Luzhou Laojiao Co., Ltd.2020 Interim Report
August 2020
Section I Important Statements, Contents and DefinitionsThe Board of Directors, Board of Supervisors, as well as directors, supervisors and senior managementother than the following directors, supervisors and senior management that have expressed dissentagainst this report guarantee that the information presented in this report is free of any false records,misleading statements or material omissions, and shall individually and together be legally liable fortruthfulness, accuracy and completeness 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 and complete.
All the directors attended the board meeting to deliberate this report by themselves.
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.
The Company has no interim dividend plan, either in the form of cash or stock.
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
2020 Interim Report ...... 1
Section I Important Statements, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Results ...... 5
Section III Business Profile ...... 9
Section IV Performance Discussion and Analysis ...... 12
Section V Significant Events ...... 21
Section VI Changes in Shares and Information about Shareholders ...... 33
Section VII Preference Shares ...... 40
Section VIII Information about Convertible Corporate Bond ...... 41
Section IX Profiles of Directors, Supervisors and Senior Management ...... 42
Section X Information about Corporate Bond ...... 43
Section XI Financial Report ...... 49
Section XII Documents Available for Reference ...... 185
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 |
| Sales Company | Refer to | Sales Company of Luzhou Laojiao Co., Ltd. |
| Brewing Company | Refer to | Luzhou Laojiao Brewing Co., Ltd. |
| Luzhou Bank | Refer to | Luzhou Bank Co., Ltd. |
Section II Company Profile and Key Financial Results
1. Corporate information
| Stock abbreviation | Luzhou Laojiao | Stock code | 000568 |
| Stock exchange where the shares of the Company are listed | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | 泸州老窖股份有限公司 | ||
| Abbr. of the Company name in Chinese (if any) | 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 | ||
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. Other Information
3.1. Contact Information of the Company
Whether any change occurred to the registered address, office address and their zip codes, websiteaddress and email address of the Company in the reporting period.? Applicable √ N/ANo change occurred to the said information in the reporting period, which can be found in the 2019Annual Report.
3.2. Information disclosure and place where the interim report is keptWhether any change occurred to the information disclosure and place where the interim report is kept? Applicable √ N/ANo change occurred to the newspapers designated by the Company for information disclosure, thewebsite designated by the CSRC for disclosing the interim report and the place where the interim is keptin the reporting period. The said information can be found in the 2019 Annual Report.
4. Key accounting data and financial indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data.? Yes √ No
| H1 2020 | H1 2019 | Change | |
| Operating revenues (CNY) | 7,634,482,901.87 | 8,013,035,019.72 | -4.72% |
| Net profits attributable to shareholders of the Company (CNY) | 3,220,452,190.27 | 2,749,781,041.42 | 17.12% |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses (CNY) | 3,233,951,849.05 | 2,727,782,527.56 | 18.56% |
| Net cash flows from operating activities (CNY) | 728,815,422.24 | 1,706,750,590.34 | -57.30% |
| Basic earnings per share (CNY/share) | 2.20 | 1.88 | 17.02% |
| Diluted earnings per share (CNY/share) | 2.20 | 1.88 | 17.02% |
| Weighted average ROE | 15.32% | 14.98% | 0.34% |
| 30 June 2020 | 31 December 2019 | Change | |
| Total assets (CNY) | 31,758,214,542.80 | 28,919,969,078.32 | 9.81% |
| Net assets attributable to shareholders of the Company (CNY) | 20,300,194,077.23 | 19,406,845,725.61 | 4.60% |
5. Differences in accounting data under domestic and overseasaccounting standards
5.1. 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.
5.2. 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.
6. Non-recurring profits and losses
√ Applicable ? N/A
Unit: CNY
| Item | Amount | Note |
| Profit or loss from disposal of non-current assets (including the write-off portion of the impairment provision) | 104,663.83 | See "Section XI Note 5.40" for details. |
| Government grants accounted for, in the profit or loss for the current period (except for the government grants closely related to the business of the Company and given at a fixed amount or quantity in accordance with the national uniform standards) | 10,441,675.27 | See "Section XI Note 5.36" for details. |
| Other non-operating income and expenditure except above-mentioned items | -28,272,944.37 | See "Section XI Note 5.41, 5.42" for details. |
| Less: Corporate income tax | -4,475,851.24 | |
| Minority interests (after tax) | 248,904.75 | |
| Total | -13,499,658.78 | -- |
Explain the reasons if the Company classifies an item as a non-recurring profit/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies OfferingTheir Securities to the Public-Non-Recurring Profits and Losses, or classifies any non-recurringprofit/loss item mentioned in the said explanatory announcement as a recurring profit/loss item.
? Applicable √ N/ANo such cases for the reporting period.
Section III Business Profile
1. Business scope in the reporting period
The Company stands on liquor subdivision industry which belongs to liquor, beverage and refined teamanufacturing industry with the specialized liquor product design, production and sales as the mainbusiness model. The main business is the research and development, production and sales of liquorseries such as "National Cellar 1573" and "Luzhou Laojiao", and the main comprehensive performanceindicators rank high in the liquor industry. During the reporting period, the Company proactively tackledadverse impact of the COVID-19 pandemic on macro-economy and the consumption industry, closelyfollowed the development theme of "Firm Determination, Strong Confidence, Strict Management,Targeted Audit, Talent Development and All-out Efforts", and advanced each task in an orderly manner,thereby achieving constant and healthy growth of operating results.
2. Significant changes in the main assets
2.1. Significant changes in the main assets
| Main assets | Reasons for any significant change |
| Equity assets | N/A |
| Fixed assets | The closing balance increased by CNY 1,315,252,724.43 compared to opening balance, indicating an increase of 86.59 percent. It was mainly due to the increase in construction in progress that met the expected conditions for use and was transferred to fixed assets in the current period. |
| Intangible assets | The closing balance increased by CNY 105,656,470.75 compared to opening balance, indicating an increase of 31.80 percent. It was mainly due to the increased land acquisition in the current period. |
| Construction in progress | N/A |
2.2. Main assets overseas
? Applicable √ N/A
3. Analysis of core competitiveness
A. Geographical advantageLuzhou City, where the Company is located, sits in the transitional area between the southern rim of theSichuan Basin and the Yunnan-Guizhou Plateau, which features a warmer and more humid sub-tropicalclimate compared to other areas at the same latitude, with a temperature always above 0℃ throughoutthe year. The unique climate and soil are agreeable to grow grains for liquor brewing. The glutinous red
sorghum and soft wheat grown in this area are the primary raw materials for the liquor of the Company.The cellars in which the Company brews its liquor are made of the local loessal clay characteristic ofstrong viscosity, a variety of minerals and excellent moisture retention. In addition, the abundant andquality water in the region, creates a unique geographical advantage for the production of theCompany’s liquor.
B. Advantage of cellars and brewing techniqueAged cellars are the most essential condition for a strong aromatic liquor maker to produce good qualityliquor. 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 23-generation inheritance and a classic brewingtechnique for strong aromatic liquor. 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.
C. Brand advantageBrand is a key business resource for liquor 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 liquor, was selected in 1952by the first national tasting competition judges as one of the four most famous liquor brands in China. It isthe only strong aromatic liquor brand that won the title of “National Famous Liquor” for five consecutivetimes, as well as the pioneer with regard to the “Tequ” variety of liquor. In recent years, the Companyhas successfully put in place a brand system of “dual brands, three product series, and five 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 liquor is increasingly known by consumers as anational brand of strong aromatic liquor and of authentic flavor.
D. Quality and R&D advantageThe Company is committed to producing high-quality liquor, 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 eight research platforms are established, including National EngineeringResearch Center 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 liquor, as well as production efficiency improvement.
E. Talent advantageThe Company has built up the richness in its talent pool throughout the years. It has 1 inheritor ofnational intangible cultural heritage, 2 masters of Chinese brewing, 2 masters of Chinese liquor, 3masters of Chinese liquor technique, 2 Chinese liquor connoisseurs, 4 senior professor engineers, 6experts who receive special allowances from the State Council, 3 national technicians, 3 academic andtechnologic leaders of Sichuan province, 1 excellent expert with special contribution of Sichuan province,1craftsman of Sichuan province, 1 technological elite of Sichuan province, as well as hundreds of highlyskilled personnel including national liquor judges, senior brewing technicians and brewing technicians.The comprehensive and professional personnel system assures the sound development of theCompany.
Section IV Performance Discussion and Analysis
1. Overview
For the first half of 2020, operating revenue amounted to CNY 7.634 billion, down 4.72% year on year;and the net profit attributable to the shareholders of the listed company reached CNY 3.22 billion, up
17.12% year on year. Over the past half year, the Company's main work included:
A. The Company carried out solid pandemic prevention and control, and resumed work and productionstep by step. The Company has attached great importance to pandemic prevention and control since thebattle to fight and control COVID-19 pandemic fully commenced. In addition to quickly setting up asteering group for COVID-19 prevention and control, the Company developed a comprehensiveprevention and control system that comprised an "all-level" prevention and control organ, an "all-day"reporting mechanism for prevention and control, an "all-round" prevention and control range, and an"all-coverage" inspection for prevention and control. It has taken a number of measures, includingcommunication and education on the pandemic prevention and control, survey of personnel & follow-ups,testing and monitoring of staff health conditions, and guaranteed inventory of supplies. Through theresponsive and scientific approaches, the Company aimed to carry forward production and businessoperations while all departments were dutifully performing the pandemic prevention and control, on thebasis of no infected and no suspected cases.
B. The Company introduced innovative marketing ideas and made constant breakthroughs in the market.In order to actively adapt to adjustments of drinking places and environment, the Company took a seriesof innovative measures: Providing live streaming activities such as "Cloud Storage" and "Masters' Classon the Cloud" under the Storage Ceremony to preserve our aromatic heritage and exhibit cultural value;organizing online activities including "Online Drinking Date" and "Household Chef Competition" tostimulate consumers to open a bottle at home; making use of online live-streaming platforms and theadvertising model of "Mainstream Media + KOL" to publicize the Company's brand culture, productfeatures and tasting knowledge; capitalizing on supermarkets and e-commerce platforms to strengthencooperation on logistics and delivery and expand channel sales; and vigorously enhancing its presencein nutritious liquor, pre-mixed liquor and fruit wine, and launching healthy and fashionable products toattract young consumers.
C. The Company promoted development of major projects and was resolute to realize targets. TheCompany insisted on "One Policy and One Measure for One Project", and facilitated the resumption ofwork and production for major projects by steps, areas and procedures. It accelerated projectdevelopment and ensured Huangyi Brewery Eco-Park (focusing on the brewing technical innovationprogram) would be put into comprehensive operations as scheduled. At present, the brewing unitsatisfies requirements for production and use; the workshop for raw material processing, sewageprocessing station, energy centre and other supporting facilities meet the conditions for trial production.As for the technical upgrade project in the Smart Packaging Centre, design and debugging of the smartpackaging equipment have been completed. The Company is making every effort to build the center intoa leading example in the liquor industry as an automatic, information-based and intelligent base for finalproduct packaging, warehousing and logistics.
D. The Company endeavored to secure production and consolidated the foundation for production andoperations. The specialized automatic lines for Luzhou Laojiao Tequ and Erqu have been built and putinto operations, which set an example of automatic and intelligent operation for the industry. TheCompany verified the implementation information of suppliers, bottling enterprises and logisticsenterprises, conducted surveys, streamlined problems and provided pandemic-prevention supplies suchas masks and disinfectants for them. Thus, difficulties of supporting enterprises in pandemic preventionand resumption of work and production were effectively solved.
2. Analysis of main business
Same with the contents presented in “1.Overview” of this section.Year-on-year changes in key financial data
Unit：CNY
| H1 2020 | H1 2019 | YoY Change | Reason for any significant change | |
| Operating revenues | 7,634,482,901.87 | 8,013,035,019.72 | -4.72% | |
| Cost of sales | 1,386,636,428.85 | 1,626,443,132.19 | -14.74% | |
| Selling and distribution expenses | 1,111,958,208.98 | 1,538,501,721.21 | -27.72% | |
| General and administrative expenses | 360,013,975.76 | 340,569,422.14 | 5.71% | |
| Finance expenses | -108,274,836.69 | -96,209,653.90 | ||
| Corporate income tax | 1,034,276,363.11 | 898,232,269.30 | 15.15% | |
| R&D expenses | 44,739,047.81 | 28,917,680.78 | 54.71% | Mainly due to the increased R&D projects in the current period |
| Net cash flows from operating activities | 728,815,422.24 | 1,706,750,590.34 | -57.30% | Mainly due to the decreased cash received from sale of goods in the current period |
| Net cash flows from investing activities | -1,050,174,817.35 | -1,369,801,975.96 | ||
| Net cash flows from financing activities | 1,499,441,368.05 | -6,649,100.00 | Mainly due to the funds raised through a public offering of corporate bonds in the current period |
| Net increase in cash and cash equivalents | 1,180,083,124.68 | 331,607,209.11 | 255.87% | |
| Taxes and surcharges | 679,513,830.82 | 1,027,010,927.88 | -33.84% | Mainly due to the decreased consumption tax in the current period |
Significant changes to the profit structure or sources of the Company in the reporting period? Applicable √ N/ANo such changes in the Reporting Period.
Breakdown of operating revenues
Unit：CNY
| H1 2020 | H1 2019 | YoY Change | |||
| Amount | As a percentage of operating revenues | Amount | As a percentage of operating revenues | ||
| Total | 7,634,482,901.87 | 100% | 8,013,035,019.72 | 100% | -4.72% |
| By business segment | |||||
| Liquor | 7,566,057,028.33 | 99.10% | 7,921,465,489.46 | 98.86% | -4.49% |
| Other | 68,425,873.54 | 0.90% | 91,569,530.26 | 1.14% | -25.27% |
| By product | |||||
| High-end liquor | 4,745,839,916.79 | 62.16% | 4,313,391,651.80 | 53.83% | 10.03% |
| Mid-end liquor | 1,911,536,587.51 | 25.04% | 2,223,580,529.40 | 27.75% | -14.03% |
| Low-end liquor | 908,680,524.03 | 11.90% | 1,384,493,308.26 | 17.28% | -34.37% |
| Other | 68,425,873.54 | 0.90% | 91,569,530.26 | 1.14% | -25.27% |
| By geographical segment | |||||
| Domestic | 7,605,771,011.08 | 99.62% | 7,942,834,815.11 | 99.12% | -4.24% |
| Overseas | 28,711,890.79 | 0.38% | 70,200,204.61 | 0.88% | -59.10% |
Business segment, products or geographical segments contributing over 10% of the operating revenuesor 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 | ||||||
| Liquor | 7,566,057,028.33 | 1,360,968,975.63 | 82.01% | -4.49% | -14.73% | 2.16% |
| By product | ||||||
| High-end liquor | 4,745,839,916.79 | 386,491,876.45 | 91.86% | 10.03% | 6.84% | 0.25% |
| Mid-end liquor | 1,911,536,587.51 | 374,351,987.13 | 80.42% | -14.03% | -3.42% | -2.15% |
| Low-end liquor | 908,680,524.03 | 600,125,112.05 | 33.96% | -34.37% | -29.12% | -4.89% |
| By geographical segment | ||||||
| Domestic | 7,537,345,137.54 | 1,353,180,457.73 | 82.05% | -4.00% | -14.69% | 2.25% |
| Overseas | 28,711,890.79 | 7,788,517.90 | 72.87% | -59.10% | -20.16% | -13.23% |
Under the circumstances that the statistical standards for the Company’s main business data adjusted inthe reporting period, the Company’s main business data in the current year is calculated based onadjusted statistical standards at the end of the reporting period
□ Applicable √N/A
Reason for any over 30% YoY movements in the data above
√ Applicable ? N/A
A. Revenue from low-end liquor decreased by 34.37% year-on-year, mainly due to the decreased salesrevenue as a result of the COVID-19 pandemic.B. Overseas revenue decreased by 59.10% year-on-year, mainly due to the decreased sales revenue asa result of the impact of the COVID-19 pandemic on the overseas market.
3. Analysis of non-core business
? Applicable √ N/A
4. Assets and liabilities
4.1 Significant change of asset items
Unit：CNY
| 30 June 2020 | 30 June 2019 | Change in percentage | Explanation about any material change | |||
| Amount | As a percentage of total assets | Amount | As a percentage of total assets | |||
| Cash and cash equivalents | 10,933,749,651.46 | 34.43% | 9,698,993,836.79 | 38.78% | -4.35% | |
| Accounts receivable | 5,545,439.80 | 0.02% | 23,445,033.71 | 0.09% | -0.07% | |
| Inventories | 3,805,416,004.07 | 11.98% | 3,312,040,577.33 | 13.24% | -1.26% | |
| Long-term equity investments | 2,311,188,426.50 | 7.28% | 2,164,914,634.63 | 8.66% | -1.38% | |
| Fixed assets | 2,834,118,122.34 | 8.92% | 957,083,776.69 | 3.83% | 5.09% | |
| Construction in progress | 7,066,117,415.73 | 22.25% | 4,606,922,145.41 | 18.42% | 3.83% |
4.2 Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit：CNY
| Item | Opening balance | Changes in fair value through profit or loss | Changes in cumulative fair value recorded into equity | Provision for impairment | Amount of purchase | Amount of sale | Other changes | Closing balance |
| Financial asset | ||||||||
| 4. Investments in other equity instruments | 352,395,255.78 | 2,071,357.57 | 249,903,774.35 | 354,466,613.35 | ||||
| Total | 352,395,255.78 | 2,071,357.57 | 249,903,774.35 | 354,466,613.35 | ||||
| Financial liability | 0.00 | 0.00 | 0.00 | 0.00 | ||||
Information about other changesWhether measurement attribution of main assets changes significantly in this year?Yes √ No
4.3 Restricted asset rights as of the end of this reporting period
| Item | Closing Balance | Reason |
| Other cash and cash equivalents (CNY) | 1,400,000.00 | According to regulations of Tourism Bureau, the travel service deposit was deposited in a designated bank |
| Total | 1,400,000.00 |
5. Investment
5.1. Total investment
√ Applicable ? N/A
| Investment made in the reporting period (CNY) | Investment made in the same period of last year (CNY) | YoY change |
| 1,439,229,693.32 | 1,628,300,040.10 | -11.61% |
5.2. Significant equity investment made in the reporting period? Applicable √ N/A
5.3. Significant ongoing non-equity investment in the reporting period
√ Applicable □ N/A
Unit: CNY
| Item | Investment form | Whether it is a fixed asset investment | Industry of the investment project | Amount of input in the reporting period | Accumulated actual input amount by the end of the reporting period | Capital source | Project progress | Projected income | Accumulated actual income by the end of the reporting period | Reasons for not meeting the schedule and projected income | Date of disclosure (if any) | Disclosure index (if any) |
| Technical renovation project of brewing | Self-built | Yes | Liquor | 668,790,911.16 | 7,031,481,709.23 | Fund-raising+self-finance | 95.00% | 0.00 | 0.00 | N/A | 28 April 2016 | Announcement of About subsidiary technical renovation project of brewing No：2016-12（http:// |
| www.cninfo.com.cn/） | ||||||||||||
| Total | -- | -- | -- | 668,790,911.16 | 7,031,481,709.23 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
5.4. Financial assets at fair value
√ Applicable □ N/A
Unit: CNY
| Category of assets | Initial investment cost | Changes in fair value recognized in profit or loss | Changes in the cumulative fair value recorded into equity | Amount of purchase | Amount of sale | Cumulative income | Closing amount | Capital source |
| Stock | 64,869,156.76 | 2,071,357.57 | 255,793,172.13 | 0.00 | 0.00 | 51,571,309.05 | 320,662,328.89 | Owned fund |
| Total | 64,869,156.76 | 2,071,357.57 | 255,793,172.13 | 0.00 | 0.00 | 51,571,309.05 | 320,662,328.89 | -- |
5.5. Financial assets investment
5.5.1. Securities investment
√ Applicable □ N/A
| Category of securities | Stock code | Abbreviation of securities | Initial investment cost | Accounting measurement model | Beginning book balance | Changes in fair value recognized in profit or loss | Changes in the cumulative fair value recorded into equity | Amount of purchase | Amount of sale | Profit and loss during the reporting period | Closing book balance | Accounting item | Capital source |
| Domestic and foreign stock | 601211 | GTJA | 12,719,156.76 | Fair value measurement | 217,756,674.52 | -14,485,706.31 | 190,551,811.45 | 0.00 | 0.00 | 0.00 | 203,270,968.21 | Investments in other equity instruments | Owned fund |
| Domestic and foreign stock | 002246 | SNC | 1,030,000.00 | Fair value measurement | 11,757,933.60 | -62,542.20 | 10,665,391.40 | 0.00 | 0.00 | 0.00 | 11,695,391.40 | Investments in other equity | Owned fund |
| instruments | |||||||||||||
| Domestic and foreign stock | 1983 | LZBANK | 51,120,000.00 | Fair value measurement | 89,076,363.20 | 16,619,606.08 | 54,575,969.28 | 0.00 | 0.00 | 0.00 | 105,695,969.28 | Investments in other equity instruments | Owned fund |
| Total | 64,869,156.76 | -- | 318,590,971.32 | 2,071,357.57 | 255,793,172.13 | 0.00 | 0.00 | 0.00 | 320,662,328.89 | -- | -- | ||
5.5.2. Derivative investment
□Applicable √ N/A
No such cases in the reporting period
6. Sale of major assets and equity interests
6.1. Sale of major assets
? Applicable √ N/ANo such cases in the reporting period.
6.2. Sale of major equity interests
? Applicable √ N/A
7. Analysis of major subsidiaries
√ Applicable ? N/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 |
| Sales Company of Luzhou Laojiao Co., | Subsidiary | Sales of liquor | 100,000,000.00 | 6,340,378,557.03 | 3,914,306,325.65 | 7,385,629,676.82 | 3,018,858,569.22 | 2,266,302,374.73 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √N/A
Notes for major holding companies and joint stock companies
8. Structured entities controlled by the Company
? Applicable √ N/A
9. Operating performance forecast for January-September 2020Warning of a forecast negative net profit for the January-September period of the current year or aconsiderable YoY change therein, as well as the reasons:
? Applicable √ N/A
10. Risks facing the Company and countermeasuresA. Risk of macroeconomic fluctuations. Since uncertainty of domestic macro-economy is increasing dueto multiple negative factors such as spread of COVID-19 pandemic worldwide, global economyrecession and international trade frictions, development of the liquor industry has been hampered. TheCompany will strengthen study of macroeconomic situations and industrial trends, and make timelyadjustments to operating strategies, so as to adapt to changes in the external environment.
B. Risks from intensified industry competitions. The Company will continuously enhance brand building,improve production efficiency and elaborately develop channels to continuously enhance corecompetitiveness.
C. Risk of management and operation. With the Company's business, assets and personnel scalecontinuously growing, operational decision-making and risk control will be tougher. To tackle thisproblem, the Company will conduct strict management and key inspection, continuously stabilize anddevelop talents, vigorously improve its management level and enhance the efficiency of managementand operations.
D. Risk of food safety. Given that food safety is a major concern of the society, the Company will furtherpractice the idea of "making the quality visible", enhance and extend the quality regulation system, andbuild an intelligent, standardized and visible quality tracing system with higher level.
Section V Significant Events
1. Annual and extraordinary general meeting convened during the reporting period
1.1 General meeting convened during the reporting period
| Meeting | Type | Investor participation ratio | Date of the meeting | Date of disclosure | Index to disclosed information |
| The 2019 Annual General Meeting | Annual General Meeting | 61.57% | 30 June 2020 | 1 July 2020 | Announcement on Resolutions of the 2019 Annual General Meeting No.: 2020-20 (http://www.cninfo.com.cn/) |
1.2 Extraordinary general meetings convened at the request of preference shareholders withresumed voting rights? Applicable √ N/A
2. Profit distribution and converting capital reserves into share capital for thereporting period
? Applicable √ N/ANo such cases in the reporting period.
3. 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.
4. Engagement and disengagement of CPAs firm
Are the interim financial statements audited?
□ Yes √ No
The interim financial statements are not audited.
5. Explanation of the board of directors and the supervisory committee regarding the"Non-standard audit opinion" for the reporting period? Applicable √ N/A
6. Explanations of the board of directors regarding the "Non-standard audit opinion"of Last Year? Applicable √ N/A
7. Bankruptcy and reorganization
? Applicable √ N/ANo such cases in the reporting period.
8. Litigation
Material litigation and arbitration
√ Applicable ? N/A
| Profile of litigation (arbitration) | Amount involved in the case (CNY’ 0,000) | Whether it forms an estimate liability | Progress in litigation (arbitration) | Trial results and impacts of litigation (arbitration) | Execution of judgment of litigation (arbitration) | Date of disclosure | Disclosure index |
| The Company filed a lawsuit with ABC Changsha Yingxin Branch over a deposit dispute, and the case has been completed in the first instance of Hunan Province Higher People's Court and the | 14,942.5 | No | The second trial has been concluded | For the losses that the Company cannot recover through criminal execution procedures, 40% shall be borne by ABC Changsha Yingxin Branch, 20% shall be borne by ABC Changsha | Not executed | 15 October 2014 | See Section V “Other significant events” |
| final trial of the Supreme People's Court | Hongxin Branch and the rest shall be borne by the Company itself. | ||||||
| The Company filed a lawsuit with ICBC Nanyang Zhongzhou Branch over a deposit dispute, and Henan Province Higher People’s Court had made the judgment of the first trial. | 15,000 | No | The first trial has been concluded | For the losses that the Company cannot recover through criminal execution procedures, 50% shall be borne by ICBC Nanyang Zhongzhou Branch; for the losses that the Company cannot recover through criminal execution procedures concerning CNY 122.1 million of principal in the case, 10% shall be borne by Sanya Rural Commercial Bank Hongsha Branch, and the rest shall be borne by the Company itself. | Not executed | 10 January 2015 | See Section V “Other significant events” |
Other litigation? Applicable √ N/A
9. Doubts from Media
? Applicable √ N/AThe Company had no issues about which media generally raised doubts in the Reporting Period.
10. Punishments and rectifications
? Applicable √ N/ANo such cases in the reporting period.
11. Credit conditions of the Company as well as its controlling shareholder andactual controller? Applicable √ N/A
12. Implementation of any equity incentive plan, employee stock ownership plan orother incentive measures for employees? Applicable √ N/ANo such cases in the reporting period.
13. Significant related party transactions
13.1. Related party transactions arising from routine operation
? Applicable √ N/ANo such cases in the reporting period.
13.2. Related party transactions regarding purchase or sales of assets or equity interests? Applicable √ N/ANo such cases in the reporting period.
13.3. Related party transitions arising from joint investments in external parties? Applicable √ N/ANo such cases in the reporting period.
13.4. Credits and liabilities with related parties
? Applicable √ N/ANo such cases in the reporting period.
13.5. Other significant related party transactions
? Applicable √ N/ANo such cases in the reporting period.
14. Occupation of the Company's fund by the controlling shareholder or its relatedparties for non-operating purposes? 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. Entrust assets management
? Applicable √ N/ANo such cases in the reporting period.
15.4 Other significant contracts
? Applicable √ N/ANo such cases in the reporting period.
16. Social Responsibilities
16.1 Information about environment protection
Whether the listed company and its subsidiaries belong to heavy polluting industries prescribed by theenvironmental protection departmentYes
| Company name | Name of main pollutant and particular pollutant | Discharge type | Number of discharge outlet | Distribution of discharge outlet | Emission concentration | Pollution discharge standard | Total emission | Approved total emission | Excessive discharge |
| Luzhou Laojiao Co.,Ltd. | COD | Continuous discharge | 1 | Luohan Base | 21.988mg/L | 50mg/L | 3.731t | 25t/a | No |
| Luzhou Laojiao Co.,Ltd. | Ammonia nitrogen | Continuous discharge | 1 | Luohan Base | 0.584mg/L | 5mg/L | 0.088t | 2.5t/a | No |
| Luzhou Laojiao Co.,Ltd. | Total phosphorus | Continuous discharge | 1 | Luohan Base | 0.127mg/L | 0.5 mg/L | 0.021t | 0.25t/a | No |
| Luzhou Laojiao Co.,Ltd. | Total nitrogen | Continuous discharge | 1 | Luohan Base | 4.756 mg/L | 15 mg/L | 0.789t | 7.5t/a | No |
| Luzhou Laojiao Co.,Ltd. | Sulfur dioxide | Continuous discharge | 2 | Luohan Base | 0.432mg/m? | 50mg/m? | 0.015t | 4.7t/a | No |
| Luzhou Laojiao Co.,Ltd. | Oxynitride | Continuous discharge | 2 | Luohan Base | 27.407mg/m? | 200mg/m? | 1.266t | 22.1t/a | No |
| Luzhou Laojiao Co.,Ltd. | PM | Continuous discharge | 2 | Luohan Base | 7.018mg/m? | 20 mg/m? | 0.321t | 2.8t/a | No |
Information about construction and operation of anti-pollution installationsWaste water: Areas of the Company that produce wastewater are National Cellar Base, Xiaoshi Base,Zaojiaoxiang Base, Anning Park and Luohan Base. The high-concentration brewing wastewater from theold brewery workshops in the urban area is temporarily collected in the tanks, and is later transferred tothe wastewater treatment station of Luohan Base by truck for treatment. The wastewater treatmentstation of Luohan Base is equipped with online monitors to automatically monitor COD, ammonianitrogen, total phosphorus, total nitrogen, pH value and flows, which enables real-time networkingoperation of monitoring data with the Environmental Information Center of Luzhou City. The Company'sfacilities for prevention and control of wastewater pollution are under normal operations, ensuringup-to-standard discharge through general discharging outlets.
Waste gas: Areas of the Company that produce exhaust gas are National Cellar Base, Xiaoshi Base,Zaojiaoxiang Base and Luohan Base (20t/h, 306/h). Small natural gas boilers and direct-fired bottomboilers are used in the old brewery workshops in the urban areas. The boilers of Luohan Base areequipped with online monitors to automatically monitor exhaust gas, which enables real-time networkingoperation of monitoring data with the Environmental Information Center of Luzhou City. Low NOxcombustion technology is adopted for the natural gas boilers. The Company's facilities for preventionand control of exhaust gas pollution are under normal operations, ensuring up-to-standard emission ofexhaust gas through outlets.
Environmental impact assessment for construction project and other environmental protectionadministrative permissionThe Company observes requirements in the Management Policy for "Three Simultaneities" ofEnvironmental Protection in Construction Projects for all construction projects. Regarding the technicalupgrade program in the smart packaging center of Luzhou Laojiao, technical upgrade programs ofLuzhou Laojiao brewing workshops as well as the public and auxiliary facilities, cogeneration project,technical upgrade program of packaging line in Luzhou Laojiao Anning Base, renovation project offacilities for environmental protection and discharge, and technical upgrade program of supportingproduction facilities of Luzhou Laojiao, requirements in national laws and regulations for environmentalprotection are followed. The Company is preparing the Assessment Report on Environmental Impact,and reports to the Bureau of Ecology and Environment of Luzhou for approval to obtain environmentalprotection administrative permission.
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 tothe 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 and upload relevant data to online platforms. Luohan Base of the
Company and its automatic online monitors for exhaust gas are under networking operation with theInformation Center of the Bureau of Ecology and Environment of Luzhou; self-monitoring information arereleased on "Environmental Credit China" and the "Platform of Sichuan Province for Management andSharing of Information about Pollution Source Monitoring" to facilitate supervision from all walks of life.Other information about environmental protection that should be disclosed:
N/A
Other information about environment protectionN/A
16.2 Information about targeted poverty alleviation
16.2.1 Targeted poverty alleviation plan
A. Basic StrategyUnder the guidance of CPC committees and governments at central, provincial and municipal levels, theCompany adheres to the corporate philosophy of "liquor brewed with the universe, spirit generated bythe world", and thoroughly implements the poverty relief arrangements made by CPC committees andgovernments at different levels in the year for the final victory of poverty relief. With the "ruralrevitalization strategy" as a pillar and the construction of "new civilization villages" and "new villages withfour favorable aspects" as objectives, the Company continuously consolidates poverty reliefachievements in two villages (Xiangtian Village in Longshan Town, Gulin County, Luzhou City andGuntang Village in Maiwa Township, Hongyuan County, Ngawa Prefecture) under major targetedassistance to fulfill the promise that "efforts will not be retrieved until a complete victory is won".
B. Overall ObjectiveBy comprehensively implementing working requirements on poverty relief from CPC committees andgovernments at different levels, the Company will focus on improving infrastructure, making up fordeficiencies in public services, stabilizing productivity, increasing income and enhancing education onvillagers in two villages under targeted relief. It will comprehensively consolidate poverty reliefachievements, further solidify industrial basis, enhance quality of villagers, strengthen hard strength ofpoverty relief, and assist the villages in achieving high-quality, stable poverty relief and ruralrevitalization and development.
C. Key tasksBy persisting with the assistance principle of simultaneously "transfusing blood, producing blood andpromoting blood circulation" and following the philosophy of "making up for shortage and satisfyingpeople's needs" and "sustainable development", the Company insists on considering industrialdevelopment as a major route, ambition and intelligence enhancement as fundamental measures, andconstruction of new civilization villages as boosters to solidly promote poverty relief and ruralgovernance. It plans to continuously improve quality of villagers, optimize environment in ruralcommunities and strengthen hard strength of poverty relief through the project of medical supply
donation, the project of infrastructure improvement, industry development and ideological education onvillagers in the two villages.
D. Guarantee measuresThe Company will further implement "Five Ones" assistance measures, insist on the working mechanismof "one responsible institution, one person responsible for assistance, one project team, one cadre inone village, and one working team in one village", and solidify "Five Pillars" of "improve poverty reliefteams, develop strict system of responsibility, develop ledgers for poverty relief, streamline poverty reliefideas and implement poverty relief projects", so as to ensure orderly progress in poverty relief.
16.2.2 Outline of annual targeted poverty alleviation
A. Targeted Poverty Relief in Xiangtian Village, Longshan Town, Gulin CountyRegarding assistance in Xiangtian Village, Gulin County, the Company attaches importance todeveloping ecological agriculture, cultivating industrial teams and enhancing quality of villagers inaccordance with the idea of developing weak sessions.
1. Make full use of geographical advantages to develop planting bases of traditional Chinese medicinalmaterials. Supported by the local government, Xiangtian Village plans to build planting bases oftraditional Chinese medicinal materials with an area of 500 mu (approximately 0.33 square kilometers).The Company invites experts to carry out several field investigations and demonstrate geographicalenvironment, climate, plant species and planting models.
2. Expand the project of paddy cum fish culture to develop the aquaculture industry. With the project ofpaddy cum fish culture as the pillar industry of Xiangtian Village, the Company plans to assist theGovernment of Longshan Town in expanding fish culture in paddy fields in Xiangtian Village throughroad hardening, land consolidation and dam governance to further enlarge the culture scale.
3. Continue to support the farming industry and back poverty-stricken households to develop courtyardeconomy. In view of the farming capability of poverty-stricken households, the Company plans todistribute piglets and charity baby chicks to pairing poverty-stricken households.
4. Organize activities of Party branch pairing. The Party branch of the Liquor Body Design &Management Center of the Company is paired with the Party branch of Xiangtian Village to carry out thepairing Party building activity of "paired Party branches and hand-in-hand Party members". In the firsthalf of the year, the Party day activity themed "pandemic prevention started with Party members" wascarried out.
5. Carry out pairing assistance activities. The Company further explores the long-term mechanism forenterprises' pairing assistance of poverty-stricken villages, deepens one-for-one pairing assistancebetween members in the Company's core management team as well as grass-roots Party organizationsand poverty-stricken households in Xiangtian Villages, revises measures of "one assistance manual forone household", and pays visits and condolence.
B. Targeted Poverty Relief in Hongyuan County and Guntang VillageIn 2020, the Company persists with the principle that efforts and funds invested in assistance will onlyincrease, continuously advances poverty relief in Hongyuan County and Guntang Village, and tackles
difficulties in healthcare assistance, industrial infrastructure building, expansion of product saleschannels, Party guidance, and ideological & cultural education on herdsmen.
1. Continuously implement "consumption poverty relief". The Company continuously insists on theindustrial poverty relief road of "Luzhou Laojiao e-commerce + enterprises in Hongyuan County +collective economy + poverty-stricken herdsmen", and conducts the project of "making a fortune fromsales".
2. Survey proposed donation projects. The Company carries out several field surveys on the project ofpasture lane circles in Guntang Village, the lane maintenance project in distant grazing fields in GuntangVillage, the project of Banhan Bridge in distant grazing fields in Guntang Village, and the project ofteaching buildings and centralized heating of students' dormitories in Maiwa Township Primary School.
3. Organize Party branch co-building and pairing assistance with poverty-stricken households. The No. 1Party branch of Luzhou Laojiao Sales Company was paired with the Party branch of Guntang Village.Together they carried out the pairing Party co-building activity of "work hard to alleviate poverty and worktogether to build a moderately prosperous society". The Company conducted one-for-one pairingassistance between members in the Company's core management team as well as grass-roots Partyorganizations and poverty-stricken households in Guntang Villages, formulated measures of "oneassistance manual for one household", and paid condolence during the Spring Festival and home visits.
16.2.3 Follow-up poverty alleviation plan
For targeted poverty relief in Xiangtian Village, Gulin County, the Company helps to stabilize productivity,secure supply and increase farmers' income through consumption poverty relief, intelligence andambition enhancement, visits and aids, so as to continuously consolidate poverty relief achievements.For targeted poverty relief in Hongyuan County and Guntang Village, the Company builds pasture lanes,Banhan Bridge and pasture lane circles in distant grazing fields in Guntang Village as well as teachingbuildings and centralized heating of students' dormitories in Maiwa Township Primary School. It willconsolidate poverty relief achievement in healthcare poverty relief, industrial poverty relief, expansion ofproduct sales channels, cultural & educational poverty relief, further improve infrastructure, improvequality of villagers, optimize environment in village communities and continuously develop weaksessions in Hongyuan County and Guantang Village.
17. Other significant events
√ Applicable ? N/A
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. The Company has reported tothe public security authorities for intervention with the assets preservation measure and filed civil claimsfor two contract disputes among the three cases. Combined with the assets preservation situation of thepublic security authorities and professional legal advice issued by lawyers, the Company has made aprovision of CNY 200 million for bad debts for the deposit of CNY 500 million for contract disputes.During the reporting period, the Supreme People’s Court made a final judgment on the dispute arisingout of the deposit contract between the Company and ABC Changsha Yingxin Branch. In respect of the
losses that couldn’t be recovered through criminal procedures, ABC Changsha Yingxin Branch shouldbear 40% of the compensation liability, ABC Changsha Hongxing Branch 20%, and the remaining lossesshould be borne by the Company. Henan Province Higher People’s Court had made the judgment of thefirst trial on the lawsuit of the Company with ICBC Nanyang Zhongzhou Branch over a deposit dispute:
for the losses that the Company cannot recover through criminal execution procedures, 50% shall beborne by ICBC Nanyang Zhongzhou Branch; for the losses that the Company cannot recover throughcriminal execution procedures concerning CNY 122.1 million of principal in the case, 10% shall be borneby Sanya Rural Commercial Bank Hongsha Branch, and the rest shall be borne by the Company itself.As of 30 June 2020, the Company had recovered an amount of CNY 214,859,700 for three of thedisputes.
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 |
2. The Company held the 16th meeting of the ninth board of directors on 10 January 2020, reviewed andapproved the Proposal on Changes in Accounting Policies and decided to prepared the Company’sfinancial statements as required by the Accounting Standards for Business Enterprises No.14-Revenue(CK[2017]No.22) revised and issued by the Ministry of Finance since 1 January 2020.
18. 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 upon deliberation. According to the proposal, extra CNY 1,462,996,500 of funds wouldbe invested in the technical upgrade program of brewing. Upon this increase of funds, the totalinvestment in the technical upgrade program of brewing would reach CNY 8,877,276,500. For moreinformation, please refer to the following announcements: Announcement on Investing in the TechnicalUpgrade Program of Brewing by the Subsidiary disclosed on 28 April 2016 with an Announcement No. of2016-12; Announcement on Increasing Investment in the Technical Upgrade Program of Brewingdisclosed on 2 June 2020 with an Announcement No. of 2020-17 (http://www.cninfo.com.cn/). As of 30June 2020, 95% of the project has been completed.
Section VI Changes in Shares and Information about
Shareholders
1. Changes in shares
1.1 Changes in shares
Unit：Share
| Before | Changes in this year (＋，－) | After | |||||||
| Number | Proportion | Issuance of new shares | Bonus shares | Capitalization of capital reserves | Other | Subtotal | Number | Proportion | |
| I. Restricted shares | 4,647,181 | 0.32% | -34,594 | -34,594 | 4,612,587 | 0.31% | |||
| 2. Shares held by state-owned corporations | 4,166,666 | 0.28% | 4,166,666 | 0.28% | |||||
| 3. Shares held by other domestic investors | 480,515 | 0.03% | -34,594 | -34,594 | 445,921 | 0.03% | |||
| Shares held by domestic individuals | 480,515 | 0.03% | -34,594 | -34,594 | 445,921 | 0.03% | |||
| II. Non-restricted shares | 1,460,105,295 | 99.68% | 34,594 | 34,594 | 1,460,139,889 | 99.69% | |||
| 1.CNY common shares | 1,460,105,295 | 99.68% | 34,594 | 34,594 | 1,460,139,889 | 99.69% | |||
| 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
Implementation progress of shares repurchases
□ Applicable √ N/A
Implementation progress of share buyback reduction through centralized bidding
□ 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 holding restricted shares at the beginning of the reporting period | Decrease of restricted shares during the reporting period | Increase of restricted shares during the reporting period | Number of holding restricted shares by the end of the reporting period | Restriction reason | Restricted shares relieved date |
| Shen Caihong | 138,375 | 34,594 | 0 | 103,781 | Shares locked by senior executives | 2 January 2020 |
| Total | 138,375 | 34,594 | 0 | 103,781 | -- | -- |
2. Issuance and listing of securities
√ Applicable □ N/A
| Name of stock and its derivative securities | Issuance date | Issuance price (or interest rate) | Numbers | Listing date | Approved numbers for trading | Expiry date of the trading | Disclosure index | Disclosure date |
| Stock | ||||||||
| Convertible corporate bonds, separate bargaining convertible corporate bonds and corporate bonds | ||||||||
| 2020 Public Offering of Corporate | 17 March 2020 | 3.50% | 15,000,000 | 25 March 2020 | 15,000,000 | Announcement on Issuance of | 12 March 2020 | |
| 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) (http://www.cninfo.com.cn/) | ||
| Other derivative securities | |||
Information about securities issued in the reporting periodOn 17 March 2020, the Company completed the issuance of 2020 Public Offering of Corporate Bond ofLuzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) at CNY 100 per piece. The final actualissuance scale was CNY 1.5 billion and the final coupon rate was 3.50%. The said bonds were traded onShenzhen Stock Exchange on 25 March 2020.
3. Total number of shareholders and their shareholdings
Unit：Share
| Total number of common shareholders at the end of the reporting period | 116,932 | Total number of preference shareholders with resumed voting rights by the end of the reporting period (if any)(see Note 8) | 0 | ||||||||
| Shareholdings of common shareholders with a shareholding percentage over 5% or the top 10 common shareholders | |||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total common shares held by the end of the reporting period | Increase/decrease during the reporting period | Number of holding restricted common shares | Number of holding non-restricted common shares | Pledged or frozen shares | ||||
| Status of shares | Number of shares | ||||||||||
| Luzhou | State-owned | 26.02% | 381,088,389 | 0 | 0 | 381,088,389 | |||||
| Laojiao Group Co., Ltd. | corporation | |||||||
| Luzhou XingLu Investment Group Co., Ltd. | State-owned corporation | 24.99% | 365,971,142 | 0 | 0 | 365,971,142 | Pledged | 101,980,000 |
| China Securities Finance Corporation limited | Other | 2.31% | 33,842,059 | 0 | 0 | 33,842,059 | ||
| Hong Kong Securities Clearing Company Limited | Outbound corporation | 1.97% | 28,902,451 | -11,407,824 | 0 | 28,902,451 | ||
| Central Huijin Asset Management Co.,Ltd. | State-owned | 1.43% | 20,937,500 | 0 | 0 | 20,937,500 | ||
| Bank of China Co.,Ltd. – Middle and small capital stock s hybrid securities investment fund by E fund | Other | 1.36% | 19,989,538 | -1,390,028 | 0 | 19,989,538 | ||
| Agricultural Bank of China Co.,Ltd. - Consumption industry stock - based securities investment fund by E fund | Other | 1.33% | 19,521,463 | -1,308,367 | 0 | 19,521,463 | ||
| Bank of China Co., Ltd- Blue Chip Selected hybrid | Other | 1.29% | 18,850,032 | — | 0 | 18,850,032 |
| securities investment fund by E fund | |||||||||||
| Bank of China Co.,Ltd. – Liquor index classification securities investment fund by China Merchants Fund | Other | 1.26% | 18,474,494 | 369,433 | 0 | 18,474,494 | |||||
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | Other | 0.89% | 13,000,000 | -2,912,158 | 0 | 13,000,000 | |||||
| Related parties or acting-in-concert | 1. Laojiao Group and Xinglu Group are both wholly state-owned companies under the jurisdiction of SASAC of Luzhou. The two companies signed the agreement of persons acting in concert on 31 December 2015. For details, please refer to the announcement of the Company on 5 January 2016 - Announcement on the agreement of persons acting in concert signed by shareholders. The announcement number is 2016-1 (http://www.cninfo. com.cn/). 2. In addition, whether there is an association between the remaining shareholders or they belong to persons acting in concert is unknown. | ||||||||||
| Shareholdings of the top 10 non-restricted common shareholders | |||||||||||
| Name of shareholder | Number of non-restricted common 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 | ||||||||
| China Securities Finance Corporation limited | 33,842,059 | CNY common shares | 33,842,059 | ||||||||
| Hong Kong Securities Clearing | 28,902,451 | CNY common | 28,902,451 | ||||||||
| Company Limited | shares | ||
| Central Huijin Asset Management Co.,Ltd. | 20,937,500 | CNY common shares | 20,937,500 |
| Bank of China Co.,Ltd. – Middle and small capital stock s hybrid securities investment fund by E fund | 19,989,538 | CNY common shares | 19,989,538 |
| Agricultural Bank of China Co.,Ltd. - Consumption industry stock - based securities investment fund by E fund | 19,521,463 | CNY common shares | 19,521,463 |
| Bank of China Co., Ltd- Blue Chip Selected hybrid securities investment fund by E fund | 18,850,032 | CNY common shares | 18,850,032 |
| Bank of China Co.,Ltd. – Liquor index classification securities investment fund by China Merchants Fund | 18,474,494 | CNY common shares | 18,474,494 |
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | 13,000,000 | CNY common shares | 13,000,000 |
| The statement of association or acting-in-concert between the top 10 shareholders of unrestricted common shares and between the top 10 shareholders of common unrestricted shares and top 10 common shareholders | See the table above | ||
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.
4. Change of controlling shareholder or actual controller
Change of the controlling shareholder during the reporting period
?Applicable √N/ANo such cases in the reporting period
Change of the actual controller during the reporting period?Applicable √ N/AThe actual controller of the Company has not changed during the reporting period.
Section VII Preference Shares
? Applicable √ N/ANo preferred stock in the Company during the reporting period.
Section VIII Information about Convertible Corporate Bond? Applicable √ N/ANo convertible corporate bond in the Company during the reporting period.
Section IX Profiles of Directors, Supervisors and Senior
Management
1. Changes in shares held by directors, supervisors, and senior management? Applicable √ N/ANo changes occurred to shares held by directors, supervisors and senior management in the reportingperiod. See the 2019 Annual Report for more details.
2. Changes in directors, supervisors, and senior management
√ Applicable □ N/A
| Name | Title | Type | Date | Reason |
| Jiang Yuhui | Deputy general manager | Appoint | 2020.1.10 | Appointed |
| Wu Qin | Deputy general manager | Appoint | 2020.1.10 | Appointed |
Section X Information about Corporate Bond
Whether there exists a public issue and listing of corporate bond that is not yet due or failed to beredeemed at the date of the interim report authorized.Yes
1. Basic information about the corporate bond
| Name | Abbr. | Code | Issue date | Due date | Bond balance (CNY 10,000) | Interest rate | Way of redemption |
| 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 2024 | 250,000 | 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 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 | 17 March 2020 | 17 March 2025 | 150,000 | 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. | ||
| Listed or transferred trading place of corporate bond | Shenzhen Stock Exchange | |
| Appropriate arrangement of the investors | 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) | |
| Interest payment during the reporting period | “19 Lao Jiao 01” and “20 Lao Jiao 02” have not reached the interests payment period by the end of 30 June 2020. | |
| Execution of the relevant regulations during the reporting period such as the affiliated option clause of the issuers or investors, special clauses such as the exchangeable regulations of corporate bond (if applicable) | The term of “19 Lao Jiao 01” is five years with the issuer’s option for adjustment to the stated interest rate and the investor’s option for sell back at the end of the 3rd year | |
2. List of the bond trustee and the rating organization
| Bond trustee: | |||||||
| Name | China International Capital Corporation Limited. | Office address | 27th and 28th Floor, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, | Contact person | Xie Ci, Qi Qin | Contact number | （010）65051166 |
| Beijing | |||||
| Rating organization executed the tracking rating of the corporate bonds of the reporting period: | |||||
| Name | China Chengxin International Credit Rating Co., Ltd. | Office address | Building 6, Galaxy SOHO, No.2 Nanzhugan hutong,Chaoyangmennei Avenue, Dongcheng District, Beijing | ||
| Alternation reasons, execution process and influences on the investors’ interests etc. if there was alternation of the bond trustees and the credit rating agencies engaged by the Company during the reporting period (if applicable) | N/A | ||||
3. Information about usage of fund-raising of the corporate bond
| Information about usage of fund-raising and the execution process of corporate bond | The Company raised a fund of CNY 4.0 billion through the issue of corporate bonds respectively on 27 August 2019 and 17 March 2020. After deduction of the issue fees, the balance amount was set to use in the technical renovation project of brewing (Phase II), Project of Intelligent Upgrading and Building of the Information Management System, Project of Acquiring Sealing Equipment for the Cellar of Huangyi Brewing Base and Project of Acquiring Accessory Equipment for Leaven Making for Huangyi Brewing Base. As of 30 June 2020, CNY 2,003,815,000 of the fund-raising through the issue of corporate bonds had been used. |
| Closing balance (CNY 10,000) | 200,722.61 |
| Operating situation of the fund-raising special account | In accordance with related laws and regulations, the Company has designated several accounts specifically for fundraising to receive, deposit and transfer funds raised through the issue of corporate bonds and pay interests and principals. Details of these bank accounts are as follows: (1) account name: Luzhou Laojiao Co., Ltd. bank: CGB Chengdu Branch account number: 9550880046723000135 (2) account name: Luzhou Laojiao Co., Ltd. bank: Bank of Communications Luzhou Branch account number: 517517460013000000860 (3) account name: Luzhou Laojiao Co., Ltd. bank: CMBC Chengdu Fucheng Avenue Branch account number: 028900140410888 (4) account name: Luzhou Laojiao Co., Ltd. |
| bank: China Minsheng Bank Chengdu Branch account number: 631395395 The Company has signed a third-party regulation agreement with each bank and the trustee. | |
| Whether the usage of the fund-raising met with the usage, using plan and other agreements committed on the prospectus | The usage of the fund-raising met with the usage committed on the prospectus |
Note: 1 Including the interest of fund-raising
4. Rating situation of corporate bond information
On 15 August 2019, China Chengxin Securities Rating Co., Ltd. issued a credit rating report for “19 LaoJiao 01”. The Company’s main body has a credit rating of AAA and a stable rating outlook; the bond’scredit rating is AAA.
On 2 March 2020, China Chengxin International Credit Rating Co., Ltd. issued a credit rating report for“20 Lao Jiao 01”. The Company’s main body has a credit rating of AAA and a stable rating outlook; thebond’s credit rating is AAA.
On 28 June 2020, China Chengxin Securities Rating Co., Ltd. issued a tracking rating report in 2020 for“19 Lao Jiao 01” and “20 Lao Jiao 01”, maintained the credit rating of AAA for the Company’s main bodyand a stable rating outlook as well as the credit rating of AAA for “19 Lao Jiao 01” and “20 Lao Jiao 01”.
5. Credit-adding mechanism, repayment plan and other repayment guaranteemeasures of the corporate bondNot applicable
6. Information about convening of the bondholders meeting during the reportingperiodThe Company did not convene bondholders meeting during the reporting period.
7. Information about duty execution of bond trustee during the reporting period
During the validity of the corporate bond, the trustee performed continuous tracking of the Company’scredit information and management and utilization of the fund-raising strictly in accordance with theBonds Trusteeship Agreement, urged the Company to fulfill its obligations agreed in the prospectus ofthe corporate bond, proactively exercised its duties as a bonds trustee and safeguarded the legitimate
rights and interests of the bondholders.
CICC produced an interim report on the trusteeship affairs for the Company’s involvement of significantlitigation respectively on 17 April 2020 and 12 May 2020 and disclosed it synchronously on cninfo(http://www.cninfo.com.cn/). CICC produced the 2019 report on the trusteeship affairs on 30 June 2020and disclosed it synchronously on cninfo (http://www.cninfo.com.cn/).
8. The major accounting data and the financial indicators of the Company as of theend of the reporting period and of the end of last year (or the reporting period andthe same period of last year)
| Item | 30 June 2020 | 30 June 2019 | YoY change |
| Current ratio | 251.74% | 240.36% | 11.38% |
| Asset-liability ratio | 35.62% | 32.38% | 3.24% |
| Quick ratio | 196.90% | 184.48% | 12.42% |
| The reporting period | The same period of last year | YoY change | |
| Times interest earned of EBITDA | 45.05 | 59.03 | -23.68% |
Main reason of the above accounting data and the financial indicators with the YoY change exceeded30%?Applicable √ N/A
9. Overdue payment
?Applicable √ N/ANo overdue payment during the reporting period.
10. Information about interest payment of other bonds and debt financinginstruments during the reporting periodNot applicable
11. Information about acquired bank credit lines, usage and repayment of the bankloans during the reporting periodNot applicable
12. Information about the execution of the agreements or the commitments related tothe corporate bond fund-raising specification during the reporting periodDuring the reporting period, the Company used the raised funds strictly according to the agreementsrelated to the corporate bond fund-raising specification.
13. Significant events occurring during the reporting period
No significant events during the reporting period.
14. Whether there was guarantor of the corporate bond
□ Yes √ No
Section XI Financial Report
1. Auditor’s report
Are these interim financial statements audited by an independent auditor?
□ Yes √ No
The interim financial statements are not audited by an independent auditor.
2. Financial statements
Monetary unit for the financial statements and the notes thereto: CNYPrepared by: Luzhou Laojiao Co., Ltd.
Consolidated balance sheet
As at 30 June 2020
Monetary Unit: CNY
| Item | Balance as at 30 June 2020 | Balance as at 31 December 2019 |
| Current assets: | ||
| Cash and cash equivalents | 10,933,749,651.46 | 9,753,666,526.78 |
| Settlement reserves | ||
| Lending funds | ||
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 5,545,439.80 | 18,293,914.23 |
| Accounts receivables financing | 2,855,987,446.81 | 2,393,797,259.80 |
| Prepayment | 163,698,852.80 | 151,818,448.48 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve | ||
| Other receivables | 205,474,170.86 | 159,753,421.64 |
| Including：Interests receivable | 67,318,644.44 | 45,636,744.44 |
| Dividends receivable | 30,114,991.30 | |
| Buying back the sale of financial assets |
| Inventories | 3,805,416,004.07 | 3,641,235,092.33 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 249,589,311.90 | 195,174,048.57 |
| Total current assets | 18,219,460,877.70 | 16,313,738,711.83 |
| Non-current assets: | ||
| Disbursement of loans and advances | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 2,311,188,426.50 | 2,230,721,725.72 |
| Investments in other equity instruments | 354,466,613.35 | 352,395,255.78 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 2,834,118,122.34 | 1,518,865,397.91 |
| Construction in progress | 7,066,117,415.73 | 7,257,393,087.56 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | ||
| Intangible assets | 437,890,503.22 | 332,234,032.47 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 2,726,918.71 | 928,805.23 |
| Deferred tax assets | 491,392,575.44 | 676,152,614.07 |
| Other non-current assets | 40,853,089.81 | 237,539,447.75 |
| Total non-current assets | 13,538,753,665.10 | 12,606,230,366.49 |
| Total assets | 31,758,214,542.80 | 28,919,969,078.32 |
| Current liabilities: | ||
| Short-term loans | ||
| Borrowings from the central bank | ||
| Loans from other banks |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 6,825,905.98 | |
| Accounts payable | 2,030,319,305.16 | 1,868,623,958.02 |
| Advance from customer | 2,244,442,643.64 | |
| Contract liabilities | 588,278,202.31 | |
| Financial assets sold for repurchase | ||
| Deposits from customers and inter-bank | ||
| Customer brokerage deposits | ||
| Securities underwriting brokerage deposits | ||
| Employee benefits payable | 363,794,712.74 | 342,025,687.49 |
| Taxes payable | 1,188,292,358.23 | 1,633,044,231.67 |
| Other payable | 2,988,320,565.30 | 698,942,399.37 |
| Including：Interests payable | 90,135,616.44 | 30,650,684.93 |
| Dividends payable | 2,328,956,436.84 | |
| Handling charges and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | 71,461,894.52 | |
| Total current liabilities | 7,237,292,944.24 | 6,787,078,920.19 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term loans | ||
| Bonds payable | 3,986,319,687.09 | 2,490,883,676.39 |
| Including：Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities |
| Deferred income | 23,345,000.00 | 23,845,000.00 |
| Deferred tax liabilities | 63,948,293.05 | 63,430,453.64 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,073,612,980.14 | 2,578,159,130.03 |
| Total liabilities | 11,310,905,924.38 | 9,365,238,050.22 |
| Owners' equity | ||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preference shares | ||
| Perpetual bonds | ||
| Capital reserves | 3,722,777,063.13 | 3,722,777,063.13 |
| Less: treasury stock | ||
| Other comprehensive income | 196,669,728.76 | 194,817,130.57 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| General risk reserve | ||
| Undistributed profits | 13,451,242,333.34 | 12,559,746,579.91 |
| Total equity attributable to owners of the parent company | 20,300,194,077.23 | 19,406,845,725.61 |
| Non-controlling interests | 147,114,541.19 | 147,885,302.49 |
| Total owners' equity | 20,447,308,618.42 | 19,554,731,028.10 |
| Total liabilities and owners' equity | 31,758,214,542.80 | 28,919,969,078.32 |
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 30 June 2020
Monetary Unit: CNY
| Item | Balance as at 30 June 2020 | Balance as at 31 December 2019 |
| Current assets: | ||
| Cash and cash equivalents | 9,880,433,674.31 | 8,872,692,385.79 |
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivables |
| Accounts receivables | 915,332.71 | 21,562.85 |
| Accounts receivables financing | ||
| Prepayment | 17,878,055.71 | 11,682,593.27 |
| Other receivables | 7,526,535,796.06 | 5,850,481,480.50 |
| Including：Interests receivable | 111,388,492.40 | 40,570,144.44 |
| Dividends receivable | 30,114,991.30 | |
| Inventories | 1,646,163.02 | 1,049,384.24 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 10,549,321.25 | 5,562,360.72 |
| Total current assets | 17,437,958,343.06 | 14,741,489,767.37 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 5,717,148,554.61 | 5,636,681,853.83 |
| Investments in other equity instruments | 354,137,691.72 | 352,066,334.15 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 534,607,551.77 | 601,481,983.81 |
| Construction in progress | 1,006,518,048.07 | 967,953,263.55 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | ||
| Intangible assets | 292,071,257.27 | 297,830,285.02 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 2,588,888.01 | 777,834.15 |
| Deferred tax assets | 84,821,454.75 | 75,249,717.72 |
| Other non-current assets | ||
| Total non-current assets | 7,991,893,446.20 | 7,932,041,272.23 |
| Total assets | 25,429,851,789.26 | 22,673,531,039.60 |
| Current liabilities: | ||
| Short-term loans | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 76,577,965.35 | 87,652,671.29 |
| Advance from customer | 9,712,630.35 | |
| Contract liabilities | 17,169,582.79 | |
| Employee benefits payable | 129,254,089.35 | 116,124,722.19 |
| Taxes payable | 96,865,083.43 | 82,399,599.18 |
| Other payables | 4,334,854,219.02 | 1,099,598,588.83 |
| Including：Interests payable | 90,135,616.44 | 30,650,684.93 |
| Dividends payable | 2,328,956,436.84 | |
| Liabilities held for sale | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | 2,232,045.77 | |
| Total current liabilities | 4,656,952,985.71 | 1,395,488,211.84 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | 3,986,319,687.09 | 2,490,883,676.39 |
| Including：Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | 2,380,000.00 | 2,380,000.00 |
| Deferred tax liabilities | 63,948,293.05 | 63,430,453.64 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,052,647,980.14 | 2,556,694,130.03 |
| Total liabilities | 8,709,600,965.85 | 3,952,182,341.87 |
| Owners' equity | ||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preference shares | ||
| Perpetual bonds | ||
| Capital reserves | 3,706,816,950.12 | 3,706,816,950.12 |
| Less: treasury stock | ||
| Other comprehensive income | 200,129,191.89 | 192,332,738.05 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| Undistributed profits | 9,883,799,729.40 | 11,892,694,057.56 |
| Total owners' equity | 16,720,250,823.41 | 18,721,348,697.73 |
| Total liabilities and owners' equity | 25,429,851,789.26 | 22,673,531,039.60 |
Consolidated income statement
Monetary Unit: CNY
| Item | H1 2020 | H1 2019 |
| 1. Total operating revenue | 7,634,482,901.87 | 8,013,035,019.72 |
| Including: Operating revenue | 7,634,482,901.87 | 8,013,035,019.72 |
| Interest income | ||
| Earned premium | ||
| Fee and commission income | ||
| 2. Total operating costs | 3,461,876,189.00 | 4,458,613,035.17 |
| Including: Cost of sales | 1,386,636,428.85 | 1,626,443,132.19 |
| 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 | 679,513,830.82 | 1,027,010,927.88 |
| Selling and distribution | 1,111,958,208.98 | 1,538,501,721.21 |
| expenses | ||
| General and administrative expenses | 360,013,975.76 | 340,569,422.14 |
| Research and Development expenses | 32,028,581.28 | 22,297,485.65 |
| Financial expenses | -108,274,836.69 | -96,209,653.90 |
| Including：Interest expenses | 66,532,174.99 | 64,806,647.95 |
| Interest income | 173,389,442.03 | 160,388,809.43 |
| Plus: Other income | 10,441,675.27 | 17,293,543.26 |
| Investment income ("-" for losses) | 104,338,756.40 | 97,024,631.16 |
| Including: income from investment in associates and joint ventures | 94,958,932.04 | 88,275,961.45 |
| 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) | ||
| Credit impairment losses (“-” for losses) | -401,066.70 | -3,835,284.24 |
| Impairment losses(“-“ for losses) | ||
| Gains from disposal of assets("-" for losses) | 104,663.83 | 248,064.82 |
| 3. Operating profits ("-" for losses) | 4,287,090,741.67 | 3,665,152,939.55 |
| Plus: non-operating income | 10,944,441.71 | 17,760,567.89 |
| Less: non-operating expenses | 39,217,386.08 | 5,069,812.91 |
| 4. Total profits before tax ("-" for total losses) | 4,258,817,797.30 | 3,677,843,694.53 |
| Less: income tax expenses | 1,034,276,363.11 | 898,232,269.30 |
| 5. Net profit ("-" for net loss) | 3,224,541,434.19 | 2,779,611,425.23 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operation ("-" for losses) | 3,224,541,434.19 | 2,779,611,425.23 |
| 5.1.2 Net profit from discontinued operation ("-" for losses) | ||
| 5.2 By ownership | ||
| 1) Attributable to owners of the parent company | 3,220,452,190.27 | 2,749,781,041.42 |
| 2) Attributable to non-controlling interests | 4,089,243.92 | 29,830,383.81 |
| 6. Net of tax from other comprehensive income | -3,007,407.03 | 34,428,095.75 |
| Net of tax from other comprehensive income to the owner of the parent company | 1,852,598.19 | 34,416,541.61 |
| 6.1 Other comprehensive income cannot reclassified into the profit and loss: | 1,553,518.16 | 27,648,251.01 |
| 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 | 1,553,518.16 | 27,648,251.01 |
| 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 | 299,080.03 | 6,768,290.60 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | 6,242,935.68 | 6,679,104.79 |
| 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 | -5,943,855.65 | 89,185.81 |
| 7) Others | ||
| Net of tax from other comprehensive income to non-controlling interests | -4,860,005.22 | 11,554.14 |
| 7. Total comprehensive income | 3,221,534,027.16 | 2,814,039,520.98 |
| Total comprehensive income attributable to owners of the parent company | 3,222,304,788.46 | 2,784,197,583.03 |
| Total comprehensive income attributable to non-controlling interests | -770,761.30 | 29,841,937.95 |
| 8. Earnings per share | ||
| (1) Basic earnings per share | 2.20 | 1.88 |
| (2) Diluted earnings per share | 2.20 | 1.88 |
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 | H1 2020 | H1 2019 |
| 1. Operating revenue | 1,502,921,693.39 | 2,447,219,300.12 |
| Less: Cost of sales | 1,040,786,248.30 | 1,621,162,415.45 |
| Taxes and surcharges | 15,549,764.92 | 25,151,156.04 |
| Selling and distribution expenses | ||
| General and administrative expenses | 274,620,160.19 | 286,401,299.53 |
| Research and Development expenses | 9,011,286.24 | 6,268,987.51 |
| Financial expenses | -131,445,866.38 | -103,760,837.11 |
| Including：Interest expenses | 33,323,418.69 | 9,270,944.42 |
| Interest income | 164,861,694.13 | 113,078,683.00 |
| Plus: Other income | 6,812,036.02 | 10,186,492.26 |
| Investment income ("-" for losses) | 104,338,756.40 | 97,024,631.16 |
| Including: income from investment in associates and joint ventures | 94,958,932.04 | 88,275,961.45 |
| 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) | ||
| Credit impairment losses (“-” for losses) | -44,132.47 | -177,197.13 |
| Asset impairment losses (“-” for losses) | ||
| Gains from disposal of assets("-" for losses) | 104,663.83 | 108,159.28 |
| 2. Operating profits ("-" for losses) | 405,611,423.90 | 719,138,364.27 |
| Plus: non-operating income | 8,883,565.15 | 4,646,619.50 |
| Less: non-operating expenses | 24,377,133.78 | 4,741,335.98 |
| 3. Total profits before tax ("-" for total losses) | 390,117,855.27 | 719,043,647.79 |
| Less: income tax expenses | 70,055,746.59 | 158,455,510.79 |
| 4. Net profit ("-" for net loss) | 320,062,108.68 | 560,588,137.00 |
| 4.1 Net profit from continuing operation ("-" for losses) | 320,062,108.68 | 560,588,137.00 |
| 4.2 Net profit from discontinued operation ("-" for losses) | ||
| 5. Net of tax from other comprehensive income | 7,796,453.84 | 34,327,355.80 |
| 5.1 Other comprehensive income cannot reclassified into the profit and | 1,553,518.16 | 27,648,251.01 |
| loss: | ||
| 1) Remeasure the variation of net indebtedness or net asset of defined benefit plans | ||
| 2) Share in other comprehensive income that cannot be classified into profit and loss under equity method | ||
| 3) Changes in fair value of investments in other equity instruments | 1,553,518.16 | 27,648,251.01 |
| 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 | 6,242,935.68 | 6,679,104.79 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | 6,242,935.68 | 6,679,104.79 |
| 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 | 327,858,562.52 | 594,915,492.80 |
| 7. Earnings per share | ||
| (1) Basic earnings per share | 0.22 | 0.38 |
| (2) Diluted earnings per share | 0.22 | 0.38 |
Consolidated statement of cash flows
Monetary Unit: CNY
| Item | H1 2020 | H1 2019 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 6,282,235,240.80 | 8,152,078,438.66 |
| 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 | 3,846,942.76 | 1,532,457.12 |
| Cash received from other operating activities | 218,878,679.44 | 219,496,515.99 |
| Subtotal of cash inflows from operating activities | 6,504,960,863.00 | 8,373,107,411.77 |
| Cash paid for goods purchased and services received | 1,510,115,362.00 | 2,049,373,923.84 |
| 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 | 433,219,103.00 | 457,570,946.93 |
| Cash paid for taxes and surcharges | 2,718,765,468.22 | 3,080,471,348.44 |
| Cash paid for other operating activities | 1,114,045,507.54 | 1,078,940,602.22 |
| Subtotal of cash outflows from operating activities | 5,776,145,440.76 | 6,666,356,821.43 |
| Net cash flows from operating activities | 728,815,422.24 | 1,706,750,590.34 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | ||
| Cash received from returns on investments | ||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 566,471.43 | 493,622.28 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 566,471.43 | 493,622.28 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 1,050,741,288.78 | 1,370,295,598.24 |
| Cash paid for investments | ||
| 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 | 1,050,741,288.78 | 1,370,295,598.24 |
| Net cash flows from investing activities | -1,050,174,817.35 | -1,369,801,975.96 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 5,621,368.05 | 3,500,000.00 |
| Including: cash received by subsidiaries from investments by minority shareholders | 5,621,368.05 | 3,500,000.00 |
| Cash received from borrowings | 1,494,000,000.00 | |
| Cash received from other financing activities | ||
| Subtotal of cash inflows from financing activities | 1,499,621,368.05 | 3,500,000.00 |
| Cash paid for debt repayments | ||
| Cash paid for distribution of dividends and profits or payment of interest | ||
| Including: dividends and profits paid to minority shareholders by subsidiaries | ||
| Cash paid for other financing activities | 180,000.00 | 10,149,100.00 |
| Subtotal of cash outflows from financing activities | 180,000.00 | 10,149,100.00 |
| Net cash flows from financing activities | 1,499,441,368.05 | -6,649,100.00 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | 2,001,151.74 | 1,307,694.73 |
| 5. Net increase in cash and cash equivalents | 1,180,083,124.68 | 331,607,209.11 |
| Plus: balance of cash and cash | 9,752,266,526.78 | 9,365,986,627.68 |
| equivalents at the beginning of the period | ||
| 6. Balance of cash and cash equivalents at the end of the period | 10,932,349,651.46 | 9,697,593,836.79 |
Cash flow statements of parent company
Monetary Unit: CNY
| Item | H1 2020 | H1 2019 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 1,704,864,696.11 | 2,505,459,765.21 |
| Refunds of taxes and surcharges | ||
| Cash received from other operating activities | 190,974,553.30 | 144,617,971.84 |
| Subtotal of cash inflows from operating activities | 1,895,839,249.41 | 2,650,077,737.05 |
| Cash paid for goods purchased and services received | 358,716,633.54 | 1,626,982,937.71 |
| Cash paid to and on behalf of employees | 407,927,258.16 | 432,617,691.04 |
| Cash paid for taxes and surcharges | 150,445,400.43 | 266,688,773.22 |
| Cash paid for other operating activities | 1,375,167,996.43 | 71,483,657.64 |
| Subtotal of cash outflows from operating activities | 2,292,257,288.56 | 2,397,773,059.61 |
| Net cash flows from operating activities | -396,418,039.15 | 252,304,677.44 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | ||
| Cash received from returns on investments | ||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 566,471.43 | 487,222.28 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 566,471.43 | 487,222.28 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 90,227,143.76 | 97,098,339.93 |
| Cash paid for investments | 10,149,100.00 | |
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 90,227,143.76 | 107,247,439.93 |
| Net cash flows from investing activities | -89,660,672.33 | -106,760,217.65 |
| 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 | ||
| Cash paid for other financing activities | 180,000.00 | |
| Subtotal of cash outflows from financing activities | 180,000.00 | |
| Net cash flows from financing activities | 1,493,820,000.00 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 1,007,741,288.52 | 145,544,459.79 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 8,872,692,385.79 | 6,189,473,157.83 |
| 6. Balance of cash and cash equivalents at the end of the period | 9,880,433,674.31 | 6,335,017,617.62 |
Consolidated statement of changes in owners' equity
For the six months ended 30 June 2020
Monetary Unit: CNY
| Item | H1 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) | 1,852,598.19 | 891,495,753.43 | 893,348,351.62 | -770,761.30 | 892,577,590.32 | ||||||||||
| (1) Total comprehensive income | 1,852,598.19 | 3,220,452,190.27 | 3,222,304,788.46 | -770,761.30 | 3,221,534,027.16 | ||||||||||
| (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 | -2,328,956,436.84 | ||||||||||||
| 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 | -2,328,956,436.84 | ||||||||||||
| 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 30 June of the current year | 1,464,752,476.00 | 3,722,777,063.13 | 196,669,728.76 | 1,464,752,476.00 | 13,451,242,333.34 | 20,300,194,077.23 | 147,114,541.19 | 20,447,308,618.42 |
For the six months ended 30 June 2019
Monetary Unit: CNY
| Item | H1 2019 | ||||||||||||||
| 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 | 3,716,675,022.48 | 136,592,276.64 | 1,464,752,476.00 | 10,181,899,224.84 | 16,964,671,475.96 | 159,541,143.03 | 17,124,212,618.99 | |||||||
| Plus: adjustments for changes in accounting policies | 33,689,709.06 | 5,752,926.37 | 39,442,635.43 | 39,442,635.43 | |||||||||||
| 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 | 3,716,675,022.48 | 170,281,985.70 | 1,464,752,476.00 | 10,187,652,151.21 | 17,004,114,111.39 | 159,541,143.03 | 17,163,655,254.42 | |||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 6,102,040.65 | 34,416,541.61 | 479,414,703.62 | 519,933,285.88 | 13,590,797.30 | 533,524,083.18 | |||||||||
| (1) Total comprehensive income | 34,416,541.61 | 2,749,781,041.42 | 2,784,197,583.03 | 29,841,937.95 | 2,814,039,520.98 | ||||||||||
| (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 | -2,270,366,337.80 | -2,270,366,337.80 | -2,270,366,337.80 | ||||||||||||
| Withdrawal of surplus reserves | |||||||||||||||
| Withdrawal of general risk reserve | |||||||||||||||
| Profit distributed to owners (or shareholders) | -2,270,366,337.80 | -2,270,366,337.80 | -2,270,366,337.80 |
| 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 | 6,102,040.65 | 6,102,040.65 | -16,251,140.65 | -10,149,100.00 | |||||||||||
| 4. Balance as at 30 June of | 1,464,75 | 3,722,777,0 | 204,698,52 | 1,464,752,4 | 10,667,066, | 17,524,047, | 173,131,940. | 17,697,179,3 |
| the current year | 2,476.00 | 63.13 | 7.31 | 76.00 | 854.83 | 397.27 | 33 | 37.60 |
Statement of changes in owners' equity of parent company
For the six months ended 30 June 2020
Monetary Unit: CNY
| Item | H1 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 (“-” for decreases) | 7,796,453.84 | -2,008,894,328.16 | -2,001,097,874.32 | |||||||||
| (1) Other comprehensive income | 7,796,453.84 | 320,062,108.68 | 327,858,562.52 | |||||||||
| (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 30 June of the current year | 1,464,752,476.00 | 3,706,816,950.12 | 200,129,191.89 | 1,464,752,476.00 | 9,883,799,729.40 | 16,720,250,823.41 |
For the six months ended 30 June 2019
Monetary Unit: CNY
| Item | H1 2019 | |||||||||||
| 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 | 134,386,305.26 | 1,464,752,476.00 | 9,285,944,182.35 | 16,056,652,389.73 | ||||||
| Plus: adjustments for changes in accounting policies | 33,988,903.84 | 5,354,000.00 | 39,342,903.84 | |||||||||
| 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 | 168,375,209.10 | 1,464,752,476.00 | 9,291,298,182.35 | 16,095,995,293.57 | ||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 34,327,355.80 | -1,709,778,200.80 | -1,675,450,845.00 | |||||||||
| (1) Other comprehensive income | 34,327,355.80 | 560,588,137.00 | 594,915,492.80 | |||||||||
| (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 | -2,270,366,337.80 | -2,270,366,337.80 | ||||||||||
| Withdrawal of surplus reserves | ||||||||||||
| Profit distributed to owners (or shareholders) | -2,270,366,337.80 | -2,270,366,337.80 | ||||||||||
| 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 30 June of the current year | 1,464,752,476.00 | 3,706,816,950.12 | 202,702,564.90 | 1,464,752,476.00 | 7,581,519,981.55 | 14,420,544,448.57 |
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 ashareholding 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 capital
reserve 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 81,088,300 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 addressRegistered 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 food and beverage manufacturing industry.The main activity are research and development, production and sales of “National Cellar 1573”,”LuzhouLaojiao” and other liquor series.The main products are: “National Cellar 1573 Series”,”Century-old Luzhou Laojiao JiaolingSeries” ,”Luzhou Laojiao Tequ”, ”Touqu”, ”Erqu” and other liquor series.
3.4 The name of the controlling shareholder and the ultimate substantive controller
The 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 26 August2020.
3.6 Consolidated financial statement scope and their changes
(1) The 28 subsidiaries included in the consolidated financial statements for the current period are listedas 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. | Red sorghum company | 60.00 | 60.00 | |
| Sales Company of Luzhou Laojiao Co., Ltd. | Sales company | 100.00 | 100.00 | |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Nostalgic company | 100.00 | 100.00 | |
| 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. | Dingyi company | 100.00 | 100.00 | |
| Luzhou Dinghao Liquor Industry Sales Co., Ltd. | Dinghao 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 Pinchuang Technology Co., Ltd. | Pinchuang company | 100.00 | 100.00 |
| 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. | Commercial Development | 100.00 | 100.00 | |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Electronic Commerce | 90.00 | 90.00 | |
| Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd. | Whitail Electronic Commerce | 100.00 | 100.00 | |
| Luzhou Laojiao Selected Electronic Commerce Co., Ltd. | Selected Electronic Commerce | 100.00 | 100.00 | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note 3 | Whitail liquor industry | 35.00 | 60.00 | |
| Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. | Panda Whitail | 60.00 | 60.00 | |
| Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co., Ltd. | Whitail Tongdao Uncle | 70.00 | 70.00 | |
| Luzhou Baonuo Biotechnology Co., Ltd. | Baonuo biotechnology | 100.00 | 100.00 | |
| 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, and the chairman of the board (legal representative) is thedirector sent by the Company. The Company has actual control over Custom liquor company, so it is included in the scopeof 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 and its subsidiaries, among thefive members of the board of directors, the Company has sent three people. The Company has actual control over Whitailliquor industry and its subsidiaries, so it is included in the scope of consolidation.Details of the subsidiaries incorporated into the consolidated financial statements show on “7. Interests in subsidiaries”.
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 is
based 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 estimates
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 as of 30 June 2020, and the Company’s and results ofoperations and cash flows for the year as of 30 June 2020. In addition, in all material respects, thefinancial statements of the Company comply with disclosure requirements of the financial statementsand their notes in accordance with Rules on Company Information Disclosure and Preparation ofPublicly 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 retained
earnings 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 preparingconsolidated 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.
For subsidiaries acquired from the business combination not under common control, the financialstatements shall be adjusted on the basis of the fair value of identifiable net assets on the date ofpurchase. For the subsidiary acquired from the business combination under common control, its assetsand liabilities (including the goodwill formed by the acquisition of the subsidiary by the ultimatecontrolling party) shall be adjusted on the basis of the book value in the consolidated statements of theultimate controlling party.
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 line
item 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 notunder 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 business
General 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 the former subsidiary’s equity investment of or other changes inowners' equity excluding net profit and loss, other comprehensive income and profit distribution shall betransferred to investment income for the current period when control is lost. Other comprehensiveincome resulting from changes in net liabilities or net assets due to re-measurement of defined benefitplan 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 accountingtreatment method 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.
A joint arrangement that is not structured through a separate vehicle shall be classified as a jointoperation. A separate vehicle refers to a separately identifiable financial structure, including separatelegal entities or entities without a legal personality but recognized by statute.
(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 is 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 previousbalance 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 fairvalue that is reflected in foreign currency at the end of the period, the Company shall firstly translate theforeign currency into the amount in functional currency at the spot exchange rate on the date when thefair value is determined, and then compare it with the original functional currency amount. Differencebetween the translated functional currency amount and the original functional currency amount is treatedas profit or loss from changes in fair value (including changes in exchange rate) and is recognized incurrent profit and loss. If there is a non-monetary item of available-for-sale financial assets, thedifferences 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 offoreign subsidiaries shall be translated at approximate exchange rate of spot rate on the date of cashflow.
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 such
financial 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 atthe 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 into
other 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 of
the 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 markettransactions 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 theinterest 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 assesses
the 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 future
economic situation consulting historical credit loss experience. The comparative table of the credit lossrate is as follows:
| Aging | Expected loss provision rate % |
| Within 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
| 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 3-10Financial 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 measures the provision for loss based on the amount equivalent to the expected credit loss overthe entire life, and the resulting increase or reversal of provision for loss shall be included in the currentprofit or loss as gains or losses on impairment. The accrual 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 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 | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
| 3-4 years | 40 |
| 4-5 years | 80 |
| Over 5 years | 100 |
5.15 Inventory
(1) Classification of inventory
Inventories are classified as: raw materials, goods in progress, semi-finished goods, stock commodities,revolving materials (including packing materials and low-cost consumables).
(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 and semi-finished goods shall be accounted according to the actual cost, and the weightedaverage method shall be used when they are received and delivered. The actual cost of the inventory atthe end of the month above shall be taken as the standard cost, and the delivery shall be pricedaccording to the standard cost. At the end of the month, the standard cost of the inventory at the end ofthe 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 productranges 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 Note 5.12 for the detail on the Company’s method of determining the expected credit loss ofcontract assets and accounting 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 within
one 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.
Measurement of non-current assets or disposal groups held for salea. 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 disposalgroups 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 heldfor sale. Interest and other charges on liabilities in the disposal groups held for sale continue to berecognized.
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 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:
Dispatch representatives to the board of directors or similar authorities of the investee.To participate in the financial and business policy making process of the investee.Significant transactions with the investee.
Dispatch management personnel to the investee.To provide key technical data to the investee.
(2) Determination of the initial investment cost
a. Long-term equity investment resulting from combinationBusiness combination under common control：
For the long-term equity investments obtained by cash paid, non-monetary 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, the Company shallwrite off the part of incomes from internal unrealized transactions between the Company and associatesand joint ventures which are attributable to the Company and recognize the profit and loss oninvestments on such basis. Where the losses on internal transactions between the Company and theinvestee 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.
5.20 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.Note: The Company’s newly-built brewing production lines, packaging production lines and warehousingassets, and the houses and buildings, special and general equipment formed thereof are obviously
different from the existing same types of assets and have obviously longer estimated service life than thesame types of fixed assets. The maximum years of depreciation for different types of the newly-builtfixed assets are as follows: 45 years for houses and buildings; 35 years for special equipment and 25years for general equipment.During the year, some of the Company’s projects in progress reached the expected usable state andwere transferred into fixed assets.
(3) Recognition standard, valuation method and depreciation method for fixed assets acquiredunder financing leaseIf the purchase price of a fixed asset exceeds the normal credit conditions and the payment is delayed,which has a financing nature, the cost of the fixed asset shall be determined on the basis of the presentvalue of the purchase price. The difference between the actual price paid and the present value of thepurchase price, unless it should be capitalized, shall be recorded into the current profit and loss in thecredit period.For fixed assets acquired under financing lease, at the inception of the lease, the Company shallrecognizes it at the lower of the fair value of the leased assets or the present value of the minimum leasepayments.Fixed assets acquired under financing lease is adapted the same depreciation method as the one usedon other fixed assets owned by the Company. If there is reasonable assurance that the Company willobtain the ownership of the leased assets when the lease term expires, the leased assets should bedepreciated over its useful life; if there is no reasonable assurance that the Company will obtain theownership of the leased assets when the lease term expires, the leased assets should be depreciatedover the shorter of the lease term or the useful life of the leased assets.
5. 21 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 andrecoverable amount.
5. 22 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 for acquiring and constructing or producing assets eligible for capitalization,borrowing costs of special loan actually incurred in the current period less the interest income of theloans unused and deposited in bank or return on temporary investment should be recognized as thecapitalization amount of borrowing costs. As for general loans used for acquiring and constructing orproducing assets eligible for capitalization, the interest of general loans to be capitalized should becalculated by multiplying the weighted average of asset disbursements of the part of accumulated assetdisbursements in excess of special loans by the capitalization rate of used general loans. During theperiod of capitalization, the capitalized amount of interest of each accounting period shall not exceed thecurrent actual interest of the relevant loans. Where there are discounts or premiums on loans, theamounts of interest for each accounting period should be adjusted taking account of amortizablediscount or premium amounts for the period by effective interest method. Auxiliary expenses incurredfrom special loans before the acquired or constructed assets eligible for capitalization reach the workingcondition for their intended use or sale should be capitalized when they incur and charged to the costs ofassets eligible for capitalization; those incurred after the acquired or constructed assets eligible forcapitalization reach the working condition for their intended use or sale should be recognized as costsaccording to the amounts incurred when they incur 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 theacquisition 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. 23 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 lossother 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 assets
with 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 policyThe 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. 24 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 long-term 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 long-term assetsis less than its book value, the book value shall be written down to the recoverable amount, and theamount 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. 25 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. 26 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. 27 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 employee
provides 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 resignationpersuasion 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 benefitsOther 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. 28 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 variouspossible 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. 29 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 exercisedFor the equity-settled share-based payment settled immediately after the grant, the fair value of the
equity 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. 30 Revenue
Accounting policies for recognition and measurement of revenueThe Company has implemented the new revenue standards
(1) Recognition principals of revenue
At the beginning of the contract, the Company shall evaluate the contract, identify each individualperformance obligation of the contract and determine whether each individual performance obligationshall be performed within a certain period of time or at a certain point.If one of the following conditions is met, the performance obligations shall be performed within a certainperiod of time; Otherwise, the performance obligation shall be performed at a certain point:
a. The client obtains and consumes the economic benefits brought by the Company's performance ofthe contract at the same time;b. The customer can control the commodities or services under construction during the performance ofthe Company;c. The commodities or services produced by the Company during the performance of the contract shallhave irreplaceable uses and the Company shall be entitled to receive payment for the accumulated partof the performance of the contract to date throughout the contract period.For a contract performance obligation fulfilled in a time period, the Group recognizes the revenue
according to the progress towards the contract completion during the period. When the progress cannotbe reasonably determined and if the cost already incurred by the Group is expected to be compensated,the revenue should be recognized according to the amount of the cost already incurred, until theprogress towards the contract completion can be reasonably determined. For a contract performanceobligation fulfilled at a time point, the Group recognizes the revenue at the time point when the customeracquires the control over the related commodity or service. In judging whether the customer hasacquired the control over a commodity, the Company considers the following signs:
a. The Company is entitled to the current right of payment collection in respect of the commodity. Inother words, the customer has the current obligation to pay for the commodity.b. The Company has transferred the legal ownership of the commodity to the customer. In other words,the customer has owned the legal ownership of the commodity.c. The Company has transferred the physical commodity to the customer. In other words, the customerhas taken physical possession of the commodity.d. The Company has transferred the major risks and remunerations in respect of the ownership of thecommodity. In other words, the customer has acquired the major risks and remunerations in respect ofthe ownership of the commodity.e. The customer has accepted the commodity.f. Other signs indicating that the customer has acquired control over the commodity.
(2) Measurement principals of revenue
a. The Company measures the revenue according to the transaction price allocated to each individualperformance obligation. The transaction price is the amount of consideration to which the Company isexpected to be entitled as a result of the transfer of goods or services to the customer, excludingpayments received on behalf of the third parties.b. When determining the contract transaction price, if there is a variable consideration, the Companydetermines the best estimate of the variable consideration in accordance with the expected value or theamount most likely to occur, and includes the transaction price in the amount not exceeding the amountthat would most likely not result in a significant reversal of the accumulated recognized revenue whenthe relevant uncertainties are eliminated.c. If a contract has any significant financing component, the Group will determine the transaction price bythe amount assumed to be paid by the customer in cash when acquiring the control over the commodityor the service. The difference between the transaction price and the contract consideration is amortizedin the effective interest method during the contract period. On the start date of a contract, if the Groupexpects that the gap between the customer’s acquisition of the control over the commodity or the serviceand its payment of the price will not exceed one year, the contract will not be considered as containingany significant financing component.d. If the contract contains two or more performance obligations, the Company shall at the beginning ofthe contract allocate the transaction price to each individual performance obligation according to therelative proportion of the individual selling price of the commodities committed by each individualperformance obligation, and measure the revenue according to the transaction price allocated to eachindividual performance obligation.
Differences in accounting policies for the recognition of revenue caused by different business models forthe same type of business
5. 31 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. 32 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 be obtainedin 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 be
recovered 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. 33 Lease
(1) Accounting treatment of operating lease
a. The Company records rents of leased assets into current expense using straight line method in eachperiod of the lease term including rent-free period. Initial direct expenses incurred are recorded intocurrent expense. Contingent rents are recorded into current profit or loss when occur. When the lessorbears the leasehold expenses which shall be borne by the Company, the expenses shall be deductedfrom total rents and the residual rent is recognized into current profit or loss in each period of the leaseterm.b. The rents arising from leasing assets shall be recorded into rent revenue using straight line method ineach period of the lease term including rent-free period. Initial direct expenses incurred are recorded intocurrent expense. If the amount is large, it shall be capitalized and recorded into current income ininstallment in the period of lease term according to the same recognition base of rent revenue. When thelessee bears the leasehold expenses which shall be borne by the Company, the expenses shall bededucted from total rents and the residual rent is amortized in each period of the lease term.
(2) Accounting treatment of finance lease
a. As the lessee, it recognizes the lower of fair value of lease asset and minimum lease payment at thebeginning day of the lease as the initial value of the asset leased in and the minimum lease payment aslong-term payable, the difference as unrealized finance expense. Unrealized finance expense isamortized in the period during the lease term and recognized as current finance expenses using actualeffective rate method.b. As the lessor, it recognizes the difference between the total of minimum lease amount received andresidual amount not guaranteed and the present value of that as unrealized finance income. Itrecognizes unrealized finance income as rent revenue in the period of lease term when the Companyreceives rent. The initial direct expense related to the lease transaction shall be recorded in the initialrecognition of finance lease receivable and be deducted from recognized income in the period of leaseterm.
5. 34 Income tax expense
The Company’s income tax is calculated in the balance sheet liability method.The Company recognized deferred tax assets when both of the following conditions are met:
(1) Temporary differences are very likely to reverse in foreseeable future;
(2) It is very likely in the future that the taxable income amount can be obtained and used to offset thedeductible temporary differences, which is capped at the taxable income amount that is very likely toobtain.On the balance sheet date, the current income tax liabilities (or assets) formed in the current period andprevious periods are measured at the expected income tax amount payable (or returnable) calculatedaccording to tax laws. For deferred tax assets and deferred tax liabilities, in accordance with tax law, they
shall be measured at the applicable tax rate during the period of expected recovery of such assets orsatisfaction of such liabilities.On the balance sheet date, the Company reviews the carrying values of deferred tax assets anddeferred tax liabilities. The Company’s current income tax and deferred tax will be treated as income taxexpenses or income, except for income tax from business combinations or transactions or mattersrecognized directly in owners’ equity.
5. 35 Changes in significant accounting policies and accounting estimates
5.35.1. Changes in significant accounting policies
√Applicable ?N/A
| Content and reason of changes | Approval procedures | Note |
| On 5 July 2017, the Ministry of Finance revised and issued Accounting Standards for Business Enterprises No.14-Revenue (CK[2017]No.22, hereinafter referred to as “new standards governing revenue”), and required those enterprises both listed in domestic and aboard and those enterprises overseas listed with International Financial Reporting Standards or Accounting Standards for Business Enterprises for preparation of financial statements to implement it since 1 January 2018, required other domestically listed enterprises to implement it since 1 January 2020. | Approved on the 16th Meeting of the 9th Board of Directors |
Note: Pursuant to the connection regulation for old and new standards, the Company starts to disclosefinancial statements as required by the new standards governing revenue since 2020 without retroactiveadjustment for comparative data of 2019. The changes in accounting policies caused no influence onrelated financial indicators of 2019.There was no other change in significant accounting policies in the Reporting Period other than theabove changes.
5.35.2. Changes in significant accounting estimates
? Applicable √ N/A
5.35.3. Adjustments to the financial statements at the beginning of the execution year of any newstandard governing revenue or leases from 2020
√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 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Cash and cash equivalents | 9,753,666,526.78 | 9,753,666,526.78 | |
| Settlement reserves | |||
| Lending funds | |||
| Trading financial assets | |||
| Derivative financial assets | |||
| Notes receivables | |||
| Accounts receivables | 18,293,914.23 | 18,293,914.23 | |
| Accounts receivables financing | 2,393,797,259.80 | 2,393,797,259.80 | |
| Prepayment | 151,818,448.48 | 151,818,448.48 | |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance contract reserve | |||
| Other receivables | 159,753,421.64 | 159,753,421.64 | |
| Including：Interests receivable | 45,636,744.44 | 45,636,744.44 | |
| Dividends receivable | |||
| Buying back the sale of financial assets | |||
| Inventories | 3,641,235,092.33 | 3,641,235,092.33 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year |
| Other current assets | 195,174,048.57 | 195,174,048.57 | |
| Total current assets | 16,313,738,711.83 | 16,313,738,711.83 | |
| Non-current assets: | |||
| Disbursement of loans and advances | |||
| Investment in debt obligations | |||
| Investment in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 2,230,721,725.72 | 2,230,721,725.72 | |
| Other equity instrument investment | 352,395,255.78 | 352,395,255.78 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 1,518,865,397.91 | 1,518,865,397.91 | |
| Construction in progress | 7,257,393,087.56 | 7,257,393,087.56 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-to-use assets | |||
| Intangible assets | 332,234,032.47 | 332,234,032.47 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | 928,805.23 | 928,805.23 | |
| Deferred tax assets | 676,152,614.07 | 676,152,614.07 | |
| Other non-current assets | 237,539,447.75 | 237,539,447.75 | |
| Total non-current assets | 12,606,230,366.49 | 12,606,230,366.49 | |
| Total assets | 28,919,969,078.32 | 28,919,969,078.32 | |
| Current liabilities: | |||
| Short-term loans | |||
| Borrowings from the central bank | |||
| Loans from other banks |
| Trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 1,868,623,958.02 | 1,868,623,958.02 | |
| Advance from customer | 2,244,442,643.64 | -2,244,442,643.64 | |
| Contract liabilities | 1,986,232,428.00 | 1,986,232,428.00 | |
| 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 | 342,025,687.49 | 342,025,687.49 | |
| Taxes payable | 1,633,044,231.67 | 1,633,044,231.67 | |
| Other payable | 698,942,399.37 | 698,942,399.37 | |
| Including：Interests payable | 30,650,684.93 | 30,650,684.93 | |
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance accounts payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 258,210,215.64 | 258,210,215.64 | |
| Total current liabilities | 6,787,078,920.19 | 6,787,078,920.19 | |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term loans | |||
| Bonds payable | 2,490,883,676.39 | 2,490,883,676.39 |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term payroll payables | |||
| Accrued liabilities | |||
| Deferred income | 23,845,000.00 | 23,845,000.00 | |
| Deferred tax liabilities | 63,430,453.64 | 63,430,453.64 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,578,159,130.03 | 2,578,159,130.03 | |
| Total liabilities | 9,365,238,050.22 | 9,365,238,050.22 | |
| Owners' equity: | |||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,722,777,063.13 | 3,722,777,063.13 | |
| Less: Treasury stock | |||
| Other comprehensive income | 194,817,130.57 | 194,817,130.57 | |
| Special reserves | |||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | |
| General risk reserve | |||
| Undistributed profits | 12,559,746,579.91 | 12,559,746,579.91 | |
| Total equity attributable to owners of the parent company | 19,406,845,725.61 | 19,406,845,725.61 | |
| Non-controlling interests | 147,885,302.49 | 147,885,302.49 | |
| Total owners' equity | 19,554,731,028.10 | 19,554,731,028.10 | |
| Total liabilities and owners' equity | 28,919,969,078.32 | 28,919,969,078.32 |
Statement for adjustmentSince the implementation of the new standards governing revenue on 1 January 2020, the Companypresents the part of advance from customer excluding taxes under the item of contract liabilities andpresents the part of VAT under the item of other current liabilities.
Balance sheet of parent company
Monetary Unit: CNY
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Cash and cash equivalents | 8,872,692,385.79 | 8,872,692,385.79 | |
| Trading financial assets | |||
| Derivative financial assets | |||
| Notes receivables | |||
| Accounts receivables | 21,562.85 | 21,562.85 | |
| Accounts receivables financing | |||
| Prepayment | 11,682,593.27 | 11,682,593.27 | |
| Other receivables | 5,850,481,480.50 | 5,850,481,480.50 | |
| Including: Interests receivable | 40,570,144.44 | 40,570,144.44 | |
| Dividends receivable | |||
| Inventories | 1,049,384.24 | 1,049,384.24 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 5,562,360.72 | 5,562,360.72 | |
| Total current assets | 14,741,489,767.37 | 14,741,489,767.37 | |
| Non-current assets: | |||
| Investment in debt obligations | |||
| Investment in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 5,636,681,853.83 | 5,636,681,853.83 | |
| Other equity instrument investment | 352,066,334.15 | 352,066,334.15 | |
| Other non-current financial assets |
| Investment property | |||
| Fixed assets | 601,481,983.81 | 601,481,983.81 | |
| Construction in progress | 967,953,263.55 | 967,953,263.55 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-to-use assets | |||
| Intangible assets | 297,830,285.02 | 297,830,285.02 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | 777,834.15 | 777,834.15 | |
| Deferred tax assets | 75,249,717.72 | 75,249,717.72 | |
| Other non-current assets | |||
| Total non-current assets | 7,932,041,272.23 | 7,932,041,272.23 | |
| Total assets | 22,673,531,039.60 | 22,673,531,039.60 | |
| Current liabilities: | |||
| Short-term loans | |||
| Trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payables | |||
| Accounts payable | 87,652,671.29 | 87,652,671.29 | |
| Advance from customer | 9,712,630.35 | -9,712,630.35 | |
| Contract liabilities | 8,595,248.10 | 8,595,248.10 | |
| Employee benefits payable | 116,124,722.19 | 116,124,722.19 | |
| Taxes payable | 82,399,599.18 | 82,399,599.18 | |
| Other payables | 1,099,598,588.83 | 1,099,598,588.83 | |
| Including：Interests payable | 30,650,684.93 | 30,650,684.93 | |
| Dividends payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 1,117,382.25 | 1,117,382.25 |
| Total current liabilities | 1,395,488,211.84 | 1,395,488,211.84 | |
| Non-current liabilities: | |||
| Long-term loans | |||
| Bonds payable | 2,490,883,676.39 | 2,490,883,676.39 | |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term payroll payables | |||
| Accrued liabilities | |||
| Deferred income | 2,380,000.00 | 2,380,000.00 | |
| Deferred tax liabilities | 63,430,453.64 | 63,430,453.64 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,556,694,130.03 | 2,556,694,130.03 | |
| Total liabilities | 3,952,182,341.87 | 3,952,182,341.87 | |
| Owners' equity | |||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,706,816,950.12 | 3,706,816,950.12 | |
| Less: Treasury stock | |||
| Other comprehensive income | 192,332,738.05 | 192,332,738.05 | |
| Special reserves | |||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | |
| Undistributed profits | 11,892,694,057.56 | 11,892,694,057.56 | |
| Total owners' equity | 18,721,348,697.73 | 18,721,348,697.73 | |
| Total liabilities and owners' equity | 22,673,531,039.60 | 22,673,531,039.60 |
Statement for adjustmentSince the implementation of the new standards governing revenue on 1 January 2020, the Company
presents the part of advance from customer excluding taxes under the item of contract liabilities andpresents the part of VAT under the item of other current liabilities.
5.35.4. Retrospective restatement of previous comparative data due to the execution of any newstandard governing revenue or lease from 2020? Applicable √ N/A
6. Taxes
6.1. Major tax types and rates
| Tax type | Tax base | Tax rate |
| Value-added tax | Taxable sales income | 16%, 13%,10%, 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) | Liquor tax price or ex-factory price | 20% |
| Consumption tax (based on quantity) | Quantity of wine | CNY 1.00/kg |
| Education surcharge | Taxable turnover tax | 3% |
| Local education surcharge | Taxable turnover tax | 2% |
| Property tax | Original value of the property*70%; house rent | 1.2%, 12% |
| Land use tax | Land area | CNY 5-18.00/m2 |
| Others | According to national regulation |
Tax payment subject using different corporate income tax rates, the corporate income 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% |
| Mingjiang Co., Ltd. | 21%-40% |
| Luzhou Laojiao Commercial Development (North America) 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 State Administration of Taxation on Corporate Income TaxQuestions Concerning the Further Implementation of the Western Development Strategy (StateAdministration of Taxation Announcement No.12 of 2012), companies are located in the western regionwhose primary business is listed in the Catalogue of Encouraged Industries in the Western Region, andthe annual primary business income accounting for over 70% of the total enterprise income. Thesecompanies can be subject to the corporate income tax at a reduced rate of 15%. The Company's holdingsubsidiary, Luzhou Pinchuang Technology Co., Ltd., whose primary business income meet therequirements of scope and standard of the Catalogue of Encouraged Industries in the Western Region,is paid at the rate of 15% for corporate income 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 December2020, 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 (All currency unitis CNY, except other statements)
7.1. Cash and cash equivalents
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Cash | 15,116.53 | 28,776.67 |
| Bank deposit | 10,914,711,794.09 | 9,744,243,225.66 |
| Other cash and cash equivalents | 19,022,740.84 | 9,394,524.45 |
| Total | 10,933,749,651.46 | 9,753,666,526.78 |
| Including: Total deposit outbound | 77,946,310.56 | 61,031,136.88 |
| Total amount with restriction to use due to mortgage, pledge or freeze | 1,400,000.00 | 1,400,000.00 |
Other statements:
Note 1: The total amount of funds deposited outbound is CNY 77,946,310.56, including: Luzhou LaojiaoInternational Development (Hong Kong) Co., Ltd., the holding subsidiary of the Company, with a totalamount of CNY 75,192,192.90, and CNY 2,754,117.66 of Mingjiang Co., Ltd., the holding subsidiary ofthe 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 Company's wholly-owned subsidiary, Luzhou Laojiao Tourism CultureCo., Ltd., in the designated bank according to the regulations of the tourism bureau, and balance of CNY17,622,740.84 deposited by the Company's holding subsidiary, Luzhou Laojiao Electronic CommerceCo., Ltd. on the third-party e-commerce platform.
7.2. Accounts receivable
7.2.1. 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 | 5,863,932.59 | 100.00% | 318,492.79 | 5.43% | 5,545,439.80 | 19,266,797.97 | 100.00% | 972,883.74 | 5.05% | 18,293,914.23 |
| Including: | ||||||||||
| Accounts receivable tested for impairment on the portfolio with characteristics of credit risk | 5,863,932.59 | 100.00% | 318,492.79 | 5.43% | 5,545,439.80 | 19,266,797.97 | 100.00% | 972,883.74 | 5.05% | 18,293,914.23 |
| Total | 5,863,932.59 | 100.00% | 318,492.79 | 5.43% | 5,545,439.80 | 19,266,797.97 | 100.00% | 972,883.74 | 5.05% | 18,293,914.231 |
Note: 1. The closing book balance at the period-end decreased CNY 13,402,865.38 compared with theperiod-begin, with an decrease by 69.56%, primarily driven by the influence of the credit accounts to
overseas business in the Hong Kong company.Accounts receivable tested for impairment on the portfolio:
Monetary Unit: CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 5,863,932.59 | 318,492.79 | 5.43% |
| Total | 5,863,932.59 | 318,492.79 | -- |
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
Monetary Unit: CNY
| Provision for bad debt | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit loss in the duration (no credit impairment) | Expected credit loss in the duration (with credit impairment) | ||
| Balance on 1 January 2020 | 972,883.74 | 972,883.74 | ||
| Balance of 1 January 2020 in the current period |
| --Transferred to the Phase II | ||||
| --Transferred to the Phase III | ||||
| --Reversed to the Phase II |
| --Reversed to the Phase I | ||||
| Withdrawn in the current period | ||||
| Reversed in the current period | 654,390.95 | 654,390.95 |
| Verified in the current period | ||||
| Other changes | ||||
| Balance on 30 June 2020 | 318,492.79 | 318,492.79 |
Disclosure by aging
Monetary Unit: CNY
| Aging | Closing balance |
| Within 1 year (including 1 year) | 5,739,762.78 |
| 1-2 years | 53,143.94 |
| 2-3 years | 11,100.41 |
| Over 3 years | 59,925.46 |
| 3-4 years | 59,925.46 |
| Total | 5,863,932.59 |
7.2.2. 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 | 972,883.74 | 654,390.95 | 318,492.79 | |||
| Total | 972,883.74 | 654,390.95 | 318,492.79 | |||
7.2.3. 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 |
| Alipay (China) Network Technology Co., Ltd. | 4,650,120.19 | 79.30% | 232,506.01 |
| Jiuxian Network Technology Co., Ltd. | 287,927.54 | 4.91% | 14,396.38 |
| TAI FUNG CASTELMOR LIMITED | 180,493.94 | 3.08% | 9,024.70 |
| Luzhou Liquor and Spirits Jinsanjiao Liquor Industry Development Co., Ltd. | 168,826.64 | 2.88% | 8,441.33 |
| Luzhou Lingang Investment Group Co., Ltd. | 120,791.94 | 2.06% | 6,039.60 |
| Total | 5,408,160.25 | 92.23% |
7.3. Accounts receivable financing
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 2,855,987,446.81 | 2,393,797,259.80 |
| Total | 2,855,987,446.81 | 2,393,797,259.801 |
Note: 1. The business mode to manage notes receivable aims to collect contract cash flow as well as tosell the financial assets, and thus the notes receivable is presented as accounts receivable financing;due to the short term of notes receivable less than 1 year, and the sales time, sales price and saleproportion cannot be estimated reliably, the face value is regarded as the fair value of accountsreceivable financing by the Company.
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 is no account receivable financing pledged.
(2) There is CNY 2,473,793,500.00 as follows of accounts receivable financing that have been endorsedto other parties by the Company but have not expired on the balance sheet date:
| Item | Derecognition at period-end | Not derecognition at period-end |
| Bank acceptance bill | 2,473,793,500.00 | |
| Subtotal | 2,473,793,500.00 |
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 beenterminated.
(3) There are no accounts receivable financing transferred to accounts receivable due to thenon-performance of the agreements by the issuers.
(4) There is no accounts receivable financing actually written off during the reporting period.
7.4. Prepayment
7.4.1. Aging analysis
Monetary Unit: CNY
| Aging | Closing Balance | Opening Balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 142,405,827.65 | 86.99% | 150,806,477.44 | 99.33% |
| 1-2 years | 20,445,025.15 | 12.49% | 861,490.00 | 0.57% |
| 2-3 years | 848,000.00 | 0.52% | 150,481.04 | 0.10% |
| Total | 163,698,852.80 | -- | 151,818,448.48 | -- |
7.4.2. Top five entities with the largest balances of prepayment
| Company Name | Closing Balance | Proportion to the total closing balance of prepayment |
| New Shottes Brook Private Company | 32,148,505.76 | 19.64% |
| Shanghai Merlot Advertising Co., Ltd. | 20,032,538.97 | 12.24% |
| Phoenix Metropolis Media Technology Co.,Ltd. | 17,000,000.00 | 10.38% |
| Zhongneng Kecheng Fluid Technology Co., Ltd. | 10,395,000.00 | 6.35% |
| Beijing Tencent Culture Media Co., Ltd. | 10,000,000.00 | 6.11% |
| Subtotal | 89,576,044.73 | 54.72% |
7.5 Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Interest receivable | 67,318,644.44 | 45,636,744.44 |
| Dividend receivable | 30,114,991.30 | |
| Other receivables | 108,040,535.12 | 114,116,677.20 |
| Total | 205,474,170.86 | 159,753,421.64 |
7.5.1. Interest receivable
7.5.1.1. Classification of interest receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Fixed deposits | 67,318,644.44 | 45,636,744.44 |
| Total | 67,318,644.44 | 45,636,744.441 |
Note: 1. The closing balance increased CNY 21,681,900.00 compared with opening balance, with an increase by 47.51%,mainly due to the increase of interest income on fixed deposit resulted from the increase of stock funds in the reportingperiod.
7.5.1.2. Allowance of provision for bad debt
? Applicable √ N/A
7.5.2. Dividend receivable
7.5.2.1. Classification of dividend receivable
Monetary Unit: CNY
| Item (investee) | Closing Balance | Opening Balance |
| Sichuan Nitrocell Co., Ltd. | 85,995.53 | |
| Guotai Junan Securities Co., Ltd. | 4,593,028.83 | |
| Huaxi Securities Co., Ltd. | 20,735,166.94 | |
| Luzhou Bank Co., Ltd. | 4,700,800.00 | |
| Total | 30,114,991.30 |
7.5.2.2. Allowance of provision for bad debt
? Applicable √ N/AOther statements:
7.5.3. Other receivables
7.5.3.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds | 22,440,474.18 | 27,025,658.11 |
| Petty cash | 2,094,596.14 | 2,184,482.07 |
| Saving deposits involving contract disputes | 285,140,297.52 | 287,400,297.52 |
| Other | 3,817,047.95 | 1,902,662.52 |
| Total | 313,492,415.79 | 318,513,100.22 |
7.5.3.2. 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 | Expected loss in the duration (credit | Expected loss in the duration (credit |
| months | impairment not occurred) | impairment occurred) | ||
| Balance of 1 January 2020 | 4,396,423.02 | 200,000,000.00 | 204,396,423.02 | |
| Balance of 1 January 2020 in the current period | —— | —— | —— | —— |
| Allowance of the current period | 1,055,457.65 | 1,055,457.65 | ||
| Balance of 30 June 2020 | 5,451,880.67 | 200,000,000.00 | 205,451,880.67 |
Changes of book balance with significant amount changed of loss provision in the current period? Applicable √ N/ADisclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 8,541,595.33 |
| 1-2 years | 14,116,598.76 |
| 2-3 years | 1,842,697.25 |
| Over 3 years | 288,991,524.45 |
| 3-4 years | 414,000.00 |
| 4-5 years | 1,788,626.93 |
| Over 5 years | 286,788,897.52 |
| Total | 313,492,415.79 |
7.5.3.3. 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 Note1 | 200,000,000.00 | 200,000,000.00 | ||||
| Other | 4,396,423.02 | 1,055,457.65 | 5,451,880.67 | |||
| receivables tested for impairment by the portfolio | ||||||
| Total | 204,396,423.02 | 1,055,457.65 | 205,451,880.67 |
Note 1: In the 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 Nanyang Zhongzhou Sub-branch ofIndustrial and Commercial Bank of China. The deposits have lost the nature of monetary fund due to their involvement incontract disputes and have thus been transferred into “other receivables”. As of 31 December 2019, of the depositsinvolved in contract disputes, the amount that was not recovered was CNY 287,400,297.52. Related attorneys of W&HLaw Firm Chengdu produced the Legal Opinions on the Allowance of Provision for Bad Debt of Luzhou Laojiao Co., Ltd.for Abnormal Deposits in Three Places Including Changsha and Nanyang on 17 March 2020. According to the opinions,“Whereas during the period from 25 March 2016 till this production of legal opinions on the allowance proportion ofprovision for bad debt, there is no matter that occurred and affected or changed the provision for bad debt, and thus thejudgment on the allowance of provision for bad debt at CNY 200 million shall remain”. Refer to Note 12.2. for details.
7.5.3.4. 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 |
| Saving deposits involving contract disputes | 285,140,297.52 | Over 5 years | 90.96% | 200,000,000.00 | |
| Housing and Urban-Rural Development Bureau of Longmatan District, Luzhou | Security deposit | 1,983,130.23 | Within 1 year | 0.63% | 99,156.51 |
| Luzhou Electric Power Bureau of Longmatan District, Luzhou | Security deposit | 1,520,000.00 | 3-4 years | 0.48% | 608,000.00 |
| Alipay | Security deposit | 885,000.00 | 2-3 years | 0.28% | 177,000.00 |
| Administration Bureau of Construction Engineering of Luzhou | Security deposit | 636,000.00 | Within 1 year | 0.20% | 31,800.00 |
| Total | -- | 290,164,427.75 | -- | 92.56% | 200,915,956.51 |
7.6 Inventories
Whether the Company needs to comply with the disclosure requirements of real estate industryNo
7.6.1. 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 | 67,502,649.96 | 67,502,649.96 | 59,935,022.20 | 59,935,022.20 | ||
| Goods in progress | 304,796,354.38 | 304,796,354.38 | 201,122,739.38 | 201,122,739.38 | ||
| Finished goods | 814,645,886.62 | 814,645,886.62 | 1,246,567,814.37 | 1,246,567,814.37 | ||
| Revolving materials | 13,983,433.02 | 13,983,433.02 | 18,778,952.72 | 18,778,952.72 | ||
| Self-made semi-finished goods | 2,604,487,680.09 | 2,604,487,680.09 | 2,114,830,563.66 | 2,114,830,563.66 | ||
| Total | 3,805,416,004.07 | 3,805,416,004.07 | 3,641,235,092.33 | 3,641,235,092.33 | ||
7.6.2. Provision for stock obsolescence and impairment provision of contract performance costsThe net realizable value is not lower than book cost in the closing balance of inventory, so there is no provision for declinein value of inventories.
7.7. Other current assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 138,504,084.59 | 112,912,411.46 |
| Corporate income tax | 81,009,255.17 | 78,049,453.69 |
| Other taxes | 30,075,972.14 | 4,212,183.42 |
| Total | 249,589,311.90 | 195,174,048.57 |
7.8. 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., Ltd. | 2,209,738,981.55 | 95,995,572.83 | 6,242,935.68 | 20,735,166.94 | 2,291,242,323.12 | 2,567,098.80 | |||||
| Sichuan Development Wine Investment Co., Ltd. | 12,982,744.17 | -1,036,640.79 | 11,946,103.38 | ||||||||
| Sichuan Tongniang Liquor Industry Technology Research Institute | 8,000,000.00 | 8,000,000.00 | |||||||||
| Co., Ltd. Note | |||||||||||
| Subtotal | 2,230,721,725.72 | 94,958,932.04 | 6,242,935.68 | 20,735,166.94 | 2,311,188,426.50 | 2,567,098.80 | |||||
| Total | 2,230,721,725.72 | 94,958,932.04 | 6,242,935.68 | 20,735,166.94 | 2,311,188,426.50 | 2,567,098.80 |
7.9. Other equity instrument investment
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Financial assets assigned measured by fair value and the changes be included in the current gains and losses: | ||
| Including: | ||
| 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 Nitrocell Co., Ltd. | 11,695,391.40 | 11,757,933.60 |
| Luzhou Bank Co., Ltd. | 105,695,969.28 | 89,076,363.20 |
| Guotai Junan Securities Co., Ltd. | 203,270,968.21 | 217,756,674.52 |
| Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 1,192,450.22 | 1,192,450.22 |
| Total | 354,466,613.35 | 352,395,255.78 |
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 |
| Shenzhen Xingangfeng Development | 2,354,000.00 | According to the mode of managing |
| Co., Ltd. | 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 | ||||
| Guotai Junan Investment Management Co., Ltd. | According to the mode of managing assets by management layer | |||||
| Guojiu Big Data Co., Ltd. | According to the mode of managing assets by management layer | |||||
| Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. | 136,471.41 | According to the mode of managing assets by management layer | ||||
| Sichuan Nitrocell Co., Ltd. | 85,995.53 | 10,665,391.40 | According to the mode of managing assets by management layer | |||
| Luzhou Bank Co., Ltd. | 4,700,800.00 | 54,575,969.28 | According to the mode of managing |
| assets by management layer | ||||||
| Guotai Junan Securities Co., Ltd. | 4,593,028.83 | 190,551,811.45 | According to the mode of managing assets by management layer | |||
| Sichuan Zhonghe Tongchuang Maca Investment Co., Ltd. | 200,000.00 | According to the mode of managing assets by management layer | ||||
| Luzhou Enterprise Union Trading Co., Ltd. | 198,926.37 | According to the mode of managing assets by management layer | ||||
| Luzhou Zunchi Auto Service Co., Ltd. | According to the mode of managing assets by management layer |
7.10. Fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Fixed assets | 2,831,169,969.04 | 1,516,871,720.00 |
| Disposal of fixed assets | 2,948,153.30 | 1,993,677.91 |
| Total | 2,834,118,122.34 | 1,518,865,397.91 |
7.10.1. 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 | 1,268,681,845.39 | 717,723,621.29 | 367,265,484.93 | 37,843,023.14 | 722,422,161.53 | 3,113,936,136.28 |
| 2.Increase in current period | 653,863,251.55 | 380,349,780.89 | 254,766,083.61 | 4,247,787.61 | 171,542,281.92 | 1,464,769,185.58 |
| (1) External purchase | 100,105,765.43 | 160,509,693.95 | 2,116,122.04 | 4,247,787.61 | 1,008,286.67 | 267,987,655.70 |
| (2) Transfer from construction in progress | 553,757,486.12 | 219,840,086.94 | 252,649,961.57 | 170,533,995.25 | 1,196,781,529.88 | |
| (3) Increase from business combination | ||||||
| 3.Decrease in current period | 42,539,467.89 | 26,697,379.51 | 5,611,178.88 | 1,145,069.37 | 39,275,425.09 | 115,268,520.74 |
| (1) Disposal or retirement | 42,539,467.89 | 26,697,379.51 | 5,611,178.88 | 1,145,069.37 | 39,275,425.09 | 115,268,520.74 |
| 4.Closing Balance | 1,880,005,629.05 | 1,071,376,022.67 | 616,420,389.66 | 40,945,741.38 | 854,689,018.36 | 4,463,436,801.12 |
| II. Accumulated depreciation | ||||||
| 1.Opening Balance | 595,935,621.65 | 500,627,398.98 | 198,415,362.10 | 28,328,811.20 | 273,134,282.28 | 1,596,441,476.21 |
| 2.Increase in current period | 31,290,257.91 | 31,148,224.52 | 28,475,494.99 | 972,938.47 | 25,270,348.91 | 117,157,264.80 |
| (1) Provision | 31,290,257.91 | 31,148,224.52 | 28,475,494.99 | 972,938.47 | 25,270,348.91 | 117,157,264.80 |
| 3.Decrease in current period | 57,654,712.62 | 6,087,154.12 | 4,539,553.59 | 969,935.62 | 12,703,493.05 | 81,954,849.00 |
| (1) Disposal or retirement | 57,654,712.62 | 6,087,154.12 | 4,539,553.59 | 969,935.62 | 12,703,493.05 | 81,954,849.00 |
| 4.Closing Balance | 569,571,166.94 | 525,688,469.38 | 222,351,303.50 | 28,331,814.05 | 285,701,138.14 | 1,631,643,892.01 |
| 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 | 1,309,811,522.04 | 545,687,553.29 | 394,069,086.16 | 12,613,927.33 | 568,987,880.22 | 2,831,169,969.04 |
| 2.Opening Book Value | 672,123,283.67 | 217,096,222.31 | 168,850,122.83 | 9,514,211.94 | 449,287,879.25 | 1,516,871,720.001 |
Note: 1. The closing balance increased CNY 1,314,298,249.04 compared with opening balance, with an increase by
86.65%, mainly due to the influence of increase of fixed assets transferred from construction in progress that has reachedintended usable state in the reporting period.
7.10.2. Fixed assets without certification of right
Monetary Unit: CNY
| Item | Book value | Reason for not having the certification of right |
| Buildings | 27,393,870.81 | The property ownership certificate has not been processed yet for the historical reasons, and it plans to be processed after gradually improving procedures. |
7.10.3. Disposal of fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Disposal and retirement of assets | 2,948,153.30 | 1,993,677.91 |
| Total | 2,948,153.30 | 1,993,677.91 |
7.11. Construction in progress
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Construction in progress | 7,066,117,415.73 | 7,257,393,087.56 |
| Total | 7,066,117,415.73 | 7,257,393,087.56 |
7.11.1. 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 | 5,564,258,529.02 | 5,564,258,529.02 | 6,072,403,009.71 | 6,072,403,009.71 | ||
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 198,164,339.28 | 198,164,339.28 | 8,079,135.92 | 8,079,135.92 | ||
| Construction project of Luzhou Laojiao Liquor Culture Museum and supporting facility | 401,491,211.54 | 401,491,211.54 | 401,316,175.65 | 401,316,175.65 | ||
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 75,866,942.05 | 75,866,942.05 | 11,346,483.95 | 11,346,483.95 | ||
| Marketing network command center office area reconstruction and expansion project | 188,237,417.96 | 188,237,417.96 | 220,539,935.89 | 220,539,935.89 | ||
| New model application project of intelligent production workshop of solid state liquor | 189,417,456.65 | 189,417,456.65 | 189,417,456.65 | 189,417,456.65 | ||
| Guojiao Culture Park Qiankun Wine Castle Cultural Tourism project | 250,048,605.68 | 250,048,605.68 | 229,262,370.65 | 229,262,370.65 | ||
| Luohan brewing production automation equipment renovation project | 1,338,051.22 | 1,338,051.22 | 669,025.61 | 669,025.61 | ||
| Transformation of production line of Luzhou Laojiao packaging workshop (Huangyi North District) | 19,969,859.03 | 19,969,859.03 | 17,329,425.02 | 17,329,425.02 | ||
| Other projects | 177,325,003.30 | 177,325,003.30 | 107,030,068.51 | 107,030,068.51 | ||
| Total | 7,066,117,415.73 | 7,066,117,415.73 | 7,257,393,087.56 | 7,257,393,087.56 |
7.11.2. Significant changes in construction in progress
Monetary Unit: CNY
| Item | Budget | Opening | Increase in | Transfer into | Other decreas | Closing Balance | Proportion of | Progress (%) | Accumulative | Including: | Capitalization | Source of funds |
| Balance | current period | fixed assets | es | accumulative project input in budget | capitalized interest | Capitalized interest for the period | rate for the period (%) | |||||
| Technical renovation project of brewing | 8,877,276,500.00 | 6,072,403,009.71 | 668,790,911.16 | 1,176,935,391.85 | 5,564,258,529.02 | 79.21% | 95.00% | 44,069,847.96 | 32,254,730.46 | 3.67% | Capital raised and self-raised | |
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 1,577,913,400.00 | 8,079,135.92 | 190,085,203.36 | 198,164,339.28 | 12.56% | 23.00% | Other | |||||
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 888,544,100.00 | 11,346,483.95 | 64,520,458.10 | 75,866,942.05 | 8.54% | 20.00% | Other | |||||
| Marketing network command | 271,500,000.00 | 220,539,935.89 | 17,462,813.55 | 49,765,331.48 | 188,237,417.96 | 87.66% | 98.00% | Other |
| center office area reconstruction and expansion project | ||||||||||||
| New model application project of intelligent production workshop of solid state liquor | 245,100,000.00 | 189,417,456.65 | 189,417,456.65 | 77.28% | 95.00% | Other | ||||||
| Guojiao Culture Park Qiankun Wine Castle Cultural Tourism project | 337,885,813.44 | 229,262,370.65 | 20,786,235.03 | 250,048,605.68 | 74.00% | 80.00% | Other | |||||
| Luohan brewing production automation equipment renovation | 59,870,000.00 | 669,025.61 | 669,025.61 | 1,338,051.22 | 85.08% | 95.00% | Other |
| project | ||||||||||||
| Transformation of production line of Luzhou Laojiao packaging workshop (Huangyi North District) | 57,774,100.00 | 17,329,425.02 | 2,640,434.01 | 19,969,859.03 | 72.86% | 85.00% | Other | |||||
| Total | 12,315,863,913.44 | 6,749,046,843.40 | 964,955,080.82 | 1,176,935,391.85 | 49,765,331.48 | 6,487,301,200.89 | -- | -- | 44,069,847.96 | 32,254,730.46 | 3.67% | -- |
7.12. Intangible assets
7.12.1. Details of intangible assets
Monetary Unit: CNY
| Item | Land use right | Patent right | No-patent right technology | Trademark right | Computer software | Total |
| I. Original cost | ||||||
| 1. Opening Balance | 403,541,637.89 | 1,700,050.44 | 1,890,746.08 | 40,655,564.69 | 447,787,999.10 | |
| 2. Increase in current period | 114,766,341.80 | 1,204,105.75 | 115,970,447.55 | |||
| (1) Acquired | 114,766,341.80 | 1,204,105.75 | 115,970,447.55 | |||
| (2) Internal developed | ||||||
| (3) Business combination | ||||||
| 3. Decrease in current period | ||||||
| (1) Disposal |
| 4. Closing Balance | 518,307,979.69 | 1,700,050.44 | 1,890,746.08 | 41,859,670.44 | 563,758,446.65 | |
| II. Accumulated amortization | ||||||
| 1. Opening Balance | 92,646,292.87 | 440,593.96 | 1,628,723.83 | 20,838,355.97 | 115,553,966.63 | |
| 2. Increase in current period | 7,281,525.26 | 8,398.75 | 100,807.63 | 2,923,245.16 | 10,313,976.80 | |
| (1) Provision | 7,281,525.26 | 8,398.75 | 100,807.63 | 2,923,245.16 | 10,313,976.80 | |
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | 99,927,818.13 | 448,992.71 | 1,729,531.46 | 23,761,601.13 | 125,867,943.43 | |
| 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 | 418,380,161.56 | 1,251,057.73 | 161,214.62 | 18,098,069.31 | 437,890,503.22 | |
| 2. Opening Book Value | 310,895,345.02 | 1,259,456.48 | 262,022.25 | 19,817,208.72 | 332,234,032.471 |
Note: 1. The closing balance increased CNY 105,656,470.75 compared with the opening balance, with an increase by
31.80%, primarily driven by the impact of acquisition in the current period.
There is no proportion of intangible assets formed by internal development to the balance of intangible assets at theperiod-end.
7.13. Long-term deferred expense
Monetary Unit: CNY
| Item | Opening Balance | Increase | Amortization | Other decrease | Closing Balance |
| Improvement expense of rented fixed assets | 928,805.23 | 2,048,427.67 | 250,314.19 | 2,726,918.71 | |
| Total | 928,805.23 | 2,048,427.67 | 250,314.19 | 2,726,918.71 |
Other statementsThe closing balance at the period-end is mainly the expense for the improvement in Chengdu laboratory and HuaxiBuilding by operating lease.
7.14. Deferred tax assets/ deferred tax liabilities
7.14.1. 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 | 208,960,412.33 | 52,240,103.08 | 208,551,338.49 | 52,073,505.61 |
| Unrealized profits from internal transactions | 1,378,558,258.36 | 344,639,564.59 | 2,194,391,801.31 | 548,597,950.33 |
| Deductible losses | 4,095,434.12 | 1,023,858.53 | 4,745,206.42 | 1,186,301.61 |
| Impact from salary | 344,735,026.28 | 86,183,756.57 | 269,597,906.46 | 66,865,466.60 |
| Impact from deferred earnings | 23,345,000.00 | 5,836,250.00 | 23,845,000.00 | 5,961,250.00 |
| Impact from fixed assets depreciation | 282,989.27 | 46,693.23 | 277,518.07 | 45,790.48 |
| Impact from fair value changes of other equity instrument investment | 5,689,397.78 | 1,422,349.44 | 5,689,397.78 | 1,422,349.44 |
| Total | 1,965,666,518.14 | 491,392,575.44 | 2,707,098,168.53 | 676,152,614.07 |
7.14.2. 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 | 255,793,172.13 | 63,948,293.05 | 253,721,814.56 | 63,430,453.64 |
| Total | 255,793,172.13 | 63,948,293.05 | 253,721,814.56 | 63,430,453.64 |
7.14.3. Details of unrecognized deferred tax assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Deductible losses | 16,639,334.63 | 16,684,718.93 |
| Impact from employee benefits payable | 1,592,824.26 | 3,997,637.66 |
| Impact from provision for impairment of assets | 184.28 | 8,007.14 |
| Impact from fair value changes of other equity instrument investment | 200,000.00 | 200,000.00 |
| Total | 18,432,343.17 | 20,890,363.73 |
7.14.4. Deductible losses from unrecognized deferred tax assets will due on the following years
Monetary Unit: CNY
| Year | Closing Amount | Opening Amount | Notes |
| 2020 | 1,274,970.05 | 1,320,354.35 | |
| 2021 | 2,942,475.67 | 2,942,475.67 | |
| 2022 | 668,388.33 | 668,388.33 | |
| 2023 | 760,000.23 | 760,000.23 | |
| 2024 | 10,993,500.35 | 10,993,500.35 | |
| Total | 16,639,334.63 | 16,684,718.93 | -- |
7.15. 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 | 40,853,089.81 | 40,853,089.81 | 237,539,447.75 | 237,539,447.75 | ||
| Total | 40,853,089.81 | 40,853,089.81 | 237,539,447.75 | 237,539,447.75 |
Other statements:
The closing balance decreased CNY 196,686,357.94 compared with the opening balance, with a decrease by 82.80%,mainly due to the impact of the prepayment settlement on construction and payment on land in the current period in theBrewing Company, a Company's subsidiary.
7.16. Notes payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Bank acceptance bill | 6,825,905.98 | |
| Total | 6,825,905.98 |
The total amount of notes payable due but unpaid was CNY 0.00.
7.17. Accounts payable
7.17.1. Presentation of accounts payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Materials and service expense | 715,529,698.27 | 656,206,916.53 |
| Engineering equipment expense | 1,314,789,606.89 | 1,212,417,041.49 |
| Total | 2,030,319,305.16 | 1,868,623,958.02 |
7.18. Contract liabilities
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Advance from customers | 588,278,202.31 | 1,986,232,428.00 |
| Total | 588,278,202.31 | 1,986,232,428.001 |
Note: 1. The closing balance decreased CNY 1,397,954,225.69 compared with the opening balance, with a decrease by
70.38%, mainly due to the decrease of advances on sales resulted from the impact of COVID-19 epidemic in the reportingperiod after implementing the new revenue standards from 1 January 2020.
7.19. Employee benefits payable
7.19.1. 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 | 287,224,789.36 | 410,510,682.02 | 409,147,717.26 | 288,587,754.12 |
| 2. Post-employment benefits- defined contribution plans | 54,791,926.60 | 49,684,174.44 | 29,278,113.95 | 75,197,987.09 |
| 3. Termination benefits | 8,971.53 | 8,971.53 | ||
| Total | 342,025,687.49 | 460,194,856.46 | 438,425,831.21 | 363,794,712.74 |
7.19.2. 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 | 199,313,121.72 | 348,683,429.83 | 357,369,810.47 | 190,626,741.08 |
| 2. Employees’ welfare | 5,614,973.11 | 5,614,973.11 | ||
| 3. Social insurance premiums | 19,481,524.27 | 18,100,853.81 | 10,469,438.84 | 27,112,939.24 |
| Including: Medical insurance premium | 14,322,591.60 | 16,157,986.59 | 8,479,531.75 | 22,001,046.44 |
| Work-related injury insurance | 2,307,307.70 | 775,872.95 | 577,213.62 | 2,505,967.03 |
| Maternity insurance premium | 2,851,624.97 | 1,166,994.27 | 1,412,693.47 | 2,605,925.77 |
| 4. Housing funds | 7,643,514.06 | 27,383,819.18 | 29,056,810.02 | 5,970,523.22 |
| 5. Labor union expenditures and employee education funds | 60,786,629.31 | 10,727,606.09 | 6,636,684.82 | 64,877,550.58 |
| Total | 287,224,789.36 | 410,510,682.02 | 409,147,717.26 | 288,587,754.12 |
7.19.3. 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 | 40,648,126.70 | 30,495,257.68 | 14,874,649.91 | 56,268,734.47 |
| 2. Unemployment insurance premium | 7,696,125.09 | 784,072.09 | 595,144.35 | 7,885,052.83 |
| 3. Enterprise annuity | 6,447,674.81 | 18,404,844.67 | 13,808,319.69 | 11,044,199.79 |
| Total | 54,791,926.60 | 49,684,174.44 | 29,278,113.95 | 75,197,987.09 |
7.20. Taxes payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 187,720,086.97 | 130,301,346.24 |
| Consumption tax | 196,714,279.84 | 706,805,251.73 |
| Enterprise income tax | 754,316,930.43 | 663,458,294.52 |
| Individual income tax | 2,559,830.88 | 24,337,261.47 |
| Urban maintenance and construction tax | 26,516,363.33 | 56,353,741.57 |
| Education surcharge | 11,364,218.60 | 24,151,666.39 |
| Local education surcharge | 7,576,145.75 | 16,101,110.87 |
| Property tax | 281,630.41 | 1,017,585.02 |
| Stamp duty | 438,646.53 | 438,646.53 |
| Land use tax | 616,030.86 | 9,891,132.70 |
| Others | 188,194.63 | 188,194.63 |
| Total | 1,188,292,358.23 | 1,633,044,231.67 |
7.21. Other payables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Interest payable | 90,135,616.44 | 30,650,684.93 |
| Dividends payable | 2,328,956,436.84 | |
| Other payables | 569,228,512.02 | 668,291,714.44 |
| Total | 2,988,320,565.30 | 698,942,399.37 |
7.21.1. Interest payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Interest of corporate bonds | 90,135,616.44 | 30,650,684.93 |
| Total | 90,135,616.44 | 30,650,684.93 |
7.21.2. Dividends payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Ordinary stock dividends | 2,328,956,436.84 | |
| Total | 2,328,956,436.84 |
7.21.3. Other payables
7.21.3.1. Categories by nature
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Security deposit | 536,427,539.08 | 637,133,029.48 |
| Intercourse funds | 9,895,610.34 | 5,009,860.11 |
| Others | 22,905,362.60 | 26,148,824.85 |
| Total | 569,228,512.02 | 668,291,714.44 |
7.22. Other current liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Output tax to be transferred | 71,461,894.52 | 258,210,215.64 |
| Total | 71,461,894.52 | 258,210,215.641 |
Note: 1. The closing balance decreased CNY 186,748,321.12 compared with the opening balance, with a decrease by
72.32%, mainly due to the decrease of advances on sales resulted from the impact of COVID-19 epidemic in the reportingperiod after implementing the new revenue standards from 1 January 2020.
7.23. Bonds payable
7.23.1. Bonds payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Corporate bonds in 2019 (Phase I) | 2,491,821,730.29 | 2,490,883,676.39 |
| Corporate bonds in 2020 (Phase I) | 1,494,497,956.80 | |
| Total | 3,986,319,687.09 | 2,490,883,676.39 |
7.23.2. 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 depreciation | Repayment in the reporting period | Closing Balance | |
| Corporate bonds in 2019 (Phase I) | 2,500,000,000.00 | 27 August 2019 | 3+2 | 2,490,000,000.00 | 2,490,883,676.39 | 75,032,876.71 | 1,821,730.29 | 2,491,821,730.29 | |||
| Corporate bonds in 2020 (Phase I) | 1,500,000,000.00 | 16 March 2020 | 5 | 1,494,000,000.00 | 1,494,000,000.00 | 15,102,739.73 | 497,956.80 | 1,494,497,956.80 | |||
| Total | -- | -- | -- | 3,984,000,000.00 | 2,490,883,676.39 | 1,494,000,000.00 | 90,135,616.44 | 2,319,687.09 | 3,986,319,687.091 |
Note: 1. On 18 July 2019, the Company obtained approval from CSRC with the document “ZJXK [2019] No. 1312” forpublic issue of corporate bonds capped at CNY 4 billion (inclusive of CNY 4 billion) to eligible investors (hereinafterreferred to as “the bonds”). The bonds would be issued in phases without guarantee. The Company’s public issue ofcorporate bonds (Phase I) to eligible investors in 2019 (hereinafter referred to as “the bonds of 2019”) started on 27August 2019 and ended on 28 August 2019; the final amount actually issued was CNY 2.5 billion and the final statedinterest rate was 3.58%. The short name of the bonds of 2019 was “19 Laojiao 01” and the code was “112959”. Thenominal value of each bond was CNY 100, issue quantity 25 million, and issue price CNY 100 per bond. The term of thebonds of 2019 is five years, with the issuer’s option for adjustment to the stated interest rate and the investor’s option forsell back at the end of the third year. Meanwhile, the Company’s public issue of corporate bonds to eligible investor in2020 (Phase I) (short name was “20 Laojiao 01” and the code was “149062”) started on 16 March 2020 and ended on 17March 2020, of which the final amount actually issued was CNY 1.5 billion and the final stated interest rate was 3.50%with the term of five years.
7.24. Deferred income
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Reason |
| Government grants | 23,845,000.00 | 500,000.00 | 23,345,000.00 | Reception of financial allocation | |
| Total | 23,845,000.00 | 500,000.00 | 23,345,000.00 | -- |
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 production line for liquor brewing and qu-making | 2,380,000.00 | 2,380,000.00 | Related to assets | |||||
| New mode application project of digital workshop for solid state liquor production | 3,465,000.00 | 3,465,000.00 | Relevant to asset | |||||
| Construction project of spirit room of Luzhou Laojiao brewing technical renovation | 7,000,000.00 | 7,000,000.00 | Related to assets | |||||
| Luzhou Laojiao automatic wine production | 500,000.00 | 500,000.00 | Relevant to asset |
| line technical renovation project | ||||||||
| Cooling water circulation and waste heat recovery of steamed bran in brewing workshop | 500,000.00 | 500,000.00 | 0.00 | Relevant to asset | ||||
| Brewing wastewater treatment project | 10,000,000.00 | 10,000,000.00 | Related to assets |
7.25. 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 | |||||
7.26. 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 | 179,809,555.65 | ||
| Total | 3,722,777,063.13 | 3,722,777,063.13 |
7.27. 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 | 185,824,312.58 | 2,071,357.57 | 517,839.41 | 1,553,518.16 | 187,377,830.74 | |||
| Fair value changes of other equity instrument investment | 185,824,312.58 | 2,071,357.57 | 517,839.41 | 1,553,518.16 | 187,377,830.74 | |||
| II. Other comprehensive income that will be reclassified into profit and loss | 8,992,817.99 | -4,560,925.19 | 299,080.03 | -4,860,005.22 | 9,291,898.02 | |||
| Including: Other comprehensive income that will be reclassified into profit and loss under equity method | 6,159,230.69 | 6,242,935.68 | 6,242,935.68 | 12,402,166.37 | ||||
| Difference from conversion of financial statements in foreign currency | 2,833,587.30 | -10,803,860.87 | -5,943,855.65 | -4,860,005.22 | -3,110,268.35 | |||
| Total | 194,817,130.57 | -2,489,567.62 | 517,839.41 | 1,852,598.19 | -4,860,005.22 | 196,669,728.76 | ||
7.28. 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 |
7.29. Undistributed profits
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Undistributed profit before adjustment at the end of the last year | 12,559,746,579.91 | 10,181,899,224.84 |
| Total adjustment for undistributed profit at the beginning of year (+ for increase, - for decrease) | 5,752,926.37 | |
| Undistributed profit after adjustment at the beginning of year | 12,559,746,579.91 | 10,187,652,151.21 |
| Plus: Net profit attributable to owners of the parent company for the current period | 3,220,452,190.27 | 2,749,781,041.42 |
| Ordinary share dividends payable | 2,328,956,436.84 | 2,270,366,337.80 |
| Undistributed profits at the end of the period | 13,451,242,333.34 | 10,667,066,854.83 |
7.30. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 7,566,057,028.33 | 1,360,968,975.63 | 7,921,465,489.46 | 1,596,030,314.78 |
| Other business | 68,425,873.54 | 25,667,453.22 | 91,569,530.26 | 30,412,817.41 |
| Total | 7,634,482,901.87 | 1,386,636,428.85 | 8,013,035,019.72 | 1,626,443,132.19 |
7.31. Business taxes and surcharges
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Consumption tax | 509,573,103.20 | 811,673,839.81 |
| Urban maintenance and construction tax | 84,391,437.23 | 113,578,609.14 |
| Educational surcharge | 36,066,318.42 | 48,676,546.77 |
| Property tax | 6,080,276.41 | 5,410,638.81 |
| Land use tax | 14,387,112.79 | 12,786,606.75 |
| Stamp duty | 5,152,513.60 | 1,996,228.89 |
| Local education surcharge | 23,815,732.65 | 32,451,031.22 |
| Others | 47,336.52 | 437,426.49 |
| Total | 679,513,830.82 | 1,027,010,927.881 |
Note: 1. The amount in the current period decreased CNY 347,497,097.06 compared with that of previous period, with adecrease by 33.84%, primarily driven by the impact of decrease of consumption tax in the reporting period.
7.32. Selling and distribution expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Advertising promotion and marketing expense | 776,665,852.75 | 1,111,488,089.51 |
| Transportation and storage costs | 45,113,965.94 | 150,264,300.20 |
| Others | 290,178,390.29 | 276,749,331.50 |
| Total | 1,111,958,208.98 | 1,538,501,721.21 |
Other statements:
Note: According to new revenue standards, the transportation fee of contract performance cost will be adjusted to“operating coasts” from “selling expenses” to account.
7.33. General and administrative expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Employee compensation | 202,689,320.65 | 203,392,254.29 |
| Depreciation and amortization | 51,721,598.92 | 62,017,736.80 |
| Management fee and service expense | 23,647,099.54 | 11,106,919.06 |
| Others | 81,955,956.65 | 64,052,511.99 |
| Total | 360,013,975.76 | 340,569,422.14 |
7.34. Research and development expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Comprehensive research and development expenses | 32,028,581.28 | 22,297,485.65 |
| Total | 32,028,581.28 | 22,297,485.65 |
Other statements:
Note: The amount in the current period increased CNY 9,731,095.63 compared with that of previous period, with anincrease by 43.64%, primarily driven by the impact of increase of research and development projects in the reporting
period.
7.35. Financial expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Interest expenses | 66,532,174.99 | 64,806,647.95 |
| Less: Interest income | 173,389,442.03 | 160,388,809.43 |
| Losses from currency exchange | -1,530,667.65 | -1,029,860.86 |
| Handling charges | 113,098.00 | 402,368.44 |
| Total | -108,274,836.69 | -96,209,653.90 |
7.36. Other income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Government grants | 9,570,078.30 | 17,293,543.26 |
| Individual income tax commission refund | 871,596.97 |
7.37. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under the equity method | 94,958,932.04 | 88,275,961.45 |
| Dividend income gained during the period of holding other equity instrument investment | 9,379,824.36 | 8,748,669.71 |
| Total | 104,338,756.40 | 97,024,631.16 |
Other statements:
There is no major restriction on the repatriation of the Company's investment income.
7.38. Credit impairment loss
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Bad debt loss of other receivables | -1,055,457.65 | -3,176,665.28 |
| Bad debt loss of accounts receivable | 654,390.95 | -658,618.96 |
| Total | -401,066.70 | -3,835,284.24 |
Other statements:
Note: The amount in the current period decreased CNY 3,434,217.54 compared with that of previous period, with adecrease by 89.54%, primarily driven by the impact of decrease of accounts receivable in the reporting period.
7.39. Gains from disposal of assets
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Gains from disposal of non-current assets | 104,663.83 | 248,064.82 |
| Including: Gains from disposal of fixed assets | 104,663.83 | 248,064.82 |
| Gains from disposal of intangible assets | ||
| Total | 104,663.83 | 248,064.82 |
7.40. Non-operating income
Monetary Unit: CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Compensation for default | 1,019,231.18 | 4,957,308.01 | 1,019,231.18 |
| Others | 9,925,210.53 | 12,803,259.88 | 9,925,210.53 |
| Total | 10,944,441.71 | 17,760,567.89 | 10,944,441.71 |
7.41. 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 | 24,034,863.69 | 4,800,000.00 | 24,034,863.69 |
| Others | 15,182,522.39 | 269,812.91 | 15,182,522.39 |
| Total | 39,217,386.08 | 5,069,812.91 | 39,217,386.08 |
7.42. Income tax expense
7.42.1. Statement of income tax expense
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Current period income tax | 849,516,324.48 | 993,254,782.13 |
| Deferred income tax | 184,760,038.63 | -95,022,512.83 |
| Total | 1,034,276,363.11 | 898,232,269.30 |
7.42.2. Adjustment for accounting profit and income tax expense
Monetary Unit: CNY
| Item | Current Period |
| Total profit | 4,258,817,797.30 |
| Income tax expenses determined by statutory/applicable tax rate | 1,064,704,449.33 |
| Impact from subsidiaries’ different tax rates | -1,029,603.50 |
| Impact from adjust for impact from income tax expense in previous period | 18,225,544.27 |
| Impact from non-taxable income | -26,085,591.85 |
| Impact from non-deductible costs, expenses and losses | 6,832,402.88 |
| Impact from deductable losses of unrecognized deferred income tax at the beginning of the reporting period | -11,208,636.44 |
| Impact from deductible temporary difference or losses due to unrecognized deferred tax asset in current period | -8,338,450.17 |
| Impact from research and development expense deduction | -8,823,751.41 |
| Income tax expense | 1,034,276,363.11 |
7.43. Other comprehensive income
Details in Note 5.27. Other comprehensive income.
7.44. Notes to the statement of cash flow
7.44.1. Cash received from other operation activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Government grants | 9,941,675.27 | 3,798,856.00 |
| Interest income from bank deposit | 146,071,271.36 | 148,852,282.99 |
| Others | 62,865,732.81 | 66,845,377.00 |
| Total | 218,878,679.44 | 219,496,515.99 |
7.44.2. Cash paid for other operating activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for expenses | 1,114,045,507.54 | 1,078,940,602.22 |
| Total | 1,114,045,507.54 | 1,078,940,602.22 |
7.44.3. Cash paid for other investing activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for buying equity of Pinchuang | 10,149,100.00 | |
| Rating and registration fee of corporation bond in 2020 (Phase I) | 180,000.00 | |
| Total | 180,000.00 | 10,149,100.00 |
7.45. Supplementary information to statement of cash flow
7.45.1. 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 | 3,224,541,434.19 | 2,779,611,425.23 |
| Credit impairment provision | 401,066.70 | 3,835,284.24 |
| Depreciation of fixed asset, oil and gas assets and productive biological assets | 117,157,264.80 | 77,589,989.75 |
| Amortization of intangible assets | 10,313,976.80 | 5,020,288.05 |
| Amortization of long-term deferred expense | 250,314.19 | |
| Losses from disposal of fixed assets, intangible assets and other long-term | -104,663.83 | -248,064.82 |
| assets (Gains use “-”) | ||
| Financial expenses (Gains use “-”) | -108,274,836.69 | -96,209,653.90 |
| Losses on investments (Gains use “-”) | -104,338,756.40 | -97,024,631.16 |
| Decrease in deferred income tax assets (Increase uses “-”) | 184,760,038.63 | -95,022,512.83 |
| Increase in deferred income tax liabilities (Decrease uses “-”) | 517,839.41 | 20,582,191.10 |
| Decrease in inventories (Increase use “-”) | 164,180,911.74 | -81,624,827.38 |
| Decrease in operating receivables (Increase use “-”) | -507,042,866.12 | -226,272,769.49 |
| Increase in operating payables (Decrease use “-”) | -2,253,546,301.18 | -583,486,128.45 |
| Net cash flows from operating activities | 728,815,422.24 | 1,706,750,590.34 |
| 2. Significant investing and financing activities not involving cash: | -- | -- |
| 3.Net change in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 10,932,349,651.46 | 9,697,593,836.79 |
| Less: Opening balance of cash | 9,752,266,526.78 | 9,365,986,627.68 |
| Net change in cash and cash equivalents | 1,180,083,124.68 | 331,607,209.11 |
7.45.2. Composition of cash and cash equivalent
Monetary Unit: CNY
| Item | Opening Balance | Closing Balance |
| 1. Cash | 10,932,349,651.46 | 9,752,266,526.78 |
| Including: Cash on hand | 15,116.53 | 28,776.67 |
| Unrestricted bank deposit | 10,914,711,794.09 | 9,744,243,225.66 |
| Other unrestricted cash and cash equivalents | 17,622,740.84 | 7,994,524.45 |
| 3. Closing balance of cash and cash equivalents | 10,932,349,651.46 | 9,752,266,526.78 |
| Including: Cash and cash equivalent with restriction to use of parent company and subsidiaries | 1,400,000.00 | 1,400,000.00 |
Other statements:
The difference between the closing balance of cash and cash equivalents and cash at bank and on hand is CNY
1,400,000.00, which is a travel service deposit with limited use rights in other cash and cash equivalents.
7.46. Assets with restricted ownership or use rights
Monetary Unit: CNY
| Item | Closing book balance | Reason for restriction |
| Other cash and cash equivalents | 1,400,000.00 | According to the regulations of tourism bureau, travel service deposit is deposited in a designated bank. |
| Total | 1,400,000.00 | -- |
7.47. Foreign currency transactions
7.47.1. 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 | 20,234,946.88 | 7.13160 | 144,307,547.16 |
| EUR | |||
| HKD | 82,234,059.92 | 0.91437 | 75,192,357.37 |
| Accounts Receivable | -- | -- | |
| Including: USD | 35,972.63 | 7.13160 | 256,542.41 |
| EUR | |||
| HKD | 2,799,452.06 | 0.91437 | 2,559,734.98 |
| Other Receivables | |||
| Including: USD | |||
| HKD | 3,732,504.41 | 0.91437 | 3,412,890.06 |
| AUD | |||
| Accounts Payable | |||
| Including: USD | 59,824.08 | 7.13160 | 426,641.41 |
| HKD | 4,893,526.26 | 0.91437 | 4,474,493.61 |
| Other Payables | |||
| Including: USD | 260,947.31 | 7.13160 | 1,860,971.84 |
| HKD | 21,715,718.35 | 0.91437 | 19,856,201.39 |
| Long-term Loans | -- | -- |
| Including: USD | |||
| EUR | |||
| HKD |
7.47.2. 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 |
| Mingjiang Co., Ltd. | USA | USD | Currency in the registration place |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | USA | USD | Currency in the registration place |
7.48. Government grants
7.48.1. Details of government grants
Monetary Unit: CNY
| Item | Amount | Presentation | Amount included in profit or loss of the current period |
| Related to assets | 23,845,000.00 | Deferred income | 500,000.00 |
| Related to income | 9,941,675.27 | Other income | 9,941,675.27 |
7.48.2. Return of government grants
? Applicable √ N/A
8. Interests in other entities
8.1. Interests in subsidiaries
8.1.1. 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 | |
| Sales Company of Luzhou Laojiao Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Custom Liquor Co., Ltd. | Luzhou | Luzhou | Liquor sales | 15.00% | Investment | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Luzhou | Luzhou | 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 Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Dinghao Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Import and Export Trade | Luzhou | Luzhou | Wine import and export trade | 100.00% | Investment |
| Co., Ltd. | ||||||
| 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. | Luzhou | Luzhou | Fruit wine sales | 41.00% | Investment | |
| Mingjiang Co., Ltd. | America | America | Liquor sales | 54.00% | 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 Innovated | Luzhou | Luzhou | Wine sales | 100.00% | Investment |
| Electronic Commerce Co., Ltd. | ||||||
| Luzhou Laojiao Selected Electronic Commerce Co., Ltd. | Luzhou | Luzhou | Wine sales | 100.00% | Investment | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note | Luzhou | Luzhou | Wine sales | 35.00% | Investment | |
| Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. Note | Chengdu | Chengdu | Wine sales | 60.00% | Investment | |
| Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co., Ltd. Note | Luzhou | Luzhou | Wine sales | 70.00% | 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 1.6, the Company holds less than 51% shares of Luzhou Laojiao Custom Liquor Co., Ltd., Luzhou Laojiaofruit wine industry Co., Ltd., and Luzhou Laojiao Whitail Liquor Industry Co., Ltd. but in these companies’ board, amongthe five members, the Company has sent three persons, which is in the majority. The Company has substantial controlover these companies, so they are included in the consolidation scope.
8.1.2. Important non-wholly-owned subsidiaries
Monetary Unit: CNY
| Name of subsidiary | Proportion of share | Gains and losses | Dividends paid to | Closing balance of |
| holdings of non-Controlling shareholders | attributable to non-Controlling shareholders during current period | non-controlling shareholders during current period | non-controlling shareholders interest | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 25.00% | -8,478,085.84 | 79,866,090.68 |
8.1.3. 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. | 903,590,282.11 | 1,920,963.51 | 905,511,245.62 | 586,046,882.92 | 586,046,882.92 | 1,314,554,833.37 | 2,881,595.65 | 1,317,436,429.02 | 964,059,722.96 | 964,059,722.96 | ||
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. | 681,478,570.36 | -33,912,343.36 | -33,912,343.36 | 4,354,456.34 | 1,242,290,444.26 | 58,199,867.66 | 58,199,867.66 | 6,001,688.70 |
8.2. Interests in joint ventures and associates
8.2.1. Important joint ventures and associates
| Name of joint | Major business | Place of | Business nature | Shareholding proportion | Accounting |
| venture/associates | location | registration | Direct | Indirect | Method | |
| 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 the proportion of votingrights:
The Company has sent directors to the board of Huaxi Securities and has the corresponding substantive decision-makingpower, so the Company still has significant influence on Huaxi Securities.
8.2.2. Major financial information of important associates
Monetary Unit: CNY
| Closing Balance/Amount in current period | Opening Balance/Amount in previous period | |
| Current assets | 71,784,083,573.72 | 57,134,274,353.71 |
| Non-current assets | 9,443,735,656.27 | 10,693,128,565.71 |
| Total assets | 81,227,819,229.99 | 67,827,402,919.42 |
| Current liabilities | 48,588,373,248.51 | 39,721,993,771.95 |
| Non-current liabilities | 12,211,020,210.61 | 8,411,797,290.51 |
| Total liabilities | 60,799,393,459.12 | 48,133,791,062.46 |
| Non-controlling shareholder interest | 45,500,512.41 | 44,225,184.16 |
| Shareholder interest attributable to parent company | 20,382,925,258.46 | 19,649,386,672.80 |
| Share of net assets calculated based on shareholding proportion | 2,117,785,934.35 | 2,042,272,245.65 |
| --Others | 167,466,735.90 | 167,466,735.90 |
| Book value of equity investments in associate companies | 2,291,242,323.12 | 2,209,738,981.55 |
| Fair value of equity investments in associate companies that have public quote | 2,900,195,060.72 | 3,003,870,895.44 |
| Operating revenue | 2,093,322,666.77 | 2,004,723,301.51 |
| Net profit | 923,922,741.39 | 855,773,668.36 |
| Other comprehensive income | 10,391,172.52 | 58,174,536.83 |
| Total comprehensive income | 934,313,913.91 | 913,948,205.19 |
8.2.3. 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 | 19,946,103.38 | 28,982,744.17 |
| Total following items calculated on the basis of shareholding proportion | -- | -- |
| --Net profit | -1,036,640.79 | -1,051,774.26 |
| -- Total comprehensive income | -1,036,640.79 | -1,051,774.26 |
9. Risks related to financial instruments
Business activities of a company usually face various financial risks, mainly credit risk, liquidity risk and market risk. TheCompany's overall risk management plan addresses the unpredictability of financial markets and seeks to reducepotential adverse effects on the Company's financial performance.
9.1. Credit risk
Credit risk refers to the risk that one party to a financial instrument cannot perform its obligations, causing financial lossesto the other party. The Company only trades with recognized, reputable, and large third parties. In accordance with theCompany's policy, the terms of sale with customers are based on transactions of payment before delivery, with only asmall amount of credit transactions, and credit review for all customers who require credit to trade. In addition, theCompany continuously monitors and controls the balance of the receivables to ensure that the Company does not facesignificant bad debt risks.
9.2. Liquidity risk
Liquidity risk refers to the risk unable to obtain sufficient funds in time to meet business development needs or to repaydebts due and other payment obligations. The Company has sufficient working capital, and in recent years there has beenno external borrowing to supplement the working capital of daily operating activities. The liquidity risk is extremely small.
9.3. Market risk
Market risk refers to the risk that the fair value or future cash flow of financial instruments will fluctuate due to changes inmarket prices, including foreign exchange risk, interest rate risk and other price risks.
9.3.1. Foreign exchange risk
The Company's main business is located in the mainland of China, and main business is settled in CNY. Only twosubsidiaries, Hong Kong company and Mingjiang company, settle in HKD in Hong Kong and USD in the United Statesrespectively. The proportion and impact of their income and profit scale are negligible, and the foreign exchange risk is
minimal.
9.3.2. Rate risk
The Company's operating capital is sufficient and in recent years there has been no external borrowing, so interest raterisk is minimal.
9.3.3. Other price risks
Other price risk refers to the risk of fluctuation caused by market price changes other than foreign exchange risk andinterest rate risk, whether these changes are caused by factors related to a single financial instrument or its issuer or allsimilar financial instruments traded in the market. Other price risks faced by the Company mainly come fromavailable-for-sale financial assets measured at fair value.
10. Fair value disclosure
10.1. 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 | -- | -- | -- | -- |
| 1.3 Other equity instrument investment | 320,662,328.89 | 33,804,284.46 | 354,466,613.35 | |
| 1.6 Accounts receivable financing | 2,855,987,446.81 | 2,855,987,446.81 | ||
| 2. Discontinuous measurement at fair value | -- | -- | -- | -- |
10.2. 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 investment according to theclosing price on the last trading day of Shenzhen Stock Exchange or Shanghai Stock Exchange at the period-end. Thecompanies listed in Hong Kong determine the fair value of other equity instrument investment according to the closingprice of Hong Kong Dollar on the last trading day of Hong Kong Stock Exchange at the period-end and the median price ofRMB exchange rate disclosed on the same day by China Foreign Exchange Trade System.
10.3. Valuation technique adopted and nature and amount determination of important parametersfor continuously and discontinuously within Level 3 of the fair value hierarchyAccounts receivable financing: Due to the short term of notes receivable less than 1 year, and the sales time, sales priceand sale proportion cannot be estimated reliably, the Company shall measure the fair value by regarding the face value asthe reasonable estimation.
Other equity instrument investment: Due to no significant changes in business environment, business condition andfinancial situation of invested companies, the Company shall measure the fair value according to the lower one betweeninvestment cost and the share of net assets enjoyed by invested companies on the base date as the reasonableestimation.
11. Related parties and related party transactions
11.1. 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 (wholly state-owned); registration place: Ai Rentang Square,China Liquor Golden Triangle Wine Industry Park, Luzhou, Sichuan Province; Business Scope: Investment and assetmanagement; investment in liquor, food, finance, trade, logistics, education, medical and health, cultural tourism, Internetindustry; holding company services; social economic consulting, business management consulting; enterprisemanagement services; supply chain management services; import and export business and trade agency; foodproduction, sales (including online); planting and sales of crops (including online). (The Company cannot start businessactivities until projects subject to approval according to law are approved by relevant departments.)The final control party of the Company is SASAC of Luzhou.
11.2. Subsidiaries of the Company
For details please see Note 7.1. Interests in subsidiaries.
11.3. Joint ventures and associates of the Company
For details please see Note 7.3. Interests in joint ventures and associates.Other statementsThere are no other joint ventures or associates that have related party transactions with the Company in the current periodor in the previous period and result in balance.
11.4. Other related party of the Company
| Name of Other Related Party | Relationship with the Company |
| Luzhou Jiaxin Holding Group Co., Ltd. | The same parent company |
| Luzhou Laojiao Zhitong Trading Co., Ltd. | The same parent company |
| Luzhou Lianzhong Logistics Co. Ltd. | The same parent company |
| Luzhou COSCO Lianzhong Logistics Co., Ltd. | The same parent company |
| Luzhou Laojiao Commercial College of Luzhou | The same parent company |
| Sichuan Kangrun Group Yongsheng Asset Operation Management Co., Ltd. | The same parent company |
| Sichuan Wine & Spirits Trading Center Co., Ltd. | The same parent company |
| Sichuan Kangrun Group Real Estate Development Co., Ltd. | The same parent company |
| Sichuan Kangrun Investment Group Co., Ltd. | The same parent company |
| New Shottes Brook Private Company | The same parent company |
| Huaxi Securities Co., Ltd. | Associate company and the same parent company |
| Laojiao Group and its other subsidiaries | The same parent company |
| Luzhou Communication Investment Group Auto Service Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou Huarun XingLu Gas Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou XingLu Water (Group) Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou XingLu Property Management Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Other subsidiary of the second largest shareholder |
Other statements:
Note 1: On 31 December 2015, Laojiao Group and XingLu Investment Group, the second biggest shareholder, signed aconcerted action agreement that when the parties in deal with the Company’s business development and make decisionsby shareholders meeting and board of directors according to the company law and other relevant laws and regulationsand the articles of association, the parties should adopt the consistent actions. The agreement is valid as of 13 December2015 and ends on 1 June 2021. During the effective period of this agreement, before any party submits proposalsinvolving the major issues of the Company's business development to the shareholders meeting or exercise the votingrights at the shareholders meeting and the board of directors, the internal coordination for relevant proposals and votingevents shall be conducted by persons acting in concert. If there are different opinions, it will be subject to Laojiao Group’sopinion. In view of this, the Company will disclose the transactions with XingLu Investment Group and its controllingenterprises as other related parties of the Company.
11.5. Related transactions
11.5.1. 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. | 1,573,495.21 | |||
| Laojiao Group and its other subsidiaries | Training, accommodation, storage, transportation services, etc. | 31,544,140.62 | 31,584,485.67 | ||
| Purchase of goods: | |||||
| Luzhou Jiaxin Holding Group Co., Ltd. | Housing construction fee , land expense, etc. | 189,886,890.41 | |||
| Laojiao Group and its other subsidiaries | Red wine, water, power, gas, etc. | 10,884,402.85 | 17,875,795.12 | ||
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Water, gas, etc. | 4,215,676.77 | 3,775,017.46 | ||
| Total | 238,104,605.86 | 53,235,298.25 |
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, etc. | 1,016,556.74 | 5,516,565.23 |
| XingLu Investment Group and its subsidiaries | Wine | 74,880.00 | |
| Total | 1,016,556.74 | 5,591,445.23 |
11.5.2. Related party leasing
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 | House lease | 1,589,785.01 |
11.5.3. Key management compensation
Monetary Unit: CNY
subsidiariesItem
| Item | Amount in current period | Amount in previous period |
| Key management | 3,359,999.88 | 3,039,999.90 |
11.6. Receivables and payables of related parties
11.6.1. Receivables
Monetary Unit: CNY
| Item | Related party | Closing Balance | Opening Balance | ||
| Book value | Provision for bad debt | Book value | Provision for bad debt | ||
| Other non-current assets (transfer prepayment of land use right) | Luzhou Jiaxin Holding Group Co., Ltd. | 70,994,300.00 | |||
| Prepayment | Laojiao Group and its subsidiaries | 32,148,505.76 | 32,149,113.33 | ||
| Other receivables | Laojiao Group and its subsidiaries | 10,000.00 | 10,000.00 | ||
| Accounts receivable | Laojiao Group and its subsidiaries | 2,596.77 | |||
| Prepayment | XingLu Group and its subsidiaries | 119,942.78 | 3,145.70 | ||
11.6.2. Payables
Monetary Unit: CNY
| Item | Related party | Closing Balance | Opening Balance |
| Accounts payable | Luzhou Jiaxin Holding Group Co., Ltd. | 68,263,979.99 | 178,170.40 |
| Accounts payable | Laojiao Group and its subsidiaries | 11,325.20 | 508,292.02 |
| Advance from customers | Laojiao Group and its subsidiaries | 2,947.96 | 5,148.03 |
| Other payables | Laojiao Group and its | 986,948.00 | 950,000.00 |
| subsidiaries | |||
| Accounts payable | XingLu Group and its subsidiaries | 310,969.53 | |
| Other payables | XingLu Group and its subsidiaries | 100,000.00 | 100,000.00 |
12. Commitments and contingencies
12.1. Contingencies
12.1.1. Significant contingencies at the balance sheet date
The Company’s three savings deposits of CNY 500 million, including ABC Changsha Yingxin Sub-branch and ICBCNanyang Zhongzhou Sub-branch are involved in contract disputes. The Company has reported to the public securityauthorities for intervention with the assets preservation measure and filed civil claims for two contract disputes among thethree cases. Combined with the assets preservation situation of the public security authorities and professional legaladvice issued by lawyers, the Company has made a provision of CNY 200 million for bad debts for the deposit of CNY 500million for contract disputes. During the reporting period, the Supreme People’s Court made a final judgment on thedispute arising out of the deposit contract between the Company and ABC Changsha Yingxin Sub-branch. In respect ofthe losses that couldn’t be recovered through criminal procedures, ABC Changsha Yingxin Sub-branch should bear 40%of the compensation liability, ABC Changsha Hongxing Sub-branch 20%, and the remaining losses should be borne bythe Company. Henan Province Higher People’s Court had made the judgment of the first trial on the lawsuit of theCompany with ICBC Nanyang Zhongzhou Sub-branch over a deposit dispute: for the losses that the Company cannotrecover through criminal execution procedures, 50% shall be borne by ICBC Nanyang Zhongzhou Sub-branch; for thelosses that the Company cannot recover through criminal execution procedures concerning CNY 122.1 million of principalin the case, 10% shall be borne by Sanya Rural Commercial Sub-branch Hongsha B Sub-branch, and the rest shall beborne by the Company itself.As of 30 June 2020, the Company has recovered the abovementioned saving deposits involving contract disputes withCNY 214.8597 million.Except for the above matters, the Company has no other significant contingencies that need to be disclosed as the end of30 June 2020.
12.1.2. In despite of no significant contingency to disclose, the Company shall also makerelevant statements
There is no significant contingency to disclose.
13. Post balance sheet event
13.1. Profit distribution
Monetary Unit: CNY
| Profits or dividends planned to distribute | 2,328,956,436.84 |
| Reviewed and approved profits or dividends declared to distribute | 2,328,956,436.841 |
Note: 1. According to resolutions of the general meeting, the cash dividend was distributed to all shareholders with CNY
15.9 per 10 shares (tax inclusive), and has been implemented on 24 August 2020.
13.2. Statement for other post balance sheet events
None
14. Other important information
14.1. Other significant events that can affect investors’ decision
14.1.1. Saving deposits involving contract disputes
As stated in Note 12.2, three saving deposits involved contract disputes in Agricultural Bank of China Changsha YingxinSub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank, with a totalamount of CNY 500 million. At present, the investigation of related cases and the preservation of assets have been underway. The Company has initiated a civil procedure to recover the loss from the responsible unit.
14.1.2. Progress of technical renovation project of brewing investment
Based on the Company ‘s development strategy, the "13th Five-Year Plan" and deep analysis of the liquor industry andthe actual situation of the Company itself, the Company invested in the implementation of technical renovation project ofbrewing with Brewing Company, the wholly-owned subsidiary, as the main body. The total investment of the project isCNY 8,877.2765 million, and the required funds are solved by the Company with self-owned funds and other financingmethods. At present, the project has invested a total of CNY 7,031.4817 million, and the completion ratio has been 95%.
15. Notes to the main Items of the financial statements of parent company (allcurrency unit is CNY, except other statements)
15.1. Accounts receivable
15.1.1. 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 | 924,789.31 | 100.00% | 9,456.60 | 1.02% | 915,332.71 | 21,759.06 | 100.00% | 196.21 | 0.90% | 21,562.85 |
| the portfolio | ||||||||||
| Including: | ||||||||||
| Accounts receivables tested for impairment on the portfolio with characteristics of credit risk | 924,789.31 | 100.00% | 9,456.60 | 1.02% | 915,332.71 | 21,759.06 | 100.00% | 196.21 | 0.90% | 21,562.85 |
| Total | 924,789.31 | 100.00% | 9,456.60 | 1.02% | 915,332.71 | 21,759.06 | 100.00% | 196.21 | 0.90% | 21,562.85 |
Accounts receivables tested for impairment by the portfolio:
Monetary Unit: CNY
| Item | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 924,789.31 | 9,456.60 | 1.02% |
| Other portfolios | |||
Please refer to the relevant information of disclosure of provision for bad debt of other accounts receivable if adopting thegeneral mode of expected credit loss to withdraw provision for bad debt of accounts receivable.
√Applicable ? N/A
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 2020 | 196.21 | 196.21 | ||
| Balance of 1 January 2020 in the current period | ||||
| --Transfer to Second stage |
| -- Transfer to Third stage | ||||
| -- Reverse to Second stage | ||||
| -- Reverse to First stage |
| Allowance of the current period | 9,260.39 | 9,260.39 | ||
| Reversal of the current period |
| Verification of the current period | ||||
| Other changes |
| Balance of 30 June 2020 | 9,456.60 | 9,456.60 |
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 924,789.31 |
| Total | 924,789.31 |
15.1.2. Provision and recovery for bad and doubtful debt in the current period
Allowance 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 | 196.21 | 9,260.39 | 9,456.60 | |||
| Total | 196.21 | 9,260.39 | 9,456.60 | |||
15.1.3. 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 Liquor Golden Triangle Liquor Development Co., Ltd. | 168,826.64 | 18.26% | 8,441.33 |
| China Tower Luzhou Branch | 20,305.32 | 2.20% | 1,015.27 |
| Total | 189,131.96 | 20.46% |
15.2. Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Interest receivable | 111,388,492.40 | 40,570,144.44 |
| Dividend receivable | 30,114,991.30 | |
| Other receivables | 7,385,032,312.36 | 5,809,911,336.06 |
| Total | 7,526,535,796.06 | 5,850,481,480.501 |
Note: 1. Other receivables listed above were other accounts receivable that has deducted interest receivable, dividendreceivable.
15.2.1. Interest receivable
15.2.1.1. Classification of interest receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Fixed deposits | 111,388,492.40 | 40,570,144.44 |
| Total | 111,388,492.40 | 40,570,144.441 |
Note: 1. The closing balance increased CNY 70,818,347.96 compared with the opening balance, with an increase by
174.56%, mainly due to the impact of increase of interest receivable of fixed deposits.
15.2.2. Dividend receivable
15.2.2.1. Classification of dividend receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Sichuan Nitrocell Co., Ltd. | 85,995.53 | |
| Guotai Junan Securities Co., Ltd. | 4,593,028.83 | |
| Huaxi Securities Co., Ltd. | 20,735,166.94 | |
| Luzhou Bank Co., Ltd. | 4,700,800.00 | |
| Total | 30,114,991.30 |
15.2.3. Other receivables
15.2.3.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds of subsidiaries receivable | 7,288,425,036.26 | 5,709,914,323.15 |
| Intercourse funds | 12,574,759.08 | 14,258,750.49 |
| Petty cash | 1,044,021.15 | 454,894.47 |
| Saving deposits involving contract disputes | 285,140,297.52 | 287,400,297.52 |
| Total | 7,587,184,114.01 | 6,012,028,265.63 |
15.2.3.2. 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 2020 | 2,116,929.57 | 200,000,000.00 | 202,116,929.57 | |
| Balance of 1 January 2020 in the current period | —— | —— | —— | —— |
| Allowance of the current period | 34,872.08 | 34,872.08 | ||
| Balance of 30 June 2020 | 2,151,801.65 | 200,000,000.00 | 202,151,801.65 |
Changes of carrying amount with significant amount changed of loss provision in the current period? Applicable √ N/ADisclosure by aging
Monetary Unit: CNY
| Aging | Closing Balance |
| Within 1 year (including 1 year) | 7,291,087,065.85 |
| 1-2 years | 9,285,426.46 |
| 2-3 years | 701,697.25 |
| Over 3 years | 286,109,924.45 |
| 3-4 years | 65,000.00 |
| 4-5 years | 28,626.93 |
| Over 5 years | 286,016,297.52 |
| Total | 7,587,184,114.01 |
15.2.3.3. 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 | |||
| 计提 | 收回或转回 | 核销 | 其他 | |||
| Other receivables tested for impairment individually Note 1 | 200,000,000.00 | 200,000,000.00 | ||||
| Other receivables tested for impairment by the portfolio | 2,116,929.57 | 34,872.08 | 2,151,801.65 | |||
| Total | 202,116,929.57 | 34,872.08 | 202,151,801.65 |
Note 1: Refer to Note 5.5, 12.2 for details.
15.2.3.4. 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 | 6,702,446,250.05 | Within 1 year | 88.34% | |
| 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 | 285,140,297.52 | Over 5 years | 3.76% | 200,000,000.00 |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Internal transactions | 252,780,059.64 | Within 1 year | 3.33% | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Internal transactions | 188,416,563.68 | Within 1 year | 2.48% | |
| Luzhou Laojiao Nostalgia Liquor Co., Ltd. | Internal transactions | 57,716,699.70 | Within 1 year | 0.76% | |
| Total | -- | 7,486,499,870.59 | -- | 98.67% | 200,000,000.00 |
15.3. 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 | 3,413,960,128.11 | 3,413,960,128.11 | 3,413,960,128.11 | 3,413,960,128.11 | ||
| Investment in associates and joint venture | 2,305,755,525.30 | 2,567,098.80 | 2,303,188,426.50 | 2,225,288,824.52 | 2,567,098.80 | 2,222,721,725.72 |
| Total | 5,719,715,653.41 | 2,567,098.80 | 5,717,148,554.61 | 5,639,248,952.63 | 2,567,098.80 | 5,636,681,853.83 |
15.3.1. Investment in subsidiary
Monetary Unit: CNY
| Investee | Opening Balance (book value) | Changes in current period | Closing Balance (book value) | Closing balance of provision for impairment | |||
| Increase | Decrease | Provision for impairment | Other | ||||
| Luzhou Pinchuang Technology Co., Ltd. | 57,649,100.00 | 57,649,100.00 | |||||
| Sales Company of Luzhou Laojiao Co., Ltd. | 103,162,447.09 | 103,162,447.09 | |||||
| Luzhou Laojiao Brewing Co., Ltd. | 3,172,109,991.25 | 3,172,109,991.25 | |||||
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | 5,433,789.77 | 5,433,789.77 | |||||
| Luzhou Laojiao | 51,604,800.00 | 51,604,800.00 | |||||
| Electronic Commerce Co., Ltd. | |||||||
| 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 | 0.00 | 0.001 | |||||
| Total | 3,413,960,128.11 | 3,413,960,128.11 |
Note: 1. The Company obtained 100% of equity in Health Liquor Industry by the business combination under the samecontrol. The net assets of Health Liquor Industry were negative on the M&A date, and the book cost of long-term equityinvestment was limited to 0 by the Company.
15.3.2. 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 | |||||||||||
| None | |||||||||||
| 2. Associate | |||||||||||
| Huaxi Securities Co., Ltd. | 2,209,738,981.55 | 95,995,572.83 | 6,242,935.68 | 20,735,166.94 | 2,291,242,323.12 | 2,567,098.80 | |||||
| Sichuan Development | 12,982,744.17 | -1,036,640.79 | 11,946,103.38 | ||||||||
| Wine Investment Co., Ltd. | |||||||||||
| Subtotal | 2,222,721,725.72 | 94,958,932.04 | 6,242,935.68 | 20,735,166.94 | 2,303,188,426.50 | 2,567,098.80 | |||||
| Total | 2,222,721,725.72 | 94,958,932.04 | 6,242,935.68 | 20,735,166.94 | 2,303,188,426.50 | 2,567,098.80 |
15.4. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 1,486,572,539.81 | 1,040,786,248.30 | 2,431,931,413.35 | 1,621,162,415.45 |
| Other business | 16,349,153.58 | 15,287,886.77 | ||
| Total | 1,502,921,693.39 | 1,040,786,248.30 | 2,447,219,300.12 | 1,621,162,415.45 |
15.5. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under equity method | 94,958,932.04 | 88,275,961.45 |
| Dividend income from other equity instrument investment during holing period | 9,379,824.36 | 8,748,669.71 |
| Total | 104,338,756.40 | 97,024,631.16 |
16. Supplementary information
16.1. Detailed statement of extraordinary gain and loss in the current period (+ for gain, - for loss)
√ Applicable ? N/A
Monetary Unit: CNY
| Item | Amount | Remark |
| Gains or losses on disposal non-current assets | 104,663.83 | For details please see Note 5.40. |
| Government grants included into current profits and losses (other than | 10,441,675.27 | For details please see Note 5.36. |
| government grants closely related to enterprise business and granted by quota or quantity according to national unified standard) | ||
| Other non-operating income and costs other than above items | -28,272,944.37 | For details please see Note 5.41, 5.42. |
| Less: Impact from income tax | -4,475,851.24 | |
| Impact from non-controlling shareholders’ equity | 248,904.75 | |
| Total | -13,499,658.78 | -- |
Statement for extraordinary gain and loss items that the Company defines according to the definition in “ExplanatoryAnnouncement of Information Disclosure of Company that Issues Securities publicly NO.1- Extraordinary Gain and Loss”and definition of recurrent gain and loss items that are listed as extraordinary gain and loss in the “ExplanatoryAnnouncement of Information Disclosure of Company that Issues Securities publicly NO.1- Extraordinary Gain and Loss”:
? Applicable √ N/A
16.2. 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 ordinary shareholders of the Company | 15.32% | 2.20 | 2.20 |
| Net profits attributable to ordinary shareholders of the Company after deduction of extraordinary gain and loss | 15.38% | 2.20 | 2.20 |
Section XII Documents Available for Reference
1. Financial statements signed and stamped by the legal representative, person in charge of accounting affairs andperson in charge of accounting department;
2. The originals of all company documents and announcements that are disclosed on the public website designated byCSRC during the reporting period.