
An analysis of provision under the aging analysis method:
√ Applicable ? N/A
Aging
Aging | Closing Balance | ||
Other receivables | Provision for bad debt | Proportion of provision | |
Within 1 year | 27,994,235.26 | 1,399,711.76 | 5.00% |
1-2 years | 636,506.00 | 63,650.60 | 10.00% |
2-3 years | 2,245,417.94 | 449,083.59 | 20.00% |
3-4 years | 184,722.70 | 73,889.08 | 40.00% |
4-5 years | 116,218.00 | 92,974.40 | 80.00% |
Over 5 years | 4,892,125.52 | 4,892,125.52 | 100.00% |
Total | 36,069,225.42 | 6,971,434.95 | 19.33% |
Statements for determining the portfolio:
Other receivables using balance percentage method to provide bad debt:
? Applicable √ N/AOther receivables using other method to provide bad debt:
? Applicable √ N/A
7.4.2.2. Provision and recovery for bad and doubtful other receivables in the currentperiod.The provision allowance of current period is CNY -2,201,616.55. The recovery of currentperiod is CNY 0.00.
7.4.2.3. Other receivables actually written off during the reporting period
Item | Written off amount |
Other receivables actually written off | 413,133.86 |
Statements for written off:
There are no significant other receivables actually written off.
7.4.2.4. Analysis of other receivables by category
Category | Closing Balance | Opening Balance |
Intercourse funds | 26,300,395.29 | 23,529,848.53 |
Petty cash | 2,963,363.02 | 3,734,517.61 |
Saving deposits involving contract disputes | 307,456,275.25 | 400,000,000.00 |
Other | 6,805,467.11 | 3,500,887.65 |
Total | 343,525,500.67 | 430,765,253.79 |
7.4.2.5. Top five entities with the largest balances of the other receivables
Company Name | Category | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
Agricultural Bank of China Changsha Yingxin branch, Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou branch and another bank. | Saving deposits involving contract disputes | 307,456,275.25 | 4-5 years | 89.50% | 200,000,000.00 |
Company Name
Company Name | Category | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
Zhejiang Tmall Technology Co., Ltd. | Online platform fee, security deposit, etc. | 5,743,646.09 | Within 1 year | 1.67% | 287,182.30 |
Housing and Urban-Rural Development Bureau of Longmatan District, Luzhou City | Security deposit | 2,401,617.09 | Within 1 year,1-2 years | 0.70% | 131,336.00 |
Luzhou Electric Power Bureau of Longmatan District, Luzhou City | Security deposit | 1,520,000.00 | 2-3 years,Over 5 years | 0.44% | 912,000.00 |
China Real Estate Development Corporation Luzhou Branch | Loan | 1,500,000.00 | Over 5 years | 0.44% | 1,500,000.00 |
Total | -- | 318,621,538.43 | -- | 92.75% | 202,830,518.30 |
7.4.2.6. Other receivables involving government subsidyThere are no other receivables involving government subsidy during the reporting period.
7.4.2.7. Other receivables derecognized arising from financial assets transferThere are no other receivables derecognized arising from financial assets transfer duringthe reporting period.
7.4.2.8. Amount of assets and liabilities resulting from transfer of other receivablesand continuing involvementThere are no assets and liabilities resulting from transfer of other receivables andcontinuing involvement during the reporting period.
7.5 Inventories
Does the Company need to comply with the disclosure requirements of real estateindustryNo
7.5.1. Categories of Inventories
Category | Closing Balance | Opening Balance | ||||
Book Balance | Provision for stock obsolescence | Book Value | Book Balance | Provision for stock obsolescence | Book Value | |
Raw materials | 68,423,897.18 | 68,423,897.18 | 67,290,652.11 | 67,290,652.11 | ||
Goods in progress | 138,889,316.08 | 138,889,316.08 | 133,177,796.66 | 133,177,796.66 | ||
Finished goods | 1,181,824,032.21 | 1,181,824,032.2 | 871,353,398.56 | 871,353,398.56 |
Category
Category | Closing Balance | Opening Balance | ||||
Book Balance | Provision for stock obsolescence | Book Value | Book Balance | Provision for stock obsolescence | Book Value | |
1 | ||||||
Revolving materials | 8,812,993.84 | 8,812,993.84 | 3,246,579.80 | 3,246,579.80 | ||
Self-made semi-finished goods | 1,741,647,734.69 | 1,741,647,734.69 | 1,629,157,619.19 | 1,629,157,619.19 | ||
goods in transit | 90,817,775.95 | 90,817,775.95 | 107,640,476.94 | 107,640,476.94 | ||
Total | 3,230,415,749.95 | 3,230,415,749.95 | 2,811,866,523.26 | 2,811,866,523.26 |
Whether the Company needs to comply with the disclosure requirements of “ShenzhenStock Exchange Disclosure Guide No. 4 - Listed Companies Engaged in Seed or PlantingBusiness”No.Whether the Company needs to comply with the disclosure requirements of “ShenzhenStock Exchange Disclosure Guide No.11 - Listed Companies Engaged in Jewelry RelatedBusiness”No.
7.5.2. Provision for stock obsolescenceThe net realizable value is not lower than book cost in the closing balance of inventory, sothere is no provision for decline in value of inventories.
7.5.3. Statements for borrowing cost capitalized and included in the closing balanceof inventoryThere is no borrowing cost capitalized and included in the closing balance of inventory.
7.5.4. Closing conditions of assets completed but not settled through constructioncontractsThere are no closing conditions of assets completed but not settled through constructioncontracts.
7.6. Other current assets
Item | Closing Balance | Opening Balance |
Value-added tax | 121,918,815.13 | 23,714,061.05 |
Corporate income tax | 70,659,379.26 | 48,960,190.22 |
Other taxes | 1,659,042.63 | 182,168.33 |
Total | 194,237,237.02 | 72,856,419.60 |
Other statements:
1. The value-added tax expected to be deducted in the next fiscal year and corporate
income tax and other taxes are disclosed in other current assets.
2. The closing balance increased CNY 121,380,817.42 compared with the opening
balance, an increase by 166.60%, mainly due to the increase in input value-added tax.
7.7. Available-for-sale financial assets
7.7.1. Details of available-for-sale financial assets
Item
Item | Closing Balance | Opening Balance | ||||
Book Balance | Provision for impairment | Book Value | Book Balance | Provision for impairment | Book Value | |
Available-for-sale equity instruments | 281,572,374.83 | 5,752,926.37 | 275,819,448.46 | 328,327,384.26 | 5,752,926.37 | 322,574,457.89 |
Measured by fair value | 190,758,692.59 | 190,758,692.59 | 237,513,702.02 | 237,513,702.02 | ||
Measured by cost | 90,813,682.24 | 5,752,926.37 | 85,060,755.87 | 90,813,682.24 | 5,752,926.37 | 85,060,755.87 |
Total | 281,572,374.83 | 5,752,926.37 | 275,819,448.46 | 328,327,384.26 | 5,752,926.37 | 322,574,457.89 |
7.7.2. Available-for-sale financial assets measured at fair value at period end
Categories of available-for-sale financial assets | Available-for-sale equity instruments | Available-for-sale debt instruments | Total |
Cost of equity instruments / Amortized cost of debt instruments | 13,749,156.76 | 13,749,156.76 | |
Fair value | 190,758,692.59 | 190,758,692.59 | |
Cumulative fair value changes through other comprehensive income | 177,009,535.83 | 177,009,535.831 |
Note: 1.Available-for-sale financial assets measured at fair value at the end of the period were stockinvestment in Guotai Junan Securities Co.,Ltd. and Sichuan Nitrocell Co.,Ltd..
7.7.3. Available-for-sale financial assets measured by cost at period end
Investee
Investee | Book Balance | Provision for impairment | Proportion of equity held in investee | Current period cash dividends | ||||||
Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | |||
Guotai Junan Investment Management Co., Ltd. | 22,611,834.24 | 22,611,834.24 | 1.64% | |||||||
Commercial Bank of Luzhou City | 51,120,000.00 | 51,120,000.00 | 1.66% | 4,339,200.00 | ||||||
Shenzhen Xingangfeng Development Co., Ltd. | 2,354,000.00 | 2,354,000.00 | 2,354,000.00 | 2,354,000.00 | 33.00% | |||||
Sichuan Deyang Jintai Hotel | 2,000,000.00 | 2,000,000.00 | 2,000,000.00 | 2,000,000.00 | 3.05% | |||||
Hainan Huitong International Trust Company | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 0.89% | |||||
Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. | 1,000,000.00 | 1,000,000.00 | 2.86% | |||||||
Guojiu Big Data Co., Ltd. | 10,000,000.00 | 10,000,000.00 | 11.33% | |||||||
Luzhou Zunzhi Auto Service Co., Ltd. | 25,000.00 | 25,000.00 | 5.00% | |||||||
Sichuan Zhonghe Tongchuang Maca Investment Co., Ltd. | 200,000.00 | 200,000.00 | 200,000.00 | 200,000.00 | 2.00% | |||||
Luzhou Enterprise Union Trading Co., Ltd. | 502,848.00 | 502,848.00 | 198,926.37 | 198,926.37 | 11.31% | |||||
Total | 90,813,682.24 | 90,813,682.24 | 5,752,926.37 | 5,752,926.37 | -- | 4,339,200.00 |
7.7.4. Changes in provision for impairment of available-for-sale assets during the reporting period
Categories of available-for-sale financial assets
Categories of available-for-sale financial assets | Available-for-sale equity instruments | Available-for-sale debt instruments | Total |
Opening balance of the provision for impairment | 5,752,926.37 | 5,752,926.37 | |
Closing balance of the provision for impairment | 5,752,926.37 | 5,752,926.37 |
7.7.5. Statements for fair value of available-for-sale equity instrument at the period end decreases significantly or decreases continuouslybut no provision for impairmentThere is no significant decline in the fair value of available-for-sale equity instrument at the period end or a continuously decline but no provision forimpairment.
7.8. Long-term equity investments
Investee | Opening Balance | Changes in Current Period | Closing Balance | Closing Balance of provision for impairment | |||||||
Increase | Decrease | Gain or loss recognized under equity method | Adjustments of other comprehensive income | Other changes in equity | Cash divided or profit declared | Provision for impairment | Other | ||||
Huaxi Securities Co., Ltd. | 1,827,461,071.65 | 89,710,642.15 | -359,548.89 | 171,419,326.19 | 10,367,583.47 | 2,077,863,907.63 | 2,567,098.80 | ||||
Sichuan Development Wine Investment Co., Ltd. | 16,636,159.43 | -829,619.65 | 15,806,539.78 | ||||||||
Subtotal | 1,827,461,071.65 | 16,636,159.43 | 88,881,022.50 | -359,548.89 | 171,419,326.19 | 10,367,583.47 | 2,093,670,447.41 | 2,567,098.80 | |||
Total | 1,827,461,071.65 | 16,636,159.43 | 88,881,022.50 | -359,548.89 | 171,419,326.19 | 10,367,583.47 | 2,093,670,447.41 | 2,567,098.80 |
Other statements:
1. On 5 February 2018, Huaxi Securities, a joint venture of the Company, was listed on
the Shenzhen Stock Exchange. The shareholding ratio of the Company holding HuaxiSecurities was diluted from 12.99% before the listing to 10.39%; The voting right ofHuaxi Securities was less than 20% but it still has significant influence because theCompany has sent directors to the board of Huaxi Securities and has thecorresponding substantive decision-making power.2. On 9 February 2018, the 25
th
meeting of the eighth Board of Directors deliberated andapproved the Proposal on the Acquisition of Equity Related Transactions and ForeignInvestment of Sichuan Development Wine Investment Co., Ltd., deciding to useowned funds to acquire all 30% equity of Sichuan Development Wine Investment Co.,Ltd. held by the controlling shareholder Laojiao Group on the estimated price of CNY10,594,650.00; On 16 October 2018, the 3rd meeting of the ninth board of directorsdeliberated and approved the Proposal on the Acquisition of 12% equity of SichuanDevelopment Wine Investment, deciding to purchase the 12% equity of the companylisted on the Southwest United Property Exchange by the Sichuan Development(Holdings) Co., Ltd. at the listing price of CNY 6 million; Thus, the Company holds42% equity of Sichuan Development Wine Investment Co., Ltd. and has a significantimpact on it with the equity method as an associated enterprise.
7.9. Fixed assets
Item
Item | Closing Balance | Opening Balance |
Fixed assets | 1,028,995,516.07 | 1,129,894,772.60 |
Disposal of fixed assets | 671,399.40 | |
Total | 1,029,666,915.47 | 1,129,894,772.60 |
7.9.1. Details of fixed assets
Item | Buildings and constructions | Specialized equipment | General equipment | Transportation equipment | Other equipment | Total |
Original cost | ||||||
1.Opening balance | 1,173,356,149.69 | 506,915,296.03 | 253,176,265.88 | 39,279,474.84 | 540,625,993.99 | 2,513,353,180.43 |
2.Increase in current period | 9,421,817.90 | 6,111,604.01 | 14,168,672.94 | 85,862.07 | 38,592,337.50 | 68,380,294.42 |
(1)External purchase | 303,184.93 | 3,327,943.13 | 12,420,866.69 | 85,862.07 | 5,703,638.82 | 21,841,495.64 |
(2)Transfer from construction in progress | 10,679,539.59 | 388,781.84 | 4,379,200.58 | 32,912,204.32 | 48,359,726.33 | |
(3)Increase from business combination |
Item
Item | Buildings and constructions | Specialized equipment | General equipment | Transportation equipment | Other equipment | Total |
(4)Original cost adjustment for completion settlement Note 1 | -1,999,112.27 | 178,184.72 | -1,820,927.551 | |||
(5)Internal adjustment of assets Note 2 | 438,205.65 | 2,394,879.04 | -2,631,394.33 | -201,690.36 | 2 | |
3.Decrease in current period | 10,724,390.34 | 948,586.05 | 5,263,962.83 | 2,430,646.98 | 19,747,583.10 | 39,115,169.30 |
(1)Disposal or retirement | 10,724,390.34 | 948,586.05 | 5,263,962.83 | 2,430,646.98 | 19,747,583.10 | 39,115,169.30 |
4.Closing Balance | 1,172,053,577.25 | 512,078,313.99 | 262,080,975.99 | 36,934,689.93 | 559,470,748.39 | 2,542,618,305.55 |
Accumulated depreciation | ||||||
1.Opening Balance | 557,857,042.47 | 432,719,199.10 | 146,887,561.29 | 30,820,383.50 | 214,551,281.40 | 1,382,835,467.76 |
2.Increase in current period | 51,066,964.39 | 33,783,676.07 | 30,285,255.55 | 2,078,066.89 | 37,777,746.33 | 154,991,709.23 |
(1)Provision | 51,057,890.64 | 33,732,804.40 | 30,307,915.91 | 2,078,066.89 | 37,815,031.39 | 154,991,709.23 |
(2)Internal adjustment of assets | 9,073.75 | 50,871.67 | -22,660.36 | -37,285.06 | ||
3.Decrease in current period | 4,487,790.07 | 697,024.04 | 4,947,424.69 | 2,314,506.37 | 12,380,582.41 | 24,827,327.58 |
(1)Disposal or retirement | 4,487,790.07 | 697,024.04 | 4,947,424.69 | 2,314,506.37 | 12,380,582.41 | 24,827,327.58 |
4.Closing Balance | 604,436,216.79 | 465,805,851.13 | 172,225,392.15 | 30,583,944.02 | 239,948,445.32 | 1,512,999,849.41 |
Provision for impairment | ||||||
1.Opening Balance | 622,940.07 | 622,940.07 | ||||
2.Increase in current period | ||||||
(1)Provision | ||||||
3.Decrease in current period | ||||||
(1)Disposal or retirement |
Item
Item | Buildings and constructions | Specialized equipment | General equipment | Transportation equipment | Other equipment | Total |
4.Closing Balance | 622,940.07 | 622,940.07 | ||||
Book Value | ||||||
1.Closing Book Value | 566,994,420.39 | 46,272,462.86 | 89,855,583.84 | 6,350,745.91 | 319,522,303.07 | 1,028,995,516.07 |
2.Opening Book Value | 614,876,167.15 | 74,196,096.93 | 106,288,704.59 | 8,459,091.34 | 326,074,712.59 | 1,129,894,772.60 |
Note:
1. The original cost of the assets adjusted for completion settlement in the current period refers to thedifference between the amount of construction in progress of pre-transfer in the previous period and theamount after the completion of the current period.2. Internal adjustment of assets in the current period refer that the Company hired an intermediaryagency to re-clean and adjust for the fixed assets category of the previous year in order to manage fixedassets better.
7.9.2. Fixed assets without certification of right
Item | Book value | Reason for not having the certification of right |
Buildings | 1,988,539.70 | The property ownership certificate has not been processed yet for the historical reasons, and it plans to be processed after gradually improving procedures. |
Workshop | 28,047,411.95 | The property ownership certificate has not been processed yet for the historical reasons, and it plans to be processed after gradually improving procedures. |
7.9.3. Disposal of fixed assets
Item | Closing Balance | Opening Balance |
Retirement of assets | 671,399.40 | |
Total | 671,399.40 |
7.10. Construction in progress
Item | Closing Balance | Opening Balance |
Construction in progress | 3,000,489,249.86 | 1,567,263,995.95 |
Total | 3,000,489,249.86 | 1,567,263,995.95 |
7.10.1. Details of the construction in progress
Item | Closing Balance | Opening Balance | ||||
Book Balance | Provision for impairment | Book Value | Book Balance | Provision for impairment | Book Value | |
Technical renovation project of brewing | 2,362,483,702.39 | 2,362,483,702.39 | 1,159,259,852.35 | 1,159,259,852.35 |
Item
Item | Closing Balance | Opening Balance | ||||
Book Balance | Provision for impairment | Book Value | Book Balance | Provision for impairment | Book Value | |
National cellar square upgrade project | 396,458,270.43 | 396,458,270.43 | 382,650,395.70 | 382,650,395.70 | ||
Marketing network command center office area reconstruction and expansion project | 41,727,132.77 | 41,727,132.77 | 569,503.85 | 569,503.85 | ||
New model application project of intelligent production workshop of solid state liquor | 41,628,781.02 | 41,628,781.02 | 100,403.31 | 100,403.31 | ||
Technical upgrading project of sewage station | 7,019,543.87 | 7,019,543.87 | ||||
Luohan brewing production automation equipment renovation project | 18,143,603.80 | 18,143,603.80 | 11,869,453.35 | 11,869,453.35 | ||
Cellar construction project | 66,252,965.92 | 66,252,965.92 | 2,640,114.50 | 2,640,114.50 | ||
Packaging production line purchase project | 3,325,592.75 | 3,325,592.75 | ||||
Other projects | 66,775,249.66 | 66,775,249.66 | 6,848,680.14 | 6,848,680.14 | ||
Total | 3,000,489,249.86 | 3,000,489,249.86 | 1,567,263,995.95 | 1,567,263,995.951 |
Note: 1.The closing balance increased CNY 1,433,225,253.91 compared with the opening balance, withan increase by 91.45%, because the technical renovation project of brewing is in the process as planned,and the investment input increases year by year.
7.10.2. Significant changes in construction in progress
Item
Item | Budget | Opening Balance | Increase in current period | Transfer into fixed assets | Other decreases | Closing Balance | Proportion of accumulative project input in budget | Progress (%) | Accumulative capitalized interest | Including: Capitalized interest for the period | Capitalization rate for the period (%) | Source of funds |
Technical renovation project of brewing | 7,414,280,000.00 | 1,159,259,852.35 | 1,203,223,850.04 | 2,362,483,702.39 | 31.86% | 40.00 | Capital raised by share issuing and self-financing | |||||
National cellar square upgrade project | 420,000,000.00 | 382,650,395.70 | 13,807,874.73 | 396,458,270.43 | 94.39% | 95.00 | Other | |||||
Marketing network command center office area reconstruction and expansion project | 271,500,200.00 | 569,503.85 | 41,157,628.92 | 41,727,132.77 | 15.37% | 30.00 | Other | |||||
New model application project of intelligent production workshop of solid state liquor | 245,100,000.00 | 100,403.31 | 41,528,377.71 | 41,628,781.02 | 16.98% | 20.00 | Other | |||||
Technical upgrading project of sewage station | 77,050,000.00 | 7,019,543.87 | 7,019,543.87 | 9.11% | 40.00 | Other |
Item
Item | Budget | Opening Balance | Increase in current period | Transfer into fixed assets | Other decreases | Closing Balance | Proportion of accumulative project input in budget | Progress (%) | Accumulative capitalized interest | Including: Capitalized interest for the period | Capitalization rate for the period (%) | Source of funds |
Luohan brewing production automation equipment renovation project | 62,840,000.00 | 11,869,453.35 | 22,179,142.87 | 15,904,992.42 | 18,143,603.80 | 28.87% | 60.00 | Other | ||||
Cellar construction project | 65,000,000.00 | 2,640,114.50 | 63,612,851.42 | 66,252,965.92 | 101.93% | 98.00 | Capital raised by share issuing | |||||
Total | 8,555,770,200.00 | 1,557,089,723.06 | 1,392,529,269.56 | 15,904,992.42 | 2,933,714,000.20 | -- | -- | -- |
7.10.3. Provision for impairment of construction in progressThe net realizable value is not lower than book cost in the closing balance of construction in progress, so there is no provision for impairment ofconstruction in progress.
7.11. Intangible assets
7.11.1. Details of intangible assets
Item
Item | Land use right | Patent right | No-patent right technology | Trademark right | Computer software | Total |
Original cost | ||||||
1. Opening Balance | 303,836,329.47 | 567,975.00 | 1,864,746.08 | 22,589,518.24 | 328,858,568.79 | |
2. Increase in current period | 9,988,002.65 | 9,988,002.65 | ||||
(1)Acquired | 9,988,002.65 | 9,988,002.65 | ||||
(2)Internal developed | ||||||
(3)Business combination | ||||||
3. Decrease in current period | ||||||
(1)Disposal | ||||||
4. Closing Balance | 303,836,329.47 | 567,975.00 | 1,864,746.08 | 32,577,520.89 | 338,846,571.44 | |
Accumulated amortization | ||||||
1. Opening Balance | 81,643,952.97 | 406,998.96 | 1,413,835.45 | 14,354,636.08 | 97,819,423.46 | |
2. Increase in current period | 6,262,530.17 | 16,797.50 | 96,187.68 | 2,684,259.75 | 9,059,775.10 | |
(1)Provision | 6,262,530.17 | 16,797.50 | 96,187.68 | 2,684,259.75 | 9,059,775.10 | |
3. Decrease in current period | ||||||
(1)Disposal | ||||||
4. Closing Balance | 87,906,483.14 | 423,796.46 | 1,510,023.13 | 17,038,895.83 | 106,879,198.56 | |
Provision for impairment | ||||||
1. Opening Balance | ||||||
2. Increase in current period | ||||||
(1)Provision | ||||||
3. Decrease in current period | ||||||
(1)Disposal or retirement | ||||||
4. Closing Balance | ||||||
Book Value | ||||||
1. Closing Book | 215,929,846.33 | 144,178.54 | 354,722.95 | 15,538,625.06 | 231,967,372.88 |
Item
Item | Land use right | Patent right | No-patent right technology | Trademark right | Computer software | Total |
Value | ||||||
2. Opening Book Value | 222,192,376.50 | 160,976.04 | 450,910.63 | 8,234,882.16 | 231,039,145.33 |
7.11.2. Details of land use right without the certification of right
Item | Book value | Reason for not having the certification of right |
Land use right | 191,732.63 | The ownership certificate has not been processed yet for the historical reasons, and it plans to be processed after gradually improving procedures. |
7.12. Deferred tax assets/ deferred tax liabilities
7.12.1 Deferred tax assets before offset
Item | Closing Balance | Opening Balance | ||
Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
Provision for asset impairment | 216,298,166.31 | 54,074,386.45 | 218,751,736.26 | 54,687,934.08 |
Unrealized profits from internal transactions | 1,309,793,977.06 | 327,531,965.78 | 1,293,350,763.20 | 323,337,690.81 |
Deductible losses | 872,951.87 | 218,237.97 | 3,846,566.85 | 961,641.71 |
Impact from salary | 201,262,655.64 | 50,030,751.13 | 115,528,226.92 | 28,381,218.67 |
Impact from deferred earnings | 18,840,778.20 | 4,555,670.74 | 16,996,051.66 | 3,908,893.86 |
Impact from fixed assets depreciation | 145,146.51 | 23,949.17 | 507,655.76 | 83,763.20 |
Total | 1,747,213,675.59 | 436,434,961.24 | 1,648,981,000.65 | 411,361,142.33 |
7.12.2 Deferred tax liabilities before offset
Item | Closing Balance | Opening Balance | ||
Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
Fair value changes of available-for-sale assets | 177,009,535.83 | 44,252,383.96 | 223,764,545.26 | 55,941,136.35 |
Total | 177,009,535.83 | 44,252,383.96 | 223,764,545.26 | 55,941,136.35 |
7.12.3. Deferred tax assets or liabilities presented as net value after offset
Item | Closing offset amount of deferred tax assets and deferred tax liabilities | Closing balance of deferred tax assets or deferred tax liabilities after offset | Opening offset amount of deferred tax assets and deferred tax liabilities | Opening balance of deferred tax assets or deferred tax liabilities after offset |
Deferred tax assets | 436,434,961.24 | 411,361,142.33 | ||
Deferred tax liabilities | 44,252,383.96 | 55,941,136.35 |
7.12.4. Details of unrecognized deferred tax assets
Item
Item | Closing Balance | Opening Balance |
Deductible losses | 17,608,147.09 | 28,544,342.43 |
Impact from provision for impairment of available-for-sale assets | 200,000.00 | 200,000.00 |
Impact from employee benefits payable | 1,618,142.01 | 1,532,571.82 |
Impact from deferred earnings | 24,000.00 | |
Impact from provision for impairment of assets | 5,096.46 | |
Total | 19,431,385.56 | 30,300,914.25 |
7.12.5. Deductible losses from unrecognized deferred tax assets will due on thefollowing years
Year | Closing Amount | Opening Amount | Notes |
2018 | 4,426,712.93 | ||
2019 | 1,164,310.73 | ||
2020 | 2,954,015.20 | 4,649,215.96 | |
2021 | 8,109,464.53 | 7,521,410.02 | |
2022 | 6,544,667.36 | 10,782,692.79 | |
Total | 17,608,147.09 | 28,544,342.43 | -- |
7.13. Other non-current assets
Item | Closing Balance | Opening Balance |
Value-added tax to be deducted | 4,314.05 | 4,314.05 |
Prepaid equipment expense | 16,919,004.20 | |
Prepaid land expense | 26,763,369.74 | |
Others | 1,293,208.42 | |
Total | 44,979,896.41 | 4,314.05 |
Other statements:
1. The closing balance of Value-added tax to be deducted is CNY 4,314.05, which is input tax of LuzhouBoda Brewing Co., Ltd., a subsidiary of the Company. As it has no business temporarily, it is estimatedthat it cannot be deducted within the next year, so it is listed in other non-current assets.2. The closing balance increased CNY 44,975,582.36 compared with the opening balance, with anincrease by 1,042,537.35%, mainly due to the impact of the new prepayment on construction andpayment on land of CNY 43,682,373.94 in the current period in the Brewery Company, a Company'ssubsidiary.
7.14. Notes and accounts payable
Category | Closing Balance | Opening Balance |
Accounts payables | 1,292,050,954.06 | 740,700,050.76 |
Total | 1,292,050,954.06 | 740,700,050.76 |
7.14.1. Presentation of accounts payable
Item
Item | Closing Balance | Opening Balance |
Within 1 year | 1,283,226,149.23 | 734,067,517.60 |
1-2 years | 6,964,123.24 | 4,227,780.92 |
2-3 years | 544,190.59 | 661,571.89 |
Over 3 years | 1,316,491.00 | 1,743,180.35 |
Total | 1,292,050,954.06 | 740,700,050.761 |
Note:1.The closing balance increased CNY 551,350,903.30 compared with the opening balance, with anincrease by 74.44%. Firstly, the purchase of raw materials and packaging materials has increased in thecurrent period. Secondly, the investment in the technical renovation project of brewing has increasedyear by year, and the amount of construction equipment payable has increased.
7.14.2. Significant accounts payable aging more than 1 year
Other statements:
There is no significant accounts payable aging more than 1 year.
7.15. Advance from customers
7.15.1. Presentation of advances from customers
Item | Closing Balance | Opening Balance |
Within 1 year | 1,548,909,002.82 | 1,930,720,655.19 |
1-2 years | 31,636,485.70 | 6,254,648.13 |
2-3 years | 4,230,033.33 | 3,606,983.63 |
Over 3 years | 19,649,668.11 | 16,821,732.94 |
Total | 1,604,425,189.96 | 1,957,404,019.89 |
7.15.2. Significant advance from customers aging more than 1 year
Item | Closing Balance | Reason for not settled |
Advance from customers of payment for liquor | 55,516,187.14 | Payment is in settlement period |
Total | 55,516,187.14 | -- |
7.16. Employee benefits payable
7.16.1. Employee benefits payable shown as follows
Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
Short-term benefits | 111,149,325.18 | 620,624,437.52 | 495,679,602.71 | 236,094,159.99 |
Post-employment benefits- defined contribution plans | 26,404,135.85 | 90,661,781.13 | 85,076,855.00 | 31,989,061.98 |
Termination benefits | 147,072.15 | 138,100.62 | 8,971.53 | |
Total | 137,700,533.18 | 711,286,218.65 | 580,894,558.33 | 268,092,193.501 |
Note: 1.The closing balance increased CNY 130,391,660.32 compared with the opening balance, with anincrease by 94.69%, mainly due to the expansion of the Company's scale, the increase in staff, and theincrease in performance pay and bonuses.
7.16.2. Short-term employee benefits payable shown as follows
Item
Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
Wages, bonuses, allowances and grants | 85,744,972.24 | 481,405,751.45 | 366,428,985.48 | 200,721,738.21 |
Employees’ welfare | 44,477,316.98 | 44,477,316.98 | ||
Social insurance premiums | 8,183,495.19 | 27,401,368.10 | 21,473,000.59 | 14,111,862.70 |
Including: Medical insurance premium | 6,717,961.40 | 22,809,279.76 | 18,553,665.13 | 10,973,576.03 |
Work-related injury insurance | 1,020,367.09 | 2,003,927.55 | 1,607,354.17 | 1,416,940.47 |
Maternity insurance premium | 445,166.70 | 2,588,160.79 | 1,311,981.29 | 1,721,346.20 |
Housing funds | 51,051.47 | 51,154,695.25 | 51,089,737.93 | 116,008.79 |
Labor union expenditures and employee education funds | 17,169,806.28 | 16,185,305.74 | 12,210,561.73 | 21,144,550.29 |
Total | 111,149,325.18 | 620,624,437.52 | 495,679,602.71 | 236,094,159.99 |
7.16.3. Defined contribution plan shown as follows
Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
Basic endowment insurance premium | 7,514,736.36 | 61,784,911.42 | 51,536,043.46 | 17,763,604.32 |
Unemployment insurance premium | 5,998,331.55 | 1,913,736.07 | 752,193.66 | 7,159,873.96 |
Enterprise annuity | 12,891,067.94 | 26,963,133.64 | 32,788,617.88 | 7,065,583.70 |
Total | 26,404,135.85 | 90,661,781.13 | 85,076,855.00 | 31,989,061.98 |
7.17. Taxes payable
Item | Closing Balance | Opening Balance |
Value-added tax | 416,220,575.79 | 210,917,636.38 |
Consumption tax | 544,950,527.72 | 400,011,992.63 |
Enterprise income tax | 580,497,468.84 | 289,699,536.39 |
Individual income tax | 9,702,128.37 | 5,534,176.09 |
Urban maintenance and construction tax | 55,496,044.38 | 43,402,175.65 |
Education surcharge | 22,601,336.84 | 18,646,679.12 |
Local education surcharge | 13,211,282.71 | 12,570,849.21 |
Property tax | 389,027.85 | 1,206,827.35 |
Stamp duty | 4,300,446.09 | 5,965,709.00 |
Land use tax | 616,031.18 | |
Others | 43,206.30 | 272,446.70 |
Item
Item | Closing Balance | Opening Balance |
Total | 1,648,028,076.07 | 988,228,028.52 |
Other statements: The closing balance increased CNY 659,800,047.55 compared with the openingbalance, with an increase by 66.77%, mainly due to the increase of enterprise income tax, value-addedtax and consumption tax with the growth of sales income in the current period.
7.18. Other payables
Item | Closing Balance | Opening Balance |
Dividends payable | 4,500,000.00 | |
Other payables | 602,887,024.88 | 538,692,435.55 |
Total | 602,887,024.88 | 543,192,435.55 |
7.18.1. Dividends payable
Item | Closing Balance | Opening Balance |
Dividends due to ordinary shareholders | 4,500,000.00 | |
Total | 4,500,000.00 |
Other statements include significant dividends payable overdue for over 1 year and outstanding reasons.The opening balance of the dividends payable to ordinary shares is the dividends payable ofnon-controlling shareholders of Pinchuang company, the Company's subsidiary. It was paid in thisreporting period.
7.18.2. Other payables7.18.2.1. Categories by nature
Item | Closing Balance | Opening Balance |
Security deposit | 543,339,684.25 | 497,716,438.39 |
Intercourse funds | 28,265,598.58 | 34,340,599.33 |
Others | 31,281,742.05 | 6,635,397.83 |
Total | 602,887,024.88 | 538,692,435.55 |
7.18.2.2. Important other payables aging more than 1 year
There is no important other payables aging more than 1 year.
7.19. Long-term employee benefits payable
7.19.1. Long-term employee benefits payable table
Item | Closing Balance | Opening Balance |
Other long-term benefits | 7,929.00 | |
Total | 7,929.001 |
Note: The closing balance of other long-term welfare refers to the employee's internal retirement benefitsthat do not need to be fully paid in the last 12 months. It was the net liability calculated on the expensespaid to inner-retired staff by the Company until the retirement date at a discount rate of 4.22% which wasinterest rate of the five-year government bond of the previous year. As the end of the period, theCompany no longer has relevant situation.
7.20. Deferred income
Item
Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Reason |
Government grants | 19,992,728.85 | 9,985,200.00 | 8,996,773.85 | 20,981,155.00 | Reception of financial allocation |
Total | 19,992,728.85 | 9,985,200.00 | 8,996,773.85 | 20,981,155.00 | -- |
Details:
Liability Item
Liability Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Cost reduction in current period | Other changes | Closing Balance | Related to assets/ income |
Demonstration project of biomass gas production technology and equipment industrialization of brewing solid waste | 1,250,000.00 | 516,666.67 | 733,333.33 | Related to assets | ||||
Key technology research and industrialization project of artificial pit mud cultivation | 280,000.00 | 280,000.00 | Related to assets | |||||
Demonstration project of biomass gas technology and equipment industrialization from solid waste of brewing | 400,000.00 | 400,000.00 | Related to assets | |||||
Agricultural, industrial and social integration regional circular economy technology model and demonstration project | 520,000.00 | 520,000.00 | Relevant to asset | |||||
The second batch of provincial strategic emerging industry project | 566,666.67 | 200,000.00 | 366,666.67 | Related to assets | ||||
Modern warehousing logistics information operation and maintenance system construction project | 583,333.33 | 583,333.33 | Related to assets | |||||
The national service industry development guidance fund central base construction project | 642,857.14 | 214,285.73 | 428,571.41 | Related to assets | ||||
The central finance promotes the service industry development project | 800,000.00 | 800,000.00 | Related to assets | |||||
Luzhou agricultural science and technology park construction project | 1,000,000.00 | -400,000.00 | 600,000.00 | Related to assets | ||||
Solid state brewing engineering capacity improvement project | 1,125,000.00 | 375,000.00 | 750,000.00 | Related to assets |
Liability Item
Liability Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Cost reduction in current period | Other changes | Closing Balance | Related to assets/ income |
Demonstration project of science and technology service of solid brewing industry for food safety and efficient production | 1,241,117.98 | 15,344.82 | 1,225,773.16 | Related to assets | ||||
Liquor circulation electronic traceability system phase I construction project | 1,500,000.00 | 1,500,000.00 | Related to assets | |||||
Luzhou Lao jiao Co.,Ltd. Logistics business spin-off project | 1,750,000.00 | 600,000.00 | 1,150,000.00 | Related to assets | ||||
Demonstration and application project of intelligent production line for liquor brewing and qu-making | 2,780,000.00 | -400,000.00 | 2,380,000.00 | Related to assets | ||||
Standardization demonstration base project | 2,972,677.19 | 1,082,300.39 | 1,890,376.80 | Related to assets | ||||
Luzhou-flavor liquor brewing intelligent workshop new mode application project | 4,000,000.00 | 4,000,000.00 | Related to assets | |||||
New mode application project of digital workshop for solid state liquor production | 3,465,000.00 | 3,465,000.00 | Relevant to asset | |||||
Luzhou Laojiao automatic wine production line technical renovation project | 500,000.00 | 500,000.00 | Related to assets | |||||
Cooling water circulation and waste heat recovery of steamed bran in brewing workshop | 500,000.00 | 500,000.00 | Related to assets | |||||
Demonstration project of thermochemical energy and drying of brewing waste and coupling technology of brewing process | 586,000.00 | 586,000.00 | Related to assets | |||||
Demonstration project of thermochemical soil improvement materials and green planting of brewery waste | 620,000.00 | 620,000.00 | Related to income |
Liability Item
Liability Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Cost reduction in current period | Other changes | Closing Balance | Related to assets/ income |
Other projects - related to income | 387,333.34 | 387,333.34 | Related to income | |||||
Other projects - related to assets | 2,193,743.20 | 314,200.00 | 722,509.57 | 1,785,433.63 | Related to assets |
Other statement:
The other change decreased CNY 800,000.00 in the current period was to transfer the project subsidy to the cooperative unit according to the project task book and the progressof project implementation.
7.21. Share capital
Item
Item | Opening Balance | Increases/decreases in the current period (+, -) | Closing Balance | ||||
Issuance of new shares | Bonds share | Conversion of reserves funds into shares | Others | Subtotal | |||
Total number of shares | 1,464,752,476.00 | 1,464,752,476.00 |
7.22. Capital reserves
Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
Share premium(Capital premium) | 3,536,865,466.83 | 1,735,994.66 | 3,536,865,466.83 | |
Other capital reserves | 6,654,234.80 | 171,419,326.19 | 179,809,555.65 | |
Total | 3,543,519,701.63 | 173,155,320.85 | 3,716,675,022.48 |
Statements of capital reserves include increase or decrease changes of various categories and reasonsof changes in the current period1. The increase in share premium in the current period was the difference between the acquisition priceand the proportion of the identifiable net assets that the E-commerce company continues to calculatefrom the purchase date when the company acquired a minority shareholding in the subsidiary company,E-commerce company.2. Huaxi Securities was listed on the Shenzhen Stock Exchange on 5 February 2018. The shareholdingratio of the Company holding Huaxi Securities was diluted from 12.99% before the listing to 10.39%. Theincrease in other capital reserves is the share of the book value of net assets of Huaxi Securities theCompany enjoyed on the basis of shareholding ratio.
7.23. Other comprehensive income
Item
Item | Opening Balance | Current period | Closing Balance | ||||
Amount in current period before income tax | Less: Previously recognized in other comprehensive income transferred to profit and loss | Less: income tax | Amount attribute to parent company after tax | Amount attribute to non-controlling shareholders after tax | |||
Other comprehensive income that will be reclassified into profit and loss | 171,227,292.19 | -45,676,074.01 | -11,688,752.39 | -34,635,015.55 | 647,693.93 | 136,592,276.64 | |
Including: Other comprehensive income that will be reclassified into profit and loss under equity method | 1,988,702.29 | -359,548.90 | -359,548.90 | 1,629,153.39 | |||
Changes in fair value of available for sale financial assets | 167,823,408.91 | -46,755,009.43 | -11,688,752.39 | -35,066,257.04 | 132,757,151.87 | ||
Difference from conversion of financial statements in foreign currency | 1,415,180.99 | 1,438,484.32 | 790,790.39 | 647,693.93 | 2,205,971.38 | ||
Total | 171,227,292.19 | -45,676,074.01 | -11,688,752.39 | -34,635,015.55 | 647,693.93 | 136,592,276.64 |
7.24. Surplus reserves
Item
Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
Statutory surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | ||
Total | 1,464,752,476.00 | 1,464,752,476.00 |
Statements for surplus reserves include increase or decrease changes and change reasons this period:
The statutory surplus reserve is drawn at 10% of the parent company's net profit, and is limited to theparent company's share capital.
7.25. Undistributed profits
Item | Current Period | Previous Period |
Undistributed profit before adjustment at the end of the last year | 8,527,196,810.86 | 7,397,874,451.50 |
Total adjustment for undistributed profit at the beginning of year | -19,959,862.65 | |
Undistributed profit after adjustment at the beginning of year | 8,527,196,810.86 | 7,377,914,588.85 |
Plus: net profit attributable to owners of the parent company for the current period | 3,485,643,008.98 | 2,557,944,598.97 |
Less: withdrawal of statutory surplus reserves | 62,500,000.00 | |
ordinary share dividends payable | 1,830,940,595.00 | 1,346,162,376.96 |
Undistributed profits at the end of the period | 10,181,899,224.84 | 8,527,196,810.86 |
7.26. Operating revenue and cost of sales
Item | Current Period | Previous Period | ||
Revenue | Cost of sales | Revenue | Cost of sales | |
Primary business | 12,859,523,825.56 | 2,878,994,470.11 | 10,114,600,585.81 | 2,859,769,882.87 |
Other business | 195,941,935.99 | 55,007,388.80 | 280,266,907.65 | 58,045,173.65 |
Total | 13,055,465,761.55 | 2,934,001,858.91 | 10,394,867,493.46 | 2,917,815,056.52 |
7.27. Business taxes and surcharges
Item | Current Period | Previous Period |
Consumption tax | 1,254,699,216.54 | 1,049,362,375.31 |
Urban maintenance and construction tax | 186,133,761.82 | 146,723,195.28 |
Educational surcharge | 79,725,865.40 | 62,064,859.14 |
Property tax | 11,252,344.25 | 3,991,367.53 |
Land use tax | 9,618,415.36 | 14,200,672.84 |
Stamp duty | 11,077,748.47 | 12,730,883.34 |
Local education surcharge | 53,171,925.46 | 46,032,938.33 |
Others | 155,775.67 | |
Total | 1,605,835,052.97 | 1,335,106,291.77 |
7.28. Selling and distribution expenses
Item
Item | Current Period | Previous Period |
Advertising promotion and marketing expense | 2,641,767,107.45 | 1,879,646,808.80 |
Transportation and storage costs | 215,414,715.67 | 220,015,711.84 |
Others | 535,539,609.21 | 312,222,001.67 |
Total | 3,392,721,432.33 | 2,411,884,522.31 |
Other statements:
The amount of this period increased CNY 980,836,910.02 compared with previous period, with anincrease by 40.67%, mainly due to advertising and marketing promotion strengthened in the currentperiod in order to enhance the brand influence and promote sales.
7.29. General and administrative expenses
Item | Current Period | Previous Period |
Employee compensation | 354,105,514.18 | 180,770,697.71 |
Depreciation and amortization | 136,785,444.52 | 142,139,945.00 |
Management fee and service expense | 55,198,156.70 | 27,225,557.31 |
Others | 176,359,857.40 | 168,327,505.97 |
Total | 722,448,972.80 | 518,463,705.99 |
Other statements:
The amount of this period increased CNY 203,985,266.81 compared with previous period, with anincrease by 39.34%, mainly due to the expansion of the Company's scale, the increase in staff, and theincrease in performance pay and bonuses.
7.30. Research and development expenses
Item | Current Period | Previous Period |
Comprehensive research and development expenses | 62,172,210.70 | 50,990,507.33 |
Total | 62,172,210.70 | 50,990,507.33 |
7.31. Financial expenses
Item | Current Period | Previous Period |
Interest expenses | 64,698,037.12 | 34,356,638.97 |
Less: Interest income | 280,805,447.66 | 145,682,879.58 |
Losses from currency exchange | -731,529.96 | 961,580.83 |
Amortization of unacknowledged financial charges | 1,964.45 | |
Handling charges | 1,772,457.71 | 3,464,672.63 |
Total | -215,066,482.79 | -106,898,022.70 |
Other statements:
1. Interest expenses mainly results from bank acceptance bill discounting.2. The amount of this period decreased CNY 108,168,460.09 compared with previous period, with adecrease by 101.19%, mainly due to the increase of interest income on deposit resulting from stockfunds in the current period.
7.32. Impairment losses
Item
Item | Current Period | Previous Period |
Bad debt loss | -2,035,339.62 | 448,154.45 |
Total | -2,035,339.62 | 448,154.45 |
Other statements:
The amount of this period decreased CNY 2,483,494.07 compared with previous period, with a decreaseby 554.16%, mainly due to the decrease of accounts receivable and recovery for bad and doubtful debt inthe current period.
7.33. Other income
Item | Current Period | Previous Period |
Government grants | 22,342,598.30 | 27,087,985.92 |
Individual income tax commission refund | 1,749,728.51 | 56,873.65 |
7.34. Investment income
Item | Current Period | Previous Period |
Investment income from long-term equity investments under the equity method | 88,881,022.50 | 132,404,279.33 |
Investment income gained during the period of holding the available-for-sale financial assets | 9,112,541.00 | 5,912,117.71 |
Total | 97,993,563.50 | 138,316,397.04 |
Other statements:
There is no major restriction on the repatriation of the Company's investment income.
7.35. Gains from disposal of assets
Item | Current Period | Previous Period |
Gains from disposal of non-current assets | -492,389.13 | -4,256,543.78 |
Including: gains from disposal of fixed assets | -492,389.13 | -4,256,543.78 |
7.36. Non-operating income
Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
Compensation for default | 26,772,376.92 | 15,990,595.57 | 26,772,376.92 |
Others | 4,460,100.29 | 9,846,325.80 | 4,460,100.29 |
Total | 31,232,477.21 | 25,836,921.37 | 31,232,477.21 |
7.37. Non-operating costs
Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
Donation expenses | 32,585,518.55 | 14,559,500.00 | 32,585,518.55 |
Losses from retirement of fixed assets | 13,393,602.05 | 13,393,602.05 |
Item
Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
Others | 3,549,328.49 | 5,821,376.59 | 3,549,328.49 |
Total | 49,528,449.09 | 20,380,876.59 | 49,528,449.09 |
Other statements:
The amount of this period increased CNY 29,147,572.50 compared with previous period, with anincrease by 143.01%, mainly due to the donation expenses increased CNY 18,026,018.55 and thelosses from retirement of fixed assets increased CNY 13,393,602.05.
7.38. Income tax expense
7.38.1. Statement of income tax expense
Item | Current Period | Previous Period |
Current period income tax | 1,173,293,516.03 | 886,383,123.71 |
Deferred income tax | -25,073,818.91 | -54,689,373.40 |
Total | 1,148,219,697.121 | 831,693,750.312 |
Note:1. The amount of this period increased CNY 316,525,946.81 compared with previous period, withan increase by 143.01%, mainly due to the increase of profit.2. Details of income tax rate in Note 6.Taxes
7.38.2. Adjustment for accounting profit and income tax expense
Item | Current Period Amount |
Total profit | 4,658,685,585.55 |
Income tax expenses determined by statutory/applicable tax rate | 1,164,671,396.39 |
Impact from subsidiaries’ different tax rates | -14,426,965.85 |
Impact from adjust for impact from income tax expense in previous period | -7,297,996.38 |
Impact from non-taxable income | -19,628,359.76 |
Impact from non-deductible costs, expenses and losses | 15,638,804.09 |
Impact from deductible temporary difference or losses due to unrecognized deferred tax asset in current period | 4,857,846.39 |
Impact from recovery for deductible temporary losses due to recognized deferred tax asset at early stage | 4,404,972.24 |
Income tax expense | 1,148,219,697.12 |
7.39. Other comprehensive income
Details in Note 7.23 Other comprehensive income
7.40. Notes to the statement of cash flow
7.40.1. Cash received from other operation activities
Item | Current Period | Previous Period |
Government grants | 23,331,024.45 | 17,166,817.40 |
Other receivables | 91,393,724.75 |
Item
Item | Current Period | Previous Period |
Interest income from bank deposit | 263,400,471.52 | 141,431,303.89 |
Others | 104,468,341.22 | 95,921,130.77 |
Total | 482,593,561.94 | 254,519,252.06 |
Statement for cash received from other operation activitiesThe amount in current period increased CNY 228,074,309.88 compared with previous period,with anincrease by 89.61%. Firstly, the Company recovered CNY 91,393,724.75 of saving deposits involvingcontract disputes. Secondly, the interest income on deposit increased CNY 121,969,167.63.
7.40.2. Cash paid for other operating activities
Item | Current Period | Previous Period |
Cash paid for expenses | 3,076,367,890.52 | 2,244,603,990.01 |
Payment of tourism bureau deposit | 1,200,000.00 | |
Total | 3,077,567,890.52 | 2,244,603,990.01 |
Statement for cash paid for other operation activitiesThe amount in current period increased CNY 832,963,900.51 compared with previousperiod, with an increase by 37.11%, mainly due to the increase in advertising andmarketing promotion.
7.40.3. Cash paid for other investing activities
Item | Current Period | Previous Period |
Net outflow of Internal adjustment | 244,125,003.53 | |
Cash paid for buying subsidiary - E-commerce company | 9,604,800.00 | |
Total | 9,604,800.00 | 244,125,003.53 |
7.41. Supplementary information to statement of cash flow
7.41.1. Supplementary information to statement of cash flow
Item | Current Period | Previous Period |
1. Reconciliation of net profit to cash flow from operating activities | -- | -- |
Net profit | 3,510,465,888.43 | 2,602,024,285.09 |
Plus: provision for asset impairment | -2,035,339.62 | 448,154.45 |
Depreciation of fixed asset, oil and gas assets and productive biological assets | 154,991,709.23 | 161,101,237.90 |
Amortization of intangible assets | 9,059,775.10 | 8,301,452.51 |
Amortization of long-term deferred expenses | 492,389.13 | 4,256,543.78 |
Losses from retirement of fixed assets (Gains use “-”) | 13,393,602.05 | |
Financial expenses (Gains use “-”) | 63,966,507.16 | 35,320,184.25 |
Losses on investments (Gains use “-”) | -97,993,563.50 | -138,316,397.04 |
Decrease in deferred income tax assets (Increase uses “-”) | -25,073,818.91 | -54,666,993.69 |
Increase in deferred income tax liabilities (Decrease uses “-”) | -22,379.71 | |
Decrease in inventories (Increase use “-”) | -418,549,226.69 | -298,091,290.60 |
Decrease in operating receivables (Increase use “-”) | 233,990,726.21 | -452,241,323.24 |
Item
Item | Current Period | Previous Period |
Increase in operating payables (Decrease use “-”) | 855,207,369.65 | 1,835,620,588.19 |
Net cash flows from operating activities | 4,297,916,018.24 | 3,703,734,061.89 |
2. Significant investing and financing activities not involving cash | -- | -- |
3.Net change in cash and cash equivalents | -- | -- |
Closing balance of cash | 9,365,986,627.68 | 8,449,422,154.91 |
Less: opening balance of cash | 8,449,422,154.91 | 4,826,248,031.74 |
Net change in cash and cash equivalents | 916,564,472.77 | 3,623,174,123.17 |
7.41.2. Net cash paid during current period for subsidiaries’ acquisitionsThere is no net cash paid during current period for subsidiaries’ acquisitions.
7.41.3. Net cash received during current period from disposing subsidiariesThere is no net cash received during current period from disposing subsidiaries.
7.41.4. Composition of cash and cash equivalent
Item | Opening Balance | Closing Balance |
1. Cash | 9,365,986,627.68 | 8,449,422,154.91 |
Including: Cash on hand | 4,420.76 | 10,907.81 |
Unrestricted bank deposit | 9,364,716,075.36 | 8,449,228,764.97 |
Other unrestricted cash and cash equivalents | 1,266,131.56 | 182,482.13 |
2. Closing balance of cash and cash equivalents | 9,365,986,627.68 | 8,449,422,154.91 |
Other statements:
The difference between the closing balance of cash and cash equivalents and cash at bank and on handis CNY 1,400,000,00, which is a travel service deposit with limited use rights in other cash and cashequivalents.
7.42. Assets with restricted ownership or use rights
Item | Closing Book Balance | Reason for Restriction |
Other cash and cash equivalents | 1,400,000.00 | According to the regulations of tourism bureau, travel service deposit is deposited in a designated bank. |
Total | 1,400,000.00 | -- |
7.43. Foreign currency transactions
7.43.1. Foreign currency transactions
Item | Closing Balance in Foreign Currency | Exchange Rate | Closing Balance in CNY |
Cash at Bank and on Hand | -- | -- | 115,442,541.42 |
Including: USD | 16,383,718.02 | 6.8632 | 112,444,733.50 |
EUR | |||
HKD | 3,366,299.20 | 0.8762 | 2,949,551.36 |
Item
Item | Closing Balance in Foreign Currency | Exchange Rate | Closing Balance in CNY |
AUD | 10,001.36 | 4.8250 | 48,256.56 |
Accounts Receivable | -- | -- | 1,003,841.49 |
Including: USD | 146,264.35 | 6.8632 | 1,003,841.49 |
EUR | |||
HKD | |||
Long-term Loans | -- | -- | |
Including: USD | |||
EUR | |||
HKD | |||
Advance from Customers | 935,519.13 | ||
Including: HKD | 738,200.77 | 0.8762 | 646,811.51 |
USD | 22,038.16 | 6.8632 | 151,252.30 |
AUD | 28,488.15 | 4.8250 | 137,455.32 |
Other Receivables | 3,733,469.76 | ||
Including: HKD | 1,236,852.82 | 0.8762 | 1,083,730.44 |
USD | 304,493.25 | 6.8632 | 2,089,798.07 |
AUD | 116,050.00 | 4.8250 | 559,941.25 |
Accounts Payable | 1,255,351.19 | ||
Including: HKD | 493,103.36 | 0.8762 | 432,057.16 |
USD | 119,957.75 | 6.8632 | 823,294.03 |
Other Payables | 15,766,894.83 | ||
Including: HKD | 4,975,591.67 | 0.8762 | 4,359,613.42 |
USD | 1,662,093.69 | 6.8632 | 11,407,281.41 |
7.43.2. Description of the foreign business entity, including the important foreignbusiness entity, shall disclose its main foreign business place, bookkeepingstandard currency and selection basis, and shall also disclose the reason for thechange of the bookkeeping standard currency√ Applicable ? N/A
Company | Operation site | Bookkeeping currency | Choosing Reason |
Luzhou Laojiao International Development(Hong Kong)Co., Ltd. | Hong Kong, China | HKD | Currency in the registration place |
Mingjiang Co., Ltd. | New York, USA | USD | Currency in the registration place |
7.44. Government grants
7.44.1. Details of government grants
Item | Amount | Presentation | Amount included in profit or loss of the current period |
Item
Item | Amount | Presentation | Amount included in profit or loss of the current period |
Related to assets | 20,361,155.00 | Deferred income | 7,809,440.51 |
Related to income | 620,000.00 | Deferred income | 387,333.34 |
Related to income | 14,145,824.45 | Other income | 14,145,824.45 |
8. Changes in consolidated scope
8.1. Business combination not under common control
8.1.1. Business combination not under common control during current periodThere is no business combination not under common control during current period.
8.2. Business combination under common control
8.2.1. Business combination under common control during current periodThere is no business combination under common control during current period.
8.3. Reverse purchase
The basic information of the transaction, the basis of the transaction constitutes thereverse purchase, whether the assets and liabilities retained by the listed companyconstitute the business and its basis, the determination of the merger cost, and theadjustment of the equity amount and its calculation according to the equity transaction:
There is no reverse purchase during current period.
8.4. Disposing subsidiaries
Whether there is a situation of losing control after disposing the investment in thesubsidiary only once? Yes √ NoWhether there is a situation of disposing the investment in the subsidiary through severaltransactions step by step and losing control during the period? Yes √ No
8.5. Consolidated scope changes due to other reasons
Explain other reasons for changing consolidated scope (such as establishing a newsubsidiary, liquidating a subsidiary) and its related situation.As mentioned in the Note 3.6, the newly merged enterprises include: In this year, SalesCompany of Luzhou Laojiao Co., Ltd., a wholly-owned subsidiary of the Company,invested and established Luzhou Laojiao fruit wine industry Co., Ltd. and MingjiangCo.Ltd., which holds 41% and 54% shares respectively. The reduced merged enterprise isthe canceled the subsidiary, Luzhou Laojiao Guibin Service Co., Ltd.
9. Interests in other entities
9.1. Interests in subsidiaries
9.1.1. Group Composition:
Name ofSubsidiaries
Name of Subsidiaries | Major business location | Place of registration | Nature of business | Shareholding Proportion | Acquisition method | |
Direct | Indirect | |||||
Luzhou Laojiao Brewing Co., Ltd. | Luzhou | Luzhou | Liquor manufacture and sales | 100.00% | Investment | |
Luzhou Boda Brewing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Luzhou | Luzhou | Agricultural product planting and sales | 60.00% | Business combination under common control | |
Sales Company of Luzhou Laojiao Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
Luzhou Laojiao Custom Liquor Co., Ltd. | Luzhou | Luzhou | Liquor sales | 15.00% | Investment | |
Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Luzhou | Luzhou | Supply chain management; sales | 100.00% | Investment | |
Luzhou Dingli Liquor Industry Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
Luzhou Dingyi Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
Luzhou Dinghao Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
Luzhou Laojiao Import and Export trade Co., Ltd. | Luzhou | Luzhou | Import and export trade | 100.00% | Investment | |
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 75.00% | Investment |
Name ofSubsidiaries
Name of Subsidiaries | Major business location | Place of registration | Nature of business | Shareholding Proportion | Acquisition method | |
Direct | Indirect | |||||
Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 75.00% | Investment | |
Luzhou Laojiao Guibin Service Co.,Ltd. | Luzhou | Luzhou | Business services, wine sales | 95.00% | Investment | |
Luzhou Laojiao Fruit Wine Industry Co., Ltd. | Luzhou | Luzhou | Fruit wine sales | 41.00% | Investment | |
Mingjiang Co., Ltd. | USA | USA | Liquor sales | 54.00% | Investment | |
Luzhou Pinchuang Technology Co., Ltd. | Luzhou | Luzhou | Technology development and service | 95.00% | Investment | |
Luzhou Laojiao Tourism Culture Co., Ltd. | Luzhou | Luzhou | Liquor sales, tourism | 100.00% | Investment | |
Luzhou Laojiao International Development(Hong Kong)Co., Ltd. | Hong Kong | Hong Kong | Wine sales | 55.00% | Investment | |
Luzhou Laojiao Electronic Commerce Co., Ltd. | Luzhou | Luzhou | Liquor sales | 90.00% | Investment | |
Luzhou Laojiao Baitiao Liquor Industry Co., Ltd. | Luzhou | Luzhou | Concoction of wine sales | 35.00% | Investment | |
Luzhou Baonuo Biotechnology Co., Ltd. | Luzhou | Luzhou | Fermented product manufacture | 100.00% | Investment | |
Luzhou Laojiao Health Liquor Industry Co.,Ltd. | Luzhou | Luzhou | Health care wine manufacture and sales | 100.00% | Business combination under common control | |
Luzhou Laojiao Health Sales Co., Ltd. | Luzhou | Luzhou | Health care wine sales | 100.00% | Business combination under common control |
Statement for that the proportion of share-holding is different from the proportion of voting rights:
As the Note 3.6, the Company holds less than 51% shares of Luzhou Laojiao Custom Liquor Co., Ltd.,Luzhou Laojiao fruit wine industry Co., Ltd., and Luzhou Laojiao Baitiao Liquor Industry Co., Ltd. but inthese companies’ board, among the five members, the Company have sent three person, which is in themajority. The Company has substantial control over these companies, so they are included in the
consolidation scope.
9.1.2. Important non-wholly-owned subsidiaries
Name of subsidiary
Name of subsidiary | Proportion of share holdings of non-Controlling shareholders | Gains and losses attributable to non-Controlling shareholders during current period | Dividends paid to non-controlling shareholders during current period | Closing balance of non-controlling shareholders interest |
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 25.00% | -59,978.67 | 83,287,621.26 | |
Luzhou Laojiao Custom Liquor Co., Ltd | 85.00% | 12,588,867.22 | 34,183,184.06 |
9.1.3. Major financial information of important non-wholly-owned subsidiaries
Name of subsidiary | Closing Balance | Opening Balance | ||||||||||
Current assets | Non-current assets | Total assets | Current Liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 1,166,879,541.23 | 8,708.99 | 1,166,888,250.22 | 833,737,765.21 | 833,737,765.21 | 1,133,316,438.78 | 2,249,387.40 | 1,135,565,826.18 | 801,894,834.55 | 801,894,834.55 | ||
Luzhou Laojiao Custom Liquor Co., Ltd | 84,545,682.39 | 866,940.67 | 85,412,623.06 | 45,197,112.41 | 45,197,112.41 | 63,655,919.80 | 412,775.56 | 64,068,695.36 | 38,663,616.73 | 38,663,616.73 |
Name of subsidiary
Name of subsidiary | Current Period | Previous Period | ||||||
Operating revenue | Net profit | Total comprehensive income | Operating cash flow | Operating revenue | Net profit | Total comprehensive income | Operating cash flow | |
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 2,493,854,876.92 | -303,651.51 | -303,651.51 | 16,457,683.16 | 2,405,756,993.61 | 83,648,582.41 | 83,648,582.41 | -304,677,182.86 |
Luzhou Laojiao Custom Liquor Co., Ltd | 163,005,460.59 | 14,810,432.02 | 14,810,432.02 | 15,388,726.32 | 121,336,926.80 | 17,896,450.80 | 17,896,450.80 | 13,293,051.34 |
9.1.4. Significant limitations for using group assets and paying off group liabilities
There are no significant limitations for using group assets and paying off group liabilities.
9.1.5. Financial support and other support provided to the structure subjects that are incorporated into the scope of consolidated financialstatements
There are no structure subjects that are incorporated into the scope of consolidated financial statements.
9.2. Transactions that change owners’ equity share of the subsidiary and still control the subsidiary
9.2.1. Statements for the changes of owners’ equity share of the subsidiary
As stated in Note 3.6 note 5, until 31 December 31 2018, the registered capital of E-commerce company was CNY 60 million, and the Company’s subscribed capital contributionwas CNY 54 million, whose shareholding ratio was 90.00%.
9.2.2. Impact of the transactions on non-controlling interests and equity attributable to the parent company
June 2018 | September 2018 | Total | |
--Cash | 8,866,000.00 | 738,800.00 | 9,604,800.00 |
Total purchase cost/ disposal consideration | 8,866,000.00 | 738,800.00 | 9,604,800.00 |
Less: share of net assets of the subsidiary calculated at the proportion acquired /disposed | 10,308,361.72 | 1,032,432.94 | 11,340,794.66 |
Difference | -1,442,361.72 | -293,632.94 | -1,735,994.66 |
Including: adjust capital reserves | 1,442,361.72 | 293,632.94 | 1,735,994.66 |
9.3. Interests in joint ventures and associates
9.3.1. Important joint ventures and associates
Name of jointventure/associates
Name of joint venture/associates | Major business location | Place of registration | Business nature | Shareholding Proportion | Accounting Method | |
Direct | Indirect | |||||
Important joint ventures: none | ||||||
Important associates: | ||||||
Huaxi Securities Co., Ltd. | Chengdu, Sichuan province | Chengdu, Sichuan province | Securities | 10.39% | Equity method |
Statement for that the proportion of shareholdings in joint ventures or associates is different from theproportion of voting rights:
The basis of holding less than 20% of the voting rights in other entities but having significant influence orholding 20% or more than 20% of the voting rights in other entities but having insignificant influence:
On 5 February 2018, Huaxi Securities was listed on the Shenzhen Stock Exchange. The shareholdingratio of the Company holding Huaxi Securities was diluted from 12.99% before the listing to 10.39%. TheCompany has sent directors to the board of Huaxi Securities and has the corresponding substantivedecision-making power, so the Company still has significant influence on Huaxi Securities.
9.3.2. Major financial information of important associates
Closing Balance/Amount in Current Period | Opening Balance/Amount in Previous Period | |
Huaxi Securities Co., Ltd. | Huaxi Securities Co., Ltd. | |
Current assets | 39,285,470,127.19 | 42,341,287,994.61 |
Non-current assets | 7,495,424,200.01 | 8,175,472,282.46 |
Total assets | 46,780,894,327.20 | 50,516,760,277.07 |
Current liabilities | 22,645,172,995.67 | 32,512,916,865.11 |
Non-current liabilities | 5,735,587,548.65 | 5,183,876,316.48 |
Total liabilities | 28,380,760,544.32 | 37,696,793,181.59 |
Non-controlling shareholder interest | 44,260,373.43 | 62,636,144.96 |
shareholder interest attributable to parent company | 18,355,873,409.45 | 12,757,330,950.52 |
Share of net assets calculated based on shareholding proportion | 1,907,830,072.92 | 1,657,427,236.96 |
Book value of equity investments in associate companies | 2,075,296,808.82 | 1,824,893,972.85 |
Fair value of equity investments in associate companies that have public quote | 2,283,596,675.28 | |
Operating revenue | 2,545,233,363.80 | 2,671,626,421.94 |
Net profit | 845,132,348.07 | 1,019,988,335.17 |
Other comprehensive income | -9,197,741.57 | -46,360,450.51 |
Total comprehensive income | 835,934,606.50 | 973,627,884.66 |
Closing Balance/Amount in Current Period | Opening Balance/Amount in Previous Period | |
Huaxi Securities Co., Ltd. | Huaxi Securities Co., Ltd. | |
Dividends from associate companies this year | 10,367,583.46 | 13,641,557.20 |
9.3.3. Financial information summarized of unimportant joint ventures andassociate companies
Closing Balance/Amount in Current Period | Opening Balance/Amount in Previous Period | |
Joint ventures: | -- | -- |
Total following items calculated on the basis of shareholding proportion | -- | -- |
Associate companies: | -- | -- |
Total book value of investments | 15,806,539.78 | |
Total following items calculated on the basis of shareholding proportion | -- | -- |
--Net profit | -829,619.65 | |
-- Total comprehensive income | -829,619.65 |
Other statements:
As stated in Note 7.8. note 2, the Company acquired 42% equity of Sichuan DevelopmentWine Investment Co., Ltd. in 2018, and has a significant impact on it, using the equitymethod as an associated enterprise.
10. Risks related to financial instruments
Business activities of a company usually face various financial risks, mainly credit risk,liquidity risk and market risk. The Company's overall risk management plan addresses theunpredictability of financial markets and seeks to reduce potential adverse effects on theCompany's financial performance.
10.1. Credit riskCredit risk refers to the risk that one party to a financial instrument cannot perform itsobligations, causing financial losses to the other party. The Company only trades withrecognized, reputable, and large third parties. In accordance with the Company's policy,the terms of sale with customers are based on transactions of payment before delivery,with only a small amount of credit transactions, and credit review for all customers whorequire credit to trade. In addition, the Company continuously monitors and controls thebalance of the receivables to ensure that the Company does not face significant bad debtrisks.
10.2. Liquidity riskLiquidity risk refers to the risk unable to obtain sufficient funds in time to meet businessdevelopment needs or to repay debts due and other payment obligations. The Company
has sufficient working capital, and in recent years there has been no external borrowing tosupplement the working capital of daily operating activities. The liquidity risk is extremelysmall.
The total budget investment of the Company's Technical renovation project of brewing isCNY 7,414,280,000.00, and the first phase of the project’s budget is CNY3,340,810,000.00. The Company will use raised funds of CNY 2,952,735,000.00, whichwas approved by the CSRC in July 2017 for the first phase. The balance will besupplemented by self-financed funds about CNY 388,075,000.00. This project will nothave a significant impact on the liquidity of funds.
10.3. Market risk
Market risk refers to the risk that the fair value or future cash flow of financial instrumentswill fluctuate due to changes in market prices, including foreign exchange risk, interestrate risk and other price risks.
10.3.1. Foreign exchange riskThe Company's main business is located in the mainland of China, and main business issettled in CNY. Only two subsidiaries, Hong Kong company and Mingjiang company, settlein HKD in Hong Kong and USD in the United States respectively. The proportion andimpact of their income and profit scale are negligible, and the foreign exchange risk isminimal.
10.3.2. Rate riskThe Company's operating capital is sufficient and in recent years there has been noexternal borrowing, so interest rate risk is minimal.
10.3.3. Other price risksOther price risk refers to the risk of fluctuation caused by market price changes other thanforeign exchange risk and interest rate risk, whether these changes are caused by factorsrelated to a single financial instrument or its issuer or all similar financial instrumentstraded in the market. Other price risks faced by the Company mainly come fromavailable-for-sale financial assets measured at fair value.
11. Fair Value Disclosure
11.1. Closing fair value of assets and liabilities measured at fair value
Item
Item | Closing fair value | |||
Level 1 | Level 2 | Level 3 | Total | |
1. Continuous measurement at fair value | -- | -- | -- | -- |
(2)Equity instrument investment | 190,758,692.59 | 190,758,692.59 |
Item
Item | Closing fair value | |||
Level 1 | Level 2 | Level 3 | Total | |
2. Discontinuous measurement at fair value | -- | -- | -- | -- |
11.2. Determination basis of the market value of items measuredcontinuously and discontinuously within Level 1 of the fair valuehierarchy
Open market prices
12. Related parties and related party transactions
12.1. The Parent company of the Company
Parent company | Registration place | Business nature | Registered capital | Shareholding proportion by the parent company | Voting rights proportion by the parent company |
Luzhou Laojiao Group Co., Ltd. | Luzhou,Sichuan | Brewing and Food Industry | 2,798,818,800.00 | 26.02% | 51.01% |
Statements for situation of parent company:
The nature of parent company: Limited liability company (wholly state-owned);Registration place: Ai Rentang Square, China Liquor Golden Triangle Wine Industry Park, Luzhou,Sichuan Province;Business Scope: Investment and asset management; investment in liquor, food, finance, trade, logistics,education, medical and health, cultural tourism, Internet industry; holding company services; socialeconomic consulting, business management consulting; enterprise management services; supply chainmanagement services; import and export business and trade agency; food production, sales (includingonline); planting and sales of crops (including online). (The Company cannot start business activities untilprojects subject to approval according to law are approved by relevant departments.)The final control party of the Company is SASAC of Luzhou.
12.2. Subsidiaries of the Company
For details please see Note 9.1. Interests in subsidiaries
12.3. Joint ventures and associates of the Company
For details please see Note 9.3. Interests in joint ventures and associatesOther joint ventures or associates that have related party transactions with the Companyin the current period or in the previous period and result in balance are as follows:
There are no other joint ventures or associates that have related party transactions withthe Company in the current period or in the previous period and result in balance.
12.4. Other related party of the Company
Name of Other Related Party | Relationship with the Company |
Luzhou Laojiao Construction and Installation | Wholly-owned subsidiary of the parent company |
Name of Other Related Party
Name of Other Related Party | Relationship with the Company |
Engineering Co. Ltd. | |
New Shottes Brook Private Company | Wholly-owned subsidiary of the parent company |
Luzhou Lianzhong Logistics Co. Ltd. | Wholly-owned subsidiary of the parent company |
Luzhou Laojiao Industrial Investment Management Co. , Ltd. | Wholly-owned subsidiary of the parent company |
Luzhou Laojiao Real Estate Development Co., Ltd. | Wholly-owned subsidiary of the parent company |
Huaxi Securities Co.,Ltd. | Associate company and holding subsidiaries of the parent company |
Luzhou Xinglu Water (Group) Co., Ltd. | Holding subsidiary of the second largest shareholder |
Luzhou Huarun Xinglu Gas Co., Ltd. | Holding subsidiary of the second largest shareholder |
Laojiao Group and its other subsidiaries | Wholly-owned subsidiary of the parent company |
Luzhou Xinglu Touzi Jituan Co., Ltd. and its other subsidiaries | Holding subsidiary of the second largest shareholder of the Company |
Other statement:
On 31 December 2015, Laojiao Group and Xinglu Group, the second biggest shareholder, signed aconcerted action agreement that when the parties in deal with the Company’s business development andmake decisions by shareholders meeting and board of directors according to the company law and otherrelevant laws and regulations and the articles of association, the parties should adopt the consistentactions. The agreement is valid as of 13 December 2015 and ends on 1 June 2021. During the effectiveperiod of this agreement, before any party submits proposals involving the major issues of theCompany's business development to the shareholders meeting or exercise the voting rights at theshareholders meeting and the board of directors, the internal coordination for relevant proposals andvoting events shall be conducted by persons acting in concert. If there are different opinions, it will besubject to Laojiao Group’s opinion. In view of this, the Company will disclose the transactions with XingluGroup and its controlling enterprises as other related parties of the Company.
12.5 Related transactions
12.5.1. Related transactions of purchase and sales of goods / rendering and receiptof servicesTable of purchase of goods / receipt of services
Name of Related Party | Transaction | Amount in current period | Approved trading amount | Whether over approved trading amount | Amount in previous period |
Receipt of services: | |||||
Luzhou Lianzhong Logistics Co. Ltd. | Storage and transport service | 17,604,367.59 | Yes | ||
Luzhou Xinglu Touzi Jituan Co., Ltd. and its other subsidiaries | Property management fee ,etc. | 1,911,100.00 | Yes | 1,900,772.00 |
Name of Related
Party
Name of Related Party | Transaction | Amount in current period | Approved trading amount | Whether over approved trading amount | Amount in previous period |
Laojiao Group and its other subsidiaries | Training, accommodation services, etc. | 655,704.88 | Yes | 731,713.22 | |
Huaxi Securities Co.,Ltd. | Sponsor and underwriting fees of private share placement | 32,320,000.00 | |||
Luzhou Laojiao Construction and Installation Engineering Co. Ltd. | Construction funds and maintenance costs | 193,924.12 | |||
Purchase of goods | |||||
New Shottes Brook private company | Red wine | 66,793,476.33 | No | 26,971,264.99 | |
Luzhou Laojiao Industrial Investment Management Co. , Ltd. | Land, etc. | 26,292,000.00 | No | ||
Luzhou Xinglu Water (Group) Co., Ltd. | Water | 4,441,998.74 | Yes | 631,853.92 | |
Luzhou Huarun Xinglu Gas Co., Ltd. | Gas, etc. | 3,782,843.32 | Yes | 3,370,428.64 | |
Laojiao Group and its other subsidiaries | Water, power, etc. | 512,783.17 | Yes | ||
Laojiao Group | Acquisition of 30% equity of Sichuan Development Wine Investment Co., Ltd. held by Laojiao Group | 10,594,650.00 | No |
Table of sales of goods and rendering of service
Name of Related Party
Name of Related Party | Transaction | Amount in current period | Amount in previous period |
sales of goods: | |||
Laojiao Group and its subsidiaries | Wine, etc. | 318,580.42 | 4,154,856.17 |
Xinglu Group and its subsidiaries | Wine | 586,044.00 | 1,883,992.00 |
Rendering of service: | |||
Laojiao Group | Rendering of service | 1,190,880.00 |
12.5.2. Related party leasingThe Company as lessee:
Name of lessor | Type of leased asset | Leasing fee recognized during current period | Leasing fee recognized during previous period |
Luzhou Laojiao Real Estate Development Co. Ltd. | House lease | 1,851,227.44 |
12.5.3. Key management compensation
Item | Amount in current period | Amount in previous period |
Key management | 6,977,200.00 | 9,799,682.10 |
12.6. Receivables and payables of related parties
12.6.1. Receivables
Item | Related party | Closing Balance | Opening Balance | ||
Book value | Provision for bad debt | Book value | Provision for bad debt | ||
Prepayment | New Shottes Brook private company | 18,086,370.77 | 30,974,021.43 | ||
Prepayment | Luzhou Xinglu Water (Group) Co., Ltd. | 4,377.45 | |||
Prepayment | Sichuan Kangrun Investment Group Co., Ltd. | 10,000.00 | |||
Accounts receivable | Luzhou Yongsheng Asset Operation and Management Co., Ltd. | 1,526.40 |
12.6.2. Payables
Item | Related party | Closing Balance | Opening Balance |
Other payables | Luzhou Laojiao Construction and Installation Engineering Co. Ltd. | 34,175.78 | 628,505.15 |
Other payables | Luzhou Liquor Industry | 154,352.70 | 154,352.70 |
Item
Item | Related party | Closing Balance | Opening Balance |
Concentration Development Zone Brewing Co. Ltd. | |||
Advance from customers | Luzhou Laojiao Zhitong Trading Co., Ltd. | 900,866.00 | 39,998.00 |
Advance from customers | Luzhou Laojiao Group Co., Ltd. | 1,680.00 | 1,680.00 |
Advance from customers | Sichuan Hongxin Financing Guarantee Co. Ltd. | 7,745.00 | |
Advance from customers | Luzhou laojiao business school | 840.00 | |
Accounts payable | Luzhou Huarun Xinglu Gas Co., Ltd. | 382,967.14 | |
Accounts payable | Luzhou Laojiao Real Estate Development Co., Ltd. | 20,255.07 | |
Accounts payable | Luzhou Lianzhong Logistics Co. Ltd. | 946,701.22 | |
Accounts payable | Luzhou laojiao business school | 4,100.00 |
13. Share-based payment
13.1. Overall Share-based payment
? Applicable √ N/A
13.2. Equity-settled share-based payment
? Applicable √ N/A
13.3. Cash-settled share-based payment
? Applicable √ N/A
14. Commitments and Contingencies
14.1. Contingencies
14.1.1. Significant contingencies at the balance sheet dateOn 15 October 2014 and 10 January 2015, the Company disclosed three saving depositsinvolving contract disputes in Agricultural Bank of China Changsha Yingxin Branch,Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou Branch and anotherbank, with a total amount of CNY 50 million. The public security organization hasinvestigated, and the investigation of related cases and the preservation of assets areunder way. The Company has initiated a civil procedure to recover the loss from theresponsible unit, among them:
The criminal case with saving deposits involving contract disputes in Agricultural Bank of
China Changsha Yingxin branch with amount of CNY 15 million was decided byChangsha Intermediate People's Court in the first instance, and then maintained byHunan Higher People's Court in the second instance. The amount involved in the casewas ultimately determined to be CNY 149,425,000.00. The Company recovered CNY10,379,900.00 of returned deposits from Agricultural Bank of China Changsha YingxinBranch.
The Company has filed a lawsuit with Sichuan Higher People's Court about the savingdeposits involving contract disputes in Industrial and Commercial Bank of China Ltd.Nanyang Zhongzhou branch with amount of 15 million. Sichuan Higher People's Courtruled that the case should be transferred to the Henan Higher People's Court. HenanHigher People's Court considered that due to the involvement of criminal cases, its trialshould be based on the results of criminal case. The case has not yet been settled andproceedings are suspended.
The Company referred to another deposit of CNY 20 million in the Notice of SignificantEvents No. 2015-1 on 17 April 2015, recovering a total of CNY 182,163,800.00 as the endof 31 December 2018.
Except for the above matters, the Company has no other significant contingencies thatneed to be disclosed as the end of 31 December 2018.
15. Post balance sheet event
15.1. Profit distribution
Unit: CNY
Profit or dividend planned to be distributed
Profit or dividend planned to be distributed | 2,270,366,337.80 |
15.2. Sales return
There are no important sales returning after balance sheet date.
15.3. Statement for other post balance sheet events
(1) Investment planned in establishing Luzhou Laojiao Wine E-commerce CoThe 6th meeting of the ninth board of directors was held on 28 January 2019 by means ofcommunication voting. The meeting reviewed and approved the Proposal on theSubsidiary's Investment in Establishing Luzhou Laojiao Wine E-Commerce Co., Ltd., andthe Company agreed that its subsidiary, Luzhou Laojiao E-Commerce Co., Ltd. invested inestablishing a wholly-owned subsidiary, Luzhou Laojiao Wine E-Commerce Co., Ltd.,whose registered capital is CNY 5 million and is mainly engaged in e-commerce sales ofimported wine, grape juice and other products.
(2) Investment planned in establishing Luzhou Laojiao Baidiao E-commerce Co. byinvestmentThe 6th meeting of the 9th Board of Directors was held on 28 January, 2019 by means of
communication voting.The meeting reviewed and approved the Proposal on theSubsidiary's Investment in Establishing Luzhou Laojiao Baidiao E-Commerce Co., Ltd.,and the Company agreed that its subsidiary, Luzhou Laojiao E-Commerce Co., Ltd.invested in establishing a wholly-owned subsidiary, Luzhou Laojiao Baidiao E-CommerceCo., Ltd., whose registered capital is CNY 3 million and is mainly engaged in e-commercesales of pre-mixed liquor, oak barrel liquor and other products.
(3) Investment in establishing Chengdu Tianfu Panda Baidiao Liquor Co., Ltd. byinvestmentThe 4th meeting of the ninth Board of Directors was held on 26 October, 2018 by live andvideo conference. The meeting reviewed and approved the Proposal on the Subsidiary'sInvestment in Establishing Chengdu Tianfu Panda Baidiao Liquor Co., Ltd. The Companyagreed that the subsidiary, Luzhou Laojiao Baidiao Liquor Co., Ltd. and Chengdu TianfuPanda Culture Communication Co., Ltd. jointly invested and established Chengdu TianfuPanda Liquor Co., Ltd., whose registered capital is CNY 5 million. Luzhou Laojiao BaidiaoLiquor Co., Ltd. invested CNY 3 million by cash, accounting for 60% of the total sharecapital, and was controlling shareholder; Chengdu Tianfu Panda Culture CommunicationCo., Ltd. invested CNY 2 million, accounting for 40% of the total share capital. Thecompany was established on 26 February 2019.
(4) Luzhou Boda Brewing Co., Ltd., a subsidiary of the Company, has been canceledOn May 29 2018, the 28 meeting of the eighth board of directors reviewed and approvedthe "About the cancellation of Luzhou Boda Brewing Co., Ltd.”. Due to businessadjustment in recent years, Luzhou Boda Brewing Co., Ltd. has not conducted the actualproduction and operation activities, therefore, the Company decided to cancel it. It doesnot have a significant impact on the Company's financial position and operating results.Luzhou Boda Brewing Co., Ltd. has obtained the notice of approval of cancellation on 25March 2019.
Except for the above matters, the Company has no other post balance sheet events thatneed to be disclosed up to 25 April 2019.
16. Other Important Information
16.1. Annuity plan
The Company carried out the enterprise annuity payment work normally in 2018. In 2018,according to the relevant provisions of the Enterprise Annuity Methods (Order No. 36 ofthe Ministry of Human Resources and Social Security), the Company revised the LuzhouLaojiao Co., Ltd. Enterprise Annuity Plan on 1 December 2018. After discussion anddecision of the Workers' Congress on 28 December 2018, it was filed a record through theMinistry of Human Resources and Social Security of Luzhou on 25 February 2019.
After the revision of the new enterprise annuity method, the enterprise annuity funds arepaid by both the Company and employees. The Company's contribution shall not exceed
8% of the Company's total salary in the previous year as stipulated by the state, and theindividual contribution shall be withheld by the Company according to 1% of total salary ofthe employee in the previous year.
16.2. Segment information
16.2.1. If the Company has no reporting segment or cannot disclose total assetsand total liabilities of reporting segments, the reason should be disclosed.Except for the business on wine sales, the Company does not operate other businessesthat have a significant impact on operation results. In addition, the Company operatesmainly in one area, revenue mainly from China and main assets also located in China, sothe Company does not need to disclose segment data.
16.3. Other significant events that can affect investors’ decision(1) Saving deposits involving contract disputesAs stated in Note 14.1, three saving deposits involved contract disputes in AgriculturalBank of China Changsha Yingxin Branch, Industrial and Commercial Bank of China Ltd.Nanyang Zhongzhou Branch and another bank, with a total amount of CNY 50 million. Atpresent, the investigation of related cases and the preservation of assets have been underway. The Company has initiated a civil procedure to recover the loss from the responsibleunit.
Based on the amount of assets preserved by the public security organization at presentand professional legal opinions issued by Beijing Weiheng (Chengdu) Law Firm on 6January 2019, the Company has made provision for bad debts on savings depositsinvolving contract disputes of CNY 200 million. In the future, the amount of bad debts maybe adjusted along with the process and recovery of cases.
(2) Progress of technical renovation project of brewing invested by subsidiaryBased on the Company's development strategy, the "13th Five-Year Plan" and deepanalysis of the liquor industry and the actual situation of the Company itself, the Companyinvested in the implementation of technical renovation project of brewing with BrewingCompany, the wholly-owned subsidiary, as the main body. The total investment of theproject is CNY 7,414,280,000, and the required funds are solved by the Company withowned funds and other financing methods. At present, the project has invested a total ofCNY 2,362,483,700.00, and the completion ratio has been 40%.
(3) State-owned shareholders signed a concerted action agreementOn 31 December 2015, the state-owned shareholders and Xinglu Group signed aconcerted action agreement that when the parties in deal with the Company’s businessdevelopment and make decisions by shareholders meeting and board of directorsaccording to the Company law and other relevant laws and regulations and the articles ofassociation, the parties should adopt the consistent actions. The agreement is valid as of31 December 2015 and ends on 1 June 2021. The signed agreement helps state-ownedshareholders further improve and clear ownership relations, standardize corporate
governance. After the signing, the Company's shareholding structure has not changed.The controlling shareholder is still Laojiao group, and the ultimate controlling is stillSASAC of Luzhou.
(4) To acquire part of the equity of Luzhou Pinchuang Technology Co., Ltd.The 5
th
meeting of the ninth Board of Directors reviewed and approved the Proposal onPurchase of part Equity Related Transactions of Luzhou Pinchuang Technology Co., Ltd.on 28 December 2018. The Company has decided to purchase all 5% of LuzhouPinchuang Technology Co., Ltd. owned by Luzhou Sanxiang Technology ServicesDepartment with its own capital at the estimated price of CNY 10,149,100.00. As the endof the period, the equity acquisition has not been completed.
(5) Plan to establish Luzhou Baitiao Tongdao Uncle Constellation Wine Sales Co.,Ltd.On December 28, 2018, the Company’s fifth board meeting of ninth board of directorsreviewed and approved the "About plan to establish Luzhou Baidiao Tongdao UncleConstellation wine sales Co., Ltd.” It agreed that Luzhou Laojiao Baitiao Liquor IndustryCo., Ltd., a subsidiary of the Company and Shenzhen Tongdao Uncle CultureCommunication Co., Ltd. jointly invest and establish Luzhou Baitiao Tongdao UncleConstellation Wine Sales Co., Ltd. The registered capital of the company is CNY 5 million,among which Luzhou Laojiao Baitiao Liquor Industry Co., Ltd. contributes CNY 3.5 millionin cash, accounting for 70% of the total capital stock, and it is the controlling shareholder.Shenzhen Tongdao Uncle Culture Communication Co., Ltd. contributed CNY 1.5 million,accounting for 30% of the total capital stock.
Except for the above matters, the Company has no other significant events that can affectinvestors’ decision that need to be disclosed up to 31 December, 2018.
17. Notes to the Main Items of the Financial Statements ofParent Company (All currency unit is CNY, except otherstatements)
17.1. Notes and accounts receivable
Item
Item | Closing Balance | Opening Balance |
Accounts receivable | 67,698.43 | 86,250.43 |
Total | 67,698.43 | 86,250.43 |
17.1.1. Accounts receivable17.1.1.1. Analysis by categories
Type
Type | Closing Balance | Opening Balance | ||||||||
Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
Accounts receivables tested for impairment on the portfolio with characteristics of credit risk | 68,103.61 | 100.00% | 405.18 | 0.59% | 67,698.43 | 91,856.79 | 100.00% | 5,606.36 | 6.10% | 86,250.43 |
Total | 68,103.61 | 100.00% | 405.18 | 0.59% | 67,698.43 | 91,856.79 | 100.00% | 5,606.36 | 6.10% | 86,250.43 |
Accounts receivable with significant single amount and tested for impairment individually:
? Applicable √ N/A
An analysis of provision under the aging analysis method:
√ Applicable ? N/A
Aging | Closing Balance | ||
Accounts receivable | Provision for bad debt | Proportion | |
Classification of within 1 year | |||
Risk free | 60,000.00 | ||
Within 1 year | 8,103.61 | 405.18 | 5.00% |
Subtotal | 68,103.61 | 405.18 | 0.59% |
Total | 68,103.61 | 405.18 | 0.59% |
Statements for determining the portfolio:
Accounts receivables using balance percentage method to provide bad debt:
? Applicable √ N/A
17.1.1.2. Provision and recovery for bad and doubtful debt in the current periodThe provision allowance of current period is CNY -5,201.18. The recovery of currentperiod is CNY 0.00.
17.1.1.3. Accounts receivable actually written off during the reporting periodStatements for accounts receivable written off:
There is no accounts receivable actually written off during the reporting period.
17.1.1.4. Top five entities with the largest balances of accounts receivableThe sum of top five entities with the largest balances of accounts receivable is CNY68,103.61, accounting for 100% of the closing balance of accounts receivable, and thecorresponding provision for bad debt is CNY 405.18.
17.1.1.5. Derecognition of accounts receivables due to transfer of financial assetsThere is no derecognition of accounts receivables due to transfer of financial assetsduring the reporting period.
17.1.1.6. Amount of assets and liabilities resulting from transfer of accountsreceivables and continuing involvementThere are no assets and liabilities resulting from transfer of accounts receivables andcontinuing involvement during the reporting period.
17.2. Other receivables
Item
Item | Closing Balance | Opening Balance |
Interest receivable | 29,970,944.44 | 11,167,975.69 |
Other receivables | 4,627,756,101.58 | 5,604,515,648.88 |
Total | 4,657,727,046.02 | 5,615,683,624.57 |
17.2.1. Interest receivable17.2.1.1. Classification of interest receivable
Item | Closing Balance | Opening Balance |
Fixed deposits | 29,970,944.44 | 11,167,975.69 |
Total | 29,970,944.44 | 11,167,975.691 |
Note: 1. The closing balance increased CNY 18,802,968.75 compared with opening balance, with anincrease by 106.03%, mainly due to the increase of interest income on fixed deposit resulting from stockfunds in the current period.
17.2.1.2. Significant interest receivable overdueThere is no significant interest receivable overdue at period end.
17.2.2. Other receivables17.2.2.1. Other receivables disclosed by categories
Type
Type | Closing Balance | Opening Balance | ||||||||
Book Balance | Provision for bad debt | Book Value | Book Balance | Provision for bad debt | Book Value | |||||
Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
Other receivables with significant single amount and tested for impairment individually | 307,456,275.25 | 6.36% | 200,000,000.00 | 65.05% | 107,456,275.25 | 400,000,000.00 | 6.88% | 200,000,000.00 | 50.00% | 200,000,000.00 |
Other receivables tested for impairment on the portfolio with characteristics of credit risk | 4,525,091,586.91 | 93.64% | 4,791,760.58 | 0.11% | 4,520,299,826.33 | 5,412,681,140.42 | 93.12% | 8,165,491.54 | 0.15% | 5,404,515,648.88 |
Total | 4,832,547,862.16 | 100.00% | 204,791,760.58 | 4.24% | 4,627,756,101.58 | 5,812,681,140.42 | 100.00% | 208,165,491.54 | 50.15% | 5,604,515,648.88 |
Other receivables with significant single amount and tested for impairment individually:
√ Applicable ? N/A
Company Name | Closing Balance | |||
Book Balance | Provision balance for bad debt | Proportion of Provision | Reason | |
Agricultural Bank of China Changsha Yingxin branch, Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou branch and another bank. | 307,456,275.25 | 200,000,000.00 | 65.05% | For details please see Note14.1 |
Total | 307,456,275.25 | 200,000,000.00 | -- | -- |
An analysis of provision under the aging analysis method:
√ Applicable ? N/A
Aging
Aging | Closing Balance | ||
Other receivables | Provision for bad debt | Proportion of Provision | |
Classification of within 1 year | |||
Risk free | 4,510,110,733.71 | ||
Within 1 year | 10,028,014.85 | 501,400.74 | 5.00% |
Sub-total | 4,520,138,748.56 | 501,400.74 | 5.00% |
1-2 years | 415,215.72 | 41,521.57 | 10.00% |
2-3 years | 193,383.93 | 38,676.79 | 20.00% |
3-4 years | 184,722.70 | 73,889.08 | 40.00% |
4-5 years | 116,218.00 | 92,974.40 | 80.00% |
Over 5 years | 4,043,298.00 | 4,043,298.00 | 100.00% |
Total | 4,525,091,586.91 | 4,791,760.58 |
Statements for determining the portfolio:
Other receivables using balance percentage method to provide bad debt:
? Applicable √ N/A
Other receivables using other method to provide bad debt:
? Applicable √ N/A
17.2.2.2. Provision and recovery for bad and doubtful other receivables in thecurrent period.The provision allowance of current period is CNY -2,960,597.10. The recovery of currentperiod is CNY 0.00.
17.2.2.3. Other receivables actually written off during the reporting period
Item | Written off amount |
Other receivables actually written off | 413,133.86 |
Statements for written off:
There are no significant other receivables actually written off.
17.2.2.4. Analysis of other receivables by category
Category | Closing Balance | Opening Balance |
Internal transactions with related parties within the scope of merger | 4,510,110,733.71 | 5,391,751,764.73 |
Intercourse funds | 14,282,195.47 | 19,885,208.11 |
Petty cash | 698,657.73 | 1,044,167.58 |
Saving deposits involving contract disputes | 307,456,275.25 | 400,000,000.00 |
Total | 4,832,547,862.16 | 5,812,681,140.42 |
17.2.2.5. Top five entities with the largest balances of the other receivables
Company Name
Company Name | Category | Closing Balance | Aging | Proportion in total receivables | Provision at period end |
Luzhou Laojiao Brewing Co., Ltd. | Internal transactions | 2,640,034,560.59 | Within 1 year | 54.63% | |
Sales Company of Luzhou Laojiao Co., Ltd. | Internal transactions | 1,583,875,514.35 | Within 1 year | 32.78% | |
Agricultural Bank of China Changsha Yingxin branch, Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou branch and another bank. | Saving deposits involving contract disputes | 307,456,275.25 | 4-5 years | 6.36% | 200,000,000.00 |
Luzhou Laojiao Electronic Commerce Co., Ltd. | Internal transactions | 98,579,653.89 | Within 1 year | 2.04% | |
Luzhou Laojiao Import and Export trade Co., Ltd. | Internal transactions | 75,548,088.86 | Within 1 year | 1.56% | |
Total | -- | 4,705,494,092.94 | -- | 97.37% | 200,000,000.00 |
17.2.2.6. Other receivables involving government grantsThere are no other receivables involving government subsidy during the reporting period.
17.2.2.7. Other receivables derecognized arising from financial assets transferThere are no other receivables derecognized arising from financial assets transfer duringthe reporting period.
17.2.2.8. Amount of assets and liabilities resulting from transfer of otherreceivables and continuing involvementThere are no assets and liabilities resulting from transfer of other receivables andcontinuing involvement during the reporting period.
17.3. Long-term equity investments
Item
Item | Closing Balance | Opening Balance | ||||
Book Balance | Provision for impairment | Book Value | Book Balance | Provision for impairment | Book Value | |
Investment in subsidiary | 3,403,811,028.11 | 3,403,811,028.11 | 3,394,206,228.11 | 3,394,206,228.11 | ||
Investment in associate and joint venture | 2,093,670,447.40 | 2,567,098.80 | 2,091,103,348.60 | 1,827,461,071.65 | 2,567,098.80 | 1,824,893,972.85 |
Total | 5,497,481,475.51 | 2,567,098.80 | 5,494,914,376.71 | 5,221,667,299.76 | 2,567,098.80 | 5,219,100,200.96 |
17.3.1. Investment in subsidiary
Investee | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Provision for impairment in current period | Closing balance of provision for impairment |
Luzhou Pinchuang Technology Co., Ltd. | 47,500,000.00 | 47,500,000.00 | ||||
Sales Company of Luzhou Laojiao Co., Ltd. | 103,162,447.09 | 103,162,447.09 | ||||
Luzhou Laojiao Brewing Co., Ltd. | 3,172,109,991.25 | 3,172,109,991.25 | ||||
Luzhou Laojiao International Development(Hong Kong)Co., Ltd. | 5,433,789.77 | 5,433,789.77 | ||||
Luzhou Laojiao Electronic Commerce Co., Ltd. | 42,000,000.00 | 9,604,800.00 | 51,604,800.00 | |||
Luzhou Baonuo Biotechnology Co., Ltd. | 20,000,000.00 | 20,000,000.00 | ||||
Luzhou Laojiao Tourism Culture Co., Ltd. | 4,000,000.00 | 4,000,000.00 | ||||
Luzhou Laojiao Health Liquor Industry Co.,Ltd. | ||||||
Total | 3,394,206,228.11 | 9,604,800.00 | 3,403,811,028.11 |
17.3.2. Investment in associate and joint venture
Investee
Investee | Opening Balance | Changes in Current Period | Closing Balance | Closing Balance of provision for impairment | |||||||
Increase | Decrease | Gain or loss recognized under equity method | Adjustments of other comprehensive income | Changes in other equity | Cash divided or profit declared | Provision for impairment | Other | ||||
1. Joint Venture | |||||||||||
None | |||||||||||
2. Associate | |||||||||||
Huaxi Securities Co., Ltd. | 1,827,461,071.65 | 89,710,642.15 | -359,548.90 | 171,419,326.19 | 10,367,583.47 | 2,077,863,907.62 | 2,567,098.80 | ||||
Sichuan Development Wine Investment Co., Ltd. | 16,636,159.43 | -829,619.65 | 15,806,539.78 | ||||||||
Subtotal | 1,827,461,071.65 | 16,636,159.43 | 88,881,022.50 | -359,548.90 | 171,419,326.19 | 10,367,583.47 | 2,093,670,447.40 | 2,567,098.80 | |||
Total | 1,827,461,071.65 | 16,636,159.43 | 88,881,022.50 | -359,548.90 | 171,419,326.19 | 10,367,583.47 | 2,093,670,447.40 | 2,567,098.80 |
17.3.3. Other statementsFor details about changes in current period please see Note 7.8 Long-term equity investments.
17.4. Operating revenue and cost of sales
Item
Item | Current Period | Previous Period | ||
Revenue | Cost of sales | Revenue | Cost of sales | |
Primary business | 3,325,711,704.83 | 2,268,801,347.29 | 2,806,613,863.86 | 2,086,961,571.07 |
Other business | 35,593,034.44 | 103,324.95 | 48,668,525.71 | 3,066,418.73 |
Total | 3,361,304,739.27 | 2,268,904,672.24 | 2,855,282,389.57 | 2,090,027,989.80 |
17.5. Investment income
Item | Current Period | Previous Period |
Investment income from long-term equity investments under cost method | 2,015,909,035.78 | 1,832,323,011.65 |
Investment income from long-term equity investments under equity method | 88,881,022.50 | 132,404,279.33 |
Investment income gained during the period of holding available-for-sale investments | 9,112,541.00 | 5,912,117.71 |
Total | 2,113,902,599.28 | 1,970,639,408.69 |
18. Supplementary information
18.1. Detailed statement of extraordinary gain and loss in the currentperiod (+ for gain, - for loss)
√ Applicable ? N/A
Item | Amount | Remark |
Gains or losses on disposal non-current assets | -13,885,991.18 | For details please see Note 7.35, 7.37 |
Government grants included into current profits and losses (other than government grants closely related to enterprise business and granted by quota or quantity according to national unified standard) | 22,342,598.30 | For details please see Note 7.33 |
Other non-operating income and costs other than above items | -4,902,369.83 | For details please see Note 7.33, 7.37 |
Less: impact from income tax | 316,133.32 | |
impact from non-controlling shareholders equity | 768,397.45 | |
Total | 2,469,706.52 | -- |
Statement for extraordinary gain and loss items that the Company defines according to the definition in“Explanatory Announcement of Information Disclosure of Company that Issues Securities publicly NO.1-Extraordinary Gain and Loss” and definition of recurrent gain and loss items that are listed asextraordinary gain and loss in the “Explanatory Announcement of Information Disclosure of Companythat Issues Securities publicly NO.1- Extraordinary Gain and Loss”:
? Applicable √ N/A
18.2. Return on equity and earnings per share
Profit during reporting period
Profit during reporting period | Weighted average ROE | EPS(CNY/Share) | |
Basic EPS | Diluted EPS | ||
Net profits attributable to ordinary shareholders of the Company | 21.81% | 2.380 | 2.380 |
Net profits attributable to ordinary shareholders of the Company after deduction of extraordinary gain and loss | 21.80% | 2.378 | 2.378 |
18.3. Accounting data differences under domestic and foreignaccounting standards
18.3.1. Differences of net profit and net assets between international accountingstandards and Chinese accounting standards disclosed in the financial reporting atthe same time? Applicable √ N/A
18.3.2. Differences of net profit and net assets between outbound accountingstandards and Chinese accounting standards disclosed in the financial reporting atthe same time? Applicable √ N/A
Section XII Documents Available for Preference
1. Financial statements signed and stamped by the legal representative, person in chargeof accounting affairs and person charge of accounting department ;2. The original of the auditor’s report with the seal of the accounting firm, and signed andstamped by CPAs;3. The originals of all company documents and announcements that are disclosed on thepublic website designated by CSRC during the reporting period.