Luzhou Laojiao Co., Ltd.2021 Annual Report
April 2022
Section I Important Statements, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior management guaranteethat the information presented in this report is free of any false records, misleading statements ormaterial omissions, and shall individually and together be legally liable for truthfulness, accuracy andcompleteness of its contents.
Liu Miao, responsible person for the Company, Xie Hong, responsible person for accounting work andYan Li, responsible person for the Company’s financial affairs (Accounting Supervisor) have warrantedthat the financial statements in this report are true, accurate and complete.
Other directors attended the board meeting to deliberate this report by themselves except the followingdirectors.
| 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 |
| Qian Xu | Director | Work | Wang Hongbo |
Affected by risks, uncertainties and assumptions, the forward-looking statements concerning businessobjectives and future plans made in this report based on the subjective assumptions and judgments ofthe future policies and economic conditions may be significantly different from the actual results. Suchstatements shall not be considered as virtual promises of the Company to investors, and the investorsand relevant persons shall maintain adequate risk awareness and shall understand the differencesbetween plans, forecasts and commitments.
In the annual report, the potential risks in the operation of the Company have been disclosed. Investorsare kindly reminded to pay attention to possible investment risks.
The profit distribution plan approved by the board of directors: based on 1,471,615,076 shares, a cashdividend of CNY 32.44 (tax inclusive) will be distributed for every 10 existing shares held, 0 shares ofbonus shares (tax inclusive), and reserves would not be converted into share capital.
This Report has been prepared in both Chinese and English. Should there be any discrepancies ormisunderstandings between the two versions, the Chinese version shall prevail.
Contents
Section I Important Statements, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Results ...... 6
Section III Management Discussion and Analysis ...... 11
Section IV Corporate Governance ...... 43
Section V Environmental and Social Responsibility ...... 72
Section VI Significant Events ...... 80
Section VII Changes in Shares and Information about Shareholders ...... 89
Section VIII Preferred Shares ...... 98
Section IX Information about Bond ...... 99
Section X Financial Report ...... 108
Documents Available for Reference
1. Financial statements signed and stamped by the responsible person for the Company, the responsibleperson for accounting work and the responsible person for the Company’s financial affairs (AccountingSupervisor);
2. The original of the auditor’s report with the seal of the accounting firm, and signed and stamped byCPAs;
3. The originals of all company documents and announcements that are disclosed to the public duringthe reporting period.
Definitions
| 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 Investment Group 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 Bank Co., Ltd. |
| Sales Company | Refer to | Luzhou Laojiao Sales Co., Ltd. |
| Brewing Company | Refer to | Luzhou Laojiao Brewing Co., Ltd. |
Section II Company Profile and Key Financial Results
1. Corporate information
| Stock abbreviation | Luzhou Laojiao | Stock code | 000568 |
| Changed stock abbreviation (if any) | N/A | ||
| 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 | ||
| Past changes of registered address | The Company’s registered address has changed from 46 Guihua Street, Luzhou City, Sichuan Province, China to Guojiao Square, Luzhou City, Sichuan Province, China in 2000. | ||
| Business address | Luzhou Laojiao Marketing Network Command Center, Nanguang Road, Luzhou City, Sichuan Province, China | ||
| Postal code | 646000 | ||
| Company website | 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
| Stock exchange website where this Report is disclosed | China Securities Journal, Securities Times, Securities Daily |
| Media and website where this Report is disclosed | 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 | Li Wulin, He Shoufu, and Tang Fangmo |
Sponsors engaged by the Company to continuously perform its supervisory function during the reportingperiod
□ Applicable √ N/A
Financial adviser engaged by the Company to continuously perform its supervisory function during thereporting period.? Applicable √ N/A
6. Key accounting data and financial indicatorsWhether the Company performed a retroactive adjustment to or restatement of accounting data.? Yes √ No
| 2021 | 2020 | YoY Change | 2019 | |
| Operating revenues (CNY) | 20,642,261,724.37 | 16,652,854,549.80 | 23.96% | 15,816,934,272.86 |
| Net profits attributable to shareholders of the Company (CNY) | 7,955,554,351.73 | 6,005,723,069.36 | 32.47% | 4,641,988,857.03 |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses (CNY) | 7,884,384,055.60 | 5,990,831,793.72 | 31.61% | 4,600,916,766.09 |
| Net cash flows from operating activities (CNY) | 7,698,648,104.51 | 4,916,102,451.30 | 56.60% | 4,841,619,203.86 |
| Basic earnings per share (CNY/share) | 5.43 | 4.10 | 32.44% | 3.17 |
| Diluted earnings per share (CNY/share) | 5.43 | 4.10 | 32.44% | 3.17 |
| Weighted average ROE | 31.15% | 28.27% | 2.88% | 25.50% |
| At the end of 2021 | At the end of 2020 | YoY Change | At the end of 2019 | |
| Total assets (CNY) | 43,211,782,005.68 | 35,009,203,823.45 | 23.43% | 28,919,969,078.32 |
| Net assets attributable to shareholders of the Company (CNY) | 28,040,247,005.94 | 23,074,858,552.59 | 21.52% | 19,406,845,725.61 |
Whether the lower of the net profits attributable to shareholders of the Company before and afternon-recurring gains and losses was negative for the last three accounting years, and the latest auditor’sreport indicated that there was uncertainty about the Company’s ability to continue as a going concern? Yes √ No
Whether the lower of the net profits attributable to shareholders of the Company before and after
non-recurring gains and losses was negative? Yes √ No
7. Differences in accounting data under domestic and overseasaccounting standards
7.1. Differences in the net profits and net assets disclosed in the financial reportsprepared under the international and China accounting standards? Applicable √ N/ANo such differences for the reporting period.
7.2. Differences in the net profits and net assets disclosed in the financial reportsprepared under the overseas and China accounting standards? Applicable √ N/ANo such differences for the reporting period.
8. Key financial results by quarter
Unit: CNY
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenues | 5,003,680,377.12 | 4,313,416,649.93 | 4,792,727,587.31 | 6,532,437,110.01 |
| Net profits attributable to shareholders of the Company | 2,166,766,179.07 | 2,059,550,543.18 | 2,049,184,699.30 | 1,680,052,930.18 |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses | 2,158,046,960.66 | 2,050,603,172.22 | 2,068,265,688.40 | 1,607,468,234.32 |
| Net cash flows from operating activities | 1,310,035,683.78 | 1,428,201,356.12 | 1,217,815,864.27 | 3,742,595,200.34 |
Whether there are any material differences between the financial indicators above or their summationsand 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 | 2021 | 2020 | 2019 | Note |
| Profit or loss from disposal of non-current assets (including the write-off portion of the impairment provision) | -347,429.88 | 8,123,010.18 | 23,211,482.49 | See "Section X Note 5.44" 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 consistently given at a fixed amount or quantity in accordance with the national policies or standards) | 51,756,953.15 | 31,409,825.37 | 43,969,302.07 | See "Section X Note 5.40 and 5.45" for details. |
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 6,352,241.79 | See "Section X Note 5.42" for details. | ||
| Reversed portions of impairment allowances for receivables which are tested individually for impairment | 80,000,000.00 | See "Section X Note 5.43" for details. | ||
| Other non-operating income and expenditure except above-mentioned items | -40,241,672.68 | -20,289,086.46 | -11,510,048.21 | See "Section X Note 5.45 and 5.46" for details. |
| Less: Corporate income tax | 24,082,098.59 | 4,512,028.92 | 13,076,295.35 | |
| Minority interests (after tax) | 2,267,697.66 | -159,555.47 | 1,522,350.06 | |
| Total | 71,170,296.13 | 14,891,275.64 | 41,072,090.94 | -- |
Other items that meet the definition of non-recurring gain/loss:
? Applicable √ N/ANo such cases for the reporting period.
Explain the reasons if the Company classifies any non-recurring gain/loss item mentioned in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities tothe Public-Non-Recurring Gains and Losses as a recurring gain/loss item.? Applicable √ N/ANo such cases for the reporting period.
Section III Management Discussion and Analysis
1. Industry overview for the reporting period
Amid the unpromising macro status at home and abroad since 2021, the Chinese baijiu industry hasbeen undergoing multiple pressures arising from economic adjustments, spending shrinks, industry-wide competition, and the recurrent COVID-19 pandemic, which drives the whole baijiu industry tospeed up its concentration on brands, quality, and leading enterprises. Facing numerous pressures andchallenges, the Company actively built a scientific and sound strategic system, brand system, capacitysystem, talent system, and management system to prepare for faster growth.
2. Business scope in the reporting period
The Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
Holding 10 food business licenses, the Company operates within the baijiu subdivision industry whichbelongs to the liquor & wine, beverage and refined tea production industry with specialized baijiuproduct design, production and sales as its main business model. The Company’s main business is theresearch and development, production and sales of baijiu series such as "National Cellar 1573" and"Luzhou Laojiao", and its main comprehensive performance indicators rank high in the baijiu industry.For 2021, operating revenue amounted to CNY 20.642 billion, up 23.96% year on year; and the netprofit attributable to the shareholders of the listed company reached CNY 7.956 billion, up 32.47% yearon year.
For the Company's brand operations, please refer to "4.1 Overview" under “4. Analysis of mainbusiness” in this section. The Company’s main products are classified as follows:
| Main product types | Classification criteria | Representative brand name |
| Mid- and high-end Baijiu | Tax-inclusive sales price ≥ CNY 150 per bottle | National Cellar 1573, Luzhou Laojiao Tequ, and Century-old Luzhou Laojiao Jiaoling Baijiu |
| Other Baijiu | Tax-inclusive sales price < CNY 150 per bottle | Luzhou Laojiao Touqu and Luzhou Laojiao Erqu |
Main sales models:
Currently, the Company has two main sales models:
1. Traditional channel operation model: It is mainly authorized distribution of the offline distributors. TheCompany establishes cooperative relationships with the distributors by product lines and regions. TheCompany directly supplies goods to the distributors, and then distributors sell them to consumers andterminal outlets.
2. Emerging channel operation model: It is mainly online sales operations. The Company establishescooperative relationships with e-commerce platforms, self-media and webcasters, and sells the goods toconsumers through flagship stores, specialty stores, live streaming rooms on online platforms and othernetwork terminals.
Distribution models:
√ Applicable □N/A
1. Main sales models
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 sales model
| By sales model | ||||||
| Traditional channel operation model | 19,523,560,616.72 | 2,691,947,704.54 | 86.21% | 24.40% | 5.25% | 2.51% |
| Emerging channel operation model | 891,609,852.37 | 193,737,447.09 | 78.27% | 18.26% | 25.90% | -1.32% |
2. Distributors
Unit: Number
| Region | Number of distributors at the end of the reporting period | Increased number during the reporting period | Decreased number during the reporting period | YoY change of number of distributors (%) | Reason for any significant change |
Domestic
| Domestic | 1783 | 407 | 671 | -12.90 | |
| Overseas | 148 | 8 | 34 | -14.94 |
3. Main settlement method for distributors and distribution method
The Company's main settlement method for distributors is payment before delivery. The distributionmethod is authorized distribution.
4. Top five distributors
The Company had no accounts receivable from the top five distributors at the end of the period. Fordetails, please refer to Section III 4.2.8. "Main customers and suppliers".
Store sales terminals accounted for more than 10%
□ Applicable √ N/A
Online direct sales
√ Applicable □N/A
For the sales of the Company's main products, please refer to Section III 4.2.1. "Breakdown of operatingrevenues". The Company's complete series of products are sold online. Its main cooperation platformsincluded JD.com and Tmall.
Sales price of main products contributing over 10% of the total operating revenues for the current periodchanged by more than 30% from the previous reporting period
□ Applicable √ N/A
Purchase model and purchase content
Unit: CNY
| Purchase model | Purchase content | Amount of main purchase content |
| Organic raw grains are purchased through cooperative model and supplied by organic raw grain bases; other raw grains and packaging materials are purchased through bid invitation | Raw materials | 4,540,737,351.28 |
| Purchase based on the unified pricing of the National Development and Reform Commission and the price bureau, and purchase through bid invitation | Fuels and energies | 131,839,617.88 |
| Purchase through bid invitation | Low-value consumables | 67,031,892.39 |
The purchase of raw materials from cooperatives or farmers accounted for more than 30% of the totalpurchase amount
□ Applicable √ N/A
The price of main raw materials purchased externally changed by more than 30% year-on-year
□ Applicable √ N/A
Main production model:
The Company's main production model is self-production.
Commissioned processing and production
□ Applicable √ N/A
Main breakdown items of cost of sales
Unit: CNY
| By business segment | Item | 2021 | 2020 | YoY Change | ||
| Amount | As % of cost of sales | Amount | As % of cost of sales | |||
Baijiu
| Baijiu | Raw materials | 2,502,121,435.16 | 86.71% | 2,363,441,505.18 | 87.17% | 5.87% |
| Baijiu | Labor costs | 160,836,008.91 | 5.57% | 157,352,625.49 | 5.80% | 2.21% |
| Baijiu | Manufacturing overhead | 222,727,707.56 | 7.72% | 190,639,876.30 | 7.03% | 16.83% |
Production volume and inventory
1. Production volume, sales volume and inventory of main products
| Product classification | Production volume (ton) | Sales volume (ton) | Inventory (ton) | YoY change of production volume (%) | YoY change of sales volume (%) | YoY change of inventory | Description of major changes |
| Mid- and high-end baijiu | 48,662.90 | 31,765.82 | 39,177.05 | 100.13 | 25.42 | 75.84 | Production volume and inventory increased year-on-year mainly due to the Company's adjustment of production plans. |
| Other baijiu | 46,155.34 | 46,054.68 | 13,675.50 | -47.01 | -51.82 | 0.74 | Production volume and sales volume decreased year-on-year mainly due to the decreased sales volume of Erqu products. |
2. Inventory at the end of the reporting period
Unit: Ton
| Finished baijiu | Semi-finished baijiu (including base baijiu) |
52,852.55
| 52,852.55 | 385,727.12 |
3. Capacity
Unit: Ton
| Main products | Design capacity | Actual capacity | Capacity in progress |
| Baijiu | 170,000 | 170,000 | 0 |
3. Analysis of core competitiveness
A. Geographical advantageLuzhou City, where the Company is located, sits in the transitional area between the southern rim of the
Sichuan Basin and the Yunnan-Guizhou Plateau, featuring a warmer and more humid sub-tropicalclimate compared to other areas at the same latitude, with a temperature above 0℃ throughout the year.The unique climate and soil are agreeable to grow grains for baijiu brewing. The glutinous red sorghumand soft wheat grown in this area are the primary raw materials for the baijiu of the Company. The cellarsin which the Company brews its baijiu are made of the local loessal clay characterized by strongviscosity, rich minerals and excellent moisture retention. In addition, the abundant and quality water inthe region creates a unique geographical advantage for the production of the Company’s baijiu.
B. Advantage of cellars and brewing techniqueAged cellars are the most essential condition for a strong aromatic baijiu maker to produce good qualitybaijiu. The Cellars of National Treasure 1573, founded in 1573, was granted by the State Council as thefirst Cultural Relic of National Importance in the industry under the Protection of the State in December1996. 1,619 cellars of Luzhou Laojiao which have been continuously used for over 100 years, togetherwith its 16 ancient brewing workshops and three natural cellar holes, were all selected as the fourthbatch of Cultural Relics of National Importance under the Protection of the State in 2013. They areunique resources that cannot be replicated. In both 2006 and 2012, Luzhou Laojiao Daqu Cellars weretwice selected into the preliminary list of China for World Heritage. In November 2018, Luzhou LaojiaoCellars and Brewing Workshops were selected into China’s Industrial Heritage List. The time-honoredTraditional Brewing Technique of Luzhou Laojiao is a 24-generation inheritance and a classic brewingtechnique for strong aromatic baijiu. This technique was selected as the first batch of National IntangibleCultural Heritage in May 2006. The Cellars of National Treasure 1573 and the Traditional BrewingTechnique of Luzhou Laojiao together provide the most essential basis and assurance for the quality ofthe product series of National Cellar 1573 and Luzhou Laojiao. Additionally, Huangyi Brewery Eco-Parkhas moved into full production in late 2020. Upholding the cultural connotations of “inheritance of ancientways, pure-grain brewing, traditional techniques, and intelligent technologies”, the Company carried outbrewing technical renovation featuring automatic, intelligent and information technology-basedtransformation. As such, it has established a baijiu brewery eco-park comprising brewing workshops,leaven making workshops, and base baijiu storage cellars, along with energy and sewage treatmentfacilities. This brewery eco-park brings with it new production capacities of 100,000 tons of qualitypure-grain solid baijiu and 100,000 tons of leaven in addition to a new storage capacity of 380,000 tonsof baijiu per year, marking a substantial increase in the Company’s production capacity.
C. Brand advantageBrand is a key business resource for baijiu producers. The Company’s reputation is greatly built on itssuperiority in brand. National Cellar 1573, which is of a connoisseurship level, is a world-famoushigh-end brand. Luzhou Laojiao Tequ, a classic brand for strong aromatic baijiu, was selected in 1952 bythe first national tasting competition judges as one of the four most famous baijiu brands in China. It isthe only strong aromatic baijiu brand that won the title of “National Famous Liquor” for five consecutivetimes, as well as the pioneer with regard to the “Tequ” variety of baijiu. In recent years, the Company hassuccessfully put in place a brand system of “dual brands, three product series, and major singleproducts” with great clarity and focus. The programs carried out to promote the brand of National Cellar1573 and revive the brand of Luzhou Laojiao have produced remarkable results, with significantimprovement in brand influence. The Company’s baijiu is increasingly known by consumers as a
national brand of strong aromatic baijiu and of authentic flavor.
D. Quality and R&D advantageThe Company is committed to producing high-quality baijiu, advocating a healthy lifestyle and “makingthe quality visible”. The first “Organic Sorghum Planting Base” was established and the six-factormanagement system (including organic, quality, safety, environment, measurement and energy) wasbuilt and improved. The research platforms are established, including National Engineering ResearchCenter of Solid-State Brewing, National Liquor Test Center, National Postdoctoral Workstation, etc,which all support the innovation and upgrading of products with their strong technical force. In recentyears, the Company has put in a lot of efforts in researching Tequ production, brewing informatization &automation. Relying on the technological innovation platforms such as the National Industrial DesignCenter, and continuously deepening the cooperation with universities and scientific research institutesincluding the Chinese Academy of Sciences and the Jiangnan University, the Company has undertakendozens of national- or provincial-level projects and has been granted hundreds of invention or utilitymodel patents. And remarkable results have been achieved with respect to improvement of the quality ofbase Baijiu, as well as production efficiency improvement.
E. Talent advantageThe Company has 1 inheritor of national intangible cultural heritage, 4 masters of Chinese brewing, 2masters of Chinese baijiu, 1 master of Chinese baijiu technique, 2 Chinese liquor connoisseurs, 11senior professor engineers, 7 experts who receive special allowances from the State Council, 4 nationaltechnicians, 3 academic and technologic leaders of Sichuan province, 2 craftsmen of Sichuan province,1 technological elite of Sichuan province, as well as hundreds of highly skilled personnel includingnational baijiu judges, senior brewing technicians and brewing technicians. The comprehensive andprofessional personnel system assures the sound development of the Company.
4. Analysis of main business
4.1. Overview
In 2021, the Company successfully accomplished multiple tasks and targets, including the salesexpansion, brand culture empowerment, capacity upgrade, digital and intelligent innovation, andmanagement efficiency improvement, getting off to a good start in the "14th Five-year Plan" period. Forthe reporting period, operating revenue amounted to CNY 20.642 billion, up 23.96% year on year; andthe net profit attributable to the shareholders of the listed company reached CNY 7.956 billion, up
32.47% year on year. Major business actions taken by the Company in the year are summarized asfollows:
A. Precision marketing to expand its marketIn 2021, the Company resolutely implemented the development requirement of "precision marketing todevelop the market", made comprehensive efforts to promote its national market presence and basemarket development, and saw significant progress in implementing the strategy of "developmenttowards Eastern and Southern China". In addition, breakthroughs were constantly recorded in the
overseas market, e-commerce channel, and innovation segments, which contributed to a sharp fall inthe marketing expense, a consistent increase in the profit, and a constant expansion of the customerbase. With years of efforts, the Company has developed into a top producer of new baijiu that is"comprehensively customer-centric".
B. Brand building and polishingFirmly focusing on the strategy of "dual brands, three product series, and major single products" in 2021,the Company gradually perfected its brand matrix. Specifically, the "bottled vintage baijiu" it rolled outwas the first in the industry to reveal the true vintage of baijiu. Additionally, the Company quicklyintroduced its "Chinese Flavor" product in core cities in China, and the National Cellar 1573 series hasbeen one of the three high-end baijiu products in China. New strategic products were also launched,such as Luzhou Laojiao 1952 and Luzhou Laojiao · Hey Guys. All these measures contributed to thebreakthroughs in its "dual brands" strategy. Furthermore, work concerning the marketing of variousbrands and the fostering of the core consumer circle was underway smoothly, with the frequency ofevents and the number of VIP registrations rising sharply year on year as well as the brand influencebeing extended significantly. In doing so, the young, fashionable, and healthy elements of the brand ofLuzhou Laojiao were constantly highlighted, and the brand heritage was richer.
C. Capacity upgrade for a better supply guaranteeIn 2021, after Huangyi Brewery Eco-Park came on stream, the Company completed its layouts of thecapacity to produce quality solid pure-grain base baijiu, the storage capacity, and the packaging capacity.Thus, its supply guarantee capabilities were greatly improved. As such, a new capacity pattern of "1 + 2+ N" was formed to support the Company's sales expansion during the "14th Five-year Plan" period withhigh-quality capacity. Specifically, "1" refers to "one center", namely the Cellars of National Treasure1573; "2" refers to "two parks", namely Luohan Brewery Eco-Park and Huangyi Brewery Eco-Park; "N"refers to "n bases", including An'ning Science and Technology Park, three natural cellar holes, LuzhouBaijiu Industry Development Zone, and other production bases. Concerning important awards andhonors, the Company was honored with the "China National Light Industry Council Technology ProgressAward (First Prize)" as well as the titles of "National Green Manufacturing Demonstration Unit (theMinistry of Industry and Information Technology)" and "Advanced Collective in Light IndustryInnovation".
D. Digital and intelligent empowerment for transformation and upgradingIn 2021, the Company consistently promoted the building of a ''digital and intelligent Luzhou Laojiao".Gaining a leading position in the world in terms of digital and intelligent brewing and production, theCompany was honored with the title of "China Light Industry Demonstration Case Enterprise inIntelligent Manufacturing". In addition, comprehensive efforts were made to promote the "Three-networkIntegration, Five-flow Interconnection, and Multi-code Interrelation" project; it proactively explored theO2O new retail model, built online cloud stores, and launched activities to develop digital consumers,which led to a consistent increase in the return of core consumers. Moreover, several digital andintelligent management innovation projects undertaken by the Company were selected as the scientificand technological programs, pilot projects, and special research projects at the ministerial or provinciallevel.
E. Refined management for efficiency improvementIn 2021, based on the development requirement for "refined management to increase benefits", theCompany comprehensively improved its basic management, established several important systems,and optimized project management procedures and key nodes so that the resource factors can highlymatch the business actions. Besides, it made comprehensive efforts to solidify its line of defense againstbusiness risks and carried out the supervision of major projects and special supervision and inspectionof high-risk operations to create a security cordon for preserving and increasing the value of state assets.It fully promoted the selection and cultivation of scientific talent and successfully implemented therestricted share incentive plan, thereby further establishing and improving its long-term incentivemechanism and unlocking the creativity of talent, organization, and management. With these efforts, theCompany was honored with the title of "China Top 100 Employers in 2021".
In 2021, remarkable achievements were achieved in the Company's comprehensive governance,security and ecological protection, and fulfillment of social responsibility. Specifically, it consistentlypromoted the comprehensive governance project of "consolidating foundation, strengtheningmanagement, building image, and maintaining security" to ensure that it realized sound, steady, andhigh-quality development; it fully implemented the "Nine Security Regulations", passed the accreditationfor the rating of "tier-one enterprise with standard safety production", and was listed as "National GreenPlants" and "China Top 100 Light Industry Enterprises in 2021". Furthermore, it consistently launchedmajor assistance projects in regions that had been lifted out of poverty, such as building cultural plazas,donating sanitation, and renovating the workshops of rice mill plants, proactively assisted Zhengzhou inflood relief and Lu County in earthquake relief, and normally carried out long-term public welfare projects,including "Southwest Medical University·Luzhou Laojiao Scholarship" and "Sichuan PoliceCollege·Luzhou Laojiao Golden Shield Prize". Additionally, it set up "Sichuan Province Luzhou MiddleSchool·Luzhou Laojiao Fund for Teaching Prize and Scholarship", becoming a model state-ownedenterprise in the fulfillment of social responsibility. In 2021, the Company was honored with the title of"National Advanced Collective in Poverty Alleviation" and was listed as "Top 100 Enterprises inCorporate Social Responsibility in Chengdu-Chongqing Economic Circle".
4.2. Revenues and cost of sales
4.2.1. Breakdown of operating revenues
Unit：CNY
| 2021 | 2020 | YoY Change | |||
| Amount | As % of operating revenues | Amount | As % of operating revenues | ||
| Total | 20,642,261,724.37 | 100% | 16,652,854,549.80 | 100% | 23.96% |
| By business segment | |||||
| Baijiu | 20,415,170,469.09 | 98.90% | 16,447,960,569.22 | 98.77% | 24.12% |
| Other revenues | 227,091,255.28 | 1.10% | 204,893,980.58 | 1.23% | 10.83% |
| By product | |||||
| Mid- and high-end baijiu | 18,397,360,159.99 | 89.12% | 14,236,990,348.38 | 85.49% | 29.22% |
| Other baijiu | 2,017,810,309.10 | 9.78% | 2,210,970,220.84 | 13.28% | -8.74% |
| Other revenues | 227,091,255.28 | 1.10% | 204,893,980.58 | 1.23% | 10.83% |
| By geographical segment | |||||
| Domestic | 20,558,860,984.10 | 99.60% | 16,602,974,426.77 | 99.70% | 23.83% |
| Overseas | 83,400,740.27 | 0.40% | 49,880,123.03 | 0.30% | 67.20% |
| By sales model | |||||
| Traditional channel operation model | 19,523,560,616.72 | 94.58% | 15,693,989,192.05 | 94.24% | 24.40% |
| Emerging channel operation model | 891,609,852.37 | 4.32% | 753,971,377.17 | 4.53% | 18.26% |
| Other revenues | 227,091,255.28 | 1.10% | 204,893,980.58 | 1.23% | 10.83% |
4.2.2. Business segments, products, geographical segments or sales modelscontributing over 10% of the operating revenues or profits
√ 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 | ||||||
| Baijiu | 20,415,170,469.09 | 2,885,685,151.63 | 85.86% | 24.12% | 6.43% | 2.34% |
| By product | ||||||
| Mid- and high-end baijiu | 18,397,360,159.99 | 1,777,774,059.98 | 90.34% | 29.22% | 28.06% | 0.09% |
| Other baijiu | 2,017,810,309.10 | 1,107,911,091.65 | 45.09% | -8.74% | -16.27% | 4.93% |
| By geographical segment | ||||||
| Domestic | 20,558,860,984.10 | 2,939,761,934.57 | 85.70% | 23.83% | 4.40% | 2.66% |
| By sales model | ||||||
| Traditional channel operation model | 19,523,560,616.72 | 2,691,947,704.54 | 86.21% | 24.40% | 5.25% | 2.51% |
Under the circumstances that the statistical standards for the Company’s main business data wereadjusted in the reporting period, the Company’s main business data in the current year is calculatedbased on adjusted statistical standards at the end of the reporting period? Applicable √ N/A
4.2.3. Whether revenue from sales of goods is higher than revenue of renderingservices
√ Yes ? No
| By business segment | Item | Unit | 2021 | 2020 | YoY Change |
| Baijiu | Sales volume | ton | 77,820.5 | 120,915.16 | -35.64% |
| Production volume | ton | 94,818.24 | 111,419.73 | -14.90% | |
| Inventory | ton | 52,852.55 | 35,854.81 | 47.41% |
Reason for any over 30% YoY movements in the data above
√ Applicable ? N/A
Sales volume decreased 35.64% year-on-year mainly due to the decreased sales volume of Erquproducts.Inventory increased 47.41% year-on-year mainly due to the Company's adjustment of production plans.
4.2.4. Execution of significant sales or purchase contracts in the reporting period? Applicable √ N/A
4.2.5. Breakdown of cost of sales
By business segment
Unit：CNY
| By business segment | Item | 2021 | 2020 | YoY Change | ||
| Amount | As % of cost of sales | Amount | As % of cost of sales | |||
| Baijiu | Raw materials | 2,502,121,435.16 | 86.71% | 2,363,441,505.18 | 87.17% | 5.87% |
| Baijiu | Labor costs | 160,836,008.91 | 5.57% | 157,352,625.49 | 5.80% | 2.21% |
| Baijiu | Manufacturing overhead | 222,727,707.56 | 7.72% | 190,639,876.30 | 7.03% | 16.83% |
4.2.6. Change in the scope of the consolidated financial statements for the reportingperiod
√ Yes ? No
Subsidiaries that are newly incorporated into the scope of consolidation in this period
| Name of subsidiary | Reason |
| Luzhou Laojiao New Retail Co., Ltd. | Incorporated through investment |
Liquidation and cancellation for subsidiaries in this period
| Name of subsidiary | Reason |
| Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd. | Liquidation and cancellation |
| Luzhou Laojiao Selected Electronic Commerce Co., Ltd. | Liquidation and cancellation |
| Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. | Liquidation and cancellation |
Luzhou Whitail Tongdao Uncle Constellation Baijiu Sales Co., Ltd.
| Luzhou Whitail Tongdao Uncle Constellation Baijiu Sales Co., Ltd. | Liquidation and cancellation |
4.2.7. Major changes in the business, products or services in the reporting period? Applicable √ N/A
4.2.8. Main customers and suppliers
Sales to main customers of the Company
| Total sales to top five customers（CNY） | 14,131,318,165.57 |
| Total sales to top five customers as % of the total sales | 68.46% |
| Total sales to related parties among top five customers as % of the total sales | 0.00% |
Information on top five customers
| No. | Customer | Sales amount (CNY) | As % of the total sales for the year |
| 1 | Customer A | 10,176,701,612.84 | 49.31% |
| 2 | Customer B | 1,911,034,739.30 | 9.26% |
| 3 | Customer C | 1,362,875,680.76 | 6.60% |
| 4 | Customer D | 394,842,717.85 | 1.91% |
| 5 | Customer E | 285,863,414.82 | 1.38% |
| Total | -- | 14,131,318,165.57 | 68.46% |
Other information on main customers? Applicable √ N/A
Main suppliers of the Company
| Total purchases from top five suppliers（CNY） | 1,979,375,304.80 |
| Total purchases from top five suppliers as % of the total purchases | 41.76% |
| Total purchases from related parties among top five suppliers as % of the total purchases | 0.00% |
Information on top five suppliers
| No. | Supplier | Purchases (CNY) | As % of the total purchases for the year |
| 1 | Supplier A | 693,363,225.88 | 14.63% |
| 2 | Supplier B | 461,883,429.11 | 9.75% |
| 3 | Supplier C | 369,396,963.49 | 7.79% |
| 4 | Supplier D | 238,529,587.31 | 5.03% |
| 5 | Supplier E | 216,202,099.01 | 4.56% |
| Total | -- | 1,979,375,304.80 | 41.76% |
Other information on main suppliers? Applicable √ N/A
4.3. Expenses
Unit：CNY
| 2021 | 2020 | YoY Change | Reason for any significant change | |
| Selling and distribution expenses | 3,599,211,604.56 | 3,090,655,832.25 | 16.45% | |
| General and administrative expenses | 1,056,116,367.85 | 844,454,467.47 | 25.06% | |
| Finance expenses | -216,885,999.21 | -132,445,202.74 | The YoY decrease of CNY 84,440,796.47 was mainly due to the increased interest income from funds. | |
| R&D expenses | 137,712,329.78 | 85,858,119.80 | 60.40% | The YoY increase of CNY 51,854,209.98 (or 60.40%) was mainly due to the increased R&D investments in the current period. |
The Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
4.3.1. Breakdown of selling and distribution expenses
Unit：CNY
| Selling and distribution expenses | 2021 | 2020 | YoY Change | Reason for any significant change |
| Advertising expenses | 1,769,053,962.56 | 1,316,519,804.16 | 34.37% | Increased advertising activities |
| Sales promotion expenses | 1,139,273,684.38 | 1,074,611,735.49 | 6.02% | |
| Warehousing and logistics expenses | 100,059,219.52 | 92,177,677.09 | 8.55% | |
| Labor costs | 357,659,249.63 | 324,598,768.07 | 10.19% | |
| Other | 233,165,488.47 | 282,747,847.44 | -17.54% |
4.3.2. Breakdown of advertising expenses
Unit：CNY
| Advertising | Expenses |
Online advertising (exclusive of TV advertising)
| Online advertising (exclusive of TV advertising) | 364,133,344.81 |
| Offline advertising | 461,146,398.77 |
TV advertising
| TV advertising | 627,635,674.24 |
| Other (inclusive of branding ideas, exhibitions & showcases, advertising materials, activity planning, etc.) | 316,138,544.74 |
4.4. R&D investments
√ Applicable ? N/A
| Major R&D projects | Purpose | Progress | Specific objectives | Expected impact on the Company |
| Thermochemical Energy- and Resource-based Coupled Utilization Technology of Brewing Waste | The project is a national key R&D program during the "13th Five-year Plan" period undertaken by the Company, which aims to realize the energy- and resource-based utilization of brewing waste with thermochemical technology. | Key equipment for the resource- and energy-based utilization of brewing waste has been developed and built. | To develop an intelligent equipment system with packaged technology for the resource- and energy-based utilization of brewing waste and successfully build a demonstration base for the project industrialization to ensure the low-carbon, green development of the Chinese baijiu industry. | Realize a large-scale resource- and energy-based utilization of brewing waste and achieve both ecological and economic benefits. |
| A Study on the Expression Regulation of Key Genes in Leaven | The project is an international project that the Company jointly undertook, | A study on the diversity of microorganisms in the incised | To study the correlation between the leaven microorganisms and metabolites and develop | Improve the leaven and baijiu quality and enhance the Company's core competitiveness. |
| Microorganisms and the Improvement of Chinese Leaven Quality | which studies the evolution pattern and formation mechanism of microbiomes during the natural leaven-marking and fermentation. | notopterygium has been carried out. | high-quality, functional leaven. | |
| Establishment of Sichuan Innovation Center for Solid-state Brewing Technologies | The project aims to overcome a batch of core technological challenges in solid-state brewing and resolve major problems faced by the solid-state brewing sector. | The building of a technological innovation platform is underway to consistently resolve major problems faced by the solid-state brewing sector. | To carry out multiple studies on the core technologies concerning solid-state brewing and build an influential scientific and technological innovation center. | Successfully build a technological innovation platform, thereby improving the Company's scientific and technological innovation capabilities and level. |
| A Study on the Optimization of Key Intelligent Equipment and the System Control for Brewing | The project aims to develop core technologies for each link of brewing production and build intelligent brewing production lines to comprehensively upgrade the solid-state brewing technologies in the baijiu industry. | The creation of the key brewing equipment and supporting control system is underway. | To build an intelligent brewing demonstration production line. | Level up the Company's intelligent brewing and promote the transformation and upgrading of the traditional brewing industry. |
Information about R&D personnel
| 2021 | 2020 | YoY Change | |
| Number of R&D personnel | 494 | 474 | 4.22% |
| R&D personnel as % of total employees | 14.39% | 14.23% | 0.16% |
| Educational backgrounds of R&D personnel | —— | —— | —— |
| Bachelor’s degree | 326 | 313 | 4.15% |
| Master’s degree | 120 | 115 | 4.35% |
| Doctoral degree (including postdoctoral | 23 | 16 | 43.75% |
| workstations) | |||
| Age structure of R&D personnel | —— | —— | —— |
| Below 30 | 220 | 223 | -1.35% |
| 30~40 | 210 | 204 | 2.94% |
Information about R&D investments
| 2021 | 2020 | YoY Change | |
| R&D investments (CNY) | 169,125,528.48 | 112,418,055.64 | 50.44% |
| R&D investments as % of operating revenues | 0.82% | 0.68% | 0.14% |
| Capitalized R&D investments (CNY) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% | 0.00% |
Reason for any significant change in the composition of R&D personnel and the impact? Applicable √ N/A
Reason for any significant YoY change in the percentage of the R&D investments in the operatingrevenues? Applicable √ N/A
Reason for any sharp variation in the percentage of the capitalized R&D investments and rationale? Applicable √ N/A
4.5. Cash flows
Unit：CNY
| Item | 2021 | 2020 | YoY Change |
| Subtotal of cash inflows from operating activities | 23,520,677,136.09 | 17,722,942,520.06 | 32.71% |
| Subtotal of cash outflows from operating activities | 15,822,029,031.58 | 12,806,840,068.76 | 23.54% |
| Net cash flows from operating activities | 7,698,648,104.51 | 4,916,102,451.30 | 56.60% |
| Subtotal of cash inflows from investing activities | 41,893,415.77 | 49,450,467.66 | -15.28% |
| Subtotal of cash outflows from investing activities | 2,719,942,312.51 | 2,223,910,509.48 | 22.30% |
| Net cash flows from investing activities | -2,678,048,896.74 | -2,174,460,041.82 | |
| Subtotal of cash inflows from financing activities | 8,305,794.84 | 1,503,947,876.16 | -99.45% |
| Subtotal of cash outflows from financing activities | 3,190,924,317.15 | 2,420,721,436.84 | 31.82% |
| Net cash flows from financing activities | -3,182,618,522.31 | -916,773,560.68 | |
| Net increase in cash and cash equivalents | 1,834,333,879.02 | 1,815,928,536.03 | 1.01% |
Explanation of why the data above varied significantly
√ Applicable ? N/A
Net cash flows from operating activities increased by CNY 2,782,545,653.21 (or 56.60%) year-on-year,mainly due to the increased cash received from sale of goods in the current period.Net cash flows from financing activities decreased by CNY 2,265,844,961.63 year-on-year, mainly dueto the issue of corporate bonds last year.
Explanation of main reasons leading to the material difference between net cash flows from operatingactivities during the reporting period and net profit for the year? Applicable √ N/A
5. Analysis of non-core business
? Applicable √ N/A
6. Assets and liabilities
6.1. Significant change of asset items
Unit：CNY
| At the end of 2021 | At the beginning of 2021 | Change in percentage | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Cash and cash equivalents | 13,513,494,580.56 | 31.27% | 11,624,870,340.60 | 33.16% | -1.89% | |
| Accounts | 1,628,248.55 | 0.00% | 1,507,852.43 | 0.00% | 0.00% | |
| receivable | ||||||
| Inventories | 7,277,573,166.80 | 16.84% | 4,695,663,431.25 | 13.39% | 3.45% | |
| Long-term equity investments | 2,626,744,236.25 | 6.08% | 2,477,667,171.27 | 7.07% | -0.99% | |
| Fixed assets | 8,089,487,274.39 | 18.72% | 6,887,108,174.72 | 19.64% | -0.92% | |
| Construction in progress | 1,259,845,487.50 | 2.92% | 2,012,129,880.15 | 5.74% | -2.82% | |
| Right-of-use assets | 52,714,810.04 | 0.12% | 50,201,409.36 | 0.14% | -0.02% | |
| Contract liabilities | 3,510,110,701.25 | 8.12% | 1,678,837,166.94 | 4.79% | 3.33% | |
| Lease liabilities | 40,667,668.08 | 0.09% | 40,213,454.28 | 0.11% | -0.02% |
Whether overseas assets account for a larger proportion in total assets? Applicable √ N/A
6.2. 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 | Other changes | Closing balance |
| Financial asset | ||||||||
| 1.Held-for-trading financial assets (exclusive of derivative financial assets) | 6,352,241.79 | 6,352,241.79 | 700,000,000.00 | 706,352,241.79 | ||||
| 4.Investments in other equity instruments | 347,160,399.42 | 15,609,351.01 | 258,206,911.43 | 542,370.00 | 363,312,120.43 | |||
| Accounts receivables financing | 3,209,371,766.35 | 1,548,260,012.29 | 4,757,631,778.64 | |||||
| Subtotal of financial | 3,556,532,165.77 | 21,961,592.80 | 264,559,153.22 | 700,542,370.00 | 1,548,260,012.29 | 5,827,296,140.86 | ||
| assets | ||||||||
| Total | 3,556,532,165.77 | 21,961,592.80 | 264,559,153.22 | 700,542,370.00 | 1,548,260,012.29 | 5,827,296,140.86 | ||
| Financial liability | 0.00 | 0.00 |
Information about other changesN/A
Whether measurement attribution of main assets changes significantly in this year?Yes √ No
6.3. Restricted asset rights as of the end of this reporting period
| Item | Closing Balance | Reason |
| Bank deposits (CNY) | 99,056,621.63 | Accrued interest on term deposits |
| Other cash and cash equivalents (CNY) | 11,909,017.10 | Restricted security deposits for travel service and bank guarantees |
| Total | 110,965,638.73 |
7. Investment
7.1. Total investment
√ Applicable ? N/A
| Investment made in the reporting period (CNY) | Investment made in the prior year (CNY) | YoY change |
| 1,781,224,057.98 | 2,896,569,612.76 | -38.51%1 |
Note 1: The total investment decreased by CNY 1,115,345,554.78 (or 38.51%) year-on-year, mainly dueto the completion of the technical renovation project of brewing.
7.2. Significant equity investment made in the reporting period
? Applicable √ N/A
7.3. Significant ongoing non-equity investment in the reporting period
√ Applicable □ N/A
Unit: CNY
| 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 | Baijiu | 124,187,567.03 | 7,846,598,994.21 | Fund-raising+self-financing | 100.00% | 0.00 | 0.001 | N/A | 2 June 2020 | Announcement No. 2020-17 on Increasing the Investment in the Technical Renovation Project of Brewing |
| Total | -- | -- | -- | 124,187,567.03 | 7,846,598,994.21 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
Note 1: When the project is put into operation, it brings new production capacities of 100,000 tons ofquality pure-grain solid baijiu and 100,000 tons of leaven in addition to a new storage capacity of380,000 tons of baijiu per year.
7.4. Financial assets investment
7.4.1. Securities investment
√ Applicable □ N/A
Unit: CNY
| 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 | Amount of purchase | Amount of sale | Profit and loss during the reporting period | Closing book balance | Accounting item | Capital source |
| equity | |||||||||||||
| Domestic and foreign stock | 601211 | GTJA | 12,719,156.76 | Fair value measurement | 206,450,757.39 | 4,239,718.92 | 197,971,319.55 | 0.00 | 0.00 | 6,595,118.32 | 210,690,476.31 | Investments in other equity instruments | Own fund |
| Domestic and foreign stock | 002246 | SNC | 1,030,000.00 | Fair value measurement | 11,460,858.15 | 4,503,038.39 | 14,933,896.54 | 0.00 | 0.00 | 62,542.20 | 15,963,896.54 | Investments in other equity instruments | Own fund |
| Domestic and foreign stock | 01983 | LZBANK | 51,120,000.00 | Fair value measurement | 95,561,825.55 | 6,612,796.16 | 51,054,621.71 | 0.00 | 0.00 | 0.00 | 102,174,621.71 | Investments in other equity instruments | Own fund |
| Total | 64,869,156.76 | -- | 313,473,441.09 | 15,355,553.47 | 263,959,837.80 | 0.00 | 0.00 | 6,657,660.52 | 328,828,994.56 | -- | -- | ||
7.4.2. Derivative investment
□Applicable √ N/A
No such cases in the reporting period
7.5. Use of funds raised
√ Applicable ? N/A
7.5.1. General use of funds raised
√ Applicable □ N/A
Unit：CNY 10,000
| Year | Method | Total amount of funds raised | Total amount of raised funds used in the | Accumulated amount of raised funds used | Total amount of re-purposed funds raised | Total amount of accumulated | Accumulated re-purposed funds raised | Total amount of unused funds raised | Purpose and direction of unused | Amount of funds raised idle for more than |
| reporting period | in the reporting period | re-purposed funds raised | as % of total funds raised | funds raised | two years | |||||
| 2017 | Non-public offering of shares | 295,273.5 | 25.28 | 309,458.29 | 0 | 0 | 0.00% | 01 | Supplementing working capital permanently | 0 |
| 2019 | Public offering of corporate bond | 249,000 | 35,775.66 | 253,081.84 | 0 | 0 | 0.00% | 0 | N/A | 0 |
| 2020 | Public offering of corporate bond | 149,400 | 22,598.34 | 35,660.46 | 0 | 0 | 0.00% | 121,879.75 | Deposited in special account for raised funds | 0 |
| Total | -- | 693,673.5 | 58,399.28 | 598,200.59 | 0 | 0 | 0.00% | 121,879.75 | -- | 0 |
| Notes for general use of funds raised | ||||||||||
| The total amounts of used and unused funds raised include interest on the funds. | ||||||||||
Note 1: The balance of raised funds was CNY 4.19.
7.5.2. Fund raised for committed projects
√ Applicable □ N/A
Unit：CNY 10,000
| Committed investment projects and direction of over-raised funds | Whether the project has been changed (including partial change) | Total amount of funds raised 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 | ||||||||||
| Technical Renovation Project of Brewing (Phrase I) | No | 295,273.5 | 295,273.5 | 25.28 | 309,458.29 | 104.80% | 31 December 2020 | N/A | N/A | No |
| Technical Renovation Project of Brewing | No | 398,400 | 398,400 | 56,447.45 | 268,220.21 | 72.48% | — | N/A | N/A | No |
| (Phrase II) | ||||||||||
| Project of Intelligent Upgrading and Building of the Information Management System | No | 1,153.93 | 3,498.55 | — | N/A | N/A | No | |||
| Project of Acquiring Sealing Equipment for the Cellar of Huangyi Brewing Base | No | 0 | 12,043.3 | — | N/A | N/A | No | |||
| Project of Acquiring Accessory Equipment for Leaven Making for Huangyi Brewing Base | No | 772.62 | 4,980.25 | — | N/A | N/A | No | |||
| Subtotal of committed investment projects | -- | 693,673.5 | 693,673.5 | 58,399.28 | 598,200.6 | -- | -- | -- | -- | |
| Use of over-raised funds | ||||||||||
| None | ||||||||||
| Total | -- | 693,673.5 | 693,673.5 | 58,399.28 | 598,200.6 | -- | -- | N/A1 | -- | -- |
| Situation and reason for not reaching plan progress or expected benefits (by specific items) | N/A | |||||||||
| Significant changes of project feasibility | N/A | |||||||||
| Amount, purpose 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 advance investment and replacement | Applicable | |||||||||
| Funds raised through non-public offering of shares: On 30 November 2017, the Company held the 24th meeting of the eighth board of directors and the 13th meeting of the eighth board of supervisors. At the meetings, the Proposal on Using Raised Funds to Replace Advance Investments was considered and approved, which agreed to the Company’s replacement of the advance investment of self-raised funds of CNY 581,774,996.30 using the raised funds. | ||||||||||
| Non-executive directors of the Company issued independent opinions of consent. Sichuan Huaxin (Group) CPA Firm (Limited Liability Partnership) verified the matter on the advance investments in the raised funds investment projects with self-pooled funds and produced the Special Report (CHXZ (2017) No. 534) on 14 November 2017. Funds raised through public offering of corporate bond: On 14 May 2019, the Company held the 1st special meeting of shareholders in 2019, which considered and approved the Proposal on Requesting the Company’s General Meeting of Shareholders to Fully Authorize Chairman of the Board or Other Personnel Authorized by the Board to Go Through Procedures for the Public Offering of Corporate Bond. According to the Proposal, in the event of inconsistency between the payment of the raised funds and the progress of the project implementation, the Company may make advance investments using other funds (including self-owned funds, bank project loans, etc.) according to the actual situation, and replace fund investment other than capital funds when the raised funds are in place. As of 31 December 2021, the Company had replaced advance investments of self-pooled funds of CNY 573,178,496.64 using the raised funds. | |
| Idle raised funds used for temporary supplementary liquidity | N/A |
| Amount and reason for surplus of funds raised | Applicable |
| There is a surplus (including interest income) of CNY 4.19 upon the completion of the committed investment project—Technical Renovation Project of Brewing (Phrase I)—in which the funds raised in the non-public offering of shares were used. | |
| Purpose and whereabouts of unused funds raised | The surplus of CNY 4.19 of the funds raised in the non-public offering of shares has been transferred on 22 July 2021 to the general settlement account for supplementing the working capital permanently. The idle funds raised through public offering of corporate bond are deposited in the special account No. 9550880046723000135 for raised funds in the Chengdu Branch of China Guangfa Bank Co., Ltd., the special account No. 517517460013000000860 for raised funds in the Luzhou Branch of Bank of Communications Co., Ltd., and the special account No. 631395395 for raised funds in the Chengdu Branch of China Minsheng Banking Corp., Ltd. |
| Problems and other situation when raised funds are used and disclosed | N/A |
Note 1: The raised funds investment project—Technical Renovation Project of Brewing (Phrase I)—hasbeen completed. As of the end of the reporting period, the difference between the cumulative input andthe committed input of raised funds was the net amount of the interest income from bank deposits minusthe bank charges.
Note 2: The subtotal of funds raised through corporate bonds for committed projects was CNY 3,984million, which was the combined amount of CNY 4,000 million (CNY 2,500 million of corporate bondsissued in August 2019 plus CNY 1,500 million of corporate bonds issued in March 2020) minus the totalissuance costs of CNY 16 million. Because there were uncertainties in the approval and issue time forpublic offerings of corporate bond in the review of issue plans, in order to ensure smooth progress of the
projects and protect the interests of the Company’s shareholders, the investment sequence and specificamounts of the corresponding raised funds should be determined by the Chairman of the Board asauthorized by the general meeting of shareholders or other persons as authorized by the Board ofDirectors within the scope of the four projects of Technical Renovation Project of Brewing Phrase II,Project of Intelligent Upgrading and Building of the Information Management System, Project ofAcquiring Sealing Equipment for the Cellar of Huangyi Brewing Base, and Project of AcquiringAccessory Equipment for Leaven Making for Huangyi Brewing Base according to the actual needs,provided that the capital funds for each project is no less than 20% of the total investment. Therefore, thetotal amount of committed raised funds investment is not stated separately for the aforesaid fourprojects.
Note 3: As of December 2020, construction was completed for the Technical Renovation Project ofBrewing. Quality inspection and acceptance of the relevant sub-projects was finished. Other inspectionand acceptance, as well as advance transfer to fixed assets based on estimated value were finished inJune 2021. When the project is put into operation, it brings new production capacities of 100,000 tons ofquality pure-grain solid baijiu and 100,000 tons of leaven in addition to a new storage capacity of380,000 tons of baijiu per year.
Note 4: The Project of Intelligent Upgrading and Building of the Information Management System was inthe process. It does not generate income on a separate basis because it is a management-relatedproject.
Note 5: Construction was completed for the Project of Acquiring Sealing Equipment for the Cellar ofHuangyi Brewing Base in December 2020. Quality inspection and acceptance of the project was finished.Other inspection and acceptance, as well as settlement were finished in June 2021. The project does notgenerate income on a separate basis for it is a supporting project of the Technical Renovation Project ofBrewing.
Note 6: Construction was completed for the Project of Acquiring Accessory Equipment for LeavenMaking for Huangyi Brewing Base in December 2020. Quality inspection and acceptance of the projectwas finished. Other inspection and acceptance, as well as settlement were finished in June 2021. Theproject does not generate income on a separate basis for it is a supporting project of the TechnicalRenovation Project of Brewing.
7.5.3. Re-purposed funds raised
? Applicable √ N/ANo such cases in the reporting period
8. Sale of major assets and equity interests
8.1. Sale of major assets
? Applicable √ N/ANo such cases in the reporting period.
8.2. Sale of major equity interests
? Applicable √ N/A
9. Analysis of major subsidiaries
√ Applicable ? N/A
Main subsidiaries and joint companies with an over 10% influence on the Company’s net profit
Unit：CNY
| Company name | Company type | Business scope | Registered capital | Total assets | Net assets | Operating Revenue | Operating profit | Net profit |
| Luzhou Laojiao Sales Co., Ltd. | Subsidiary | Luzhou Laojiao series unified package Baijiu sales | 100,000,000.00 | 7,766,741,489.31 | 2,006,079,891.62 | 20,126,182,533.58 | 8,103,239,927.36 | 6,077,048,365.84 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √N/A
Notes for major holding companies and joint stock companiesThe total assets of Sales Company increased 51.14% mainly due to the increased current assets suchas accounts receivables financing. Its operating profit and net profit increased 37.68% and 38.12%respectively, mainly due to the increased sales of mid- and high-end products.
10. Structured entities controlled by the Company
? Applicable √ N/A
11. Outlook for the future development of the Company
11.1. Industry landscape and trends
A. According to the data released by the National Bureau of Statistics, total production of brewed baijiuby baijiu producers above the designated size was 7.1563 million kl between January and December2021, down 0.59% year on year; total sales revenues reached CNY 603.348 billion, up 18.60% year onyear; total profits of CNY 170.194 billion were realized, up 32.95% year on year. Though the totalconsumption in the baijiu industry has been shrinking in recent years, the consumption upgrade isobvious, and the market share is showing a trend toward the brand, quality, and leading enterpriseconcentration.
B. As the young consumer groups rise, with the post-80s and post-90s generations gradually becomingthe main force of baijiu consumption, their young, fashionable, and personalized diverse demands willexert a significant influence on the industry and new product development.
C. Digital, information-based, and intelligent development will be the mainstream of China and a majormeasure taken by traditional baijiu producers to gain a competitive edge and respond to thedisappearance of demographic dividends. Additionally, it is expected to become the main direction forfuture industrial capacity expansion and development.
11.2. Company’s development strategy
11.2.1. Development opportunities in the future
A. More and more favorable domestic policies are introduced to maintain steady growth and boostconsumption, which will play a key role in enhancing socio-economic vitality and restoring consumerconfidence, as well as promote the sound development of the whole baijiu market.
B. Constant development of city clusters in China and consistent inflow and concentration of populationand funds bring about scale effects and growing new and high-quality consumption demands. In thiscircumstance, high-quality, innovative baijiu products with cultural connotations will be increasinglypopular in the market and stand out among the rest in the competition.
C. In 2021, the Company resolutely implemented the "136" development strategy and finally achieved aseries of major breakthroughs, including a record high in sales performance again, the gradually perfectbrand matrix, the completed quality capacity layout, the internationally advanced level of intelligence,increasingly optimized talent building mechanism, and major projects consistently underway. All theseachievements laid a solid foundation for the Company's strategic expansion.
11.2.2. Possible challenges and risks in the future
A. Pandemic risks: The rampant pandemic overseas, cluster infections in several regions in China, andthe emergence of various variants have posed severe challenges to pandemic prevention and controland resulted in great uncertainties in the baijiu and other consumption sectors.
B. Economic risks: In recent years, the exacerbated global inflation and partial trade sanctions have
impacted the global economy; in addition, the Russia-Ukraine conflict has led to a change in the patternof globalization, which may cause the restructuring of supply chains and the split of industrial chainsacross the world, a slowdown in the economic growth, and even financial crisis, thereby impacting theconsumption market.
C. Policy risks: The baijiu industry has been undergoing great pressures arising from public opinions andis susceptible to policy factors, including industry policies, consumption tax, and consumption scenariorestrictions. Therefore, baijiu producers shall proactively assume the corresponding social responsibility,advocate and disseminate the idea of healthy drinking, and carry forward the cultural connotations ofbaijiu to build a positive social image for the baijiu industry.
11.2.3. The Company's "14th five-year" development strategyFocusing on the development concepts of "leveraging advantages, making up for shortcomings,improving quality, enhancing strength, and seeking revitalization", the Company has formulated the"14th five-year" strategic plan: "136" strategy.
Adhere to one development objective:
Adhere to the objective of returning to China's baijiu industry "top three".
Adhere to three major development principles:
The first is to adhere to brand guidance and vigorously enhance the value of famous baijiu brands inChina. The second is to adhere to the foundation of quality and vigorously build the core production areaof famous baijiu brands in the world. The third is to adhere to culture casting and vigorously build apilgrimage site for Chinese baijiu culture.
Construct a "six-in-one" Luzhou LaojiaoThe first is to build the brand of Luzhou Laojiao. Focusing on the development arrangement of "dualbrands, three product series, and major single products", the Company shall continue to enhance thevalue of the high-end brand National Cellar 1573, promote the value return of famous Luzhou Laojiaobrands, and lead the direction of appealing to more younger consumers and becoming moreinternational and stylish with brand innovation.
The second is to build the quality of Luzhou Laojiao. The Company shall build a reputation of quality,adhere to brewing with organic raw grains, create new taste and flavors, increase trust in quality, andsatisfy taste preferences. It shall establish a model for quality, expand the scope of quality supervision,and improve the innovative quality traceability system covering the entire product life cycle. It shallstrengthen standard guidance, consolidate the image of standard baijiu for Chinese baijiu appreciation,and become a setter of Chinese baijiu quality standards.
The third is to build the culture of Luzhou Laojiao. The Company shall consolidate its leading position inthe baijiu industry, enhance cultural self-confidence, create new cultural expressions, accelerate theintegration of culture and tourism, and enhance cultural identity. It shall create a good industrial andecological culture on behalf of the industry elites, tell the Chinese story of baijiu on behalf of the Chinesebaijiu, and build the world-class clusters of cultural landscape on behalf of the national industries. It shall
create a business card of baijiu culture that integrates the wharf culture of the Yangtze River, the cavestorage culture of baijiu, the culture of baijiu factory, the culture of folk customs and sacrifice, the localculture of Bashu, the culture of baijiu rituals, and the intangible culture of craftsmanship.
The fourth is to build an innovative Luzhou Laojiao. The Company shall strengthen scientific andtechnological innovation, build a strong scientific and technological platform, focus on the transformationof achievements, attach importance to scientific and technological promotion, and provide theoreticaland practical support for the upgrading of Chinese baijiu technology. It shall strengthen managementinnovation, optimize the allocation of elements, improve the policies and procedures, use innovativemeans to improve the precise, systematic and professional management, and improve the modernenterprise management system. It shall strengthen marketing innovation, keep pace with the market,accelerate the innovation of products, strategies, organizations, channels, services and models, andstimulate the vitality of market expansion.
The fifth is to build the digital intelligence of Luzhou Laojiao. The Company shall integrate the elementsof major business system by digital means, open up the value chain of management, purchase andsupply, production, quality inspection, marketing and service, comprehensively improve the businessdecision-making in a forward-looking, accurate, timely and systematic manner, improve managementefficiency, prevent and control operation risks, and strengthen the linkage between production and sales.It shall intensify the integrated application of intelligent equipment and systems in the entire industrychain, solidify knowledge and experience with scientific and technological means, improve high-qualityproduction capacity, control operating costs, and become a leader in the intelligent technology revolutionand a model enterprise for innovation and upgrading of industrial models.
The sixth is to build a harmonious Luzhou Laojiao. The Company shall insist on sharing with employees,strengthen the leadership of the Communist Party of China, enhance organizational construction,increase incentives for talent, promote the "Three Ones" talent project, improve the efficiency of humanresources, and build the "employees paradise" and "talent paradise" of Luzhou Laojiao. It shall persist indeveloping with the society, optimize the industrial ecology, build a resource platform, proactively helpthe poverty stricken students and facilitate local development, and share and grow with shareholders,investors, partners, the media and related parties. It shall adhere to the dependence on the environment,promote the green development concept of "respect for heaven and earth, law of nature, and care forlife" in baijiu brewing, build an industrial model of circular economy, create a good internal and externalenvironment that conforms to national strategies, responds to social expectations, and promotes thesustainable development of the industry, and guide the green and integrated ecological development ofthe baijiu industry.
11.3. Completion of the business plan in 2021
In the reporting period, the Company achieved the operating revenue of CNY 20.642 billion, up by
23.96% year-on-year. The net profit attributable to shareholders of the listed company reached CNY
7.956 billion, up by 32.47% year-on-year. The Company has successfully completed its business target“to achieve a year-on-year increase in operating revenue by at least 15%" as set by the Board ofDirectors at the beginning of the year.
11.4. Business plan in 2022
According to the Outline of Production and Operation in 2022 reviewed and approved by the Board ofDirectors, the Company will closely center on the development theme of "improving development quality,strengthening cultural empowerment, and accelerating breakthroughs", and strive to achieve ayear-on-year increase in operating revenue by at least 15% (The business plan in 2022 is formulated bythe Company according to the 14th five-year strategic plan and based on its business capabilities. Itdoes not represent the Company's profit forecast for 2022, and is not a commitment by the Company.Whether it can be achieved depends on many factors such as changes in market conditions and effortsof the operation team. There are great uncertainties. Investors are kindly reminded to pay specialattention).
The main measures are as follows:
A. Improve development qualityIn 2022, the Company will adhere to the three principles of "concentration, capacity gathering, and talentgathering" to comprehensively optimize and improve market, capacity, and talent layouts.
a. Promote "seven concentrations" to ensure a sound market. The Company will implement themarket development philosophy of "seven concentrations", namely the concentrations on thehigh-end-driven development, the brand rejuvenation, the creation, the consumption innovation,the key markets, the collaborative marketing, and the price and logistics.
b. Promote "three capacity gatherings" to give full play to the advantages of the capacityguarantee. Luzhou Laojiao has basically formed an advanced production guarantee pattern of"intelligent manufacturing, technology-driven development, and project support", which providesgreat capacity support for the Company to make breakthroughs during the "14th Five-year Plan" period.Digital, information-based, and intelligent development will be the mainstream of China and a majormeasure taken by traditional baijiu producers to gain a competitive edge and respond to thedisappearance of demographic dividends. Therefore, the Company shall complete its digital andintelligent transformation during the "14th Five-year Plan" period to form comparative advantages torespond to fierce peer competition.
c. Promote "three talent gatherings" to create a talent hub. On the one hand, the Company willgather talent via material incentives. Specifically, it will focus on the timely implementation of theshare incentive mechanism and the medium- and long-term incentive mechanism to improve theremuneration packages for employees and its material incentives. On the other, it will gather talent viagrowth incentives. A scientific talent selection and employment mechanism will be established andimproved to create an environment that emphasizes that "talent is capital, and there must be places forexcellent talent" for excellent talent to realize individual development. Additionally, it will gather talentvia spirit incentives. Efforts will be made to optimize the working environment for employees, organizeand carry out assistance activities, and create a corporate cultural IP that displays the Company's styleand features, elevates its image, and shows employees' talents, thereby enhancing the sense ofhappiness and gain of employees.
B. Enhance cultural empowermentIn 2022, based on the three goals of "level, friendliness, and popularity", the Company will producequality fruits, create effective platforms, and provide sufficient support for its business expansion, brandupgrading, market expansion, and team growth.
a. Improve the level of the brand culture. The Company will adhere to its high-end brand culturalimage and seize various scarce resources to raise the added value of the brand culture from the global,national, and leading perspectives. Besides, it will constantly elevate the style of the brand culture, refinethe value by discovering and making use of the advantages of others, and then integrate them into thecorporate brand cultural events, thereby building a unique corporate brand cultural system that matchesthe spirit of the age and meets the expectations of all walks of life.
b. Improve the friendliness of the brand culture. The Company will fully uphold the"consumer-centric" philosophy to enrich the cultural connotations of various brand IP activities tofamiliarize consumers with the "people-friendly, fashionable, and healthy" brand of Luzhou Laojiao.Additionally, it will hold fast to the value idea that "customers mean teams", maintain and consolidate itspartnership with dealers from multiple perspectives, and ensure that excellent customers will feel thehonor of being a member of Luzhou Laojiao comprehensively.
c. Improve the popularity of the brand culture. The Company will establish a public relations systemby hierarchy and rank, strengthen its communication and exchanges with other enterprises, andconstantly expand its cooperation with associations. By holding high-level exchange events and carryingout cross-industry collaboration, the Company will interest more people and attract them to purchase itsproducts. Besides, online and offline media communication matrixes that echo each other will be formedto realize the fission effect of brand communication. Furthermore, it will stay true to its aspiration that "letthe world taste Chinese flavor" and prepare to introduce Chinese culture, Chinese manufacturing, andChinese lifestyle to the world in the post-pandemic era, thereby steadily expanding its overseaschannels and better telling the stories of the national nongxiangxing baijiu.
C. Accelerate breakthroughsSolid progress made in the "13th Five-year Plan" period and 2021 has laid a foundation for LuzhouLaojiao to make breakthroughs in its development. In 2022, the Company will follow the "threeacceleration" principle to gather strong momentum to compete with the top three brands.
a. Accelerate breakthroughs in the sales scale. The Company will set a higher goal and maintainhigh-speed growth momentum in sales to sprint bravely and reach a higher level. Besides, acceleratedgrowth will be realized, with the National Cellar series products playing the leading role, Luzhou Laojiaoseries products firmly forming new growth poles, and Luzhou Laojiao Health Care and Xinjiuye seriesproducts accelerating innovation. The Company will intensify its efforts in developing markets in atargeted manner. Specifically, it will promote the fission, thorough development of the base market,consolidate its foundation for the key market, expand the strategic market and make breakthroughs, andaccelerate the layout of the blank market, thereby displaying a trend that features the nationwidedevelopment and the parallel progress in the development of various markets.
b. Accelerate breakthroughs in management efficiency. The Company will promote theimplementation of the "136" strategy by comprehensively exploring an effective mechanism that ensuresthat "departments and employees must be responsible for practicing the '136' strategy in each project". Itwill improve the capabilities of the headquarters, strengthen the big-picture awareness, serviceawareness, and efficiency awareness in terms of the integrated management system, and develop theintegrated management capability that will "empower the sales, production, and front line". It willstrengthen the comprehensive collaboration. Specifically, it will fully promote a system-based,standard, digital, and intelligent Luzhou Laojiao and build a mechanism to facilitate cross-system,cross-department, and cross-unit communication and collaboration.
c. Accelerate breakthroughs in contributions. The Company shall make greater contributions tothe country. For example, it shall proactively assume the responsibility of serving the country throughindustry and play the exemplary role of a state-owned enterprise. It will make greater contributions tosociety. Specifically, it will make use of its development achievements and actively promote ruralrevitalization, help students in need continue their studies via fund donation, and assist people in need tobuild an exemplary image. It will make greater contributions to its partners. By creating value forshareholders, investors, customers of dealers, and partners along the upstream and downstreamindustrial chains, the Company will realize wealth growth, business development, and commonprosperity. It will make greater contributions to employees. With more material, growth, and spiritincentives, and respect for talent, knowledge, and creation, the Company will enhance employees'loyalty, confidence, and sense of belonging and share its development achievements with its employeesin an observable, touchable, and hopeful manner.
In 2021, Luzhou Laojiao got off to a good start in the "14th Five-year Plan" period. It realized thestrategic goal of the Company and accomplished various tasks and indicators and finally achievedoutstanding development performance. In 2022, we will be more confident and resolute in launching abattle of "improving quality, enhancing culture, and accelerating breakthroughs" comprehensively,embarking on a new journey of development, accomplishing the mission entrusted by the history, andwinning greater victories and honors.
12. Visits paid to the Company for purposes of research, communication,interview, etc. in the reporting period
√ Applicable ? N/A
| Date of visit | Place of visit | Way of visit | Type of visitor | Visitor | Main inquiry information and materials provided | Index to main inquiry information |
| 19 May 2021 | Company Headquarters | Other | Other | All investors | Industry Trends and Company Performance | http://www.cninfo.com.cn/ |
| 10 June 2021 | Company Headquarters | Field survey | Institution | Institutional investor | Company Performance | http://www.cninfo.com.cn/ |
| 29 June 2021 | Company Headquarters | Field survey | Other | Institutional and individual investors and media | Company Performance | http://www.cninfo.com.cn/ |
| 29 December 2021 | Company Headquarters | Field survey | Other | Institutional and individual investors | Company Performance | http://www.cninfo.com.cn/ |
Section IV Corporate Governance
1. Basic situation of corporate governance
Since it was listed, in accordance with the Corporate Law, the Securities Law, The Listed CompanyGovernance Standards and other laws, administrative regulations and departmental rules and normativedocuments, the Company has constantly perfected corporate governance structure, standardized itsoperation, established the rules and system on the basis of the Company's articles of association whosemain framework is the 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 the managementsystem whose main structure is the shareholders meeting, board of directors, board of supervisors andmanagement. During the reporting period, the Company won a number of honors and awards, including“The 12
thTianma Awards—Best Board of Directors, and Best Investor Relations”, and “JinglunAwards—Outstanding Company with Investor Relations Value of the Year”.
Any incompliance with the applicable laws and administrative regulations, as well as regulations relatedto the governance of listed companies issued by the CSRC?Yes√ NoThere is no incompliance with the applicable laws and administrative regulations, as well as regulationsrelated to the governance of listed companies issued by the CSRC.
2. Independency of assets, personnel, finance, organizations andbusinesses which are separated from the controlling shareholder andthe actual controllerThe Company has an independent and complete production and operation system and independentdecision-making ability. There is no horizontal competition between the Company and the controllingshareholders and its subsidiaries. The Company has daily affiliated transactions with the controllingshareholders and its subsidiaries. Such daily affiliated transactions belong to the need of rationalallocation of resources and do not affect the independence of the Company. For affiliated transactions,the Company has strictly fulfilled the relevant decision-making procedures and information disclosureobligations, and implemented the system of Non-executive directors' prior examination and avoidancesystem of related directors (shareholders).
2.1 In the aspect of assets
Asset integrity. There are clear ownership and independency of the Company's assets invested bycontrolling shareholders. The Company has an independent and complete production, supply, salessystem and auxiliary production system and supporting facilities. The industrial property rights,trademarks and non-patented technology and other intangible assets are owned by the Company. Thereis no situation that the controlling shareholders 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 sales of baijiuseries of “Luzhou Laojiao” and “National Cellar 1573”. It has the ability to operate independently in themarket. The board of directors and the management can independently make production and operationdecisions within the corresponding authority.
2.3 In the aspect of personnel
The Company has built independent labor management, personnel management and salarymanagement. The Company has established a relatively complete labor management system and postresponsibility system. Meanwhile, the Company's senior management personnel all receive salary in theCompany, but not at the controlling shareholders.
2.4 In the aspect of organization
Organization independence. The Company has independent production management organization andsystem, independent office and production management place, and independent managementorganization, functional organization and branch.
2.5 In the aspect of finance
Financial independence. The Company has completed and independent financial department.Independent accounting system and financial management are established. The Company separatelysets bank accountants, conducts external settlement and pays taxes according to law.
3. Horizontal competition
?Applicable √ N/A
4. Annual meeting of shareholders and special meetings of shareholdersconvened during the reporting period
4.1. Meetings of shareholders convened during the reporting period
| Meeting | Type | Investor participation ratio | Convened date | Disclosure date | Resolutions |
| 2020 Annual General Meeting of Shareholders | General Meeting of Shareholders | 61.16% | 29 June 2021 | 30 June 2021 | 2020 Annual General Meeting Resolution Announcement” Announcement No:2021-27 |
| (http://www.cninfo.com.cn/) | |||||
| The First Special Meeting of Shareholders of 2021 | Special Meeting of Shareholders | 63.63% | 29 December 2021 | 30 December 2021 | Announcement on Resolutions of The First Special Meeting of Shareholders of 2021 Announcement No:2021-60 (http://www.cninfo.com.cn/) |
4.2. Special meetings of shareholders convened at the request of preferredshareholders with resumed voting rights?Applicable √ N/A
5. Directors, supervisors, and senior management
5.1 General information
| 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) | Reason for share changes |
| Liu Miao | Chairman of the board | Incumbent | Male | 52 | 2015.6.30-2024.6.29 | 192,187 | 0 | 0 | 0 | 192,187 | |
| Lin Feng | Director, General manager | Incumbent | Male | 48 | 2015.6.30-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Wang Hongbo | Director, Deputy general manager, | Incumbent | Male | 58 | 2015.3.6-2024.6.29 | 0 | 0 | 0 | 0 | 0 |
| Secretary of the board | |||||||||||
| Shen Caihong | Director, Deputy general manager | Incumbent | Male | 56 | 2002.6.30-2024.6.29 | 138,375 | 0 | 0 | 0 | 138,375 | |
| Xiong Pingting | Director, Deputy general manager | Incumbent | Female | 46 | 2021.6.29-2024.6.29 | 0 | 0 | 01 | 0 | 0 | |
| Liu Junhai | Non-executive director | Incumbent | Male | 52 | 2018.6.27-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Chen You’an | Non-executive director | Incumbent | Male | 64 | 2021.6.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Sun Dongsheng | Non-executive director | Incumbent | Male | 63 | 2021.6.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Lyu Xianpei | Non-executive director | Incumbent | Male | 58 | 2021.6.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Qian Xu | External director | Incumbent | Male | 58 | 2015.6.30-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Ying Hanjie | External director | Incumbent | Male | 52 | 2016.9.13-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Yang Ping | Chairman of the Board of Supervisors | Incumbent | Male | 45 | 2021.6.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Lian Jing | Supervisor | Incumbent | Male | 52 | 2012.6.27-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Li Guangjie | Supervisor | Incumbent | Male | 52 | 2018.6.27-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Guo Shihua | Supervisor | Incumbent | Female | 43 | 2021.6.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 | |
| Li Lunyu | Supervisor | Incumbent | Female | 35 | 2021.6.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 |
| Xie Hong | CFO | Incumbent | Female | 52 | 2015.3.6-2024.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| He Cheng | Deputy general manager | Incumbent | Male | 55 | 2015.6.30-2024.6.29 | 0 | 0 | 0 | 0 | |||
| Zhang Suyi | Deputy general manager | Incumbent | Male | 50 | 2015.12.29-2024.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Li Yong | Deputy general manager | Incumbent | Male | 45 | 2021.9.20-2024.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Jiang Yuhui | Director, Deputy general manager | Former | Female | 59 | 2009.5.20-2021.6.29 | 254,000 | 0 | 0 | 0 | 254,000 | ||
| Du Kunlun | Non-executive director | Former | Male | 53 | 2015.6.30-2021.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Xu Guoxiang | Non-executive director | Former | Male | 62 | 2015.6.30-2021.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Tan Lili | Non-executive director | Former | Female | 67 | 2015.6.30-2021.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Yang Benhong | Supervisor | Former | Female | 55 | 2009.5.20-2021.6.29 | 10,000 | 0 | 0 | 0 | 10,000 | ||
| Cao Cong | Supervisor | Former | Male | 37 | 2015.6.30-2021.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Wu Qin | Deputy general manager | Former | Male | 60 | 2020.1.10-2021.6.29 | 0 | 0 | 0 | 0 | 0 | ||
| Total | -- | -- | -- | -- | -- | -- | 594,562 | 0 | 0 | 0 | 594,562 | -- |
Note 1: During the reporting period, before Ms. Xiong Pingting took office as director and deputy generalmanager and had access to insider information, she sold 100 shares in the Company.
Whether any director, supervisor or senior management resigned before the expiry of their periods ofservice during the reporting period
□ Yes √ No
Changes in directors, supervisors, and senior management
√ Applicable □ N/A
| Name | Title | Type | Date | Reason |
| Jiang Yuhui | Director, Deputy general manager | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
| Du Kunlun | Non-executive director | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
| Xu Guoxiang | Non-executive director | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
| Tan Lili | Non-executive director | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
| Yang Benhong | Supervisor | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
| Cao Cong | Supervisor | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
| Wu Qin | Deputy general manager | Resigned upon the expiry of the period of service | 2021.6.29 | Resigned upon the expiry of the period of service |
5.2 Employment information
Professional background, work experience and major duties of current directors, supervisors and seniormanagement.Mr. Liu Miao, Male, born in 1969, MBA of Wright State University in the USA, Master of Chinese Brewing,senior marketing specialist. He used to serve as planning minister, general manager of Sales Company,general manager assistant, and deputy general manager of the Company. At present, he is secretary ofthe party committee and chairman of the board in the Company, as well as secretary of the partycommittee and chairman of the board in Laojiao Group.
Mr. Lin Feng, Male, born in 1973, Master degree, senior marketing specialist. He was deputy generalmanager 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 deputy secretary of theparty committee, director, and general manager of the Company.
Mr. Wang Hongbo, Male, born in 1964, Master degree. He was director and secretary of party committeeof Luzhou Commerce Bureau, director of Luzhou Liquor Industry Development Bureau, director ofLuzhou branch of China council for the promotion of international trade, deputy secretary general, officedirector of Luzhou Municipal Party Committee and deputy secretary of the party committee of theCompany. At present, he is member of the party committee, director, deputy general manager, secretaryof the board of the Company and chairman of the board of Luzhou Laojiao International Development（Hong Kong）Co.,Ltd.
Mr. Shen Caihong, Male, born in 1966, Master degree, professor-level senior engineer, one of the firstbatch of representative inheritors of national intangible cultural heritage, one of the first batch of “Master
of Chinese Brewing”, and one of the first batch of "Sichuan craftsmen". He was manager of theCompany’s leaven-making branch, manager of base baijiu 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 center and chairman of the board ofLuzhou Pinchuang Technology Co.,Ltd.
Xiong Pingting, female, born in 1975, holds a master's degree and the titles of Human ResourceManagement Professional (grade one), Economist, and Assistant Political Mentor. Positions previouslyheld by her include Deputy Director and Director of the Office of Luzhou Laojiao Sales Co., Ltd., DeputyDirector of the Office of Jiangyang District People's Government of Luzhou (temporary), Deputy Directorof the Human Resources Department and Corporate Management Department of Luzhou Laojiao Co.,Ltd., General Manager of the Brand Operation Department, Director of the Office (concurrently),Secretary of the general Party branch, and Deputy General Manager of Luzhou Laojiao Sales Co., Ltd.Currently, she serves as Member of the Party Committee Committee, Director, Deputy General Manager,and Chairman of the Labor Union of the Company.
Liu Junhai, male, born in 1969, holds a Ph.D. degree in law and is a doctoral supervisor. Positionspreviously held by him include Assistant to the Director and Researcher at the Institute of Law of theChinese Academy of Social Sciences ("CASS"), Professor at CASS, Vice Chairman of ChinaConsumers Association, and Deputy Director Researcher at the Planning Committee under the ChinaSecurities Regulatory Commission ("CSRC"). Currently, he serves as Professor at the Law School ofRenmin University of China, Director at the Institute of Commercial Law of Renmin University of China,Arbitrator at China International Economic and Trade Arbitration Commission and Beijing ArbitrationCommission (Beijing International Arbitration Center) (concurrently), and Independent Director of ChinaThree Gorges Renewables (Group) Co., Ltd. (concurrently). He has served as a non-executive directorof the Company since June 2018.
Chen You'an, male, born in 1958, holds an Eng.D. degree in management science and engineering andis a Senior Engineer. He once took a job at government macro regulation agencies, developmentfinancing agencies, and local and national sovereign wealth fund agencies. Besides, he served asDeputy General Manager of Central Huijin Investment Ltd. and Chairman of China Galaxy FinancialHoldings Co., Ltd. and China Galaxy Securities Co., Ltd. (concurrently). Currently, he is IndependentDirector of CPIC Fund Management Co., Ltd., Nomura Orient International Securities Co., Ltd., andHexie Health Insurance Co., Ltd. He has served as a non-executive director of the Company since June2021.
Sun Dongsheng, male, born in 1958, holds an Eng.D. degree. Positions previously held by him includeProfessor at Shandong University, Doctoral Supervisor, Researcher at the Institute of IndustrialTechnology under the Ministry of International Trade and Industry, Director, Vice President, andPresident of Shenzhen Capital Group Co., Ltd., and Director of Beijing Easpring Material TechnologyCo., Ltd. and Shenzhen Kaizhong Precision Technology Co., Ltd. Currently, he is Independent Directorof Shenzhen Dawei Innovation Technology Co., Ltd. He has served as a non-executive director of theCompany since June 2021.
Lyu Xianpei, male, born in 1964, holds a Ph.D. degree in accounting. Positions previously held by himinclude Vice Dean at the School of Accounting and Director at the Auditing Department of SouthwesternUniversity of Finance and Economics, as well as Independent Director of Tibet Rhodiola PharmaceuticalHolding Co., Ltd., Sichuan Chuantou Energy Co., Ltd., and Sichuan Swellfun Co., Ltd. Currently, heserves as Professor and Doctoral Supervisor at Southwestern University of Finance and Economics andChairman of Sichuan Educational Audit Society. He has served as a non-executive director of theCompany since June 2021.
Mr. Qian Xu, Male, born in 1963, PhD. He was general manager and chairman of the board of BeijingEnterprises Real-Estate Group Co.,Ltd.. At present, he is chairman of the board and general manager ofBeijing Enterprises Urban Development Group Co.,Ltd., chairman of the board of Beijing Properties（Holdings） Limited (Listed on the Hong Kong Stock Exchange), non-executive director of CAQHoldings Limited (Listed on the Australian Stock Exchange). He has served as a director of theCompany since June 2015.
Mr. Ying Hanjie, Male, born in 1969, Doctor of Biochemistry, professor, and academician of the ChineseAcademy of Engineering. He was deputy director of Pharmacy and Life Sciences School of NanjingUniversity of Technology. At present, he is director of National Biochemical Engineering TechnologyResearch Center of Nanjing Tech University, chairman of the board of Nanjing Biotogether Co., Ltd.,director of Nanjing High Tech University Biological Technology Research Institute Co., Ltd., and directorof Jiangsu Institute of Industrial Biotechnology. He has served as a director of the Company sinceSeptember 2016.
Yang Ping, male, born in 1976, holds a doctoral degree. Positions previously held by him include DeputyDirector and Director at the National Cellar Workshop Section, Director at the Production andTechnology Department, and Deputy General Manager of Luzhou Laojiao Brewing Co., Ltd. Currently,he is Chairman of the Board of Supervisors of the Company, as well as Secretary of the PartyCommittee and General Manager of Luzhou Laojiao Brewing Co., Ltd.
Mr. Lian Jing, Male, born in 1969, Bachelor degree. He was director of Economic Information PublicityDepartment of Luzhou Economic and Trade Commission; director of Fixed Assets InvestmentDepartment of Luzhou Development Planning Committee; director of Fixed Assets InvestmentDepartment of Luzhou Development and Reform Committee; chairman of the board and generalmanager of Luzhou State-owned Gongfang Operation Management Co., Ltd.; chairman of the board andgeneral manager of Luzhou State-Owned Assets Management Co.,Ltd.; chairman of the board andgeneral manager of Luzhou State-owned Gongfang Economic Management Co., Ltd.; director, deputygeneral manager, general manager of Luzhou Hongyang State-Owned Assets Management Co.,Ltd;deputy secretary of the party committee, director, general manager of Luzhou Industrial InvestmentGroup Co.,Ltd.; external director of Luzhou Culture Tourism Development Investment Group Co. Ltd.;and chairman of the Board of Supervisors of Laojiao Group. At present, he is chairman of the Board ofSupervisors of Luzhou State-Owned Capital Operation and Management Co. Ltd; executive director andgeneral manager of Luzhou Guoxin Asset Management Co. Ltd; external director of XingLu Group,
Luzhou Liquor Industrial Park Development and Investment Co. Ltd., Luzhou Public TransportationGroup Co. Ltd., Sichuan Rongtong Security Investment Group Co. Ltd., Luzhou Aviation DevelopmentInvestment Group Co., Ltd., and Sichuan Guxu Coal Field Development Co., Ltd. He has served as asupervisor of the Company since June 2012.
Mr. Li Guangjie, Male, born in 1969, Master degree, economist. He was manager of PlanningDepartment of the Company, deputy director of Sales Company, manager of Import and Exportcompany, general manager assistant of Sales Company. At present, he is supervisor and deputygeneral manager of Sales Company.
Guo Shihua, female, born in 1978, holds a university degree and is Senior Engineer. She worked at theEngineering Management Department, Department of Design, and Audit Department of Luzhou NorthChemical Industries Co., Ltd. Currently, she is Supervisor and Vice Director of the Audit Department ofthe Company.
Li Lunyu, female, born in 1986, holds a university degree as well as is Assistant Political Mentor andAssistant Engineer. Positions previously held by her include Publicity Officer at the Office of the CPCLuzhou Laojiao Committee, Deputy Head and Manager of Tianjin Division of the Business Departmentfor Luzhou Laojiao Tequ 60 and 80, Secretary of the CPC National Cellar Section Branch of LuzhouLaojiao Brewing Co., Ltd., Director of the Office of the CPC Luzhou Laojiao Brewing Committee, andDirector of the Discipline Inspection Department and Vice Chairman of the Labor Union of LuzhouLaojiao Brewing Co., Ltd. Currently, she is Supervisor, Vice Chairman of the Labor Union, and Directorof the Office of the Labor Union of the Company.
Ms. Xie Hong, Female, born in 1969, Master degree, senior accountant, and senior economist. She wassection chief of Treasury Section of the Finance Bureau, section chief of Non-tax Revenue CollectionManagement Section, director of Luzhou Municipal Finance Treasury Payment Center, chief accountantof Luzhou Finance Bureau. At present, she is a member of the party committee and CFO of theCompany.
Mr. He Cheng, Male, born in 1966, Master of Management Economics of Nanyang TechnologicalUniversity, senior engineer, expert who receives special allowances from the State Council, Master ofChinese Baijiu, and Master of Chinese Brewing. He was chief dispatcher of the Company, generalmanager of Brewing Company, as well as director of the business administration department, director ofthe human resources department, director of the quality department, and director of the dispatchingcenter of the Company. At present, he is a member of the party committee, deputy general manager andchief quality officer of the Company.
Mr. Zhang Suyi, Male, born in 1971, PhD, professor-level senior engineer, representative inheritor ofSichuan Intangible Cultural Heritage. He was a worker, production team leader and assistantsuperintendent at Brewing Workshop No. 6, vice director and director of Gouchu Center, and deputychief engineer of the Company, as well as deputy general manager, director of the Baijiu Body DesignCenter, and chief engineer of baijiu body design of Brewing Company. At present, he is deputy general
manager and director of safety and environmental protection of the Company.
Li Yong, male, born in 1977, holds a postgraduate degree and is a brewing engineer. He once worked atthe Party and government organizations at the township level as well as agencies at the county andmunicipal levels. Besides, positions previously held by him include Director of the Office of LuzhouLaojiao Group Co., Ltd., Director of the General Manager Office of Luzhou Laojiao Co., Ltd., DeputyParty Secretary of the CPC Sales Company Committee, Secretary of Commission of DisciplineInspection Sales Company Branch, and Deputy General Manager of Luzhou Laojiao Sales Co., Ltd.Currently, he is Deputy General Manager of the Company.
Position in shareholder-holding companies
√ Applicable ? N/A
| 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 |
| Liu Miao | Laojiao Group | Secretary of the party committee, Chairman of the board | 11 March 2022 | 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 |
| Liu Junhai | China International Economic and Trade Arbitration Commission, and Beijing Arbitration Commission (Beijing International Arbitration Center) | Arbitrator | |||
| Liu Junhai | Institute of Commercial Law of Renmin University of China | Director | |||
| Liu Junhai | China Three Gorges Renewables (Group) Co., Ltd. | Non-executive director | |||
| Chen You’an | CPIC Fund, Nomura Oriental International Securities Co., Ltd., and Hexie Health Insurance Co., Ltd. | Non-executive director | |||
| Sun | Shenzhen Dawei Innovation Technology | Non-executi |
| Dongsheng | Co., Ltd. | ve director | |||
| Lyu Xianpei | Sichuan Education and Audit Society | Chairman | |||
| Qian Xu | Beijing Enterprises Urban Development Group Co.,Ltd. | Chairman of the board, general manager | |||
| Qian Xu | Beijing Properties （Holdings） Limited | Chairman of the board | |||
| Qian Xu | CAQ Holdings Limited. | Non-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., and Jiangsu Institute of Industrial Biotechnology | Director | |||
| Lian Jing | Luzhou State-Owned Capital Operation and Management Co. Ltd | Chairman of the board of supervisors | |||
| Lian Jing | Luzhou Guoxin Asset Management Co. Ltd. | Executive director, general manager | |||
| Lian Jing | XingLu Group, Luzhou Liquor Industrial Park Development and Investment Co. Ltd., Luzhou Public Transportation Group Co. Ltd., Sichuan Rongtong Security Investment Group Co. Ltd., Luzhou Aviation Development Investment Group Co., Ltd., and Sichuan Guxu Coal Field Development Co., Ltd. | External director |
Punishments imposed in the recent three years by the securities regulators on the incumbent directors,supervisors and senior management as well as those who left in the reporting period? Applicable √ N/A
5.3 Remuneration of directors, supervisors and senior management
The following describes the decision-making procedures, grounds on which decisions are made andactual remuneration payment of directors, supervisors and senior management.
Decision-making procedures for directors, supervisors and senior management: The remuneration ofnon-executive directors, external directors and external supervisors shall be determined by the generalmeeting of shareholders, and the remuneration of directors, supervisors and senior management whohold positions within the Company shall be determined by relevant rules of SASAC of Luzhou andrelevant rules of the Company.
Grounds on which decisions are made of directors, supervisors and senior management: Calculateaccording 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 reporting period
Unit CNY 10,000
| 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 | Male | 52 | Incumbent | 149.66 | No |
| Lin Feng | Director, General manager | Male | 48 | Incumbent | 147.9 | No |
| Wang Hongbo | Director, Deputy general manager, Secretary of the board | Male | 58 | Incumbent | 118.63 | No |
| Shen Caihong | Director, Deputy general manager | Male | 56 | Incumbent | 102.76 | No |
| Xiong Pingting | Director, Deputy general manager | Female | 46 | Incumbent | 34.82 | No |
| Liu Junhai | Non-executive director | Male | 52 | Incumbent | 9.52 | No |
| Chen You’an | Non-executive director | Male | 64 | Incumbent | 4.76 | No |
| Sun Dongsheng | Non-executive director | Male | 63 | Incumbent | 4.76 | No |
| Lyu Xianpei | Non-executive director | Male | 58 | Incumbent | 4.76 | No |
| Qian Xu | External director | Male | 58 | Incumbent | 9.52 | No |
| Ying Hanjie | External director | Male | 52 | Incumbent | 9.52 | No |
| Yang Ping | Chairman of the Board of Supervisors | Male | 45 | Incumbent | 54.34 | No |
| Lian Jing | Supervisor | Male | 52 | Incumbent | 0 | No |
| Li Guangjie | Supervisor | Male | 52 | Incumbent | 100.53 | No |
| Guo Shihua | Supervisor | Female | 43 | Incumbent | 22.37 | No |
| Li Lunyu | Supervisor | Female | 35 | Incumbent | 24.81 | No |
| Xie Hong | CFO | Female | 52 | Incumbent | 116.93 | No |
| He Cheng | Deputy general manager | Male | 55 | Incumbent | 100.18 | No |
| Zhang Suyi | Deputy general manager | Male | 50 | Incumbent | 97.53 | No |
| Li Yong | Deputy general manager | Male | 45 | Incumbent | 15 | No |
| Jiang Yuhui | Director, Deputy general manager | Female | 59 | Former | 86.91 | No |
| Du Kunlun | Non-executive director | Male | 53 | Former | 4.76 | No |
| Xu Guoxiang | Non-executive director | Male | 62 | Former | 4.76 | No |
| Tan Lili | Non-executive director | Female | 67 | Former | 4.76 | No |
| Yang Benhong | Supervisor | Female | 55 | Former | 36.74 | No |
| Cao Cong | Supervisor | Male | 37 | Former | 22.38 | No |
| Wu Qin | Deputy general manager | Male | 60 | Former | 91.25 | No |
| Total | -- | -- | -- | -- | 1,379.861 | -- |
Note 1: The table above shows the remunerations of directors, supervisors and senior management fortheir periods of service in 2021.
6. Performance of directors during the reporting period
6.1. Board meetings convened during the reporting period
| Meeting | Convened date | Disclosure date | Resolutions |
| The 24th Meeting of the Ninth Board of Directors | 28 January 2021 | 29 January 2021 | Announcement on Resolutions of the 24th Meeting of the Ninth Board of Directors (Announcement No. 2021-4) (http://www.cninfo.com.cn/) |
| The 25th Meeting of the Ninth Board of Directors | 22 March 2021 | 23 March 2021 | Announcement on Resolutions of the 25th Meeting of the Ninth Board of Directors (Announcement No. 2021-7) (http://www.cninfo.com.cn/) |
| The 26th Meeting of the Ninth Board of Directors | 13 April 2021 | 15 April 2021 | Announcement on Resolutions of the 26th Meeting of the Ninth Board of Directors (Announcement No. 2021-9) (http://www.cninfo.com.cn/) |
| The 27th Meeting of the Ninth Board of Directors | 29 April 2021 | 30 April 2021 | Announcement on Resolutions of the 27th Meeting of the Ninth Board of Directors (Announcement No. 2021-11) (http://www.cninfo.com.cn/) |
| The 28th Meeting of the Ninth Board of Directors | 4 June 2021 | 5 June 2021 | Announcement on Resolutions of the 28th Meeting of the Ninth Board of Directors (Announcement No. 2021-19) (http://www.cninfo.com.cn/) |
| The 29th Meeting of the Ninth Board of Directors | 18 June 2021 | 19 June 2021 | Announcement on Resolutions of the 29th Meeting of the Ninth Board of Directors (Announcement No. 2021-25) (http://www.cninfo.com.cn/) |
| The First Meeting of the 10th Board of Directors | 29 June 2021 | 30 June 2021 | Announcement on Resolutions of the First Meeting of the 10th Board of Directors (Announcement No. 2021-28) (http://www.cninfo.com.cn/) |
| The Second Meeting of the 10th Board of Directors | 2 August 2021 | 3 August 2021 | Announcement on Resolutions of the Second Meeting of the 10th Board of Directors (Announcement No. 2021-32) (http://www.cninfo.com.cn/) |
| The Third Meeting of the 10th Board of Directors | 12 August 2021 | 14 August 2021 | Announcement on Resolutions of the Third Meeting of the 10th Board of Directors (Announcement No. 2021-34) (http://www.cninfo.com.cn/) |
| The Fourth Meeting of the 10th Board of Directors | 26 August 2021 | 28 August 2021 | Announcement on Resolutions of the Fourth Meeting of the 10th Board of Directors (Announcement No. 2021-36) (http://www.cninfo.com.cn/) |
| The Fifth Meeting of the 10th Board of Directors | 16 September 2021 | 17 September 2021 | Announcement on Resolutions of the Fifth Meeting of the 10th Board of Directors (Announcement No. 2021-42) (http://www.cninfo.com.cn/) |
| The Sixth Meeting of the 10th Board of Directors | 20 September 2021 | 22 September 2021 | Announcement on Resolutions of the Sixth Meeting of the 10th Board of Directors (Announcement No. 2021-43) (http://www.cninfo.com.cn/) |
| The Seventh Meeting of the 10th Board of Directors | 26 September 2021 | 27 September 2021 | Announcement on Resolutions of the Seventh Meeting of the 10th Board of Directors (Announcement No. 2021-44) (http://www.cninfo.com.cn/) |
| The Eighth Meeting of the 10th Board of Directors | 27 October 2021 | 29 October 2021 | Announcement on Resolutions of the Eighth Meeting of the 10th Board of Directors (Announcement No. 2021-48) (http://www.cninfo.com.cn/) |
| The Ninth Meeting of the 10th Board of Directors | 6 December 2021 | 7 December 2021 | Announcement on Resolutions of the Ninth Meeting of the 10th Board of Directors (Announcement No. 2021-53) (http://www.cninfo.com.cn/) |
| The 10th Meeting of the 10th Board of Directors | 13 December 2021 | 14 December 2021 | Announcement on Resolutions of the 10th Meeting of the 10th Board of Directors (Announcement No. 2021-54) (http://www.cninfo.com.cn/) |
| The 11th Meeting of the 10th Board of Directors | 19 December 2021 | 20 December 2021 | Announcement on Resolutions of the 11th Meeting of the 10th Board of Directors (Announcement No. 2021-58) (http://www.cninfo.com.cn/) |
| The 12th Meeting of the 10th Board of Directors | 29 December 2021 | 30 December 2021 | Announcement on Resolutions of the 12th Meeting of the 10th Board of Directors (Announcement No. 2021-61) (http://www.cninfo.com.cn/) |
6.2. Attendance of directors in board meeting and general meeting of shareholders
| Attendance of director in board meeting and general meeting of shareholders | |||||||
| Director | Attendance due in the reporting period (times) | Attendance on site (times) | Attendance by telecommunication (times) | Attendance through a proxy (times) | Absence (times) | Absence for two consecutive times | Attendance at general meeting of shareholders (times) |
| Liu Miao | 18 | 4 | 14 | 0 | 0 | No | 2 |
| Lin Feng | 18 | 4 | 14 | 0 | 0 | No | 2 |
| Wang Hongbo | 18 | 3 | 14 | 1 | 0 | No | 1 |
| Shen Caihong | 18 | 3 | 14 | 1 | 0 | No | 2 |
| Xiong Pingting | 12 | 3 | 9 | 0 | 0 | No | 2 |
| Liu Junhai | 18 | 3 | 14 | 1 | 0 | No | 0 |
| Chen You’an | 12 | 3 | 9 | 0 | 0 | No | 1 |
| Sun Dongsheng | 12 | 3 | 9 | 0 | 0 | No | 0 |
| Lyu Xianpei | 12 | 3 | 9 | 0 | 0 | No | 1 |
| Qian Xu | 18 | 3 | 14 | 1 | 0 | No | 0 |
| Ying Hanjie | 18 | 3 | 14 | 1 | 0 | No | 1 |
| Jiang Yuhui | 6 | 1 | 5 | 0 | 0 | No | 1 |
| Du Kunlun | 6 | 1 | 5 | 0 | 0 | No | 0 |
| Xu Guoxiang | 6 | 1 | 5 | 0 | 0 | No | 1 |
| Tan Lili | 6 | 0 | 5 | 1 | 0 | No | 1 |
6.3. Objections from directors in related issues of the Company
Were there any objections on related issues of the Company from director? Yes √ NoDirectors have no objection on related issues of the Company during the reporting period.
6.4. Other details about the performance of duties by directors
Was there any advice from directors adopted by the Company?
√ Yes ? No
Explanation about advice of directors is adopted or not adopted by the Company or notThe Company adopted the advice of non-executive directors in respect of safe production, systemimprovement, and internal control construction.
7. Activities of special committees under the Board of Directors duringthe reporting period
| Committee | Members | Number of meetings convened | Convened date | Topics | Substantial opinion and recommendations | Other information | Details of objections (if any) |
| The Strategy Committee | Liu Miao, Wang Hongbo and Sun Dongsheng (Xu Guoxiang and Liu | 5 | 25 January 2021 | Review of the following proposals: 1. The Proposal on the De-registration of Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd.; 2. The Proposal on the De-registration of Luzhou Whitail Tongdao Uncle Constellation Wine | Approved, to be submitted to the Board of Directors for further |
| Junhai have ceased to be a member of the Strategy Committee since 29 June 2021) | Sales Co., Ltd.; and 3. The Proposal on the Incorporation of Luzhou Laojiao New Retail Management Co., Ltd. | review | |||||
| 7 April 2021 | Review of the following proposal: The Proposal on the Acquisition of a 5% Interest in Luzhou Sanrenxuan Liquor Industry Co., Ltd. & the Related-party Transaction | Approved, to be submitted to the Board of Directors for further review | |||||
| 15 June 2021 | Review of the following proposal: The Proposal on the Investment and Wealth Management with Own Funds | Approved, to be submitted to the Board of Directors for further review | |||||
| 17 August 2021 | Review of the following proposal: The Proposal on the De-registration of Luzhou Laojiao Tourism Culture Co., Ltd. | Approved, to be submitted to the Board of Directors for further review | |||||
| 8 November 2021 | Review of the following proposals: 1. The Proposal on the Investment and Participation in the H-stock Offering of China Tourism Group Duty Free Corporation Limited; and 2. The Proposal on the De-registration of Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd. | Approved, to be submitted to the Board of Directors for further review | |||||
| The Nomination Committee | Liu Junhai, Lyu Xianpei and Shen Caihong (Xu Guoxiang has ceased to be | 3 | 1 June 2021 | Review of the following proposal: The Proposal on the Review of the Qualifications of Non-employee Director Candidates for the 10th Board of Directors | Approved, to be submitted to the Board of Directors |
| a member of the Nomination Committee since 29 June 2021) | for further review | ||||||
| 15 June 2021 | Review of the following proposal: The Proposal on the Formulation of the Plan of Luzhou Laojiao Co., Ltd. for Market-based Employment of Deputy General Managers. | Approved, to be submitted to the Board of Directors for further review | |||||
| 10 September 2021 | Review of the following proposal: The Proposal on the Nomination for Senior Management | Approved, to be submitted to the Board of Directors for further review | |||||
| The Audit Committee | Lyu Xianpei, Chen You’an and Qian Xu (Tan Lili and Du Kunlun have ceased to be a member of the Audit Committee since 29 June 2021) | 4 | 19 April 2021 | Review of the following proposals: 1. The 2020 Annual Financial Report; 2. The 2020 Internal Control Self-assessment Report; 3. The Summary Report of the 2020 Annual Audit; 4. The Work Plan for the 2021 Internal Audit; and 5. The Q1 2021 Report | Approved, to be submitted to the Board of Directors for further review | ||
| 1 June 2021 | Review of the following proposal: The Proposal on the Re-appointment of CPA Firm | Approved, to be submitted to the Board of Directors for further review | |||||
| 19 August 2021 | Review of the following proposal: The 2021 Interim Financial Report | Approved, to be submitted to the Board of Directors for further review |
| 22 October 2021 | Review of the following proposal: The Proposal on the Q3 2021 Report | Approved, to be submitted to the Board of Directors for further review | |||||
| The Remuneration and Appraisal Committee | Chen You’an, Sun Dongsheng and Ying Hanjie (Du Kunlun and Xu Guoxiang have ceased to be a member of the Remuneration and Appraisal Committee since 29 June 2021) | 4 | 19 April 2021 | Review of the following proposals: 1. The Proposal on the Formulation of the Management Methods of Luzhou Laojiao Co., Ltd. for Remunerations and Appraisal of Senior Management; 2. The Proposal on the Formulation of the Specific Management Rules of Luzhou Laojiao Co., Ltd. for Remunerations of Senior Management; 3. The Proposal on the Formulation of the Specific Management Rules of Luzhou Laojiao Co., Ltd. for Performance Appraisal of Senior Management; and 4. The Proposal on Performance Appraisals of Senior Management for the Year and Their Periods of Service | Approved, to be submitted to the Board of Directors for further review | ||
| 23 September 2021 | Review of the following proposals: 1. The Proposal on the 2021 Restricted Share Incentive Plan (Draft) and Summary; 2. The Proposal on the Performance Appraisal Methods for the 2021 Restricted Share Incentive Plan; and 3. The Proposal on the Management Methods for the 2021 Restricted Share Incentive Plan | Approved, to be submitted to the Board of Directors for further review | |||||
| 10 December 2021 | Review of the following proposal: The Proposal on the Management Methods of Luzhou Laojiao Co., Ltd. for Remunerations and | Approved, to be submitted to the |
| Appraisal of Management Team Members | Board of Directors for further review | |||
| 19 December 2021 | Review of the following proposal: The Proposal on the Formulation of The Company and Individual Appraisal Indicators for Management Team Members of Luzhou Laojiao Co., Ltd. for 2021 | Approved, to be submitted to the Board of Directors for further review |
8. Performance of duties by the board of supervisorsWere there any risks to the Company identified by the board of supervisors when performing its dutiesduring the reporting period? Yes √ NoThe board of supervisors has no objection during the reporting period.
9. Staff in the Company
9.1. Number, functions and educational backgrounds of the staff
| Number of in-service staff of the parent company at the end of the reporting period | 1,198 |
| Number of in-service staff of main subsidiaries at the end of the reporting period | 2,236 |
| Total number of in-service staff at the end of the reporting period | 3,434 |
| Total number of staff with remuneration in the period | 3,434 |
| Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension | 913 |
| Functions | |
| Function by category | Number of staff |
| Production staff | 1,264 |
| Sales staff | 879 |
| R&D staff | 700 |
| Financial staff | 99 |
| Administrative staff | 492 |
| Total | 3,434 |
| Educational backgrounds | |
| Educational background by category | Number of staff |
| Senior high school and below | 573 |
| Junior college | 1,044 |
| Bachelor | 1,489 |
| Master | 319 |
| Doctor | 9 |
| Total | 3,434 |
9.2. Staff remuneration policy
In 2021, the Company implemented the distribution policy of "sharing benefits, paying for losses,classification and setting, and long-term policy effects", continuously strengthened the digitalassessment, linked individual performance with organizational performance, and highlighted thedistribution according to performance. The Company implemented the post rating wage system andstrengthened the performance management of all employees. According to the following principles:
A. Link individual performance with organizational performance: The increase of wages is linked to theincrease of the Company's operating performance and profit growth; Under the same caliber, theproportion of increase in salaries shall not exceed the proportion of increase in performance and profitgrowth.
B. Salary and its changes based on position, ability and performance: The salary of employee shall bedetermined by position and the depth of their expertise. The salary shall be adjusted accordingly whenthe position, ability and performance change.
C. Performance orientation, bonus and forfeit: Performance assessment is conducted according to theactual contributions of employees, and the salary distribution is inclined to the employees with excellentperformance.
D. The principle of equal wage negotiation: Abide by the principles that both sides of labor and capitalagrees in collective negotiation, so as to realize the unity of benefit and fairness.
9.3. Staff training plans
In 2021, based on the staff career development system and job qualification standards, the Companyimplemented a targeted training system comprising different levels to meet demands for staff abilityimprovement for different positions and different levels.
A. Sail Program: The “Sail Program” training was conducted for new employees hired through campusand social recruitment and for other grassroots employees. The purpose was to enhance newemployees’ understanding and recognition of the Company’s core values, familiarize them with theCompany’s production and operation statuses and their work procedures, and allow them to accumulateprofessional knowledge and skills and improve their ability to work independently.
B. Dive Program: The “Dive Program” training was conducted for general employees on specializedlines. The purpose was to strengthen their specialty knowledge and ability to solve specialty problems,enhance their basic management skills, improve their competency and raise their performance. Due tothe huge coverage of trainees across different business segments, the training was conducted in theform of sub-programs, such as “Happy Learning Sub-program” and “Excellent Frontline ManagerSub-program” to provide specialty knowledge and skills of different systems.
C. Voyage Program: The “Voyage Program” training was conducted for key personnel with a systematicdesign of three-year development plans and a focus on three themes, including “self-management”,“work management” and “interpersonal management”. The purpose was to enrich employees’knowledge on corporate business management, improve their knowledge structure, and enhance theirstrategic understanding and abilities of work and team management.
D. Steering Program: The “Steering Program” training was conducted for middle management personneland department experts in the form of online and offline combined, “coming in” and “going out” combinedand ability enhancement and work style building combined. Through the learning of advancedmanagement concepts and practices, the training aimed to drive employees to broaden their mind,expand their vision, strengthen their leadership skills and enhance their level of corporate management.
In addition, 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 ofstaff title appraisal, skill appraisal, recommendation and assessment and so on.
9.4. Labor outsourcing
? Applicable √ N/A
10. Profit distribution and converting capital reserves into share capital
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, in thereporting period.
√ Applicable ? N/A
According to the plan for profit distribution for 2020 deliberated and approved by 2020 annual meeting ofshareholders, based on its total of 1,464,752,476 shares, the Company distributed a cash dividend of
CNY 20.51 (tax inclusive) per 10 shares to all shareholders. The distribution plan was implemented on20 August 2021.
| 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 |
The Company made a profit in the reporting period and the profit distributable to shareholders of theCompany was positive, but it did not put forward a preliminary plan for cash dividend distribution toshareholders.? Applicable √ N/A
Preliminary plan for profit distribution and converting capital reserves into share capital for the reportingperiod
√ Applicable ? N/A
| Bonus shares for every 10 shares (share) | 0 |
| Dividends for every 10 shares (CNY) (tax included) | 32.44 |
| Total shares as the basis for the preliminary plan for profit distribution (share) | 1,471,615,076 |
| Total cash dividends (CNY) (tax included) | 4,773,919,306.54 |
| Cash dividends in other forms (e.g. repurchase share) | 0.00 |
| Total cash dividends (CNY) (including other forms) | 4,773,919,306.54 |
| Distributable profit (CNY) | 21,187,860,235.89 |
| Percentage of cash dividends in the total distributed profit (including other forms) | 60.01% |
| Information of the cash dividends | |
| The development stage of the Company is mature and the Company has no major fund expenditure arrangement. When the profit distribution is carried out, the proportion of cash dividends in this profit distribution should at least reach 80%. | |
| 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 32.44 (tax inclusive) per 10 shares to all shareholders based on its total of 1,471,615,076 shares, representing a total cash dividend amount of CNY 4,773,919,306.54, according to the Company's actual conditions. Where any change occurs to the Company’s total share capital before the implementation of the distribution plan, relevant adjustments shall be made with the same total distribution amount. The Company will not carry out any bonus issue or convert capital reserves into share capital for 2021. | |
11. Implementation of any equity incentive plan, employee stockownership plan or other incentive measures for employees
√ Applicable ? N/A
11.1. Equity incentives
On 26 September 2021, the Proposal on the 2021 Restricted Share Incentive Plan (Draft) and Summaryof Luzhou Laojiao Co., Ltd., the Proposal on the Performance Appraisal Methods for the 2021 RestrictedShare Incentive Plan of Luzhou Laojiao Co., Ltd., and the Proposal on the Management Methods for the2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd. were approved at the Seventh Meetingof the 10
th
Board of Directors. On 29 December 2021, the aforesaid proposals were approved at the FirstExtraordinary General Meeting of Shareholders of 2021. On the same day, the Proposal on the Grant ofRestricted Shares to Awardees was approved at the 12
th Meeting of the 10
th
Board of Directors. As such,it was decided to grant a total of 6.9286 million restricted shares to 444 eligible awardees at CNY
92.71/share in the first grant on 29 December 2021. During the payment process after the grant datewas determined, four awardees chose to waive a total of 66 thousand restricted shares that theCompany had intended to grant to them due to personal reasons. Therefore, in fact, 6.8626 millionrestricted shares were granted to 437 awardees as registered. On 21 February 2022, the Companycompleted the registration of the grant under the restricted share incentive plan. Upon the registration ofthe grant, the total shares of the Company increased from 1,464,752,476 shares to 1,471,615,076shares.
Equity incentives for directors and senior management
√ Applicable ? N/A
Unit: share
| Name | Office title | Stock options held at the beginning of the reporting period | Stock options granted in the reporting period | Exercisable share options for the reporting period | Exercised share options in the reporting period | Exercise price for exercised share options in the reporting period (CNY / share) | Stock options held at the end of the reporting period | Market price at the end of the reporting period (CNY / share) | Restricted shares held at the beginning of the reporting period | Unlocked shares in the reporting period | Restricted shares granted in the reporting period | Grant price of the restricted shares (CNY/ share) | Restricted shares held at the end of the reporting period |
| Liu Miao | Chairman of the board | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 95,900 | 92.71 | 0 |
| Lin Feng | Director, General manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 95,900 | 92.71 | 0 |
| Wang Hongbo | Director, Deputy general manager, Secretary of the board | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 92.71 | 0 |
| Shen Caihong | Director, Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 92.71 | 0 |
| Xie Hong | CFO | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 92.71 | 0 | ||
| He Cheng | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 92.71 | 0 |
| Zhang Suyi | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 92.71 | 0 |
| Xiong Pingting | Director, Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 62,800 | 92.71 | 0 |
| Li Yong | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 62,800 | 92.71 | 0 |
| Total | -- | 0 | 0 | 0 | 0 | -- | 0 | -- | 0 | 0 | 700,900 | -- | 0 |
| Notes (if any) | The grant date for the restricted share incentive plan was 29 December 2021 and the registration date of the grant was 21 February 2022. | ||||||||||||
Appraisal mechanism and incentives for senior managementFor details, please refer to the 2021 Restricted Share Incentive Plan (Draft) and Summary of LuzhouLaojiao Co., Ltd., the Performance Appraisal Methods for the 2021 Restricted Share Incentive Plan ofLuzhou Laojiao Co., Ltd., and the Management Methods for the 2021 Restricted Share Incentive Plan ofLuzhou Laojiao Co., Ltd., which have been disclosed by the Company on www.cninfo.com.cn on 26September 2021.
11.2. Implementation of employee stock ownership plans? Applicable √ N/A
11.3. Other incentive measures for employees
? Applicable √ N/A
12. Establishment and implementation of the internal control systemduring the reporting period
12.1. Establishment and implementation of the internal control systemDuring the reporting period, in accordance with the Basic Rules for Internal Control of Enterprises, theGuidelines of the Shenzhen Stock Exchange for the Internal Control of Listed Companies, relevant laws,administrative regulations, normative documents, and other regulatory requirements concerning internalcontrol, as well as the reality of the Company, the Company consistently improved and optimized itsinternal control systems and established a well-developed system that covered the corporategovernance, administrative management, operations management, financial management, humanresources, production guarantee, and safety and environmental protection. Additionally, it strengthenedthe implementation, supervision, inspection, feedback, and improvement of the internal control systemsin the operations management to ensure that each internal control system is reasonable, complete, andeffective, thereby promoting the sound, sustainable development of the Company.
12.2. Material internal control deficiencies found in the reporting period
□ Yes √ No
13. The Company’s management and control of subsidiaries during thereporting period
| Company name | Consolidation plan | Consolidation progress | Problems arising in consolidation | Solutions taken | Solution implementation progress | Subsequent solutions |
| N/A | ||||||
14. Internal control self-assessment report and auditor report
14.1. Internal control self-assessment report
| Disclosure date of the internal control self-assessment report | 29 April 2022 | |
| Disclosure index of the internal control self-assessment report | 2021 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 | Material 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）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 . | Material deficiencies：（1）violate national regulations and laws；（2）The Company’s decision-making procedures are unscientific；if there is a decision-making misplay, it will result in significant deal failure; （3）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）material deficiencies of internal control cannot be rectified in time. |
| Quantitative standard | 1. Material deficiencies：Misstatement ≥ 5% of total profits；Misstatement ≥ 1% of | 1. Material deficiencies：loss≥5% of net profits. |
| total assets；Misstatement ≥ 5% of total operating revenue；Misstatement ≥5% of owner's equity 2. Significant 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. | 2. Significant deficiencies：3% of net profits≤ loss＜5% of net profits. 3. General deficiencies：loss＜3% of net profits | |
| Number of financial-report material deficiencies | 0 | |
| Number of non-financial-report material deficiencies | 0 | |
| Number of significant financial-report related deficiencies | 0 | |
| Number of significant Non-financial-report related deficiencies | 0 | |
14.2. Internal control auditor report
√ Applicable ? N/A
| Deliberation opinion section in the internal control audit report | |
| In accordance with the Basic Rules for Internal Control of Enterprises, the guidelines for assessment, and the other applicable laws and regulations, the Company has assessed the effectiveness of the design and operation of internal control as of 31 December 2021. During the reporting period, the Company has established internal control over businesses and matters within the assessment scope, which were effectively executed. The internal control objectives have been met, with no material deficiencies. No significant change occurred to the Company’s internal control during the period from the base day of the internal control assessment report to the issue day of the report that had a substantial impact on the conclusion of the assessment report. | |
| Disclosure of internal control audit report | Disclosed |
| Disclosure date of the internal control audit report | 29 April 2022 |
| Disclosure index of the internal control audit report | 2021 Internal Control Auditor Report （http://www.cninfo.com.cn/） |
| Type of the audit’s opinion | Standard unqualified 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 with theself-assessment report issued by the board of directors.
√ Yes ? No
15. Remediation of Problems Identified by Self-inspection in the SpecialCampaign on Listed Company GovernanceDuring the reporting period, the Company carried out a special self-inspection of the governance, duringwhich it comprehensively reviewed its governance and identified and fixed deficiencies in accordancewith regulatory rules, the Articles of Association, and other normative documents. Through theself-inspection, it was found that due to the pandemic in 2020, the Board of Directors and its specialcommittees mainly voted via communication. Besides, non-executive directors seldom attended on-siteevents with a total of working days of less than ten, which violated the related rule that non-executivedirectors shall work on site for no less than ten workdays. Later, the Company remedied the problem. In2021, the non-executive directors of the Company carried out on-site work by attending the GeneralMeeting of Shareholders and meetings of the Board of Directors and special committees, listening to thereporting by the management of the Company of the production and operation on site, and inspectingthe construction of major projects of the Company.
Section V Environmental and Social Responsibility
1. Information about environment protection
Whether the listed company and its subsidiaries belong to heavy polluting industries prescribed by theenvironmental protection department
√ Yes □ No
| 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 | Direct discharge | 1 | Luohan Brewery Eco-Park | 22.858 mg/L | 50 mg/L | 10.1639 t/a | 25 t/a | No |
| Luzhou Laojiao Co., Ltd. | Ammonia nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.470 mg/L | 5 mg/L | 0.1973 t/a | 2.5 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 6.781 mg/L | 15 mg/L | 3.0287 t/a | 7.5 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total phosphorus | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.171 mg/L | 0.5 mg/L | 0.0777 t/a | 0.25 t/a | No |
| Luzhou Laojiao Co., Ltd. | PM | Organized discharge | 2 | Luohan Brewery Eco-Park | 7.425 mg/m3 | 20 mg/m3 | 0.7955 t/a | 3.9 t/a | No |
| Luzhou Laojiao Co., Ltd. | Sulfur dioxide | Organized discharge | 2 | Luohan Brewery Eco-Park | 0.079 mg/m3 | 50 mg/m3 | 0.0087 t/a | 11.5 t/a | No |
| Luzhou Laojiao Co., Ltd. | Oxynitride | Organized discharge | 2 | Luohan Brewery Eco-Park | 30.710 mg/m3 | 150 mg/m3 | 3.3129 t/a | 45.4 t/a | No |
| Luzhou Laojiao Co., Ltd. | COD | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 34.931 mg/L | 400 mg/L | 16.8328 t/a | 400 t/a | No |
| Luzhou | Ammonia | Indirect | 1 | Huangyi | 0.777 mg/L | 30 mg/L | 0.2508 t/a | 30 t/a | No |
| Laojiao Co., Ltd. | nitrogen | discharge | Brewery Eco-Park | ||||||
| Luzhou Laojiao Co., Ltd. | Total nitrogen | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 11.682 mg/L | 50 mg/L | 6.3003 t/a | 50 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total phosphorus | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 0.624 mg/L | 3 mg/L | 0.3068 t/a | 3 t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | PM | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 1.026mg/m3 | 5 mg/m3 | 0.5248 t/a | 8.64 t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | PM | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 1.065 mg/m3 | 20 mg/m3 | 0.0804 t/a | No | |
| Luzhou Laojiao Brewing Co., Ltd. | Sulfur dioxide | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.602 mg/m3 | 35 mg/m3 | 0.3027 t/a | 18.88 t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | Sulfur dioxide | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.423 mg/m3 | 50 mg/m3 | 0.0314 t/a | No | |
| Luzhou Laojiao Brewing Co., Ltd. | Oxynitride | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial | 32.315 mg/m3 | 100 mg/m3 | 16.5729 t/a | 136.08 t/a |
| Park | |||||||||
| Luzhou Laojiao Brewing Co., Ltd. | Oxynitride | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 42.007 mg/m3 | 150 mg/m3 | 3.2266 t/a |
Information about construction and operation of anti-pollution installationsA. Waste water: Areas of the Company that produce wastewater are National Cellar Base, XiaoshiBase, Zaojiaoxiang Base, Anning Park, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. InNational Cellar Base, Xiaoshi Base, Zaojiaoxiang Base, and Anning Park, the high-concentrationbrewing wastewater is temporarily collected in pools (or tanks), and is later transferred to the wastewatertreatment station of Huangyi Brewery Eco-Park by truck for treatment. The wastewater treatmentstations of Luohan Brewery Eco-Park and Huangyi Brewery Eco-Park are equipped with online monitorsto automatically monitor COD, ammonia nitrogen, total phosphorus, total nitrogen, pH value and flows,and transmit the monitoring data to the supervision platform of the higher authority. The Company'sfacilities for prevention and control of wastewater pollution are under normal operations, ensuringup-to-standard discharge through general discharging outlets.
B. Waste gas: Areas of the Company that produce exhaust gas are National Cellar Base, Xiaoshi Base,Zaojiaoxiang Base, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. In National Cellar Base,Xiaoshi Base and Zaojiaoxiang Base, small natural gas boilers and direct-fired bottom boilers are used.The boilers of Luohan Brewery Eco-Park (20t/h, 30t/h) and the boilers of Huangyi Brewery Eco-Park(20t/h, 75t/h, 75t/h) are equipped with online monitors to automatically monitor exhaust gas, and transmitthe monitoring data to the supervision platform of the higher authority. Low NOx combustion technologyis adopted for the natural gas boilers. The Company's facilities for prevention and control of exhaust gaspollution are under normal operations, ensuring up-to-standard emission of exhaust gas through outlets.
Environmental impact assessment for construction project and other environmental protectionadministrative permissionThe Company’s new reconstruction and expansion projects are carried out in accordance with theapplicable laws and regulations. The environmental assessment and approval procedures shall becompleted before commencement of the projects. After the projects are completed, the environmentalprotection inspection and acceptance shall be carried out in accordance with the requirements of theenvironmental assessment. Construction projects started in 2021 have gone through the approvalprocedures in accordance with the relevant requirements.
Emergency plan for environmental emergenciesThe Company developed the Contingency Plan for Environmental Emergencies (Revision 2020), theEnvironmental Risk Assessment Report and the Emergency Resources Survey Report, and reported to
the Environmental Emergency Service Center of Luzhou for filing. Institutions of the Company organizedtraining programs on the contingency plan for employees, and carried out drills of contingency plans,which improved employees' capability to respond to environmental emergencies.
Environmental self-monitoring programThe Company developed the environmental self-monitoring plan and entrusted third-party agencies toconduct environmental self-monitoring. Self-monitoring information is released on "Environmental CreditChina" and the "Platform of Sichuan Province for Management and Sharing of Information aboutPollution Source Monitoring" to facilitate social supervision.
Administrative penalties received in the reporting period due to environmental issues
| The Company or subsidiary | Reason for penalties | Regulation violated | Penalties | Impact on the Company | Rectification |
| N/A | |||||
Other information about environmental protection that should be disclosedN/A
Measures taken to reduce carbon emissions during the reporting period and the results
√ Applicable ? N/A
In 2021, the Company reduced its carbon dioxide emissions by more than 10,000 tons throughinnovative electricity consumption models, electricity alternative trading programs, purchase of greenelectricity, etc.
Other information about environment protectionN/A
2. Social responsibility
See the 2021 Social Responsibility Report disclosed on the same day with this Annual Report.
3. Efforts in poverty alleviation and rural revitalization
3.1. Work Plan for Rural Revitalization in 2021
In 2021, the Company consistently implemented the arrangements for rural revitalization made by theCPC Central Committee, the CPC Provincial Committee, and the CPC Municipal Committee, and carriedout the duties of assisting Xiangtian Village of Longshan Town, Gulin County, and Guntang Village ofMaiwa Township, Hongyuan County. Following the working idea of "shoring up weak spots, consolidating
achievements, and consolidating the foundation to promote rural revitalization" and based on the realityof the designated assisted villages, the Company consolidated resources and increased inputs,improved the construction of infrastructure, promoted the development of characteristic industries, anddeepened the transformation of the conception of education, to fully promote the revitalization of thedesignated assisted villages.
A. Intensify the leadership of the Party organizations and enrich the assistance teams. The Companyproactively paired up its Party organizations at the grass-roots level and the Party branches of XiangtianVillage and Guntang Village for co-development, helped the Party branches implement the "threemeetings and one lecture", Party branch meeting, and other systems, and collaborated with the localParty organizations to build a strong village Party branch. Besides, it also encouraged its Partyorganizations at the grass-roots level to guide the assisted villages to establish and improve ruralgovernance system that is led by the Party organization and combines autonomy, rule of law, and rule ofmorality; selected and trained excellent cadres to be stationed in the villages and helped them improvetheir working capabilities via guidance from experienced staff and project practice.
B. Deepen industrial assistance and expand advantages. The Company held firm to the idea of "onespecialty for one village" and deepened the "self-motivation-based" assistance model. It consistentlypromoted the "rice-fish farming" project and assisted farmers with construction, production, and sellingby considering local characteristics to increase their income. Additionally, lectures by experts and specialmeetings were held to improve farmers' job skills and cultivate forgoers in getting rich.
C. Consistently assist farmers in building up self-belief and provide them with necessary education toboost their confidence in development. The Company consistently carried out in-depth education ongratitude and forging ahead through special meetings and farmers' night schools to reinforce the belief oflistening to the Party, remembering the Party's favor, and following the Party. In addition, moral exemplarselection activities were held to cultivate new etiquette and civility that feature respect for the elderly,care for the young, harmony between couples, friendliness between neighbors, pleasure to offer help,and integrity. Also, the Company provided consistent educational assistance to prevent poverty frompassing down from generation to generation.
D. Carry out "three projects" and develop infrastructure. In 2021, adhering to the principle of"implementing policies comprehensively and highlighting advantages", the Company pushed ahead withthe project of "A Civilized Village for Work, A Beautiful Village for Living, and A Salubrious Village" tobuild a high-quality, beautiful village.
3.2. Summary of the 2021 Rural Revitalization
In 2021, based on the "precise policy implementation" principle and capitalizing on its advantages, theCompany invested CNY 1.135 million and conducted five high-quality assistance projects. It upgradedthe assistance team, featured characteristic industries, practiced the guiding principles, and enhancedthe infrastructure with various steps.
A. Enhance organizational guarantees to steer the big picture of the work. In 2021, the CPC Luzhou
Laojiao Committee established a steering group for rural revitalization work. Members of the groupcarried out field research four times, held two CPC committee meetings to discuss the targetedassistance work, held three symposiums to discuss work, and formulated an assistance plan for thefollowing five years by focusing on the "five revitalization", namely the industrial, talent, cultural,ecological, and organizational revitalization. In addition, a targeted assistance team was set up to bestationed in the village, with three new staff and one liaison selected to be stationed in the village, whichfurther enriched the assistance force. On the centennial anniversary of the Communist Party of China,cadres stationed in the village collaborated with the Party branches of Xiangtian Village and GuntangVillage to launch a campaign on studying the Party's history. Through "three meetings and one lecture"and "themed Party lessons", 80-odd Party members were called together to learn the importantinstructions of General Secretary Xi Jinping on rural revitalization, the guiding principle of the SixthPlenary Session of the 19th CPC Central Committee, and policies on rural governance and serving thepeople. The Company's campaign team for Party's history learning held four micro Party lessons byproviding access to Party's history learning for village Party members. A total of 35 Party branches at thegrassroots level were paired up with Party members in poverty to guide them to learn Party's history.Furthermore, cadres stationed in the village and of the Party branches of the two villages did practicalthings for the people by carrying out publicity for pandemic prevention and control and career guidance,as well as providing 100-odd public welfare jobs. The Company collaborated with health centers at thetownship level to deliver medical care and vaccination services to people in need in the villages, therebyensuring that all eligible people were vaccinated.
B. Upgrade industrial assistance and expand advantages. The "self-motivation-based" assistance modeland "courtyard economy" were deepened and vigorously supported. By encouraging farmers to raisechickens, ducks, pigs, and other animals under existing conditions, the per capita annual income offarmers increased by CNY 2,000. With its advantages in nationwide sales channels and e-commerceplatforms with high traffic, the Company launched a campaign of "Creating Wealth through Sales" toassist farmers via e-commerce platforms, which realized a total income of more than CNY 5 million and a
6.6-fold increase in annual sales compared with that without the assistance of e-commerce platforms.Meanwhile, the Party branches at the grassroots level of the Company were encouraged to purchase theagricultural produce instead of donations, contributing CNY 104,800 to the increase of the income offarmers and the collective income of villages. The Company also upgraded the rice processingworkshops to lay a solid foundation for the professional, scale-based, and market-based development ofcharacteristic industries. Through these measures, the industries got on track comprehensively, thesales were significantly improved, and the "independent development" capabilities of the assistedvillages were consistently enhanced.
C. Consistently assist farmers in building up self-belief and provide them with necessary education tostimulate their self-motivation. The Company launched a village-level exemplar assessment and setscientific assessment standards that cover five perspectives, including "etiquette and civility andbecoming better off through diligence". In 2021, a total of 50 people were assessed as moral andself-made exemplars, which promoted material and spirit poverty alleviation. Themed teach-ins wereheld via farmers' night schools, special meetings, and interviews. For example, a total of 32 teach-insabout agronomic knowledge and forest fire prevention were organized. Additionally, cadres stationed inthe villages took the lead in giving themed Party lessons on Party's history learning. Meanwhile, they
collected urgent, obstinate issues of great concern to the villagers and finally resolved ten-odd issues.For example, they provided access to the medical services in the town for households enjoying fiveguarantees and low-income families, shuttle bus services for people to go to fairs, and vaccinationvehicles. The Company consistently assisted students by setting assistance funds to help high schoolgraduates go to university. The "Voluntary Education" campaign had been launched for six consecutiveyears to encourage students in rural areas to pursue their studies and prevent poverty from passingdown from generation to generation. Also, the Company organized warmth-sending and Spring Festivalcare-extension activities, through which it sent warmth and care to 151 assisted households and300-odd common farming households and further aroused their enthusiasm and initiative in getting rich.
D. Take various steps in terms of infrastructure guarantees to build a beautiful village. The Companyassisted Guntang Village in building a village cultural plaza and supported Guntang Village in holdingvillagers' cultural events to provide a stage for both masses' cultural events and Tibetan cultural festivalsand carry forward the traditional cultures of ethnic minorities. Besides, it assisted the villages in settingup sanitary facilities such as waste transfer stations to optimize the image of the villages. Fullyleveraging its own resources and advantages, the Company collaborated with medical facilities such asSouthwest Medical University and Aier Eye Hospital twice to deliver medical services to villagers.Through publicity for pandemic prevention and eye protection and volunteer dental clinics, the lives andhealth of villagers were protected.
During the reporting period, the Company was honored with the awards such as "National AdvancedCollective in Poverty Alleviation", "Outstanding Contribution Award for Social Poverty Alleviation", "TheThird Sichuan Charity Award", and "The Most Charitable Model". Additionally, Zhang Wenping, a cadreof the Company stationed in Guntang Village, was honored with the title of "Top Ten Poverty AlleviationFigures in Sichuan State-owned Enterprises".
3.3. Subsequent Plans for Rural Revitalization
In 2022, based on the general requirement for "prosperous industry, livable ecology, civilized rural style,effective governance, and well-off life", the Company will deepen the implementation of arrangementsmade by the CPC Central Committee, the State Council, the CPC Sichuan Provincial Committee, thePeople's Government of Sichuan Province for effectively linking up the achievements of povertyalleviation with rural revitalization, and continue to provide assistance for Xiangtian Village and GuntangVillage. Besides, with advantages in funds, technologies, talent, and management, the Company willtake more vigorous steps and gather more powerful momentum to promote the modernization cause andsustainable development of the designated assisted villages and strive to build a model anddemonstration village for rural revitalization.
First, intensify the leadership of Party organizations and fulfill the assistance responsibility. TheCompany will further improve its political stance, assume the social responsibility of a state-ownedenterprise, and provide assistance and fulfill its responsibilities in poverty alleviation. Additionally, to fulfillits assistance responsibility, the Company will promote the cooperation between its Party branches andassisted villages as well as the training of cadres of the two village Party branches and of the Companystationed in the two villages.
Second, consistently promote the upgrading of industries and income increase through povertyalleviation. Giving full play to its advantages in resources and platforms, the Company will train moretechnological, sales, and management talent in Hongyuan County to enlarge the group of "forgoers ingetting rich", thereby encouraging the developed groups to assist backward ones. Besides, it will build abrand image for yak products in Hongyuan County and increase the inputs in the development ofderivatives, so as to enhance the visibility and reputation and lend constant impetus to the developmentof the assisted villages.
Third, establish a long-term mechanism to facilitate rural revitalization. The Company will focus on thestandard that rural poor people are free from worries over food and clothing and have access tocompulsory education, basic medical services, and safe housing, strengthen dynamic monitoring of anytrends indicating a return to poverty, and consistently promote the development of the assisted villagesto share the fruits of poverty alleviation with villagers. Meanwhile, measures including "external supportand self-motivation" and "building up self-belief and providing access to education" will be incorporatedinto the long-term mechanism for rural revitalization.
Section VI Significant Events
1. Performance of undertakings
1.1. Undertakings of the Company's actual controller, shareholders, related partiesand acquirer, as well as the Company and other commitment makers fulfilled in thereporting period or ongoing by the end of this reporting period? Applicable √ N/ANo such cases in the reporting period.
1.2. Where any earnings forecast was made for any of the Company's assets orprojects and the reporting period is still within the forecast period, the Companyshall explain whether the performance of the asset or project reaches the earningsforecast and reasons
? Applicable √ N/A
2. Occupation of the Company's fund by the controlling shareholder orits related parties for non-operating purposes? Applicable √ N/ANo such cases in the reporting period.
3. Irregularities in the provision of guarantees
? Applicable √ N/ANo such cases in the reporting period.
4. Explanation of the board of directors regarding the latest"non-standard audit opinion"? Applicable √ N/A
5. Explanation of the board of directors, the board of supervisors andnon-executive directors (if any) regarding the "non-standard auditopinion" for the reporting period? Applicable √ N/A
6. Reason for changes in accounting policies and accounting estimates,as well as correction of major accounting errors compared to thefinancial report for the prior year
√ Applicable □ N/A
The Company has disclosed the Announcement on Changes to Accounting Policies on 16 January 2021,deciding to adopt the new accounting standard for leases from 1 January 2021. On 7 December 2018,the Ministry of Finance issued the revised Accounting Standards for Business EnterprisesNo.21—Leases (CK [2018] No. 35). As required by the Ministry of Finance, enterprises that are listedboth domestically and overseas and those that are listed overseas but adopt China’s AccountingStandards for Business Enterprises in the preparation of financial statements shall adopt the newaccounting standards from 1 January 2019; while other enterprises that adopt the Accounting Standardsfor Business Enterprises shall adopt the new accounting standards from 1 January 2021. Due to theaforesaid revised accounting standards, the Company has adjusted its accounting policies with respectto leases accordingly.
7. Reason for changes in scope of the consolidated financial statementscompared to the financial report for the prior year
√ Applicable □ N/A
Subsidiaries that are newly incorporated into the scope of consolidation in this period
| Name of subsidiary | Reason |
| Luzhou Laojiao New Retail Co., Ltd. | Incorporated through investment |
Liquidation and cancellation for subsidiaries in this period
| Name of subsidiary | Reason |
Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd.
| Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd. | Liquidation and cancellation |
| Luzhou Laojiao Selected Electronic Commerce Co., Ltd. | Liquidation and cancellation |
Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd.
| Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. | Liquidation and cancellation |
| Luzhou Whitail Tongdao Uncle Constellation Baijiu Sales Co., Ltd. | Liquidation and cancellation |
8. Engagement and disengagement of CPA firm
CPA firm at present
| Name of the domestic CPA firm | Sichuan Huaxin (Group) CPA Firm |
| The Company’s payment for the domestic CPA firm (CNY’0,000) | 98 |
| Consecutive years of the audit service provided by the domestic CPA firm | 23 |
| Names of the certified public accountants from the domestic CPA firm | Li Wulin, Tang Fangmo, He Shoufu |
| Consecutive years of the audit service provided by the certified public accountants | Li Wulin 2 years, Tang Fangmo 3 years, He Shoufu 2 years |
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/A
The Company appointed Sichuan Huaxin (Group) CPA Firm as the internal control auditor for this year.The remuneration of audit in total paid by the Company was CNY 500 thousand.
9. Possibility of delisting after disclosure of this annual report
? Applicable √ N/A
10. Bankruptcy and reorganization
? Applicable √ N/ANo such cases in the reporting period.
11. 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 | 14,942.5 | No | The second trial has | For the losses that the Company | The Company applied to Hunan | 15 October 2014 | See Section VI “Other |
| Changsha Yingxin Branch over a deposit dispute, and the case has been completed in the first instance of Hunan Province Higher People's Court and the final trial of the Supreme People's Court. The case is now at the stage of enforcement. | been concluded, and the case is now at the stage of enforcement. | cannot recover through criminal execution procedures, 40% shall be borne by ABC Changsha Yingxin Branch, 20% shall be borne by ABC Changsha Hongxin Branch and the rest shall be borne by the Company itself. | Province Higher People's Court for enforcement of the verdict. Hunan Province Higher People's Court ruled that Hunan Changsha Intermediate People’s Court should see to the execution of the verdict. Upon the enforcement, the banks have paid part of the compensations. | significant events” | |||
| The Company filed a lawsuit with ICBC Nanyang Zhongzhou Branch over a deposit dispute, and the case has been completed in the first instance of Henan Province Higher People's Court and the final trial of the Supreme People's Court. The case is now at the stage of enforcement. | 15,000 | No | The second trial has been concluded, and the case is now at the stage of enforcement. | ICBC Nanyang Zhongzhou Branch, ICBC Nanyang Branch, and Sanya Rural Commercial Bank Hongsha Branch shall pay compensations of CNY 75 million, CNY 7.5 million and CNY 6.105 million respectively with the relevant interest to the Company, and the rest of the loss shall be borne by the Company itself. | The banks have paid part of the compensations. As there was a dispute over the verdict, the Company applied to Henan Province Higher People's Court for enforcement of the verdict. Henan Province Higher People's Court ruled that Nanyang Intermediate People’s Court should see to the execution of the verdict. The case is now at the stage of enforcement by Nanyang Intermediate People’s Court. | 10 January 2015 | See Section VI “Other significant events” |
12. Punishments and rectifications
? Applicable √ N/ANo such cases in the reporting period.
13. Credit conditions of the Company as well as its controllingshareholder and actual controller? Applicable √ N/A
14. Significant related party transactions
14.1. Related party transactions arising from routine operation? Applicable √ N/ANo such cases in the reporting period.
14.2. Related party transactions regarding purchase or sales of assets or equityinterests? Applicable √ N/ANo such cases in the reporting period.
14.3. Related party transitions arising from joint investments in external parties? Applicable √ N/ANo such cases in the reporting period.
14.4. Credits and liabilities with related parties
? Applicable √ N/ANo such cases in the reporting period.
14.5. Transactions with related finance companies
? Applicable √ N/AThe Company did not make deposits in, receive loans or credit from and was not involved in any other
finance business with any related finance company or any of its related parties.
14.6. Transactions between finance companies controlled by the Company andrelated parties? Applicable √ N/ANo related parties made deposits in, received loans or credit from or was involved in any other financebusiness with any finance company controlled by the Company.
14.7. Other significant related party transactions
? Applicable √ N/ANo such cases in the reporting period.
15. Significant contracts and their execution
15.1. Trusteeship, contracting and leasing
15.1.1. Trusteeship
? Applicable √ N/ANo such cases in the reporting period.
15.1.2. Contracting
? Applicable √ N/ANo such cases in the reporting period.
15.1.3. Leasing
? Applicable √ N/ANo such cases in the reporting period.
15.2. Major guarantees
? Applicable √ N/ANo such cases in the reporting period.
15.3. Entrusted cash asset management
15.3.1. Entrusted assets management
√ Applicable ? N/A
Entrusted assets management during the reporting period
Unit: CNY 10,000
| Type | Fund source for entrusted assets management | Amount of entrusted assets management | Undue balance | Overdue outstanding amount | Impairment allowances for the overdue outstanding amount |
| Wealth management product of bank | Own funds | 50,000 | 50,000 | 0 | 0 |
| Wealth management product of trust company | Own funds | 20,000 | 20,000 | 0 | 0 |
| Total | 70,000 | 70,000 | 0 | 0 | |
Particulars of high risk wealth management products with a significant single amount or low security orpoor liquidity? Applicable √ N/A
Expected inability to recover the principal of entrusted assets management or other circumstances thatmay result in impairment? Applicable √ N/A
15.3.2 Entrust loans
? Applicable √ N/ANo such cases in the reporting period.
15.4. Other significant contracts
? Applicable √ N/ANo such cases in the reporting period.
16. Other significant events
√ Applicable ? N/A
The Company’s three savings deposits of CNY 500 million, including ABC Changsha Yingxin Branchand ICBC Nanyang Zhongzhou Branch are involved in contract disputes. Combined with the assetspreservation situation of the public security authorities and professional legal advice issued by lawyers,the Company has made a provision of CNY 200 million for bad debts for the deposit of CNY 500 millionfor contract disputes. As of the end of the reporting period, a cumulative amount of CNY 368 million hadbeen recovered with respect to the three disputed contracts. In view of the value of assets preserved bythe public security authorities and the professional legal advice issued by Beijing Weiheng (Chengdu)Law Firm, the Company adjusted the provision for bad debts by reversing an amount of CNY 80 million.Therefore, the cumulative provision for bad debts for the aforesaid contract disputes was CNY 120million as at the end of the reporting period.
See details in the Company’s announcements:
| 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 | |
| 7 May 2019 | 2019-11 | Announcement of significant litigation progress part IX |
| 17 May 2019 | 2019-13 | Announcement of significant litigation progress part X |
| 24 March 2020 | 2020-6 | Announcement of significant litigation progress part XI |
| 6 May 2020 | 2020-14 | Announcement of significant litigation progress part XII |
| 7 November 2020 | 2020-34 | Announcement of significant litigation progress part XIII |
| 6 July 2021 | 2021-30 | Announcement of significant litigation progress part XIV |
| 15 December 2021 | 2021-57 | Announcement of significant litigation progress part XV |
| 30 December 2021 | 2021-64 | Announcement of significant litigation progress part XVI |
17. Significant events of subsidiaries
√ Applicable □ N/A
The Company invested in the technical upgrade program of brewing and implemented the program withthe wholly-owned subsidiary, Brewing Company, as the entity. On 30 June 2020, the Proposal onIncreasing Investment in the Technical Upgrade Program of Brewing was approved by the 2019 AnnualGeneral Meeting of Shareholders upon deliberation. According to the proposal, extra CNY1,462,996,500 of funds would be invested in the technical upgrade program of brewing. Upon thisincrease of funds, the total investment in the technical upgrade program of brewing would reach CNY8,877,276,500. For more information, please refer to the following announcements: Announcement onInvesting in the Technical Upgrade Program of Brewing by the Subsidiary disclosed on 28 April 2016with an Announcement No. of 2016-12; Announcement on Increasing Investment in the TechnicalUpgrade Program of Brewing disclosed on 2 June 2020 with an Announcement No. of 2020-17(http://www.cninfo.com.cn/). As of December 2020, construction was completed for the project. Qualityinspection and acceptance of the relevant sub-projects was finished. Other inspection and acceptance,as well as advance transfer to fixed assets based on estimated value were finished in June 2021.
Section VII 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 | 445,921 | 0.03% | -198,000 | -198,000 | 247,921 | 0.02% | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned corporations | |||||||||
| 3. Shares held by other domestic investors | 445,921 | 0.03% | -198,000 | -198,000 | 247,921 | 0.02% | |||
| Of which: shares held by domestic corporations | |||||||||
| Shares held by domestic individuals | 445,921 | 0.03% | -198,000 | -198,000 | 247,921 | 0.02% | |||
| 4. Shares held by foreign corporations | |||||||||
| Of which: shares held by foreign corporations | |||||||||
| Shares held by foreign individuals | |||||||||
| II. Non-restricted shares | 1,464,306,555 | 99.97% | 198,000 | 198,000 | 1,464,504,555 | 99.98% | |||
| 1.CNY common shares | 1,464,306,555 | 99.97% | 198,000 | 198,000 | 1,464,504,555 | 99.98% | |||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| 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/A
Approval of share changes? Applicable √ N/A
Transfer of share ownership? Applicable √ N/A
Effects of changes in shares on the basic EPS, diluted EPS, net assets per share attributable to commonshareholders of the Company and other financial indexes over the last year and the last reporting period? Applicable √ N/A
Other contents that the Company considers it necessary or required by the securities regulatoryauthorities to disclose? Applicable √ N/A
1.2 Changes in restricted shares
√ Applicable □ N/A
Unit：Share
| Name of shareholder | Number of restricted shares held at the beginning of the reporting period | Increase in restricted shares during the reporting period | Decrease in restricted shares during the reporting period | Number of restricted shares held at the end of the reporting period | Reason for restriction | Date of unlocking |
| Jiang Yuhui | 190,500 | 0 | 190,500 | 0 | Locked-up shares of senior management | 29 December 2021 |
| Yang Benhong | 7,500 | 0 | 7,500 | 0 | Locked-up shares of senior management | 29 December 2021 |
| Total | 198,000 | 0 | 198,000 | 0 | -- | -- |
2. Issuance and listing of securities
2.1 Securities (excluding preferred shares) issued in the reporting period? Applicable √ N/A
2.2 Changes in total shares of the Company and the shareholder structure, as well asthe 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 of common shareholders at the end of the reporting period | 142,588 | Total number of common shareholders at the prior month-end before the disclosure date of the annual report | 140,711 | Total number of preferred shareholders with resumed voting rights by the end of the reporting period (if any)(see Note 8) | 0 | Total number of preferred 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, marked or frozen shares | ||||||||
| Status of shares | Number of shares | ||||||||||||||
| Luzhou Laojiao Group Co., Ltd. | State-owned corporation | 26.02% | 381,088,389 | 0 | 0 | 381,088,389 | |||||||||
| Luzhou XingLu Investment Group Co., Ltd. | State-owned corporation | 24.99% | 365,971,142 | 0 | 0 | 365,971,142 | |||||||||
| Bank of China Co., Ltd. – Baijiu index | Other | 3.22% | 47,095,334 | 17,258,349 | 0 | 47,095,334 | |||||||||
| classification securities investment fund by China Merchants Fund | ||||||||
| Hong Kong Securities Clearing Company Limited | Outbound corporation | 2.42% | 35,440,088 | 2,538,426 | 0 | 35,440,088 | ||
| China Securities Finance Corporation Limited | Other | 2.31% | 33,842,059 | 0 | 0 | 33,842,059 | ||
| Bank of China Co., Ltd.－Blue chip selected hybrid securities investment fund by E Fund | Other | 1.78% | 26,000,000 | -1,700,000 | 0 | 26,000,000 | ||
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | Other | 1.31% | 19,200,000 | 4,122,089 | 0 | 19,200,000 | ||
| Central Huijin Asset Management Co., Ltd. | State-owned corporation | 0.92% | 13,539,862 | -7,397,638 | 0 | 13,539,862 | ||
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E Fund | Other | 0.72% | 10,573,293 | -3,413,534 | 0 | 10,573,293 | ||
| Bank of China Co., Ltd.－Dingyi hybrid securities investment fund by Invesco Great Wall (LOF) | Other | 0.55% | 8,000,000 | - | 0 | 8,000,000 | ||
| 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 | 1. Luzhou Laojiao Group Co., Ltd. and Luzhou XingLu Investment Group Co., Ltd. are both holding state-owned companies under the jurisdiction of SASAC of Luzhou. The two companies signed the agreement of persons acting in concert on 31 December 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/). The two companies signed the renewed agreement of persons acting in concert on 27 May 2021. For details, please refer to the announcement of the Company on 29 May 2021 - Announcement on the renewed agreement of persons acting in concert signed by shareholders. The announcement number is 2021-18 (http://www.cninfo.com.cn/). 2. In addition, whether there is an association between the remaining shareholders or they belong to persons acting in concert is unknown. | |||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | N/A | |||
| Special account for repurchased shares among the top 10 shareholders (if any) (see note 10) | N/A | |||
| 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 Investment Group Co., Ltd. | 365,971,142 | CNY common shares | 365,971,142 | |
| Bank of China Co., Ltd. – Baijiu index classification securities investment fund by China Merchants Fund | 47,095,334 | CNY common shares | 47,095,334 | |
| Hong Kong Securities Clearing Company Limited | 35,440,088 | CNY common shares | 35,440,088 | |
| China Securities Finance Corporation Limited | 33,842,059 | CNY common shares | 33,842,059 | |
| Bank of China Co., Ltd.－Blue chip selected hybrid securities investment fund by E Fund | 26,000,000 | CNY common shares | 26,000,000 | |
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | 19,200,000 | CNY common shares | 19,200,000 | |
| Central Huijin Asset Management Co., Ltd. | 13,539,862 | CNY common shares | 13,539,862 | |
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E Fund | 10,573,293 | CNY common shares | 10,573,293 |
| Bank of China Co., Ltd.－Dingyi hybrid securities investment fund by Invesco Great Wall (LOF) | 8,000,000 | CNY common shares | 8,000,000 |
| 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 | ||
| Top 10 common shareholders participating in securities margin trading (if any) (see note 4) | N/A | ||
Did any of the top 10 common shareholders or the top non-restricted common shareholders of theCompany conduct any promissory repurchase during the reporting period.? Yes √ NoThe top 10 non-restricted common shareholders, the top10 common shareholders did not conduct anypromissory repurchase during the reporting period.
3.2 Controlling shareholder
Nature of controlling shareholder：Local state-ownedType of controlling shareholder：Corporation
| Name of controlling shareholder | Legal representative/Company principal | Date of establishment | Credibility code | Main business scope |
| Luzhou Laojiao Group Co.,Ltd. | Liu Miao | 21 December 2000 | 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). (The Company cannot start business activities until projects subject to approval according to law are approved by relevant departments.) | ||
| 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 2021, 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 30 September 2021, Laojiao Group holds 212,954,666 shares of Hongli Zhihui Group Co., Ltd. (300219.SZ) through its wholly-owned subsidiary, Sichuan Jinduo investment Co., Ltd., accounting for 30.08% of the total issued shares. 3. As of 30 September 2021, 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 2021, Laojiao Group holds 390,528,000 shares of Luzhou Bank (01983.HK), accounting for 14.37% 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 Administration CommissionType of actual controller：Corporation
| Name of actual controller | Legal representative/Company principal | Date of establishment | Credibility code | Main business scope |
| SASAC of Luzhou | Du Lei | 1 March 2005 | 11510400771686813T | State-owned assets supervision and administration department |
| Share holdings 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 2021, XingLu Group, a controlled subsidiary of SASAC of Luzhou, holds 511,654,127 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 59.51% of the total issued shares. Luzhou Infrastructure Construction Investment Co., Ltd., a holding subsidiary of XingLu 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 controlled 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 30 September 2021, Laojiao Group holds 212,954,666 shares of Hongli Zhihui Group Co., Ltd. (300219.SZ) through its controlled subsidiary, Sichuan Jinduo investment Co., Ltd., accounting for 30.08% of the total shares issued. | |||
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 assets management?Applicable √ N/A
3.4 Number of accumulative pledged shares held by the company’s controllingshareholder or the largest shareholder as well as its acting-in-concert partiesaccounts for 80% of all shares of the company held by them?Applicable √ N/A
3.5 Other corporate shareholders with a shareholding proportion over 10%
√Applicable ? N/A
| Name of corporate shareholder | Legal representative/Company principal | Date of establishment | Registered capital (CNY) | Main business scope |
| Luzhou XingLu Investment Group Co., Ltd. | Dai Zhiwei | 28 January 2003 | 4,934,049,244 | Investment and asset management; Project management services; Self-finance real estate business activities; Investment advisory services, financial advisory services |
3.6 Limits on reduction of the Company’s shares held by its controlling shareholder,actual controller, restructuring party and other commitment entities.?Applicable √ N/A
4. Specific implementation of share repurchase during the reportingperiod
Implementation progress of shares repurchases
□ Applicable √ N/A
Implementation progress of share buyback reduction through centralized bidding
□ Applicable √ N/A
Section VIII Preferred Shares? Applicable √ N/ANo preferred stock in the Company during the reporting period.
Section IX Information about Bond
√ Applicable ? N/A
1. Enterprise bonds
? Applicable √ N/ANo such cases in the reporting period.
2. Corporate bonds
√ Applicable ? N/A
2.1. Basic information about the corporate bond
Unit: CNY
| Name | Abbr. | Code | Issue date | Value date | Due date | Bond balance | Interest rate | Way of redemption | Place of trading |
| 2019 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 19 Lao Jiao 01 | 112959.SZ | 27 August 2019 | 28 August 2019 | 28 August 2024 | 2,500,000,000.00 | 3.58% | In terms of the bonds of this phase, interests will be paid by year and the principal will be repaid in lump sum at maturity. The interests will be paid once every year and the interests | Shenzhen Stock Exchange |
| for the last installment will be paid together with the principal. | |||||||||
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 20 Lao Jiao 01 | 149062.SZ | 16 March 2020 | 17 March 2020 | 17 March 2025 | 1,500,000,000.00 | 3.50% | In terms of the bonds of this phase, interests will be paid by year and the principal will be repaid in lump sum at maturity. The interests will be paid once every year and the interests for the last installment will be paid together with the principal. | Shenzhen Stock Exchange |
| Appropriate arrangement of the investors (if any) | The bonds are applicable to eligible investors who have qualified securities accounts with Shenzhen Branch of China Securities Depository and Clearing Co., Ltd., are permitted to engage in the subscription and transfer of corporate bonds in accordance with the Management Measures for the Issue and Transaction Management of Corporate Bonds, Management Measures for the Suitability of Securities and Futures Investors, Management Measures of Shenzhen Stock Exchange for the Suitability of Securities Market Investors, and relevant laws and regulations, and have the corresponding risk identification and bearing capacity (excluding those prohibited by laws and regulations) | ||||||||
| Trading systems applicable | Tradable by way of bidding, offering, inquiry and agreement | ||||||||
| Risk of termination of listing and | N/A | ||||||||
Overdue bonds? Applicable √ N/A
2.2. Triggering and execution of issuer or investor option clauses and investorprotection clauses? Applicable √ N/A
2.3. Information about the intermediaries
trading (if any) andcountermeasures
Bond
| Bond | Intermediary | Office address | Signature accountant | Contact person of intermediary | Contact number |
| 2019 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I)/ 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | China International Capital Corporation Limited. | 33rd Floor, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | N/A | Qi Qin | (010)65051166 |
| 2019 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I)/ 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | China Chengxin International Credit Rating Co., Ltd. | Building 6, Galaxy SOHO, No.2 Nanzhugan hutong,Chaoyangmennei Avenue, Dongcheng District, Beijing | N/A | Sun Shu | (010)66428877 |
| 2019 Public Offering of | Sichuan Huaxin (Group) CPA Firm | 28th Floor, No.18 Jinmaolidu South, | Li Wulin, Tang Fangmo, He | He Shoufu | （028）85560449 |
| Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I)/ 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | Ximianqiao Street, Chengdu | Shoufu |
Indicate by tick mark whether above intermediaries changed in the reporting period
□ Yes √ No
2.4. List of the usage of the raised funds
Unit: CNY
| Bonds | Total amount | Amount spent | Unused amount | Operation of special account for raised funds (if any) | Rectification of raised funds for violation operation (if any) | Whether is consistent with the usage, using plan and other agreements stipulated in the raising specification |
| 2019 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 2,500,000,000.00 | 2,530,818,423.111 | 0.00 | The company has set up a special account to deposit the funds raised and has signed a fund account supervision agreement to clarify it. The special account for | N/A | Yes |
| Ltd., Chengdu Fucheng Avenue Sub-branch; Bank account: 028900140410888. | ||||||
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 1,500,000,000.00 | 356,604,601.62 | 1,218,797,527.44 | The company has set up a special account to deposit the funds raised and has signed a fund account supervision agreement to clarify it. The special account for fund raising was operating normally during the Reporting Period. (1) Account name: Luzhou Laojiao Co., Ltd.; Opening bank: Guangfa Bank Co., Ltd., Chengdu Branch; Bank account: 9550880046 | N/A | Yes |
Note: 1. Including accumulated interest income of CNY 40,825,632.44, net of issue costs of CNY10,000,000 and accumulated handling expenses of CNY 7,209.33
The raised funds were used for project construction
√ Applicable ? N/A
The Company raised a fund of CNY 4.0 billion through the issue of corporate bonds respectively on 27August 2019 and 16 March 2020. After deduction of the issue fees, the balance amount was set to use inthe technical renovation project of brewing (Phase II), Project of Intelligent Upgrading and Building of theInformation Management System, Project of Acquiring Sealing Equipment for the Cellar of HuangyiBrewing Base and Project of Acquiring Accessory Equipment for Leaven Making for Huangyi BrewingBase. As of 31 December 2021, CNY 2,887,423,000 of the fund-raising through the issue of corporatebonds had been used.
The Company changed the usage of above funds raised from bonds during the reporting period.
□ Applicable √ Not applicable
2.5. Changes in credit ratings in the reporting period
□ Applicable √ Not applicable
2.6. Execution and changes with respect to guarantees, repayment plans and otherrepayment-ensuring measures in the reporting period, as well as the impact on theinterests of bond holders
□ Applicable √ Not applicable
3. Debt instruments as a non-financial enterprise
? Applicable √ N/ANo such cases in the reporting period.
4. Convertible corporate bonds
? Applicable √ N/ANo such cases in the reporting period.
5. Consolidated loss of the reporting period over 10% of net assets as atthe end of last year? Applicable √ N/A
6. Matured interest-bearing debt excluding bonds up the period-end
? Applicable √ N/A
7. Whether there was any violation of rules and regulations during thereporting period
□ Yes √ No
8. The major accounting data and the financial indicators of the recent 2years of the company as of the end of the reporting period
Unit：CNY 10,000
| Item | 31 December 2021 | 31 December 2020 | Change |
| Current ratio | 2.43 | 2.57 | -5.45% |
| Debt/asset ratio | 34.89% | 33.78% | 1.11% |
| Quick ratio | 1.74 | 1.95 | -10.77% |
| 2021 | 2020 | Change | |
| Net profits before non-recurring gains and losses | 788,438.41 | 599,083.18 | 31.61% |
| EBITDA/debt ratio | 277.43% | 203.61% | 73.82% |
| Interest cover (times) | 49.41 | 30.88 | 60.01% |
| EBITDA-to-interest cover (times) | 52.01 | 32.05 | 62.28% |
Section X Financial Report
1. Auditor’s report
| Type of audit report | Standard without reserved opinion |
| Signing date of auditor’s report | 27 April 2022 |
| Name of Audit | Sichuan Huaxin (Group) CPA Firm |
| No. of auditor’s report | Chuan Huaxin Audit [2022] No. 0041 |
| Names of auditors | Li Wulin, Tang Fangmo, He Shoufu |
Auditor’s Report
To the shareholders of Luzhou Laojiao Co., Ltd.:
OpinionWe have audited the financial statements of Luzhou Laojiao Co., Ltd. (hereinafter referred to as the“Company”), which comprise the consolidated balance sheet and balance sheet as at 31 December2021, consolidated income statement and income statement, consolidated cash flow statement andcash flow statement, consolidated statement of changes in owners' equity and statement of changes inowners' equity for the year then ended; and notes to the financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, in accordancewith Accounting Standards for Business Enterprises and present fairly the financial position of thecompany as at 31
December 2021 and its operating results and cash flow for the year then ended.
Basis for opinionWe conducted our audit in accordance with China Standards on Auditing (“CSAs”) for Certified PublicAccountants. Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of professional ethics for Certified Public Accountants inChina (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole and, in forming our opinionthereon, and we do not provide a separate opinion on these matters. Key audit matters identified in ouraudit are summarized as follows:
1. Key audit matters-Recognition of domestic baijiu sales revenue
Key audit matters
| Key audit matters | How our audit addressed the Key Audit Matter |
As shown in Note 5.34 in the Financial Statements,the domestic baijiu sales revenue in the Company isCNY 20,331,834,100, accounting for 99.59% of theprimary business revenue of CNY 20,415,170,500. Itis the main source of the Company's operating profit.For the operating revenue is one of the key resultsindicators and the inherent risk of its misstatement isrelatively high, therefore, we identified the recognitionof domestic baijiu sales revenue as a key auditmatter.
| As shown in Note 5.34 in the Financial Statements, the domestic baijiu sales revenue in the Company is CNY 20,331,834,100, accounting for 99.59% of the primary business revenue of CNY 20,415,170,500. It is the main source of the Company's operating profit. For the operating revenue is one of the key results indicators and the inherent risk of its misstatement is relatively high, therefore, we identified the recognition of domestic baijiu sales revenue as a key audit matter. | Our procedures in relation to recognition of domestic baijiu 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, unit price of sales 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 accounted for 68.46% 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 contract liabilities 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 baijiu 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 business information and key personnel information, and checked whether they are related party of the Company. 4. For other customers, randomly checked sales contracts, customers' purchase orders, shipping |
documents, transport documents, accounting vouchers,payment receipts, customer signature records and othermaterials to verify the occurrence, completeness andaccuracy of the revenue recognized by the management.
5. Selected the confirmation voucher of large amount of
sales before and after the balance sheet date, paidattention to the date of sales invoice and customerreceipt, and paid attention to whether there is a largeamount of return after the period, so as to verify whetherthe corresponding revenue is included in the appropriateaccounting period.The evidence obtained from the above audit procedurescan support the Company's management's recognition ofdomestic baijiu sales revenue.
2. Key audit matters-Existence of bank deposits
2. Key audit matters-Existence of bank deposits
Key audit matters
| Key audit matters | How our audit addressed the Key Audit Matter |
| As of 31 December 2021, the bank balance of the Company is CNY 13.491 billion, accounting for 31.22% of the total assets. Bank deposits are high-risk assets. Therefore, we identified 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 balance reconciliation of all bank accounts compiled by the Company, and check all the outstanding items, whether there are any important 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- Recognition of the book value, the time and amount of pre-transfers into fixed assets of the technical renovation project of brewing | |
Key audit matters
| Key audit matters | How our audit addressed the Key Audit Matter |
| As shown in Note 5.12 of the financial statements, the Company's budgeted investment in the technical renovation project of brewing is CNY 8,877,276,500. The Company intends to increase fixed assets and intangible assets of CNY 1,087,245,000 from transfer in 2021, and the balance of the construction in progress will be CNY 0 at the end of the construction. Because the amount spent on the technical renovation project of brewing is significant, the recognition of the time and amount of transfer from construction in progress to fixed assets involves the estimation and judgment of the management, and the withdrawal of depreciation and amortization has a direct impact on the current profit, we identified the recognition of the book value, the time and amount of pre-transfers into fixed assets of the technical renovation project of brewing as a key audit matter. | Our procedures in relation to the recognition of the book value, the time and amount of pre-transfers into fixed assets of the technical renovation project of brewing included: 1. Understood and tested the design and implementation of key internal controls related to the assets management cycle to confirm the effectiveness of relevant internal controls. 2. Check on project investment: we selected samples for new important amounts occurred in the current period with regard to the technical renovation project of brewing, reviewed the ledger of the project contracts, and examined supporting documents related to it, including tender and bidding documents, project establishment or budget documents, project contracts and invoices, final statement of the project, procurement contracts and invoices, and payment approvals. 3. Check the time and recheck the amount of pre-transfers into fixed assets: The Company selected for new important amounts transferred into fixed assets in the current period with regard to the technical renovation project of brewing, and checked the inspection reports jointly confirmed by the five ownership including supervisors, constructors, designers, inspectors and Project Responsible Unit. The Company also checked the Notice on Project Transfer into Fixed Assets compiled by the Project Responsible Unit and related approval procedures, and made a |
Other informationThe directors of the Company are responsible for the other information. The other information comprisesthe information included in the annual report, but does not include the financial statements and ourauditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of directors and those charged with governance for the financial statementsThe directors of the Company are responsible for the preparation of the financial statements that give atrue and fair view in accordance with the disclosure requirements of Accounting Standards for BusinessEnterprises, and designing, implementing and maintaining internal control that is necessary to ensurethe financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s abilityto continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless the directors either intend to liquidate the Company or tocease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reportingprocess.
Auditor's responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with CSAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the directors.
(4) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.However, future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solelyresponsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.
From the matters communicated with the governance, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are thereforethe key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of such communication.
Sichuan Huaxin (Group) CPA Firm Chinese CPA: Li Wulin(Engagement Partner):
Chengdu·China Chinese CPA: Tang Fangmo
Chinese CPA: He Shoufu
27 April 2022
2. Financial statements
Monetary unit for the financial statements and the notes thereto: CNYPrepared by: Luzhou Laojiao Co.,Ltd.
Consolidated balance sheetAs at 31 December 2021
Monetary Unit: CNY
| Item | Balance as at 31 December 2021 | Balance as at 31 December 2020 |
| Current assets: | ||
| Cash and cash equivalents | 13,513,494,580.56 | 11,624,870,340.60 |
| Settlement reserves | ||
| Lending funds | ||
| Held-for-trading financial assets | 706,352,241.79 | |
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 1,628,248.55 | 1,507,852.43 |
| Accounts receivables financing | 4,757,631,778.64 | 3,209,371,766.35 |
| Prepayment | 178,087,688.81 | 74,685,537.38 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve | ||
| Other receivables | 28,615,361.96 | 127,032,931.42 |
| Including：Interests receivable | ||
| Dividends receivable | 1,407,900.00 | |
| Buying back the sale of financial assets | ||
| Inventories | 7,277,573,166.80 | 4,695,663,431.25 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 111,974,532.91 | 156,565,424.18 |
| Total current assets | 26,575,357,600.02 | 19,889,697,283.61 |
| Non-current assets: | ||
| Disbursement of loans and advances |
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 2,626,744,236.25 | 2,477,667,171.27 |
| Investments in other equity instruments | 363,312,120.43 | 347,160,399.42 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 8,089,487,274.39 | 6,887,108,174.72 |
| Construction in progress | 1,259,845,487.50 | 2,012,129,880.15 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 52,714,810.04 | |
| Intangible assets | 2,606,359,188.72 | 2,657,118,025.37 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 1,463,869.21 | 2,305,902.21 |
| Deferred tax assets | 986,112,983.42 | 725,210,660.84 |
| Other non-current assets | 650,384,435.70 | 10,806,325.86 |
| Total non-current assets | 16,636,424,405.66 | 15,119,506,539.84 |
| Total assets | 43,211,782,005.68 | 35,009,203,823.45 |
| Current liabilities: | ||
| Short-term loans | ||
| Borrowings from the central bank | ||
| Loans from other banks | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 121,285,117.60 | |
| Accounts payable | 2,420,354,469.53 | 2,604,289,199.77 |
| Advance from customer | ||
| Contract liabilities | 3,510,110,701.25 | 1,678,837,166.94 |
| Financial assets sold for repurchase | ||
| Deposits from customers and inter-bank | ||
| Customer brokerage deposits |
| Securities underwriting brokerage deposits | ||
| Employee benefits payable | 648,103,740.96 | 505,022,627.19 |
| Taxes payable | 3,173,479,627.79 | 2,046,027,211.13 |
| Other payable | 652,393,292.60 | 501,623,924.54 |
| Including：Interests payable | ||
| Dividends payable | ||
| Handling charges and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 86,202,215.03 | 72,219,178.08 |
| Other current liabilities | 456,314,391.17 | 218,267,353.36 |
| Total current liabilities | 10,946,958,438.33 | 7,747,571,778.61 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term loans | ||
| Bonds payable | 3,990,785,742.23 | 3,987,872,100.02 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 40,667,668.08 | |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | 28,531,014.28 | 29,739,000.00 |
| Deferred tax liabilities | 67,578,019.93 | 62,151,071.11 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,127,562,444.52 | 4,079,762,171.13 |
| Total liabilities | 15,074,520,882.85 | 11,827,333,949.74 |
| Owners' equity | ||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bonds |
| Capital reserves | 3,755,354,665.73 | 3,722,777,063.13 |
| Less: treasury stock | ||
| Other comprehensive income | 167,527,152.32 | 186,063,325.03 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| General risk reserve | ||
| Undistributed profits | 21,187,860,235.89 | 16,236,513,212.43 |
| Total equity attributable to owners of the parent company | 28,040,247,005.94 | 23,074,858,552.59 |
| Non-controlling interests | 97,014,116.89 | 107,011,321.12 |
| Total owners' equity | 28,137,261,122.83 | 23,181,869,873.71 |
| Total liabilities and owners' equity | 43,211,782,005.68 | 35,009,203,823.45 |
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 31 December 2021
Monetary Unit: CNY
| Item | Balance as at 31 December 2021 | Balance as at 31 December 2020 |
| Current assets: | ||
| Cash and cash equivalents | 13,038,549,397.55 | 11,100,327,211.33 |
| Held-for-trading financial assets | 706,352,241.79 | |
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 1,207,477.63 | 3,927.50 |
| Accounts receivables financing | ||
| Prepayment | 1,464,893.09 | 1,431,698.57 |
| Other receivables | 10,033,554,898.57 | 7,052,749,694.83 |
| Including：Interests receivable | ||
| Dividends receivable | 1,407,900.00 | |
| Inventories | 3,918,211.13 | 850,076.30 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year |
| Other current assets | 78,509.44 | |
| Total current assets | 23,785,047,119.76 | 18,155,441,117.97 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 6,051,400,833.91 | 5,884,091,712.47 |
| Investments in other equity instruments | 362,983,198.80 | 346,831,477.79 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 1,087,640,695.62 | 640,254,574.76 |
| Construction in progress | 53,881,812.48 | 550,932,404.00 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 573,800.02 | |
| Intangible assets | 671,147,243.40 | 684,010,106.13 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 1,364,659.65 | 2,180,811.89 |
| Deferred tax assets | 91,734,925.57 | 89,484,552.65 |
| Other non-current assets | 500,600.00 | 1,526,325.86 |
| Total non-current assets | 8,321,227,769.45 | 8,199,311,965.55 |
| Total assets | 32,106,274,889.21 | 26,354,753,083.52 |
| Current liabilities: | ||
| Short-term loans | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 83,724,151.54 | 80,663,835.54 |
| Advance from customer | ||
| Contract liabilities | 2,523,947.74 | 753,349.81 |
| Employee benefits payable | 234,008,858.96 | 168,254,646.38 |
| Taxes payable | 285,894,625.64 | 153,437,992.21 |
| Other payables | 1,659,106,919.10 | 699,733,563.56 |
| Including：Interests payable | ||
| Dividends payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 72,625,138.08 | 72,219,178.08 |
| Other current liabilities | 328,113.21 | 116,457.13 |
| Total current liabilities | 2,338,211,754.27 | 1,175,179,022.71 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | 3,990,785,742.23 | 3,987,872,100.02 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 163,523.64 | |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | 1,904,000.00 | |
| Deferred tax liabilities | 67,578,019.93 | 62,151,071.11 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,058,527,285.80 | 4,051,927,171.13 |
| Total liabilities | 6,396,739,040.07 | 5,227,106,193.84 |
| Owners' equity | ||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 3,739,666,108.27 | 3,706,816,950.12 |
| Less: treasury stock | ||
| Other comprehensive income | 167,572,013.86 | 185,441,302.55 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| Undistributed profits | 18,872,792,775.01 | 14,305,883,685.01 |
| Total owners' equity | 25,709,535,849.14 | 21,127,646,889.68 |
| Total liabilities and owners' equity | 32,106,274,889.21 | 26,354,753,083.52 |
Consolidated income statement
Monetary Unit: CNY
| Item | Year 2021 | Year 2020 |
| 1. Total operating revenue | 20,642,261,724.37 | 16,652,854,549.80 |
| Including: Operating revenue | 20,642,261,724.37 | 16,652,854,549.80 |
| Interest income | ||
| Earned premium | ||
| Fee and commission income | ||
| 2. Total operating costs | 10,393,487,334.14 | 8,935,579,731.67 |
| Including: Cost of sales | 2,952,431,488.31 | 2,823,484,558.06 |
| 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 | 2,864,901,542.85 | 2,223,571,956.83 |
| Selling and distribution expenses | 3,599,211,604.56 | 3,090,655,832.25 |
| General and administrative expenses | 1,056,116,367.85 | 844,454,467.47 |
| Research and Development expenses | 137,712,329.78 | 85,858,119.80 |
| Financial expenses | -216,885,999.21 | -132,445,202.74 |
| Including：Interest expenses | 195,125,786.35 | 190,368,213.56 |
| Interest income | 419,897,541.04 | 333,430,076.04 |
| Plus: Other income | 52,319,231.39 | 32,045,453.48 |
| Investment income ("-" for | 202,205,718.92 | 201,498,918.28 |
| losses) | ||
| Including: income from investment in associates and joint ventures | 195,543,058.40 | 192,119,093.92 |
| Income from the derecognition of financial assets measured at amortized cost (“-” for losses) | ||
| Foreign exchange gains ("-" for losses) | ||
| Net gain on exposure hedges (“-” for losses) | ||
| Gains from the changes in fair values(“-“ for losses) | 6,352,241.79 | |
| Credit impairment losses (“-” for losses) | 81,126,114.88 | 373,734.80 |
| Impairment losses(“-“ for losses) | ||
| Gains from disposal of assets("-" for losses) | -347,429.88 | 8,123,010.18 |
| 3. Operating profits ("-" for losses) | 10,590,430,267.33 | 7,959,315,934.87 |
| Plus: non-operating income | 27,246,707.88 | 32,645,773.17 |
| Less: non-operating expenses | 66,717,487.09 | 52,934,859.63 |
| 4. Total profits before tax ("-" for total losses) | 10,550,959,488.12 | 7,939,026,848.41 |
| Less: income tax expenses | 2,613,697,101.19 | 1,980,512,205.93 |
| 5. Net profit ("-" for net loss) | 7,937,262,386.93 | 5,958,514,642.48 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operation ("-" for losses) | 7,937,262,386.93 | 5,958,514,642.48 |
| 5.1.2 Net profit from discontinued operation ("-" for losses) | ||
| 5.2 By ownership | ||
| 1) Attributable to shareholders of the parent company | 7,955,554,351.73 | 6,005,723,069.36 |
| 2) Attributable to non-controlling interests | -18,291,964.80 | -47,208,426.88 |
| 6. Net of tax from other | -19,081,558.37 | -10,282,236.19 |
| comprehensive income | ||
| Net of tax from other comprehensive income to the owner of the parent company | -18,536,172.71 | -8,753,805.54 |
| 6.1 Other comprehensive income cannot reclassified into the profit and loss: | 11,707,013.25 | -3,926,142.29 |
| 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 | ||
| 3) Changes in fair value of investments in other equity instruments | 11,707,013.25 | -3,926,142.29 |
| 4) Changes in fair value of the company’s credit risks | ||
| 5) Other | ||
| 6.2 Other comprehensive income that will be reclassified into the profit and loss | -30,243,185.96 | -4,827,663.25 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | -29,576,301.94 | -2,965,293.21 |
| 2) Changes in fair value of investments in other debt obligations | ||
| 3) Other comprehensive income arising from the reclassification of financial assets | ||
| 4) Allowance for credit impairments in investments in other debt obligations | ||
| 5) Reserve for cash-flow hedge | ||
| 6) Balance arising from the translation of foreign currency financial statements | -666,884.02 | -1,862,370.04 |
| 7) Others | ||
| Net of tax from other comprehensive income to non-controlling interests | -545,385.66 | -1,528,430.65 |
| 7. Total comprehensive income | 7,918,180,828.56 | 5,948,232,406.29 |
| Total comprehensive income attributable to owners of the parent company | 7,937,018,179.02 | 5,996,969,263.82 |
| Total comprehensive income attributable to non-controlling interests | -18,837,350.46 | -48,736,857.53 |
| 8. Earnings per share | ||
| (1) Basic earnings per share | 5.43 | 4.10 |
| (2) Diluted earnings per share | 5.43 | 4.10 |
Legal representative：Liu MiaoPerson in charge of accounting affairs：Xie HongPerson in charge of accounting department：Yan Li
Income statement of parent company
Monetary Unit: CNY
| Item | Year 2021 | Year 2020 |
| 1. Operating revenue | 7,602,627,780.05 | 5,498,845,453.48 |
| Less: Cost of sales | 5,665,157,031.44 | 4,185,130,000.53 |
| Taxes and surcharges | 48,515,753.23 | 39,668,792.03 |
| Selling and distribution expenses | ||
| General and administrative expenses | 771,788,593.30 | 639,110,100.69 |
| Research and Development expenses | 56,568,184.04 | 31,103,513.75 |
| Financial expenses | -353,442,195.81 | -212,027,662.64 |
| Including：Interest expenses | 156,432,933.96 | 108,660,100.27 |
| Interest income | 511,551,991.26 | 321,948,107.20 |
| Plus: Other income | 32,634,508.70 | 23,441,901.80 |
| Investment income ("-" for losses) | 6,474,502,865.88 | 4,129,509,837.47 |
| Including: income from investment in associates and joint ventures | 171,693,567.56 | 191,110,318.79 |
| Income from the derecognition of financial assets at |
| amortized cost (“-” for losses) | ||
| Net gain on exposure hedges (“-” for losses) | ||
| Gains from the changes in fair values(“-“ for losses) | 6,352,241.79 | |
| Credit impairment losses (“-” for losses) | 80,203,108.29 | 1,373,316.74 |
| Asset impairment losses (“-” for losses) | ||
| Gains from disposal of assets("-" for losses) | 546,546.66 | 8,127,635.68 |
| 2. Operating profits ("-" for losses) | 8,008,279,685.17 | 4,978,313,400.81 |
| Plus: non-operating income | 15,646,393.45 | 13,505,161.25 |
| Less: non-operating expenses | 61,173,017.79 | 33,646,104.00 |
| 3. Total profits before tax ("-" for total losses) | 7,962,753,060.83 | 4,958,172,458.06 |
| Less: income tax expenses | 391,636,642.56 | 216,026,393.77 |
| 4. Net profit ("-" for net loss) | 7,571,116,418.27 | 4,742,146,064.29 |
| 4.1 Net profit from continuing operation ("-" for losses) | 7,571,116,418.27 | 4,742,146,064.29 |
| 4.2 Net profit from discontinued operation ("-" for losses) | ||
| 5. Net of tax from other comprehensive income | -17,869,288.69 | -6,891,435.50 |
| 5.1 Other comprehensive income cannot reclassified into the profit and loss: | 11,707,013.25 | -3,926,142.29 |
| 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 | ||
| 3) Changes in fair value of investments in other equity instruments | 11,707,013.25 | -3,926,142.29 |
| 4) Changes in fair value of the company’s credit risks |
| 5) Other | ||
| 5.2 Other comprehensive income that will be reclassified into the profit and loss | -29,576,301.94 | -2,965,293.21 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | -29,576,301.94 | -2,965,293.21 |
| 2) Changes in fair value of investments in other debt obligations | ||
| 3) Other comprehensive income arising from the reclassification of financial assets | ||
| 4) Allowance for credit impairments in investments in other debt obligations | ||
| 5) Reserve for cash-flow hedge | ||
| 6) Balance arising from the translation of foreign currency financial statements | ||
| 7) Others | ||
| 6. Total comprehensive income | 7,553,247,129.58 | 4,735,254,628.79 |
| 7. Earnings per share | ||
| (1) Basic earnings per share | ||
| (2) Diluted earnings per share |
Consolidated statement of cash flows
Monetary Unit: CNY
| Item | Year 2021 | Year 2020 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 22,547,242,658.59 | 17,181,826,402.36 |
| 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 | ||
| Cash received from interest, handling charges and commissions | ||
| Net increase in placements from other financial institutions | ||
| Net capital increase in repurchase business | ||
| Net cash received from customer brokerage deposits | ||
| Refunds of taxes and surcharges | 3,431,889.01 | 4,409,523.82 |
| Cash received from other operating activities | 970,002,588.49 | 536,706,593.88 |
| Subtotal of cash inflows from operating activities | 23,520,677,136.09 | 17,722,942,520.06 |
| Cash paid for goods purchased and services received | 5,071,928,013.73 | 3,935,832,838.54 |
| 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 | ||
| Net increase in lending funds | ||
| Cash paid for interests, handling charges and commissions | ||
| Cash paid for policy dividends | ||
| Cash paid to and on behalf of employees | 1,016,371,335.03 | 798,605,373.41 |
| Cash paid for taxes and surcharges | 6,428,760,153.55 | 5,241,424,782.99 |
| Cash paid for other operating activities | 3,304,969,529.27 | 2,830,977,073.82 |
| Subtotal of cash outflows from operating activities | 15,822,029,031.58 | 12,806,840,068.76 |
| Net cash flows from operating activities | 7,698,648,104.51 | 4,916,102,451.30 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | ||
| Cash received from returns on investments | 38,354,817.50 | 28,707,091.30 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 3,538,598.27 | 20,743,376.36 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 41,893,415.77 | 49,450,467.66 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 1,979,399,942.51 | 2,143,910,509.48 |
| Cash paid for investments | 740,542,370.00 | 80,000,000.00 |
| Net increase in pledge loans | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 2,719,942,312.51 | 2,223,910,509.48 |
| Net cash flows from investing activities | -2,678,048,896.74 | -2,174,460,041.82 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 8,305,794.84 | 9,947,876.16 |
| Including: cash received by subsidiaries from investments by | 8,305,794.84 | 9,947,876.16 |
| minority shareholders | ||
| Cash received from borrowings | 1,494,000,000.00 | |
| Cash received from other financing activities | ||
| Subtotal of cash inflows from financing activities | 8,305,794.84 | 1,503,947,876.16 |
| Cash paid for debt repayments | ||
| Cash paid for distribution of dividends and profits or payment of interest | 3,168,553,209.93 | 2,420,541,436.84 |
| Including: dividends and profits paid to minority shareholders by subsidiaries | 2,085,000.00 | |
| Cash paid for other financing activities | 22,371,107.22 | 180,000.00 |
| Subtotal of cash outflows from financing activities | 3,190,924,317.15 | 2,420,721,436.84 |
| Net cash flows from financing activities | -3,182,618,522.31 | -916,773,560.68 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | -3,646,806.44 | -8,940,312.77 |
| 5. Net increase in cash and cash equivalents | 1,834,333,879.02 | 1,815,928,536.03 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 11,568,195,062.81 | 9,752,266,526.78 |
| 6. Balance of cash and cash equivalents at the end of the period | 13,402,528,941.83 | 11,568,195,062.81 |
Cash flow statements of parent company
Monetary Unit: CNY
| Item | Year 2021 | Year 2020 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 6,550,150,291.27 | 6,027,493,323.47 |
| Refunds of taxes and surcharges | ||
| Cash received from other operating activities | 625,297,165.56 | 383,743,781.07 |
| Subtotal of cash inflows from operating activities | 7,175,447,456.83 | 6,411,237,104.54 |
| Cash paid for goods purchased and services received | 4,522,910,945.39 | 4,712,837,125.15 |
| Cash paid to and on behalf of employees | 357,239,225.81 | 292,139,082.61 |
| Cash paid for taxes and surcharges | 540,331,615.01 | 321,193,312.05 |
| Cash paid for other operating activities | 280,329,112.79 | 245,064,341.42 |
| Subtotal of cash outflows from operating activities | 5,700,810,899.00 | 5,571,233,861.23 |
| Net cash flows from operating activities | 1,474,636,557.83 | 840,003,243.31 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | ||
| Cash received from returns on investments | 6,334,501,455.30 | 3,957,726,785.62 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 1,087,162.03 | 20,105,415.90 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 6,335,588,617.33 | 3,977,832,201.52 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 19,211,172.69 | 223,191,670.76 |
| Cash paid for investments | 740,542,370.00 | 80,000,000.00 |
| Net cash paid to acquire subsidiaries and other business units |
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 759,753,542.69 | 303,191,670.76 |
| Net cash flows from investing activities | 5,575,835,074.64 | 3,674,640,530.76 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | ||
| Cash received from loans | 1,494,000,000.00 | |
| Cash received from other financing activities | ||
| Subtotal of cash inflows from financing activities | 1,494,000,000.00 | |
| Cash paid for debt repayments | ||
| Cash paid for distribution of dividends and profits or payment of interest | 3,146,207,328.27 | 2,343,157,574.72 |
| Cash paid for other financing activities | 2,010,331,534.97 | 1,493,126,651.60 |
| Subtotal of cash outflows from financing activities | 5,156,538,863.24 | 3,836,284,226.32 |
| Net cash flows from financing activities | -5,156,538,863.24 | -2,342,284,226.32 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | -943.95 | |
| 5. Net increase in cash and cash equivalents | 1,893,931,825.28 | 2,172,359,547.75 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 11,045,051,933.54 | 8,872,692,385.79 |
| 6. Balance of cash and cash equivalents at the end of the period | 12,938,983,758.82 | 11,045,051,933.54 |
Consolidated statement of changes in owners' equity
For the year ended 31 December 2021
Monetary Unit: CNY
| Item | Year 2021 | ||||||||||||||
| Equity attributable to owners of the parent company | Non-controlling interests | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 | |||||||
| 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 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 | |||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 32,577,602.60 | -18,536,172.71 | 4,951,347,023.46 | 4,965,388,453.35 | -9,997,204.23 | 4,955,391,249.12 | |||||||||
| (1) Total comprehensive income | -18,536,172.71 | 7,955,554,351.73 | 7,937,018,179.02 | -18,837,350.46 | 7,918,180,828.56 | ||||||||||
| (2) Capital contributed or reduced by owners | 32,577,602.60 | 32,577,602.60 | 8,840,146.23 | 41,417,748.83 | |||||||||||
| Capital contributions by | 8,305,794.84 | 8,305,794.84 | |||||||||||||
| owners | |||||||||||||||
| Capital contributions by other equity instruments holders | |||||||||||||||
| Amounts of share-based payments recognized in owners' equity | 32,577,602.60 | 32,577,602.60 | 534,351.39 | 33,111,953.99 | |||||||||||
| Others | |||||||||||||||
| (3) Profit distribution | -3,004,207,328.27 | -3,004,207,328.27 | -3,004,207,328.27 | ||||||||||||
| Withdrawal of surplus reserves | |||||||||||||||
| Withdrawal of general risk reserve | |||||||||||||||
| Profit distributed to owners (or shareholders) | -3,004,207,328.27 | -3,004,207,328.27 | -3,004,207,328.27 | ||||||||||||
| 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 | |||||||||||||||
| Carry-forward of retained earnings from other comprehensive income | |||||||||||||||
| 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 | 3,755,354,665.73 | 167,527,152.32 | 1,464,752,476.00 | 21,187,860,235.89 | 28,040,247,005.94 | 97,014,116.89 | 28,137,261,122.83 |
For the year ended 31 December 2020
Monetary Unit: CNY
| Item | Year 2020 | ||||||||||||||
| Equity attributable to owners of the parent company | Non-controlling interests | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,722,777,063.13 | 194,817,130.57 | 1,464,752,476.00 | 12,559,746,579.91 | 19,406,845,725.61 | 147,885,302.49 | 19,554,731,028.10 | |||||||
| 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 | 3,722,777,063.13 | 194,817,130.57 | 1,464,752,476.00 | 12,559,746,579.91 | 19,406,845,725.61 | 147,885,302.49 | 19,554,731,028.10 | |||||||
| 3.Increases/decreases in the current period (“-” for decreases) | -8,753,805.54 | 3,676,766,632.52 | 3,668,012,826.98 | -40,873,981.37 | 3,627,138,845.61 | ||||||||||
| (1) Total comprehensive income | -8,753,805.54 | 6,005,723,069.36 | 5,996,969,263.82 | -48,736,857.53 | 5,948,232,406.29 | ||||||||||
| (2) Capital contributed or reduced by owners | 9,947,876.16 | 9,947,876.16 | |||||||||||||
| Capital contributions by owners | 9,947,876.16 | 9,947,876.16 | |||||||||||||
| Capital contributions by other equity instruments holders | |||||||||||||||
| Amounts of share-based payments recognized in owners' equity | |||||||||||||||
| Others | |||||||||||||||
| (3) Profit distribution | -2,328,956,436.84 | -2,328,956,436.84 | -2,085,000.00 | -2,331,041,436.84 | |||||||||||
| Withdrawal of surplus reserves | |||||||||||||||
| Withdrawal of general risk |
| reserve | |||||||||||||||
| Profit distributed to owners (or shareholders) | -2,328,956,436.84 | -2,328,956,436.84 | -2,085,000.00 | -2,331,041,436.84 | |||||||||||
| 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 | |||||||||||||||
| Carry-forward of retained earnings from other comprehensive income | |||||||||||||||
| 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 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 |
Statement of changes in owners' equity of parent company
For the year ended 31 December 2021
Monetary Unit: CNY
| Item | Year 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equity | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,706,816,950.12 | 185,441,302.55 | 1,464,752,476.00 | 14,305,883,685.01 | 21,127,646,889.68 | ||||||
| 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 | 3,706,816,950.12 | 185,441,302.55 | 1,464,752,476.00 | 14,305,883,685.01 | 21,127,646,889.68 | ||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 32,849,158.15 | -17,869,288.69 | 4,566,909,090.00 | 4,581,888,959.46 | ||||||||
| (1) Other comprehensive income | -17,869,288.69 | 7,571,116,418.27 | 7,553,247,129.58 | |||||||||
| (2) Capital contributed or reduced by owners | 32,849,158.15 | 32,849,158.15 | ||||||||||
| Capital contributions by owners | ||||||||||||
| Capital contributions by other equity instruments holders | ||||||||||||
| Amounts of share-based payments recognized in owners' equity | 32,849,158.15 | 32,849,158.15 | ||||||||||
| Others | ||||||||||||
| (3) Profit distribution | -3,004,207,328.27 | -3,004,207,328.27 | ||||||||||
| Withdrawal of surplus reserves | ||||||||||||
| Profit distributed to owners (or shareholders) | -3,004,207,328.27 | -3,004,207,328.27 | ||||||||||
| 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 | ||||||||||||
| Carry-forward of retained earnings from other comprehensive |
| income | ||||||||||||
| 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 | 3,739,666,108.27 | 167,572,013.86 | 1,464,752,476.00 | 18,872,792,775.01 | 25,709,535,849.14 |
For the year ended 31 December 2020
Monetary Unit: CNY
| Item | Year 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equity | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,706,816,950.12 | 192,332,738.05 | 1,464,752,476.00 | 11,892,694,057.56 | 18,721,348,697.73 | ||||||
| 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 | 3,706,816,950.12 | 192,332,738.05 | 1,464,752,476.00 | 11,892,694,057.56 | 18,721,348,697.73 | ||||||
| 3.Increases/decreases in the current period | -6,891,435.50 | 2,413,189,627.45 | 2,406,298,191.95 | |||||||||
| (“-” for decreases) | ||||||||||||
| (1) Other comprehensive income | -6,891,435.50 | 4,742,146,064.29 | 4,735,254,628.79 | |||||||||
| (2) Capital contributed or reduced by owners | ||||||||||||
| Capital contributions by owners | ||||||||||||
| Capital contributions by other equity instruments holders | ||||||||||||
| Amounts of share-based payments recognized in owners' equity | ||||||||||||
| Others | ||||||||||||
| (3) Profit distribution | -2,328,956,436.84 | -2,328,956,436.84 | ||||||||||
| Withdrawal of surplus reserves | ||||||||||||
| Profit distributed to owners (or shareholders) | -2,328,956,436.84 | -2,328,956,436.84 | ||||||||||
| 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 | ||||||||||||
| Carry-forward of retained earnings from other comprehensive income | ||||||||||||
| 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 | 3,706,816,950.12 | 185,441,302.55 | 1,464,752,476.00 | 14,305,883,685.01 | 21,127,646,889.68 |
3. Company Profile
3.1 Company Overview
Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Company" or "the Company"), formerly known asLuzhou Laojiao Brewery, was established in March 1950. On 20 September 1993, Luzhou Laojiaobrewery established a joint-stock limited company with fund-raising exclusively from its operationalassets. On 25 October 1993, the public offering of shares was approved by Sichuan Provincial People'sGovernment and CSRC with two documents of ChuanFuHan (1993) No.673 and FaShenZi (1993)No.108. After the 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 841,399,673 shares aftermultiple rights issues, among which the controlling shareholder, State Assets Management Bureau ofLuzhou (later renamed as State-owned Assets Supervision and Administration 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 of SASAC ofLuzhou decreased from 69.56% to 60.43%.
In November 2006, the Company implemented private placement, and the total share capital increasedfrom 841,399,673 shares to 871,399,673 shares. The shareholding ratio of SASAC of Luzhou decreasedfrom 60.43% to 58.35%.
As the end of 27 February 2007, SASAC of Luzhou sold 42,069,983 shares of the Company, and afterthe sale, it still held 466,375,156 shares of the Company, with its shareholding ratio reduced to 53.52%.
On 19 May 2008, the Company increased 522,839,803 shares of capital stock resulting from capitalreserve and undistributed profits transferred to increase capital stock. After the implementation, the totalshare capital reached 1,394,239,476 shares, among which, SASAC of Luzhou held 746,200,250 sharesof the Company, and the shareholding ratio was still 53.52%.
On 3 September 2009, the 300,000,000 shares and the 280,000,000 shares held by SASAC of Luzhouwere separately transferred to Luzhou Laojiao Group Co., Ltd. (hereinafter referred to as the "LaojiaoGroup") and Luzhou XingLu Investment Group Co., Ltd. (hereinafter referred to as the "Xinglu Group").After the transfer, Laojiao Group, Xinglu Group, and SASAC of Luzhou respectively held 300,000,000shares, 280,000,000 shares and 166,200,250 shares. So far, Laojiao Group became the first majorityshareholder and SASAC of Luzhou was the actual controller.
From 6 June 2012 to 20 November 2013, the first and second phases of the Company's equity incentiveplan were exercised. After the exercise, the total share capital of the Company was changed to1,402,252,476 shares.
On 10 April 2014 and 18 July 2016, SASAC of Luzhou transferred 81,088,320 shares and 84,000,000shares to Laojiao Group and Xinglu Group respectively. In addition, Laojiao Group has increased itsequity stake through the secondary market of 13,137,100 shares. So far, Laojiao Group, Xinglu Groupand SASAC of Luzhou held 394,225,489 shares, 365,971,142 shares and 1,111,930 shares respectively,with the shareholding ratios of 28.11%, 26.10% and 0.08% respectively.
On 23 August 2017, the Company issued CNY 62,500,000 ordinary shares (A shares) privately, raisinga total capital of CNY 3,000,000,000. After the additional issuance, the total capital stock of theCompany was changed to 1,464,752,476 shares. In addition, from 2017 to 2018, Laojiao Groupdecreased 13,137,100 shares that were increased through the secondary market from April 2014 toDecember 2015. After share reduction, Laojiao Group, Xinglu Group and SASAC of Luzhou held381,088,389 shares, 365,971,142 shares and 1,111,930 shares respectively, with the shareholdingratios of 26.02%, 24.99% and 0.08% respectively. Laojiao Group still was the first majority shareholderand SASAC of Luzhou still was the actual controller.
3.2 Registered address of the Company, company type, and headquarter address
Registered address and headquarter address of the Company are located in Sichuan Luzhou LaojiaoSquare and company type is other incorporated company (Listed).
3.3 Business nature of the Company and main business activity
Industry of the Company is the baijiu subdivision industry of the liquor and wine, beverage and refinedtea production industry.The main activity are research and development, production and sales of “National Cellar 1573”,”LuzhouLaojiao” and other baijiu series.The main products are: “National Cellar 1573 Series”,”Century-old Luzhou Laojiao JiaolingSeries” ,”Luzhou Laojiao Tequ”,”Touqu”,”Erqu” and other baijiu series.
3.4 The name of the controlling shareholder and the ultimate substantive controllerThe controlling shareholder is Luzhou Laojiao Group Co., Ltd.; the ultimate substantive control isSASAC of Luzhou.
3.5 Approval and submission of the financial report and its dateThe financial report is approved and submitted by the board of directors of the Company on 27 April2022.
3.6 Consolidated financial statement scope and their changes
(1) The 25 subsidiaries included in the consolidated financial statements for the current periodare listed as follows:
| Name of subsidiary | Abbreviation | Shareholding proportion(%) | Voting rights (%) | |
| Direct | Indirect | |||
| Luzhou Laojiao Brewing Co., Ltd. | Brewing company | 100.00 | 100.00 | |
Luzhou Red Sorghum Modern Agricultural Development Co.,Ltd.
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Red sorghum company | 60.00 | 60.00 | |
| Luzhou Laojiao Sales Co., Ltd. Note 4 | Sales company | 100.00 | 100.00 |
Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd.
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Nostalgic company | 100.00 | 100.00 |
Luzhou Laojiao Custom Liquor Co., Ltd. Note 1
| Luzhou Laojiao Custom Liquor Co., Ltd. Note 1 | Custom liquor company | 15.00 | 60.00 | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Selected company | 100.00 | 100.00 | |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | Guangxi Imported Liquor Industry | 100.00 | 100.00 | |
| Luzhou Dingli Liquor Industry Co., Ltd. | Dingli company | 100.00 | 100.00 |
Luzhou Dingyi Liquor Industry Sales Co., Ltd.
| Luzhou Dingyi Liquor Industry Sales Co., Ltd. | Dingyi company | 100.00 | 100.00 | |
| Luzhou Laojiao New Liquor Industry Co., Ltd. Note 4 | New Liquor Industry company | 100.00 | 100.00 | |
| Luzhou Laojiao Import and Export trade Co., Ltd. | Import and export company | 100.00 | 100.00 |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Boda marketing | 75.00 | 75.00 | |
| Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. | Bosheng Hengxiang | 100.00 | 100.00 | |
| Luzhou Laojiao Fruit Wine industry Co., Ltd. Note 2 | Fruit wine industry | 41.00 | 60.00 | |
| Mingjiang Co., Ltd. | Mingjiang company | 54.00 | 54.00 |
Luzhou Laojiao New Retail Co., Ltd.
| Luzhou Laojiao New Retail Co., Ltd. | New retail company | 40.00 | 100.00 | 100.00 |
| Luzhou Pinchuang Technology Co., Ltd. | Pinchuang company | 100.00 | 100.00 |
Luzhou Laojiao Tourism Culture Co., Ltd.
| Luzhou Laojiao Tourism Culture Co., Ltd. | Tourism culture | 100.00 | 100.00 | |
| Luzhou Laojiao International Development（Hong Kong）Co., Ltd. | Hong Kong company | 55.00 | 55.00 | |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | North America company | 100.00 | 100.00 |
Luzhou Laojiao Electronic Commerce Co., Ltd.
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Electronic Commerce company | 90.00 | 90.00 | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note 3 | Whitail liquor industry | 35.00 | 60.00 | |
| Luzhou Baonuo Biotechnology Co., Ltd. | Baonuo biotechnology | 100.00 | 100.00 |
Luzhou Laojiao Health Liquor Industry Co., Ltd.
| Luzhou Laojiao Health Liquor Industry Co., Ltd. | Health Liquor Industry | 100.00 | 100.00 | |
| Luzhou Laojiao Health Sales Co., Ltd. | Health sales | 100.00 | 100.00 |
Note 1: Although the Company holds less than 51% of the equity of Custom liquor company, among the five members ofthe board of directors, the Company has sent three people. The Company has actual control over Custom liquor company,so it is included in the scope of consolidation.Note 2: Although the Company holds less than 51% of the equity of Fruit wine industry, among the five members of theboard of directors, the Company has sent three people, and the chairman of the board (legal representative) is the directorsent by the Company. The Company has actual control over Fruit wine industry, so it is included in the scope ofconsolidation.Note 3: Although the Company holds less than 51% of the equity of Whitail liquor industry, among the five members of theboard of directors, the Company has sent three people. The Company has actual control over Whitail liquor industry andits subsidiaries, so it is included in the scope of consolidation.Note 4: On 28 October 2021, the subsidiary Sales Company of Luzhou Laojiao Co., Ltd. was renamed Luzhou LaojiaoSales Co., Ltd. And on 14 October 2021, the subsidiary Luzhou Dinghao Liquor Industry Sales Co., Ltd. was renamedLuzhou Laojiao New Liquor Industry Co., Ltd.
Details of the subsidiaries incorporated into the consolidated financial statements show on “7.1. Interestsin subsidiaries”
(2) Subsidiaries that are newly incorporated into the scope of consolidation in this period
| Name of subsidiary | Reason |
Luzhou Laojiao New Retail Co., Ltd.
| Luzhou Laojiao New Retail Co., Ltd. | Incorporated through investment |
(3) Liquidation and cancellation for subsidiaries in this period
| Name of subsidiary | Reason |
| Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd. | Liquidation cancellation |
| Luzhou Laojiao Selected Electronic Commerce Co., Ltd. | Liquidation cancellation |
Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd.
| Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. | Liquidation cancellation |
| Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co., Ltd. | Liquidation cancellation |
Details of changes in the scope of consolidation show on “6.5. Changes in consolidated scope for otherreasons”.
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 the preparation isbased on actual transactions and events in compliance with Accounting Standards for BusinessEnterprises and relevant guidance and explanation (the following called the ASBE) issued by Ministry ofFinance, and Rules on Company Information Disclosure and Preparation of Publicly Issued SecuritiesNo.15- General Rules on Financial Reporting Rules (2014 Revision) issued by CSRC.
4.2. Going concern
The Company’s business activities have adequate financial support. Based on the current informationobtained by the Company, comprehensively considering factors such as macro-policy risk, marketoperation risk, current or long-term profitability, debt repayment ability of the Company, as well as itsresource of financial support, the Company believes that it is reasonable to prepare the financialstatements on a going concern basis and there are no events or situations resulting in significant doubtsover going concern for at least 12 months.
5. Significant accounting policies and accounting estimatesThe disclosure requirements for related food and wine manufacturing business in the Self-regulatoryGuidelines No. 3 for Companies Listed on Shenzhen Stock Exchange - Industry Information Disclosureshall be observed.
5.1 The declaration about compliance with ASBE
The financial statements of the Company have been prepared in accordance with ASBE, and presenttruly and completely, the financial position and the Company’s and results of operations, changes inshareholders’ equity and cash flows. In addition, in all material respects, the financial statements of theCompany comply with disclosure requirements of the financial statements and their notes in accordancewith Rules on Company 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 to 31st 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 involving enterprises undercommon control and business combinations not involving enterprises undercommon control
(1) Business combination under common control
Assets and liabilities obtained by the Company from the combine through business combination undercommon control shall be measured at the book value as stated in the consolidated financial statementsof ultimate controlling party at the combination date. The share of the book value of the merged party’sowner’s equity in the consolidated financial statements is taken as the initial investment cost of long-termequity investments in individual financial statements. The capital reserve (stock premium or capitalpremium) is adjusted according to the difference between the book value of net asset acquired throughcombination and the book value of consideration paid for the combination (or total par value of sharesissued). If the capital reserve (stock premium or capital premium) is insufficient to offset, the retainedearnings shall be adjusted.
(2) Business combination not under common control
Assets paid, liabilities incurred or assumed and the equity securities issued as consideration forcombination shall be measured based on fair value on the acquisition date, the difference between fairvalue and its book value shall be included in current profit and loss. The Company shall recognize thedifference of the combination costs in excess of the fair value of the net identifiable asset acquired fromthe acquiree through combination as goodwill. After the review, if the combination costs are still in shortof the fair value of the net identifiable asset acquired from the acquiree through combination, include thedifference in the current profit and loss.Fees, commissions, and other transaction expenses paid on issuance of equity securities ascombination consideration in the business combination shall be included in the initial measurementamount of equity securities.
5.6 Preparation of consolidated financial statements
(1) Consolidated Financial Statement Scope
The scope of the Company’s consolidated financial statements is based on control, and all subsidiariescontrolled are included in the consolidation scope of the consolidated financial statements.
(2) Consolidation procedures
The consolidated financial statements are based on the financial statements of the Company and itssubsidiaries, and are prepared by the parent company with other relevant information. When preparing
consolidated financial statement, the Company considers the Group as an accounting entity, adoptsunified accounting policies, and applies the requirements of ASBE related to recognition, measurementand presentation to reflect the Group’s financial position, operating results and cash flows.
All the subsidiaries within the consolidation scope of consolidated financial statements shall adopt thesame accounting policies and accounting periods as those of the Company. If the accounting policies oraccounting periods of a subsidiary are different from those of the Company, the financial statements ofthe subsidiary, upon preparation of consolidated financial statements, shall be made necessaryadjustment based on its own accounting policies and accounting periods of the Company. Forsubsidiaries acquired from the business combination not under common control, the financial statementsshall be adjusted on the basis of the fair value of identifiable net assets on the date of purchase. For thesubsidiary acquired from the business combination under common control, its assets and liabilities(including the goodwill formed by the acquisition of the subsidiary by the ultimate controlling party) shallbe adjusted on the basis of the book value in the consolidated statements of the ultimate controllingparty.
The portion of a subsidiary’s equity, the current net profit and loss of subsidiaries, and the currentcomprehensive income attributable to non-controlling interests shall be separately presented asnon-controlling interests in consolidated balance sheet within owners' equity, below the net profit lineitem and below the total comprehensive income line item in the consolidated income statementrespectively. When the amount of current loss attributable to non-controlling shareholders of a subsidiaryexceeds the balance of the non-controlling shareholders’ portion in the opening balance of owner'sequity of the subsidiary, the excess shall be allocated against the non-controlling interests.
Acquisition of subsidiaries or businessDuring the reporting period, if the Company acquires subsidiaries from the business combination undercommon control, the opening balance in the consolidated balance sheet shall be adjusted. The income,expenses and profits of the newly acquired subsidiaries from the beginning to the end of the reportingperiod shall be included in the consolidated income statement. The cash flows of the newly acquiredsubsidiaries from the beginning to the end of the reporting period shall be included in the consolidatedstatement of cash flows. At the same time, the relevant items of the comparative information shall beadjusted as the combined entity existed since the control point of the ultimate controlling party.
If the Company can control the investee from the business combination under common control due toadditional investment or other reasons, the parties involved in the combine shall be deemed to adjust inthe current state when the ultimate controlling party starts to control them. For the equity investmentbefore obtaining control of the investee, the recognized relevant profit or loss and other comprehensiveincome and other changes in net assets between the later of acquisition date of previous equity and thedate on which both the investor and the investee are under common control and the combination dateshall respectively write-down the beginning retained earnings or current profits and losses during theperiod of comparative information.
During the reporting period, if the Company acquires subsidiaries from the business combination not
under common control, the opening balance in the consolidated balance sheet shall not be adjusted.The income, expenses and profits of the newly acquired subsidiaries from the acquisition date to the endof the reporting period shall be included in the consolidated income statement. The cash flows of thenewly acquired subsidiaries from the acquisition date to the end of the reporting period shall be includedin the consolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee not under common controldue to additional investment or other reasons, the Company shall re-measure the previously held equityinterests to its fair value on the acquisition date, and the difference shall be recognized as investmentincome. When the previously held equity investment is accounted for under equity method, any othercomprehensive income previously recognized and other equity changes (excluding othercomprehensive, net profit and loss and profit distribution ) in relation to the acquiree’s equity changesshall be transferred to profit and loss for the current period when acquisition took place, except for othercomprehensive income resulting from changes in net liabilities or net assets due to re-measurement ofdefined benefit plan by investee.
Disposal of subsidiaries and businessGeneral treatmentsDuring the reporting period, if the Company disposes subsidiaries, the income, expenses and profits ofthe newly disposed subsidiaries from the beginning to the disposal date shall be included in theconsolidated income statement. The cash flows from the beginning to the disposal date shall be includedin the consolidated statement of cash flows.
In case of loss of control over the investee due to partial disposal of the equity investment or otherreasons, the Company shall re-measure the remaining equity investment at its fair value at the date ofloss of control. The amount of the consideration obtained from the disposal of the equity and the fairvalue of the remaining equity, minus the net asset shares calculated continuously from the acquisitiondate based on the previous shareholding proportion and the goodwill, the difference shall be included inthe investment income of the period when the control is lost. Other comprehensive income related to theformer subsidiary’s equity investment of or other changes in owners' equity excluding net profit and loss,other comprehensive income and profit distribution shall be transferred to investment income for thecurrent period when control is lost. Other comprehensive income resulting from changes in net liabilitiesor net assets due to re-measurement of defined benefit plan by investee is excluded.
Disposal of subsidiaries by stepIf the Company loses control of a subsidiary is through multiple transactions by steps, the terms,conditions and economic impact of the disposal transaction shall be considered. When one or more ofthe following conditions may indicate that multiple transactions should be treated as a package oftransactions for accounting treatment:
a.These arrangements were entered into at the same time or in contemplation of each 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 one other arrangement;
d.One arrangement alone is not economically justified, but it is economically justified when consideredtogether with other arrangements
If the transactions of the disposal of the equity investment of the subsidiary until the loss of controlbelong to a package transaction, the Company shall account for as a transaction; However, thedifference between each disposal consideration received and the corresponding proportion of thesubsidiary’s net assets before the loss of control shall be recognized as other comprehensive income inthe consolidated financial statements and transferred into the profit and loss of the current period whenthe control is lost.
If the transactions from the disposal of the equity investment of the subsidiary to the loss of control arenot considered as a package transactions, the accounting treatment shall be conducted according to therelevant policies on the partial disposal of the equity investment of the subsidiary where control isretained before the loss of control. When the control is lost, the disposal shall be accounted for accordingto the general treatment.
Purchase of non-controlling interestsThe difference between the increase in the cost of long-term equity investment result from acquisition ofnon-controlling shareholders and the share of net assets of the subsidiary calculated continuously fromthe acquisition date or combination date based on newly shareholding proportion shall be adjusted toequity (share) premium of capital reserves in the consolidated balance sheet. If the capital reserve isinsufficient, any excess shall be adjusted 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 subsidiary without loss ofcontrol, the difference between disposal consideration and net assets of the subsidiary calculatedcontinuously since the acquisition date or the combination date related to the disposal of long-termequity investment shall be adjusted to equity (share) premium of capital reserves in the consolidatedbalance sheet. If the capital reserve is insufficient, any excess shall be adjusted against retainedearnings.
5.7 Classification of joint venture arrangements and the accounting treatmentmethod of common operation
(1) Classification of joint venture arrangements
A joint arrangement is classified as either a joint operation or a joint venture according to the structure,legal form, agreed terms and other facts and conditions of a joint arrangement. A joint arrangement thatis structured through a separate vehicle is usually classified as a joint venture. However, when a jointarrangement provides clear evidence that it meets any of the following requirements and complies withapplicable laws and regulations as a joint operation:
a. The legal form of the joint arrangement indicates that the parties that have joint control have rights tothe assets, and obligations for the liabilities, relating to the arrangement.b. The terms of the joint arrangement specify that the parties that have joint control have the rights to theassets, and the obligations for the liabilities, relating to the arrangement.
c. Other facts and circumstances indicate that the parties that have joint control have rights 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 the arrangement, andthe arrangement depends on the parties that have joint control on a continuous basis for settling theliabilities of the arrangement.
(2) Accounting by parties of a joint operator
A joint operator shall recognize the following items in relation to its interest in a joint operation, andaccount 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 other participants inthe joint venture, resulting from investment or sale of assets to the joint venture by the Company(excluding those assets constituting the business), prior to the sale of such assets to a third party. TheCompany shall fully recognize impairment loss when there are any impairment loss of invested or soldassets occurring in accordance with the ASBE No.8-Asset Impairment. The Company shall onlyrecognize the part of the profit and loss attributable to other participants in the joint venture before sellingthe assets and other assets purchased from the joint venture (excluding those assets constituting thebusiness) to a third party. When the impairment loss of the purchased assets is in accordance with theASBE No.8-Asset Impairment, the Company shall recognize such losses according to its share. Whenthe Company does not have common control over the joint venture, if the Company enjoys the assetsrelated to the joint venture and assumes the liabilities related to the joint venture, the accountingtreatment shall be conducted according to the above principles. Otherwise, the accounting treatmentshall be conducted 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 and deposits that canbe readily withdrawn on demand as cash. Cash equivalents are the Company’s short-term (due within 3months from purchase date), highly liquid investments that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of changes in value. Restricted bank deposits are notrecognized as cash and cash equivalents in the cash flow statement.
5.9 Foreign currency transactions and translation of foreign currency statements
(1) Foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in theforeign currency shall be translated into the amount in CNY currency at the spot exchange rate of thetransaction date. For the monetary items of foreign currencies, the translation is done according to spotrate of the balance sheet date. The exchange difference generated from the difference of spot rate of thecurrent balance sheet date and the time of initial recognition of a foreign currency or the previous
balance sheet date is charged to the profit or loss of the current period except that the exchangedifference generated from foreign currency borrowings relating to assets of which the acquisition orproduction satisfies the capitalization conditions is capitalized.Non-monetary items measured at fair value that is reflected in foreign currency at the end of the period,the Company shall firstly translate the foreign currency into the amount in functional currency at the spotexchange rate on the date when the fair value is determined, and then compare it with the originalfunctional currency amount. Difference between the translated functional currency amount and theoriginal functional currency amount is treated as profit or loss from changes in fair value (includingchanges in exchange rate) and is recognized in current profit and loss. If there is a non-monetary item ofavailable-for-sale financial assets, the differences are recorded into other comprehensive income.
(2) Translation of foreign currency statements
Assets and liabilities in the balance sheets shall be translated at the spot exchange rates on balancesheet date. Shareholders’ equity items, except for the item of "undistributed profits", are translated at thespot exchange rates on the dates when the transactions occur. Revenue and expense items in theincome statement are translated at the spot exchange rates on the dates when the transactions occur orat the exchange rate determined in a systematical and reasonable method and similar to the spotexchange rate on the day when the transactions occur. Differences arising from the above translations offoreign currency financial statements are separately listed under other comprehensive income in theconsolidated balance sheet. If the overseas business is partly disposed of, the foreign currency financialstatements exchange difference shall be calculated in proportion to the percentage of disposal andtransferred to gain or loss on disposal for the current period.Foreign currency cash flow and cash flow of foreign subsidiaries shall be translated at approximateexchange rate of spot rate on the date of cash flow.
5.10 Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liabilityor equity instrument of another entity. When the Company becomes a party to a financial instrumentcontract, the related financial asset or financial liability should be recognized.
(1) Classification, recognition and measurement of financial assets
Based on the business model of financial asset management and the contract cash flow characteristicsof financial assets, the Company classifies financial assets into: financial assets measured at amortizedcost; financial assets measured at fair value with their changes included into other comprehensiveincome; and financial assets measured at fair value with their changes included into currentprofits/losses.
At the initial recognition, financial assets are measured at fair value. For financial assets measured at fairvalue with their changes included into current profits/losses, the expenses involved in the transaction aredirectly recorded into current profits/losses; for other financial liabilities, the expenses involved in thetransaction are recorded into the initially recognized amount.
1) Financial assets measured at amortized cost
The business model in which the Company manages financial assets measured at amortized cost aimsto receive contract cash flow. Furthermore, the characteristics of the contract cash flow of such financialassets are consistent with basic borrowing and lending arrangements, which means that cash flowgenerated on a specific date serves only as payment for principal and interests based on the amount ofunpaid principal. The Company adopts the effective interest method for such financial interests,performs subsequent measurement of them at amortized cost, and includes the gains or losses fromderecognition, changes or impairment of them into current profits/losses.
2) Financial assets measured at fair value with their changes included into other comprehensive incomeThe business model in which the Company manages such financial assets both aims to receive contractcash flow and for the purpose of sale. Furthermore, the characteristics of the contract cash flow of suchfinancial assets are consistent with basic borrowing and lending arrangements. The Company measuresuch financial assets at fair value and include their changes into other comprehensive income, butrecord impairment losses or gains, exchange gains or losses and interest income calculated in theeffective interest method into current profits/losses.
At the initial recognition, the Company may specify non-trading equity instrument investment as afinancial asset measured at fair value with its changes included into other comprehensive income andshould recognize the dividend income according to regulations; the specification is irrevocable oncemade. When the financial asset is derecognized, the cumulative gains or losses previously included intoother comprehensive income should be transferred into retained earnings.
3) Financial assets measured at fair value with their changes included into current profits/lossesFor financial assets other than the above financial assets measured at amortized cost and financialassets measured at fair value with their changes included into other comprehensive income, theCompany classifies them as financial assets measured at fair value with their changes included intocurrent profits/losses. In addition, at the initial recognition, the Company specifies partial financial assetsas financial assets measured at fair value with their changes included into current profits/losses, in orderto eliminate or substantially reduce accounting mismatch. For such financial assets, the Companyperforms subsequent measurement using fair value and records changes in the fair value into currentprofits/losses.
(2) Classification, recognition and measurement of financial liabilities
At their initial recognition, financial liabilities are divided into financial liabilities measured at fair valuewith their changes included into current profits/losses and other financial liabilities. For financial liabilitiesmeasured at fair value with their changes included into current profits/losses, the expenses involved inthe transaction are directly recorded into the current profits/losses. For other financial liabilities, theexpenses involved in the transaction are recorded into the initially recognized value.
1) Financial liabilities measured at fair value with their changes included into current profits/lossesFinancial liabilities measured at fair value with their changes included into current profits/losses includetrading financial liabilities (including derivatives classified as financial liabilities) and the financialliabilities specified to be measured at fair value with their changes included into current profits/losses at
the initial recognition.
Trading financial liabilities (including derivatives classified as financial liabilities) are subsequentlymeasured at fair value, with changes in fair value recorded into current profits/losses, except for thoserelated to hedge accounting.
For those specified as financial liabilities measured at fair value with their changes included into currentprofits/losses, changes in the fair value of such liabilities caused by changes in the Company’s owncredit risk should be included into other comprehensive income. In derecognition of such liabilities,cumulative changes in their value caused by the Company’s own credit risk that have been recorded intoother comprehensive income should be transferred into retained earnings. Other changes in their fairvalue should be recorded into current profits/losses. If treatment of the impact of the Company’s owncredit risk changes of such financial liabilities in the above manner causes or expands accountingmismatch in profits/losses, the Company will include all gains or losses of such financial liabilities(including the amount of the impact of the Company’s own credit risk changes) into currentprofits/losses.
2) Other financial liabilities
Financial liabilities other than those formed from the transfer of financial assets not meetingderecognition conditions or continuous involvement into transferred financial assets and those outsidefinancial guarantee contracts are classified as financial liabilities measured at amortized cost. Suchfinancial liabilities should be subsequently measured at amortized cost and the gains or losses fromderecognition or amortization should be included into current profits/losses.
(3) Recognition basis and measurement method of transfer of financial assetsIf a financial asset meets any of the following conditions, it shall be derecognized: 1)The contractual rightfor collecting the cash flow of the financial asset has been terminated; 2)The financial asset has beentransferred and almost all the risks and remunerations in respect of the ownership of the financial assethas been transferred to the transferee; 3)The financial asset has been transferred, and although theenterprise neither transfers nor retains almost all the risks and remunerations in respect of the ownershipof the financial asset, it has abandoned its control over the asset.
If the enterprise neither transfers nor retains almost all the risks and remunerations in respect of theownership of the financial asset and does not abandon its control over the asset, the involved financialasset shall be recognized according to the level of continuous involvement of the transferred financialasset and the relevant liabilities shall be recognized accordingly. The level of continuous involvement ofthe transferred financial asset refers to the level of risk faced by the enterprise due to changes in thevalue of the financial asset.
If the overall transfer of the financial asset meets the recognition conditions, the difference between thecarrying value of the transferred financial asset as well as the consideration received from the transferand the cumulative amount of fair value changes originally-recorded into other comprehensive incomesshall be recorded into the current profits/losses.
If partial transfer of the financial asset meets the recognition conditions, the carrying value of thetransferred financial asset shall be apportioned at the relative fair value between the derecognition andunderecognition part. The difference between the summation of the consideration received from thetransfer and the cumulative amount of fair value changes originally-recorded into other comprehensiveincomes that should be apportioned to the derecognition part and the apportioned aforementionedcarrying value shall be recorded into the current profits/losses.
For a financial asset sold with the right of recourse or with the transfer of the financial asset endorsement,the Company shall decide whether almost all the risks and remunerations in respect of the ownership ofthe financial asset should be transferred. If they are transferred, the financial asset shall bederecognized; if they are retained, the financial asset shall not be derecognized; if they are neithertransferred nor retained, the Company will continue to decide whether the enterprise should retaincontrol over the asset and perform the accounting treatment according to the principles stated inprevious paragraphs.
(4) Derecognition of financial liabilities
When the current obligation of a financial liability (or a part of it) is relieved, the Company willderecognize the financial liability (or the part of it). When the Company (borrower) signs an agreementwith a lender to replace an original financial liability in the form of bearing a new financial liability and thecontract terms for the new financial liability differ from those for the original in substance, the originalfinancial liability should be derecognized and the new one should be recognized. When the Companymakes substantial changes to the contract terms of an original financial liability (or a part of it), theoriginal financial liability should be derecognized and a new financial liability should be recognizedaccording to the amended contract terms.
When a financial liability (or a part of it) is derecognized, the Company will include the differencebetween its carrying value and the consideration paid (including non-cash assets or liabilities borne thatare transferred out) into current profits/losses.
(5) Offsetting of financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial liabilities andmay execute the legal right currently and simultaneously, the Company plans to settle or simultaneouslyencash the financial assets in net amounts and pay off the financial liabilities, the financial assets andthe financial liabilities which are presented in the net amount after the mutual offset in the balance sheet.Other than that, they shall be presented separately in the balance sheet without the mutual offset.
(6) Method of determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant can receive for selling an asset or transferring aliability in an orderly transaction on the measurement date. For an existing financial instrument in anactive market, the Company adopts the quotations in the active market to determine its fair value.Quotations in the active market refer to prices that can be easily obtained from exchanges, brokers,industrial associations and pricing service institutions and represent the actual prices in the market
transactions happening in a fair trade. For a non-existing financial instrument in an active market, theCompany adopts the valuation technique to determine its fair value. The valuation technique includesreferences to familiar situations and the prices used by the parties voluntarily participating in the recentmarket transactions, as well as references to the present fair value of other financial instruments of thesame nature, discounted cash flow method and options pricing model. In the valuation, the Companyuses a valuation technique that is applicable in the current situation with sufficient data available andother information support, chooses input values that are consistent with the asset or liabilitycharacteristics considered by market players in related asset or liability transactions, and makemaximum effort to use related observable input values on a preferential basis. When it is unable orunfeasible to obtain related observable input values, unobservable will be used.
(7) Equity instruments
Equity instruments refer to the contracts that can prove the Company’s residual equity of assets after thededuction of all liabilities. The Company’s issuance (including refinancing), repurchase, sale orcancellation of equity instruments serve as the change treatment of equity. Transaction expensesrelated to the equity transactions are deducted from the equity. The Company does not recognizechanges in the fair value of equity instruments.
Dividends from the Company’s equity instruments distributed during the validity (including the “interests”from instruments classified as equity instruments) are treated as profit distribution.
(8) Impairment of financial instruments
Based on the expected credit loss, the Company treats financial assets measured at amortized cost anddebt instrument investment measured at fair value with its changes included into other comprehensiveincome by impairment and recognizes the provision for loss.
Credit loss means the difference between all contract cash flow discounted at the original effectiveinterest rate to be received according to contracts and all contract cash flow expected to be received,namely, the present value of all cash shortage. For a financial asset with credit impairment purchased byor originated from the Company, it should be discounted by the effective interest rate after creditadjustment to the financial asset.
For accounts receivable that do not contain significant financing components, the Company adoptssimplified measurement to measure loss provisions according to the amount equivalent to the expectedcredit loss for the entire duration.
For a financial asset other than those using the above simplified measurement, the Company assesseson each balance sheet date whether its credit risk has substantially increased since the initial recognition.If it has not and is in the first stage, the Company will measure the loss provision at the amountequivalent to the expected credit loss for the next 12 months and calculate the interest income accordingto the book balance and the effective interest rate; if it has substantially increased since the initialrecognition without credit impairment and is in the second stage, the Company will measure the lossprovision at the amount equivalent to the expected credit loss for the entire duration and calculate the
interest income according to the book balance and the effective interest rate; if credit impairment hasoccurred since the initial recognition and is in the third stage, the Company will measure the lossprovision by the amount equivalent to the expected credit loss for the entire duration and calculate theinterest income according to the amortization cost and the effective interest rate. For financialinstruments with low credit risks on balance sheet dates, the Company assumes that their credit riskshave not substantially increased since the initial recognition.
The Company assesses expected credit losses of financial instruments based on individual and groupassessment. The Company considers the credit risk characteristics of different customers and assessesthe expected credit losses of accounts receivable and other receivables based on account age portfolio.When assessing expected credit losses, the Company considers reasonable and well-foundedinformation on past matters, present conditions and forecast of future economic conditions.
When it no longer reasonably expects to recover all or part of the contract cash flow of financial assets,the Company will directly write down the book balance of such financial assets.
5.11 Notes receivable
The method of determining the expected credit loss of notes receivables and accounting treatmentmethod:
Divide notes receivables into various portfolios according to common risk characteristics based on thecredit risk characteristics of acceptors and determine the accounting estimate policies of expected creditloss:
| Portfolio name | Provision method |
| Bank acceptance bill portfolio | The management evaluates that this type has low credit risk and its fixed bad debt provision ratio is 0%. |
| Trade acceptance portfolio | The provision for impairment is made according to the expected loss rate with the same portfolio classification of accounts receivables |
5.12 Accounts receivables
The method of determining the expected credit loss of accounts receivables and accounting treatmentmethod:
As for accounts receivables, regardless of whether there is a significant financing component, theCompany always measures the provision for loss based on the amount equivalent to the expected creditloss over the entire life, and the resulting increase or reversal of provision for loss shall be included in thecurrent profit or loss as gains or losses on impairment. The accrual method is as follows:
(1) When there is objective evidence showing that an account receivable has incurred credit impairment,the Company shall make bad debt provision for the account receivable and recognize the expectedcredit loss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluatedat a reasonable cost, the Company shall divide the accounts receivables portfolio according to credit riskcharacteristics and measure the expected credit loss based on portfolios.
| Portfolio name | Provision method |
| Risk portfolio | Expected credit loss |
| Other portfolio | No bad debt provision |
Other portfolio refers to the normal intercourse funds among the Company and businesses under thesame control, the recovery of which are controllable with no risks. Thus, no bad debt provision wasmade.The Company combines the accounts receivables classified as risk portfolio in accordance with similarcredit risk characteristics (aging), and calculates the expected credit loss through the exposure at defaultand expected credit loss rate over the entire life based on the current situation and prediction of futureeconomic situation consulting historical credit loss experience. The comparative table of the credit lossrate is as follows:
| Aging | Expected loss provision rate % |
Within 1 year
| Within 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
3-4 years
| 3-4 years | 40 |
| 4-5 years | 80 |
| Over 5 years | 100 |
5.13 Accounts receivables financing
The accounts receivables financing of the Company refer to the notes receivables measured at fair valuethrough other comprehensive income on the balance sheet date. For more details, see Note 5.10Financial instruments.
5.14 Other receivables
The method of determining the expected credit loss of other receivables and accounting treatmentmethod:
As for other receivables, regardless of whether there is a significant financing component, the Companyalways calculates the expected credit loss through the exposure at default and expected credit loss ratein the next 12 months or over the entire life based on the current situation and prediction of futureeconomic situation consulting historical credit loss experience, and the resulting increase or reversal ofprovision for loss shall be included in the current profit or loss as gains or losses on impairment. Theaccrual method is as follows:
(1) When there is objective evidence showing that the other receivable has incurred credit impairment,the Company shall make bad debt provision for the other receivable and recognize the expected creditloss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluatedat a reasonable cost, the Company shall divide the other receivables portfolio according to credit riskcharacteristics and measure the expected credit loss based on portfolios.
| Portfolio name | Provision method |
| Risk portfolio | Expected credit loss |
| Other portfolio | No bad debt provision |
Other portfolio refers to the normal intercourse funds among the Company and businesses under thesame control, the recovery of which are controllable with no risks. Thus, no bad debt provision wasmade.The Company combines the other receivables classified as risk portfolio in accordance with similar creditrisk characteristics (aging), and calculates the expected credit loss through the exposure at default andexpected credit loss rate in the next 12 months or over the entire life based on the current situation andprediction of future economic situation consulting historical credit loss experience. The comparativetable of the credit loss rate is as follows:
| Aging | Expected loss provision rate % |
Within 1 year
| Within 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
3-4 years
| 3-4 years | 40 |
| 4-5 years | 80 |
Over 5 years
| Over 5 years | 100 |
5.15 Inventory
(1) Classification of inventory
Inventories are classified as: raw materials, goods in progress (including semi-finished goods), stockcommodities, dispatched inventories, revolving materials (including packing materials and low-costconsumables).
(2) Measurement method of dispatched inventories
The standard cost is used for daily accounting of raw materials, and the difference of material costshould be carried forward on a monthly basis to adjust the standard cost into the actual cost; The goodsin progress (including semi-finished goods) shall be accounted according to the actual cost, and theweighted average method shall be used when they are received and delivered. The actual cost of theinventory at the end of the month above shall be taken as the standard cost, and the delivery shall bepriced according to the standard cost. At the end of the month, the standard cost of the inventory at theend of the month 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 for stockobsolescenceAt the end of the period, inventory is measured according to the lower of cost and net realizable value.The difference between inventory cost and net realizable value is higher than the provision for stockobsolescence , which is recorded into current profit and loss. For inventories that are related to product
ranges produced and sold in the same district or used for the same or similar ultimate purpose and aredifficult to be measured separately from other inventories, the Company provides for stock obsolescenceas a whole. For inventories 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 of the finishedproducts is higher than the cost. If a decline in the value of materials shows that the net realizable valueof the finished products is lower than the cost, the materials shall be measured at the net realizablevalue.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization method of packing materials and low-cost consumables
It is amortized in full at once.
5.16 Contract assets
The Company presents contract assets or contract liabilities on the balance sheet according to therelationship between the fulfillment of its contract performance obligations and its customers’ payment.
Considerations that the Company has the right to collect for commodities transferred or servicesprovided to customers (and such right depends on other factors than time lapses) are presented ascontract assets. The Company presents the right possessed to collect consideration from customersunconditionally (only depending on the passing of time) as accounts receivable. Refer to “The method ofdetermining the expected credit loss of accounts receivables and accounting treatment method” for thedetail on the Company’s method of determining the expected credit loss of contract assets andaccounting treatment method.
5.17 Contract costs
Contract costs comprise incremental costs incurred as the Company obtains a contract, and costs forcontract performance. Incremental costs incurred as the Company obtains a contract refer to those costswhich will not incur without entering into a contract (such as sales commission). If it is expected that thecosts are recoverable, the Company will recognize the costs incurred to obtain a contract as one form ofassets. In case that the term of asset amortization is shorter than one year or one normal operating cycle,the costs will be recognized as profit and loss of the current period after occurrence.
If the costs incurred from contract performance fall outside the inventory or the scope of other enterpriseaccounting standards and satisfy all of the following conditions, the Company will recognize the costs forcontract performance as assets: a) The costs are directly related to one existing contract or contract thatis expected to be obtained; b) The costs enrich the Company's resources for future contractperformance (including continual fulfillment); c) The costs are estimated to be recovered.
Assets recognized from costs incurred to obtain a contract and costs for contract performance
(hereinafter referred to as "assets related to contract costs") will be amortized based on the basis thesame with the income from commodities or services related to the assets, and will be recognized asprofit and loss of the current period. In case that the book value of assets related to contract costs ishigher than the difference of the two items below, the Company will set aside provisions for assetsimpairment to deal with the extra part, and recognize that part as impairment losses: a) Estimatedresidual consideration to be obtained from transfer of commodities or services related to the assets; b)Estimated costs incurred from transfer of the relevant commodities or services.
5.18 Assets held for sale
(1) Classification of non-current assets held for sale or disposal groups
The Company shall classify the non-current assets or disposal group meeting the following conditionsinto the held-for-sale category: The assets (or disposal group) must be available for immediate sale in itspresent condition subject only to terms that are usual and customary for sales of such assets (ordisposal groups); Its sale must be highly probable.; The Company has already made a decision todispose the component and has a commitment from the purchaser, the transfer will be completed withinone year.
The non-current assets or disposal group acquired by the Company for resale shall be divided into theheld-for-sale category on the acquisition date if it meets the condition that "the sale is expected to becompleted within one year" and if it is likely to meet other conditions for the held-for-sale category withina short period (usually three months).
Due to one of the following reasons that the Company is unable to control, leading to the transactionsuncompleted with non-related party within one year, and the Company still commits to sale non-currentassets or disposal groups, it can continue to account for non-current assets or disposal groups asheld-for-sale: the buyer or any other party accidentally set sale extension condition. The Company has totake action in time according to these conditions and the extension problem is expected to be solvedwithin one year; In rare cases, the Company has taken the necessary steps and re-satisfy the hold forsale category condition within the first year for the new circumstances which caused it unable tocomplete the sale of the non-current assets or disposal group within one year.
(2) Measurement of non-current assets or disposal groups held for sale
a. Initial measurement and subsequent measurementWhen the Company measure a non-current asset or disposal group held for sale initially or re-measureat balance sheet date subsequently, the impairment loss should be recognized if the book value ishigher than fair value less costs to sell at the amount of the difference of these two in profit and loss, theprovision for assets held for sale need to be recognized at the same time.
For the non-current assets or disposal groups divided into held-for-sale category on the acquisition date,they shall be measured as the lower of the initial measurement amount and the net amount afterdeducting the selling expenses from the fair value under the assumption that it is not divided intoheld-for-sale categories at the initial measurement. Except for the non-current assets or the disposal
groups obtained in the enterprise merger, the difference caused by the non-current assets or thedisposal groups taking the net amount after the fair value minus the selling expenses as the initialmeasurement amount shall be recorded into the current profit and loss.
For the impairment of disposal group, it should write off goodwill if existing, and then write down therelated assets proportionally.
Depreciation or amortization should cease for the non-current asset held for sale. Interest and othercharges on liabilities in 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 balance sheet date increasesafter the fair value minus the selling expenses, the amount previously written down shall be reversed,and the amount of the impairment loss recognized after being classified as the held-for-sale shall bereversed, and the reversed 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 balance sheet date increasesafter the fair value deducting the selling expenses, the amount previously written down shall be reversed,and the amount of the impairment loss recognized as non-current assets after being classified as theheld-for-sale shall be reversed, 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 losses recognized beforethe classification of the held-for-sale shall not be reversed.
The subsequent reversed amount of the impairment loss recognized by the disposal groups held for saleshall be increased in proportion to the book value of non-current assets except goodwill in the disposalgroups.
c. The accounting treatment that does not continue to be classified as held-for-sale and the terminationof recognitionNon-current assets or disposal groups that are no longer divided into held-for-sale category ornon-current assets are removed from disposal groups held for sale because of no longer meeting thecondition of classification of held-for-sale, they are measured at lower of the following two: book valuebefore being classified as the held-for-sale considering depreciation, amortization or impairment thatshould have been recognized under the assumption that it is not divided into held-for-sale categories;and recoverable amount.
When terminating the recognition of the non-current assets held for sale or the disposal groups, theunrecognized gains or losses shall be recorded into the current profit and loss.
5.19 Long-term receivables
For more details, see Note 5.10 Financial instruments.
5.20 Long-term equity investment
(1) Judgment criteria of common control and significant influence
Common control on an agreement with other participants refers to the Company share control with otherparticipants on an arrangement according to relevant conventions, which exists only when decisionsabout the relevant activities require the unanimous consent of the parties sharing control. Thisarrangement belongs to joint venture. Where the joint venture arrangement is made by a separate entityand the Company is judged to have rights to the net assets of such a separate entity according to therelevant conventions. Such a separate entity shall be regarded as a joint venture and accounted by theequity method. If the Company is judged to be not entitled to the net assets of the separate entityaccording to relevant conventions, the separate entity shall be regarded as a joint venture and theCompany shall recognize the items related to the shares of the joint venture and perform accountingtreatment in accordance with relevant accounting standards.The term ‘significant influence’ refers to the power to participate in decision-making on the financial andoperating policies of the investee, but with no control or joint control over the formulation of these policies.The Company judges that it has a significant impact on the invested entity through one or more of thefollowing situations and taking all the facts and circumstances into consideration:
a. Dispatch representatives to the board of directors or similar authorities of the investee.b. To participate in the financial and business policy making process of the investee.c. Significant transactions with the investee.d. Dispatch management personnel to the investee.e. 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 assets paid or assumedliabilities and the equity securities issued by the acquirer, on the merger date, the initial investment costof long-term equity investment shall be taken as the share of the owner's equity of the investee in thebook value of the final control party's consolidated financial statements. If the investee under businesscombination under common control can be controlled due to additional investment or other reasons, theinitial investment cost of long-term equity investment shall be determined on the merger date accordingto the share of the net assets of the investee in the book value of the final control party's consolidatedfinancial statements. 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 equity investment before themerger and the new consideration of acquiring shares on the merger date shall be recorded to adjust theequity premium. If the equity premium is insufficient to be written down, the retained earnings shall bewritten down.
Business combination not under common control：The Company takes the initial investment cost oflong-term equity investment as the merger cost determined on the purchase date. If the investee can becontrolled under business combination not under common control due to additional investment or otherreasons, the previous book value of the equity investment held plus the sum of the newly addedinvestment cost shall be taken as the initial investment cost calculated according to the cost method.
b. Long-term equity investment obtained by other meansFor the long-term equity investments obtained by cash paid, the Company recognizes their fair value asthe initial investment costs.
For the long-term equity investments acquired by the issue of equity securities, the initial investment costshall be the fair value of the equity securities issued.
For long-term equity investments obtained by non-monetary assets exchange, under the condition thatan exchange of non-monetary assets is of commerce nature and the fair value of assets exchanged canbe reliably measured, non-monetary assets traded in is initially stated at the fair value of the assetstraded out, unless there is conclusive evidence indicating that the fair value of the assets traded in ismore reliable; if the above conditions are not satisfied, initial investment costs of long-term equityinvestments traded in shall be recognized at the book value of the assets traded out and the relevanttaxes and surcharges payable.
For long-term equity investments obtained by debt restructuring, the Company recognizes the fair valueof shares of debt-for-equity swap as the initial investment costs.
(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 the cost method. Forlong-term equity investments accounted at the cost method, except cash dividends or profits declaredbut not yet distributed which are included in the actual payments or the consideration actually paid forthe investment, the cash dividends or profits declared by the investee shall be recognized as theinvestment income 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 influence over the investee, theequity method is adopted for accounting. For long-term equity investments measured at the equitymethod, if the initial investment costs are higher than the investor’s attributable share of the fair value ofthe investee’s identifiable net assets, no adjustment will be made to the initial costs of the long-termequity investments; if the initial investment costs are lower than the investor’s attributable share of thefair value of the investee’s identifiable net assets, the difference shall be recognized in current profit andloss.
The Company shall, according to the shares of net profits and other comprehensive income realized bythe investee that shall be enjoyed or borne by the Company, recognize the profit and loss on theinvestments and adjust the book value of the long-term equity investments. When recognizing the netprofits and losses and other comprehensive income of the investee that the Company shall enjoy or bear,the Company shall make a recognition and calculation based on the net book profits and losses of theinvestee after appropriate adjustments. However, where the Company is unable to obtain the relevantinformation due to failure to reasonably determine the fair value of the investee’s identifiable assets,minor difference between the investee’s identifiable assets and the book value thereof or other reasons,the profits or losses on the investments shall be directly calculated and recognized based on the netbook profits and losses of the investee. The Company shall calculate the part distributed from cashdividends or profits declared by the investee and correspondingly reduce the book value of the long-termequity investments. When recognizing the income from investments in associates and joint ventures, theCompany shall write off the part of incomes from internal unrealized transactions between the Companyand associates and joint ventures which are attributable to the Company and recognize the profit andloss on investments on such basis. Where the losses on internal transactions between the Company andthe investee are impairment of related assets, full amounts of such losses shall be recognized. Profit andloss from internal unrealized transactions between the Company’s subsidiaries included into thecombination scope and associates and joint ventures shall be written off according to the aboveprinciples and the profit and loss on investments thereafter 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 thefollowing sequence: Firstly, write off the book value of the long-term equity investments; where the bookvalue of the long-term equity investments is insufficient to cover the loss, investment losses arerecognized to the extent that book value of long-term equity which form net investment in the investee inother substances and the book value of long-term receivables shall be written off; after all the abovetreatments, if the Company still assumes additional obligation according to investment contracts oragreements, the obligation expected to be assumed should be recognized as provision and included intothe investment loss in the current period. If the investee is profitable in subsequent accounting periods,the Company shall treat the loss in reverse order against that described above after deductingunrecognized share of loss: i.e. write down the book value of the recognized provision, then restore thebook value of long-term interests which substantially form net investments in the investee, then restorethe book value of long-term investments, and recognize investment income at the same time.
5.21 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 both and can bemeasured and sold separately. The Company’s investment property includes land use right already rent,land use right held for appreciation and then sold, and buildings already rent.
Initial RecognitionWhen the Company can obtain the rental income or value-added income related to the investment
property and the cost of the investment property that can be measured reliably, the Company will initiallymeasure it according to the actual expenditure of purchase or construction:
The cost of the purchased investment property includes the purchase price and related taxes directlyattributable to the asset;The cost of self-built investment property consists of the necessary expenses incurred before the assetreaches the intended use condition;The cost of the investment property obtained by other means shall be recognized in accordance withrelevant accounting standards.
Subsequent measurementIn general, the Company adopts the cost model to measure the follow-up expenditure of investmentproperty. The depreciation or amortization of investment property shall be carried out in accordance withthe accounting policies for the Company's fixed assets or intangible assets.
If there is solid evidence suggests that the investment property acquired can be measured at fair valuecontinuously and reliably, the Company can use fair value model for subsequent measurement. For theinvestment property measured at fair value model, the Company does not provide depreciation oramortization and adjusts its book value based on the fair value of investment property at the balancesheet 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 investment property will betransferred to other assets.
5.22. Fixed assets
(1) Recognition of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, providing services,renting or business management with useful life exceeding one accounting year. Fixed assets arerecognized when the following criteria are satisfied simultaneously: It is probable that the economicbenefits relating to the fixed assets will flow into the Company; the cost of the fixed assets can bemeasured reliably.
(2) Depreciation of fixed assets
| Category | Depreciation method | Estimated useful life (Year) | Estimated residual value rate (%) | Annual depreciation rate (%) |
| Buildings and Constructions | Straight-line method | 10－45 | 5% | 9.50%－2.11% |
| Special equipment | Straight-line method | 5－35 | 5% | 19.00%－2.71% |
| Universal equipment | Straight-line method | 4－25 | 5% | 23.75%－3.80% |
| Transportation equipment | Straight-line method | 6 | 5% | 15.83% |
| Other equipment | Straight-line method | 4－16 | 5% | 23.75－5.94% |
Except for fixed assets still in use after full depreciation, the Company depreciates all fixed assets andcalculates the depreciation in the straight-line depreciation method.Based on the nature and use of fixed assets, the Company determines their service life and estimatednet salvage value and reviews their service life, estimated net salvage value and depreciation method atthe end of the year. Changes in the service life, estimated net salvage value and depreciation method ofthe same type of assets are treated as changes in accounting estimation.
(3) Recognition standard, valuation method and depreciation method for fixed assets acquiredunder financing leaseA finance lease refers to a lease where almost all the risks and rewards, related to the ownership of theleased asset, are substantially transferred, regardless of whether the ownership is eventually transferredor not. The policy for the accrual of the depreciation of the leasehold property for the fixed assetsacquired under the finance lease was consistent with that adopted for the Company's fixed assets. Ifthere is reasonable assurance that the Company will obtain the ownership of the leased assets when thelease term expires, the leased 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 the lease term expires,the leased assets should be depreciated over the shorter of the lease term or the useful life of the leasedassets.
5. 23. Construction in progress
(1) Construction in progress refers to various construction and installation works carried out for theconstruction or repair of fixed assets, including the actual expenditure incurred in new construction,reconstruction and expansion, and the net value of fixed assets transferred from the reconstruction andexpansion projects.
(2) Construction in progress is accounted on an individual project basis with actual cost valuationmethod. The borrowing costs incurred before the projects reach the intended use condition shall beincluded in the project cost. The fixed assets shall be carried forward in the month when the project isqualified for acceptance and delivery for use. For those that have reached the intended use condition buthave not yet completed the final account, from the date of reaching the intended use condition,according to the project budget, construction cost or the actual cost of the project, the cost transferred tothe fixed assets 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 be adjustedaccording to the actual cost, but the amount of depreciation accrued shall not be adjusted.
(3) The loan interest and related expenses incurred during the construction period shall be capitalizedinto the cost of the construction in Progress.
(4) On the balance sheet date, the construction in progress is recognized at the lower of book value and
recoverable amount.
5. 24. Borrowing costs
(1) Scope of borrowing costs and its capitalization conditions
The Company’s borrowing costs capitalized during period of capitalization are relevant loan expensesdirectly attributable to the assets eligible for capitalization, including interest thereon, amortization ofdiscounts or premiums, ancillary expenses and exchange differences incurred from foreign currencyloan, etc.Borrowing costs are capitalized when the following three conditions are met simultaneously: ① the assetexpenditure has occurred, ② the borrowing costs have occurred, ③ the purchase and constructionactivities necessary to make the assets reach the intended use condition have started.
(2) Recognition of capitalized amounts
The capitalized amount of borrowing expenses is calculated as follows: As for special loan borrowed foracquiring and constructing or producing assets eligible for capitalization, borrowing costs of special loanactually incurred in the current period less the interest income of the loans unused and deposited in bankor return on temporary investment should be recognized as the capitalization amount of borrowing costs.As for general loans used for acquiring and constructing or producing assets eligible for capitalization,the interest of general loans to be capitalized should be calculated by multiplying the weighted averageof asset disbursements of the part of accumulated asset disbursements in excess of special loans by thecapitalization rate of used general loans. During the period of capitalization, the capitalized amount ofinterest of each accounting period 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 the period byeffective interest method. Auxiliary expenses incurred from special loans before the acquired orconstructed assets eligible for capitalization reach the working condition for their intended use or saleshould be capitalized when they incur and charged to the costs of assets eligible for capitalization; thoseincurred after the acquired or constructed assets eligible for capitalization reach the working condition fortheir intended use or sale should be recognized as costs according to the amounts incurred when theyincur and charged to the current profit or loss.
(3) Recognition of capitalization rate
For a special loan for the purchase and construction of fixed assets, the capitalization rate is the interestrate of the loan;For more than one special loan for the acquisition and construction of fixed assets, the capitalization rateis a weighted average interest rate of these loans.
(4) Capitalization suspension of borrowing costs
If the acquisition and construction or production activities of assets eligible for capitalization areinterrupted abnormally and this condition lasts for more than three months, the capitalization ofborrowing costs should be suspended. The borrowing costs incurred during interruption are charged toprofit or loss for the current period, and the capitalization of borrowing costs continues when the
acquisition and construction or production activities of the asset resume.
(5) Capitalization cessation of borrowing costs
Capitalization of borrowing costs should cease when the acquired and constructed or produced assetseligible for capitalization have reached the working condition for their intended use or sale. Borrowingcosts incurred after the assets eligible for capitalization have reached the working condition for theirintended use or sale should be recognized as the current profit and loss when they incur. If parts of theacquired and constructed or produced assets are completed separately but the assets cannot be used orsold externally until overall completion, the capitalization of borrowing costs should cease at the time ofoverall completion of the said assets.
5. 25. Right-of-use assets
Refer to Note 5.42 Lease for the detail.
5. 26. Intangible assets
(1) Measurement method, useful life, impairment test
Measurement methoda. Costs of intangible assets purchased include purchase price, related tax and expenses and otherexpenditure that can be distributed to the asset directly to reach its expected use.b. Intangible assets invested by investors shall be valued at the value agreed upon in the investmentcontract or agreement;c. Expenses on the research phase of internally researched and developed intangible assets shall beincluded in the current profit and loss when they incur; The expenditures incurred in the developmentstage of the internal research and development projects shall be recognized as intangible assets whenthe following conditions are met; otherwise, they shall be recorded into the current profit and loss whenthey 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 economic benefits shall be proved,including being able to prove that there is a potential market for the products manufactured by applyingthe intangible assets or there is a potential market for the intangible assets themselves or theintangible assets will be used internally;iv. It is able to finish the development of the intangible assets, and able to use or sell the intangibleassets, with the support of sufficient technologies, financial resources and other resources.v. The expenditure attributable to the intangible asset during its development phase can be measuredreliably.d. If payment of the purchase price of intangible assets can be deferred and exceeds normal creditconditions, the purchase has the nature of finance in fact and cost of the intangible asset shall bedetermined on the basis of present value of the purchase price. The difference between the amountactually paid and the present value of the purchase price should be recorded into current profit or loss
other than those should be capitalized during the credit period.Useful life and amortization methodFor intangible assets with limited useful life, amortization shall be carried out according to thestraight-line method within the period that brings economic benefits to the enterprise. At the end of eachperiod, the useful life and amortization method of intangible assets with limited service life shall bereviewed. 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 it is impossible toforesee the term in which intangible assets bring economic benefits to the enterprise. Intangible assetswith uncertain useful life shall not be amortized during the holding period, and the life of intangible assetsshall 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 shall continue during each accounting period. At the end of each period, the usefullife of intangible assets with uncertain service life shall be reviewed.
Impairment testOn the balance sheet date, intangible assets are valued at the lower of book value and recoverableamount.
(2) Internal research and development expenditure accounting policy
The expenditures incurred in the development stage of the internal research and development projectsshall be recognized as intangible assets when the following conditions are met; otherwise, they shall berecorded into the current profit and loss when they 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 benefits shall be proved,including being able to prove that there is a potential market for the products manufactured by applyingthe intangible assets or there is a potential market for the intangible assets themselves or the intangibleassets will be used internally;d. It is able to finish the development of the intangible assets, and able to use or sell the intangible assets,with the support of sufficient technologies, financial resources and other resources.e. The expenditure attributable to the intangible asset during its development phase can be measuredreliably.Development expenditures that have been recorded into profit and loss in previous periods are notrecognized as assets in subsequent periods. The capitalized expenditure in the development stage islisted as development expenditure in the balance sheet, and it will be recorded into intangible assetsfrom the date when the project reaches its intended purpose.
5. 27. Long-term assets impairment
On the balance sheet date, the Company makes a judgment on whether there are signs of possibleimpairment of long-term assets. If there are impairment indicators of non-current assets, the Companyestimates the recoverable amount based on individual asset. If recoverable amount of individual asset isdifficult to be estimated, the Company should recognize the recoverable amount of the asset groupwhich the individual asset belongs to.
The recoverable amount is the higher of fair values less costs of disposal and the present values of thefuture cash flows expected to be derived from the asset.If the measurement result of recoverable amount shows that recoverable amount of the non-currentassets is less than its book value, the book value shall be written down to the recoverable amount, andthe amount written down shall be recognized as the impairment loss of assets, recorded into the currentprofit and loss, and the corresponding impairment provision of assets shall be made at the same time.Once impairment loss stated above is recognized, reversal is not allowed in the subsequent accountingperiods.After the recognition of the impairment loss, the depreciation or amortization expense of the impairmentasset shall be adjusted accordingly in the future period so as to systematically apportion the adjustedbook value of the asset (deducting the expected net salvage value) within the remaining service life ofthe asset.The Company should perform impairment test for goodwill and intangible assets with indefinite life atleast 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 animpairment test. When the Company performs an impairment test on relevant asset group or asset groupportfolio including goodwill, if there are signs of impairment, the Company shall firstly perform animpairment test on asset group or asset group portfolio excluding goodwill and calculate the recoverableamount, and compare with the related book value, recognize the corresponding impairment loss. Then,the Company performs an impairment test on relevant asset group or asset group portfolio includinggoodwill, and compares the book value of the relevant asset groups or asset group portfolio (includingproportional book value of goodwill) with its recoverable amount. If the recoverable amount of relevantasset group or asset group portfolio is less than its book value, the Company shall recognize impairmentloss of goodwill.
5. 28. Long-term deferred expenses
Long-term deferred expenses shall be initially measured according to the actual costs incurred. It isamortized using the straight-line method over the beneficial period. If it cannot benefit the followingaccounting period, the amortized value of the item that has not been amortized will be transferred to thecurrent profit and loss.
5. 29. Contract liabilities
The recognition method of contract liabilities: The Company presents contract assets or contractliabilities on the balance sheet according to the relationship between the fulfillment of its contractperformance obligations and its customers’ payment. Obligations to be fulfilled by the Company oftransferring commodities or providing services to customers, as the Company has received or shouldreceive customers’ considerations, are presented as contract liabilities.
5. 30. Employee benefits
(1) Accounting treatment method of short-term benefits
Short-term benefits are the benefits that the Company expects to pay in full within 12 months after thereporting period in which the employee provided relevant services, excluding the compensation foremployment termination. Accrued short term benefits will be recognized as liability during the accountingperiod in which 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 benefits
a. Defined contribution planThe defined contribution plan of the Company includes payments of basic pension and unemploymentinsurance calculated according to the local payment base and proportion. The amount shall be includedinto the profit and loss or the relevant assets cost for the accounting period in which the employeeprovides the service to the Company.b. Defined benefit planAccording to the formula determined by the expected accumulative projected unit credit method, theCompany will record the benefit obligation generated by the defined benefit plan belonging to the periodduring in which the employee provides the service into the current profit and loss or the relevant assetscost.The deficit or surplus resulting from the present value minus the fair value of the assets of a definedbenefit plan is recognized as a net liability or net asset of a defined benefit plan. If there is surplus in thedefined benefit plan, the net assets of the defined benefit plan shall be measured at the lower of thesurplus and the upper limit of assets of the defined benefit plan.All defined benefit plan obligations, including those expected to be paid within the twelve monthsfollowing the end of the annual reporting period in which the employee provides the service, arediscounted based on the market yield and high quality corporate bonds in an active market that matchthe duration and currency of defined benefit plan obligations on the balance sheet date.The service costs generated by the defined benefit plan and the net interest on net liabilities or netassets of the defined benefit plan are included in the current profit and loss or relevant assets cost;Changes in net liabilities or net assets generated by the re-measurement of the defined benefit plan areincluded in other comprehensive income and are not reversed to profit and loss in subsequentaccounting periods.At the time of settlement of the defined benefit plan, the settlement gains or losses shall be recognizedaccording to the difference between the present value of the obligations of the defined benefit plan andthe settlement price determined on the settlement date.
(3) Accounting treatment method of termination benefits
Employee benefits liabilities shall be recognized and included into profit or loss for the current period onthe earlier date of the two following circumstances:
a. When the Company is not able to withdraw the benefits from termination of employment or resignation
persuasion unilaterally;b. When the Company recognizes costs and fees relevant to reforming the termination benefits payment.As for the termination benefits that cannot be fully paid within 12 months after the end of the annualreport period, the Company shall choose an appropriate discount rate and record it into current profit andloss based on it.
(4) Accounting treatment method of other long-term employee benefits
Other long-term employee benefits are all employee benefits other than short-term benefits,post-employment benefits and termination benefits.Other long-term employee benefits provided by the Company to the employee that meet the conditionsof the defined contribution 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 assets of otherlong-term employee benefits shall be recognized and measured in accordance with the relevantprinciples of the defined benefits plan.
5. 31. Lease liabilities
Refer to the Note 5.42 Lease for details.
5. 32. Estimated liabilities
(1) Recognition criteria of estimated liabilities
If the contingent obligations meet the following conditions simultaneously, the Company shall recognizeit as an estimated liability:
This obligation is the Company's current obligation; the performance of this obligation is highly likely toresult in an outflow of economic benefits from the Company; The amount of the obligation can bemeasured reliably.
(2) Measurement method of estimated liabilities
The Company's estimated liabilities are initially measured in terms of the best estimate of theexpenditure of fulfilling the relevant current obligations.For determining the best estimate, the Company takes various factors into account such as the risk,uncertainty and time value of money related to contingencies. If the time value of money has a significantimpact, the best estimate is determined by discounting the relevant future cash outflows.The best estimate is processed as follows:
Where there is a continuous range (or range) of required expenditures and the probability of theoccurrence of various results within the range is same, the best estimate is determined according to themean of the middle value of the range, namely the mean value of the upper and lower limits.Where there is no continuous range (or range) of required expenditures, or where there is a continuousrange but the possibility of various outcomes within the range is different, if the contingencies involve asingle item, the best estimate is determined according to the most likely amount; If the contingenciesinvolve more than one item, the best estimate is calculated 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 of the Companyare expected to be compensated by a third party, the amount of compensation shall be recognized as anasset when it is basically confirmed that it can be received, and the confirmed amount of compensationshall not exceed the book value of the estimated liabilities.
5. 33. Share-based payment
(1) The type of share-based payment
Share-based payment is classified as equity-settled share-based payment and cash-settled share-basedpayment.
(2) The method of determining the fair value of equity instruments
For equity-settled share-based payment related with employees, the equity instrument is measured atfair value. The cash-settled share-based payment shall be measured according to the fair value of theliabilities calculated and determined on the basis of shares or other equity instruments undertaken by theCompany.For the fair value of the stock option granted, the fair value is determined by using the stock optionpricing model, and the following factors are taken into account: the current price of the underlying shares,the exercise price of the option, the risk-free interest rate within 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 exercised
For the equity-settled share-based payment settled immediately after the grant, the fair value of theequity instrument shall be included in the relevant costs or expenses on the grant date, and the capitalreserve shall be increased accordingly. Grant date means the date on which the share-paymentagreement is approved.For the equity-settled share-based payment, in which the services during waiting period are completedand the performance conditions are met, in return for services of employees, on each balance sheetdate during waiting period, the current obtained service shall be included in the relevant costs orexpenses and the capital reserves in accordance with the fair value of the equity instruments on thegrant date, based on best estimate of the number of vested equity instruments, and the subsequentchanges in fair value shall not be recognized. On each balance sheet date during waiting period, theCompany makes the best estimate based on the latest available employee number change and othersubsequent information, and modifies the number of equity instruments for the estimated vesting. On thevesting date, the final expected number of vesting instruments is the same as the actual number ofvesting instruments.
(4) Relevant accounting treatment of implement, modification and termination of share-based paymentplanFor equity-settled share-based payment, no adjustments will be made to the recognized costs and totalowners' equity after the vesting date. On the vesting date, the Company shall recognize the share capitaland the equity premium according to the exercise situation, and carry forward the capital reserverecognized in the waiting period.
No matter how it modifies the terms and conditions of the granted equity instruments or it cancels thegranted equity instruments or its settlement, the equity instruments granted by the Company shall berecognized at fair value on the grant date and it measures obtained the corresponding services, unless itcannot be vested because it cannot meet the vesting conditions of equity instruments (except marketconditions).
5. 34. Revenue
Accounting policies for recognition and measurement of revenue
(1) Basic principles of revenue identification
The Company recognizes revenue when it has fulfilled the performance obligations under the contract,that is, when the customers obtain the control of relevant goods or services, at the transaction priceallocated to the performance obligations.Performance obligations refer to the Company's promise that it will transfer clearly distinguishable goodsor services to customers under the contract.Obtaining control of related goods refers to that customers can control the use of the goods and obtainalmost all the economic benefits from the goods.The Company will evaluate the contract on the contract start date, identify each individual performanceobligation contained in the contract, and judge whether each individual performance obligation will beperformed within a certain period of time or at a certain point in time. If one of the following conditions ismet, and the performance obligation are performed within a certain period of time, the Company willidentify revenue within a period of time according to the performance progress: a. The customers obtainand consume the economic profits while the Company performs the contract. b. The customers cancontrol the products under construction during the performance of the Company; c. The productsproduced during the performance of the Company cannot be replaced, and the Company has the right tocollect payment for the completed performance accumulated during the entire contract period.Otherwise, the Company will identify revenue when the customers obtain control rights of the relevantgoods or services.For the performance obligations performed within a certain period of time, the Company will apply theinput-output method to identify the appropriate performance progress based on the nature of the goodsand services. The input-output method is to identify the performance progress based on the value of thegoods that have been transferred to the customers to the customers. When the performance progresscannot be reasonably identified and the Company's incurred costs are expected to be compensated, theCompany will identify the revenue according to the amount of the incurred costs until the performanceprogress can be reasonably identified.
(2) The methods of revenue identification
The Company mainly sells alcoholic products, which is a performance obligation performed at a certainpoint in time. The revenue identification of domestic products must meet the following requirements: a.The Company has delivered the products to the purchasers according to the contract and thepurchasers have signed and confirmed the receipts. b. The amount of sales revenue has been identified.c. The payment has been received; the receipt of the document of title has been obtained and therelevant economic benefits are likely to flow in. d. The product-related costs can be reliably calculated.The following requirements must be met to confirm the revenue of export products: a. The Company has
declared the products in accordance with the contract, obtained the bills of lading, received the paymentor obtained the receipt of payment and related economic benefits that are likely to flow in. b. The mainrisks and rewards of the product ownership have been transferred. c. The legal ownership of the goodshas been transferred.Differences in accounting policies for the recognition of revenue caused by different business models forthe same type of business
5. 35. Government grants
Government grants are monetary assets and non-monetary assets acquired free of charge by theCompany from the government like fiscal subsidies.
(1) Judgment basis and accounting treatment method of government grants related to assetsGovernment grants related to assets are government grants that are acquired by the Company and usedfor forming long-term assets through purchasing and constructing or other ways. If the governmentdocuments do not clearly specify the target of the subsidy, the Company shall separately explainjudgment basis of classifying the government grants into the government grants related to assets orincome.Accounting method: it shall be recognized as deferred income allocated evenly over the useful lives (theperiod of depreciation and amortization) of the relevant assets from the month of commence ofdepreciation or amortization when the relevant assets reaching the intended use condition, and includedin the current profit or loss. However, government grants measured at the nominal amount shall bedirectly included in current profit and loss.
(2) Judgment basis and accounting treatment method of government grants related to incomeGovernment grants related to income are government grants other than government grants related toassets;Accounting method:
a. If it is used to compensate the Company’s relevant expenses or losses in future periods, it should berecognized as deferred income and included into the current profit and loss or written off of the relatedcosts when the relevant expenses, losses are recognized.b. If it is used to compensate the Company’s relevant expenses or losses incurred, it is directly includedinto the current profit and loss on acquisition or written off of the related costs.c. Recognition time-point of government grantsGovernment grants are recognized when the Company can meet the attached conditions for thegovernment 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 the received or receivableamount. If a government grant is a non-monetary asset, it shall be measured at its fair value; and if itsfair value cannot be obtained in a reliable way, it shall be measured at a nominal amount.
5. 36. 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 met simultaneously:
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 is likely to beobtained in the future and is limited to the amount of taxable income that is likely to be obtained.On each balance sheet date, the current income tax liabilities (or assets) incurred in the current period orprior periods shall be measured by the Company in light of the expected payable (refundable) amount ofincome taxes according to the tax law; The deferred income tax assets and deferred income tax liabilitiesshall be measured at the tax rate applicable to the period during which the assets are expected to berecovered or the liabilities are expected to be settled.The Company shall review the carrying amount of deferred income tax assets on each balance sheetdate. The current income tax and deferred income tax shall be recorded into the current profit and lossas income tax expense or income, except for the income tax generated from the enterprise merger,transactions or events directly recognized in the owner's equity.
5. 37. Lease
(1) Accounting treatment of operating lease
The Company implemented the New Lease Standards from 1 January 2021.From the effectiveness date of a contract, the Company assessed whether the contract was a lease orincludes any lease. If a party to the contract transferred the right allowing the control over the use of oneor more assets that had been identified within a certain period, in exchange for a consideration, suchcontract was a lease or includes a lease.
① Accounting treatment with the Company as lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets andlease liabilities for the lease, unless it is a simplified short-term lease or a low-value asset lease.Right-of-use assets are initially measured at costs, including: A. The initial measurement amount oflease liabilities; B. If there is a lease incentive for the lease payment paid on or before the start date ofthe lease term, the relevant amount of the lease incentive already enjoyed shall be deducted; C. Initialdirect expenses incurred by the Company; D. The expected cost to be borne by the Company in order todismantle and remove the assets leased, restore original state of the place where the assets leased arein, or restore the assets leased to the state stipulated in the lease terms.The Company initially measures the lease obligation at the present value of the lease paymentsoutstanding at the commencement date of the lease term. When calculating the present value of leasepayments, the Company uses the interest rate implicit in lease as the rate of discount. If the interest rateimplicit in lease cannot be determined, the Company’s incremental lending rate is used as the rate ofdiscount.After the commencement of the lease term, the Company uses the cost model for subsequentmeasurement of right-of-use assets, depreciates right-of-use assets on a straight-line basis, calculatesthe interest expense on the lease liability within the lease term and includes it in the current profit or loss,unless such interest charge is stipulated to be included in the underlying asset cost. Variable leasepayments that are not included in the measurement of the lease obligation should be included in the
current profit or loss when they are actually incurred, unless such payments are stipulated to be includedin the underlying asset cost.After the commencement of the lease term, the Company remeasures the lease liability and adjusts thecorresponding right-of-use asset, and if the carrying value of the right-of-use asset has been reduced tozero but the lease liability is subject to further reduction, the difference is recorded in current profit or loss:
(1) When there is a change in the valuation of the purchase option, renewal option or termination option,or actual exercise, the Company remeasures the lease liabilities at the present value of the leasepayments after the change and the revised discount rate; (2) When there is a change in the actual fixedpayment, the estimated payable of the residual value of the guarantee, the index or rate used to confirmthe lease payment, the Company calculated the present value based on the changed lease paymentamount and the original discount rate to remeasure the lease liabilities. However, where changes inlease payments arise from changes in floating interest rates, a revised discount rate was used tocalculate the present value.The Company does not recognize the right-of-use assets and lease liabilities for short-term leases andleases of low-value assets, which are included in the profit or loss for the current period or the cost ofrelevant assets on a straight-line basis during each period of the lease term.
② Accounting treatment with the Company as lessor
The Company recognizes the lease payments receivable of the operating lease as rental earnings ineach period within the lease term on a straight-line basis or according to other systematic andreasonable methods. The initial direct costs related to the operating lease are capitalized, amortizedwithin the lease term on the same basis as the recognition of rental earnings, and included in profit orloss for the current period. The received variable lease payments related to the operating lease that arenot included in the lease payments receivable are included in profit or loss for the current period whenthey are actually incurred.
(2) Accounting treatment of finance lease
① Lease classification
The Company classifies leases into finance leases and operating leases at the inception of leases. Afinance lease refers to a lease where almost all the risks and rewards, related to the ownership of theleased asset, are substantially transferred, regardless of whether the ownership is eventually transferredor not. All leases other than finance leases are classified as operating leases.
② Accounting treatment of finance leases
Accounting treatment with the Company as lessorOn the commencement date of the lease term, the Company recognizes the finance lease receivablesfor the finance lease and derecognizes the leased asset of the finance lease. In the initial measurementof finance lease receivables, the sum of the unsecured residual value and the present value of the leasepayments receivable not yet received on the commencement date of the lease term discounted at theinterest rate implicit in lease is the entry value of the finance lease receivables. The Company calculatesand recognizes the interest income in each period within the lease term at a fixed interest rate implicit inthe lease. The received variable lease payments that are not included in the measurement of the netinvestment in the lease are included in profit or loss for the current period when they are actually
incurred.
5. 38 Changes in significant accounting policies and accounting estimates
5.38.1. Changes in significant accounting policies
√Applicable ?N/A
| Content and reason of changes | Approval procedures | Note |
| On 7 December 2018, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 21 -- Leases" (CK[2018]No.35) (hereinafter referred to as the "New Lease Standards"). According to the requirements of the Ministry of Finance, companies that are listed both domestically and abroad and companies that are listed abroad and prepare financial statements under the Accounting Standards for Business Enterprises shall implement the New Lease Standards from 1 January 2019; other companies that implement the Accounting Standards for Business Enterprises shall implement the New Lease Standards from 1 January 2021. Due to the above-mentioned revision of accounting standards, the Company has made corresponding adjustments to the lease accounting policy previously adopted. | N/A | According to the Company's existing leased assets, if a lease meets the criteria for short-term leases, the lease payment shall continue to be included in the expenses according to the current model; for a lease with a lease term of more than one year, it is required to recognize the right-of-use assets and lease liabilities and accrue depreciation. At the same time, in accordance with the regulations on the transition from old to new standards, the Company does not have any lease that needs to be adjusted retrospectively. This change in accounting policies does not affect the Company's shareholders' equity, net profit and other related financial indicators in 2020. |
For the date of initial adoption, the Company made the following adjustments as a result ofimplementing the New Lease Standards: For operational leasing prior to the date of initial adoption, theCompany will measure the lease liabilities according to the present value discounted at the incrementalborrowing rate of 3.85% on the date of initial adoption based on the remaining lease payments, andmeasure the right-of-use asset at an amount equal to the lease liability based on each lease option, andmake necessary adjustments based on the advance rental.There was no other change in significant accounting policies in the reporting period other than the abovechanges.
5.38.2. Changes in significant accounting estimates
? Applicable √ N/A
5.38.3. Adjustments to the financial statements at the beginning of the execution year of any newstandard governing leases from 2021
√Applicable ?N/A
Whether items of balance sheets at the beginning of the year need to be adjusted
√ Yes □ No
Consolidated balance sheet
Monetary Unit: CNY
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Cash and cash equivalents | 11,624,870,340.60 | 11,624,870,340.60 | |
| Settlement reserves | |||
| Lending funds | |||
| Trading financial assets | |||
| Derivative financial assets | |||
| Notes receivables | |||
| Accounts receivables | 1,507,852.43 | 1,507,852.43 | |
| Accounts receivables financing | 3,209,371,766.35 | 3,209,371,766.35 | |
| Prepayment | 74,685,537.38 | 74,685,537.38 | |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance contract reserve | |||
| Other receivables | 127,032,931.42 | 127,032,931.42 | |
| Including：Interests receivable | |||
| Dividends receivable | 1,407,900.00 | 1,407,900.00 | |
| Buying back the sale of financial assets | |||
| Inventories | 4,695,663,431.25 | 4,695,663,431.25 | |
| Contract assets |
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 156,565,424.18 | 156,565,424.18 | |
| Total current assets | 19,889,697,283.61 | 19,889,697,283.61 | |
| Non-current assets: | |||
| Disbursement of loans and advances | |||
| Investment in debt obligations | |||
| Investment in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 2,477,667,171.27 | 2,477,667,171.27 | |
| Other equity instrument investment | 347,160,399.42 | 347,160,399.42 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 6,887,108,174.72 | 6,887,108,174.72 | |
| Construction in progress | 2,012,129,880.15 | 2,012,129,880.15 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-to-use assets | 50,201,409.36 | 50,201,409.36 | |
| Intangible assets | 2,657,118,025.37 | 2,657,118,025.37 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | 2,305,902.21 | 2,305,902.21 | |
| Deferred tax assets | 725,210,660.84 | ||
| Other non-current assets | 10,806,325.86 | 10,806,325.86 | |
| Total non-current assets | 15,119,506,539.84 | 15,169,707,949.20 | 50,201,409.36 |
| Total assets | 35,009,203,823.45 | 35,059,405,232.81 | 50,201,409.36 |
| Current liabilities: | |||
| Short-term loans |
| Borrowings from the central bank | |||
| Loans from other banks | |||
| Trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 121,285,117.60 | 121,285,117.60 | |
| Accounts payable | 2,604,289,199.77 | 2,604,289,199.77 | |
| Advance from customer | |||
| Contract liabilities | 1,678,837,166.94 | 1,678,837,166.94 | |
| Financial assets sold for repurchase | |||
| Customers deposits and deposits from banks and other financial institutions | |||
| Customer brokerage deposits | |||
| Securities underwriting brokerage deposits | |||
| Employee benefits payable | 505,022,627.19 | 505,022,627.19 | |
| Taxes payable | 2,046,027,211.13 | 2,046,027,211.13 | |
| Other payable | 501,623,924.54 | 501,623,924.54 | |
| Including：Interests payable | |||
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance accounts payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 72,219,178.08 | 82,207,133.16 | 9,987,955.08 |
| Other current liabilities | 218,267,353.36 | 218,267,353.36 | |
| Total current liabilities | 7,747,571,778.61 | 7,757,559,733.69 | 9,987,955.08 |
| Non-current liabilities: | |||
| Insurance contract |
| reserves | |||
| Long-term loans | |||
| Bonds payable | 3,987,872,100.02 | 3,987,872,100.02 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 40,213,454.28 | 40,213,454.28 | |
| Long-term payables | |||
| Long-term payroll payables | |||
| Accrued liabilities | |||
| Deferred income | 29,739,000.00 | 29,739,000.00 | |
| Deferred tax liabilities | 62,151,071.11 | ||
| Other non-current liabilities | |||
| Total non-current liabilities | 4,079,762,171.13 | 4,119,975,625.41 | 40,213,454.28 |
| Total liabilities | 11,827,333,949.74 | 11,877,535,359.10 | 50,201,409.36 |
| Owners' equity: | |||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,722,777,063.13 | 3,722,777,063.13 | |
| Less: Treasury stock | |||
| Other comprehensive income | 186,063,325.03 | 186,063,325.03 | |
| Special reserves | |||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | |
| General risk reserve | |||
| Undistributed profits | 16,236,513,212.43 | 16,236,513,212.43 | |
| Total equity attributable to owners of the parent company | 23,074,858,552.59 | ||
| Non-controlling interests | 107,011,321.12 | 107,011,321.12 | |
| Total owners' equity | 23,181,869,873.71 | 23,181,869,873.71 | |
| Total liabilities and owners' equity | 35,009,203,823.45 | 35,059,405,232.81 | 50,201,409.36 |
Statement for adjustmentIn accordance with the requirements of Accounting Standards for Business Enterprises No.21-Leaseissued by the Ministry of Finance, the Company starts to implement it since 1 January 2021. For detailson specific items and amounts affected, please refer to above statement.
Balance sheet of parent company
Monetary Unit: CNY
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Cash and cash equivalents | 11,100,327,211.33 | 11,100,327,211.33 | |
| Trading financial assets | |||
| Derivative financial assets | |||
| Notes receivables | |||
| Accounts receivables | 3,927.50 | 3,927.50 | |
| Accounts receivables financing | |||
| Prepayment | 1,431,698.57 | 1,431,698.57 | |
| Other receivables | 7,052,749,694.83 | 7,052,749,694.83 | |
| Including: Interests receivable | |||
| Dividends receivable | 1,407,900.00 | 1,407,900.00 | |
| Inventories | 850,076.30 | 850,076.30 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 78,509.44 | 78,509.44 | |
| Total current assets | 18,155,441,117.97 | 18,155,441,117.97 | |
| Non-current assets: | |||
| Investment in debt obligations | |||
| Investment in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 5,884,091,712.47 | 5,884,091,712.47 |
| Other equity instrument investment | 346,831,477.79 | 346,831,477.79 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 640,254,574.76 | 640,254,574.76 | |
| Construction in progress | 550,932,404.00 | 550,932,404.00 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-to-use assets | 730,727.38 | 730,727.38 | |
| Intangible assets | 684,010,106.13 | 684,010,106.13 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | 2,180,811.89 | 2,180,811.89 | |
| Deferred tax assets | 89,484,552.65 | 89,484,552.65 | |
| Other non-current assets | 1,526,325.86 | 1,526,325.86 | |
| Total non-current assets | 8,199,311,965.55 | 8,200,042,692.93 | 730,727.38 |
| Total assets | 26,354,753,083.52 | 26,355,483,810.90 | 730,727.38 |
| Current liabilities: | |||
| Short-term loans | |||
| Trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payables | |||
| Accounts payable | 80,663,835.54 | 80,663,835.54 | |
| Advance from customer | |||
| Contract liabilities | 753,349.81 | 753,349.81 | |
| Employee benefits payable | 168,254,646.38 | 168,254,646.38 | |
| Taxes payable | 153,437,992.21 | 153,437,992.21 | |
| Other payables | 699,733,563.56 | 699,733,563.56 | |
| Including：Interests payable | |||
| Dividends payable |
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 72,219,178.08 | 72,613,678.08 | 394,500.00 |
| Other current liabilities | 116,457.13 | 116,457.13 | |
| Total current liabilities | 1,175,179,022.71 | 1,175,573,522.71 | 394,500.00 |
| Non-current liabilities: | |||
| Long-term loans | |||
| Bonds payable | 3,987,872,100.02 | 3,987,872,100.02 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 336,227.38 | 336,227.38 | |
| Long-term payables | |||
| Long-term payroll payables | |||
| Accrued liabilities | |||
| Deferred income | 1,904,000.00 | 1,904,000.00 | |
| Deferred tax liabilities | 62,151,071.11 | 62,151,071.11 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 4,051,927,171.13 | 4,052,263,398.51 | 336,227.38 |
| Total liabilities | 5,227,106,193.84 | 5,227,836,921.22 | 730,727.38 |
| Owners' equity | |||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,706,816,950.12 | 3,706,816,950.12 | |
| Less: Treasury stock | |||
| Other comprehensive income | 185,441,302.55 | 185,441,302.55 | |
| Special reserves | |||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | |
| Undistributed profits | 14,305,883,685.01 | 14,305,883,685.01 | |
| Total owners' equity | 21,127,646,889.68 | 21,127,646,889.68 |
| Total liabilities and owners' equity | 26,354,753,083.52 | 26,355,483,810.90 | 730,727.38 |
Statement for adjustmentIn accordance with the requirements of Accounting Standards for Business Enterprises No.21-Leaseissued by the Ministry of Finance, the Company starts to implement it since 1 January 2021. For detailson specific items and amounts affected, please refer to above statement.
5.38.4. Retrospective restatement of previous comparative data due to the execution of any newstandard governing lease from 2021? Applicable √ N/A
6. Taxes
6.1. Major tax types and rates
| Tax type | Tax base | Tax rate |
| Value-added tax | Taxable sales income | 13 %, 9%, 6% |
| Urban maintenance and construction tax | Taxable turnover tax | 7% |
| Corporate income tax | Taxable income | 25%, 15%, 16.5%, 9%, 0% |
| Consumption tax (based on price) | Baijiu tax price or ex-factory price | 20% |
| Consumption tax (based on quantity) | Quantity of baijiu | 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 tax rates are asfollows:
| Company name | Corporate income tax rate |
| Luzhou Pinchuang Technology Co., Ltd. | 15% |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | 16.5% |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | 21%-40% |
| Mingjiang Co., Ltd. | 21%-40% |
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Exempted from corporate income tax |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | 9% |
6.2. Tax preferences
(1) According to Announcement of the Ministry of Finance, State Taxation Administration and NationalDevelopment and Reform Commission on Continuing the Corporate Income Tax Policies Concerningthe Western Development Strategy (No. 23 in 2020, Ministry of Finance), from 1 January 2021 to 31December 2030, companies are located in the western region whose primary business is listed in theCatalogue of Encouraged Industries in the Western Region, and the primary business incomeaccounting for over 60% of the total enterprise income. These companies shall be subject to thecorporate income tax at a reduced rate of 15%. The Company's holding subsidiary, Luzhou PinchuangTechnology Co., Ltd., whose primary business income meet the requirements of scope and standard ofthe Catalogue of Encouraged Industries in the Western Region, is paid at the rate of 15% for corporateincome tax.
(2) According to Article 27 of the Corporate Income Tax Law of the People's Republic of China andArticle 86, Item 1 of the Implementation Regulations of the Corporate Income Tax Law, companies areexempted from enterprise income tax when they engage in agricultural, forestry, animal husbandry andfishery industries. The holding subsidiary of the Company, Luzhou Red Sorghum Modern AgriculturalDevelopment Co., Ltd., is engaged in the cultivation and sale of organic sorghum and enjoys thereduction of corporate income tax preferences.
(3) According to the Article 15, Item 1 of the Provisional Regulations on Value-Added Tax, agriculturalproducers sell self-produced agricultural products exempt from value-added tax. The holding subsidiaryof the Company, Luzhou Red Sorghum Modern Agricultural Development Co., Ltd., is engaged in thecultivation and sale of organic sorghum and enjoys the value-added tax exemption.
(4) According to the Article 3, Item 7 of the Notice on Revise of Interim Measures of Accelerating theDevelopment in Headquarters Economy of China-Malaysia Qinzhou Industrial Park, till 31 December2025, the enterprises in the Qinzhou Industrial Park that enjoy 15% of tax rate of Western Developmentwith the half reduction in the tax period of preferential policies shall enjoy the local share of corporateincome tax exemption (namely 40% of corporate income tax was exempted, and the proportion adjustedby the state shall be executed according to new proportion); Guangxi Luzhou Laojiao Imported LiquorIndustry Co., Ltd., the wholly-owned subsidiary of the Company, pays corporate income tax at the rate of9% according to the tax preference policies.
7. Notes to the main items of the consolidated financial statements (Allcurrency unit is CNY, except other statements)
7.1. Cash and cash equivalents
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Cash | 26,281.86 | 26,978.10 |
| Bank deposit | 13,490,769,725.71 | 11,616,532,676.06 |
| Other cash and cash equivalents | 22,698,572.99 | 8,310,686.44 |
| Total | 13,513,494,580.56 | 11,624,870,340.60 |
| Including: Total deposit outbound | 63,993,390.31 | 68,247,418.50 |
| Total amount with restriction to use due to mortgage, pledge or freeze | 110,965,638.73 | 56,675,277.79 |
Other statements:
Note 1: The deposit outbound is the balance of cash and cash equivalents of the foreign holdingsubsidiary of the Company.Note 2: The closing balance of other cash and cash equivalents is the travel service deposit of CNY1,400,000.00 deposited by the subsidiary, Luzhou Laojiao Tourism Culture Co., Ltd., in the designatedbank according to the regulations of the tourism bureau, the balance of CNY 10,774,833.68 deposited bythe subsidiary, Luzhou Laojiao Electronic Commerce Co., Ltd. on the third-party e-commerce platform,and guaranty letter deposit of CNY 10, 509,017.10 by the Company and the subsidiary, Luzhou LaojiaoSales Co., Ltd., in the bank.Note 3: There is no special benefit arrangement such as establishing a fund co-management accountwith related parties in the current period.Liquor and wine manufacturing companies shall disclose in detail whether there are special interestarrangements such as establishing co-management accounts with related parties.
□ Applicable √ N/A
7.2. Held-for-trading financial assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Financial assets measured at fair value with their changes included into current profits/losses | 706,352,241.79 | |
| Including: | ||
| Financial products at fair value through | 706,352,241.79 |
| profit or loss | ||
| Including: | ||
| Total | 706,352,241.79 |
Other statements:
The closing balance represents the wealth management products of the collective asset managementplan purchased by the Company from securities-type companies and is measured at fair value based onthe amount calculated on the basis of the net unit value of the underlying assets as published on theofficial website of the asset manager.
7.3. Accounts receivable
7.3.1. Classification of accounts receivable
Monetary Unit: CNY
| 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 | |||
| Including: | ||||||||||
| Accounts receivable tested for impairment by the portfolio | 1,713,947.55 | 100.00% | 85,699.00 | 5.00% | 1,628,248.55 | 1,587,225.12 | 100.00% | 79,372.69 | 5.00% | 1,507,852.43 |
| Including: | ||||||||||
| Accounts receivable tested for impairment on the portfolio with characteristics of credit risk | 1,713,947.55 | 100.00% | 85,699.00 | 5.00% | 1,628,248.55 | 1,587,225.12 | 100.00% | 79,372.69 | 5.00% | 1,507,852.43 |
| Total | 1,713,947.55 | 100.00% | 85,699.00 | 5.00% | 1,628,248.55 | 1,587,225.12 | 100.00% | 79,372.69 | 5.00% | 1,507,852.43 |
Accounts receivable tested for impairment on the portfolio:
Monetary Unit: CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 1,713,947.55 | 85,699.00 | 5.00% |
| Other portfolio | |||
| Total | 1,713,947.55 | 85,699.00 | -- |
Please refer to the relevant information of disclosure of provision for bad debt of other accountsreceivable if adopting the general mode of expected credit loss to withdraw provision for bad debt ofaccounts receivable
□ Applicable √ N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Closing balance |
| Within 1 year (including 1 year) | 1,713,947.55 |
| Total | 1,713,947.55 |
The Company shall observe the disclosure requirements for related food and wine manufacturingbusiness in the Self-regulatory Guidelines No. 3 for Companies Listed on Shenzhen Stock Exchange -Industry Information Disclosure
7.3.2. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Provision allowance by risk portfolio | 79,372.69 | 6,326.31 | 85,699.00 | |||
| Total | 79,372.69 | 6,326.31 | 85,699.00 | |||
Note: There is no significant provision in accounts receivable reversed or recovered in the reportingperiod.
7.3.3. Top five entities with the largest balances of accounts receivable
Monetary Unit: CNY
| Company name | Closing Balance | Proportion to total closing balance of accounts receivable | Closing balance of provision for bad debt |
| Sazerac Distiller LLC | 927,137.53 | 54.09% | 46,356.88 |
| Beijing Secoo Trading Limited | 263,509.80 | 15.37% | 13,175.49 |
| Park Street Imports, | 170,916.07 | 9.97% | 8,545.80 |
| LLC | |||
| Dongguan Good View Industrial Ltd. | 129,062.76 | 7.53% | 6,453.14 |
| Shanghai Shengdayuan Information Technology Co., Ltd. | 61,934.07 | 3.61% | 3,096.70 |
| Total | 1,552,560.23 | 90.57% |
7.4. Accounts receivable financing
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 4,757,631,778.64 | 3,209,371,766.35 |
| Total | 4,757,631,778.641 | 3,209,371,766.35 |
Note: 1. At the end of the period, the revenue increased by CNY 1,548,260,012.29, up 48.24%compared with the beginning of the period, which was mainly due to the impact of the correspondingincrease in bank acceptances received as the scale of sales expanded. 2. The business mode tomanage notes receivable aims to collect contract cash flow as well as to sell the financial assets, andthus the notes receivable is presented as accounts receivable financing; since the timing and price ofbills discounted may not be reliably estimated due to the short maturity of the bills all being less than oneyear and the endorsement of the negotiable bills being valued at book value, the face value is regardedas the fair value of accounts receivable financing by the Company. 3. There was no allowance ofprovision for bad debt at the end of the reporting period.
Changes in accounts receivable financing in the reporting period and fair value:
? Applicable √ N/APlease refer to the relevant information of disclosure of impairment provision of other accountsreceivable if adopting the general mode of expected credit loss to withdraw impairment provision ofaccounts receivable financing.? Applicable √ N/A
Other statements:
(1) There was no accounts receivable financing pledge at the end of year.
(2) There is CNY 8,545,542,606.78 as follows of accounts receivable financing that have been endorsedto other parties by the Company but have not expired at the end of year:
| Item | Derecognition at period-end | Not derecognition at period-end |
Bank acceptance bill
| Bank acceptance bill | 8,545,542,606.78 | |
| Subtotal | 8,545,542,606.78 |
Note: The acceptor of the bank acceptance bill is a commercial bank. The probability of not being paiddue is very low, and the possibility of being recourse is very low, so the confirmation has been
terminated.
(3) There are no accounts receivable financing transferred to accounts receivable due to thenon-performance of the agreements by the issuers.
(4) There are no accounts receivable financing actually written off during the reporting period.
7.5. Prepayment
7.5.1. Aging analysis
Monetary Unit: CNY
| Aging | Closing Balance | Opening Balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 174,252,091.59 | 97.85% | 72,436,550.81 | 96.99% |
| 1-2 years | 3,411,121.11 | 1.92% | 2,042,638.57 | 2.73% |
| 2-3 years | 424,476.11 | 0.24% | 206,348.00 | 0.28% |
| Total | 178,087,688.811 | -- | 74,685,537.38 | -- |
Note: 1. The closing balance increased by CNY 103,402,151.43 compared with opening balance, withan increase by 138.45%, mainly due to the increase of prepayments with the rise of product promotionactivities.
Reasons for significant prepayments whose aging is longer than 1 year without timely settlement:
There is no significant prepayment whose aging is longer than 1 year.
7.5.2. Top five entities with the largest balances of prepayment
| Company Name | Closing Balance | Proportion to the total closing balance of prepayment |
Shanghai Merlot Advertising Co., Ltd.
| Shanghai Merlot Advertising Co., Ltd. | 111,519,937.93 | 62.62% |
| Luzhou Western Gas Co., Ltd. | 8,050,769.30 | 4.52% |
| Luzhou Power Supply Company of State Grid Sichuan Electric Power Company | 6,984,742.47 | 3.92% |
| Sichuan Jiacheng Jingwei Culture Communication Co., Ltd. | 4,150,312.50 | 2.33% |
| Guangzhou Degao Airport Advertising Co., Ltd. | 3,091,566.00 | 1.74% |
Subtotal
| Subtotal | 133,797,328.20 | 75.13% |
7.6. Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividend receivable | 1,407,900.00 | |
| Other receivables | 28,615,361.96 | 125,625,031.42 |
| Total | 28,615,361.96 | 127,032,931.42 |
7.6.1. Dividend receivable
7.6.1.1. Classification of dividend receivable
Monetary Unit: CNY
| Item (investee) | Closing Balance | Opening Balance |
| Guotai Junan Securities Co., Ltd. | 1,407,900.00 | |
| Total | 1,407,900.00 |
7.6.2. Other receivables
7.6.2.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds | 19,729,613.70 | 44,472,270.26 |
| Petty cash | 292,228.26 | 1,023,683.10 |
| Saving deposits involving contract disputes | 132,376,912.43 | 285,044,911.68 |
| Total | 152,398,754.391 | 330,540,865.04 |
Note 1: In the 2014 Annual Report, the Company disclosed the information about three depositsamounting to CNY 500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of China andNanyang Zhongzhou Sub-branch of Industrial and Commercial Bank of China. The deposits have lostthe nature of monetary fund due to their involvement in contract disputes and have thus been transferredinto “other receivables”. 2. The closing book balance decreased by CNY 178,142,110.65 compared withopening book balance, with a decrease by 53.89%, mainly due to the recovery of saving depositsinvolving contract disputes of CNY 152,667,999.25 in the reporting period.
7.6.2.2. Allowance of provision for bad debt
Monetary Unit: CNY
| Provision for bad debt | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) |
| Balance of 1 January 2021 | 4,915,833.62 | 200,000,000.00 | 204,915,833.62 | |
| Balance of 1 January 2021 in the current period | —— | —— | —— | —— |
| Reversal of the current period | 1,132,441.19 | 80,000,000.00 | 81,132,441.19 | |
| Balance of 31 December 2021 | 3,783,392.43 | 120,000,000.00 | 123,783,392.43 |
Changes of book balance with significant amount changed of loss provision in the current period
√ Applicable ? N/A
| Company Name | Closing book balance | Provision for bad debt | Aging | Proportion |
Agricultural Bank of China ChangshaYingxin Sub-branch, Industrial andCommercial Bank of China NanyangZhongzhou Sub-branch and another bank
| Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank | 132,376,912.43 | 120,000,000.00 | Over 5 years | 90.65% |
| Subtotal | 132,376,912.43 | 120,000,000.00 | 90.65% |
Note: see Note 12.2 and 14.7.1 for information about the deposits with involvement in contract disputes.
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 10,275,684.35 |
| 1-2 years | 4,277,630.18 |
| 2-3 years | 3,153,352.80 |
| Over 3 years | 134,692,087.06 |
| 3-4 years | 120,000.00 |
| 4-5 years | 160,000.00 |
| Over 5 years | 134,412,087.06 |
| Total | 152,398,754.39 |
7.6.2.3. Provision and recovery for bad and doubtful other receivables in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowanc | Reversal or | Write-off | Other | |||
| e | recovery | |||||
| Other receivables tested for impairment individually | 200,000,000.00 | 80,000,000.00 | 120,000,000.00 | |||
| Other receivables tested for impairment by the portfolio | 4,915,833.62 | 1,132,441.19 | 3,783,392.43 | |||
| Total | 204,915,833.62 | 81,132,441.19 | 123,783,392.43 |
Recovery for bad debt and doubtful other receivables with significant amount in the current period:
Monetary Unit: CNY
| Company name | Amount | Recovery way |
Agricultural Bank of China ChangshaYingxin Sub-branch, Industrial andCommercial Bank of China NanyangZhongzhou Sub-branch and anotherbank
| 80,000,000.00 | By litigation | |
| Total | 80,000,000.00 | -- |
7.6.2.4. Top five entities with the largest balances of the other receivables
Monetary Unit: CNY
| Company Name | Nature | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
Agricultural Bankof China ChangshaYingxinSub-branch,Industrial andCommercial Bankof China NanyangZhongzhouSub-branch andanother bank
| Saving deposits involving contract disputes | 132,376,912.43 | Over 5 years | 86.86% | 120,000,000.00 | |
| CTS Luzhou Laojiao Cultural Tourism | Security deposit | 3,590,790.65 | Within 1 year, 1-2 years | 2.36% | 354,539.53 |
| Development Co., Ltd. | |||||
| Zhejiang Tmall Technology Co.,Ltd. | Security deposit, etc. | 2,359,905.42 | Within 1 year | 1.55% | 117,995.27 |
| Longmatan Power Supply Bureau of Luzhou Power Bureau | Security deposit | 1,520,000.00 | Over 5 years | 1.00% | 1,520,000.00 |
| Housing and Urban-Rural Development Bureau of Longmatan District, Luzhou | Security deposit | 1,069,800.00 | 2-3 years | 0.70% | 213,960.00 |
| Total | -- | 140,917,408.50 | -- | 92.47% | 122,206,494.80 |
7.7. Inventories
Whether the Company needs to comply with the disclosure requirements of real estate industryNo
7.7.1. Categories of Inventories
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance | ||||
| Book Balance | Provision for stock obsolescence or impairment provision of contract performance costs | Book Value | Book Balance | Provision for stock obsolescence or impairment provision of contract performance costs | Book Value | |
| Raw materials | 123,986,924.38 | 123,986,924.38 | 92,033,654.20 | 92,033,654.20 | ||
| Goods in progress | 5,255,917,501.41 | 5,255,917,501.41 | 3,578,553,746.98 | 3,578,553,746.98 | ||
| Finished goods | 1,855,731,688.91 | 1,855,731,688.91 | 997,109,606.41 | 997,109,606.41 | ||
| Revolving materials | 79,396.01 | 79,396.01 | ||||
| Goods in transit | 41,937,052.10 | 41,937,052.10 | 27,887,027.65 | 27,887,027.65 | ||
| Total | 7,277,573,166.80 | 7,277,573,166.801 | 4,695,663,431.25 | 4,695,663,431.25 |
Note: 1. The closing balance increased CNY 2,581,909,735.55 compared with opening balance, with anincrease by 54.98%, mainly due to the remarkable increase in the output of products because someconstructions of the technical renovation project of brewing were put into production successively andmanagement requirements for shelf life of products.
The Company shall observe the disclosure requirements for related food and wine manufacturingbusiness in the Self-regulatory Guidelines No. 3 for Companies Listed on Shenzhen Stock Exchange -Industry Information Disclosure
7.8. Other current assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 82,734,324.31 | 67,752,538.61 |
| Corporate income tax | 24,638,887.44 | 83,493,943.79 |
| Other taxes | 4,601,321.16 | 5,318,941.78 |
| Total | 111,974,532.91 | 156,565,424.18 |
Other statements:
The value-added tax expected to be deducted in the next fiscal year and corporate income tax and othertaxes are disclosed in other current assets.
7.9. Long-term equity investments
Monetary Unit: CNY
| Investee | Opening Balance (book value) | Changes in current period | Closing Balance (book value) | 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 | ||||
| 1. Joint Ventures | |||||||||||
| 2. Associate | |||||||||||
| Huaxi Securities Co., | 2,383,550,372.50 | 169,638,351.75 | -29,576,301.94 | 30,284,256.98 | 2,493,328,165.33 | 2,567,098.80 | |||||
| Ltd. | |||||||||||
| Sichuan Development Wine Investment Co., Ltd. | 6,854,471.67 | -1,127,623.31 | 5,726,848.36 | ||||||||
| Sichuan Tongniang Liquor Industry Technology Research Institute Co., Ltd. Note | 8,009,898.80 | -122,437.28 | 7,887,461.52 | ||||||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 79,252,428.30 | 40,000,000.00 | 549,332.74 | 119,801,761.04 | |||||||
| Subtotal | 2,477,667,171.27 | 40,000,000.00 | 168,937,623.90 | -29,576,301.94 | 30,284,256.98 | 2,626,744,236.25 | 2,567,098.80 | ||||
| Total | 2,477,667,171.27 | 40,000,000.00 | 168,937,623.90 | -29,576,301.94 | 30,284,256.98 | 2,626,744,236.25 | 2,567,098.80 |
7.10. Other equity instrument investment
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Financial assets designated to be measured at fair value through other comprehensive income | ||
| Including: | ||
| North Chemical Industries Co.,Ltd. | 15,963,896.54 | 11,460,858.15 |
| Luzhou Bank Co., Ltd. | 102,174,621.71 | 95,561,825.55 |
| Guotai Junan Securities Co., Ltd. | 210,690,476.31 | 206,450,757.39 |
| Guotai Junan Investment Management Co., Ltd. | 22,611,834.24 | 22,611,834.24 |
| Guojiu Big Data Co., Ltd. | 10,000,000.00 | 10,000,000.00 |
| Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 1,871,291.63 | 1,075,124.09 |
| Total | 363,312,120.43 | 347,160,399.42 |
Categories of non-trading equity instrument investment in the current period:
Monetary Unit: CNY
| Item | Recognized dividends income | Accumulative gains | Accumulative losses | Amount of other comprehensive income transferred to retained earnings | Reason for assigning to measure at fair value and changes recorded into other comprehensive income | Reason of other comprehensive income transferred to retained earnings |
| North Chemical Industries Co.,Ltd. | 62,542.20 | 14,933,896.54 | According to the mode of managing assets by management layer | |||
| Luzhou Bank Co., Ltd. | 51,054,621.71 | According to the mode of managing assets by management layer | ||||
| Guotai Junan Securities Co., Ltd. | 6,595,118.32 | 197,971,319.55 | According to the mode of managing assets by management layer | |||
| Guotai Junan Investment | According to the mode of |
| Management Co., Ltd. | managing assets by management layer | |||||
| Guojiu Big Data Co., Ltd. | According to the mode of managing assets by management layer | |||||
| Shenzhen Xingangfeng Development Co., Ltd. | 2,354,000.00 | According to the mode of managing assets by management layer | ||||
| Sichuan Deyang Jintai Hotel | 2,000,000.00 | According to the mode of managing assets by management layer | ||||
| Hainan Huitong International Trust Company | 1,000,000.00 | According to the mode of managing assets by management layer | ||||
| Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 5,000.00 | 398,926.37 | According to the mode of managing assets by management layer | |||
| Subtotal | 6,662,660.52 | 263,959,837.80 | 5,752,926.37 |
7.11. Fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Fixed assets | 8,088,216,508.58 | 6,885,609,781.96 |
| Disposal of fixed assets | 1,270,765.81 | 1,498,392.76 |
| Total | 8,089,487,274.39 | 6,887,108,174.72 |
7.11.1. Details of fixed assets
Monetary Unit: CNY
| Item | Buildings and constructions | Specialized equipment | General equipment | Transportation equipment | Other equipment | Total |
| I. Original cost: | ||||||
| 1.Opening balance | 5,628,180,885.84 | 929,535,931.84 | 706,384,001.37 | 41,454,997.24 | 1,370,445,216.90 | 8,676,001,033.19 |
| 2.Increase in current period | 1,182,622,846.56 | 189,006,339.97 | 189,949,820.23 | 3,734,406.38 | 128,410,971.39 | 1,693,724,384.53 |
| (1) External purchase | 238,643.82 | 19,889,476.69 | 45,980,570.95 | 352,429.56 | 1,720,007.50 | 68,181,128.52 |
| (2) Transfer from construction in progress | 1,162,844,723.98 | 138,434,675.85 | 128,105,504.39 | 39,691.73 | 196,211,912.67 | 1,625,636,508.62 |
| (3) Increase from business combination | ||||||
| (4) Transfer from intangible assets | -93,252.61 | -93,252.61 | ||||
| (5) Adjustment to categories | 19,539,478.76 | 30,682,187.43 | 15,956,997.50 | 3,342,285.09 | -69,520,948.78 | 1 |
| 3.Decrease in current period | 739,893.02 | 1,716,534.78 | 2,152,545.79 | 117,948.16 | 7,394,125.85 | 12,121,047.60 |
| (1) Disposal or retirement | 739,893.02 | 1,716,534.78 | 2,152,545.79 | 117,948.16 | 7,394,125.85 | 12,121,047.60 |
| 4.Closing Balance | 6,810,063,839.38 | 1,116,825,737.03 | 894,181,275.81 | 45,071,455.46 | 1,491,462,062.44 | 10,357,604,370.12 |
| II. Accumulated depreciation |
| 1.Opening Balance | 607,512,483.39 | 256,818,697.20 | 249,527,593.90 | 27,657,360.07 | 648,252,176.60 | 1,789,768,311.16 |
| 2.Increase in current period | 212,242,179.55 | 127,448,829.02 | 79,021,036.74 | 3,067,893.43 | 65,003,240.34 | 486,783,179.08 |
| (1) Provision | 212,119,210.65 | 127,325,431.99 | 78,988,781.66 | 3,045,843.67 | 65,376,928.16 | 486,856,196.13 |
| (2) Changes of exchange rates | -73,017.05 | -73,017.05 | ||||
| (3) Adjustment to categories | 122,968.90 | 123,397.03 | 105,272.13 | 22,049.76 | -373,687.82 | |
| 3.Decrease in current period | 526,453.31 | 1,147,011.66 | 1,127,479.89 | 101,348.60 | 4,884,275.31 | 7,786,568.77 |
| (1) Disposal or retirement | 526,453.31 | 1,147,011.66 | 1,127,479.89 | 101,348.60 | 4,884,275.31 | 7,786,568.77 |
| 4.Closing Balance | 819,228,209.63 | 383,120,514.56 | 327,421,150.75 | 30,623,904.90 | 708,371,141.63 | 2,268,764,921.47 |
| III. 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 | ||||||
| 4.Closing Balance | 622,940.07 | 622,940.07 | ||||
| IV. Book Value | ||||||
| 1.Closing Book Value | 5,990,212,689.68 | 733,705,222.47 | 566,760,125.06 | 14,447,550.56 | 783,090,920.81 | 8,088,216,508.58 |
| 2.Opening Book Value | 5,020,045,462.38 | 672,717,234.64 | 456,856,407.47 | 13,797,637.17 | 722,193,040.30 | 6,885,609,781.96 |
Note: 1. The adjustment to the category means that the Company cleaned up and split all fixed assetsduring the current period, and adjusted the major categories of fixed assets.
7.11.2. Fixed assets leased out through operating lease
Monetary Unit: CNY
| Item | Closing book value |
| Buildings and constructions | 183,093,952.28 |
| Subtotal | 183,093,952.28 |
7.11.3. Fixed assets without certification of right
Monetary Unit: CNY
| Item | Book value | Reason for not having the certification of right |
| Buildings of parent company | 25,791,127.68 | The property ownership certificate has not been processed yet for the historical reasons, and it plans to be processed after gradually improving procedures. |
| Buildings of brewing company | 303,282,510.11 | In procedure |
| Buildings of the subsidiary-brewing company | 3,921,371,158.08 | In procedure |
| Subtotal | 4,250,444,795.87 |
7.11.4. Disposal of fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Disposal and retirement of assets | 1,270,765.81 | 1,498,392.76 |
| Total | 1,270,765.81 | 1,498,392.76 |
7.12. Construction in progress
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Construction in progress | 1,259,845,487.50 | 2,012,129,880.15 |
| Total | 1,259,845,487.50 | 2,012,129,880.15 |
7.12.1. Details of the construction in progress
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Technical renovation project of brewing of Luzhou Laojiao | 968,634,809.01 | 968,634,809.01 | ||||
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 563,063,821.82 | 563,063,821.82 | 242,719,982.63 | 242,719,982.63 | ||
| Marketing network command center office area reconstruction and expansion project | 5,473,631.57 | 5,473,631.57 | ||||
| New model application project of intelligent production workshop of solid state liquor | 16,862,599.30 | 16,862,599.30 | ||||
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 301,985,162.65 | 301,985,162.65 | 206,167,904.88 | 206,167,904.88 | ||
| Guojiao Culture Park Qiankun Wine Castle Cultural Tourism project | 305,548,667.25 | 305,548,667.25 | ||||
| Landscape improvement project of Luzhou Laojiao Huangyi Brewing Ecological Park | 149,089,445.94 | 149,089,445.94 | 1,883,254.38 | 1,883,254.38 | ||
| Other projects | 245,707,057.09 | 245,707,057.09 | 264,839,031.13 | 264,839,031.13 | ||
| Total | 1,259,845,487.50 | 1,259,845,487.501 | 2,012,129,880.15 | 2,012,129,880.15 |
Note: 1. The closing balance decreased CNY 752,284,392.65 compared with the opening balance, witha decrease by 37.39%, because of the carry forward of the technical renovation project of brewing forcompletion in the current period.
7.12.2. Significant changes in construction in progress
Monetary Unit: CNY
| 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 of Luzhou Laojiao | 8,877,276,500.00 | 968,634,809.01 | 124,187,567.03 | 1,086,474,905.09 | 6,347,470.95 | 94.05% | 100.00% | 109,424,753.82 | 22,310,774.20 | 3.67% | Capital raised and self-raised | |
| Improvement and technical renovation project of | 888,544,100.00 | 242,719,982.63 | 320,343,839.19 | 563,063,821.82 | 64.20% | 98.00% | Other |
| Luzhou Laojiao production supporting | ||||||||||||
| Marketing network command center office area reconstruction and expansion project | 299,600,000.00 | 5,473,631.57 | 16,447,932.75 | 21,921,564.32 | 93.62% | 100.00% | Other | |||||
| New model application project of intelligent production workshop of solid state liquor | 245,100,000.00 | 16,862,599.30 | 16,702,400.18 | 160,199.12 | 95.98% | 100.00% | Other | |||||
| Technical renovation of Luzhou Laojiao Intelligent | 1,577,913,400.00 | 206,167,904.88 | 95,817,257.77 | 301,985,162.65 | 19.57% | 20.00% | Other |
| packaging center | ||||||||||||
| Guojiao Culture Park Qiankun Wine Castle Cultural Tourism project | 337,885,813.44 | 305,548,667.25 | 10,694,317.63 | 289,900,020.76 | 26,342,964.12 | 93.76% | 100.00% | Other | ||||
| Landscape improvement project of Luzhou Laojiao Huangyi Brewing Ecological Park | 200,065,400.00 | 1,883,254.38 | 147,206,191.56 | 149,089,445.94 | 79.47% | 90.00% | Other | |||||
| Total | 12,426,385,213.44 | 1,747,290,849.02 | 714,697,105.93 | 1,414,998,890.35 | 32,850,634.191 | 1,014,138,430.41 | -- | -- | 109,424,753.82 | 22,310,774.20 | 3.67% | -- |
Note: 1. Other decreases refer to land use rights, software and low priced and easily worn articlestransferred to intangible assets.
7.13. Right-of-use assets
Monetary Unit: CNY
| Item | Land use right | Buildings and constructions | Total |
| I. Original cost | |||
| 1. Opening Balance | 32,680,786.33 | 17,520,623.03 | 50,201,409.36 |
| 2. Increase in current period | 15,369,867.64 | 15,369,867.64 | |
| (1) Lease in | 15,556,655.18 | 15,556,655.18 | |
| (2) Changes of exchange rates | -186,787.54 | -186,787.54 | |
| 3. Decrease in current period |
| (1) Other | |||
| 4. Closing Balance | 32,680,786.33 | 32,890,490.67 | 65,571,277.00 |
| II. Accumulated amortization | |||
| 1. Opening Balance | |||
| 2. Increase in current period | 3,634,912.70 | 9,221,554.26 | 12,856,466.96 |
| (1) Provision | 3,634,912.70 | 9,275,999.65 | 12,910,912.35 |
| (2) Changes of exchange rates | -54,445.39 | -54,445.39 | |
| 3. Decrease in current period | |||
| (1) Disposal | |||
| 4. Closing Balance | 3,634,912.70 | 9,221,554.26 | 12,856,466.96 |
| III. Provision for impairment | |||
| 1. Opening Balance | |||
| 2. Increase in current period | |||
| (1) Provision | |||
| 3. Decrease in current period | |||
| (1) Disposal | |||
| 4. Closing Balance | |||
| IV. Book Value | |||
| 1. Closing Book Value | 29,045,873.63 | 23,668,936.41 | 52,714,810.04 |
| 2. Opening Book Value | 32,680,786.33 | 17,520,623.03 | 50,201,409.36 |
7.14. Intangible assets
7.14.1. Details of intangible assets
Monetary Unit: CNY
| Item | Land use right | Patent right | No-patent right technology | Computer software | Trademark right | Total |
| I. Original cost | ||||||
| 1. Opening Balance | 2,743,432,254.34 | 1,700,050.44 | 48,066,415.14 | 1,890,746.08 | 2,795,089,466.00 | |
| 2. Increase in | 770,063.00 | 12,649,335.91 | 13,419,398.91 |
| current period | ||||||
| (1) Acquired | 3,356,835.73 | 3,356,835.73 | ||||
| (2) Internal developed | ||||||
| (3) Business combination | ||||||
| (4) Transferred from construction in progress | 770,063.00 | 9,292,500.18 | 10,062,563.18 | |||
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | 2,744,202,317.34 | 1,700,050.44 | 60,715,751.05 | 1,890,746.08 | 2,808,508,864.91 | |
| II. Accumulated amortization | ||||||
| 1. Opening Balance | 110,708,419.78 | 570,599.00 | 24,977,019.46 | 1,715,402.39 | 137,971,440.63 | |
| 2. Increase in current period | 60,638,766.62 | 130,005.04 | 3,326,236.56 | 83,227.34 | 64,178,235.56 | |
| (1) Provision | 60,638,766.62 | 130,005.04 | 3,326,236.56 | 83,227.34 | 64,178,235.56 | |
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | 171,347,186.40 | 700,604.04 | 28,303,256.02 | 1,798,629.73 | 202,149,676.19 | |
| III. Provision for impairment | ||||||
| 1. Opening Balance | ||||||
| 2. Increase in current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | ||||||
| IV. Book Value | ||||||
| 1. Closing Book Value | 2,572,855,130.94 | 999,446.40 | 32,412,495.03 | 92,116.35 | 2,606,359,188.72 | |
| 2. Opening Book Value | 2,632,723,834.56 | 1,129,451.44 | 23,089,395.68 | 175,343.69 | 2,657,118,025.37 |
There is no proportion of intangible assets formed by internal development to the balance of intangibleassets at the period-end.
7.15. Long-term deferred expense
Monetary Unit: CNY
| Item | Opening Balance | Increase | Amortization | Other decrease | Closing Balance |
| Improvement expense of rented fixed assets | 2,305,902.21 | 842,033.00 | 1,463,869.21 | ||
| Total | 2,305,902.21 | 842,033.00 | 1,463,869.21 |
7.16. Deferred tax assets/ deferred tax liabilities
7.16.1. Deferred tax assets before offset
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairment | 127,059,130.30 | 31,755,535.22 | 208,184,340.96 | 52,032,763.16 |
| Unrealized profits from internal transactions | 3,161,541,177.98 | 790,385,294.49 | 2,210,592,352.66 | 552,648,088.16 |
| Deductible losses | 5,716,197.58 | 1,429,049.40 | 11,342,715.00 | 2,835,678.76 |
| Impact from salary | 591,456,408.66 | 145,429,434.14 | 441,020,431.90 | 108,714,676.83 |
| Impact from deferred earnings | 28,531,014.28 | 7,132,753.57 | 29,739,000.00 | 7,434,750.00 |
| Impact from fixed assets depreciation | 529,787.16 | 96,441.51 | 260,745.17 | 43,022.95 |
| Recognition costs of restricted shares for equity incentive in the lock-up period | 34,895,071.181 | 8,446,243.50 | ||
| Impact from fair value changes of other equity instrument investment | 5,752,926.37 | 1,438,231.59 | 6,006,723.91 | 1,501,680.98 |
| Total | 3,955,481,713.51 | 986,112,983.42 | 2,907,146,309.60 | 725,210,660.84 |
Note: 1. Deductible temporary differences of CNY 34,895,071.18 of costs and expenses recognizedduring the lock-up period of restricted shares for share incentives represent the estimated future pre-taxdeductible amounts based on the Company's share price less the grant price at the end of the period.
7.16.2. Deferred tax liabilities before offset
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Fair value changes of other equity instrument investment | 263,959,837.80 | 65,989,959.48 | 248,604,284.33 | 62,151,071.11 |
| Fair value changes of held-for-trading financial assets | 6,352,241.79 | 1,588,060.45 | ||
| Total | 270,312,079.59 | 67,578,019.93 | 248,604,284.33 | 62,151,071.11 |
7.16.3. Details of unrecognized deferred tax assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Deductible losses | 201,219,210.53 | 123,969,302.33 |
| Impact from employee benefits payable | 139,023.54 | 74,816.40 |
| Total | 201,358,234.07 | 124,044,118.73 |
7.16.4. Deductible losses from unrecognized deferred tax assets will due on the following years
Monetary Unit: CNY
| Year | Closing Amount | Opening Amount | Notes |
| The 1st year | |||
| The 2nd year | 6,713,657.39 | 535,737.90 | |
| The 3rd year | 14,491,365.44 | 11,691,604.41 | |
| The 4th year | 108,989,982.02 | 111,741,960.02 | |
| The 5th year | 71,024,205.68 | ||
| Total | 201,219,210.53 | 123,969,302.33 | -- |
7.17. Other non-current assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Prepaid equipment and land expense | 650,384,435.70 | 650,384,435.70 | 10,806,325.86 | 10,806,325.86 | ||
| Total | 650,384,435.70 | 650,384,435.701 | 10,806,325.86 | 10,806,325.86 | ||
Note: 1. The closing balance increased CNY 639,578,109.84 compared with the opening balance, withan increase by 5918.55%, mainly due to the prepayment of land expense and security deposits forintended constructions of the Brewing Company, the Company's subsidiary, in the current period.
7.18. Notes payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Bank acceptance bill | 121,285,117.60 | |
| Total | 121,285,117.60 |
The total amount of notes payable due but unpaid was CNY 0.00.
7.19. Accounts payable
7.19.1. Presentation of accounts payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Materials and service expense | 1,171,595,976.46 | 845,025,160.84 |
| Engineering equipment expense | 1,248,758,493.07 | 1,759,264,038.93 |
| Total | 2,420,354,469.53 | 2,604,289,199.77 |
7.19.1. Significant accounts payable whose aging is longer than 1 year
Monetary Unit: CNY
| Category | Closing Balance | Reason for not payment or carrying forward |
| China Construction First Group Corporation Limited | 350,304,244.39 | Within the contract settlement period |
| Total | 350,304,244.39 | -- |
7.20. Contract liabilities
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Within 1 year | 3,484,385,115.64 | 1,637,685,488.79 |
| 1-2 years | 4,042,470.18 | 15,504,524.56 |
| 2-3 years | 1,569,941.86 | 14,385,601.53 |
| Over 3 years | 20,113,173.57 | 11,261,552.06 |
| Total | 3,510,110,701.251 | 1,678,837,166.94 |
Note: 1. The closing balance increased CNY 1,831,273,534.31 compared with the opening balance, withan increase by 109.08%, mainly due to the increase of advances from customers with the expansion ofsales scale. 2. There is no significant contract liability whose aging is longer than 1 year.
7.21. Employee benefits payable
7.21.1. Employee benefits payable shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Short-term benefits | 439,256,934.36 | 1,082,211,974.58 | 910,278,343.02 | 611,190,565.92 |
| 2. Post-employment benefits- defined contribution plans | 65,756,721.30 | 82,898,386.32 | 111,750,904.11 | 36,904,203.51 |
| 3. Termination benefits | 8,971.53 | 436,289.79 | 436,289.79 | 8,971.53 |
| Total | 505,022,627.19 | 1,165,546,650.69 | 1,022,465,536.92 | 648,103,740.96 |
7.21.2. Short-term employee benefits payable shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Wages, bonuses, allowances and grants | 362,289,928.18 | 944,161,801.21 | 757,135,473.94 | 549,316,255.45 |
| 2. Employees’ welfare | 32,343,838.35 | 32,343,838.35 | ||
| 3. Social insurance premiums | 15,250,336.23 | 28,695,655.44 | 38,579,989.96 | 5,366,001.71 |
| Including: Medical insurance premium | 11,428,828.49 | 27,046,556.20 | 36,236,506.00 | 2,238,878.69 |
| Work-related injury insurance | 2,035,870.30 | 1,565,937.23 | 2,192,141.96 | 1,409,665.57 |
| Maternity insurance premium | 1,784,957.44 | 83,162.01 | 151,342.00 | 1,716,777.45 |
| Other insurance premium | 680.00 | 680.00 | ||
| 4. Housing funds | 4,504,648.59 | 61,219,031.71 | 56,493,151.07 | 9,230,529.23 |
| 5. Labor union expenditures and employee education funds | 57,212,021.36 | 15,791,647.87 | 25,725,889.70 | 47,277,779.53 |
| Total | 439,256,934.36 | 1,082,211,974.58 | 910,278,343.02 | 611,190,565.92 |
7.21.3. Defined contribution plan shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Basic endowment insurance premium | 44,864,948.21 | 46,637,986.15 | 73,852,099.51 | 17,650,834.85 |
| 2. Unemployment insurance premium | 7,388,102.26 | 1,286,795.26 | 2,681,630.93 | 5,993,266.59 |
| 3. Enterprise annuity | 13,503,670.83 | 34,973,604.91 | 35,217,173.67 | 13,260,102.07 |
| Total | 65,756,721.30 | 82,898,386.32 | 111,750,904.11 | 36,904,203.51 |
7.22. Taxes payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 421,216,223.94 | 244,763,614.30 |
| Consumption tax | 1,263,440,836.05 | 1,059,445,349.23 |
| Enterprise income tax | 1,327,750,786.20 | 606,140,406.79 |
| Urban maintenance and construction tax | 82,437,545.17 | 72,389,068.64 |
| Education surcharge | 35,234,596.27 | 31,023,067.68 |
| Local education surcharge | 23,651,376.27 | 20,682,045.08 |
| Individual income tax | 10,467,970.24 | 5,265,751.31 |
| Stamp duty | 8,490,523.62 | 5,351,912.65 |
| Land use tax | 437,619.35 | 616,030.55 |
| Property tax | 337,645.12 | 337,763.14 |
| Others | 14,505.56 | 12,201.76 |
| Total | 3,173,479,627.791 | 2,046,027,211.13 |
Note: 1. At the end of the period, the revenue increased by CNY 1,127,452,416.66, up 55.10%compared with the beginning of the period, which was mainly due to the impact of the correspondingincrease in turnover and additional taxes and enterprise income tax related to the sale of products as thescale of revenue and profit increased during the period.
7.23. Other payables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Other payables | 652,393,292.60 | 501,623,924.54 |
| Total | 652,393,292.60 | 501,623,924.54 |
7.23.1. Other payables
7.23.1.1. Categories by nature
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Security deposit | 628,174,772.12 | 485,228,527.19 |
| Intercourse funds | 17,757,284.78 | 8,599,977.98 |
| Others | 6,461,235.70 | 7,795,419.37 |
| Total | 652,393,292.60 | 501,623,924.54 |
7.23.1.2. Significant other payables whose aging are longer than 1 yearOther statements:
Other payables whose aging are longer than 1 year are mainly security deposits collected from dealers.
7.24. Non-current liabilities due within one year
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Interest of bonds payable due within one year | 72,219,178.08 | 72,219,178.08 |
| Lease liabilities due within one year | 13,983,036.95 | 9,987,955.08 |
| Total | 86,202,215.03 | 82,207,133.16 |
7.25. Other current liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Output VAT to be transferred | 456,314,391.17 | 218,267,353.36 |
| Total | 456,314,391.17 | 218,267,353.36 |
7.26. Bonds payable
7.26.1. Bonds payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Corporate bonds in 2019 (Phase I) | 2,494,539,629.08 | 2,492,799,107.31 |
| Corporate bonds in 2020 (Phase I) | 1,496,246,113.15 | 1,495,072,992.71 |
| Total | 3,990,785,742.23 | 3,987,872,100.02 |
7.26.2. Increase/decrease of bonds payable (excluding other financial instrument classified asfinancial liabilities such as preferred shares and perpetual bonds)
Monetary Unit: CNY
| Bond name | Par value | Issuing date | Duration | Issuing amount | Opening Balance | Issued in the current period | Withdrawal of interest by par value | Amortization of premium and depreciat | Repayment in the reporting period | Closing Balance |
| ion | |||||||||||
| Corporate bonds in 2019 (Phase I) | 2,500,000,000.00 | 27 August 2019 | 3+2 | 2,490,000,000.00 | 2,492,799,107.31 | 89,500,000.00 | 1,740,521.77 | 2,494,539,629.08 | |||
| Corporate bonds in 2020 (Phase I) | 1,500,000,000.00 | 16 March 2020 | 5 | 1,494,000,000.00 | 1,495,072,992.71 | 52,500,000.00 | 1,173,120.44 | 1,496,246,113.15 | |||
| Total | -- | -- | -- | 3,984,000,000.00 | 3,987,872,100.02 | 142,000,000.00 | 2,913,642.21 | 3,990,785,742.23 |
7.27. Lease liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Lease payment | 61,305,700.55 | 57,445,299.62 |
| Less: unrecognized financing cost | -6,654,995.52 | -7,243,890.26 |
| Lease liabilities due within one year | -13,983,036.95 | -9,987,955.08 |
| Total | 40,667,668.08 | 40,213,454.28 |
7.28. Deferred income
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Reason |
| Government grants | 29,739,000.00 | 12,175,000.00 | 13,382,985.72 | 28,531,014.28 | Reception of financial allocation |
| Total | 29,739,000.00 | 12,175,000.00 | 13,382,985.72 | 28,531,014.28 | -- |
Details:
Monetary Unit: CNY
| 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 and application project of intelligent | 1,904,000.00 | 1,904,000.00 | Related to assets |
| production line for liquor brewing and qu-making | ||||||||
| New mode application project of digital workshop for solid state liquor production | 3,465,000.00 | 3,465,000.00 | 859,700.00 | 6,070,300.00 | Related to assets | |||
| Construction project of spirit room of Luzhou Laojiao brewing technical renovation | 7,000,000.00 | 1,050,000.00 | 5,950,000.00 | Related to assets | ||||
| Luzhou Laojiao automatic wine production line technical renovation project | 500,000.00 | 75,000.00 | 425,000.00 | Related to assets | ||||
| Construction project of pottery jars room of Luzhou Laojiao brewing technical renovation | 3,870,000.00 | 3,870,000.00 | Related to assets | |||||
| Boiler reconstruction project | 3,000,000.00 | 5,850,000.00 | 1,264,285.72 | 7,585,714.28 | Related to assets |
| of Luohan Brewing Base of Luzhou Laojiao | ||||||||
| New mode application project of workshop for solid state liquor production | 2,860,000.00 | 2,860,000.00 | Related to assets | |||||
| Brewing wastewater treatment project | 10,000,000.00 | 1,500,000.00 | 8,500,000.00 | Related to assets | ||||
| Total | 29,739,000.00 | 12,175,000.00 | 13,382,985.72 | 28,531,014.28 |
7.29. Share capital
Monetary Unit: CNY
| 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 | |||||
7.30. Capital reserves
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Share premium (capital premium) | 3,542,967,507.48 | 3,542,967,507.48 | ||
| Other capital reserves | 179,809,555.65 | 32,577,602.60 | 212,387,158.25 | |
| Total | 3,722,777,063.13 | 32,577,602.60 | 3,755,354,665.73 |
Other statements, including increase/decrease and reasons thereof:
During the period, the Company implemented a share incentive scheme under which a total of 6,928,600
stock options were granted to 441 core management and key personnel at CNY 92.71 per share; theincrease in other capital reserves for the period was mainly due to the impact of the income tax of thecosts and expenses to be recognized in the period for the issuance of restricted shares and the expectedpre-tax deductible amount in future periods in excess of the recognized costs and expenses.
7.31. Other comprehensive income
Monetary Unit: CNY
| 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: Previously recognized in other comprehensive income transferred to retained earnings | Less: Income tax | Amount attribute to parent company after tax | Amount attribute to non-controlling shareholders after tax | |||
| I. Other comprehensive income that will not be reclassified into profit and loss | 181,898,170.29 | 11,707,013.25 | 11,707,013.25 | 193,605,183.54 | ||||
| Fair value changes of other equity instrument investment | 181,898,170.29 | 11,707,013.25 | 11,707,013.25 | 193,605,183.54 | ||||
| II. Other comprehensive income that will be reclassified into profit and loss | 4,165,154.74 | -30,788,571.62 | -30,243,185.96 | -545,385.66 | -26,078,031.22 | |||
| Including: Other comprehensive income that will be reclassified into profit and loss under equity method | 3,193,937.48 | -29,576,301.94 | -29,576,301.94 | -26,382,364.46 | ||||
| Difference from conversion of financial statements in foreign currency | 971,217.26 | -1,212,269.68 | -666,884.02 | -545,385.66 | 304,333.24 | |||
| Total | 186,063,325.03 | -19,081,558.37 | -18,536,172.71 | -545,385.66 | 167,527,152.32 | |||
Other statements, including the adjustment of the effective gain/loss on cash flow hedges to the initialrecognized amount:
7.32. Surplus reserves
Monetary Unit: CNY
| 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 |
7.33. Undistributed profits
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Undistributed profit before adjustment at the end of the last year | 16,236,513,212.43 | 12,559,746,579.91 |
| Undistributed profit after adjustment at the beginning of year | 16,236,513,212.43 | 12,559,746,579.91 |
| Plus: Net profit attributable to owners of the parent company for the current period | 7,955,554,351.73 | 6,005,723,069.36 |
| Less: Ordinary share dividends payable | 3,004,207,328.27 | 2,328,956,436.84 |
| Undistributed profits at the end of the period | 21,187,860,235.89 | 16,236,513,212.43 |
7.34. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 20,415,170,469.09 | 2,885,685,151.63 | 16,447,960,569.22 | 2,711,434,006.97 |
| Other business | 227,091,255.28 | 66,746,336.68 | 204,893,980.58 | 112,050,551.09 |
| Total | 20,642,261,724.37 | 2,952,431,488.31 | 16,652,854,549.80 | 2,823,484,558.06 |
Whether the lower of the net profit before and after deduction of non-recurring gains and losses throughaudit is negative? Yes √ No
Details:
Monetary Unit: CNY
| Contract category | Liquor sales | Total |
| Commodity type | 20,415,170,469.09 | 20,415,170,469.09 |
| Including: | ||
| Medium and high grade liquor | 18,397,360,159.99 | 18,397,360,159.99 |
| Other liquor | 2,017,810,309.10 | 2,017,810,309.10 |
| By operating segment | 20,415,170,469.09 | 20,415,170,469.09 |
| Including: | ||
| Domestic | 20,331,834,106.49 | 20,331,834,106.49 |
| Outbound | 83,336,362.60 | 83,336,362.60 |
| Contract type | 20,415,170,469.09 | 20,415,170,469.09 |
| Including: | ||
| Commodity sales contract | 20,415,170,469.09 | 20,415,170,469.09 |
| Total | 20,415,170,469.09 | 20,415,170,469.09 |
Details about performance obligations:
N/A
7.35. Business taxes and surcharges
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Consumption tax | 2,251,935,882.19 | 1,789,225,806.16 |
| Urban maintenance and construction tax | 286,067,925.02 | 219,027,065.80 |
| Educational surcharge | 122,600,539.31 | 93,865,221.95 |
| Property tax | 74,979,375.32 | 12,002,201.20 |
| Land use tax | 30,117,077.49 | 29,309,222.09 |
| Stamp duty | 17,354,822.83 | 17,510,277.63 |
| Local education surcharge | 81,733,692.89 | 62,576,814.64 |
| Others | 112,227.80 | 55,347.36 |
| Total | 2,864,901,542.85 | 2,223,571,956.83 |
7.36. Selling and distribution expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Advertising promotion expense | 1,769,053,962.56 | 1,316,519,804.16 |
| Promotion expense | 1,139,273,684.38 | 1,074,611,735.49 |
| Employee compensation | 357,659,249.63 | 324,598,768.07 |
| Storage and logistics costs | 100,059,219.52 | 92,177,677.09 |
| Others | 233,165,488.47 | 282,747,847.44 |
| Total | 3,599,211,604.56 | 3,090,655,832.25 |
7.37. General and administrative expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Employee compensation | 540,848,428.46 | 407,645,132.83 |
| Depreciation and amortization | 128,396,634.90 | 106,498,999.53 |
| Management fee and service expense | 73,918,283.32 | 68,388,629.63 |
| Others | 312,953,021.17 | 261,921,705.48 |
| Total | 1,056,116,367.85 | 844,454,467.47 |
7.38. Research and development expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Comprehensive research and development expenses | 137,712,329.78 | 85,858,119.80 |
| Total | 137,712,329.78 | 85,858,119.80 |
7.39. Financial expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Interest expenses | 195,125,786.35 | 190,368,213.56 |
| Less: Interest income | 419,897,541.04 | 333,430,076.04 |
| Losses from currency exchange | 3,646,806.44 | 8,940,312.77 |
| Handling charges | 2,280,061.14 | 1,676,346.97 |
| Amortization of unrecognized financing costs | 1,958,887.90 | |
| Total | -216,885,999.21 | -132,445,202.74 |
Other statements:
Note: The current period decreased CNY 84,440,796.47 compared with previous period with a decreaseby 63.76%, mainly due to increase in interest income of capital.
7.40. Other income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Government grants | 50,986,059.68 | 31,409,825.37 |
| Individual income tax commission refund | 1,333,171.71 | 635,628.11 |
| Total | 52,319,231.39 | 32,045,453.48 |
| Including: details of government grants | ||
| Projects | ||
| Transfer from deferred income | 13,382,985.72 | 976,000.00 |
| Subsidy project of liquor industry development | 22,711,700.00 | 13,967,500.00 |
| High-value Patent Incubation Center Project of Luzhou Laojiao | 800,000.00 | |
| Demonstration project of brewing waste and thermochemical soil improvement materials coupled with green planting | 150,000.00 | 800,100.00 |
| Provincial industrial development fund | 150,000.00 | 790,000.00 |
| Special fund for central foreign economic and trade development | 2,000,000.00 | |
| Other projects-related to income | 13,791,373.96 | 12,876,225.37 |
| Subtotal | 50,986,059.68 | 31,409,825.37 |
7.41. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under the equity method | 195,543,058.40 | 192,119,093.92 |
| Dividend income gained during the period of holding other equity instrument investment | 6,662,660.52 | 9,379,824.36 |
| Total | 202,205,718.92 | 201,498,918.28 |
Other statements:
Note: There is no major restriction on the repatriation of the Company's investment income.
Including: investment income from long-term equity investments under the equity method:
| Item | Current Period | Previous Period |
| Huaxi Securities Co.,Ltd. | 169,638,351.75 | 197,511,851.10 |
Sichuan Development Wine Investment Co., Ltd.
| Sichuan Development Wine Investment Co., Ltd. | -1,127,623.31 | -6,128,272.50 |
| Sichuan Tongniang Liquor Industry Technology Research Institute Co., Ltd. | -122,437.28 | 9,898.80 |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 27,154,767.24 | 725,616.52 |
Subtotal
| Subtotal | 195,543,058.40 | 192,119,093.92 |
Including: dividend income gained during the period of holding other equity instrument investment:
| Item | Current Period | Previous Period |
| North Chemical Industries Co.,Ltd. | 62,542.20 | 85,995.53 |
| Luzhou Bank Co., Ltd. | 4,700,800.00 |
Guotai Junan Securities Co.,Ltd.
| Guotai Junan Securities Co.,Ltd. | 6,595,118.32 | 4,593,028.83 |
| Luzhou Zunchi Automobile Service Co., Ltd. | 5,000.00 |
Subtotal
| Subtotal | 6,662,660.52 | 9,379,824.36 |
7.42. Gain on changes in fair value
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Held-for-trading financial assets | 6,352,241.79 | |
| Total | 6,352,241.79 |
7.43. Credit impairment loss
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Bad debt loss of other receivables | 81,132,441.19 | -519,776.25 |
| Bad debt loss of accounts receivable | -6,326.31 | 893,511.05 |
| Total | 81,126,114.88 | 373,734.80 |
7.44. Gains from disposal of assets
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Gains from disposal of non-current assets | -347,429.88 | 8,123,010.18 |
| Including: Gains from disposal of fixed assets | -347,429.88 | 8,123,010.18 |
| Total | -347,429.88 | 8,123,010.18 |
7.45. Non-operating income
Monetary Unit: CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Government grants | 770,893.47 | 770,893.47 | |
| Compensation for default | 19,559,751.36 | 10,199,933.23 | 19,559,751.36 |
| Gains from damage retirement of non-current assets | 1,537.72 | ||
| Others | 6,916,063.05 | 22,444,302.22 | 6,916,063.05 |
| Total | 27,246,707.88 | 32,645,773.17 | 27,246,707.88 |
Government grants included in the current gains and losses
Monetary Unit: CNY
| Item | Distribution entity | Distribution reason | Nature | Whether influence the profits or losses of the year or not | Special subsidy or not | Current Period | Previous Period | Related to assets/related to income |
| Subsidies for the daily management of the "National Cellar Square” | Luzhou City Administration and Law Enforcement Bureau | Subsidy | Subsidies obtained from the state by undertaking the sustainability of public utilities, the supply of socially necessary products, or the function of price control | Yes | No | 47,169.81 | 0.00 | Related to income |
| Paycheck Protection Program | SBA | Subsidy | Yes | No | 723,723.66 | 0.00 | Related to income | |
| Subtotal | 770,893.47 |
7.46. Non-operating costs
Monetary Unit: CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Donation | 60,835,600.00 | 34,512,439.19 | 60,835,600.00 |
| Losses from damage retirement of non-current assets | 806,635.52 | 4,038,052.47 | 806,635.52 |
| Others | 5,075,251.57 | 14,384,367.97 | 5,075,251.57 |
| Total | 66,717,487.09 | 52,934,859.63 | 66,717,487.09 |
7.47. Income tax expense
7.47.1. Statement of income tax expense
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Current period income tax | 2,872,508,387.20 | 2,029,490,921.16 |
| Deferred income tax | -258,811,286.01 | -48,978,715.23 |
| Total | 2,613,697,101.191 | 1,980,512,205.93 |
Note: 1. The current period increased CNY 633,184,895.26 compared with previous period with anincrease by 31.97%, mainly due to the increase in corporate income tax with the increase in profits. 2.Details of income tax rates were shown on “6. Taxes”.
7.47.2. Adjustment for accounting profit and income tax expense
Monetary Unit: CNY
| Item | Current Period |
| Total profit | 10,550,959,488.12 |
| Income tax expenses determined by statutory/applicable tax rate | 2,637,739,872.03 |
| Impact from subsidiaries’ different tax rates | -4,418,344.91 |
| Impact from adjust for impact from income tax expense in previous period | 4,951,923.72 |
| Impact from non-taxable income | -45,503,284.40 |
| Impact from non-deductible costs, expenses and losses | 3,297,976.60 |
| Impact from deductible temporary difference or losses due | 17,802,499.56 |
| to unrecognized deferred tax asset in current period | |
| Impact from research and development expense deduction | -173,541.41 |
| Income tax expense | 2,613,697,101.19 |
7.48. Other comprehensive income
Details in Note 5.31. Other comprehensive income.
7.49. Notes to the statement of cash flow
7.49.1. Cash received from other operation activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Recovery of saving deposits involving contract disputes | 152,667,999.25 | 2,355,385.84 |
| Government grants | 50,548,967.43 | 37,303,825.37 |
| Interest income from bank deposit | 376,116,197.20 | 323,791,542.69 |
| Others | 390,669,424.61 | 173,255,839.98 |
| Total | 970,002,588.49 | 536,706,593.88 |
7.49.2. Cash paid for other operating activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for expenses | 3,304,969,529.27 | 2,830,977,073.82 |
| Total | 3,304,969,529.27 | 2,830,977,073.82 |
7.49.3. Cash paid for other financing activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Rating and registration fee for corporate bonds in 2020 (Phase I) | 180,000.00 | |
| Cash paid for rent of right-of-use assets | 11,862,090.12 | |
| Cash deposits paid for L/G | 10,509,017.10 | |
| Total | 22,371,107.22 | 180,000.00 |
7.50. Supplementary information to statement of cash flow
7.50.1. Supplementary information to statement of cash flow
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| 1. Reconciliation of net profit to cash flow from operating activities: | -- | -- |
| Net profit | 7,937,262,386.93 | 5,958,514,642.48 |
| Plus: Provision for asset impairment | -81,126,114.88 | -373,734.80 |
| Depreciation of fixed asset, oil and gas assets and productive biological assets | 486,856,196.13 | 286,685,687.57 |
| Depreciation of right-of-use assets | 12,910,912.35 | |
| Amortization of intangible assets | 64,178,235.56 | 21,556,291.52 |
| Amortization of long-term deferred expense | 842,033.00 | 671,330.69 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (Gains use “-”) | 347,429.88 | -8,123,010.18 |
| Losses from retirement of fixed assets (Gains use “-”) | 806,635.52 | 4,036,514.75 |
| Losses from change in fair value (Gains use “-”) | -6,352,241.79 | |
| Financial expenses (Gains use “-”) | 128,173,454.89 | 67,528,556.11 |
| Losses on investments (Gains use “-”) | -202,205,718.92 | -201,498,918.28 |
| Decrease in deferred income tax assets (Increase uses “-”) | -260,399,346.46 | -48,978,715.23 |
| Increase in deferred income tax liabilities (Decrease uses “-”) | 1,588,060.45 | |
| Decrease in inventories (Increase use “-”) | -2,581,909,735.55 | -1,054,428,338.92 |
| Decrease in operating receivables (Increase use “-”) | -1,483,346,245.17 | -742,428,686.42 |
| Increase in operating payables (Decrease use “-”) | 3,681,022,162.57 | 632,940,832.01 |
| Others | ||
| Net cash flows from operating activities | 7,698,648,104.51 | 4,916,102,451.30 |
| 2. Significant investing and financing | -- | -- |
| activities not involving cash: | ||
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under financing lease | ||
| 3.Net change in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 13,402,528,941.83 | 11,568,195,062.81 |
| Less: Opening balance of cash | 11,568,195,062.81 | 9,752,266,526.78 |
| Plus: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net change in cash and cash equivalents | 1,834,333,879.02 | 1,815,928,536.03 |
7.50.2. Composition of cash and cash equivalent
Monetary Unit: CNY
| Item | Opening Balance | Closing Balance |
| 1. Cash | 13,402,528,941.83 | 11,568,195,062.81 |
| Including: Cash on hand | 26,281.86 | 26,978.10 |
| Unrestricted bank deposit | 13,391,713,104.08 | 11,561,257,398.27 |
| Other unrestricted cash and cash equivalents | 10,789,555.89 | 6,910,686.44 |
| 3. Closing balance of cash and cash equivalents | 13,402,528,941.83 | 11,568,195,062.81 |
| Including: Cash and cash equivalent with restriction to use of parent company and subsidiaries | 110,965,638.73 | 56,675,277.79 |
Other statements:
Note: 1. The cash and cash equivalent with restriction to use are CNY 110,965,638.73, of which, CNY1,400,000.00 is a travel service deposit with limited use rights in other cash and cash equivalents, CNY10,509,017.10 is the bank cash deposits for L/G and CNY 99,056,621.63 is provision for fixed depositinterest on an accrual basis.Note 2: The amount of direct payment for goods and long-term assets (not involving cash flows) by theendorsement of bank acceptances receivable in the current and previous periods was CNY1,032,537,514.80 and CNY 187,077,553.36, respectively, which were not included in "cash receivedfrom sales of goods or rendering of services", "cash paid for goods and services" and "cash paid for thepurchase of fixed assets, intangible assets and other long-term assets" of the cash flow budget.
7.51. Assets with restricted ownership or use rights
Monetary Unit: CNY
| Item | Closing book balance | Reason for restriction |
| Bank deposits | 99,056,621.63 | Provision for fixed deposit interest on an accrual basis |
| Other cash and cash equivalents | 11,909,017.10 | Travel service deposit with limited use rights and bank cash deposits for L/G |
| Total | 110,965,638.73 | -- |
7.52. Foreign currency transactions
7.52.1. Foreign currency transactions
Monetary Unit: CNY
| Item | Closing Balance in Foreign Currency | Exchange Rate | Closing Balance in CNY |
| Cash at Bank and on Hand | -- | -- | |
| Including: USD | 39,412,559.35 | 6.3757 | 251,282,654.65 |
| EUR | 14,944.51 | 7.2197 | 107,894.88 |
| HKD | 3,611,517.25 | 0.8176 | 2,952,776.50 |
| GBP | 242,171.42 | 8.6064 | 2,084,224.11 |
| AUD | 8,647.10 | 4.6220 | 39,966.90 |
| Accounts Receivable | -- | -- | |
| Including: USD | 172,732.59 | 6.3757 | 1,101,291.17 |
| EUR | |||
| HKD | |||
| Long-term Loans | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other Receivables | |||
| Including: USD | 641.70 | 6.3757 | 4,091.29 |
| HKD | 1,414,131.69 | 0.8176 | 1,156,194.07 |
| Accounts Payable | |||
| Including: USD | 83,007.03 | 6.3757 | 529,227.92 |
| HKD | 2,471,754.99 | 0.8176 | 2,020,906.88 |
| Other Payables | |||
| Including: USD | 64,774.59 | 6.3757 | 412,983.35 |
| HKD | 39,907,105.29 | 0.8176 | 32,628,049.29 |
| Non-current liabilities due within one year | |||
| Including: HKD | 4,797,379.10 | 0.8176 | 3,922,337.15 |
| Lease liabilities | |||
| Including: HKD | 6,838,115.28 | 0.81760 | 5,590,843.05 |
7.52.2. Description of the foreign business entity, including the important foreign business entity,shall disclose its main foreign business place, bookkeeping standard currency and selectionbasis, and shall also disclose the reason for the change 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 |
Luzhou Laojiao Commercial Development (NorthAmerica) Co., Ltd.
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | USA | USD | Currency in the registration place |
| Mingjiang Co., Ltd. | USA | USD | Currency in the registration place |
7.53. Government grants
7.53.1. Details of government grants
Monetary Unit: CNY
| Item | Amount | Presentation | Amount included in profit or loss of the current period |
| Related to assets | 28,531,014.28 | Deferred income | 13,382,985.72 |
| Related to income | 37,603,073.96 | Other income | 37,603,073.96 |
| Related to income | 770,893.47 | Non-operating income | 770,893.47 |
| Total | 66,904,981.71 | 51,756,953.15 |
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 the reverse purchase,whether the assets and liabilities retained by the listed company constitute the business and its basis,the determination of the merger cost, and the adjustment of the equity amount and its calculationaccording 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 the subsidiary only once? Yes √ No
Whether there is a situation of disposing the investment in the subsidiary through several transactionsstep 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 new subsidiary,liquidating a subsidiary) and its related situation:
The subsidiary Luzhou Laojiao New Retail Co., Ltd. was established on 26 May 2021. The Companyholds 40% shares of it and the Company’s subsidiary Sales Company holds 60% shares of it.Subsidiaries Luzhou Laojiao Whitail Innovated Electronic Commerce Co., Ltd., Luzhou Laojiao SelectedElectronic Commerce Co., Ltd., Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. and LuzhouWhitail Tongdao Uncle Constellation Wine Sales Co., Ltd. were liquidated and cancelled respectively inDecember, December, July and June 2021.
9. Interests in other entities
9.1. Interests in subsidiaries
9.1.1. Group composition
| 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 Red Sorghum Modern Agricultural Development Co., Ltd. | Luzhou | Luzhou | Agricultural product planting and sales | 60.00% | Business combination under common control | |
| Luzhou Laojiao Sales 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. Note | Luzhou | Luzhou | Liquor sales | 15.00% | Investment | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | Qinzhou | Qinzhou | Red wine production and sales | 100.00% | Investment | |
| Luzhou Dingli Liquor Industry Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Dingyi | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Liquor Industry Sales Co., Ltd. | ||||||
| Luzhou Laojiao New Liquor Industry Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Luzhou | Luzhou | Wine import and export trade | 100.00% | Investment | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 75.00% | Investment | |
| Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Fruit Wine Industry Co., Ltd. Note | Luzhou | Luzhou | Fruit wine sales | 41.00% | Investment | |
| Mingjiang Co., Ltd. | America | America | Liquor sales | 54.00% | Investment | |
| Luzhou Laojiao New Retail Co., Ltd. | Luzhou | Luzhou | Liquor sales | 40.00% | 100.00% | Investment |
| Luzhou Pinchuang Technology Co., Ltd. | Luzhou | Luzhou | Technology development and service | 100.00% | 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 Commercial Development (North America) Co., Ltd. | America | America | Business development | 100.00% | Investment | |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Luzhou | Luzhou | Wine sales | 90.00% | Investment | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note | Luzhou | Luzhou | 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 Liquor Industry Co., Ltd., and Luzhou Laojiao Whitail Liquor Industry Co., Ltd. but inthese companies’ board, among the five members, the Company has sent three persons, which is in themajority. The Company has substantial control over these companies, so they are included in theconsolidation scope.
9.1.2. Important non-wholly-owned subsidiaries
Monetary Unit: CNY
| 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% | -8,977,267.45 | 60,655,083.40 |
| Total | -8,977,267.45 | 60,655,083.40 |
9.1.3. Major financial information of important non-wholly-owned subsidiaries
Monetary Unit: CNY
| 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. | 384,313,678.76 | 664,998.84 | 384,978,677.60 | 142,358,344.01 | 142,358,344.01 | 767,387,583.35 | 3,501,199.33 | 770,888,782.68 | 492,359,379.30 | 492,359,379.30 | ||
Monetary Unit: CNY
| 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. | 789,612,097.04 | -35,909,069.79 | -35,909,069.79 | 209,462,320.40 | 1,724,399,647.44 | -74,847,302.68 | -74,847,302.68 | 118,338,721.44 |
9.2. Interests in joint ventures and associates
9.2.1. Important joint ventures and 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 | Chengdu, Sichuan | 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 Company has the substantive decision-making power, so the Company still has significant influenceon Huaxi Securities.
9.2.2. Major financial information of important associates
Monetary Unit: CNY
| Closing Balance/Amount in current period | Opening Balance/Amount in previous period | |
| Current assets | 86,844,635,628.06 | 68,518,467,092.86 |
| Non-current assets | 8,950,278,369.10 | 8,710,176,937.94 |
| Total assets | 95,794,913,997.16 | 77,228,644,030.80 |
| Current liabilities | 57,157,134,622.07 | 42,599,988,723.12 |
| Non-current liabilities | 16,233,476,784.79 | 13,261,547,139.00 |
| Total liabilities | 73,390,611,406.86 | 55,861,535,862.12 |
| Non-controlling shareholder interest | 26,409,206.44 | 45,423,771.61 |
| Shareholder interest attributable to parent company | 22,377,893,383.86 | 21,321,684,397.07 |
| Share of net assets calculated based on shareholding proportion | 2,325,861,429.43 | 2,216,083,636.60 |
| Adjusted | ||
| --Goodwill | ||
| --Unrealized profits of internal transactions | ||
| --Others | 167,466,735.90 | 167,466,735.90 |
| Book value of equity investments in associate companies | 2,493,328,165.33 | 2,383,550,372.50 |
| Fair value of equity investments in associate companies that have public quote | 2,687,386,768.40 | 3,404,932,677.12 |
| Operating revenue | 5,121,995,492.55 | 4,682,755,761.60 |
| Net profit | 1,632,123,985.51 | 1,900,327,802.56 |
| Net profit from discontinued operation |
| Other comprehensive income | -284,563,526.94 | -28,530,081.19 |
| Total comprehensive income | 1,347,560,458.57 | 1,871,797,721.37 |
| Dividends from associate companies this year | 30,284,256.98 | 20,735,166.94 |
9.2.3. Financial information summarized of unimportant joint ventures and associate companies
Monetary Unit: CNY
| 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 | 133,416,070.92 | 94,116,798.77 |
| Total following items calculated on the basis of shareholding proportion | -- | -- |
| --Net profit | -8,112,270.24 | -16,435,307.24 |
| -- Total comprehensive income | -8,112,270.24 | -16,435,307.24 |
Other statements:
Unimportant associate companies refer to Sichuan Development Wine Investment Co., Ltd., SichuanTongniang Liquor Industry Technology Research Institute Co., Ltd. and CTS Luzhou Laojiao CulturalTourism Development Co., Ltd.
10. Risks related to financial instruments
The Company's primary financial instruments include monetary capital, trading financial assets,accounts receivable, receivables financing, receivables other than tax refundable, other equityinstruments, bills payable, accounts payable, other payables, lease liabilities and some other currentliabilities. A detailed description of each financial instrument is set out in Note V and notes to theConsolidated Financial Statement.Risks related to these financial instruments, and risk management policies the Company has adopted toreduce these risks are described as follows. The Company management manages and monitors the riskexposure to ensure the above risks are controlled in a limited scope.The Company adopts sensitivity analysis technology to analyze the possible impact of reasonable andpossible changes of risk variables on current profits/losses or shareholders' equity. As any risk variablerarely changes in isolation, and the correlation between variables will have a significant effect on the finalimpact amount of the change of a risk variable, the following content is based on the assumption that thechange of each variable is independent.
Risk management objective: The Company strikes an appropriate balance between risk and return, andstrives to minimize the negative impact of risk on the Company's operating performance and maximizethe interests of shareholders and other equity investors.Risk management policy: The Board of Directors shall be responsible for planning and establishing a riskmanagement framework, formulating risk management policies and related guidelines, and supervisingthe implementation of risk management measures. The Risk Management Committee shall carry out riskmanagement through close collaboration (including the identification, evaluation and avoidance ofrelevant risks) with other business units of the Company in accordance with the policies approved by theBoard of Directors. The internal audit department shall conduct regular audits on risk managementcontrols and procedures and report the results to the Audit Committee.The Company has formulated risk management policies to identify and analyze the risks it faces,clarifying specific risks and covering many aspects such as credit risk, liquidity risk and market riskmanagement. On a regular basis, the Company evaluates the specific marketing environment andvarious changes in the Company's business operations to determine whether any risk managementpolicy and system should be updated. The Company diversifies the risks to financial instruments throughappropriately diversified investments and business portfolios, and reduces the risk of concentration inany single industry, specific geographic area or specific counterparty by formulating appropriate riskmanagement policies.
10.1. Credit risk
Credit risk refers to the risk that one party to a financial instrument cannot perform its obligations,causing financial losses to the other party. The Company only trades with recognized, reputable, andlarge third parties. In accordance with the Company's policy, the terms of sale with customers are basedon transactions of payment before delivery, with only a small amount of credit transactions, and creditreview for all customers who require credit to trade. In addition, the Company continuously monitors andcontrols the balance of the receivables to ensure that the Company does not face significant bad debtrisks. In addition, the Company makes full provision for expected credit losses at each balance sheetdate based on the collection of receivables. Therefore, the Company's management believes that theCompany's credit risk has been greatly reduced.The Company's working capital is deposited in banks with high credit rating, so the credit risk of workingcapital is low.The Company's risk exposures are spread across multiple contract parties and customers in multiplegeographies, with customers in the commerce industry in addition to the alcohol distribution industry (themain industry). No systemic risk has been identified in the relevant industries. Therefore, the Companyhas no significant credit concentration risk. As at 31 December 2021, the balance of the top fivecustomers of the Company's accounts receivable amounted to CNY 1,552,600.00, accounting for
90.57% of the balance of the Company's accounts receivable.
10.2. Liquidity risk
Liquidity risk refers to the risk unable to obtain sufficient funds in time to meet business developmentneeds or to repay debts due and other payment obligations. The Company has sufficient working capital.The liquidity risk is extremely small. The Company's objective is to use a variety of financing instrumentssuch as bank clearing to maintain a balance between financing sustainability and flexibility. As at 31December 2021, the Company has been able to meet its own continuing operation requirements through
the use of cash flow from operations.The analysis of the financial liabilities held by the Company based on the maturity period of theundiscounted remaining contractual obligations is as follows:
| Item | Closing Balance | |||||
| Book value | Contract amount not discounted | Within 1 year | 1-2 years | 2-3 years | Over 3 years | |
| Notes payable | ||||||
| Accounts payable | 2,420,354,469.53 | 2,420,354,469.53 | 2,420,354,469.53 | |||
| Other payable | 652,393,292.60 | 652,393,292.60 | 652,393,292.60 | |||
Non-currentliabilitiesdue withinone year
| Non-current liabilities due within one year | 86,202,215.03 | 86,508,010.76 | 86,508,010.76 | |||
| Other current liabilities | 456,314,391.17 | 456,314,391.17 | 456,314,391.17 | |||
| Lease liabilities | 40,667,668.08 | 47,160,837.67 | 13,210,648.45 | 7236191.466 | 26,713,997.75 | |
| Subtotal | 3,655,932,036.41 | 3,662,731,001.73 | 3,615,570,164.06 | 13,210,648.45 | 7,236,191.47 | 26,713,997.75 |
10.3. Market risk
10.3.1. Foreign exchange risk
The foreign exchange risk refers to the risk of loss due to exchange rate changes. Apart from the threesubsidiaries of the Company which make purchases and sales in USD and HKD, the other majorbusiness activities are denominated and settled in CNY. The Company closely monitors the impact ofexchange rate movements on the Company's foreign exchange risk. As at 31 December 2021, theCompany's assets and liabilities are mainly in CNY balance. The Company's management considers theimpact of changes in foreign exchange risk on the Company's financial statements to be minimal.
10.3.2. Rate risk-changes in cash flow
The Company's operating capital is sufficient and in recent years there has been no external borrowing,so interest rate risk is minimal.
10.3.3. Other price risks
Other price risk refers to the risk of fluctuation caused by market price changes other than foreignexchange risk and interest rate risk, whether these changes are caused by factors related to a singlefinancial instrument or its issuer or all similar financial instruments traded in the market. Other price risksfaced by the Company mainly come from available-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
Monetary Unit: CNY
| Item | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| 1. Continuous measurement at fair value | -- | -- | -- | -- |
| 1.1 Held-for-trading financial assets | 706,352,241.79 | 706,352,241.79 | ||
| 1.1.1 Financial assets measured at fair value with their changes included into current profits/losses | 706,352,241.79 | 706,352,241.79 | ||
| 1.1.1.1 Investments in debt instruments | 706,352,241.79 | 706,352,241.79 | ||
| 1.3 Investments in other equity instruments | 328,828,994.56 | 34,483,125.87 | 363,312,120.43 | |
| Accounts receivable financing | 4,757,631,778.64 | 4,757,631,778.64 | ||
| Total liabilities continuously measured at fair value | 328,828,994.56 | 5,498,467,146.30 | 5,827,296,140.86 | |
| 2. Discontinuous measurement at fair value | -- | -- | -- | -- |
11.2. Determination basis of the market value of items measured continuously anddiscontinuously within Level 1 of the fair value hierarchyThe listed companies in mainland China determine the fair value of other equity instrument investmentaccording to the closing price on the last trading day of Shenzhen Stock Exchange or Shanghai StockExchange at the period-end. The companies listed in Hong Kong determine the fair value of other equityinstrument investment according to the closing price of Hong Kong Dollar on the last trading day of HongKong Stock Exchange at the period-end and the median price of CNY exchange rate disclosed on thesame day by China Foreign Exchange Trade System.
11.3. Valuation technique adopted and nature and amount determination ofimportant parameters for continuously and discontinuously within Level 3 of the fairvalue hierarchyTrading financial assets are wealth management products of the collective asset management plan andare measured at fair value based on the amount calculated on the basis of the net unit value of theunderlying assets as published on the official website of the asset manager.
Accounts receivable financing: As the timing and price of bills discounted may not be reliably estimateddue to the short maturity of the bills all being less than one year and the endorsement of the negotiablebills being valued at book value, the Company measures the bills receivable at their book value as areasonable estimate of fair value.
Other equity instrument investment: Due to no significant changes in business environment, businesscondition and financial situation of invested companies, the Company shall measure the fair valueaccording to the lower one between investment cost and the share of net assets enjoyed by investedcompanies on the base date as the reasonable estimation.
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 | Investment and asset management | 2,798,818,800.00 | 26.02% | 51.01% |
Statements for situation of parent company:
The nature of parent company: Limited liability company (state-owned);Registration place: Ai Rentang Square, China Baijiu Golden Triangle Liquor 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; holdingcompany services; social economic consulting, business management consulting; enterprisemanagement services; supply chain management services; import and export business and tradeagency; food production, sales (including online); planting and sales of crops (including online). (TheCompany cannot start business activities until projects subject to approval according to law areapproved by relevant departments.)The final control party of the Company is SASAC of Luzhou.
Other statements:
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 associates.There are no other joint ventures or associates that have related party transactions with the Company inthe 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 Jiachuang Wine Supply Chain Management Co., Ltd. | The same parent company |
| Luzhou Laojiao Zhitong Trading Co., Ltd. | The same parent company |
| Sichuan Hongxin Financing Guarantee Co., Ltd. | The same parent company |
| Sichuan Kangrun Investment Group Co., Ltd. | The same parent company |
| Sichuan Lianzhong Supply Chain Service Co., Ltd. | The same parent company |
| New Shottes Brook Private Company | The same parent company |
| Guangzhou Zhongying Gongyuan Energy Saving Technology Co., Ltd. | Sub-subsidiary of parent company |
| Sichuan Yukun Logistics Co., Ltd. | Sub-subsidiary of parent company |
| Sichuan Kangrun Group Construction and Installation Engineering Co., Ltd. | Sub-subsidiary of parent company |
| Luzhou Qingxigu Scenic Area Management Co., Ltd. | Sub-subsidiary of parent company |
| Luzhou COSCO Lianzhong Logistics Co., Ltd. | Sub-subsidiary of parent company |
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | Joint venture of parent company |
| Sichuan Development Wine Investment Co., Ltd. | Joint venture |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Joint venture |
| Luzhou XingLu Water (Group) Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou China Resources Xinglu Gas Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou XingLu Property Management Co., Ltd. | Subsidiary of the second largest shareholder |
| Sichuan Meiheshan Village Winery Industry Co.,Ltd. | Minority shareholder of the subsidiary Fruit Wine Industry |
| Other subsidiaries of Luzhou XingLu Investment Group Co., Ltd. | Other subsidiary of the second largest shareholder |
| Other subsidiaries of Luzhou Laojiao Group Co., Ltd. | Other subsidiary of parent company |
Other statements:
Note: On 31 December 2015, Laojiao Group and XingLu Investment Group, the second biggestshareholder, signed a concerted action agreement that when the parties in deal with the Company’sbusiness development and make decisions by shareholders meeting and board of directors according tothe company law and other relevant laws and regulations and the articles of association, the partiesshould adopt the consistent actions. The agreement is valid as of 13 December 2015 and ends on 1June 2021. During the effective period of this agreement, before any party submits proposals involvingthe major issues of the Company's business development to the shareholders meeting or exercise thevoting rights at the shareholders meeting and the board of directors, the internal coordination for relevantproposals and voting events shall be conducted by persons acting in concert. If there are differentopinions, it will be subject to Laojiao Group’s opinion. On 27 May 2021, Laojiao Group and XingLuInvestment Group renewed the concerted action agreement. The agreement is valid as of 1 June 2021and ends on 31 May 2024.
In view of this, the Company will disclose the transactions with XingLu Investment Group and itscontrolling 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 receipt of servicesTable of purchase of goods / receipt of services
Monetary Unit: CNY
| 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 XingLu Investment Group Co., Ltd. and its other subsidiaries | Property management fee ,etc. | 13,609,282.77 | 4,351,746.11 | ||
| Laojiao Group and its other subsidiaries | Training, accommodation, storage, transportation services, property management fee, etc. | 28,428,157.86 | 45,395,748.17 | ||
| CTS Luzhou Laojiao Cultural | Travel agency service fee, etc. | 5,512,511.56 | 1,041,370.00 |
| Tourism Development Co., Ltd. | |||||
| Purchase of goods: | |||||
| Laojiao Group and its other subsidiaries | Real estate | 328,967,000.00 | |||
| Laojiao Group and its other subsidiaries | Red wine, water, power, etc. | 21,190,526.05 | 27,682,924.62 | ||
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Gas | 11,547,390.36 | 6,957,769.40 | ||
| Sichuan Meiheshan Village Winery Industry Co.,Ltd. | Other wine | 976,637.50 | 225,374.00 | ||
| Total | 81,264,506.10 | 414,621,932.30 |
Table of sales of goods and rendering of service
Monetary Unit: CNY
| Name of Related Party | Transaction | Amount in current period | Amount in previous period |
| Sales of goods: | |||
| Laojiao Group and its subsidiaries | Wine, water, power, etc. | 6,885,203.34 | 11,692,235.06 |
| XingLu Investment Group and its subsidiaries | Wine | 2,880.00 | |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Wine | 84,299,013.96 | 4,716,024.00 |
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | Wine | 47,171,605.12 | |
| Rendering of service: | |||
| Laojiao Group and its subsidiaries | Rendering of service | 2,786,320.00 | |
| Sichuan Development Wine Investment Co., Ltd. | Rendering of service | 254,402.30 | |
| Luzhou Sanrenxuan Liquor | Rendering of service | 496,500.00 |
| Industry Co., Ltd. | |||
| Total | 138,855,202.42 | 19,448,981.36 |
12.5.2. Related party leasing
The Company as lessor:
Monetary Unit: CNY
| Name of lessee | Type of leased asset | Leasing income recognized during current period | Leasing income recognized during previous period |
| Laojiao Group and its subsidiaries | House lease | 2,690,880.00 | |
| Total | 2,690,880.00 |
The Company as lessee:
Monetary Unit: CNY
| Name of lessor | Type of leased asset | Leasing fee recognized during current period | Leasing fee recognized during previous period |
| Laojiao Group and its subsidiaries | House lease | 2,926,313.09 | 2,771,944.90 |
| Total | 2,926,313.09 | 2,771,944.90 |
12.5.3. Key management compensation
Monetary Unit: CNY
| Item | Amount in current period | Amount in previous period |
| Key management | 13,798,986.32 | 8,356,121.42 |
12.6. Receivables and payables of related parties
12.6.1. Receivables
Monetary Unit: CNY
| 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 | 611,542.54 | |||
| Prepayment | Luzhou XingLu Water (Group) Co., Ltd. | 690,115.49 | 42,883.70 | ||
| Prepayment | Luzhou China Resources Xinglu Gas Co., Ltd. | 19,536.30 | |||
| Prepayment | Sichuan Meiheshan Village Winery Industry Co.,Ltd. | 2,961,479.50 | 885,834.00 | ||
| Other receivables | Sichuan Kangrun Investment Group Co., Ltd. | 10,000.00 | |||
| Other receivables | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 3,590,790.65 | 354,539.53 | 3,268,472.46 | 163,423.62 |
| Other receivables | Sichuan Development Wine Investment Co., Ltd. | 102,670.32 | 5,133.52 |
12.6.2. Payables
Monetary Unit: CNY
| Item | Related party | Closing Balance | Opening Balance |
| Accounts payable | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 3,679.25 | |
| Accounts payable | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 10,838.00 | |
| Accounts payable | Guangzhou Zhongying Gongyuan Energy Saving Technology Co., Ltd. | 355,312.88 | |
| Accounts payable | Luzhou XingLu Property Management Co., Ltd. | 130,000.00 | |
| Accounts payable | Sichuan Yukun Logistics Co., Ltd. | 3,851.28 | |
| Contractual liabilities (tax inclusive) | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 158,295.76 | 35,798.45 |
| Contractual liabilities (tax inclusive) | Luzhou Laojiao Group Co., Ltd. | 523,760.03 |
| Contractual liabilities (tax inclusive) | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 19,017,274.30 | 4,704,408.00 |
| Contractual liabilities (tax inclusive) | Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | 4,065,243.22 | |
| Contractual liabilities (tax inclusive) | Luzhou Laojiao Construction and Installation Engineering Co., Ltd. | 6,144.00 | |
| Contractual liabilities (tax inclusive) | Luzhou Laojiao Zhitong Trading Co., Ltd. | 55,586.00 | |
| Contractual liabilities (tax inclusive) | Luzhou Qingxigu Scenic Area Management Co., Ltd. | 460.80 | |
| Contractual liabilities (tax inclusive) | Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 14,745,240.00 | |
| Contractual liabilities (tax inclusive) | Luzhou COSCO Lianzhong Logistics Co., Ltd. | 37,762.51 | |
| Contractual liabilities (tax inclusive) | Sichuan Hongxin Financing Guarantee Co., Ltd. | 3,072.00 | |
| Other payables | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 396,000.00 | |
| Other payables | Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 150,000.00 | |
| Other payables | Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | 1,500,000.00 | 1,500,000.00 |
| Other payables | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 1,684,148.00 | 2,384,148.00 |
| Other payables | Luzhou XingLu Property Management Co., Ltd. | 100,000.00 | |
| Other payables | Sichuan Kangrun Group Construction and Installation Engineering Co., Ltd. | 34,175.78 | 34,175.78 |
| Other payables | Luzhou COSCO Lianzhong Logistics Co., Ltd. | 50,200.00 | 200,200.00 |
13. Stock payment
13.1. The overall situation of share-based payments
√ Applicable ? N/A
Monetary Unit: CNY
| Total equity instruments granted by the Company in the reporting period | 6,928,600.00 |
| Total equity instruments exercised by the Company in the reporting period | 0.00 |
| Total equity instruments of the Company expired in the reporting period | 0.00 |
Other statements:
According to the Proposal on 2021 Restricted Share Incentive Scheme (Draft) and its Summary ofLuzhou Laojiao Co., Ltd., Proposal on the Performance Assessment Measures for 2021 RestrictedShare Incentive Scheme of Luzhou Laojiao Co., Ltd. and other documents deliberated and approved atthe 7th
Meeting of the 10
th
Board of Directors and the 1
st
Extraordinary General Meeting of Shareholdersof the Company in 2021, the Company plans to grant no more than 521 incentive targets for the first time,and the number of restricted shares to be granted will not exceed 8,834,600 at CNY 92.71 per share.
According to the 12
th Meeting of the 10
th
Board of Directors of the Company held on 29 December 2021,the Board of Directors of the Company considered that the conditions for grant under the RestrictedShare Incentive Scheme of the Company had been fulfilled, and agreed to grant 6,928,600 restrictedshares to the eligible 441 incentive targets for the first time at CNY 92.71 per share with 29 December2021 as the grant date. The original plan agreed that the number of initial granting targets would notexceed 521, and the final number of initial participants was determined to be 441, which was in line withthe provisions of the incentive scheme. The total number of initial grants was 6,928,600 shares, whichalso did not exceed the maximum number of initial grants agreed in the incentive scheme of 7,954,600shares, and the number of reserved grants remained unchanged.
13.2. Equity-settled share-based payments
√ Applicable ? N/A
Monetary Unit: CNY
| Method of determining the fair value of equity instruments on the grant date | The closing price of restricted stocks on the grant date deducted the grant price thereof |
| Basis to determine number of equity instrument that can be exercised | Making the best estimate based on the latest number of persons who can exercise rights |
| Reason for remarkable difference between the estimate of the current period and that of previous period | N/A |
| Total amount of equity-settled share-based payments included | 32,577,602.60 |
| into capital reserves | |
| Total costs of recognizing equity-settled share-based payments in the current period | 32,540,603.01 |
Other statementsNote: The difference between the cumulative amount included in capital reserve for share payments ofequity settlement and the total expense recognized represents the amount included minority interest andthe income tax effect of the excess of the pre-tax amount to be deductible in the future over the amountrecognized as cost and expense.
14. Commitments and contingencies
14.1. Contingencies
14.1.1. Significant contingencies at the balance sheet date
On 15 October 2014 and 10 January 2015, the Company disclosed three saving deposits involvingcontract disputes in Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial andCommercial Bank of China Nanyang Zhongzhou Sub-branch and another bank, with a total amount ofCNY 500 million. The public security organization has investigated, and the investigation of relatedcases and the preservation of assets are under way. The Company has initiated a civil procedure torecover the loss from the responsible unit. As of the period-end, the Company has recovered theabovementioned saving deposits involving contract disputes with CNY 367,623,100.
Except for the above matters, the Company has no other significant contingencies that need to bedisclosed as the end of 31 December 2021.
14.1.2. Explanation shall be given even if there is no significant contingency for the Company todiscloseThere was no significant contingency in the Company to disclose.
15. Post balance sheet event
15.1. Profit distribution
Monetary Unit: CNY
| Profits or dividends planned to distribute | 4,773,919,306.54 |
| Reviewed and approved profits or dividends declared to distribute | 4,773,919,306.541 |
Note: 1. As stated in Note 13.4.1, as of 21 February 2022, the total shares of the Company increased to1,471,615,076 shares from 1,464,752,476 after the grant and registration of this equity incentive plan.
15.2. Sales return
There are no important sales returning after balance sheet date.
15.3. Statement for other post balance sheet events
(1) Complete the registration of restricted share grants
At the 12
th
Meeting of the 10
thBoard of Directors of the Company held on 29 December 2021, theProposal on the Grant of Restricted Shares to Incentive Targets was deliberated and approved, and theBoard of Directors considered that the conditions for the grant under the Restricted Share IncentiveScheme had been fulfilled, and agreed to grant 6,928,600 restricted shares to the eligible 441 incentivetargets for the first time at CNY 92.71 per share with 29 December 2021 as the grant date. In theprocess of payment of funds after the grant date, four incentive targets voluntarily waived thesubscription of all the restricted shares totaling 66,000 shares to be granted to them for personalreasons. The actual number of incentive targets who participated in the subscription was 437 and thenumber of restricted shares registered for grant was 6,862,600.As at 31 January 2022, the Company has received a total of CNY 636,231,646.00 from the above 437incentive targets for the subscription of restricted shares in monetary capital, of which CNY 6,862,600.00was included in share capital and CNY 629,369,046.00 was included in capital reserve. The grant dateof this incentive scheme is 29 December 2021 and the listing date of the granted shares is 22 February2022. Upon completion of the grant registration, the total number of shares of the Company increasedfrom 1,464,752,476 to 1,471,615,076, which will not change the controlling shareholder and the actualcontroller of the Company.
(2) Participate in the establishment of Luzhou Laojiao Postdoctoral Workstation Technology Co.,Ltd.At the 13
th
Meeting of the 10
thBoard of Directors of the Company on 1 March 2022, the Proposal onParticipation in the Establishment of Luzhou Laojiao Postdoctoral Workstation Technology Co., Ltd. andRelated Party Transactions was deliberated and approved. The Company decided to jointly invest withits controlling shareholder Laojiao Group and Luzhou Energy Investment Co., Ltd. (hereinafter referredto as "Energy Investment Group") to establish Luzhou Laojiao Postdoctoral Workstation Technology Co.,Ltd. (hereinafter referred to as "Technology Company", provisional name, subject to actual businessregistration). The registered capital of the Technology Company is CNY 100 million, of which theCompany contributes CNY 40 million in cash, accounting for 40% of the total share capital; LaojiaoGroup contributes CNY 51 million, accounting for 51% of the total share capital; and Energy InvestmentGroup contributes CNY 9 million, accounting for 9% of the total share capital. The establishment of theTechnology Company will further enhance the overall technological innovation and quality and technicalstrength of the Company.
(3) Recover some savings deposits involved in contractual disputes
On 6 April 2022, the Company recovered a further portion of the saving deposits totaling CNY 2,017,700involved in contract disputes.
Except for the above matters, the Company has no other post balance sheet events that need to be
disclosed as of 31 December 2021.
16. Other important information
16.1. Annuity plan
The Company carried out the enterprise annuity payment work normally during the reporting period. Theenterprise annuity funds are paid by both the Company and employees. The Company's contributionshall 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 of the employeein the previous year.
16.2. Segment information
16.2.1. If the Company has no reporting segment or cannot disclose total assets and totalliabilities of reporting segments, the reason should be disclosed.Except for the business on wine sales, the Company does not operate other businesses that have asignificant impact on operation results. In addition, the Company operates mainly in one area, revenuemainly from China and main assets also located in China, so the Company does not need to disclosesegment data.
16.3. Other significant events that can affect investors’ decision
16.3.1. Saving deposits involving contract disputes
As stated in Note 12.2, three saving deposits involved contract disputes in Agricultural Bank of ChinaChangsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang ZhongzhouSub-branch and another bank, with a total amount of CNY 500 million. At present, the investigation ofrelated cases and the preservation of assets have been under way. The Company has initiated a civilprocedure to recover the loss from the responsible unit.
Taking into account the current amount of assets preserved by the public security authorities and thecontents of the professional legal opinion issued by Beijing Weiheng (Chengdu) Law Firm on 4 January2022 that "given that since the issuance of the previous legal opinion, a partial recovery has beenachieved through the execution of the civil judgment in force, totaling CNY 368 million. At the same time,it is expected that over CNY 10 million may be recovered in the future, and the actual loss that may arisefrom the Company's abnormal deposits in the three aforementioned places is approximately CNY 120million", the Company has made a bad debt provision of CNY 120 million for savings deposit involved incontractual disputes as at the end of the period, and the amount of the bad debt provision may beadjusted in the future based on the litigation process and recovery.
16.3.2 . Impact of implementing the new accounting standards governing leases
16.3.2.1. The Company as the lessee
16.3.2.1.1. See Note 7.13 for information about right-of-use assets.
16.3.2.1.2. See Note 5.37 for information about accounting policies of the Company governingshort-term lease and low-value asset lease. The short-term lease expenses and expenses on low-valueasset lease included into the current profits/losses in the reporting period are as follows:
| Item | Current Period |
Short-term lease expenses
| Short-term lease expenses | 10,165,629.93 |
| Low-value asset lease expenses (except short-term lease) | |
| Total | 10,165,629.93 |
16.3.2.1.3. The current profits/losses and cash flow related to leases
| Item | Current Period |
| Interest expenses of lease liabilities | 1,958,887.90 |
| Variable lease payments included into the current profits/losses but not included into lease liabilities to measure | N/A |
Income from the sublease of right-of-use assets
| Income from the sublease of right-of-use assets | N/A |
| Total cash outflow related to leases | 22,027,720.05 |
| Profits/losses generated from sale and leaseback transactions | N/A |
16.3.2.1.4. See Note 8 for information about the lease liabilities maturity analysis and correspondingliquidity risk management.
16.3.2.1.5. Nature of leases
| Asset type | Quantity | Leasing period | Whether there is the renewal option |
| Houses and buildings | 24 | Y2019-Y2027 | No |
Land use right
| Land use right | 2 | Y2021-Y2029 | The lease contract includes the renewal option clause |
16.3.2.2. The Company as the lessor
16.3.2.2.1. Lease income
| Item | Current Period |
| Lease income | 4,933,708.76 |
| Including: income related to variable lease payments not included into lease receipts to measure | N/A |
16.3.2.2.2. Operating lease assets
Fixed assets leased out from operations mainly represent the non-independent portion of the Company'stenement leased, the carrying value of which is not separately identified.
16.3.2.2.3. Subject to the lease contract with the lessee, the amount of future undiscounted lease to bereceived under the lease is irrevocable
| Residual maturity | Closing Balance |
Within 1 year
| Within 1 year | 6,500.00 |
| 1-2 years | 1,246,952.00 |
| Total | 1,253,452.00 |
Except for the above matters, the Company has no other significant events that can affect investors’decision that need to be disclosed as of 31 December 2021.
17. Notes to the main Items of the financial statements of parentcompany (all currency unit is CNY, except other statements)
17.1. Accounts receivable
17.1.1. Analysis by categories
Monetary Unit: CNY
| 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 | |||
| Including: | ||||||||||
| Accounts receivables tested for impairment by the portfolio | 1,209,701.49 | 100.00% | 2,223.86 | 0.18% | 1,207,477.63 | 3,927.50 | 100.00% | 3,927.50 | ||
| Including: | ||||||||||
| Accounts receivables tested for impairment on the portfolio with characteristics of credit risk | 1,209,701.49 | 100.00% | 2,223.86 | 0.18% | 1,207,477.63 | 3,927.50 | 100.00% | 3,927.50 | ||
| Total | 1,209,701.49 | 100.00% | 2,223.86 | 0.18% | 1,207,477.63 | 3,927.50 | 100.00% | 3,927.50 | ||
Accounts receivables tested for impairment by the portfolio:
Monetary Unit: CNY
| Item | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 44,477.18 | 2,223.86 | 5.00% |
| Other portfolios | 1,165,224.31 | ||
| Total | 1,209,701.49 | 2,223.86 | -- |
Statements for determining the portfolio:
Note: Other portfolios refer to the receivable payment for goods from the subsidiary Luzhou PinchuangTechnology Co., Ltd. and Luzhou Laojiao Electronic Commerce Co., Ltd. with no risks and provision forbad and doubtful debt.Please refer to the relevant information of disclosure of provision for bad debt of other accountsreceivable if adopting the general mode of expected credit loss to withdraw provision for bad debt ofaccounts receivable.? Applicable √ N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 1,209,701.49 |
| Total | 1,209,701.49 |
17.1.2. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Accounts receivables tested for impairment by the portfolio | 2,223.86 | 2,223.86 | ||||
| Total | 2,223.86 | 2,223.86 | ||||
There is no accounts receivable reversed or recovered with significant amount during the reportingperiod.
17.1. 3. Top five entities with the largest balances of accounts receivable
Monetary Unit: CNY
| Company Name | Closing Balance | Proportion to total closing balance of accounts receivable | Closing Balance of provision for bad debt |
| Luzhou Pinchuang | 1,156,870.61 | 95.63% |
| Technology Co., Ltd. | |||
| Luzhou Laojiao National Cellar Liquor Sales Co., Ltd. | 44,100.00 | 3.65% | 2,205.00 |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | 8,353.70 | 0.69% | |
| Luzhou Bo'ao Liquor Marketing Co., Ltd. | 377.18 | 0.03% | 18.86 |
| Total | 1,209,701.49 | 100.00% | -- |
17.2. Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividends receivable | 1,407,900.00 | |
| Other receivables | 10,033,554,898.57 | 7,051,341,794.83 |
| Total | 10,033,554,898.57 | 7,052,749,694.83 |
17.2.1. Dividend receivable
17.2.1.1. Classification of dividend receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Guotai Junan Securities Co., Ltd. | 1,407,900.00 | |
| Total | 1,407,900.00 |
17.2.2. Other receivables
17.2.2.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds of subsidiaries receivable | 10,015,555,743.27 | 6,957,047,554.34 |
| Intercourse funds and others | 6,158,145.13 | 9,599,994.92 |
| Petty cash | 2,574.63 | 393,142.93 |
| Saving deposits involving contract disputes | 132,376,912.43 | 285,044,911.68 |
| Total | 10,154,093,375.461 | 7,252,085,603.87 |
Note: 1. The closing balance increased by CNY 2,902,007,771.59 compared with opening balance, withan increase by 40.02%, mainly due to the increase of intercourse funds by CNY 3,058,508,188.93 andrecovery of saving deposits involving contract disputes of CNY 152,667,999.25 in the current period. Inthe 2014 Annual Report, the Company disclosed the information about three deposits amounting to CNY500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of China and NanyangZhongzhou Sub-branch of Industrial and Commercial Bank of China. The deposits have lost the natureof monetary fund due to their involvement in contract disputes and have thus been transferred into “otherreceivables”.
17.2.2.2. Provision for bad and doubtful other receivables in the current period
Monetary Unit: CNY
| Provision for bad debt | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 743,809.04 | 200,000,000.00 | 200,743,809.04 | |
| Balance of 1 January 2021 in the current period | —— | —— | —— | —— |
| Reversal of the current period | 205,332.15 | 80,000,000.00 | 80,205,332.15 | |
| Balance of 31 December 2021 | 538,476.89 | 120,000,000.00 | 120,538,476.89 |
Changes of carrying amount with significant amount changed of loss provision in the current period
√ Applicable ? N/A
Including, changes of carrying amount with significant amount changed of loss provision in the currentperiod:
| Company Name | Closing book balance | Provision for bad debt | Aging | Proportion |
| Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank | 132,376,912.43 | 120,000,000.00 | Over 5 years | 90.65% |
| Subtotal | 132,376,912.43 | 120,000,000.00 | 90.65% |
Note: see Note 12.2 and 14.7.1 for information about the deposits with involvement in contract disputes.
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 10,018,119,588.40 |
| 1-2 years | 3,511,500.00 |
| 2-3 years | 32,800.00 |
| Over 3 years | 132,429,487.06 |
| Over 5 years | 132,429,487.06 |
| Total | 10,154,093,375.46 |
17.2.2.3. Provision and recovery for bad and doubtful other receivables in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Other receivables tested for impairment individually | 200,000,000.00 | 80,000,000.00 | 120,000,000.00 | |||
| Other receivables tested for impairment by the portfolio | 743,809.04 | 205,332.15 | 538,476.89 | |||
| Total | 200,743,809.04 | 80,205,332.15 | 120,538,476.89 | |||
Recovery for bad debt and doubtful other receivables with significant amount in the current period:
Monetary Unit: CNY
| Company name | Amount | Recovery way |
Agricultural Bank of China ChangshaYingxin Sub-branch, Industrial andCommercial Bank of China NanyangZhongzhou Sub-branch and anotherbank
| 80,000,000.00 | By litigation | |
| Total | 80,000,000.00 | -- |
17.2.2.4. Top five entities with the largest balances of the other receivables
Monetary Unit: CNY
| Company Name | Nature | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
| Luzhou Laojiao Brewing Co., Ltd. | Internal transactions | 8,810,950,083.82 | Within 1 year | 86.77% | |
| Luzhou Laojiao New Liquor Industry Co., Ltd. | Internal transactions | 492,910,494.02 | Within 1 year | 4.85% | |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Internal transactions | 322,638,035.43 | Within 1 year | 3.18% | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Internal transactions | 192,569,492.57 | Within 1 year | 1.90% | |
| Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank. | Saving deposits involving contract disputes | 132,376,912.43 | Over 5 years | 1.30% | 120,000,000.00 |
| Total | -- | 9,951,445,018.27 | -- | 98.00% | 120,000,000.00 |
17.3. Long-term equity investments
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiary | 3,429,436,240.91 | 3,429,436,240.91 | 3,413,960,128.11 | 3,413,960,128.11 | ||
| Investment in associates and joint venture | 2,624,531,691.80 | 2,567,098.80 | 2,621,964,593.00 | 2,472,698,683.16 | 2,567,098.80 | 2,470,131,584.36 |
| Total | 6,053,967,932.71 | 2,567,098.80 | 6,051,400,833.91 | 5,886,658,811.27 | 2,567,098.80 | 5,884,091,712.47 |
17.3.1. Investment in subsidiary
Monetary Unit: CNY
| Investee | Opening Balance | Changes in current period | Closing Balance | Closing |
| (book value) | Increase | Decrease | Provision for impairment | Other | (book value) | balance of provision for impairment | |
| Luzhou Pinchuang Technology Co., Ltd. | 57,649,100.00 | 1,486,931.69 | 59,136,031.69 | ||||
| Luzhou Laojiao Sales Co., Ltd. | 103,162,447.09 | 7,803,808.25 | 110,966,255.34 | ||||
| Luzhou Laojiao Brewing Co., Ltd. | 3,172,109,991.25 | 4,583,845.03 | 3,176,693,836.28 | ||||
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | 5,433,789.77 | 272,400.63 | 5,706,190.40 | ||||
| Luzhou Laojiao Electronic Commerce Co., Ltd. | 51,604,800.00 | 920,526.26 | 52,525,326.26 | ||||
| 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. Note | 408,600.94 | 408,600.941 | |||||
| Total | 3,413,960,128.11 | 15,476,112.80 | 3,429,436,240.91 |
Note: 1. The Company obtained 100% of equity in Health Liquor Industry by the business combinationunder the same control. The net assets of Health Liquor Industry were negative on the M&A date, and
the book cost of long-term equity investment was limited to 0 by the Company. The increase in thecurrent period is due to the Company's restricted share incentive business, where the parent company(the settlement enterprise) is an investor in the recipient subsidiary (the service enterprise) and isrecognized as a long-term equity investment in the subsidiary (the recipient service enterprise) based onthe fair value of the equity instruments at the date of grant, and the capital reserve (other capital reserves)is recognized at the same time.
17.3.2. Investment in associate and joint venture
Monetary Unit: CNY
| Investee | Opening Balance (book value) | Changes in current period | Closing Balance (book value) | 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 | |||||||||||
| 2. Associate | |||||||||||
| Huaxi Securities Co., Ltd. | 2,383,550,372.50 | 169,638,351.75 | -29,576,301.94 | 30,284,256.98 | 2,493,328,165.33 | 2,567,098.80 | |||||
| Sichuan Development Wine Investment Co., Ltd. | 6,854,471.67 | -1,127,623.31 | 5,726,848.36 | ||||||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 79,726,740.19 | 40,000,000.00 | 3,182,839.12 | 122,909,579.31 | |||||||
| Subtotal | 2,470,131,584.36 | 40,000,000.00 | 171,693,567.56 | -29,576,301.94 | 30,284,256.98 | 2,621,964,593.00 | 2,567,098.80 | ||||
| Total | 2,470,131,584.36 | 40,000,000.00 | 171,693,567.56 | -29,576,301.94 | 30,284,256.98 | 2,621,964,593.00 | 2,567,098.80 | ||||
17.4. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 7,558,340,885.88 | 5,664,019,938.24 | 5,455,096,585.89 | 4,185,106,836.28 |
| Other business | 44,286,894.17 | 1,137,093.20 | 43,748,867.59 | 23,164.25 |
| Total | 7,602,627,780.05 | 5,665,157,031.44 | 5,498,845,453.48 | 4,185,130,000.53 |
Details:
Monetary Unit: CNY
| Contract category | Liquor sales | Total |
| Commodity type | ||
| Including: | ||
| Medium and high grade liquor | 7,553,686,005.58 | 7,553,686,005.58 |
| Other liquor | 4,654,880.30 | 4,654,880.30 |
| By operating segment | ||
| Including: | ||
| Domestic | 7,558,340,885.88 | 7,558,340,885.88 |
| Outbound | ||
| Contract type | ||
| Including: | ||
| Commodity sales contract | 7,558,340,885.88 | 7,558,340,885.88 |
| Total | 7,558,340,885.88 | 7,558,340,885.88 |
Details about performance obligations:
N/A
17.5. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under cost method | 6,296,151,637.80 | 3,929,019,694.32 |
| Investment income from long-term equity | 171,693,567.56 | 191,110,318.79 |
| investments under equity method | ||
| Dividends income gained during the period of holding other equity instrument investment | 6,657,660.52 | 9,379,824.36 |
| Total | 6,474,502,865.88 | 4,129,509,837.47 |
17.6. Other
Note: There is no major restriction on the repatriation of the Company's investment income.
Including: investment income from long-term equity investments under the cost method:
| Item | Current Period | Previous Period |
Luzhou Laojiao Sales Co., Ltd.
| Luzhou Laojiao Sales Co., Ltd. | 6,269,283,588.58 | 3,875,865,582.42 |
| Luzhou Baonuo Biotechnology Co., Ltd. | 9,897,435.68 |
Luzhou Pinchuang Technology Co., Ltd.
| Luzhou Pinchuang Technology Co., Ltd. | 26,868,049.22 | 43,256,676.22 |
| Subtotal | 6,296,151,637.80 | 3,929,019,694.32 |
Including: investment income from long-term equity investments under the equity method:
| Item | Current Period | Previous Period |
| Huaxi Securities Co.,Ltd. | 169,638,351.75 | 197,511,851.10 |
Sichuan Development Wine Investment Co., Ltd.
| Sichuan Development Wine Investment Co., Ltd. | -1,127,623.31 | -6,128,272.50 |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 3,182,839.12 | -273,259.81 |
| Subtotal | 171,693,567.56 | 191,110,318.79 |
Including: dividend income gained during the period of holding other equity instrument investment:
| Item | Current Period | Previous Period |
| North Chemical Industries Co.,Ltd. | 62,542.20 | 85,995.53 |
| Luzhou Bank Co., Ltd. | 4,700,800.00 |
Guotai Junan Securities Co.,Ltd.
| Guotai Junan Securities Co.,Ltd. | 6,595,118.32 | 4,593,028.83 |
Subtotal
| Subtotal | 6,657,660.52 | 9,379,824.36 |
18. Supplementary information
18.1. Detailed statement of extraordinary gain and loss in the current period (+ forgain, - for loss)
√ Applicable ? N/A
Monetary Unit: CNY
| Item | Amount | Remark |
| Gains or losses on disposal non-current assets | -347,429.88 | For details please see Note 5.44 |
| 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) | 51,756,953.15 | For details please see Note 5.40 and 5.45 |
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 6,352,241.79 | For details please see Note 5.42 |
| Reverse of provision for impairment of accounts receivable individually conducting impairment test | 80,000,000.00 | For details please see Note 5.43 |
| Other non-operating income and costs other than above items | -40,241,672.68 | For details please see Note 5.45 and 5.46 |
| Less: Impact from income tax | 24,082,098.59 | |
| Impact from non-controlling shareholders’ equity | 2,267,697.66 | |
| Total | 71,170,296.13 | -- |
Other items that meet the definition of non-recurring gain/loss:
? Applicable √ N/ANo such cases for the reporting period.
Explain the reasons if the Company classifies any non-recurring gain/loss item mentioned in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities tothe Public-Non-Recurring Gains and Losses as a recurring gain/loss item.? Applicable √ N/A
18.2. Return on equity and earnings per share
| Profit during reporting period | Weighted average ROE | EPS(CNY/Share) | |
| Basic EPS | Diluted EPS | ||
| Net profits attributable to | 31.15% | 5.43 | 5.43 |
| ordinary shareholders of the Company | |||
| Net profits attributable to ordinary shareholders of the Company after deduction of extraordinary gain and loss | 30.87% | 5.38 | 5.38 |