Luzhou Laojiao Co., Ltd.
2021 Interim Report
August 2021
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, accurate 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.
In this report, the potential risks in the operation of the Company have been disclosed. Investors arekindly reminded to pay attention to possible investment risks.
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
Section I Important Statements, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Results ...... 6
Section III Management Discussion and Analysis ...... 10
Section IV Corporate Governance ...... 25
Section V Environmental and Social Responsibility ...... 27
Section VI Significant Events ...... 34
Section VII Changes in Shares and Information about Shareholders ...... 41
Section VIII Preferred Shares ...... 47
Section IX Information about Bond ...... 48
Section X Financial Report ...... 52
Documents Available for Reference
1. Financial statements signed and stamped by the responsible person for the Company, the responsibleperson for accounting work and the responsible person for the Company’s financial affairs (AccountingSupervisor);
2. The originals of all company documents and announcements that are disclosed to the public duringthe reporting period.
Definitions
| Term | Reference | Definition |
| Company, the Company, Luzhou Laojiao | Refer to | Luzhou Laojiao Co., Ltd. |
| Laojiao Group | Refer to | Luzhou Laojiao Group Co., Ltd. |
| XingLu Group | Refer to | Luzhou XingLu Investment Group Co., Ltd. |
| SASAC of Luzhou | Refer to | State-owned Assets Supervision and Administration Commission of Luzhou |
| Huaxi Securities | Refer to | Huaxi Securities Co., Ltd. |
| Sales Company | Refer to | Sales Company of Luzhou Laojiao Co., Ltd. |
| Brewing Company | Refer to | Luzhou Laojiao Brewing Co., Ltd. |
Section II Company Profile and Key Financial Results
1. Corporate information
| Stock abbreviation | Luzhou Laojiao | Stock code | 000568 |
| Changed stock abbreviation (if any) | -- | ||
| 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 2020Annual 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 2020 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 2021 | H1 2020 | Change | |
| Operating revenues (CNY) | 9,317,097,027.05 | 7,634,482,901.87 | 22.04% |
| Net profits attributable to shareholders of the Company (CNY) | 4,226,316,722.25 | 3,220,452,190.27 | 31.23% |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses (CNY) | 4,208,650,132.88 | 3,233,951,849.05 | 30.14% |
| Net cash flows from operating activities (CNY) | 2,738,237,039.90 | 728,815,422.24 | 275.71% |
| Basic earnings per share (CNY/share) | 2.89 | 2.20 | 31.36% |
| Diluted earnings per share (CNY/share) | 2.89 | 2.20 | 31.36% |
| Weighted average ROE | 16.78% | 15.32% | 1.46% |
| 30 June 2021 | 31 December 2020 | Change | |
| Total assets (CNY) | 37,504,080,677.67 | 35,009,203,823.45 | 7.13% |
| Net assets attributable to shareholders of the Company (CNY) | 24,307,106,220.71 | 23,074,858,552.59 | 5.34% |
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/A
5.2. Differences in the net profits and net assets disclosed in the financial reportsprepared under the overseas and China accounting standards? Applicable √ N/A
5.3. Reasons for accounting data differences above
? Applicable √ N/A
6. Non-recurring gains and losses
√ Applicable ? N/A
Unit: CNY
| Item | Amount | Note |
| Gain or loss from disposal of non-current assets (including the write-off portion of the impairment provision) | 180,849.31 | See "Section XI Note 5.42" 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) | 7,226,821.19 | See "Section XI Note 5.39" for details. |
| Other non-operating income and expenditure except above-mentioned items | 17,427,895.75 | See "Section XI Note 5.43, 5.44" for details. |
| Less: Corporate income tax | 6,139,307.70 | |
| Minority interests (after tax) | 1,029,669.18 | |
| Total | 17,666,589.37 | -- |
Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
Their Securities to the Public-Non-Recurring Gains and Losses, or classifies any non-recurring gain/lossitem mentioned in the said explanatory announcement as a recurring gain/loss item.? Applicable √ N/ANo such cases for the reporting period.
Section III Management Discussion and Analysis
1. Business scope in the reporting period
The Company operates within the baijiu subdivision industry which belongs to the liquor, beverage andrefined tea manufacturing industry with specialized baijiu product design, production and sales as itsmain business model. Its primary products include baijiu series such as "National Cellar 1573" and"Luzhou Laojiao", and its main comprehensive performance indicators rank high in the baijiu industry.
As the COVID-19 pandemic eases, the baijiu industry gradually returns to normal. In the future, the totalmarket volume will shrink, consumption will be upgraded, and the market share will continue to beconcentrated in the industry leaders. The industry competition will become the competition betweensystems. The shortcomings in corporate supply chain and ecosystem chain must be addressed. Theera of joint operations of strategic product line mix and market has arrived.
The Company shall comply with the disclosure requirements of the Guidelines No. 14 of the ShenzhenStock Exchange on Industry Information Disclosure—Listed Companies Engaging in Business Relatedto Food & Liquor and Wine Production.
For H1 2021, operating revenue amounted to CNY 9.317 billion, up 22.04% year on year; and the netprofit attributable to the shareholders of the listed company reached CNY 4.226 billion, up 31.23% yearon year. Holding 20 food business licenses, the Company is primarily engaged in the research anddevelopment, production and sales of baijiu series such as "National Cellar 1573" and "LuzhouLaojiao". Its core competitiveness lies in the geographical, cellars and brewing technique, brand, qualityand R&D, and talent advantages.
In recent years, the baijiu industry, mainly characterized by slower growth, centralized differentiationand fiercer competition, is gradually having younger generation as its main consumer group. During thereporting period, the Company closely focused on the development theme of “increasing efficiency bylean management, and expanding the market by precise marketing”, and calmly coped with the adverseeffects of the constant fluctuation of the pandemic. The Company steadily and orderly advancedvarious tasks, achieved sustainable and healthy growth in operating results, provided consumers withhigh-quality products and services, and continued to meet people's needs for a better life.
The Company's production model is self-production. For the purchase of raw materials, it has thecooperative model, the unified pricing model, and the bid invitation model. And for sales models, it hasthe traditional channel operation model and the emerging channel operation model.
Brand operationsThe Company thoroughly implemented the brand revival project, and focused on the strategy of "dualbrands, three product series, and major single products" with great clarity. National Cellar 1573continued to lead the brand recognition. The market share, product profit, brand image and high-end
value continued to increase; the returning trend of Luzhou Laojiao brands’ value and consumerconfidence gradually took shape. The marketing management reform of the Touqu and Erqu seriesachieved remarkable results; innovative product series continued to meet the diversified and segmentedmarket needs. The Company has managed to cover various product price zones. And it will continue torejuvenate and promote value return of the brand.
Main sales models:
Currently, the Company has two main sales models:
1. Traditional channel operation model: It is mainly authorized distribution of the offline distributors. TheCompany establishes cooperative relationships with the distributors by product lines and regions. TheCompany directly supplies goods to the distributors, and then distributors sell them to consumers andterminal outlets.
2. Emerging channel operation model: It is mainly online sales operations. The Company establishescooperative relationships with e-commerce platforms, self-media and webcasters, and sells the goods toconsumers through flagship stores, specialty stores, live streaming rooms on online platforms and othernetwork terminals.
Distribution models:
√ Applicable □N/A
1. Main sales models
Unit: CNY
| Operating revenue | Cost of sales | Gross profit margin | YoY change of operating revenue | YoY change of cost of sales | YoY change of gross profit margin |
| By sales model | ||||||
| Traditional channel operation model | 8,663,483,014.70 | 1,169,109,178.74 | 86.51% | 19.03% | -8.96% | 4.15% |
| Emerging channel operation model | 531,759,619.22 | 117,339,362.75 | 77.93% | 84.71% | 52.90% | 4.59% |
2. Distributors
Unit: Number
| Region | Number of distributors at the end of the reporting period | Increased number during the reporting period | Decreased number during the reporting period | YoY change of number of distributors (%) | Reason for any significant change |
| Domestic | 1,899 | 340 | 488 | -11.05 |
| Overseas | 108 | 3 | 0 | 5 |
3. Main settlement method for distributors and distribution method
The Company's main settlement method for distributors is payment before delivery. The distributionmethod is authorized distribution.
4. Main customers
| Total sales to top five customers（CNY） | 6,302,696,056 |
| Total sales to top five customers as % of the total sales | 67.65% |
| Total sales to related parties among top five customers as % of the total sales | 0% |
5. Information on top five customers
| No. | Customer | Sales amount (CNY) | As % of the total sales for the year |
| 1 | Customer A | 4,747,209,850.52 | 50.95% |
| 2 | Customer B | 771,559,092.03 | 8.28% |
| 3 | Customer C | 456,988,131.13 | 4.91% |
| 4 | Customer D | 241,439,592.44 | 2.59% |
| 5 | Customer E | 85,499,389.88 | 0.92% |
| Total | - | 6,302,696,056.00 | 67.65% |
Store sales terminals accounted for more than 10%
□ Applicable √ N/A
Online direct sales
√ Applicable □N/A
For the sales of the Company's main products, please refer to Section III "Business segment, productsor geographical segments contributing over 10% of the operating revenues or profits". The Company'scomplete series of products are sold online. Its main cooperation platforms included JD.com and Tmall.
Sales price of main products contributing over 10% of the total operating revenues for the current periodchanged by more than 30% from the previous reporting period
□ Applicable √ N/A
Purchase model and purchase content
Unit: CNY
| Purchase model | Purchase content | Amount of main purchase content |
| Organic raw grains are purchased through cooperative model and supplied by organic raw grain bases; other raw grains and packaging materials are purchased through bid invitation | Raw materials | 2,154,099,305.00 |
| Purchase based on the unified pricing of the Development and Reform Commission of Luzhou and the price bureau, and purchase through bid invitation | Fuels and energies | 70,179,239.95 |
| Purchase through bid invitation | Low-value consumables | 26,671,543.91 |
The purchase of raw materials from cooperatives or farmers accounted for more than 30% of the totalpurchase amount
□ Applicable √ N/A
The price of main raw materials purchased externally changed by more than 30% year-on-year
□ Applicable √ N/A
Main production model:
The Company's main production model is self-production.
Commissioned processing and production
□ Applicable √ N/A
Main breakdown items of cost of sales
Unit: CNY
| By business segment | Item | H1 2021 | H1 2020 | YoY Change | ||
| Amount | As % of cost of sales | Amount | As % of cost of sales | |||
| Baijiu | Raw materials | 1,118,577,468.66 | 86.95% | 1,163,573,463.93 | 85.50% | -3.87% |
| Baijiu | Labor costs | 69,632,827.38 | 5.41% | 86,008,612.92 | 6.32% | -19.04% |
| Baijiu | Manufacturing overhead | 98,238,245.45 | 7.64% | 111,386,898.78 | 8.18% | -11.80% |
Production volume and inventory
1. Production volume, sales volume and inventory of main products
| Product classification | Production volume (ton) | Sales volume (ton) | Inventory (ton) | YoY change of production volume (%) | YoY change of sales volume (%) | YoY change of inventory | Description of major changes |
| Mid- and high-end baijiu | 19,773.36 | 14,252.35 | 27,800.98 | 162.79 | 6.31 | 59.68 | Production volume and inventory increased year-on-year mainly due to the Company's adjustment of |
production plans.Other baijiu
| Other baijiu | 24,702.10 | 24,629.45 | 13,647.49 | -29.93 | -29.14 | -39.49 | Inventory decreased year-on-year mainly due to the Company's adjustment of production plans. |
2. Inventory at the end of the reporting period
Unit: Ton
| Finished baijiu | Semi-finished baijiu (including base liquor) |
| 41,448.47 | 357,176.46 |
3. Capacity
Unit: Ton
| Main products | Design capacity | Actual capacity | Capacity in progress |
| Baijiu | 170,000 | 170,000 |
2. 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, featuring a warmer and more humid sub-tropicalclimate compared to other areas at the same latitude, with a temperature above 0℃ throughout the year.The unique climate and soil are agreeable to grow grains for baijiu brewing. The glutinous red sorghumand soft wheat grown in this area are the primary raw materials for the baijiu of the Company. The cellarsin which the Company brews its baijiu are made of the local loessal clay characterized by strongviscosity, rich minerals and excellent moisture retention. In addition, the abundant and quality water inthe region creates a unique geographical advantage for the production of the Company’s baijiu.
B. Advantage of cellars and brewing techniqueAged cellars are the most essential condition for a strong aromatic baijiu maker to produce good qualitybaijiu. The Cellars of National Treasure 1573, founded in 1573, was granted by the State Council as thefirst Cultural Relic of National Importance in the industry under the Protection of the State in December1996. 1,619 cellars of Luzhou Laojiao which have been continuously used for over 100 years, togetherwith its 16 ancient brewing workshops and three natural cellar holes, were all selected as the fourthbatch of Cultural Relics of National Importance under the Protection of the State in 2013. They areunique resources that cannot be replicated. In both 2006 and 2012, Luzhou Laojiao Daqu Cellars weretwice selected into the preliminary list of China for World Heritage. In November 2018, Luzhou LaojiaoCellars and Brewing Workshops were selected into China’s Industrial Heritage List. The time-honoredTraditional Brewing Technique of Luzhou Laojiao is a 24-generation inheritance and a classic brewing
technique for strong aromatic baijiu. This technique was selected as the first batch of National IntangibleCultural Heritage in May 2006. The Cellars of National Treasure 1573 and the Traditional BrewingTechnique of Luzhou Laojiao together provide the most essential basis and assurance for the quality ofthe product series of National Cellar 1573 and Luzhou Laojiao.
C. Brand advantageBrand is a key business resource for baijiu producers. The Company’s reputation is greatly built on itssuperiority in brand. National Cellar 1573, which is of a connoisseurship level, is a world-famoushigh-end brand. Luzhou Laojiao Tequ, a classic brand for strong aromatic baijiu, was selected in 1952 bythe first national tasting competition judges as one of the four most famous baijiu brands in China. It isthe only strong aromatic baijiu brand that won the title of “National Famous Liquor” for five consecutivetimes, as well as the pioneer with regard to the “Tequ” variety of baijiu. In recent years, the Company hassuccessfully put in place a brand system of “dual brands, three product series, and major singleproducts” with great clarity and focus. The programs carried out to promote the brand of National Cellar1573 and revive the brand of Luzhou Laojiao have produced remarkable results, with significantimprovement in brand influence. The Company’s baijiu is increasingly known by consumers as anational brand of strong aromatic baijiu and of authentic flavor.
D. Quality and R&D advantageThe Company is committed to producing high-quality baijiu, advocating a healthy lifestyle and “makingthe quality visible”. The first “Organic Sorghum Planting Base” was established and the six-factormanagement system (including organic, quality, safety, environment, measurement and energy) wasbuilt and improved. The research platforms are established, including National Engineering ResearchCenter of Solid-State Brewing, National Liquor Test Center, National Postdoctoral Workstation, etc,which all support the innovation and upgrading of products with their strong technical force. In recentyears, the Company has put in a lot of efforts in researching Tequ production, brewing informatization &automation. Relying on the technological innovation platforms such as the National Industrial DesignCenter, and continuously deepening the cooperation with universities and scientific research institutesincluding the Chinese Academy of Sciences and the Jiangnan University, the Company has undertakendozens of national- or provincial-level projects and has been granted hundreds of invention or utilitymodel patents. And remarkable results have been achieved with respect to improvement of the quality ofbase 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 baijiu, 1 masterof Chinese baijiu technique, 2 Chinese liquor connoisseurs, 7 senior professor engineers, 7 experts whoreceive special allowances from the State Council, 3 national technicians, 3 academic and technologicleaders of Sichuan province, 1 excellent expert with special contribution of Sichuan province, 1craftsmanof Sichuan province, 1 technological elite of Sichuan province, as well as hundreds of highly skilledpersonnel including national baijiu judges, senior brewing technicians and brewing technicians. Thecomprehensive and professional personnel system assures the sound development of the Company.
3. Analysis of main business
See contents under the heading “1. Business scope in the reporting period” above.
Year-on-year changes in key financial data
Unit：CNY
| H1 2021 | H1 2020 | YoY Change | Reason for any significant change | |
| Operating revenues | 9,317,097,027.05 | 7,634,482,901.87 | 22.04% | |
| Cost of sales | 1,335,154,943.46 | 1,386,636,428.85 | -3.71% | |
| Selling and distribution expenses | 1,183,247,931.92 | 1,111,958,208.98 | 6.41% | |
| General and administrative expenses | 439,561,779.70 | 360,013,975.76 | 22.10% | |
| Finance expenses | -128,007,967.42 | -108,274,836.69 | ||
| Corporate income tax | 1,346,062,434.86 | 1,034,276,363.11 | 30.15% | Mainly due to the increased gross profit as a result of the increased sales revenue in the current period |
| R&D expenses | 51,984,969.33 | 44,739,047.81 | 16.20% | |
| Net cash flows from operating activities | 2,738,237,039.90 | 728,815,422.24 | 275.71% | Mainly due to the increased cash received from sale of goods in the current period |
| Net cash flows from investing activities | -732,184,328.54 | -1,050,174,817.35 | Mainly due to the decreased cash paid for the technical renovation project of brewing in the current period | |
| Net cash flows from financing activities | -48,460,474.66 | 1,499,441,368.05 | -103.23% | Mainly due to the issuance of corporate bonds in the same period of last year |
| Net increase in cash and cash equivalents | 1,956,159,445.84 | 1,180,083,124.68 | 65.76% |
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 2021 | H1 2020 | YoY Change | |||
| Amount | As % of operating revenues | Amount | As % of operating revenues | ||
| Total | 9,317,097,027.05 | 100% | 7,634,482,901.87 | 100% | 22.04% |
| By business segment | |||||
| Baijiu | 9,195,242,633.92 | 98.69% | 7,566,057,028.33 | 99.10% | 21.53% |
| Other revenues | 121,854,393.13 | 1.31% | 68,425,873.54 | 0.90% | 78.08% |
| By product | |||||
| Mid- and high-end baijiu | 8,218,296,465.61 | 88.21% | 6,657,376,504.30 | 87.20% | 23.45% |
| Other baijiu | 976,946,168.31 | 10.48% | 908,680,524.03 | 11.90% | 7.51% |
| Other revenues | 121,854,393.13 | 1.31% | 68,425,873.54 | 0.90% | 78.08% |
| By geographical segment | |||||
| Domestic | 9,264,547,206.51 | 99.44% | 7,605,771,011.08 | 99.62% | 21.81% |
| Overseas | 52,549,820.54 | 0.56% | 28,711,890.79 | 0.38% | 83.02% |
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 | ||||||
| Baijiu | 9,195,242,633.92 | 1,286,448,541.49 | 86.01% | 21.53% | -5.48% | 4.00% |
| By product | ||||||
| Mid- and high-end baijiu | 8,218,296,465.61 | 772,628,560.86 | 90.60% | 23.45% | 1.55% | 2.03% |
| Other baijiu | 976,946,168.31 | 513,819,980.63 | 47.41% | 7.51% | -14.38% | 13.45% |
| By geographical segment | ||||||
| Domestic | 9,264,547,206.51 | 1,326,903,851.83 | 85.68% | 22.92% | -1.94% | 3.63% |
Under the circumstances that the statistical standards for the Company’s main business data wereadjusted in the reporting period, the Company’s main business data in the current period is calculatedbased on adjusted statistical standards at the end of the reporting period
√ Applicable ? N/A
Unit：CNY
| Operating revenue | Cost of sales | Gross profit margin | YoY change of operating revenue | YoY change of cost of sales | YoY change of gross profit margin | |
| By business segment | ||||||
| Baijiu | 7,566,057,028.33 | 1,360,968,975.63 | 82.01% | -4.49% | -14.73% | 2.16% |
| By product | ||||||
| Mid- and high-end baijiu | 6,657,376,504.30 | 760,843,863.58 | 88.57% | 1.84% | 1.53% | 0.03% |
| Other baijiu | 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% |
Reasons for changing the standardsIn order to realize the return of "Luzhou Laojiao" brands’ value and promote the implementation of the"competitive marketing" strategy, the Company implemented the operational integration of mid- andhigh-end products. The Company has reclassified the products based on the sales price. The productclassification was changed to "mid- and high-end baijiu" and "other baijiu" from "high-, mid- and low-endbaijiu" in the previous reporting period.
Reason for any over 30% YoY movements in the data above
□ Applicable √N/A
The Company shall comply with the disclosure requirements of the Guidelines No. 14 of the ShenzhenStock Exchange on Industry Information Disclosure—Listed Companies Engaging in Business Relatedto Food & Liquor and Wine Production.
A. Breakdown of selling and distribution expenses
Unit：CNY
| Selling and distribution expenses | H1 2021 | H1 2020 | YoY Change | Reason for any significant change |
| Advertising expenses | 407,510,592.52 | 537,365,225.18 | -24.17% | |
| Sales promotion expenses | 482,468,677.16 | 314,638,554.04 | 53.34% | Decreased product promotion activities due to the pandemic in the same period of last year |
| Warehousing and logistics expenses | 48,338,332.97 | 45,113,965.94 | 7.15% |
| Labor costs | 183,923,965.82 | 158,943,220.57 | 15.72% | |
| Other | 61,006,363.45 | 55,897,243.25 | 9.14% |
B. Breakdown of advertising expenses
Unit：CNY
| Advertising | Expenses |
| Online advertising (exclusive of TV advertising) | 73,208,079.01 |
| Offline advertising | 129,669,890.93 |
| TV advertising | 124,076,423.55 |
| Other (inclusive of branding ideas, exhibitions & showcases, advertising materials, activity planning, etc.) | 80,556,199.03 |
4. Analysis of non-core business
? Applicable √ N/A
5. Assets and liabilities
5.1. Significant change of asset items
Unit：CNY
| 30 June 2021 | 31 December 2020 | Change in percentage | Explanation about any material change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Cash and cash equivalents | 13,611,381,648.55 | 36.29% | 11,624,870,340.60 | 33.21% | 3.08% | |
| Accounts receivable | 6,711,515.89 | 0.02% | 1,507,852.43 | 0.00% | 0.02% | |
| Inventories | 5,916,574,963.71 | 15.78% | 4,695,663,431.25 | 13.41% | 2.37% | |
| Long-term equity investments | 2,555,473,912.21 | 6.81% | 2,477,667,171.27 | 7.08% | -0.27% | |
| Fixed assets | 7,880,413,111.37 | 21.01% | 6,887,108,174.72 | 19.67% | 1.34% | |
| Construction in progress | 1,290,824,691.35 | 3.44% | 2,012,129,880.15 | 5.75% | -2.31% | |
| Right-of-use assets | 55,525,013.10 | 0.15% | 0.15% | |||
| Contract liabilities | 1,408,069,576.54 | 3.75% | 1,678,837,166.94 | 4.80% | -1.05% | |
| Lease liabilities | 46,474,941.96 | 0.12% | 0.12% |
5.2. Main assets overseas
? Applicable √ N/A
5.3. 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 | 347,160,399.42 | 10,125,066.47 | 252,722,626.89 | 357,285,465.89 | ||||
| Total | 347,160,399.42 | 10,125,066.47 | 252,722,626.89 | 357,285,465.89 | ||||
| Financial liability | 0.00 | 0.00 | ||||||
Information about other changes
Whether measurement attribution of main assets changes significantly in this year?Yes √ No
5.4. Restricted asset rights as of the end of this reporting period
| Item | Closing Balance | Reason |
| Bank deposits (CNY) | 85,627,139.90 | Accrued interest on term deposits |
| 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 | 87,027,139.90 |
6. Investment
6.1. Total investment
√ Applicable ? N/A
| Investment made in the reporting period (CNY) | Investment made in the same period of last year (CNY) | YoY change |
| 536,408,910.19 | 1,439,229,693.32 | -62.73%1 |
Note 1: Mainly due to the completion of significant engineering and construction projects including thetechnical renovation project of brewing.
6.2. Significant equity investment made in the reporting period
? Applicable √ N/A
6.3. Significant ongoing non-equity investment in the reporting period
√ Applicable □ N/A
Unit: CNY
| Item | Investment form | Whether it is a fixed asset investment | Industry of the investment project | Amount of input in the reporting period | Accumulated actual input amount by the end of the reporting period | Capital source | Project progress | Projected income | Accumulated actual income by the end of the reporting period | Reasons for not meeting the schedule and projected income | Date of disclosure (if any) | Disclosure index (if any) |
| Technical renovation project of brewing | Self-built | Yes | Baijiu | 107,045,469.67 | 7,829,456,896.25 | Fund-raising+self-financing | 100.00% | 0.00 | 0.00 | N/A | 28 April 2016 | Announcement No. 2016-12 on Subsidiary’s Investment in the Technical Renovation Project of Brewing; Announcement No. 2020-17 on Increasing the Investment in the Technical Renovation Project of Brewing（http://www.cni |
| nfo.com.cn/） | ||||||||||||
| Total | -- | -- | -- | 107,045,469.67 | 7,829,456,896.25 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
6.4. Financial assets investment
6.4.1. Securities investment
√ Applicable □ N/A
Unit: CNY
| Category of securities | Stock code | Abbreviation of securities | Initial investment cost | Accounting measurement model | Beginning book balance | Changes in fair value recognized in profit or loss | Changes in the cumulative fair value recorded into 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 | 206,450,757.39 | -4,593,028.83 | 189,138,571.80 | 0.00 | 0.00 | 6,595,118.32 | 201,857,728.56 | Investments in other equity instruments | Own fund |
| Domestic and foreign stock | 002246 | SNC | 1,030,000.00 | Fair value measurement | 11,460,858.15 | -203,262.16 | 10,227,595.99 | 0.00 | 0.00 | 62,542.20 | 11,257,595.99 | Investments in other equity instruments | Own fund |
| Domestic and foreign stock | 01983 | LZBANK | 51,120,000.00 | Fair value measurement | 95,561,825.55 | 14,921,357.46 | 59,363,183.01 | 0.00 | 0.00 | 110,483,183.01 | Investments in other equity instruments | Own fund | |
| Total | 64,869,156.76 | -- | 313,473,441.09 | 10,125,066.47 | 258,729,350.80 | 0.00 | 0.00 | 6,657,660.52 | 323,598,507.56 | -- | -- | ||
6.4.2. Derivative investment
□Applicable √ N/A
No such cases in the reporting period
7. Sale of major assets and equity interests
7.1. Sale of major assets
? Applicable √ N/ANo such cases in the reporting period.
7.2. Sale of major equity interests
? Applicable √ N/A
8. 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., Ltd. | Subsidiary | Sales of baijiu | 100,000,000.00 | 8,479,253,903.89 | 5,295,101,512.25 | 8,957,351,430.08 | 4,104,072,345.34 | 3,107,154,760.49 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √N/A
Notes for major holding companies and joint stock companies
9. Structured entities controlled by the Company? Applicable √ N/A
10. Risks facing the Company and countermeasuresA. The uncertainty of the pandemic: The COVID-19 pandemic has gradually eased, but there are stilldifferent degrees of fluctuation, and there are still uncertainties in its impact (including the extent) ondomestic baijiu consumption. The Company will actively respond to the latest requirements for pandemicprevention and control, strictly prevent and control the pandemic, and ensure the normal and orderlyproduction and operation of the Company.
B. Macroeconomic factors: In recent years, there are frequent frictions in international trade. Themacroeconomic environment remains difficult. If the total economic demand declines, it will affect theresidents' per capita disposable income and their willingness to consume, which will have a negativeimpact on the baijiu industry. The Company will strengthen study of macroeconomic situations andindustrial trends, and make timely adjustments to operating strategies, so as to adapt to changes in theexternal environment.
C. Policy risk: As the pandemic gradually eases and the economy recovers, mainstream countries areexpected to gradually withdraw the loose monetary policies, which may affect China's relevant policies.In the short term, the baijiu consumption market may be affected. In response, the Company will keep aclose eye on economic policies at home and abroad, and make timely adjustments to its operatingstrategies accordingly.
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 IV Corporate Governance
1. Annual and extraordinary general meeting convened during thereporting period
1.1 General meeting convened during the reporting period
| Meeting | Type | Investor participation ratio | Date of the meeting | Date of disclosure | Resolution of the meeting |
| The 2020 Annual General Meeting | Annual General Meeting | 61.16% | 29 June 2021 | 30 June 2021 | Announcement No.: 2021-27 of Luzhou Laojiao Co., Ltd. on Resolutions of the 2020 Annual General Meeting (http://www.cninfo.com.cn/) |
1.2 Extraordinary general meetings convened at the request of preferenceshareholders with resumed voting rights? Applicable √ N/A
2. Changes in directors, supervisors, and senior management
√ Applicable □ N/A
| Name | Title | Type | Date | Reason |
| Xiong Pingting | Director | Elected | 29 June 2021 | |
| Chen You’an | Independent director | Elected | 29 June 2021 | |
| Sun Dongsheng | Independent director | Elected | 29 June 2021 | |
| Lyu Xianpei | Independent director | Elected | 29 June 2021 | |
| Yang Ping | Chairman of the Supervisory | Elected | 29 June 2021 |
| Committee | ||||
| Guo Shihua | Supervisor | Elected | 29 June 2021 | |
| Li Lunyu | Supervisor | Elected | 29 June 2021 | |
| Jiang Yuhui | Director and deputy general manager | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
| Wu Qin | Deputy general manager | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
| Du Kunlun | Independent director | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
| Xu Guoxiang | Independent director | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
| Tan Lili | Independent director | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
| Yang Benhong | Supervisor | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
| Cao Cong | Supervisor | Termination of employment upon the expiry of the office term | 29 June 2021 | Termination of employment upon the expiry of the office term |
3. Profit distribution and converting capital reserves into share capitalfor the reporting period
? Applicable √ N/ANo such cases in the reporting period.
4. Implementation of any equity incentive plan, employee stockownership plan or other incentive measures for employees? Applicable √ N/ANo such cases in the reporting period.
Section V Environmental and Social Responsibility
1. Information about environment protection
Whether the listed company and its subsidiaries belong to heavy polluting industries prescribed by theenvironmental protection department
√ Yes □ No
| Company name | Name of main pollutant and particular pollutant | Discharge type | Number of discharge outlet | Distribution of discharge outlet | Emission concentration | Pollution discharge standard | Total emission | Approved total emission | Excessive discharge |
| Luzhou Laojiao Co., Ltd. | COD | Direct discharge | 1 | Luohan Brewery Eco-Park | 27.190mg/L | 50mg/L | 5.5665t | 25t/a | No |
| Luzhou Laojiao Co., Ltd. | Ammonia nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.757mg/L | 5mg/L | 0.1530t | 2.5t/a | No |
| Luzhou Laojiao Co., Ltd. | Total nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 8.372mg/L | 15mg/L | 1.7084t | 7.5t/a | No |
| Luzhou Laojiao Co., Ltd. | Total phosphorus | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.223mg/L | 0.5mg/L | 0.0461t | 0.25t/a | No |
| Luzhou Laojiao Co., Ltd. | PM | Organized discharge | 2 | Luohan Brewery Eco-Park | 6.341mg/m3 | 20mg/m? | 0.6101t | 3.9t/a | No |
| Luzhou Laojiao Co., Ltd. | Sulfur dioxide | Organized discharge | 2 | Luohan Brewery Eco-Park | 0.0737mg/m3 | 50mg/m? | 0.0067t | 11.5t/a | No |
| Luzhou Laojiao Co., Ltd. | Oxynitride | Organized discharge | 2 | Luohan Brewery Eco-Park | 21.404mg/m3 | 150mg/m? | 2.0613t | 45.4t/a | No |
| Luzhou Laojiao Co., Ltd. | COD | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 38.490mg/L | 400mg/L | 8.9237t | 400t/a | No |
| Luzhou | Ammonia | Indirect | 1 | Huangyi | 0.365mg/L | 30mg/L | 0.0830t | 30t/a | No |
| Laojiao Co., Ltd. | nitrogen | discharge | Brewery Eco-Park | ||||||
| Luzhou Laojiao Co., Ltd. | Total nitrogen | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 6.309mg/L | 50mg/L | 1.4672t | 50t/a | No |
| Luzhou Laojiao Co., Ltd. | Total phosphorus | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 0.699mg/L | 3mg/L | 0.1614t | 3t/a | No |
| Luzhou Laojiao Co., Ltd. | PM | Organized discharge | 3 | Huangyi Brewery Eco-Park | 0.566mg/m3 | 5mg/m? | 0.3844t | 4.43t/a | No |
| Luzhou Laojiao Co., Ltd. | Sulfur dioxide | Organized discharge | 3 | Huangyi Brewery Eco-Park | 0.230mg/m3 | 35mg/m? | 0.1661t | 30.96t/a | No |
| Luzhou Laojiao Co., Ltd. | Oxynitride | Organized discharge | 3 | Huangyi Brewery Eco-Park | 16.629mg/m3 | 100mg/m? | 10.736t | 88.47t/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, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. InNational Cellar Base, Xiaoshi Base, Zaojiaoxiang Base, and Anning Park, the high-concentrationbrewing wastewater is temporarily collected in pools (or tanks), and is later transferred to the wastewatertreatment station of Huangyi Brewery Eco-Park by truck for treatment. The wastewater treatmentstations of Luohan Brewery Eco-Park and Huangyi Brewery Eco-Park are equipped with online monitorsto automatically monitor COD, ammonia nitrogen, total phosphorus, total nitrogen, pH value and flows,which enables real-time networking operation of monitoring data with the Environmental InformationCenter of Luzhou City. The Company's facilities for prevention and control of wastewater pollution areunder normal operations, ensuring up-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, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. In National Cellar Base,Xiaoshi Base and Zaojiaoxiang Base, small natural gas boilers and direct-fired bottom boilers are used.The boilers of Luohan Brewery Eco-Park (20t/h, 30t/h) and the boilers of Huangyi Brewery Eco-Park(20t/h, 75t/h, 75t/h) are equipped with online monitors to automatically monitor exhaust gas, whichenables real-time networking operation of monitoring data with the Environmental Information Center ofLuzhou City. Low NOx combustion technology is adopted for the natural gas boilers. The Company'sfacilities for prevention and control of exhaust gas pollution are under normal operations, ensuringup-to-standard emission of exhaust gas through outlets.
Environmental impact assessment for construction project and other environmental protectionadministrative permission
The Company’s new reconstruction and expansion projects are carried out in accordance with therequirements of national environmental protection laws and environmental assessment laws. Theenvironmental assessment and approval procedures shall be completed before commencement of theprojects. After the projects are completed, the environmental protection inspection and acceptance shallbe carried out in accordance with the requirements of the environmental assessment. Constructionprojects started in the first half of 2021 have gone through relevant approval procedures in accordancewith environmental protection requirements.
Emergency plan for environmental emergenciesThe Company developed the Contingency Plan for Environmental Emergencies (Revision 2020), theEnvironmental Risk Assessment Report and the Emergency Resources Survey Report, and reported 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. The automatic online monitors for exhaust gas of LuohanBrewery Eco-Park and Huangyi Brewery Eco-Park are connected to the Information Center of theBureau of Ecology and Environment of Luzhou; self-monitoring information are released on"Environmental Credit China" and the "Platform of Sichuan Province for Management and Sharing ofInformation about Pollution Source Monitoring" to facilitate supervision from all walks of life.
Administrative punishments received in the reporting period due to environmental issuesN/A
Other information about environmental protection that should be disclosedN/A
Other information about environment protectionN/A
2. Social responsibility
2.1. Rural revitalization plan
A. Basic strategies2021 is the first year of China's new journey of building a modern socialist country in an all-round wayand journey toward the second centenary goal. Under the guidance of the central, provincial andmunicipal Party committees and governments, the Company adheres to the corporate philosophy of"baijiu brewed with the universe, spirit generated by the world". It thoroughly implements the policy of
rural revitalization, and continues to provide assistance for two designated villages, namely XiangtianVillage, Longshan Town, Gulin County, Luzhou City, and Guntang Village, Maiwa Township, HongyuanCounty, Aba Prefecture. With the "rural revitalization strategy" as its pillar and the development of "newcivilized villages" and "new villages with four favourable aspects" as its objectives, the Companycontinuously consolidates poverty alleviation achievements and lays a solid foundation for therevitalization of the two villages.
B. Overall objectivesThe Company adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristicsfor a New Era, and fully implements the arrangement of the central and provincial Party committees aswell as provincial government regarding effectively connecting consolidation and expansion of povertyalleviation achievements with rural revitalization. The Company shall improve areas of weakness,consolidate the achievements, lay the foundation, promote the revitalization in accordance with therequirements of work plan for assisting designated villages arranged by government agencies directlymanaged by Sichuan provincial government and other relevant departments, and comprehensivelyimprove the work of assisting the two designated villages, help them get rid of poverty and promote theirrevitalization and development.
C. Key tasksIn accordance with the overall requirements of "prosperous industry, liveable ecology, civilized rural style,effective governance and well-off life" in rural revitalization and construction, the Company will adhere tothe principle of equal emphasis on "blood transfusion, haematopoiesis, and blood circulation"; continueto consolidate poverty alleviation achievements; explore the path of sustainable development; centre onpromoting the revitalization of industries, talents, culture, ecology, and organization in the two villages;focus on key points, improve areas of weakness, and strength weaknesses; continue to accelerate thepace of agricultural modernization in the two villages, develop and expand rural industries, buildecologically liveable and beautiful villages, flourish and develop rural culture, improve the modern ruralgovernance system, and guarantee and improve the well-being of rural people.
D. Guarantee measuresAdhering to the “four-in-one” assistance mechanism, the Company will establish a “four-in-one”assistance mechanism where the leadership team takes overall responsibilities, the Company’sassistance working group is responsible for promoting the assistance, each staff member takesrespective responsibilities, and staff members stationed in the villages are responsible for specificassistance work. It will shift the focus of work from poverty alleviation to comprehensively promoting ruralrevitalization and consolidation and expansion of poverty alleviation achievements, establishing andimproving dynamic monitoring on the prevention of return to poverty, follow-up support for relocation,follow-up management and supervision of poverty alleviation project assets, and normalizing assistancefor low-income households in the villages. It will also formulate assistance plans and implement themyear by year, establish work accounts, and refine the plan to assign the tasks to departments, projects,and individual persons, and implement them at all levels to ensure the orderly development of ruralrevitalization.
2.2. Summary of rural revitalization
In the first half of 2021, the Company mainly made relevant preparations for the transition from povertyalleviation to rural revitalization. Specifically, they are as follows:
A. The Company went to Xiangtian Village, Longshan Town, Gulin County, and Guntang Village, MaiwaTownship, Hongyuan County, Aba Prefecture to carry out New Year greeting activities. It visited a totalof 182 households, distributed cash and supplies, and supported Xiangtian Village to carry out activitiessuch as the summary meeting of poverty alleviation work in 2020 and ethics awards assessment.
B. The Company openly selected reserve candidates for cadres stationed in the village for povertyalleviation, and reported them to superior departments according to the requirements of the provincialand municipal organization departments. The rotation of cadres stationed in the village was completedby the end of June. So far, three new cadres under rotation program have stationed in the village forcarrying out the work.
C. The Company's grassroots Party organizations have combined the theme of "I do practical things forthe masses" with publicity and education in rural revitalization, and carried out various activities.
D. The Company went to two villages to connect assistance in rural revitalization and inspected 2021assistance projects.
2.3. Rural revitalization achievements
| Awards (content and level) | |
| National | The Company won National Advanced Collective for Poverty Alleviation |
| Provincial | 1. The Company won 2020 Outstanding Contribution Unit in the Fight Against COVID-19 presented by Sichuan Charity Federation. 2. The Company won 2021 Outstanding Contribution Award for Social Poverty Alleviation issued by Sichuan Province Foundation for Poverty Alleviation. 3. Zhang Wenping, a poverty alleviation cadre, was rated as one of “Top Ten Poverty Alleviation Figures in Sichuan State-owned Enterprises” by the Provincial State-owned Assets Supervision and Administration Commission. |
2.4. Follow-up rural revitalization plan
A. Strengthening connection with and guidance on villages designated for assistance
a. Guiding and urging the implementation of policies. The Company will participate in at least 2 jointmeetings held by the leading unit throughout the year; guide and urge Hongyuan County and GulinCounty to shift the focus of work from poverty alleviation to promoting comprehensive rural revitalizationand consolidating and expanding poverty alleviation achievements. By taking into account theassistance needs raised by the two villages, the Company will ensure that the assistance work is carried
forward in an orderly and effective manner through joint research, clear division of labour, clarification ofresponsibilities, and item by item implementation. Based on the Company's own advantages, it will makeinnovation in assistance measures to help the two villages actively strive to create advanceddemonstration villages for the implementation of rural revitalization strategy.
b. Formulating assistance plans and implementing them year by year. The Company will carry outin-depth investigations and studies in two villages designated for assistance. By taking into account the“14th Five-Year Plan” and overall plan for rural revitalization in Gulin and Hongyuan counties, it willdevelop a five-year assistance plan with clear goals and in line with the reality. It will develop annualassistance plans in accordance with the master assistance plan, implement them year by year, establishwork accounts, assign the tasks to the departments, projects and individuals, and thoroughly implementthe plans level by level.
c. Adhering to the "four-in-one" assistance mechanism. The Company's Secretary of Party Committeeand Chairman of the Board of Directors should take the first responsibility, hold special meetings toarrange and deploy assistance work at least 2 times a year; each member of the leadership team shouldgo to the county and the village for investigation and guidance no less than 6 times a year. The leader incharge of the work should convene assistance working groups and related personnel every quarter tostudy assistance for designated villages, and promote the implementation of assistance work at least 4times a year.
d. Doing a good job in consumption related assistance. The Company will continue to carry out"purchase instead of donation" project, and sell at least CNY 2 million of Hongyuan beef jerky seriesproducts and yak milk powder on the online platform through Luzhou Laojiao Electronic Commerce Co.,Ltd. every year. It will organize its cadres and employees to purchase at least CNY 200,000 of rice,poultry, livestock, and vegetables from Xiangtian Village per year.
e. Carrying out the activities of "I do practical things for the masses". The Company will take assistancefor designated villages as an important form of carrying out the activities of "I do practical things for themasses", each subordinate involved in the work should list the items under the activities of "I do practicalthings for the masses", and make effort to solve the "urgent and difficult problems faced by the masses"for the two villages, enhancing their sense of happiness and security.
B. Laying a solid foundation and continuing to promote rural revitalization
a. Improving production and living conditions. The Company will assist Guntang Village of HongyuanCounty in improving the infrastructure construction and plans to build a cultural activity square in thevillage. It will assist the local government in promoting the development of transportation and industry inthe two villages, promote the revolution of rural toilets in Xiangtian Village, carry out the treatment ofdomestic garbage and sewage, and improve the village's appearance.
b. Continuing to develop industry and collective economy. Based on the advantageous resources ofHongyuan County and Gulin County, the Company will focus on follow-up cultivation of industries in asustainable manner, respect market laws and industrial development laws, and continue to carry out
assistance work to create a public welfare brand for villages in Chengdu; help the two villages cultivategreen and organic agricultural products with geographical indications; help them standardize andestablish village collective economic organizations; promote collective economic organizations toformulate and improve their articles of association, and establish and improve legal person governancemechanisms; make good use of village-level poverty alleviation assets; and ensure sustainableeffectiveness.
c. Adopting multiple measures to stabilize employment and increase income. The Company will makegood use of the employment information platform, dynamically understand the employment needs of themasses in the two villages, organize and mobilize villagers to migrate for work, increase the training ofpractical talents by inviting experts to give lectures and holding special meetings, and organize pre-jobtraining in a targeted manner to improve villagers’ job skills, help build rural factories and workshops,encourage the development of farmyard economy such as handicraft workshops, family farms, providejobs for people who have been lifted out of poverty and those who are prone to poverty.
d. Strengthening grassroots Party organizations. The Company will cooperate with Party branches in thetwo villages and select personnel familiar with rural work and Party affairs to set up a Party buildingguidance office. The selected personnel should stay in the villages for 3 to 5 days each year to guideThree Meetings and One Lecture, Party branch meeting, democratic assessment of Party members andother systems, and cooperate with the local organization department to build a strong village Partybranch. The Company will guide migrant workers, college graduates, and demobilized soldiers to returnto their hometowns to start businesses, and help cultivate a group of foregoers in getting rich. It willcultivate and develop Party activists, Party members and reserve cadres. It will draw lessons from thesuccessful experience and practices of poverty alleviation, guide the two villages to establish andimprove rural governance system led by the Party organization and combining autonomy, rule of law,and rule of morality, and promote the modernization of rural governance system and governancecapabilities.
e. Advocating a new style of civilization. The Company will persist in improving the villagers' will andwisdom, continue to carry out in-depth education on gratitude and forging ahead, widely publicize thegreat achievements in poverty alleviation and the central and provincial Party committees' decisions anddeployments on comprehensively promoting rural revitalization through special meetings and farmersnight schools, at least 4 times a year, and guide the masses to listen to the Party, remember the Party'sfavour, and follow the Party. It will organize village group cadres, masses and forgoers in getting rich tomake on the spot investigation and study in advanced areas in rural revitalization, once a year, tobroaden their horizons, change their concepts, and improve their quality. It will strengthen the moralconstruction of villages designated for assistance and enrich the spiritual and cultural life of the villagers;persist in carrying out the Bridge Project to help students in the two villages realize their dreams andprevent the intergenerational transmission of poverty.
f. Carrying out paired-up assistance activities. Each member of the Company’s leadership team andeach grassroots Party organization will tie with and assist one household in poverty or prone to poverty,set up a paired-up assistance account, carry out “point-to-point” and “one-to-one” paired-up assistance,and endeavour to provide accurate assistance with obvious achievements.
Section VI Significant Events
1. Undertakings of the Company's actual controller, shareholders,related parties and acquirer, as well as the Company and othercommitment makers fulfilled in the reporting period or ongoing by theend of this reporting period? Applicable √ N/ANo such cases in the reporting period.
2. Occupation of the Company's fund by the controlling shareholder orits related parties for non-operating purposes? Applicable √ N/ANo such cases in the reporting period.
3. Irregularities in the provision of guarantees? Applicable √ N/ANo such cases in the reporting period.
4. Engagement and disengagement of CPAs firmAre the interim financial statements audited?
□ Yes √ No
The interim financial statements are not audited.
5. Explanation of the board of directors and the supervisory committeeregarding the "Non-standard audit opinion" for the reporting period
? Applicable √ N/A
6. Explanations of the board of directors regarding the "Non-standardaudit 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 final trial of the | 14,942.5 | No | The second trial has been concluded, and the case is now at the stage of enforcement. | 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 | The Company applied to Hunan Province Higher People's Court for enforcement of the verdict. Hunan Province Higher People's Court ruled that Hunan Changsha Intermediate | 15 October 2014 | See Section VI “Other significant events” |
| Supreme People's Court. The case is now at the stage of enforcement. | Hongxin Branch and the rest shall be borne by the Company itself. | People’s Court should see to the execution of the verdict. Upon the enforcement, the banks have paid part of the compensations. | |||||
| The Company filed a lawsuit with ICBC Nanyang Zhongzhou Branch over a deposit dispute, and the case is now in the second trial by the Supreme People's Court. | 15,000 | No | The second trial is in process | The second trial is in process and the case is still pending. | The second trial is in process and the case is still pending. | 10 January 2015 | See Section VI “Other significant events” |
Other litigation? Applicable √ N/A
9. Punishments and rectifications
? Applicable √ N/ANo such cases in the reporting period.
10. Credit conditions of the Company as well as its controllingshareholder and actual controller
? Applicable √ N/A
11. Significant related party transactions
11.1. Related party transactions arising from routine operation
? Applicable √ N/ANo such cases in the reporting period.
11.2. Related party transactions regarding purchase or sales of assets or equityinterests? Applicable √ N/ANo such cases in the reporting period.
11.3. Related party transitions arising from joint investments in external parties
? Applicable √ N/ANo such cases in the reporting period.
11.4. Credits and liabilities with related parties
? Applicable √ N/ANo such cases in the reporting period.
11.5. Transactions with related finance companies, or finance companies controlledby the Company
? Applicable √ N/AThe Company did not make deposits in, receive loans or credit from and was not involved in any otherfinance business with any related finance company, finance company controlled by the Company or anyother related parties.
11.6. Other significant related party transactions
? Applicable √ N/ANo such cases in the reporting period.
12. Significant contracts and their execution
12.1. Trusteeship, contracting and leasing
12.1.1. Trusteeship
? Applicable √ N/ANo such cases in the reporting period.
12.1.2. Contracting
? Applicable √ N/ANo such cases in the reporting period.
12.1.3. Leasing
? Applicable √ N/ANo such cases in the reporting period.
12.2. Major guarantees
? Applicable √ N/ANo such cases in the reporting period.
12.3. Entrust assets management
? Applicable √ N/ANo such cases in the reporting period.
12.4. Significant contracts in the ordinary course of business? Applicable √ N/A
12.5. Other significant contracts
? Applicable √ N/ANo such cases in the reporting period.
13. 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. Combined with the assetspreservation situation of the public security authorities and professional legal advice issued by lawyers,the Company has made a provision of CNY 200 million for bad debts for the deposit of CNY 500 million
for contract disputes. In 2020, 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 (cancelled duringthe appeal after the first-instance judgment, with its rights and obligations assumed by ABC ChangshaKaifu Branch). In respect of the losses that couldn’t be recovered through criminal procedures, ABCChangsha Kaifu Branch should bear 40% of the compensation liability, ABC Changsha HongxingBranch 20%, and the remaining losses should be borne by the Company. The Company applied toHunan Province Higher People's Court for enforcement of the verdict. Hunan Province Higher People'sCourt ruled that Hunan Changsha Intermediate People’s Court should see to the execution of the verdict.Upon the enforcement by Hunan Changsha Intermediate People’s Court, ABC Changsha Kaifu Branchand ABC Changsha Hongxing Branch paid part of the respective compensations as required by the civiljudgment. The Company received in July 2021 an amount of CNY 52,812,061.75 from Hunan ChangshaIntermediate People’s Court. Meanwhile, the civil lawsuit of the Company with ICBC NanyangZhongzhou Branch over a deposit dispute is still in the second trial. As of the date of this Report, theCompany had recovered a total amount of CNY 267,767,200 for the three disputes.
See details in the Company’s announcements:
| Date of announcement | No. | Catalogue | Official website |
| 15 October 2014 | 2014-35 | Announcement of significant litigation | http://www.cninfo.com.cn/ |
| 12 November 2014 | 2014-41 | Announcement of significant litigation progress | |
| 6 December 2014 | 2014-43 | Announcement of significant litigation progress part II | |
| 10 January 2015 | 2015-1 | Announcement of significant events | |
| 4 February 2015 | 2015-4 | Announcement of significant events progress | |
| 25 March 2015 | 2015-11 | Announcement of significant litigation progress part III | |
| 18 April 2015 | 2015-20 | Announcement of significant litigation progress part IV | |
| 22 April 2015 | 2015-21 | Announcement of significant events progress part II | |
| 24 April 2015 | 2015-25 | Announcement of significant litigation progress part V | |
| 15 July 2015 | 2015-44 | Announcement of significant litigation progress part VI | |
| 22 July 2015 | 2015-45 | Announcement of significant litigation progress part VII | |
| 6 June 2018 | 2018-17 | Announcement of significant litigation progress part VIII |
| 7 May 2019 | 2019-11 | Announcement of significant litigation progress part IX |
| 17 May 2019 | 2019-13 | Announcement of significant litigation progress part X |
| 24 March 2020 | 2020-6 | Announcement of significant litigation progress part XI |
| 6 May 2020 | 2020-14 | Announcement of significant litigation progress part XII |
| 7 November 2020 | 2020-34 | Announcement of significant litigation progress part XIII |
| 6 July 2021 | 2021-30 | Announcement of significant litigation progress part XIV |
B. Pursuant to the Accounting Standard No. 21 for Business Enterprises—Leases issued by the Ministryof Finance, the Company has adopted the said new accounting standard since 1 January 2021. For theaffected financial statement line items and amounts, see “Section X, 5.37. Changes in significantaccounting policies and accounting estimates”.
14. 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 2021, 100% of the project has been completed.
Section VII Changes in Shares and Information about
Shareholders
1. Changes in shares
1.1 Changes in shares
Unit：Share
| Before | Changes in this period (＋，－) | After | |||||||
| Number | Proportion | Issuance of new shares | Bonus shares | Capitalization of capital reserves | Other | Subtotal | Number | Proportion | |
| I. Restricted shares | 445,921 | 0.03% | 66,000 | 66,000 | 511,921 | 0.03% | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned corporations | |||||||||
| 3. Shares held by other domestic investors | 445,921 | 0.03% | 66,000 | 66,000 | 511,921 | 0.03% | |||
| Of which: shares held by domestic corporations | |||||||||
| Shares held by domestic individuals | 445,921 | 0.03% | 66,000 | 66,000 | 511,921 | 0.03% | |||
| 4. Shares held by foreign corporations | |||||||||
| Of which: shares held by foreign corporations | |||||||||
| Shares held by foreign individuals | |||||||||
| II. Non-restricted shares | 1,464,306,555 | 99.97% | -66,000 | -66,000 | 1,464,240,555 | 99.97% | |||
| 1.CNY common shares | 1,464,306,555 | 99.97% | -66,000 | -66,000 | 1,464,240,555 | 99.97% | |||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| III. Total shares | 1,464,752,476 | 100.00% | 0 | 0 | 1,464,752,476 | 100.00% |
Reasons for the change in shares? Applicable √ N/A
Approval of share changes? Applicable √ N/A
Transfer of share ownership? Applicable √ N/A
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 restricted shares held at the beginning of the reporting period | Decrease in restricted shares during the reporting period | Increase in restricted shares during the reporting period | Number of restricted shares held at the end of the reporting period | Reason for restriction | Date of unlocking |
| Yang Benhong | 7,500 | 0 | 2,500 | 10,000 | Locked-up shares due to termination of | 2021.12.29 |
| employment | ||||||
| Jiang Yuhui | 190,500 | 0 | 63,500 | 254,000 | Locked-up shares due to termination of employment | 2021.12.29 |
| Total | 198,000 | 0 | 66,000 | 264,000 | -- | -- |
2. Issuance and listing of securities
? Applicable √ N/A
3. Total number of shareholders and their shareholdings
Unit：Share
| Total number of common shareholders at the end of the reporting period | 218,549 | Total number of preferred 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, marked or frozen shares | |||
| Status of shares | Number of shares | |||||||||
| Luzhou Laojiao Group Co., Ltd. | State-owned corporation | 26.02% | 381,088,389 | 0 | 0 | 381,088,389 | ||||
| Luzhou XingLu Investment Group Co., Ltd. | State-owned corporation | 24.99% | 365,971,142 | 0 | 0 | 365,971,142 | ||||
| Bank of China Co., Ltd. –Baijiu index classification securities investment fund by China Merchants Fund | Other | 2.61% | 38,169,467 | 8,332,482 | 0 | 38,169,467 | ||||
| Bank of China Co., Ltd- | Other | 2.53% | 37,000,115 | 9,300,115 | 0 | 37,000,115 | ||||
| Blue Chip Selected hybrid securities investment fund by E fund | ||||||||
| China Securities Finance Corporation limited | Other | 2.31% | 33,842,059 | 0 | 0 | 33,842,059 | ||
| Hong Kong Securities Clearing Company Limited | Foreign corporation | 2.08% | 30,404,272 | -2,497,390 | 0 | 30,404,272 | ||
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | Other | 1.60% | 23,499,891 | 8,421,980 | 0 | 23,499,891 | ||
| Central Huijin Asset Management Co., Ltd. | State-owned corporation | 1.43% | 20,937,500 | 0 | 0 | 20,937,500 | ||
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E fund | Other | 0.88% | 12,868,345 | -1,118,482 | 0 | 12,868,345 | ||
| China Life Insurance Company Ltd.-Tradition-General Insurance Product-005L-CT001Shen | Other | 0.76% | 11,061,841 | - | 0 | 11,061,841 | ||
| Strategic investors or general corporations become the top-ten common shareholders due to placing of new shares（if any）（see note 3） | N/A | |||||||
| Related parties or acting-in-concert | 1. Luzhou Laojiao Group Co., Ltd. and Luzhou XingLu Investment Group Co., Ltd. are both holding state-owned companies under the jurisdiction of SASAC of Luzhou. The two companies signed the agreement of persons acting in concert on 31 December 2015. For details, please refer to the announcement of the Company on 5 January 2016 - Announcement on the agreement of persons acting in concert signed by shareholders. The announcement number is 2016-1 (http://www.cninfo.com.cn/). The two companies signed the renewed agreement of persons acting in concert on 27 May 2021. For details, please refer to the announcement of the Company on 27 May 2021 - Announcement on the renewed agreement of persons acting in concert signed by shareholders. | |||||||
| The announcement number is 2021-18 (http://www.cninfo.com.cn/). 2. In addition, whether there is an association between the remaining shareholders or they belong to persons acting in concert is unknown. | |||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | N/A | ||
| Special account for repurchased shares among the top 10 shareholders (if any) (see note 11) | N/A | ||
| Shareholdings of the top 10 non-restricted common shareholders | |||
| Name of shareholder | Number of non-restricted common shares held by the end of the reporting period | Type of shares | |
| Type | Number | ||
| Luzhou Laojiao Group Co., Ltd. | 381,088,389 | CNY common shares | 381,088,389 |
| Luzhou XingLu Investment Group Co., Ltd. | 365,971,142 | CNY common shares | 365,971,142 |
| Bank of China Co., Ltd. –Baijiu index classification securities investment fund by China Merchants Fund | 38,169,467 | CNY common shares | 38,169,467 |
| Bank of China Co., Ltd- Blue Chip Selected hybrid securities investment fund by E fund | 37,000,115 | CNY common shares | 37,000,115 |
| China Securities Finance Corporation limited | 33,842,059 | CNY common shares | 33,842,059 |
| Hong Kong Securities Clearing Company Limited | 30,404,272 | CNY common shares | 30,404,272 |
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | 23,499,891 | CNY common shares | 23,499,891 |
| Central Huijin Asset Management Co., Ltd. | 20,937,500 | CNY common shares | 20,937,500 |
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E fund | 12,868,345 | CNY common shares | 12,868,345 |
| China Life Insurance Company Ltd.-Tradition-General Insurance Product-005L-CT001Shen | 11,061,841 | CNY common shares | 11,061,841 |
| The statement of association or | See the table above | ||
| 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 | |
| Top 10 common shareholders participating in securities margin trading (if any) (see note 4) | N/A |
Did any of the top 10 common shareholders or the top non-restricted common shareholders of theCompany conduct any promissory repurchase during the reporting period.? Yes √ NoThe top 10 non-restricted common shareholders, the top10 common shareholders did not conduct anypromissory repurchase during the reporting period.
4. Changes in shares held by directors, supervisors, and seniormanagement
? Applicable √ N/ANo changes occurred to shares held by directors, supervisors and senior management in the reportingperiod. See the 2020 Annual Report for more details.
5. Change of controlling shareholder or actual controllerChange 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 VIII Preferred Shares
? Applicable √ N/ANo preferred stock in the Company during the reporting period.
Section IX Information about Bond
√ Applicable ? N/A
1. Enterprise bonds
? Applicable √ N/ANo such cases in the reporting period.
2. Corporate bonds
√ Applicable ? N/A
2.1. Basic information about the corporate bond
| Name | Abbr. | Code | Issue date | Value date | Due date | Bond balance | Interest rate | Way of redemption | Place of trading |
| 2019 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 19 Lao Jiao 01 | 112959.SZ | 27 August 2019 | 28 August 2019 | 28 August 2024 | 2,500,000,000.00 | 3.58% | In terms of the bonds of this phase, interests will be paid by year and the principal will be repaid in lump sum at maturity. The interests will be paid once every year and | Shenzhen Stock Exchange |
| 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 2020 | 17 March 2025 | 1,500,000,000.00 | 3.50% | In terms of the bonds of this phase, interests will be paid by year and the principal will be repaid in lump sum at maturity. The interests will be paid once every year and the interests for the last installment will be paid together with the principal. | Shenzhen Stock Exchange |
| Appropriate arrangement of the investors (if any) | The bonds are applicable to eligible investors who have qualified securities accounts with Shenzhen Branch of China Securities Depository and Clearing Co., Ltd., are permitted to engage in the subscription and transfer of corporate bonds in accordance with the Management Measures for the Issue and Transaction Management of Corporate Bonds, Management Measures for the Suitability of Securities and Futures Investors, Management Measures of Shenzhen Stock Exchange for the Suitability of Securities Market Investors, and relevant laws and regulations, and have the corresponding risk identification and bearing capacity (excluding those prohibited by laws and regulations) | ||||||||
| Trading systems applicable | Tradable by way of bidding, offering, inquiry and agreement |
| Risk of termination of listing and trading (if any) and countermeasures | N/A |
Overdue bonds? Applicable √ N/A
2.2. Triggering and execution of issuer or investor option clauses and investorprotection clauses
√ Applicable ? N/A
The term of “19 Lao Jiao 01” is five years with the issuer’s option for adjustment to the stated interestrate and the investor’s option for sell back at the end of the 3
rd
year. The said clause was not triggered inthe reporting period.
2.3. Changes in credit ratings in the reporting period
? Applicable √ N/A
2.4. Execution and changes with respect to guarantees, repayment plans and otherrepayment-ensuring measures in the reporting period, as well as the impact on theinterests of bond holders
√ Applicable ? N/A
In order to fully and effectively safeguard the interests of bondholders, the issuer has formulated a seriesof work plans for the timely and full redemption of "19 Lao Jiao 01" and "20 Lao Jiao 01", includingassigning special departments and personnel to participate in the management, arranging debtrepayment funds, formulating management measures, hiring supervising banks and signing tripartitesupervision agreements with supervising banks and bond trustees, strengthening information disclosure,and developed a set of safeguard measures to ensure the safe redemption of the bonds. During thereporting period, the above status remained unchanged.
3. Debt instruments as a non-financial enterprise
? Applicable √ N/ANo such cases in the reporting period.
4. Convertible corporate bonds
? Applicable √ N/ANo such cases in the reporting period.
5. Consolidated loss of the reporting period over 10% of net assets as atthe end of last year? Applicable √ N/A
6. The major accounting data and the financial indicators of the recent 2years of the company as of the end of the reporting period
Unit：CNY 10,000
| Item | 30 June 2021 | 31 December 2020 | Change |
| Current ratio | 247.72% | 256.72% | -9.00% |
| Debt/asset ratio | 34.78% | 33.78% | 1.00% |
| Quick ratio | 178.56% | 195.15% | -16.59% |
| H1 2021 | H1 2020 | Change | |
| Net profits before non-recurring gains and losses | 420,865.01 | 323,395.18 | 30.14% |
| Debt/EBITDA ratio | 145.46% | 111.71% | 33.75% |
| Interest cover (times) | 57.98 | 43.78 | 32.43% |
| EBITDA-to-interest cover (times) | 60.65 | 45.05 | 34.63% |
Section X 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: CNY
Prepared by: Luzhou Laojiao Co., Ltd.
Consolidated balance sheet
As at 30 June 2021
Monetary Unit: CNY
| Item | Balance as at 30 June 2021 | Balance as at 31 December 2020 |
| Current assets: | ||
| Cash and cash equivalents | 13,611,381,648.55 | 11,624,870,340.60 |
| Settlement reserves | ||
| Lending funds | ||
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 6,711,515.89 | 1,507,852.43 |
| Accounts receivables financing | 2,143,072,245.18 | 3,209,371,766.35 |
| Prepayment | 126,208,497.06 | 74,685,537.38 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve | ||
| Other receivables | 148,937,967.02 | 127,032,931.42 |
| Including：Interests receivable |
| Dividends receivable | 36,941,917.50 | 1,407,900.00 |
| Buying back the sale of financial assets | ||
| Inventories | 5,916,574,963.71 | 4,695,663,431.25 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 118,794,070.33 | 156,565,424.18 |
| Total current assets | 22,071,680,907.74 | 19,889,697,283.61 |
| Non-current assets: | ||
| Disbursement of loans and advances | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 2,555,473,912.21 | 2,477,667,171.27 |
| Investments in other equity instruments | 357,285,465.89 | 347,160,399.42 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 7,880,413,111.37 | 6,887,108,174.72 |
| Construction in progress | 1,290,824,691.35 | 2,012,129,880.15 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 55,525,013.10 | |
| Intangible assets | 2,630,461,298.22 | 2,657,118,025.37 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 1,884,885.71 | 2,305,902.21 |
| Deferred tax assets | 648,575,066.22 | 725,210,660.84 |
| Other non-current assets | 11,956,325.86 | 10,806,325.86 |
| Total non-current assets | 15,432,399,769.93 | 15,119,506,539.84 |
| Total assets | 37,504,080,677.67 | 35,009,203,823.45 |
| Current liabilities: |
| Short-term loans | ||
| Borrowings from the central bank | ||
| Loans from other banks | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 121,285,117.60 | |
| Accounts payable | 2,372,271,735.03 | 2,604,289,199.77 |
| Advance from customer | ||
| Contract liabilities | 1,408,069,576.54 | 1,678,837,166.94 |
| Financial assets sold for repurchase | ||
| Deposits from customers and inter-bank | ||
| Customer brokerage deposits | ||
| Securities underwriting brokerage deposits | ||
| Employee benefits payable | 443,558,179.03 | 505,022,627.19 |
| Taxes payable | 835,352,598.25 | 2,046,027,211.13 |
| Other payable | 3,566,879,442.88 | 501,623,924.54 |
| Including：Interests payable | ||
| Dividends payable | 3,004,207,328.28 | |
| Handling charges and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 100,836,563.54 | 72,219,178.08 |
| Other current liabilities | 183,049,063.92 | 218,267,353.36 |
| Total current liabilities | 8,910,017,159.19 | 7,747,571,778.61 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term loans | ||
| Bonds payable | 3,989,418,783.85 | 3,987,872,100.02 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 46,474,941.96 |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | 34,538,157.14 | 29,739,000.00 |
| Deferred tax liabilities | 64,682,337.72 | 62,151,071.11 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,135,114,220.67 | 4,079,762,171.13 |
| Total liabilities | 13,045,131,379.86 | 11,827,333,949.74 |
| Owners' equity | ||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 3,722,777,063.13 | 3,722,777,063.13 |
| Less: treasury stock | ||
| Other comprehensive income | 196,201,599.18 | 186,063,325.03 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| General risk reserve | ||
| Undistributed profits | 17,458,622,606.40 | 16,236,513,212.43 |
| Total equity attributable to owners of the parent company | 24,307,106,220.71 | 23,074,858,552.59 |
| Non-controlling interests | 151,843,077.10 | 107,011,321.12 |
| Total owners' equity | 24,458,949,297.81 | 23,181,869,873.71 |
| Total liabilities and owners' equity | 37,504,080,677.67 | 35,009,203,823.45 |
Legal representative：Liu MiaoPerson in charge of accounting affairs：Xie HongPerson in charge of accounting department：Yan Li
Balance sheet of parent company
As at 30 June 2021
Monetary Unit: CNY
| Item | Balance as at 30 June 2021 | Balance as at 31 December 2020 |
| Current assets: | ||
| Cash and cash equivalents | 13,261,169,639.69 | 11,100,327,211.33 |
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 732,303.55 | 3,927.50 |
| Accounts receivables financing | ||
| Prepayment | 3,196,006.89 | 1,431,698.57 |
| Other receivables | 9,348,970,969.57 | 7,052,749,694.83 |
| Including：Interests receivable | ||
| Dividends receivable | 36,941,917.50 | 1,407,900.00 |
| Inventories | 4,006,394.24 | 850,076.30 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 78,509.44 | |
| Total current assets | 22,618,075,313.94 | 18,155,441,117.97 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 5,962,576,727.02 | 5,884,091,712.47 |
| Investments in other equity instruments | 356,956,544.26 | 346,831,477.79 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 739,885,278.90 | 640,254,574.76 |
| Construction in progress | 395,522,642.60 | 550,932,404.00 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 596,511.48 | |
| Intangible assets | 677,384,385.92 | 684,010,106.13 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 1,772,735.77 | 2,180,811.89 |
| Deferred tax assets | 92,425,486.57 | 89,484,552.65 |
| Other non-current assets | 1,526,325.86 | 1,526,325.86 |
| Total non-current assets | 8,228,646,638.38 | 8,199,311,965.55 |
| Total assets | 30,846,721,952.32 | 26,354,753,083.52 |
| Current liabilities: | ||
| Short-term loans | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 73,801,792.24 | 80,663,835.54 |
| Advance from customer | ||
| Contract liabilities | 2,097,869.96 | 753,349.81 |
| Employee benefits payable | 159,720,010.34 | 168,254,646.38 |
| Taxes payable | 76,017,337.61 | 153,437,992.21 |
| Other payables | 7,714,236,210.92 | 699,733,563.56 |
| Including：Interests payable | ||
| Dividends payable | 3,004,207,328.28 | |
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 90,453,180.82 | 72,219,178.08 |
| Other current liabilities | 272,723.09 | 116,457.13 |
| Total current liabilities | 8,116,599,124.98 | 1,175,179,022.71 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | 3,989,418,783.85 | 3,987,872,100.02 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 138,854.29 | |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | 952,000.00 | 1,904,000.00 |
| Deferred tax liabilities | 64,682,337.72 | 62,151,071.11 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,055,191,975.86 | 4,051,927,171.13 |
| Total liabilities | 12,171,791,100.84 | 5,227,106,193.84 |
| Owners' equity | ||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 3,706,816,950.12 | 3,706,816,950.12 |
| Less: treasury stock | ||
| Other comprehensive income | 196,669,790.26 | 185,441,302.55 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| Undistributed profits | 11,841,939,159.10 | 14,305,883,685.01 |
| Total owners' equity | 18,674,930,851.48 | 21,127,646,889.68 |
| Total liabilities and owners' equity | 30,846,721,952.32 | 26,354,753,083.52 |
Consolidated income statement
Monetary Unit: CNY
| Item | H1 2021 | H1 2020 |
| 1. Total operating revenue | 9,317,097,027.05 | 7,634,482,901.87 |
| Including: Operating revenue | 9,317,097,027.05 | 7,634,482,901.87 |
| Interest income | ||
| Earned premium | ||
| Fee and commission income | ||
| 2. Total operating costs | 3,859,318,360.86 | 3,461,876,189.00 |
| Including: Cost of sales | 1,335,154,943.46 | 1,386,636,428.85 |
| 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 | 992,673,552.12 | 679,513,830.82 |
| Selling and distribution expenses | 1,183,247,931.92 | 1,111,958,208.98 |
| General and administrative expenses | 439,561,779.70 | 360,013,975.76 |
| Research and Development expenses | 36,688,121.08 | 32,028,581.28 |
| Financial expenses | -128,007,967.42 | -108,274,836.69 |
| Including：Interest expenses | 75,787,443.01 | 66,532,174.99 |
| Interest income | 206,402,358.25 | 173,389,442.03 |
| Plus: Other income | 9,041,045.01 | 10,441,675.27 |
| Investment income ("-" for losses) | 128,006,644.21 | 104,338,756.40 |
| Including: income from investment in associates and joint ventures | 121,343,983.69 | 94,958,932.04 |
| 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) | -218,830.33 | -401,066.70 |
| Impairment losses(“-“ for losses) | ||
| Gains from disposal of assets("-" for losses) | 180,849.31 | 104,663.83 |
| 3. Operating profits ("-" for losses) | 5,594,788,374.39 | 4,287,090,741.67 |
| Plus: non-operating income | 25,711,304.83 | 10,944,441.71 |
| Less: non-operating expenses | 8,283,409.08 | 39,217,386.08 |
| 4. Total profits before tax ("-" for total losses) | 5,612,216,270.14 | 4,258,817,797.30 |
| Less: income tax expenses | 1,346,062,434.86 | 1,034,276,363.11 |
| 5. Net profit ("-" for net loss) | 4,266,153,835.28 | 3,224,541,434.19 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operation ("-" for losses) | 4,266,153,835.28 | 3,224,541,434.19 |
| 5.1.2 Net profit from discontinued operation ("-" for losses) | ||
| 5.2 By ownership | ||
| 1) Attributable to owners of the parent company | 4,226,316,722.25 | 3,220,452,190.27 |
| 2) Attributable to non-controlling interests | 39,837,113.03 | 4,089,243.92 |
| 6. Net of tax from other comprehensive income | 9,246,453.08 | -3,007,407.03 |
| Net of tax from other comprehensive income to the owner of the parent company | 10,138,274.15 | 1,852,598.19 |
| 6.1 Other comprehensive income cannot reclassified into the profit and loss: | 7,593,799.86 | 1,553,518.16 |
| 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 | 7,593,799.86 | 1,553,518.16 |
| 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 | 2,544,474.29 | 299,080.03 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | 3,634,687.85 | 6,242,935.68 |
| 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 | -1,090,213.56 | -5,943,855.65 |
| 7) Others | ||
| Net of tax from other comprehensive income to non-controlling interests | -891,821.07 | -4,860,005.22 |
| 7. Total comprehensive income | 4,275,400,288.36 | 3,221,534,027.16 |
| Total comprehensive income attributable to owners of the parent company | 4,236,454,996.40 | 3,222,304,788.46 |
| Total comprehensive income attributable to non-controlling interests | 38,945,291.96 | -770,761.30 |
| 8. Earnings per share | ||
| (1) Basic earnings per share | 2.89 | 2.20 |
| (2) Diluted earnings per share | 2.89 | 2.20 |
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 2021 | H1 2020 |
| 1. Operating revenue | 2,677,491,673.30 | 1,502,921,693.39 |
| Less: Cost of sales | 1,928,926,973.89 | 1,040,786,248.30 |
| Taxes and surcharges | 21,482,412.01 | 15,549,764.92 |
| Selling and distribution expenses | ||
| General and administrative expenses | 337,596,961.15 | 274,620,160.19 |
| Research and Development expenses | 11,217,192.99 | 9,011,286.24 |
| Financial expenses | -174,298,477.59 | -131,445,866.38 |
| Including：Interest expenses | 30,742,980.11 | 33,323,418.69 |
| Interest income | 205,130,761.41 | 164,861,694.13 |
| Plus: Other income | 4,047,195.83 | 6,812,036.02 |
| Investment income ("-" for losses) | 111,792,244.20 | 104,338,756.40 |
| Including: income from investment in associates and joint ventures | 105,134,583.68 | 94,958,932.04 |
| 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) | -228,556.69 | -44,132.47 |
| Asset impairment losses (“-” for losses) | ||
| Gains from disposal of assets("-" for losses) | 180,849.31 | 104,663.83 |
| 2. Operating profits ("-" for losses) | 668,358,343.50 | 405,611,423.90 |
| Plus: non-operating income | 16,653,311.55 | 8,883,565.15 |
| Less: non-operating expenses | 4,338,960.68 | 24,377,133.78 |
| 3. Total profits before tax ("-" for total losses) | 680,672,694.37 | 390,117,855.27 |
| Less: income tax expenses | 140,409,892.00 | 70,055,746.59 |
| 4. Net profit ("-" for net loss) | 540,262,802.37 | 320,062,108.68 |
| 4.1 Net profit from continuing | 540,262,802.37 | 320,062,108.68 |
| operation ("-" for losses) | ||
| 4.2 Net profit from discontinued operation ("-" for losses) | ||
| 5. Net of tax from other comprehensive income | 11,228,487.71 | 7,796,453.84 |
| 5.1 Other comprehensive income cannot reclassified into the profit and loss: | 7,593,799.86 | 1,553,518.16 |
| 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 | 7,593,799.86 | 1,553,518.16 |
| 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 | 3,634,687.85 | 6,242,935.68 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | 3,634,687.85 | 6,242,935.68 |
| 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 | 551,491,290.08 | 327,858,562.52 |
| 7. Earnings per share | ||
| (1) Basic earnings per share | 0.37 | 0.22 |
| (2) Diluted earnings per share | 0.37 | 0.22 |
Consolidated statement of cash flows
Monetary Unit: CNY
| Item | H1 2021 | H1 2020 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 10,852,935,107.83 | 6,282,235,240.80 |
| 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 | 743,477.96 | 3,846,942.76 |
| Cash received from other operating activities | 496,103,267.09 | 218,878,679.44 |
| Subtotal of cash inflows from operating activities | 11,349,781,852.88 | 6,504,960,863.00 |
| Cash paid for goods purchased and services received | 2,612,739,333.51 | 1,510,115,362.00 |
| 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 | 609,928,620.07 | 433,219,103.00 |
| Cash paid for taxes and surcharges | 4,320,563,608.28 | 2,718,765,468.22 |
| Cash paid for other operating activities | 1,068,313,251.12 | 1,114,045,507.54 |
| Subtotal of cash outflows from operating activities | 8,611,544,812.98 | 5,776,145,440.76 |
| Net cash flows from operating activities | 2,738,237,039.90 | 728,815,422.24 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | ||
| Cash received from returns on investments | 1,412,900.00 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 275,836.47 | 566,471.43 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities |
| Subtotal of cash inflows from investing activities | 1,688,736.47 | 566,471.43 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 733,873,065.01 | 1,050,741,288.78 |
| 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 | 733,873,065.01 | 1,050,741,288.78 |
| Net cash flows from investing activities | -732,184,328.54 | -1,050,174,817.35 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 5,886,464.02 | 5,621,368.05 |
| Including: cash received by subsidiaries from investments by minority shareholders | 5,886,464.02 | 5,621,368.05 |
| Cash received from borrowings | 1,494,000,000.00 | |
| Cash received from other financing activities | ||
| Subtotal of cash inflows from financing activities | 5,886,464.02 | 1,499,621,368.05 |
| Cash paid for debt repayments | ||
| Cash paid for distribution of dividends and profits or payment of interest | 52,502,625.00 | |
| Including: dividends and profits paid to minority shareholders by subsidiaries | ||
| Cash paid for other financing activities | 1,844,313.68 | 180,000.00 |
| Subtotal of cash outflows from financing activities | 54,346,938.68 | 180,000.00 |
| Net cash flows from financing activities | -48,460,474.66 | 1,499,441,368.05 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | -1,432,790.86 | 2,001,151.74 |
| 5. Net increase in cash and cash equivalents | 1,956,159,445.84 | 1,180,083,124.68 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 11,568,195,062.81 | 9,752,266,526.78 |
| 6. Balance of cash and cash equivalents at the end of the period | 13,524,354,508.65 | 10,932,349,651.46 |
Cash flow statements of parent company
Monetary Unit: CNY
| Item | H1 2021 | H1 2020 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 3,026,181,734.93 | 1,704,864,696.11 |
| Refunds of taxes and surcharges | ||
| Cash received from other operating activities | 2,396,719,536.21 | 190,974,553.30 |
| Subtotal of cash inflows from operating activities | 5,422,901,271.14 | 1,895,839,249.41 |
| Cash paid for goods purchased and services received | 2,191,470,150.06 | 358,716,633.54 |
| Cash paid to and on behalf of employees | 562,431,917.32 | 407,927,258.16 |
| Cash paid for taxes and surcharges | 350,499,714.09 | 150,445,400.43 |
| Cash paid for other operating activities | 95,820,090.04 | 1,375,167,996.43 |
| Subtotal of cash outflows from operating activities | 3,200,221,871.51 | 2,292,257,288.56 |
| Net cash flows from operating | 2,222,679,399.63 | -396,418,039.15 |
| activities | ||
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | ||
| Cash received from returns on investments | 1,407,900.00 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 275,836.47 | 566,471.43 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 1,683,736.47 | 566,471.43 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 41,220,364.85 | 90,227,143.76 |
| Cash paid for investments | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 41,220,364.85 | 90,227,143.76 |
| Net cash flows from investing activities | -39,536,628.38 | -89,660,672.33 |
| 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 | 52,502,625.00 | |
| Cash paid for other financing activities | 149,580.00 | 180,000.00 |
| Subtotal of cash outflows from financing activities | 52,652,205.00 | 180,000.00 |
| Net cash flows from financing activities | -52,652,205.00 | 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 | 2,130,490,566.25 | 1,007,741,288.52 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 11,045,051,933.54 | 8,872,692,385.79 |
| 6. Balance of cash and cash equivalents at the end of the period | 13,175,542,499.79 | 9,880,433,674.31 |
Consolidated statement of changes in owners' equity
For the six months ended 30 June 2021
Monetary Unit: CNY
| Item | H1 2021 | ||||||||||||||
| Equity attributable to owners of the parent company | Non-controlling interests | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 | |||||||
| Plus: adjustments for changes in | |||||||||||||||
| accounting policies | |||||||||||||||
| Adjustments for correction of accounting errors in prior year | |||||||||||||||
| Business combinations under common control | |||||||||||||||
| Others | |||||||||||||||
| 2. Balance as at 1 January of the current year | 1,464,752,476.00 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 | |||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 10,138,274.15 | 1,222,109,393.97 | 1,232,247,668.12 | 44,831,755.98 | 1,277,079,424.10 | ||||||||||
| (1) Total comprehensive income | 10,138,274.15 | 4,226,316,722.25 | 4,236,454,996.40 | 38,945,291.96 | 4,275,400,288.36 | ||||||||||
| (2) Capital contributed or reduced by owners | 5,886,464.02 | 5,886,464.02 | |||||||||||||
| Capital contributions by owners | 5,886,464.02 | 5,886,464.02 | |||||||||||||
| Capital contributions by other equity instruments holders | |||||||||||||||
| Amounts of share-based payments recognized in owners' equity |
| Others | |||||||||||||||
| (3) Profit distribution | -3,004,207,328.28 | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||||
| Withdrawal of surplus reserves | |||||||||||||||
| Withdrawal of general risk reserve | |||||||||||||||
| Profit distributed to owners (or shareholders) | -3,004,207,328.28 | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||||
| 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 | 196,201,599.18 | 1,464,752,476.00 | 17,458,622,606.40 | 24,307,106,220.71 | 151,843,077.10 | 24,458,949,297.81 |
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 |
Statement of changes in owners' equity of parent company
For the six months ended 30 June 2021
Monetary Unit: CNY
| Item | H1 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equity | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,706,816,950.12 | 185,441,302.55 | 1,464,752,476.00 | 14,305,883,685.01 | 21,127,646,889.68 | ||||||
| Plus: adjustments for changes in accounting policies | ||||||||||||
| Adjustments for correction of accounting errors in prior year | ||||||||||||
| Others | ||||||||||||
| 2. Balance as at January 1 | 1,464,752,47 | 3,706,816,950. | 185,441,302.55 | 1,464,752,476. | 14,305,883,6 | 21,127,646,889.68 | ||||||
| of the current year | 6.00 | 12 | 00 | 85.01 | ||||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 11,228,487.71 | -2,463,944,525.91 | -2,452,716,038.20 | |||||||||
| (1) Other comprehensive income | 11,228,487.71 | 540,262,802.37 | 551,491,290.08 | |||||||||
| (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 | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||
| Withdrawal of surplus reserves | ||||||||||||
| Profit distributed to owners (or shareholders) | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||
| 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 | 196,669,790.26 | 1,464,752,476.00 | 11,841,939,159.10 | 18,674,930,851.48 |
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 |
3. Company Profile
3.1 Company Overview
Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Company" or "the Company"), formerly known asLuzhou Laojiao Brewery, was established in March 1950. On 20 September 1993, Luzhou Laojiaobrewery established a joint-stock limited company with fund-raising exclusively from its operationalassets. On 25 October 1993, the public offering of shares was approved by Sichuan Provincial People'sGovernment and CSRC with two documents of ChuanFuHan (1993) No.673 and FaShenZi (1993)No.108. After the offering, the total share capital was 86,880,000 shares, which were listed and traded inShenzhen stock exchange on 9 May 1994.
As the end of 31 December 2004, the Company's total share capital reached 841,399,673 shares aftermultiple rights issues, among which the controlling shareholder, State Assets Management Bureau ofLuzhou (later renamed as State-owned Assets Supervision and Administration Commission of Luzhou,hereinafter referred to as "SASAC of Luzhou") held 585,280,800 shares of the Company, with a
shareholding ratio of 69.56%.
On 27 October 2005, the Company implemented the non-tradable share reform. After theimplementation, the total share capital remained unchanged, and the shareholding ratio of SASAC ofLuzhou decreased from 69.56% to 60.43%.
In November 2006, the Company implemented private placement, and the total share capital increasedfrom 841,399,673 shares to 871,399,673 shares. The shareholding ratio of SASAC of Luzhou decreasedfrom 60.43% to 58.35%.
As the end of 27 February 2007, SASAC of Luzhou sold 42,069,983 shares of the Company, and afterthe sale, it still held 466,375,156 shares of the Company, with its shareholding ratio reduced to 53.52%.On 19 May 2008, the Company increased 522,839,803 shares of capital stock resulting from capitalreserve and undistributed profits transferred to increase capital stock. After the implementation, the totalshare capital reached 1,394,239,476 shares, among which, SASAC of Luzhou held 746,200,250 sharesof the Company, and the shareholding ratio was still 53.52%.
On 3 September 2009, the 300,000,000 shares and the 280,000,000 shares held by SASAC of Luzhouwere separately transferred to Luzhou Laojiao Group Co., Ltd. (hereinafter referred to as the "LaojiaoGroup") and Luzhou XingLu Investment Group Co., Ltd. (hereinafter referred to as the "Xinglu Group").After the transfer, Laojiao Group, Xinglu Group, and SASAC of Luzhou respectively held 300,000,000shares, 280,000,000 shares and 166,200,250 shares. So far, Laojiao Group became the first majorityshareholder and SASAC of Luzhou was the actual controller.
From 6 June 2012 to 20 November 2013, the first and second phases of the Company's equity incentiveplan were exercised. After the exercise, the total share capital of the Company was changed to1,402,252,476 shares.
On 10 April 2014 and 18 July 2016, SASAC of Luzhou transferred 81,088,300 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 address
Registered address and headquarter address of the Company are located in Sichuan Luzhou LaojiaoSquare and company type is other incorporated company (Listed).
3.3 Business nature of the Company and main business activityIndustry of the Company is the baijiu subdivision industry of liquor and wine, beverage and refined teamanufacturing industry.The main activity are research and development, production and sales of “National Cellar 1573”,”LuzhouLaojiao” and other baijiu series.The main products are: “National Cellar 1573 Series” and ”Luzhou Laojiao Series”.
3.4 The name of the controlling shareholder and the ultimate substantive controllerThe controlling shareholder is Luzhou Laojiao Group Co., Ltd.; the ultimate substantive control isSASAC of Luzhou.
3.5 Approval and submission of the financial report and its dateThe financial report is approved and submitted by the board of directors of the Company on 26 August2021.
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 New Retail Co., Ltd. | New retail 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. | North America company | 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. Note 3 | Panda Whitail | 60.00 | 60.00 | |
| 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. The Company has actual control over Custom liquor company,so it is included in the scope of consolidation.Note 2: Although the Company holds less than 51% of the equity of Fruit wine industry, among the five members of theboard of directors, the Company has sent three people, and the chairman of the board (legal representative) is the directorsent by the Company. The Company has actual control over Fruit wine industry, so it is included in the scope ofconsolidation.Note 3: Although the Company holds less than 51% of the equity of Whitail liquor industry 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 “8.1. Interestsin subsidiaries”
(2) Subsidiaries that are newly incorporated into the scope of consolidation in this period
| Name of subsidiary | Reason |
| Luzhou Laojiao New Retail Co., Ltd. | Incorporated through investment |
(3) Liquidation and cancellation for subsidiaries in this period
| Name of subsidiary | Reason |
| Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co., Ltd. | Liquidation cancellation |
Details of changes in the scope of consolidation show on “8. Changes in consolidated scope”.
4. Basis of preparation of financial statements
4.1. Basis of preparation of financial statements
The Company has prepared its financial statements on a going concern basis, and the preparation isbased on actual transactions and events in compliance with Accounting Standards for BusinessEnterprises and relevant guidance and explanation (the following called the ASBE) issued by Ministry ofFinance, and Rules on Company Information Disclosure and Preparation of Publicly Issued SecuritiesNo.15- General Rules on Financial Reporting Rules (2014 Revision) issued by CSRC.
4.2. Going concern
The Company’s business activities have adequate financial support. Based on the current informationobtained by the Company, comprehensively considering factors such as macro-policy risk, marketoperation risk, current or long-term profitability, debt repayment ability of the Company, as well as itsresource of financial support, the Company believes that it is reasonable to prepare the financialstatements on a going concern basis and there are no events or situations resulting in significant doubtsover going concern for at least 12 months.
5. Significant accounting policies and accounting estimatesThe Company shall comply with the disclosure requirements of the Guidelines No. 14 of the ShenzhenStock Exchange on Industry Information Disclosure—Listed Companies Engaging in Business Relatedto Food & Liquor and Wine Production.
5.1 The declaration about compliance with ASBE
The financial statements of the Company have been prepared in accordance with ASBE, and presenttruly and completely, the financial position and the Company’s and results of operations, changes inshareholders’ equity and cash flows. In addition, in all material respects, the financial statements of theCompany comply with disclosure requirements of the financial statements and their notes in accordancewith Rules on Company Information Disclosure and Preparation of Publicly Issued Securities No.15-General Rules on Financial Reporting Rules revised by CSRC in 2014.
5.2 Accounting period
The Company adopts the calendar year as its accounting year, i.e. from 1st January to 31st December.
5.3 Business Cycle
The Company’s business cycle is 12 months.
5.4 Functional currency
The Company has adopted China Yuan (CNY) as functional currency.
5.5 The accounting treatment of business combinations involving enterprises undercommon control and business combinations not involving enterprises undercommon control
(1) Business combination under common control
Assets and liabilities obtained by the Company from the combine through business combination undercommon control shall be measured at the book value as stated in the consolidated financial statementsof ultimate controlling party at the combination date. The share of the book value of the merged party’sowner’s equity in the consolidated financial statements is taken as the initial investment cost of long-termequity investments in individual financial statements. The capital reserve (stock premium or capitalpremium) is adjusted according to the difference between the book value of net asset acquired throughcombination and the book value of consideration paid for the combination (or total par value of sharesissued). If the capital reserve (stock premium or capital premium) is insufficient to offset, the retainedearnings shall be adjusted.
(2) Business combination not under common control
Assets paid, liabilities incurred or assumed and the equity securities issued as consideration forcombination shall be measured based on fair value on the acquisition date, the difference between fairvalue and its book value shall be included in current profit and loss. The Company shall recognize thedifference of the combination costs in excess of the fair value of the net identifiable asset acquired fromthe acquiree through combination as goodwill. After the review, if the combination costs are still in shortof the fair value of the net identifiable asset acquired from the acquiree through combination, include thedifference in the current profit and loss.Fees, commissions, and other transaction expenses paid on issuance of equity securities ascombination consideration in the business combination shall be included in the initial measurementamount of equity securities.
5.6 Preparation of consolidated financial statements
(1) Consolidated Financial Statement Scope
The scope of the Company’s consolidated financial statements is based on control, and all subsidiariescontrolled are included in the consolidation scope of the consolidated financial statements.
(2) Consolidation procedures
The consolidated financial statements are based on the financial statements of the Company and itssubsidiaries, and are prepared by the parent company with other relevant information. When 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. Forsubsidiaries acquired from the business combination not under common control, the financial statementsshall be adjusted on the basis of the fair value of identifiable net assets on the date of purchase. For thesubsidiary acquired from the business combination under common control, its assets and liabilities(including the goodwill formed by the acquisition of the subsidiary by the ultimate controlling party) shallbe adjusted on the basis of the book value in the consolidated statements of the ultimate controllingparty.
The portion of a subsidiary’s equity, the current net profit and loss of subsidiaries, and the currentcomprehensive income attributable to non-controlling interests shall be separately presented asnon-controlling interests in consolidated balance sheet within owners' equity, below the net profit lineitem and below the total comprehensive income line item in the consolidated income statementrespectively. When the amount of current loss attributable to non-controlling shareholders of a subsidiaryexceeds the balance of the non-controlling shareholders’ portion in the opening balance of owner'sequity of the subsidiary, the excess shall be allocated against the non-controlling interests.
Acquisition of subsidiaries or businessDuring the reporting period, if the Company acquires subsidiaries from the business combination undercommon control, the opening balance in the consolidated balance sheet shall be adjusted. The income,expenses and profits of the newly acquired subsidiaries from the beginning to the end of the reportingperiod shall be included in the consolidated income statement. The cash flows of the newly acquiredsubsidiaries from the beginning to the end of the reporting period shall be included in the consolidatedstatement of cash flows. At the same time, the relevant items of the comparative information shall beadjusted as the combined entity existed since the control point of the ultimate controlling party.
If the Company can control the investee from the business combination under common control due toadditional investment or other reasons, the parties involved in the combine shall be deemed to adjust inthe current state when the ultimate controlling party starts to control them. For the equity investmentbefore obtaining control of the investee, the recognized relevant profit or loss and other comprehensiveincome and other changes in net assets between the later of acquisition date of previous equity and thedate on which both the investor and the investee are under common control and the combination dateshall respectively write-down the beginning retained earnings or current profits and losses during theperiod of comparative information.
During the reporting period, if the Company acquires subsidiaries from the business combination 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 the
newly acquired subsidiaries from the acquisition date to the end of the reporting period shall be includedin the consolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee not under common controldue to additional investment or other reasons, the Company shall re-measure the previously held equityinterests to its fair value on the acquisition date, and the difference shall be recognized as investmentincome. When the previously held equity investment is accounted for under equity method, any othercomprehensive income previously recognized and other equity changes (excluding othercomprehensive, net profit and loss and profit distribution ) in relation to the acquiree’s equity changesshall be transferred to profit and loss for the current period when acquisition took place, except for othercomprehensive income resulting from changes in net liabilities or net assets due to re-measurement ofdefined benefit plan by investee.
Disposal of subsidiaries and businessGeneral treatmentsDuring the reporting period, if the Company disposes subsidiaries, the income, expenses and profits ofthe newly disposed subsidiaries from the beginning to the disposal date shall be included in theconsolidated income statement. The cash flows from the beginning to the disposal date shall be includedin the consolidated statement of cash flows.
In case of loss of control over the investee due to partial disposal of the equity investment or otherreasons, the Company shall re-measure the remaining equity investment at its fair value at the date ofloss of control. The amount of the consideration obtained from the disposal of the equity and the fairvalue of the remaining equity, minus the net asset shares calculated continuously from the acquisitiondate based on the previous shareholding proportion and the goodwill, the difference shall be included inthe investment income of the period when the control is lost. Other comprehensive income related to theformer subsidiary’s equity investment of or other changes in owners' equity excluding net profit and loss,other comprehensive income and profit distribution shall be transferred to investment income for thecurrent period when control is lost. Other comprehensive income resulting from changes in net liabilitiesor net assets due to re-measurement of defined benefit plan by investee is excluded.
Disposal of subsidiaries by stepIf the Company loses control of a subsidiary is through multiple transactions by steps, the terms,conditions and economic impact of the disposal transaction shall be considered. When one or more ofthe following conditions may indicate that multiple transactions should be treated as a package oftransactions for accounting treatment:
a.These arrangements were entered into at the same time or in contemplation of each other;b.These arrangements work together to achieve an overall commercial effect;c.The occurrence of one arrangement depends on the occurrence of at least one other arrangement;d.One arrangement alone is not economically justified, but it is economically justified when consideredtogether with other arrangements
If the transactions of the disposal of the equity investment of the subsidiary until the loss of controlbelong to a package transaction, the Company shall account for as a transaction; However, thedifference between each disposal consideration received and the corresponding proportion of thesubsidiary’s net assets before the loss of control shall be recognized as other comprehensive income inthe consolidated financial statements and transferred into the profit and loss of the current period whenthe control is lost.
If the transactions from the disposal of the equity investment of the subsidiary to the loss of control arenot considered as a package transactions, the accounting treatment shall be conducted according to therelevant policies on the partial disposal of the equity investment of the subsidiary where control isretained before the loss of control. When the control is lost, the disposal shall be accounted for accordingto the general treatment.
Purchase of non-controlling interestsThe difference between the increase in the cost of long-term equity investment result from acquisition ofnon-controlling shareholders and the share of net assets of the subsidiary calculated continuously fromthe acquisition date or combination date based on newly shareholding proportion shall be adjusted toequity (share) premium of capital reserves in the consolidated balance sheet. If the capital reserve isinsufficient, any excess shall be adjusted against retained earnings.
Partial disposals of equity investment in subsidiaries without loss of controlWhen the Company disposes of a portion of a long-term equity investment in a subsidiary without loss ofcontrol, the difference between disposal consideration and net assets of the subsidiary calculatedcontinuously since the acquisition date or the combination date related to the disposal of long-termequity investment shall be adjusted to equity (share) premium of capital reserves in the consolidatedbalance sheet. If the capital reserve is insufficient, any excess shall be adjusted against retainedearnings.
5.7 Classification of joint venture arrangements and the accounting treatmentmethod of common operation
(1) Classification of joint venture arrangements
A joint arrangement is classified as either a joint operation or a joint venture according to the structure,legal form, agreed terms and other facts and conditions of a joint arrangement. A joint arrangement thatis structured through a separate vehicle is usually classified as a joint venture. However, when a jointarrangement provides clear evidence that it meets any of the following requirements and complies withapplicable laws and regulations as a joint operation:
a. The legal form of the joint arrangement indicates that the parties that have joint control have rights tothe assets, and obligations for the liabilities, relating to the arrangement.b. The terms of the joint arrangement specify that the parties that have joint control have the rights to theassets, and the obligations for the liabilities, relating to the arrangement.c. Other facts and circumstances indicate that the parties that have joint control have rights to the assets,and the obligations for the liabilities, relating to the arrangement.The parties that have joint control have rights to substantially all of the output of the arrangement, and
the arrangement depends on the parties that have joint control on a continuous basis for settling theliabilities of the arrangement.
(2) Accounting by parties of a joint operator
A joint operator shall recognize the following items in relation to its interest in a joint operation, andaccount for them in accordance with relevant accounting standards:
a. Its solely-held assets, and its share of any assets held jointly;b. Its solely-assumed liabilities, and its share of any liabilities incurred jointly;c. Its revenue from the sale of its share of the output arising from the joint operation;d. Its share of the revenue from sale of the output by the joint operation; ande. Its solely-incurred expenses and its share of any expenses incurred jointly.
The Company shall only recognize the portion of the profit and loss attributable to other participants inthe joint venture, resulting from investment or sale of assets to the joint venture by the Company(excluding those assets constituting the business), prior to the sale of such assets to a third party. TheCompany shall fully recognize impairment loss when there are any impairment loss of invested or soldassets occurring in accordance with the ASBE No.8-Asset Impairment. The Company shall onlyrecognize the part of the profit and loss attributable to other participants in the joint venture before sellingthe assets and other assets purchased from the joint venture (excluding those assets constituting thebusiness) to a third party. When the impairment loss of the purchased assets is in accordance with theASBE No.8-Asset Impairment, the Company shall recognize such losses according to its share. Whenthe Company does not have common control over the joint venture, if the Company enjoys the assetsrelated to the joint venture and assumes the liabilities related to the joint venture, the accountingtreatment shall be conducted according to the above principles. Otherwise, the accounting treatmentshall be conducted in accordance with the relevant accounting standards.
5.8 Cash and cash equivalents
When preparing the cash flow statement, the Company recognizes cash on hand and deposits that canbe readily withdrawn on demand as cash. Cash equivalents are the Company’s short-term (due within 3months from purchase date), highly liquid investments that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of changes in value. Restricted bank deposits are notrecognized as cash and cash equivalents in the cash flow statement.
5.9 Foreign currency transactions and translation of foreign currency statements
(1) Foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in theforeign currency shall be translated into the amount in CNY currency at the spot exchange rate of thetransaction date. For the monetary items of foreign currencies, the translation is done according to spotrate of the balance sheet date. The exchange difference generated from the difference of spot rate of thecurrent balance sheet date and the time of initial recognition of a foreign currency or the 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 fair value that is reflected in foreign currency at the end of the period,the Company shall firstly translate the foreign currency into the amount in functional currency at the spotexchange rate on the date when the fair value is determined, and then compare it with the originalfunctional currency amount. Difference between the translated functional currency amount and theoriginal functional currency amount is treated as profit or loss from changes in fair value (includingchanges in exchange rate) and is recognized in current profit and loss. If there is a non-monetary item ofavailable-for-sale financial assets, the differences are recorded into other comprehensive income.
(2) Translation of foreign currency statements
Assets and liabilities in the balance sheets shall be translated at the spot exchange rates on balancesheet date. Shareholders’ equity items, except for the item of "undistributed profits", are translated at thespot exchange rates on the dates when the transactions occur. Revenue and expense items in theincome statement are translated at the spot exchange rates on the dates when the transactions occur orat the exchange rate determined in a systematical and reasonable method and similar to the spotexchange rate on the day when the transactions occur. Differences arising from the above translations offoreign currency financial statements are separately listed under other comprehensive income in theconsolidated balance sheet. If the overseas business is partly disposed of, the foreign currency financialstatements exchange difference shall be calculated in proportion to the percentage of disposal andtransferred to gain or loss on disposal for the current period.Foreign currency cash flow and cash flow of foreign subsidiaries shall be translated at approximateexchange rate of spot rate on the date of cash flow.
5.10 Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liabilityor equity instrument of another entity. When the Company becomes a party to a financial instrumentcontract, the related financial asset or financial liability should be recognized.
(1) Classification, recognition and measurement of financial assets
Based on the business model of financial asset management and the contract cash flow characteristicsof financial assets, the Company classifies financial assets into: financial assets measured at amortizedcost; financial assets measured at fair value with their changes included into other comprehensiveincome; and financial assets measured at fair value with their changes included into currentprofits/losses.
At the initial recognition, financial assets are measured at fair value. For financial assets measured at fairvalue with their changes included into current profits/losses, the expenses involved in the transaction aredirectly recorded into current profits/losses; for other financial liabilities, the expenses involved in thetransaction are recorded into the initially recognized amount.
1) Financial assets measured at amortized cost
The business model in which the Company manages financial assets measured at amortized cost aimsto receive contract cash flow. Furthermore, the characteristics of the contract cash flow of such financialassets are consistent with basic borrowing and lending arrangements, which means that cash flow
generated on a specific date serves only as payment for principal and interests based on the amount ofunpaid principal. The Company adopts the effective interest method for such financial interests,performs subsequent measurement of them at amortized cost, and includes the gains or losses fromderecognition, changes or impairment of them into current profits/losses.
2) Financial assets measured at fair value with their changes included into other comprehensive incomeThe business model in which the Company manages such financial assets both aims to receive contractcash flow and for the purpose of sale. Furthermore, the characteristics of the contract cash flow of suchfinancial assets are consistent with basic borrowing and lending arrangements. The Company measuresuch financial assets at fair value and include their changes into other comprehensive income, butrecord impairment losses or gains, exchange gains or losses and interest income calculated in theeffective interest method into current profits/losses.
At the initial recognition, the Company may specify non-trading equity instrument investment as afinancial asset measured at fair value with its changes included into other comprehensive income andshould recognize the dividend income according to regulations; the specification is irrevocable oncemade. When the financial asset is derecognized, the cumulative gains or losses previously included intoother comprehensive income should be transferred into retained earnings.
3) Financial assets measured at fair value with their changes included into current profits/lossesFor financial assets other than the above financial assets measured at amortized cost and financialassets measured at fair value with their changes included into other comprehensive income, theCompany classifies them as financial assets measured at fair value with their changes included intocurrent profits/losses. In addition, at the initial recognition, the Company specifies partial financial assetsas financial assets measured at fair value with their changes included into current profits/losses, in orderto eliminate or substantially reduce accounting mismatch. For such financial assets, the Companyperforms subsequent measurement using fair value and records changes in the fair value into currentprofits/losses.
(2) Classification, recognition and measurement of financial liabilities
At their initial recognition, financial liabilities are divided into financial liabilities measured at fair valuewith their changes included into current profits/losses and other financial liabilities. For financial liabilitiesmeasured at fair value with their changes included into current profits/losses, the expenses involved inthe transaction are directly recorded into the current profits/losses. For other financial liabilities, theexpenses involved in the transaction are recorded into the initially recognized value.
1) Financial liabilities measured at fair value with their changes included into current profits/lossesFinancial liabilities measured at fair value with their changes included into current profits/losses includetrading financial liabilities (including derivatives classified as financial liabilities) and the financialliabilities specified to be measured at fair value with their changes included into current profits/losses 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 intoother comprehensive income should be transferred into retained earnings. Other changes in their fairvalue should be recorded into current profits/losses. If treatment of the impact of the Company’s owncredit risk changes of such financial liabilities in the above manner causes or expands accountingmismatch in profits/losses, the Company will include all gains or losses of such financial liabilities(including the amount of the impact of the Company’s own credit risk changes) into currentprofits/losses.
2) Other financial liabilities
Financial liabilities other than those formed from the transfer of financial assets not meetingderecognition conditions or continuous involvement into transferred financial assets and those outsidefinancial guarantee contracts are classified as financial liabilities measured at amortized cost. Suchfinancial liabilities should be subsequently measured at amortized cost and the gains or losses fromderecognition or amortization should be included into current profits/losses.
(3) Recognition basis and measurement method of transfer of financial assetsIf a financial asset meets any of the following conditions, it shall be derecognized: 1)The contractual rightfor collecting the cash flow of the financial asset has been terminated; 2)The financial asset has beentransferred and almost all the risks and remunerations in respect of the ownership of the financial assethas been transferred to the transferee; 3)The financial asset has been transferred, and although theenterprise neither transfers nor retains almost all the risks and remunerations in respect of the ownershipof the financial asset, it has abandoned its control over the asset.
If the enterprise neither transfers nor retains almost all the risks and remunerations in respect of theownership of the financial asset and does not abandon its control over the asset, the involved financialasset shall be recognized according to the level of continuous involvement of the transferred financialasset and the relevant liabilities shall be recognized accordingly. The level of continuous involvement ofthe transferred financial asset refers to the level of risk faced by the enterprise due to changes in thevalue of the financial asset.
If the overall transfer of the financial asset meets the recognition conditions, the difference between thecarrying value of the transferred financial asset as well as the consideration received from the transferand the cumulative amount of fair value changes originally-recorded into other comprehensive incomesshall be recorded into the current profits/losses.
If partial transfer of the financial asset meets the recognition conditions, the carrying value of the
transferred financial asset shall be apportioned at the relative fair value between the derecognition andunderecognition part. The difference between the summation of the consideration received from thetransfer and the cumulative amount of fair value changes originally-recorded into other comprehensiveincomes that should be apportioned to the derecognition part and the apportioned aforementionedcarrying value shall be recorded into the current profits/losses.
For a financial asset sold with the right of recourse or with the transfer of the financial asset endorsement,the Company shall decide whether almost all the risks and remunerations in respect of the ownership ofthe financial asset should be transferred. If they are transferred, the financial asset shall bederecognized; if they are retained, the financial asset shall not be derecognized; if they are neithertransferred nor retained, the Company will continue to decide whether the enterprise should retaincontrol over the asset and perform the accounting treatment according to the principles stated inprevious paragraphs.
(4) Derecognition of financial liabilities
When the current obligation of a financial liability (or a part of it) is relieved, the Company willderecognize the financial liability (or the part of it). When the Company (borrower) signs an agreementwith a lender to replace an original financial liability in the form of bearing a new financial liability and thecontract terms for the new financial liability differ from those for the original in substance, the originalfinancial liability should be derecognized and the new one should be recognized. When the Companymakes substantial changes to the contract terms of an original financial liability (or a part of it), theoriginal financial liability should be derecognized and a new financial liability should be recognizedaccording to the amended contract terms.
When a financial liability (or a part of it) is derecognized, the Company will include the differencebetween its carrying value and the consideration paid (including non-cash assets or liabilities borne thatare transferred out) into current profits/losses.
(5) Offsetting of financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial liabilities andmay execute the legal right currently and simultaneously, the Company plans to settle or simultaneouslyencash the financial assets in net amounts and pay off the financial liabilities, the financial assets andthe financial liabilities which are presented in the net amount after the mutual offset in the balance sheet.Other than that, they shall be presented separately in the balance sheet without the mutual offset.
(6) Method of determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant can receive for selling an asset or transferring aliability in an orderly transaction on the measurement date. For an existing financial instrument in anactive market, the Company adopts the quotations in the active market to determine its fair value.Quotations in the active market refer to prices that can be easily obtained from exchanges, brokers,industrial associations and pricing service institutions and represent the actual prices in the 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 includes
references 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 loss
provision by the amount equivalent to the expected credit loss for the entire duration and calculate theinterest income according to the amortization cost and the effective interest rate. For financialinstruments with low credit risks on balance sheet dates, the Company assumes that their credit riskshave not substantially increased since the initial recognition.
The Company assesses expected credit losses of financial instruments based on individual and groupassessment. The Company considers the credit risk characteristics of different customers and assessesthe expected credit losses of accounts receivable and other receivables based on account age portfolio.When assessing expected credit losses, the Company considers reasonable and well-foundedinformation on past matters, present conditions and forecast of future economic conditions.
When it no longer reasonably expects to recover all or part of the contract cash flow of financial assets,the Company will directly write down the book balance of such financial assets.
5.11 Notes receivable
The method of determining the expected credit loss of notes receivables and accounting treatmentmethod:
Divide notes receivables into various portfolios according to common risk characteristics based on thecredit risk characteristics of acceptors and determine the accounting estimate policies of expected creditloss:
| Portfolio name | Provision method |
| Bank acceptance bill portfolio | The management evaluates that this type has low credit risk and its fixed bad debt provision ratio is 0%. |
| Trade acceptance portfolio | The provision for impairment is made according to the expected loss rate with the same portfolio classification of accounts receivables |
5.12 Accounts receivables
The method of determining the expected credit loss of accounts receivables and accounting treatmentmethod:
As for accounts receivables, regardless of whether there is a significant financing component, theCompany always measures the provision for loss based on the amount equivalent to the expected creditloss over the entire life, and the resulting increase or reversal of provision for loss shall be included in thecurrent profit or loss as gains or losses on impairment. The accrual method is as follows:
(1) When there is objective evidence showing that an account receivable has incurred credit impairment,the Company shall make bad debt provision for the account receivable and recognize the expectedcredit loss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluatedat a reasonable cost, the Company shall divide the accounts receivables portfolio according to credit riskcharacteristics and measure the expected credit loss based on portfolios.
| Portfolio name | Provision method |
| Risk portfolio | Expected credit loss |
| Other portfolio | No bad debt provision |
Other portfolio refers to the normal intercourse funds among the Company and businesses under thesame control, the recovery of which are controllable with no risks. Thus, no bad debt provision wasmade.The Company combines the accounts receivables classified as risk portfolio in accordance with similarcredit risk characteristics (aging), and calculates the expected credit loss through the exposure at defaultand expected credit loss rate over the entire life based on the current situation and prediction of futureeconomic situation consulting historical credit loss experience. The comparative table of the credit lossrate is as follows:
| Aging | Expected loss provision rate % |
| Within 1 year | 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 5.10Financial instruments.
5.14 Other receivables
The method of determining the expected credit loss of other receivables and accounting treatmentmethod:
As for other receivables, regardless of whether there is a significant financing component, the Companyalways 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,dispatched inventories, 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 finished
products 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
5.16 Contract assets
The Company presents contract assets or contract liabilities on the balance sheet according to therelationship between the fulfillment of its contract performance obligations and its customers’ payment.
Considerations that the Company has the right to collect for commodities transferred or servicesprovided to customers (and such right depends on other factors than time lapses) are presented ascontract assets. The Company presents the right possessed to collect consideration from customersunconditionally (only depending on the passing of time) as accounts receivable. Refer to “The method ofdetermining the expected credit loss of accounts receivables and accounting treatment method” for thedetail on the Company’s method of determining the expected credit loss of contract assets andaccounting treatment method.
5.17 Contract costs
Contract costs comprise incremental costs incurred as the Company obtains a contract, and costs forcontract performance. Incremental costs incurred as the Company obtains a contract refer to those costswhich will not incur without entering into a contract (such as sales commission). If it is expected that thecosts are recoverable, the Company will recognize the costs incurred to obtain a contract as one form ofassets. In case that the term of asset amortization is shorter than one year or one normal operating cycle,the costs will be recognized as profit and loss of the current period after occurrence.
If the costs incurred from contract performance fall outside the inventory or the scope of other enterpriseaccounting standards and satisfy all of the following conditions, the Company will recognize the costs forcontract performance as assets: a) The costs are directly related to one existing contract or contract thatis expected to be obtained; b) The costs enrich the Company's resources for future contractperformance (including continual fulfillment); c) The costs are estimated to be recovered.
Assets recognized from costs incurred to obtain a contract and costs for contract performance(hereinafter referred to as "assets related to contract costs") will be amortized based on the basis thesame with the income from commodities or services related to the assets, and will be recognized asprofit and loss of the current period. In case that the book value of assets related to contract costs ishigher than the difference of the two items below, the Company will set aside provisions for assetsimpairment to deal with the extra part, and recognize that part as impairment losses: a) Estimatedresidual consideration to be obtained from transfer of commodities or services related to the assets; b)Estimated costs incurred from transfer of the relevant commodities or services.
5.18 Assets held for sale
(1) Initial measurement and subsequent measurement
When 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 held for sale. Interest and othercharges on liabilities in the disposal groups held for sale continue to be recognized.
(2) Accounting treatment of reversal of impairment loss
If 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.
(3) 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:
a. Dispatch representatives to the board of directors or similar authorities of the investee.b. To participate in the financial and business policy making process of the investee.c. Significant transactions with the investee.d. Dispatch management personnel to the investee.e. To provide key technical data to the investee.
(2) Determination of the initial investment cost
a. Long-term equity investment resulting from combinationBusiness combination under common control：
For the long-term equity investments obtained by cash paid, non-monetary assets paid or assumedliabilities and the equity securities issued by the acquirer, on the merger date, the initial investment costof long-term equity investment shall be taken as the share of the owner's equity of the investee in thebook value of the final control party's consolidated financial statements. If the investee under businesscombination under common control can be controlled due to additional investment or other reasons, theinitial investment cost of long-term equity investment shall be determined on the merger date accordingto the share of the net assets of the investee in the book value of the final control party's consolidatedfinancial statements. The difference between the initial investment cost of the long-term equityinvestment on the merger date and sum of the book value of the long-term equity investment before themerger and the new consideration of acquiring shares on the merger date shall be recorded to adjust theequity premium. If the equity premium is insufficient to be written down, the retained earnings shall bewritten down.
Business combination not under common control：The Company takes the initial investment cost oflong-term equity investment as the merger cost determined on the purchase date. If the investee can becontrolled under business combination not under common control due to additional investment or otherreasons, the previous book value of the equity investment held plus the sum of the newly addedinvestment cost shall be taken as the initial investment cost calculated according to the cost method.
b. Long-term equity investment obtained by other meansFor the long-term equity investments obtained by cash paid, the Company recognizes their fair value asthe initial investment costs.
For the long-term equity investments acquired by the issue of equity securities, the initial investment costshall be the fair value of the equity securities issued.
For long-term equity investments obtained by non-monetary assets exchange, under the condition thatan exchange of non-monetary assets is of commerce nature and the fair value of assets exchanged canbe reliably measured, non-monetary assets traded in is initially stated at the fair value of the assetstraded out, unless there is conclusive evidence indicating that the fair value of the assets traded in ismore reliable; if the above conditions are not satisfied, initial investment costs of long-term equityinvestments traded in shall be recognized at the book value of the assets traded out and the relevanttaxes and surcharges payable.
For long-term equity investments obtained by debt restructuring, the Company recognizes the fair valueof shares of debt-for-equity swap as the initial investment costs.
(3) Subsequent measurement and recognition of profit and loss
a. Long-term equity investments measured under the cost methodLong-term equity investments that can control the investee are measured under the cost method. Forlong-term equity investments accounted at the cost method, except cash dividends or profits declaredbut not yet distributed which are included in the actual payments or the consideration actually paid for
the investment, the cash dividends or profits declared by the investee shall be recognized as theinvestment income irrespective of net profits realized by the investee before investment or afterinvestment.
b. Long-term equity investments measured under the equity methodFor the long-term equity investment which has joint control or significant influence over the investee, theequity method is adopted for accounting. For long-term equity investments measured at the equitymethod, if the initial investment costs are higher than the investor’s attributable share of the fair value ofthe investee’s identifiable net assets, no adjustment will be made to the initial costs of the long-termequity investments; if the initial investment costs are lower than the investor’s attributable share of thefair value of the investee’s identifiable net assets, the difference shall be recognized in current profit andloss.
The Company shall, according to the shares of net profits and other comprehensive income realized bythe investee that shall be enjoyed or borne by the Company, recognize the profit and loss on theinvestments and adjust the book value of the long-term equity investments. When recognizing the netprofits and losses and other comprehensive income of the investee that the Company shall enjoy or bear,the Company shall make a recognition and calculation based on the net book profits and losses of theinvestee after appropriate adjustments. However, where the Company is unable to obtain the relevantinformation due to failure to reasonably determine the fair value of the investee’s identifiable assets,minor difference between the investee’s identifiable assets and the book value thereof or other reasons,the profits or losses on the investments shall be directly calculated and recognized based on the netbook profits and losses of the investee. The Company shall calculate the part distributed from cashdividends or profits declared by the investee and correspondingly reduce the book value of the long-termequity investments. When recognizing the income from investments in associates and joint ventures, theCompany shall write off the part of incomes from internal unrealized transactions between the Companyand associates and joint ventures which are attributable to the Company and recognize the profit andloss on investments on such basis. Where the losses on internal transactions between the Company andthe investee are impairment of related assets, full amounts of such losses shall be recognized. Profit andloss from internal unrealized transactions between the Company’s subsidiaries included into thecombination scope and associates and joint ventures shall be written off according to the aboveprinciples and the profit and loss on investments thereafter shall be recognized on such basis.
When the share of net loss of the investee attributable to the Company is recognized, it is treated in thefollowing sequence: Firstly, write off the book value of the long-term equity investments; where the bookvalue of the long-term equity investments is insufficient to cover the loss, investment losses arerecognized to the extent that book value of long-term equity which form net investment in the investee inother substances and the book value of long-term receivables shall be written off; after all the abovetreatments, if the Company still assumes additional obligation according to investment contracts oragreements, the obligation expected to be assumed should be recognized as provision and included intothe investment loss in the current period. If the investee is profitable in subsequent accounting periods,the Company shall treat the loss in reverse order against that described above after deductingunrecognized share of loss: i.e. write down the book value of the recognized provision, then restore thebook value of long-term interests which substantially form net investments in the investee, then restorethe book value of long-term investments, and recognize investment income at the same time.
5.20 Investment property
Measurement model of investment propertyCost modelMethod of depreciation or amortizationInvestment property is the property that is held to earn rent or capital appreciation or both and can bemeasured and sold separately. The Company’s investment property includes land use right already rent,land use right held for appreciation and then sold, and buildings already rent.
Initial RecognitionWhen the Company can obtain the rental income or value-added income related to the investmentproperty and the cost of the investment property that can be measured reliably, the Company will initiallymeasure it according to the actual expenditure of purchase or construction:
The cost of the purchased investment property includes the purchase price and related taxes directlyattributable to the asset;The cost of self-built investment property consists of the necessary expenses incurred before the assetreaches the intended use condition;The cost of the investment property obtained by other means shall be recognized in accordance withrelevant accounting standards.
Subsequent measurementIn general, the Company adopts the cost model to measure the follow-up expenditure of investmentproperty. The depreciation or amortization of investment property shall be carried out in accordance withthe accounting policies for the Company's fixed assets or intangible assets.
If there is solid evidence suggests that the investment property acquired can be measured at fair valuecontinuously and reliably, the Company can use fair value model for subsequent measurement. For theinvestment property measured at fair value model, the Company does not provide depreciation oramortization and adjusts its book value based on the fair value of investment property at the balancesheet date. The difference between the fair value and book value is recorded into current profit or loss.
(3) When the Company changes the use of investment property, the relevant investment property will betransferred to other assets.
5.21. 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% | 2.11%-9.50% |
| Special equipment | Straight-line method | 5－35 | 5% | 2.71%-19.00% |
| Universal equipment | Straight-line method | 4－25 | 5% | 3.80%-23.75% |
| Transportation equipment | Straight-line method | 6 | 5% | 15.83% |
| Other equipment | Straight-line method | 4－16 | 5% | 5.94%-23.75% |
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.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 obviouslydifferent 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. 22. 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. 23. 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 currency
loan, etc.Borrowing costs are capitalized when the following three conditions are met simultaneously: ① the assetexpenditure has occurred, ② the borrowing costs have occurred, ③ the purchase and constructionactivities necessary to make the assets reach the intended use condition have started.
(2) Recognition of capitalized amounts
The capitalized amount of borrowing expenses is calculated as follows: As for special loan borrowed foracquiring and constructing or producing assets eligible for capitalization, borrowing costs of special loanactually incurred in the current period less the interest income of the loans unused and deposited in bankor return on temporary investment should be recognized as the capitalization amount of borrowing costs.As for general loans used for acquiring and constructing or producing assets eligible for capitalization,the interest of general loans to be capitalized should be calculated by multiplying the weighted averageof asset disbursements of the part of accumulated asset disbursements in excess of special loans by thecapitalization rate of used general loans. During the period of capitalization, the capitalized amount ofinterest of each accounting period shall not exceed the current actual interest of the relevant loans.Where there are discounts or premiums on loans, the amounts of interest for each accounting periodshould be adjusted taking account of amortizable discount or premium amounts for the period byeffective interest method. Auxiliary expenses incurred from special loans before the acquired orconstructed assets eligible for capitalization reach the working condition for their intended use or saleshould be capitalized when they incur and charged to the costs of assets eligible for capitalization; thoseincurred after the acquired or constructed assets eligible for capitalization reach the working condition fortheir intended use or sale should be recognized as costs according to the amounts incurred when theyincur and charged to the current profit or loss.
(3) Recognition of capitalization rate
For a special loan for the purchase and construction of fixed assets, the capitalization rate is the interestrate of the loan;For more than one special loan for the acquisition and construction of fixed assets, the capitalization rateis a weighted average interest rate of these loans.
(4) Capitalization suspension of borrowing costs
If the acquisition and construction or production activities of assets eligible for capitalization areinterrupted abnormally and this condition lasts for more than three months, the capitalization ofborrowing costs should be suspended. The borrowing costs incurred during interruption are charged toprofit or loss for the current period, and the capitalization of borrowing costs continues when 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 or
sold externally until overall completion, the capitalization of borrowing costs should cease at the time ofoverall completion of the said assets.
5. 24. Right-of-use assets
Refer to Note 42 for the detail.
5. 25. Intangible assets
(1) Measurement method, useful life, impairment test
a. 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 assetswith uncertain useful life shall not be amortized during the holding period, and the life of intangible assets
shall be reviewed at the end of each period. If it is still uncertain after the review at the end of the period,the impairment test shall continue during each accounting period. At the end of each period, the usefullife of intangible assets with uncertain service life shall be reviewed.
Impairment testOn the balance sheet date, intangible assets are valued at the lower of book value and recoverableamount.
(2) Internal research and development expenditure accounting policy
The expenditures incurred in the development stage of the internal research and development projectsshall be recognized as intangible assets when the following conditions are met; otherwise, they shall berecorded into the current profit and loss when they occur.a. It is technically feasible to finish intangible assets for use or sale;b. It is intended to finish and use or sell the intangible assets;c. The usefulness of methods for intangible assets to generate economic benefits shall be proved,including being able to prove that there is a potential market for the products manufactured by applyingthe intangible assets or there is a potential market for the intangible assets themselves or the intangibleassets will be used internally;d. It is able to finish the development of the intangible assets, and able to use or sell the intangible assets,with the support of sufficient technologies, financial resources and other resources.e. The expenditure attributable to the intangible asset during its development phase can be measuredreliably.Development expenditures that have been recorded into profit and loss in previous periods are notrecognized as assets in subsequent periods. The capitalized expenditure in the development stage islisted as development expenditure in the balance sheet, and it will be recorded into intangible assetsfrom the date when the project reaches its intended purpose.
5. 26. Long-term assets impairment
On the balance sheet date, the Company makes a judgment on whether there are signs of possibleimpairment of long-term assets. If there are impairment indicators of non-current assets, the Companyestimates the recoverable amount based on individual asset. If recoverable amount of individual asset isdifficult to be estimated, the Company should recognize the recoverable amount of the asset groupwhich the individual asset belongs to.The recoverable amount is the higher of fair values less costs of disposal and the present values of thefuture cash flows expected to be derived from the asset.If the measurement result of recoverable amount shows that recoverable amount of the non-currentassets is less than its book value, the book value shall be written down to the recoverable amount, andthe amount written down shall be recognized as the impairment loss of assets, recorded into the currentprofit and loss, and the corresponding impairment provision of assets shall be made at the same time.Once impairment loss stated above is recognized, reversal is not allowed in the subsequent accountingperiods.After the recognition of the impairment loss, the depreciation or amortization expense of the impairment
asset 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. 27. 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. 28 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. 29. 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 plan
The defined contribution plan of the Company includes payments of basic pension and unemploymentinsurance calculated according to the local payment base and proportion. The amount shall be includedinto the profit and loss or the relevant assets cost for the accounting period in which the employeeprovides the service to the Company.b. Defined benefit planAccording to the formula determined by the expected accumulative projected unit credit method, theCompany will record the benefit obligation generated by the defined benefit plan belonging to the periodduring in which the employee provides the service into the current profit and loss or the relevant assetscost.The deficit or surplus resulting from the present value minus the fair value of the assets of a definedbenefit plan is recognized as a net liability or net asset of a defined benefit plan. If there is surplus in thedefined benefit plan, the net assets of the defined benefit plan shall be measured at the lower of thesurplus and the upper limit of assets of the defined benefit plan.All defined benefit plan obligations, including those expected to be paid within the twelve monthsfollowing the end of the annual reporting period in which the employee provides the service, arediscounted based on the market yield and high quality corporate bonds in an active market that matchthe duration and currency of defined benefit plan obligations on the balance sheet date.The service costs generated by the defined benefit plan and the net interest on net liabilities or netassets of the defined benefit plan are included in the current profit and loss or relevant assets cost;Changes in net liabilities or net assets generated by the re-measurement of the defined benefit plan areincluded in other comprehensive income and are not reversed to profit and loss in subsequentaccounting periods.At the time of settlement of the defined benefit plan, the settlement gains or losses shall be recognizedaccording to the difference between the present value of the obligations of the defined benefit plan andthe settlement price determined on the settlement date.
(3) Accounting treatment method of termination benefits
Employee benefits liabilities shall be recognized and included into profit or loss for the current period onthe earlier date of the two following circumstances:
a. When the Company is not able to withdraw the benefits from termination of employment or 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 benefits
Other long-term employee benefits are all employee benefits other than short-term benefits,post-employment benefits and termination benefits.Other long-term employee benefits provided by the Company to the employee that meet the conditionsof the defined contribution plan shall be treated in accordance with the same principles of the definedcontribution plan; If the conditions for defined benefits are met, net liabilities or net assets of other
long-term employee benefits shall be recognized and measured in accordance with the relevantprinciples of the defined benefits plan.
5. 30 Lease liabilities
Refer to the Note 42 for details.
5. 31. 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. 32. Share-based payment
(1) The type of share-based payment
Share-based payment is classified as equity-settled share-based payment and cash-settled share-basedpayment.
(2) The method of determining the fair value of equity instruments
For equity-settled share-based payment related with employees, the equity instrument is measured atfair value. The cash-settled share-based payment shall be measured according to the fair value of theliabilities calculated and determined on the basis of shares or other equity instruments undertaken by theCompany.For the fair value of the stock option granted, the fair value is determined by using the stock optionpricing model, and the following factors are taken into account: the current price of the underlying shares,the exercise price of the option, the risk-free interest rate within the period of the option, the option life,and the expected volatility of the stock price.
(3) Recognition of the best estimate basis of instrument that can be exercised
For the equity-settled share-based payment settled immediately after the grant, the fair value of theequity instrument shall be included in the relevant costs or expenses on the grant date, and the capitalreserve shall be increased accordingly. Grant date means the date on which the share-paymentagreement is approved.For the equity-settled share-based payment, in which the services during waiting period are completedand the performance conditions are met, in return for services of employees, on each balance sheetdate during waiting period, the current obtained service shall be included in the relevant costs orexpenses and the capital reserves in accordance with the fair value of the equity instruments on thegrant date, based on best estimate of the number of vested equity instruments, and the subsequentchanges in fair value shall not be recognized. On each balance sheet date during waiting period, theCompany makes the best estimate based on the latest available employee number change and othersubsequent information, and modifies the number of equity instruments for the estimated vesting. On thevesting date, the final expected number of vesting instruments is the same as the actual number ofvesting instruments.
(4) Relevant accounting treatment of implement, modification and termination of share-based paymentplanFor equity-settled share-based payment, no adjustments will be made to the recognized costs and totalowners' equity after the vesting date. On the vesting date, the Company shall recognize the share capitaland the equity premium according to the exercise situation, and carry forward the capital reserverecognized in the waiting period.No matter how it modifies the terms and conditions of the granted equity instruments or it cancels thegranted equity instruments or its settlement, the equity instruments granted by the Company shall berecognized at fair value on the grant date and it measures obtained the corresponding services, unless itcannot be vested because it cannot meet the vesting conditions of equity instruments (except marketconditions).
5. 33. Revenue
Accounting policies for recognition and measurement of revenue
(1) Basic principles of revenue identification
The Company recognizes revenue when it has fulfilled the performance obligations under the contract,that is, when the customers obtain the control of relevant goods or services, at the transaction price
allocated to the performance obligations.Performance obligations refer to the Company's promise that it will transfer clearly distinguishable goodsor services to customers under the contract.Obtaining control of related goods refers to that customers can control the use of the goods and obtainalmost all the economic benefits from the goods.The Company will evaluate the contract on the contract start date, identify each individual performanceobligation contained in the contract, and judge whether each individual performance obligation will beperformed within a certain period of time or at a certain point in time. If one of the following conditions ismet, and the performance obligation are performed within a certain period of time, the Company willidentify revenue within a period of time according to the performance progress: a. The customers obtainand consume the economic profits while the Company performs the contract. b. The customers cancontrol the products under construction during the performance of the Company; c. The productsproduced during the performance of the Company cannot be replaced, and the Company has the right tocollect payment for the completed performance accumulated during the entire contract period.Otherwise, the Company will identify revenue when the customers obtain control rights of the relevantgoods or services.For the performance obligations performed within a certain period of time, the Company will apply theinput-output method to identify the appropriate performance progress based on the nature of the goodsand services. The input-output method is to identify the performance progress based on the value of thegoods that have been transferred to the customers to the customers. When the performance progresscannot be reasonably identified and the Company's incurred costs are expected to be compensated, theCompany will identify the revenue according to the amount of the incurred costs until the performanceprogress can be reasonably identified.
(2) The methods of revenue identification
The Company mainly sells alcoholic products, which is a performance obligation performed at a certainpoint in time. The revenue identification of domestic products must meet the following requirements: a.The Company has delivered the products to the purchasers according to the contract and thepurchasers have signed and confirmed the receipts. b. The amount of sales revenue has been identified.c. The payment has been received; the receipt of the document of title has been obtained and therelevant economic benefits are likely to flow in. d. The product-related costs can be reliably calculated.The following requirements must be met to confirm the revenue of export products: a. The Company hasdeclared the products in accordance with the contract, obtained the bills of lading, received the paymentor obtained the receipt of payment and related economic benefits that are likely to flow in. b. The mainrisks and rewards of the product ownership have been transferred. c. The legal ownership of the goodshas been transferred.Differences in accounting policies for the recognition of revenue caused by different business models forthe same type of business
5. 34. 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 assets
Government 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. 35. Deferred tax assets or deferred tax liabilities
The Company adopts the balance sheet liability method to account for income tax.The Company recognizes deferred tax assets when the following conditions are met simultaneously:
i. Temporary differences are highly likely to be reversed in the foreseeable future;ii. Taxable income that may be used to offset the deductible temporary difference is likely to beobtained in the future and is limited to the amount of taxable income that is likely to be obtained.On each balance sheet date, the current income tax liabilities (or assets) incurred in the current period orprior periods shall be measured by the Company in light of the expected payable (refundable) amount ofincome taxes according to the tax law; The deferred income tax assets and deferred income tax liabilitiesshall be measured at the tax rate applicable to the period during which the assets are expected to berecovered or the liabilities are expected to be settled.
The Company shall review the carrying amount of deferred income tax assets on each balance sheetdate. The current income tax and deferred income tax shall be recorded into the current profit and lossas income tax expense or income, except for the income tax generated from the enterprise merger,transactions or events directly recognized in the owner's equity.
5. 36. Lease
(1) Accounting treatment of operating lease
a. As the lesseeUnder the new lease standards, except for short-term leases and low-value asset leases, the lesseeswill no longer distinguish between finance leases and operating leases. All leases are subject to thesame accounting treatment, and the right-of-use assets and lease liabilities must be recognized for allleases. For the right-of-use assets, if the lessee can reasonably determine that it will obtain theownership of the leased assets at the expiration of the lease term, the depreciation shall be accruedwithin the remaining service life of the leased assets. If it cannot reasonably determine that it will obtainthe ownership of the leased assets at the expiration of the lease term, it shall depreciate the leasedassets over the lease term or the remaining service life, whichever is shorter. At the same time, thelessee shall determine whether the right-of-use asset is impaired, and account for the identifiedimpairment loss. For short-term leases and low-value asset leases, the lessee may choose not torecognize the right-of-use asset, and include the relevant lease payments into relevant asset cost orcurrent profit or loss according to the straight-line method or other systematically reasonable methodsduring each period of the lease.b. As the lessorThe 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. 37 Changes in significant accounting policies and accounting estimates
5.37.1. Changes in significant accounting policies
√Applicable ?N/A
| Content and reason of changes | Approval procedures | Note |
| On 7 December 2018, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 21 -- Leases" (CK[2018]No.35) (hereinafter referred to as the "New Lease Standards"). According to the requirements of the Ministry of Finance, companies that are listed both domestically and abroad and companies that are listed abroad and prepare financial statements under the Accounting Standards for Business Enterprises shall implement the New Lease Standards from 1 January 2019; other companies that implement the Accounting Standards for Business Enterprises shall implement the New Lease Standards from 1 January 2021. Due to the above-mentioned revision of accounting standards, the Company shall make corresponding adjustments to the lease accounting policy previously adopted. | Approved on the Meeting of the Board of Directors | According to the Company's existing leased assets, if a lease meets the criteria for short-term leases, the lease payment shall continue to be included in the expenses according to the current model; for a lease with a lease term of more than one year, it is required to recognize the right-of-use assets and lease liabilities and accrue depreciation. At the same time, in accordance with the regulations on the transition from old to new standards, the Company does not have any lease that needs to be adjusted retrospectively. This change in accounting policies does not affect the Company's shareholders' equity, net profit and other related financial indicators in 2020. |
There was no other change in significant accounting policies in the reporting period other than the abovechanges.
5.37.2. Changes in significant accounting estimates
? Applicable √ N/A
5.37.3. Adjustments to the financial statements at the beginning of the execution year of any newstandard governing leases from 2021
√Applicable ?N/A
Whether items of balance sheets at the beginning of the year need to be adjusted
√ Yes □ No
Consolidated balance sheet
Monetary Unit: CNY
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Cash and cash equivalents | 11,624,870,340.60 | 11,624,870,340.60 | |
| Settlement reserves | |||
| Lending funds | |||
| Trading financial assets | |||
| Derivative financial assets | |||
| Notes receivables | |||
| Accounts receivables | 1,507,852.43 | 1,507,852.43 | |
| Accounts receivables financing | 3,209,371,766.35 | 3,209,371,766.35 | |
| Prepayment | 74,685,537.38 | 74,685,537.38 | |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance contract reserve | |||
| Other receivables | 127,032,931.42 | 127,032,931.42 | |
| Including：Interests receivable | |||
| Dividends receivable | 1,407,900.00 | 1,407,900.00 | |
| Buying back the sale of financial assets | |||
| Inventories | 4,695,663,431.25 | 4,695,663,431.25 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year |
| Other current assets | 156,565,424.18 | 156,565,424.18 | |
| Total current assets | 19,889,697,283.61 | 19,889,697,283.61 | |
| Non-current assets: | |||
| Disbursement of loans and advances | |||
| Investment in debt obligations | |||
| Investment in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 2,477,667,171.27 | 2,477,667,171.27 | |
| Other equity instrument investment | 347,160,399.42 | 347,160,399.42 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 6,887,108,174.72 | 6,887,108,174.72 | |
| Construction in progress | 2,012,129,880.15 | 2,012,129,880.15 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-to-use assets | 50,201,409.36 | 50,201,409.36 | |
| Intangible assets | 2,657,118,025.37 | 2,657,118,025.37 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | 2,305,902.21 | 2,305,902.21 | |
| Deferred tax assets | 725,210,660.84 | ||
| Other non-current assets | 10,806,325.86 | 10,806,325.86 | |
| Total non-current assets | 15,119,506,539.84 | 15,169,707,949.20 | 50,201,409.36 |
| Total assets | 35,009,203,823.45 | 35,059,405,232.81 | 50,201,409.36 |
| Current liabilities: | |||
| Short-term loans | |||
| Borrowings from the central bank | |||
| Loans from other banks |
| Trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 121,285,117.60 | 121,285,117.60 | |
| Accounts payable | 2,604,289,199.77 | 2,604,289,199.77 | |
| Advance from customer | |||
| Contract liabilities | 1,678,837,166.94 | 1,678,837,166.94 | |
| Financial assets sold for repurchase | |||
| Customers deposits and deposits from banks and other financial institutions | |||
| Customer brokerage deposits | |||
| Securities underwriting brokerage deposits | |||
| Employee benefits payable | 505,022,627.19 | 505,022,627.19 | |
| Taxes payable | 2,046,027,211.13 | 2,046,027,211.13 | |
| Other payable | 501,623,924.54 | 501,623,924.54 | |
| Including：Interests payable | |||
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance accounts payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 72,219,178.08 | 82,207,133.16 | 9,987,955.08 |
| Other current liabilities | 218,267,353.36 | 218,267,353.36 | |
| Total current liabilities | 7,747,571,778.61 | 7,757,559,733.69 | 9,987,955.08 |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term loans | |||
| Bonds payable | 3,987,872,100.02 | 3,987,872,100.02 |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 40,213,454.28 | 40,213,454.28 | |
| Long-term payables | |||
| Long-term payroll payables | |||
| Accrued liabilities | |||
| Deferred income | 29,739,000.00 | 29,739,000.00 | |
| Deferred tax liabilities | 62,151,071.11 | ||
| Other non-current liabilities | |||
| Total non-current liabilities | 4,079,762,171.13 | 4,119,975,625.41 | 40,213,454.28 |
| Total liabilities | 11,827,333,949.74 | 11,877,535,359.10 | 50,201,409.36 |
| Owners' equity: | |||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,722,777,063.13 | 3,722,777,063.13 | |
| Less: Treasury stock | |||
| Other comprehensive income | 186,063,325.03 | 186,063,325.03 | |
| Special reserves | |||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | |
| General risk reserve | |||
| Undistributed profits | 16,236,513,212.43 | 16,236,513,212.43 | |
| Total equity attributable to owners of the parent company | 23,074,858,552.59 | 23,074,858,552.59 | |
| Non-controlling interests | 107,011,321.12 | 107,011,321.12 | |
| Total owners' equity | 23,181,869,873.71 | 23,181,869,873.71 | |
| Total liabilities and owners' equity | 35,009,203,823.45 | 35,059,405,232.81 | 50,201,409.36 |
Statement for adjustmentIn accordance with the requirements of Accounting Standards for Business Enterprises No.21-Leaseissued by the Ministry of Finance, the Company starts to implement it since 1 January 2021. For detailson specific items and amounts affected, please refer to above statement.
Balance sheet of parent company
Monetary Unit: CNY
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Cash and cash equivalents | 11,100,327,211.33 | 11,100,327,211.33 | |
| Trading financial assets | |||
| Derivative financial assets | |||
| Notes receivables | |||
| Accounts receivables | 3,927.50 | 3,927.50 | |
| Accounts receivables financing | |||
| Prepayment | 1,431,698.57 | 1,431,698.57 | |
| Other receivables | 7,052,749,694.83 | 7,052,749,694.83 | |
| Including: Interests receivable | |||
| Dividends receivable | 1,407,900.00 | 1,407,900.00 | |
| Inventories | 850,076.30 | 850,076.30 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 78,509.44 | 78,509.44 | |
| Total current assets | 18,155,441,117.97 | 18,155,441,117.97 | |
| Non-current assets: | |||
| Investment in debt obligations | |||
| Investment in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 5,884,091,712.47 | 5,884,091,712.47 | |
| Other equity instrument investment | 346,831,477.79 | 346,831,477.79 | |
| Other non-current financial assets |
| Investment property | |||
| Fixed assets | 640,254,574.76 | 640,254,574.76 | |
| Construction in progress | 550,932,404.00 | 550,932,404.00 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-to-use assets | 730,727.38 | 730,727.38 | |
| Intangible assets | 684,010,106.13 | 684,010,106.13 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | 2,180,811.89 | 2,180,811.89 | |
| Deferred tax assets | 89,484,552.65 | 89,484,552.65 | |
| Other non-current assets | 1,526,325.86 | 1,526,325.86 | |
| Total non-current assets | 8,199,311,965.55 | 8,200,042,692.93 | 730,727.38 |
| Total assets | 26,354,753,083.52 | 26,355,483,810.90 | 730,727.38 |
| Current liabilities: | |||
| Short-term loans | |||
| Trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payables | |||
| Accounts payable | 80,663,835.54 | 80,663,835.54 | |
| Advance from customer | |||
| Contract liabilities | 753,349.81 | 753,349.81 | |
| Employee benefits payable | 168,254,646.38 | 168,254,646.38 | |
| Taxes payable | 153,437,992.21 | 153,437,992.21 | |
| Other payables | 699,733,563.56 | 699,733,563.56 | |
| Including：Interests payable | |||
| Dividends payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 72,219,178.08 | 72,613,678.08 | 394,500.00 |
| Other current liabilities | 116,457.13 | 116,457.13 |
| Total current liabilities | 1,175,179,022.71 | 1,175,573,522.71 | 394,500.00 |
| Non-current liabilities: | |||
| Long-term loans | |||
| Bonds payable | 3,987,872,100.02 | 3,987,872,100.02 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 336,227.38 | 336,227.38 | |
| Long-term payables | |||
| Long-term payroll payables | |||
| Accrued liabilities | |||
| Deferred income | 1,904,000.00 | 1,904,000.00 | |
| Deferred tax liabilities | 62,151,071.11 | 62,151,071.11 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 4,051,927,171.13 | 4,052,263,398.51 | 336,227.38 |
| Total liabilities | 5,227,106,193.84 | 5,227,836,921.22 | 730,727.38 |
| Owners' equity | |||
| Share capital | 1,464,752,476.00 | 1,464,752,476.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,706,816,950.12 | 3,706,816,950.12 | |
| Less: Treasury stock | |||
| Other comprehensive income | 185,441,302.55 | 185,441,302.55 | |
| Special reserves | |||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | |
| Undistributed profits | 14,305,883,685.01 | 14,305,883,685.01 | |
| Total owners' equity | 21,127,646,889.68 | 21,127,646,889.68 | |
| Total liabilities and owners' equity | 26,354,753,083.52 | 26,355,483,810.90 | 730,727.38 |
Statement for adjustmentIn accordance with the requirements of Accounting Standards for Business Enterprises No.21-Lease
issued by the Ministry of Finance, the Company starts to implement it since 1 January 2021. For detailson specific items and amounts affected, please refer to above statement.
5.37.4. Retrospective restatement of previous comparative data due to the execution of any newstandard governing lease from 2021? Applicable √ N/A
6. Taxes
6.1. Major tax types and rates
| Tax type | Tax base | Tax rate |
| Value-added tax | Taxable sales income | 13 %, 9%, 6% |
| Urban maintenance and construction tax | Taxable turnover tax | 7% |
| Corporate income tax | Taxable income | 25%, 15%, 16.5%, 9%, 0% |
| Consumption tax (based on price) | Baijiu tax price or ex-factory price | 20% |
| Consumption tax (based on quantity) | Quantity of baijiu | CNY 1.00/kg |
| Education surcharge | Taxable turnover tax | 3% |
| Local education surcharge | Taxable turnover tax | 2% |
| Property tax | Original value of the property*70%; house rent | 1.2%, 12% |
| Land use tax | Land area | CNY 5-18.00/m2 |
| Others | According to national regulation |
Tax payment subject using different corporate income tax rates, the corporate income tax rates are asfollows:
| Company name | Corporate income tax rate |
| Luzhou Pinchuang Technology Co., Ltd. | 15% |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | 16.5% |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | 21%-40% |
| Mingjiang Co., Ltd. | 21%-40% |
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Exempted from corporate income tax |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | 9% |
6.2. Tax preferences
(1) According to Announcement of the Ministry of Finance, State Taxation Administration and NationalDevelopment and Reform Commission on Continuing the Corporate Income Tax Policies Concerningthe Western Development Strategy (No. 23 in 2020, Ministry of Finance), from 1 January 2021 to 31December 2030, companies are located in the western region whose primary business is listed in theCatalogue of Encouraged Industries in the Western Region, and the primary business incomeaccounting for over 60% of the total enterprise income. These companies shall be subject to thecorporate income tax at a reduced rate of 15%. The Company's holding subsidiary, Luzhou PinchuangTechnology Co., Ltd., whose primary business income meet the requirements of scope and standard ofthe Catalogue of Encouraged Industries in the Western Region, is paid at the rate of 15% for corporateincome tax.
(2) According to Article 27 of the Corporate Income Tax Law of the People's Republic of China andArticle 86, Item 1 of the Implementation Regulations of the Corporate Income Tax Law, companies areexempted from enterprise income tax when they engage in agricultural, forestry, animal husbandry andfishery industries. The holding subsidiary of the Company, Luzhou Red Sorghum Modern AgriculturalDevelopment Co., Ltd., is engaged in the cultivation and sale of organic sorghum and enjoys thereduction of corporate income tax preferences.
(3) According to the Article 15, Item 1 of the Provisional Regulations on Value-Added Tax, agriculturalproducers sell self-produced agricultural products exempt from value-added tax. The holding subsidiaryof the Company, Luzhou Red Sorghum Modern Agricultural Development Co., Ltd., is engaged in thecultivation and sale of organic sorghum and enjoys the value-added tax exemption.
(4) According to the Article 3, Item 7 of the Notice on Revise of Interim Measures of Accelerating theDevelopment in Headquarters Economy of China-Malaysia Qinzhou Industrial Park, till 31 December2025, the enterprises in the Qinzhou Industrial Park that enjoy 15% of tax rate of Western Developmentwith the half reduction in the tax period of preferential policies shall enjoy the local share of corporateincome tax exemption (namely 40% of corporate income tax was exempted, and the proportion adjustedby the state shall be executed according to new proportion); Guangxi Luzhou Laojiao Imported LiquorIndustry Co., Ltd., the wholly-owned subsidiary of the Company, pays corporate income tax at the rate of9% according to the tax preference policies.
7. Notes to the main items of the consolidated financial statements (Allcurrency unit is CNY, except other statements)
7.1. Cash and cash equivalents
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Cash | 26,690.29 | 26,978.10 |
| Bank deposit | 13,550,514,925.33 | 11,616,532,676.06 |
| Other cash and cash equivalents | 60,840,032.93 | 8,310,686.44 |
| Total | 13,611,381,648.55 | 11,624,870,340.60 |
| Including: Total deposit outbound | 77,396,751.36 | 68,247,418.50 |
| Total amount with restriction to use due to mortgage, pledge or freeze | 87,027,139.90 | 56,675,277.79 |
Other statements:
Note1: The deposit outbound is the balance of cash and cash equivalents of the foreign holdingsubsidiary of the Company.Note 2: The closing balance of other cash and cash equivalents is the travel service deposit of CNY1,400,000.00 deposited by the 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 CNY59,440,032.93 deposited by the Company's holding subsidiary, Luzhou Laojiao Electronic CommerceCo., Ltd. on the third-party e-commerce platform.Note 3: CNY 1,400,000.00 of the total amount of funds with limited use rights due to mortgage, pledge orfreezing is the travel service deposit with limited use rights in other cash and cash equivalents; CNY85,627,139.90 is the fixed deposit interest accrued on the accrual basis.Note 4: There is no special benefit arrangement such as establishing a fund co-management accountwith related parties in the current period.Liquor and wine manufacturing companies shall disclose in detail whether there are special interestarrangements such as establishing co-management accounts with related parties.
□ Applicable √ N/A
7.2. 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 | 7,064,789.79 | 100.00% | 353,273.90 | 5.00% | 6,711,515.89 | 1,587,225.12 | 100.00% | 79,372.69 | 5.00% | 1,507,852.43 |
| Including: | ||||||||||
| Accounts | 7,064,78 | 100.00 | 353,273. | 5.00% | 6,711,51 | 1,587,22 | 100.00% | 79,372.6 | 5.00% | 1,507,852. |
| receivable tested for impairment on the portfolio with characteristics of credit risk | 9.79 | % | 90 | 5.89 | 5.12 | 9 | 43 | |||
| Total | 7,064,789.79 | 100.00% | 353,273.90 | 5.00% | 6,711,515.89 | 1,587,225.12 | 100.00% | 79,372.69 | 5.00% | 1,507,852.43 |
Accounts receivable tested for impairment on the portfolio:
Monetary Unit: CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 7,064,789.79 | 353,273.90 | 5.00% |
| Other portfolio | |||
| Total | 7,064,789.79 | 353,273.90 | -- |
Please refer to the relevant information of disclosure of provision for bad debt of other accountsreceivable if adopting the general mode of expected credit loss to withdraw provision for bad debt ofaccounts receivable
□ Applicable √ N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Closing balance |
| Within 1 year (including 1 year) | 7,064,561.20 |
| 2-3 years | 228.59 |
| Total | 7,064,789.79 |
The Company shall comply with the disclosure requirements of the Guidelines No. 14 of the ShenzhenStock Exchange on Industry Information Disclosure—Listed Companies Engaging in Business Relatedto Food & Liquor and Wine Production.
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 | 79,372.69 | 273,901.21 | 353,273.90 | |||
| Total | 79,372.69 | 273,901.21 | 353,273.90 |
Note: There is no significant provision in accounts receivable reversed or recovered in the reportingperiod.
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 |
| China Duty Free International LTD | 3,684,965.70 | 52.16% | 184,248.29 |
| Vang Kei Hong Trading Co.,Ltd | 776,955.49 | 11.00% | 38,847.77 |
| Online Banking Online(Beijing)Technology Co.,Ltd. | 427,765.35 | 6.05% | 21,388.27 |
| Alipay.com Co.,Ltd | 386,051.91 | 5.46% | 19,302.60 |
| Beijing Gaohuitong Commercial Management Co., Ltd. | 328,806.22 | 4.65% | 16,440.31 |
| Total | 5,604,544.67 | 79.32% |
7.3. Accounts receivable financing
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 2,143,072,245.18 | 3,209,371,766.35 |
| Total | 2,143,072,245.181 | 3,209,371,766.35 |
Note: 1. The closing balance decreased CNY 1,066,299,521.17 compared with opening balance, with andecrease by 33.22%, mainly due to bill discounting and maturity of bills during the reporting period. 2.The business mode to manage notes receivable aims to collect contract cash flow as well as to sell thefinancial assets, and thus the notes receivable is presented as accounts receivable financing; due to theshort term of notes receivable less than 1 year, and the sales time, sales price and sale proportioncannot be estimated reliably, the face value is regarded as the fair value of accounts receivable financingby the Company. 3. There was no allowance of provision for bad debt at the end of the reporting period.
Changes in accounts receivable financing in the reporting period and fair value:
? Applicable √ N/APlease refer to the relevant information of disclosure of impairment provision of other accountsreceivable if adopting the general mode of expected credit loss to withdraw impairment provision of
accounts receivable financing.? Applicable √ N/A
Other statements:
(1) There is CNY 2,613,947,742.53 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 | 2,613,947,742.53 | |
| Subtotal | 2,613,947,742.53 |
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.
(2) There are no accounts receivable financing transferred to accounts receivable due to thenon-performance of the agreements by the issuers.
(3) There are 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 | 110,553,828.71 | 87.60% | 72,436,550.81 | 96.99% |
| 1-2 years | 14,615,217.47 | 11.58% | 2,042,638.57 | 2.73% |
| 2-3 years | 906,671.00 | 0.72% | 206,348.00 | 0.28% |
| Over 3 years | 132,779.88 | 0.10% | ||
| Total | 126,208,497.061 | -- | 74,685,537.38 | -- |
Note: 1. The closing balance increased by CNY 51,522,959.68 compared with opening balance, with aincrease by 68.99%, mainly due to the increase of prepayments to suppliers.Reason for failure to timely settle the significant prepayment whose aging is longer than 1 year:
7.4.2. Top five entities with the largest balances of prepayment
| Company Name | Closing Balance | Proportion to the total closing balance of prepayment |
| Shanghai Merlot Advertising Co., Ltd. | 64,632,296.79 | 51.21% |
| Luzhou Western Gas Co., Ltd. | 8,050,769.30 | 6.38% |
| Luzhou Power Supply Company of State Grid Sichuan Electric Power Company | 7,891,283.05 | 6.25% |
| Shanghai Endeavor Culture Development Co., Ltd. | 2,140,903.20 | 1.70% |
| Beijing Tencent Culture Media Co., Ltd. | 2,000,000.00 | 1.58% |
| Subtotal | 84,715,252.34 | 67.12% |
7.5 Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividend receivable | 36,941,917.50 | 1,407,900.00 |
| Other receivables | 111,996,049.52 | 125,625,031.42 |
| Total | 148,937,967.02 | 127,032,931.42 |
7.5.1. Dividend receivable
7.5.1.1. Classification of dividend receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| North Chemical Industries Co., Ltd. | 62,542.20 | |
| Guotai Junan Securities Co., Ltd. | 6,595,118.32 | 1,407,900.00 |
| Huaxi Securities Co., Ltd. | 30,284,256.98 | |
| Total | 36,941,917.50 | 1,407,900.00 |
7.5.2. Other receivables
7.5.2.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds | 30,490,693.87 | 44,472,270.26 |
| Petty cash | 1,321,153.01 | 1,023,683.10 |
| Saving deposits involving contract disputes | 285,044,911.68 | 285,044,911.68 |
| Total | 316,856,758.56 | 330,540,865.04 |
7.5.2.2. Allowance of provision for bad debt
Monetary Unit: CNY
| Provision for bad debt | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 4,915,833.62 | 200,000,000.00 | 204,915,833.62 | |
| Balance of 1 January 2021 in the current period | —— | —— | —— | —— |
| Reversal of the current period | 55,124.58 | 55,124.58 | ||
| Balance of 30 June 2021 | 4,860,709.04 | 200,000,000.00 | 204,860,709.04 |
Changes of book balance with significant amount changed of loss provision in the current period? Applicable √ N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 19,363,911.24 |
| 1-2 years | 4,555,552.32 |
| 2-3 years | 5,201,156.39 |
| Over 3 years | 287,736,138.61 |
| 3-4 years | 420,000.00 |
| 4-5 years | 210,000.00 |
| Over 5 years | 287,106,138.61 |
| Total | 316,856,758.56 |
7.5.2.3. Provision and recovery for bad and doubtful other receivables in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Other receivables tested for impairment individually Note1 | 200,000,000.00 | 200,000,000.00 | ||||
| Other receivables tested for impairment by the portfolio | 4,915,833.62 | 55,124.58 | 4,860,709.04 | |||
| Total | 204,915,833.62 | 55,124.58 | 204,860,709.04 |
Note 1: In the 2014 Annual Report, the Company disclosed the information about three depositsamounting to CNY 500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of China andNanyang Zhongzhou Sub-branch of Industrial and Commercial Bank of China. The deposits have lostthe nature of monetary fund due to their involvement in contract disputes and have thus been transferredinto “other receivables”. As of 30 June 2021, of the deposits involved in contract disputes, the amountthat was not recovered was CNY 285,044,911.68. Related attorneys of W&H Law Firm Chengduproduced the Legal Opinions on the Allowance of Provision for Bad Debt of Luzhou Laojiao Co., Ltd. forAbnormal Deposits in Three Places Including Changsha and Nanyang on 10 March 2021. According tothe opinions, “Whereas during the period from the issue of previous legal opinions till this production oflegal opinions on the allowance proportion of provision for bad debt, there is no matter that occurred andaffected or changed the provision for bad debt, and thus the judgment on the allowance of provision forbad debt at CNY 200 million shall remain”. Refer to Note 12.2. for details.Note 2: There is no provision for bad debt with significant amount in other receivables reversed orrecovered.
7.5.2.4. Top five entities with the largest balances of the other receivables
Monetary Unit: CNY
| Company Name | Nature | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
| Saving deposits involving contract disputes | 285,044,911.68 | Over 5 years | 89.96% | 200,000,000.00 |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Security deposit | 3,590,728.58 | 1-2 years | 1.13% | 359,072.86 |
| Housing and Urban-Rural Development Bureau of Longmatan District, Luzhou | Security deposit | 3,052,930.23 | 2-3 years | 0.96% | 610,586.05 |
| Zhejiang Tmall Technology Co.,Ltd. | Security deposit, etc. | 2,806,954.10 | Within 1 year | 0.89% | 140,347.71 |
| Beijing Jingdong Century Information Technology Co., Ltd. | Security deposit, etc. | 2,566,740.15 | Within 1 year | 0.81% | 128,337.01 |
| Total | -- | 297,062,264.74 | -- | 93.75% | 201,238,343.63 |
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 | 51,969,274.14 | 51,969,274.14 | 92,033,654.20 | 92,033,654.20 | ||
| Goods in progress | 4,523,240,082.39 | 4,523,240,082.39 | 3,578,553,746.98 | 3,578,553,746.98 | ||
| Finished goods | 1,244,587,623.29 | 1,244,587,623.29 | 997,109,606.41 | 997,109,606.41 | ||
| Revolving materials | 20,085,278.92 | 20,085,278.92 | 79,396.01 | 79,396.01 | ||
| Goods in transit | 76,692,704.97 | 76,692,704.97 | 27,887,027.65 | 27,887,027.65 | ||
| Total | 5,916,574,963.71 | 5,916,574,963.71 | 4,695,663,431.25 | 4,695,663,431.25 |
The Company shall comply with the disclosure requirements of the Guidelines No. 14 of the ShenzhenStock Exchange on Industry Information Disclosure—Listed Companies Engaging in Business Relatedto Food & Liquor and Wine Production.
7.7. Other current assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 92,262,906.57 | 67,752,538.61 |
| Corporate income tax | 19,973,945.99 | 83,493,943.79 |
| Other taxes | 6,557,217.77 | 5,318,941.78 |
| Total | 118,794,070.33 | 156,565,424.18 |
Other statements:
The value-added tax expected to be deducted in the next fiscal year and corporate income tax and othertaxes are disclosed in other current assets.
7.8. 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. | 2,383,550,372.50 | 101,879,949.05 | 3,634,687.85 | 30,284,256.98 | 2,458,780,752.42 | 2,567,098.80 | |||||
| Sichuan | 6,854,47 | -985,886 | 5,868,58 | ||||||||
| Development Wine Investment Co., Ltd. | 1.67 | .58 | 5.09 | ||||||||
| Sichuan Tongniang Baijiu Industry Technology Research Institute Co., Ltd. Note | 8,009,898.80 | -3,523.53 | 8,006,375.27 | ||||||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 79,252,428.30 | 3,565,771.13 | 82,818,199.43 | ||||||||
| Subtotal | 2,477,667,171.27 | 104,456,310.07 | 3,634,687.85 | 30,284,256.98 | 2,555,473,912.21 | 2,567,098.80 | |||||
| Total | 2,477,667,171.27 | 104,456,310.07 | 3,634,687.85 | 30,284,256.98 | 2,555,473,912.21 | 2,567,098.80 |
7.9. Other equity instrument investment
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Financial assets designated to be measured at fair value through other comprehensive income | ||
| Including: | ||
| North Chemical Industries Co.,Ltd. | 11,257,595.99 | 11,460,858.15 |
| Luzhou Bank Co., Ltd. | 110,483,183.01 | 95,561,825.55 |
| Guotai Junan Securities Co., Ltd. | 201,857,728.56 | 206,450,757.39 |
| Guotai Junan Investment Management Co., Ltd. | 22,611,834.24 | 22,611,834.24 |
| Guojiu Big Data Co., Ltd. | 10,000,000.00 | 10,000,000.00 |
| Sichuan China Baijiu Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 1,075,124.09 | 1,075,124.09 |
| Total | 357,285,465.89 | 347,160,399.42 |
Categories of non-trading equity instrument investment in the current period:
Monetary Unit: CNY
| Item | Recognized dividends income | Accumulative gains | Accumulative losses | Amount of other comprehensive income transferred to retained earnings | Reason for assigning to measure at fair value and changes recorded into other comprehensive income | Reason of other comprehensive income transferred to retained earnings |
| North Chemical Industries Co.,Ltd. | 62,542.20 | 10,227,595.99 | According to the mode of managing assets by management layer | |||
| Luzhou Bank Co., Ltd. | 59,363,183.01 | According to the mode of managing assets by management layer | ||||
| Guotai Junan Securities Co., Ltd. | 6,595,118.32 | 189,138,571.80 | 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 | |||||
| Shenzhen Xingangfeng Development Co., Ltd. | 2,354,000.00 | According to the mode of managing assets by management layer | ||||
| Sichuan Deyang Jintai Hotel | 2,000,000.00 | According to the mode of managing assets by management layer | ||||
| Hainan Huitong International Trust Company | 1,000,000.00 | According to the mode of managing assets by management layer | ||||
| Sichuan China Baijiu Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 5,000.00 | 652,723.91 | According to the mode of managing assets by management layer | |||
| Subtotal | 6,662,660.52 | 258,729,350.80 | 6,006,723.91 |
7.10. Fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Fixed assets | 7,879,118,840.44 | 6,885,609,781.96 |
| Disposal of fixed assets | 1,294,270.93 | 1,498,392.76 |
| Total | 7,880,413,111.37 | 6,887,108,174.72 |
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 | 5,628,180,885.84 | 929,535,931.84 | 706,384,001.37 | 41,454,997.24 | 1,370,445,216.90 | 8,676,001,033.19 |
| 2. Increase in current period | 901,615,718.69 | 140,546,156.79 | 72,233,649.97 | 3,376,185.33 | 115,464,988.91 | 1,233,236,699.69 |
| (1) External purchase | 16,122,705.16 | 4,205,246.18 | 86,725.66 | 20,414,677.00 | ||
| (2) Transfer from construction in progress | 882,076,239.93 | 93,657,503.52 | 52,071,653.30 | 33,900.24 | 184,982,972.71 | 1,212,822,269.70 |
| (3) Increase from business combination | ||||||
| (4) Adjustment to categories | 19,539,478.76 | 30,765,948.11 | 15,956,997.50 | 3,342,285.09 | -69,604,709.46 | 0.00 |
| (5) Changes of exchange rates | -247.01 | -247.01 | ||||
| 3. Decrease in current period | 4,992,370.26 | 5,393,635.52 | 143,957.89 | 168,998.96 | 10,698,962.63 | |
| (1) Disposal or retirement | 24,937.33 | 24,937.33 | ||||
| (2) Transfer of reconstruction and extension to construction in progress | 4,967,432.93 | 5,393,635.52 | 143,957.89 | 73,480.08 | 10,578,506.42 | |
| (3) Transfer to intangible assets | 95,518.88 | 95,518.88 |
| 4. Closing Balance | 6,524,804,234.27 | 1,064,688,453.11 | 778,473,693.45 | 44,831,182.57 | 1,485,741,206.85 | 9,898,538,770.25 |
| II. Accumulated depreciation | ||||||
| 1. Opening Balance | 607,512,483.39 | 256,818,697.20 | 249,527,593.90 | 27,657,360.07 | 648,252,176.60 | 1,789,768,311.16 |
| 2. Increase in current period | 102,494,304.07 | 59,470,449.55 | 34,747,350.31 | 1,539,066.16 | 30,778,972.19 | 229,030,142.28 |
| (1) Provision | 100,870,858.87 | 61,000,251.27 | 35,650,410.27 | 1,500,257.32 | 30,008,429.18 | 229,030,206.91 |
| (2) Transfer from intangible assets | ||||||
| (3) Adjustment to categories | 1,623,445.20 | -1,529,801.72 | -902,995.33 | 38,808.84 | 770,543.01 | |
| (4) Changes of exchange rates | -64.63 | -64.63 | ||||
| 3. Decrease in current period | 833.55 | 630.15 | 1,463.70 | |||
| (1) Disposal or retirement | 833.55 | 833.55 | ||||
| (2) Transfer of reconstruction and extension to construction in progress | ||||||
| (3) Transfer to intangible assets | 630.15 | 630.15 | ||||
| 4. Closing Balance | 710,005,953.91 | 316,289,146.75 | 284,274,944.21 | 29,196,426.23 | 679,030,518.64 | 2,018,796,989.74 |
| III. Provision for impairment | ||||||
| 1. Opening Balance | 622,940.07 | 622,940.07 | ||||
| 2. Increase in current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in |
| current period | ||||||
| (1) Disposal or retirement | ||||||
| 4. Closing Balance | 622,940.07 | 622,940.07 | ||||
| IV. Book Value | ||||||
| 1. Closing Book Value | 5,814,175,340.29 | 748,399,306.36 | 494,198,749.24 | 15,634,756.34 | 806,710,688.21 | 7,879,118,840.44 |
| 2. Opening Book Value | 5,020,045,462.38 | 672,717,234.64 | 456,856,407.47 | 13,797,637.17 | 722,193,040.30 | 6,885,609,781.96 |
7.10.2. Fixed assets leased out through operating lease
Monetary Unit: CNY
| Item | Closing book value |
| Buildings and constructions | 177,917,182.50 |
7.10.3. Fixed assets without certification of right
Monetary Unit: CNY
| Item | Book value | Reason for not having the certification of right |
| Buildings of parent company | 26,555,420.84 | The property ownership certificate has not been processed yet for the historical reasons, and it plans to be processed after gradually improving procedures. |
| Buildings of brewing company | 3,540,794,347.55 | In procedure |
| Subtotal | 3,567,349,768.39 |
7.10.4. Disposal of fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Disposal and retirement of assets | 1,294,270.93 | 1,498,392.76 |
| Total | 1,294,270.93 | 1,498,392.76 |
7.11. Construction in progress
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Construction in progress | 1,290,824,691.35 | 2,012,129,880.15 |
| Total | 1,290,824,691.35 | 2,012,129,880.15 |
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 of Luzhou Laojiao | 0.00 | 0.00 | 968,634,809.01 | 968,634,809.01 | ||
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 481,159,228.78 | 481,159,228.78 | 242,719,982.63 | 242,719,982.63 | ||
| Marketing network command center office area reconstruction and expansion project | 0.00 | 0.00 | 5,473,631.57 | 5,473,631.57 | ||
| New model application project of intelligent production workshop of solid state baijiu | 16,862,599.30 | 16,862,599.30 | 16,862,599.30 | 16,862,599.30 | ||
| Technical | 226,573,247.52 | 226,573,247.52 | 206,167,904.88 | 206,167,904.88 | ||
| renovation of Luzhou Laojiao Intelligent packaging center | ||||||
| Guojiao Culture Park Qiankun Wine Castle Cultural Tourism project | 309,888,048.18 | 309,888,048.18 | 305,548,667.25 | 305,548,667.25 | ||
| Other projects | 256,341,567.57 | 256,341,567.57 | 266,722,285.51 | 266,722,285.51 | ||
| Total | 1,290,824,691.35 | 1,290,824,691.351 | 2,012,129,880.15 | 2,012,129,880.15 |
Note: 1.The closing balance decreased CNY 721,305,188.8 compared with the opening balance, with adecrease by 35.85%, because of the gradual transfer of the technical renovation project of brewing tofixed assets.
7.11.2. Significant changes in construction in progress
Monetary Unit: CNY
| Item | Budget | Opening Balance | Increase in current period | Transfer into fixed assets | Other decreases | Closing Balance | Proportion of accumulative project input in budget | Progress (%) | Accumulative capitalized interest | Including: Capitalized interest for the period | Capitalization rate for the period (%) | Source of funds |
| Technical renovation project of brewing of Luzhou Laojiao | 8,877,276,500.00 | 968,634,809.01 | 107,045,469.67 | 1,073,736,655.68 | 1,943,623.00 | 0.00 | 93.84% | 100.00% | 109,424,753.82 | 22,310,774.20 | 3.67% | Capital raised and self-raised |
| Improvement and technical | 888,544,100.00 | 242,719,982.63 | 238,439,246.15 | 481,159,228.78 | 54.15% | 80.00% | Other |
| renovation project of Luzhou Laojiao production supporting | ||||||||||||
| Marketing network command center office area reconstruction and expansion project | 271,500,000.00 | 5,473,631.57 | 4,857,545.96 | 10,117,626.43 | 213,551.10 | 0.00 | 98.66% | 100.00% | Other | |||
| New model application project of intelligent production workshop of solid state baijiu | 245,100,000.00 | 16,862,599.30 | 16,862,599.30 | 95.98% | 99.00% | Other | ||||||
| Technical renovation of | 1,577,913,400.00 | 206,167,904.88 | 20,405,342.64 | 226,573,247.52 | 14.36% | 20.00% | Other |
| Luzhou Laojiao Intelligent packaging center | ||||||||||||
| Guojiao Culture Park Qiankun Wine Castle Cultural Tourism project | 337,885,813.44 | 305,548,667.25 | 4,339,380.93 | 309,888,048.18 | 91.71% | 95.00% | Other | |||||
| Total | 12,198,219,813.44 | 1,745,407,594.64 | 375,086,985.35 | 1,083,854,282.11 | 2,157,174.10 | 1,034,483,123.78 | -- | -- | 109,424,753.82 | 22,310,774.20 | 3.67% | -- |
7.12. Right-of-use assets
Monetary Unit: CNY
| Item | Buildings and constructions | Specialized equipment | Land use right | Total |
| 1. Opening balance | 17,520,623.03 | 32,680,786.33 | 50,201,409.36 | |
| 2. Increase in current period | 19,505,876.84 | 19,505,876.84 | ||
| (1) Lease in | 19,505,876.84 | 19,505,876.84 | ||
| 4. Closing Balance | 37,026,499.87 | 32,680,786.33 | 69,707,286.20 | |
| 2. Increase in current period | 12,364,816.75 | 1,817,456.35 | 14,182,273.10 | |
| (1) Provision | 12,364,816.75 | 1,817,456.35 | 14,182,273.10 | |
| 4. Closing Balance | 24,661,683.12 | 30,863,329.98 | 55,525,013.10 | |
| 1. Closing Book Value | 24,661,683.12 | 30,863,329.98 | 55,525,013.10 | |
| 2. Opening Book Value | 17,520,623.03 | 32,680,786.33 | 50,201,409.36 |
7.13. Intangible assets
7.13.1. Details of intangible assets
Monetary Unit: CNY
| Item | Land use right | Patent right | No-patent right technology | Computer software | Trademark right | Total |
| I. Original cost | ||||||
| 1. Opening Balance | 2,743,432,254.34 | 1,700,050.44 | 48,066,415.14 | 1,890,746.08 | 2,795,089,466.00 | |
| 2. Increase in current period | 770,063.00 | 4,650,675.59 | 5,420,738.59 | |||
| (1) Acquired | ||||||
| (2) Internal developed | ||||||
| (3) Business combination | ||||||
| (4) Transferred from construction in progress | 770,063.00 | 4,555,156.71 | 5,325,219.71 | |||
| (5) Transferred from fixed assets | 95,518.88 | 95,518.88 | ||||
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | 2,744,202,317.34 | 1,700,050.44 | 52,717,090.73 | 1,890,746.08 | 2,800,510,204.59 | |
| II. Accumulated amortization | ||||||
| 1. Opening Balance | 110,708,419.78 | 570,599.00 | 24,977,019.46 | 1,715,402.39 | 137,971,440.63 | |
| 2. Increase in current period | 30,451,338.86 | 65,002.52 | 1,518,000.60 | 43,123.76 | 32,077,465.74 | |
| (1) Provision | 30,451,338.86 | 65,002.52 | 1,517,370.45 | 43,123.76 | 32,076,835.59 | |
| (2) Transferred from fixed | 630.15 | 630.15 |
| assets | ||||||
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | 141,159,758.64 | 635,601.52 | 26,495,020.06 | 1,758,526.15 | 170,048,906.37 | |
| III. Provision for impairment | ||||||
| 1. Opening Balance | ||||||
| 2. Increase in current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | ||||||
| IV. Book Value | ||||||
| 1. Closing Book Value | 2,603,042,558.70 | 1,064,448.92 | 26,222,070.67 | 132,219.93 | 2,630,461,298.22 | |
| 2. Opening Book Value | 2,632,723,834.56 | 1,129,451.44 | 23,089,395.68 | 175,343.69 | 2,657,118,025.37 |
The proportion of intangible assets formed by internal development to the balance of intangible assets atthe period-end
7.14. Long-term deferred expense
Monetary Unit: CNY
| Item | Opening Balance | Increase | Amortization | Other decrease | Closing Balance |
| Improvement expense of rented fixed assets | 2,305,902.21 | 421,016.50 | 1,884,885.71 | ||
| Total | 2,305,902.21 | 421,016.50 | 1,884,885.71 |
7.15. Deferred tax assets/ deferred tax liabilities
7.15.1. 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 | 207,428,708.96 | 51,857,177.24 | 208,184,340.96 | 52,032,763.16 |
| Unrealized profits from internal transactions | 1,896,397,153.41 | 474,099,288.35 | 2,210,592,352.66 | 552,648,088.16 |
| Deductible losses | 12,668,914.76 | 3,167,228.69 | 11,342,715.00 | 2,835,678.76 |
| Impact from salary | 436,074,344.40 | 109,018,586.10 | 441,020,431.90 | 108,714,676.83 |
| Impact from deferred earnings | 34,538,157.16 | 8,634,539.29 | 29,739,000.00 | 7,434,750.00 |
| Impact from fixed assets depreciation | 1,554,602.41 | 296,565.57 | 260,745.17 | 43,022.95 |
| Impact from fair value changes of other equity instrument investment | 6,006,723.91 | 1,501,680.98 | 6,006,723.91 | 1,501,680.98 |
| Total | 2,594,668,605.01 | 648,575,066.22 | 2,907,146,309.60 | 725,210,660.84 |
7.15.2. 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 | 258,729,350.80 | 64,682,337.72 | 248,604,284.33 | 62,151,071.11 |
| Total | 258,729,350.80 | 64,682,337.72 | 248,604,284.33 | 62,151,071.11 |
7.15.3. Details of unrecognized deferred tax assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Deductible losses | 48,678,162.31 | 123,969,302.33 |
| Impact from employee benefits payable | 141,256.03 | 74,816.40 |
| Total | 48,819,418.34 | 124,044,118.73 |
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 |
| 2021 | |||
| 2022 | |||
| 2023 | 535,737.90 | 535,737.90 | |
| 2024 | 14,123,815.19 | 11,691,604.41 | |
| 2025 | 34,018,609.22 | 111,741,960.02 | |
| Total | 48,678,162.31 | 123,969,302.33 | -- |
7.16. 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 | 11,956,325.86 | 11,956,325.86 | 10,806,325.86 | 10,806,325.86 | ||
| Total | 11,956,325.86 | 11,956,325.86 | 10,806,325.86 | 10,806,325.86 | ||
7.17. Notes payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Bank acceptance bill | 121,285,117.60 | |
| Total | 121,285,117.60 |
7.18. Accounts payable
7.18.1. Presentation of accounts payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Materials and service expense | 828,250,278.80 | 845,025,160.84 |
| Engineering equipment expense | 1,544,021,456.23 | 1,759,264,038.93 |
| Total | 2,372,271,735.03 | 2,604,289,199.77 |
7.19. Contract liabilities
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Within 1 year | 1,341,672,929.97 | 1,637,685,488.79 |
| 1-2 years | 28,212,798.27 | 15,504,524.56 |
| 2-3 years | 13,478,445.81 | 14,385,601.53 |
| Over 3 years | 24,705,402.49 | 11,261,552.06 |
| Total | 1,408,069,576.54 | 1,678,837,166.94 |
7.20. Employee benefits payable
7.20.1. Employee benefits payable shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Short-term benefits | 439,256,934.36 | 511,483,240.19 | 578,570,673.70 | 372,169,500.85 |
| 2. Post-employment benefits- defined contribution plans | 65,756,721.30 | 52,216,441.83 | 46,593,456.48 | 71,379,706.65 |
| 3. Termination benefits | 8,971.53 | 8,971.53 | ||
| Total | 505,022,627.19 | 563,699,682.02 | 625,164,130.18 | 443,558,179.03 |
7.20.2. Short-term employee benefits payable shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Wages, bonuses, allowances and grants | 362,289,928.18 | 434,459,302.51 | 503,652,589.77 | 293,096,640.92 |
| 2. Employees’ welfare | 20,127,264.71 | 20,127,264.71 | ||
| 3. Social insurance | 15,250,336.23 | 18,040,425.15 | 17,137,395.46 | 16,153,365.92 |
| premiums | ||||
| Including: Medical insurance premium | 11,428,828.49 | 16,723,227.55 | 16,160,482.07 | 11,991,573.97 |
| Work-related injury insurance | 2,035,870.30 | 1,273,759.60 | 838,350.64 | 2,471,279.26 |
| Maternity insurance premium | 1,784,957.44 | 43,438.00 | 138,562.75 | 1,689,832.69 |
| Other insurance premium | 680.00 | 680.00 | ||
| 4. Housing funds | 4,504,648.59 | 30,277,378.73 | 27,543,569.23 | 7,238,458.09 |
| 5. Labor union expenditures and employee education funds | 57,212,021.36 | 8,578,869.09 | 10,109,854.53 | 55,681,035.92 |
| Total | 439,256,934.36 | 511,483,240.19 | 578,570,673.70 | 372,169,500.85 |
7.20.3. Defined contribution plan shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Basic endowment insurance premium | 44,864,948.21 | 33,661,808.17 | 27,802,544.80 | 50,724,211.58 |
| 2. Unemployment insurance premium | 7,388,102.26 | 1,279,631.34 | 1,037,899.11 | 7,629,834.49 |
| 3. Enterprise annuity | 13,503,670.83 | 17,275,002.32 | 17,753,012.57 | 13,025,660.58 |
| Total | 65,756,721.30 | 52,216,441.83 | 46,593,456.48 | 71,379,706.65 |
7.21. Taxes payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 154,944,939.24 | 244,763,614.30 |
| Consumption tax | 100,167,740.18 | 1,059,445,349.23 |
| Enterprise income tax | 541,671,856.30 | 606,140,406.79 |
| Individual income tax | 5,090,656.46 | 5,265,751.31 |
| Urban maintenance and construction tax | 17,562,506.29 | 72,389,068.64 |
| Education surcharge | 7,526,901.33 | 31,023,067.68 |
| Local education surcharge | 5,017,934.15 | 20,682,045.08 |
| Property tax | 279,763.75 | 337,763.14 |
| Stamp duty | 2,619,648.35 | 5,351,912.65 |
| Land use tax | 437,619.64 | 616,030.55 |
| Others | 33,032.56 | 12,201.76 |
| Total | 835,352,598.251 | 2,046,027,211.13 |
Note: 1.The closing balance decreased CNY 1,210,674,612.88 compared with the opening balance, witha decrease by 59.17%, mainly due to actual payment of tax at the end of last year during the reportingperiod.
7.22. Other payables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividends payable | 3,004,207,328.28 | |
| Other payables | 562,672,114.60 | 501,623,924.54 |
| Total | 3,566,879,442.88 | 501,623,924.54 |
7.22.1. Dividends payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Ordinary share dividends | 3,004,207,328.28 | |
| Total | 3,004,207,328.28 |
7.22.2. Other payables
7.22.2.1. Categories by nature
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Security deposit | 533,289,161.33 | 485,228,527.19 |
| Intercourse funds | 1,649,186.15 | 8,599,977.98 |
| Others | 27,733,767.12 | 7,795,419.37 |
| Total | 562,672,114.60 | 501,623,924.54 |
7.23. Non-current liabilities due within one year
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Bonds payable due within one year | 89,991,780.82 | 72,219,178.08 |
| Lease liabilities due within one year | 10,844,782.72 | 9,987,955.08 |
| Total | 100,836,563.54 | 82,207,133.16 |
7.24. Other current liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Output VAT to be transferred | 183,049,063.92 | 218,267,353.36 |
| Total | 183,049,063.92 | 218,267,353.36 |
7.25. Bonds payable
7.25.1. Bonds payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Corporate bonds in 2019 (Phase I) | 2,493,771,587.79 | 2,492,799,107.31 |
| Corporate bonds in 2020 (Phase I) | 1,495,647,196.06 | 1,495,072,992.71 |
| Total | 3,989,418,783.85 | 3,987,872,100.02 |
7.25.2. 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 | 2,492,799,107.31 | 133,882,191.78 | 972,480.48 | 2,493,771,587.79 | |||
| Corporat | 1,500,00 | 16 | 5 | 1,494,00 | 1,495,07 | 67,458,9 | 574,203. | 1,495,64 |
| e bonds in 2020 (Phase I) | 0,000.00 | March 2020 | 0,000.00 | 2,992.71 | 04.11 | 35 | 7,196.06 | ||||
| Total | -- | -- | -- | 3,984,000,000.00 | 3,987,872,100.02 | 201,341,095.89 | 1,546,683.83 | 3,989,418,783.85 |
7.26. Lease liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Long-term lease liabilities | 46,474,941.96 | 40,213,454.28 |
| Total | 46,474,941.96 | 40,213,454.28 |
7.27. Deferred income
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Reason |
| Government grants | 29,739,000.00 | 7,515,000.00 | 2,715,842.86 | 34,538,157.14 | Reception of financial allocation |
| Total | 29,739,000.00 | 7,515,000.00 | 2,715,842.86 | 34,538,157.14 | -- |
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 baijiu brewing and qu-making | 1,904,000.00 | 952,000.00 | 952,000.00 | Related to assets | ||||
| New mode application project of digital workshop | 3,465,000.00 | 1,665,000.00 | 256,700.00 | 4,873,300.00 | Related to assets |
| for solid state baijiu production | ||||||||
| Construction project of spirit room of Luzhou Laojiao brewing technical renovation | 7,000,000.00 | 350,000.00 | 6,650,000.00 | Related to assets | ||||
| Luzhou Laojiao automatic wine production line technical renovation project | 500,000.00 | 25,000.00 | 475,000.00 | Related to assets | ||||
| Brewing wastewater treatment project | 10,000,000.00 | 500,000.00 | 9,500,000.00 | Related to assets | ||||
| Construction project of pottery jars room of Luzhou Laojiao brewing technical renovation | 3,870,000.00 | 3,870,000.00 | Related to assets | |||||
| Boiler reconstruction project of Luohan Brewing Base of Luzhou Laojiao | 3,000,000.00 | 5,850,000.00 | 632,142.86 | 8,217,857.14 | Related to assets | |||
| Total | 29,739,000. | 7,515,000.0 | 2,715,842.8 | 34,538,157. |
| 00 | 0 | 6 | 14 |
7.28. 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 | |||||
7.29. 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 |
7.30. 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 | 181,898,170.29 | 7,593,799.86 | 7,593,799.86 | 189,491,970.15 | ||||
| profit and loss | ||||||||
| Fair value changes of other equity instrument investment | 181,898,170.29 | 7,593,799.86 | 7,593,799.86 | 189,491,970.15 | ||||
| II. Other comprehensive income that will be reclassified into profit and loss | 4,165,154.74 | 1,652,653.22 | 2,544,474.29 | -891,821.07 | 6,709,629.03 | |||
| Including: Other comprehensive income that will be reclassified into profit and loss under equity method | 3,193,937.48 | 3,634,687.85 | 3,634,687.85 | 6,828,625.33 | ||||
| Difference from conversion of financial statements in foreign currency | 971,217.26 | -1,982,034.63 | -1,090,213.56 | -891,821.07 | -118,996.30 | |||
| Total | 186,063,325.03 | 9,246,453.08 | 10,138,274.15 | -891,821.07 | 196,201,599.18 |
7.31. 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 |
7.32. Undistributed profits
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Undistributed profit before adjustment at the end of the last year | 16,236,513,212.43 | 12,559,746,579.91 |
| Undistributed profit after adjustment at the beginning of year | 16,236,513,212.43 | 12,559,746,579.91 |
| Plus: Net profit attributable to owners of the parent company for the current period | 4,226,316,722.25 | 3,220,452,190.27 |
| Ordinary share dividends payable | 3,004,207,328.28 | 2,328,956,436.84 |
| Undistributed profits at the end of the period | 17,458,622,606.40 | 13,451,242,333.34 |
7.33. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 9,195,242,633.92 | 1,286,448,541.49 | 7,566,057,028.33 | 1,360,968,975.63 |
| Other business | 121,854,393.13 | 48,706,401.97 | 68,425,873.54 | 25,667,453.22 |
| Total | 9,317,097,027.05 | 1,335,154,943.46 | 7,634,482,901.87 | 1,386,636,428.85 |
Details:
Monetary Unit: CNY
| Contract category | Segment 1 | Segment 2 | Baijiu sales | Total |
| Commodity type | 9,195,242,633.92 | 9,195,242,633.92 | ||
| Including: | ||||
| Medium and high grade baijiu | 8,218,296,465.61 | 8,218,296,465.61 | ||
| Other baijiu | 976,946,168.31 | 976,946,168.31 | ||
| By operating segment | 9,195,242,633.92 | 9,195,242,633.92 | ||
| Including: | ||||
| Domestic | 9,145,951,100.30 | 9,145,951,100.30 | ||
| Outbound | 49,291,533.62 | 49,291,533.62 | ||
| Including: | ||||
| Contract type | 9,195,242,633.92 | 9,195,242,633.92 | ||
| Including: | ||||
| Commodity sales contract | 9,195,242,633.92 | 9,195,242,633.92 | ||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Total | 9,195,242,633.92 | 9,195,242,633.92 |
7.34. Business taxes and surcharges
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Consumption tax | 768,511,169.55 | 509,573,103.20 |
| Urban maintenance and construction tax | 113,588,226.81 | 84,391,437.23 |
| Educational surcharge | 48,680,668.64 | 36,066,318.42 |
| Property tax | 8,536,994.15 | 6,080,276.41 |
| Land use tax | 15,056,103.68 | 14,387,112.79 |
| Stamp duty | 5,789,652.51 | 5,152,513.60 |
| Local education surcharge | 32,453,779.09 | 23,815,732.65 |
| Others | 56,957.69 | 47,336.52 |
| Total | 992,673,552.12 | 679,513,830.82 |
Other note:
Note: The current period increased CNY 313,159,721.30 compared with previous period with anincrease by 46.09%, mainly due to increase in consumption tax.
7.35. Selling and distribution expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Advertising promotion expense | 407,510,592.52 | 537,365,225.18 |
| Promotion expense | 482,468,677.16 | 314,638,554.04 |
| Storage and logistics costs | 48,338,332.97 | 45,113,965.94 |
| Employee compensation | 183,923,965.82 | 158,943,220.57 |
| Others | 61,006,363.45 | 55,897,243.25 |
| Total | 1,183,247,931.92 | 1,111,958,208.98 |
7.36. General and administrative expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Employee compensation | 258,646,895.05 | 202,689,320.65 |
| Depreciation and amortization | 46,232,227.29 | 51,721,598.92 |
| Management fee and service expense | 24,286,900.46 | 23,647,099.54 |
| Others | 110,395,756.90 | 81,955,956.65 |
| Total | 439,561,779.70 | 360,013,975.76 |
7.37. Research and development expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Comprehensive research and development expenses | 36,688,121.08 | 32,028,581.28 |
| Total | 36,688,121.08 | 32,028,581.28 |
7.38. Financial expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Interest expenses | 75,787,443.01 | 66,532,174.99 |
| Less: Interest income | 206,402,358.25 | 173,389,442.03 |
| Losses from currency exchange | 1,433,551.74 | -1,530,667.65 |
| Handling charges | 365,454.45 | 113,098.00 |
| Unacknowledged financial charges | 807,941.63 | |
| Total | -128,007,967.42 | -108,274,836.69 |
7.39. Other income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Government grants | 7,226,821.19 | 9,570,078.30 |
| Individual income tax commission refund | 1,814,223.82 | 871,596.97 |
| Total | 9,041,045.01 | 10,441,675.27 |
7.40. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under the equity method | 121,343,983.69 | 94,958,932.04 |
| Dividend income gained during the period of holding other equity instrument investment | 6,662,660.52 | 9,379,824.36 |
| Total | 128,006,644.21 | 104,338,756.40 |
7.41. Credit impairment loss
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Bad debt loss of other receivables | 55,124.50 | -1,055,457.65 |
| Bad debt loss of accounts receivable | -273,954.83 | 654,390.95 |
| Total | -218,830.33 | -401,066.70 |
7.42. Gains from disposal of assets
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Gains from disposal of non-current assets | 180,849.31 | 104,663.83 |
| Including: Gains from disposal of fixed assets | 180,849.31 | 104,663.83 |
7.43. 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 | 1,190,640.00 | 1,019,231.18 | 1,190,640.00 |
| Others | 24,520,664.83 | 9,925,210.53 | 24,520,664.83 |
| Total | 25,711,304.83 | 10,944,441.71 | 25,711,304.83 |
Other statements:
Note: The current period increased CNY 14,766,863.12 compared with previous period with an increaseby 134.93%, mainly due to increase in other compensation income.
7.44. 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 | 4,045,600.00 | 24,034,863.69 | 4,045,600.00 |
| Others | 4,237,809.08 | 15,182,522.39 | 4,237,809.08 |
| Total | 8,283,409.08 | 39,217,386.08 | 8,283,409.08 |
Other statements:
Note: The current period decreased CNY 30,933,977.00 compared with previous period with a decreaseby 78.88%, mainly due to a YoY decline in donation.
7.45. Income tax expense
7.45.1. Statement of income tax expense
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Current period income tax | 1,269,426,840.24 | 849,516,324.48 |
| Deferred income tax | 76,635,594.62 | 184,760,038.63 |
| Total | 1,346,062,434.861 | 1,034,276,363.11 |
Note: 1. The current period increased CNY 311,786,071.75 compared with previous period with anincrease by 30.15%, mainly due to the increase in profits with the increase in sales revenue of high-endbaijiu.
7.45.2. Adjustment for accounting profit and income tax expense
Monetary Unit: CNY
| Item | Current Period |
| Total profit | 5,612,216,270.14 |
| Income tax expenses determined by statutory/applicable tax rate | 1,403,054,067.54 |
| Impact from subsidiaries’ different tax rates | 2,806,902.18 |
| Impact from adjust for impact from income tax expense in previous period | -7,135,667.68 |
| Impact from non-taxable income | -32,001,661.05 |
| Impact from non-deductible costs, expenses and losses | 1,307,628.13 |
| Impact from deductable losses of unrecognized deferred income tax at the beginning of the reporting period | -24,312,041.64 |
| Impact from deductible temporary difference or losses due to unrecognized deferred tax asset in current period | 14,784,495.73 |
| Impact from research and development expense deduction | -12,441,288.35 |
| Income tax expense | 1,346,062,434.86 |
7.46. Other comprehensive income
Details in Note 5.30. Other comprehensive income.
7.47. Notes to the statement of cash flow
7.47.1. Cash received from other operation activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Government grants | 11,642,998.38 | 9,941,675.27 |
| Interest income from bank deposit | 174,050,502.18 | 146,071,271.36 |
| Others | 310,409,766.53 | 62,865,732.81 |
| Total | 496,103,267.09 | 218,878,679.44 |
7.47.2. Cash paid for other operating activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for expenses | 1,068,313,251.12 | 1,114,045,507.54 |
| Total | 1,068,313,251.12 | 1,114,045,507.54 |
7.47.3. Cash paid for other financing activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for renting houses, equipment etc. | 1,844,313.68 | |
| Rating and registration fee for corporate bonds in 2020 (Phase I) | 180,000.00 | |
| Total | 1,844,313.68 | 180,000.00 |
7.48. Supplementary information to statement of cash flow
7.48.1. 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 | 4,266,153,835.28 | 3,224,541,434.19 |
| Plus: Provision for asset impairment | 218,830.33 | 401,066.70 |
| Depreciation of fixed asset, oil and gas | 229,030,142.28 | 117,157,264.80 |
| assets and productive biological assets | ||
| Depreciation of right-of-use assets | ||
| Amortization of intangible assets | 32,077,465.74 | 10,313,976.80 |
| Amortization of long-term deferred expense | 421,016.50 | 250,314.19 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (Gains use “-”) | -180,849.31 | -104,663.83 |
| Losses from retirement of fixed assets (Gains use “-”) | ||
| Losses from change in fair value (Gains use “-”) | ||
| Financial expenses (Gains use “-”) | -128,007,967.42 | -108,274,836.69 |
| Losses on investments (Gains use “-”) | -128,006,644.21 | -104,338,756.40 |
| Decrease in deferred income tax assets (Increase uses “-”) | 76,635,594.62 | 184,760,038.63 |
| Increase in deferred income tax liabilities (Decrease uses “-”) | 517,839.41 | |
| Decrease in inventories (Increase use “-”) | -1,220,911,532.46 | 164,180,911.74 |
| Decrease in operating receivables (Increase use “-”) | 1,047,344,251.88 | -507,042,866.12 |
| Increase in operating payables (Decrease use “-”) | -1,436,537,103.33 | -2,253,546,301.18 |
| Others | ||
| Net cash flows from operating activities | 2,738,237,039.90 | 728,815,422.24 |
| 2. Significant investing and financing activities not involving cash: | -- | -- |
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under financing lease | ||
| 3.Net change in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 13,524,354,508.65 | 10,932,349,651.46 |
| Less: Opening balance of cash | 11,568,195,062.81 | 9,752,266,526.78 |
| Plus: Closing balance of cash |
| equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net change in cash and cash equivalents | 1,956,159,445.84 | 1,180,083,124.68 |
7.48.2. Composition of cash and cash equivalent
Monetary Unit: CNY
| Item | Opening Balance | Closing Balance |
| 1. Cash | 13,524,354,508.65 | 11,568,195,062.81 |
| Including: Cash on hand | 26,690.29 | 26,978.10 |
| Unrestricted bank deposit | 13,463,487,785.43 | 11,561,257,398.27 |
| Other unrestricted cash and cash equivalents | 60,840,032.93 | 6,910,686.44 |
| 3. Closing balance of cash and cash equivalents | 13,524,354,508.65 | 11,568,195,062.81 |
| Including: Cash and cash equivalent with restriction to use of parent company and subsidiaries | 87,027,139.90 | 56,675,277.79 |
Other statements:
Note: The difference between the closing balance of cash and cash equivalents and cash at bank and onhand is CNY 87,027,139.90, of which, CNY 1,400,000.00 is a travel service deposit with limited userights in other cash and cash equivalents and CNY 85,627,139.90 is provision for fixed deposit intereston an accrual basis.
7.49. Assets with restricted ownership or use rights
Monetary Unit: CNY
| Item | Closing book balance | Reason for restriction |
| Bank deposits | 85,627,139.90 | provision for fixed deposit interest on an accrual basis |
| 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 | 87,027,139.90 | -- |
7.50. Foreign currency transactions
7.50.1. 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 | 36,639,771.08 | 6.4601 | 236,696,585.15 |
| EUR | |||
| HKD | 7,393,783.31 | 0.8321 | 6,152,367.09 |
| Accounts Receivable | -- | -- | |
| Including: USD | 32,612.35 | 6.4601 | 210,679.04 |
| EUR | |||
| HKD | 5,616,023.35 | 0.8321 | 4,673,093.03 |
| GBP | 87,304.00 | 8.9410 | 780,585.06 |
| Long-term Loans | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other Receivables | |||
| Including: USD | 45.12 | 6.4601 | 291.48 |
| HKD | 2,076,380.93 | 0.8321 | 1,727,756.57 |
| AUD | |||
| Accounts Payable | |||
| Including: USD | 222,488.26 | 6.4601 | 1,437,296.41 |
| HKD | 2,307,339.48 | 0.8321 | 1,919,937.18 |
| Other Payables | |||
| Including: USD | 30,000.00 | 6.4601 | 193,803.00 |
| HKD | 26,419,841.95 | 0.8321 | 21,983,950.49 |
7.50.2. Description of the foreign business entity, including the important foreign business entity,shall disclose its main foreign business place, bookkeeping standard currency and selectionbasis, and shall also disclose the reason for the change of the bookkeeping standard currency
√ Applicable ? N/A
| Company | Operation site | Bookkeeping currency | Choosing Reason |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | Hong Kong, China | HKD | Currency in the registration place |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | USA | USD | Currency in the registration place |
| Mingjiang Co., Ltd. | USA | USD | Currency in the registration place |
7.51. Government grants
7.51.1. Details of government grants
Monetary Unit: CNY
| Item | Amount | Presentation | Amount included in profit or loss of the current period |
| Related to assets | 34,538,157.14 | Deferred income | 2,715,842.86 |
| Related to income | 4,510,978.33 | Other income | 4,510,978.33 |
| Total | 39,049,135.47 | 7,226,821.19 |
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 | Baijiu 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 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Laojiao Co., Ltd. | ||||||
| Luzhou Laojiao New Retail Co., Ltd. | Chengdu | Chengdu | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao Custom Liquor Co., Ltd. Note | Luzhou | Luzhou | Baijiu sales | 15.00% | Investment | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Luzhou | Luzhou | Baijiu 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 | Baijiu sales | 100.00% | Investment | |
| Luzhou Dingyi Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Dinghao Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Luzhou | Luzhou | Liquor import and export trade | 100.00% | Investment | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Luzhou | Luzhou | Baijiu sales | 75.00% | Investment | |
| Luzhou Laojiao Bosheng | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment |
| Hengxiang Liquor Sales Co., Ltd. | ||||||
| Luzhou Laojiao Fruit Wine Industry Co., Ltd. Note | Luzhou | Luzhou | Fruit liquor sales | 41.00% | Investment | |
| Mingjiang Co., Ltd. | America | America | Baijiu 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 | Baijiu sales, tourism | 100.00% | Investment | |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | Hong Kong | Hong Kong | Liquor 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 | Liquor sales | 90.00% | Investment | |
| Luzhou Laojiao Whitail Innovated Electronic Commerce Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Selected Electronic Commerce Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note | Luzhou | Luzhou | Liquor sales | 35.00% | Investment | |
| Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. Note | Chengdu | Chengdu | Liquor sales | 60.00% | 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 liquor manufacture and sales | 100.00% | Business combination under common control | |
| Luzhou Laojiao Health Sales Co., Ltd. | Luzhou | Luzhou | Health care liquor sales | 100.00% | Business combination under common control |
Statement for that the proportion of share-holding is different from the proportion of voting rights:
As the Note 3.6, the Company holds less than 51% shares of Luzhou Laojiao Custom Liquor Co., Ltd.,Luzhou Laojiao Fruit Liquor Industry Co., Ltd., and Luzhou Laojiao Whitail Liquor Industry Co., Ltd. but inthese companies’ board, among the five members, the Company has sent three persons, which is in themajority. The Company has substantial control over these companies, so they are included in theconsolidation scope.
8.1.2. Important non-wholly-owned subsidiaries
Monetary Unit: CNY
| Name of subsidiary | Proportion of share holdings of non-Controlling shareholders | Gains and losses attributable to non-Controlling shareholders during current period | Dividends paid to non-controlling shareholders during current period | Closing balance of non-controlling shareholders interest |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 25.00% | 13,863,532.37 | 83,495,883.22 |
8.1.3. Major financial information of important non-wholly-owned subsidiaries
Monetary Unit: CNY
| Name of | Closing Balance | Opening Balance |
| subsidiary | 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. | 533,486,869.06 | 2,784,660.08 | 536,271,529.14 | 202,287,996.27 | 202,287,996.27 | 767,387,583.35 | 3,501,199.33 | 770,888,782.68 | 492,359,379.30 | 492,359,379.30 |
Monetary Unit: CNY
| Name of subsidiary | Current Period | Previous Period | ||||||
| Operating revenue | Net profit | Total comprehensive income | Operating cash flow | Operating revenue | Net profit | Total comprehensive income | Operating cash flow | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 474,516,972.67 | 55,454,129.49 | 55,454,129.49 | 3,903,880.92 | 681,478,570.36 | -33,912,343.36 | -33,912,343.36 | 4,354,456.34 |
8.2. Interests in joint ventures and associates
8.2.1. Important joint ventures and associates
| Name of joint venture/associates | Major business location | Place of registration | Business nature | Shareholding proportion | Accounting Method | |
| Direct | Indirect | |||||
| Important joint ventures: none | ||||||
| Important associates: | ||||||
| Huaxi Securities Co., Ltd. | Chengdu, Sichuan | Chengdu, Sichuan | Securities | 10.39% | Equity method | |
The basis of holding less than 20% of the voting rights in other entities but having significant influence orholding 20% or more than 20% of the voting rights in other entities but having insignificant influence:
The Company has sent directors to the board of Huaxi Securities and has the corresponding substantivedecision-making power, so the Company still has significant influence on Huaxi Securities.
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 | 72,355,730,695.14 | 68,518,467,092.86 |
| Non-current assets | 11,948,969,027.36 | 8,710,176,937.94 |
| Total assets | 84,304,699,722.50 | 77,228,644,030.80 |
| Current liabilities | 44,962,108,035.50 | 42,599,988,723.12 |
| Non-current liabilities | 17,343,812,111.89 | 13,261,547,139.00 |
| Total liabilities | 62,305,920,147.39 | 55,861,535,862.12 |
| Non-controlling shareholder interest | 3,375,163.08 | 45,423,771.61 |
| Shareholder interest attributable to parent company | 21,995,404,412.03 | 21,321,684,397.07 |
| Share of net assets calculated based on shareholding proportion | 2,286,107,180.37 | 2,216,083,636.60 |
| --Others | 167,466,735.90 | 167,466,735.90 |
| Book value of equity investments in associate companies | 2,458,780,752.42 | 2,383,550,372.50 |
| Fair value of equity investments in associate companies that have public quote | 2,627,363,916.72 | 3,404,932,677.12 |
| Operating revenue | 2,507,607,439.97 | 2,093,322,666.77 |
| Net profit | 980,557,738.54 | 923,922,741.39 |
| Other comprehensive income | 34,982,558.76 | 10,391,172.52 |
| Total comprehensive income | 1,015,540,297.31 | 934,313,913.91 |
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 | 96,693,159.79 | 94,116,798.77 |
| Total following items calculated on the basis of shareholding proportion | -- | -- |
| --Net profit | 5,372,490.27 | -1,036,640.79 |
| -- Total comprehensive income | 5,372,490.27 | -1,036,640.79 |
9. Risks related to financial instruments
Business activities of a company usually face various financial risks, mainly credit risk, liquidity risk andmarket risk. The Company's overall risk management plan addresses the unpredictability of financialmarkets and seeks to reduce potential 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 losses to the other party. The Company only trades with recognized, reputable, andlarge third parties. In accordance with the Company's policy, the terms of sale with customers are basedon transactions of payment before delivery, with only a small amount of credit transactions, and creditreview for all customers who require credit to trade. In addition, the Company continuously monitors andcontrols the balance of the receivables to ensure that the Company does not face significant bad debtrisks.
9.2. Liquidity risk
Liquidity risk refers to the risk unable to obtain sufficient funds in time to meet business developmentneeds or to repay debts due and other payment obligations. The Company has sufficient working capital,and in recent years there has been no external borrowing to supplement the working capital of dailyoperating 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 fluctuatedue to changes in market 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 three subsidiaries, Hong Kong company, North America Company and Mingjiang company, settlein HKD in Hong Kong and USD in the United States respectively. The proportion and impact of theirincome 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 rate risk is minimal.
9.3.3. Other price risks
Other price risk refers to the risk of fluctuation caused by market price changes other than foreignexchange risk and interest rate risk, whether these changes are caused by factors related to a singlefinancial instrument or its issuer or all similar financial instruments traded in the market. Other price risks
faced by the Company mainly come from available-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 | 323,598,507.56 | 33,686,958.33 | 357,285,465.89 | |
| Accounts receivable financing | 2,143,072,245.18 | 2,143,072,245.18 | ||
| 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 investmentaccording to the closing price on the last trading day of Shenzhen Stock Exchange or Shanghai StockExchange at the period-end. The companies listed in Hong Kong determine the fair value of other equityinstrument investment according to the closing price of Hong Kong Dollar on the last trading day of HongKong Stock Exchange at the period-end and the median price of RMB exchange rate disclosed on thesame day by China Foreign Exchange Trade System.
10.3. Valuation technique adopted and nature and amount determination ofimportant parameters for continuously and discontinuously within Level 3 of the fairvalue hierarchyAccounts receivable financing: Due to the short term of notes receivable less than 1 year, and the salestime, sales price and sale proportion cannot be estimated reliably, the Company shall measure the fairvalue by regarding the face value as the reasonable estimation.
Other equity instrument investment: Due to no significant changes in business environment, businesscondition and financial situation of invested companies, the Company shall measure the fair valueaccording to the lower one between investment cost and the share of net assets enjoyed by investedcompanies on the base date as the reasonable estimation.
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 Baijiu Golden Triangle Liquor Industry Park, Luzhou,Sichuan Province; Business Scope: Investment and asset management; investment in liquor, food,finance, trade, logistics, education, medical and health, cultural tourism, Internet industry; holdingcompany services; social economic consulting, business management consulting; enterprisemanagement services; supply chain management services; import and export business and tradeagency; food production, sales (including online); planting and sales of crops (including online). (TheCompany cannot start business activities until projects subject to approval according to law areapproved by relevant departments.)The final control party of the Company is SASAC of Luzhou.
11.2. Subsidiaries of the Company
For details please see Note 8.1. Interests in subsidiaries
11.3. Joint ventures and associates of the Company
For details please see Note 8.2. Interests in joint ventures and associates.There are no other joint ventures or associates that have related party transactions with the Company inthe current period or in the previous period and result in balance.
11.4. Other related party of the Company
| Name of Other Related Party | Relationship with the Company |
| Sichuan Development Wine Investment Co., Ltd. | Joint venture |
| CTS Luzhou Laojiao Cultural Tourism Development Co., | Joint venture |
| Ltd. | |
| Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | The same parent company |
| Luzhou Jiaxin Holding Group Co., Ltd. | The same parent company |
| Sichuan Kangrun Group Construction and Installation Engineering Co., Ltd. | The same parent company |
| Luzhou Laojiao Zhitong Trading Co., Ltd. | The same parent company |
| Luzhou Laojiao Commercial College of Luzhou | The same parent company |
| Luzhou COSCO Lianzhong Logistics 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 |
| Sichuan Lianzhong Supply Chain Service Co., Ltd. | The same parent company |
| New Shottes Brook Private Company | The same parent company |
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | Joint venture of parent company |
| Luzhou Communication Investment Group Auto Service 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 |
| Sichuan Meiheshan Village Winery Industry Co.,Ltd. | Minority shareholder of the subsidiary Fruit Wine Industry |
| Other subsidiaries of Luzhou XingLu Investment Group Co., Ltd. | Other subsidiary of the second largest shareholder |
| Other subsidiaries of Luzhou Laojiao Group Co., Ltd. | Other subsidiary of parent company |
Other statements:
On 27 May 2021, Laojiao Group and XingLu Investment Group, the second biggest shareholder,renewed the concerted action agreement that when the parties in deal with the Company’s businessdevelopment and make decisions by shareholders meeting and board of directors according to thecompany law and other relevant laws and regulations and the articles of association, the parties shouldadopt the consistent actions. The agreement is valid as of 1 June 2021 and ends on 31 May 2024.During the effective period of this agreement, before any party submits proposals involving the majorissues of the Company's business development to the shareholders meeting or exercise the voting rightsat the shareholders meeting and the board of directors, the internal coordination for relevant proposalsand voting events shall be conducted by persons acting in concert. If there are different opinions, it willbe subject to Laojiao Group’s opinion. In view of this, the Company will disclose the transactions withXingLu Investment Group and its controlling enterprises 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. | 5,310,943.19 | 1,573,495.21 | ||
| Laojiao Group and its other subsidiaries | Training, accommodation, storage, transportation services, property management fee, etc. | 13,826,965.44 | 31,544,140.62 | ||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Travel agency service fee, etc. | 3,404,282.00 | |||
| Purchase of goods: | |||||
| Laojiao Group and its other subsidiaries | Housing construction fee , land expense, etc. | 189,886,890.41 | |||
| Laojiao Group and its other subsidiaries | Raw materials, water, power, etc. | 19,883,752.63 | 10,884,402.85 | ||
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Water, gas, etc. | 6,203,699.11 | 4,215,676.77 |
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Purchase and construction of fixed assets (pipeline relocation, etc.) | 1,071,420.60 | |||
| Sichuan Meiheshan Village Winery Industry Co.,Ltd. | Wine | 674,271.50 | |||
| Total | 50,375,334.47 | 238,104,605.86 |
Table of sales of goods and rendering of service
Monetary Unit: CNY
| Name of Related Party | Transaction | Amount in current period | Amount in previous period |
| Sales of goods: | |||
| Laojiao Group and its subsidiaries | Wine, water, power, etc. | 6,578,271.51 | 1,016,556.74 |
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | Wine | 15,278,637.12 | |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Wine | 53,519,643.03 | |
| Rendering of service: | |||
| Laojiao Group and its subsidiaries | Rendering of service | 1,095,440.00 | |
| Total | 76,471,991.66 | 1,016,556.74 |
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 subsidiaries | House lease | 1,430,038.43 | 1,589,785.01 |
| Total | 1,430,038.43 | 1,589,785.01 |
11.5.3. Key management compensation
Monetary Unit: CNY
| Item | Amount in current period | Amount in previous period |
| Key management | 3,770,000.24 | 3,359,999.88 |
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 | ||
| Accounts receivable | Luzhou COSCO Lianzhong Logistics Co., Ltd. | 3,780.00 | |||
| Prepayment | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 57,211.78 | |||
| Prepayment | Luzhou Public Transport Group Co., Ltd. | 15,123.28 | |||
| Prepayment | Luzhou China Resources Xinglu Gas Co., Ltd. | 185,000.00 | |||
| Prepayment | Luzhou XingLu Water (Group) Co., Ltd. | 279,333.75 | 42,883.70 | ||
| Prepayment | Sichuan Meiheshan Village Winery Industry Co.,Ltd. | 2,996,264.97 | 885,834.00 | ||
| Other receivables | Sichuan Kangrun Investment Group Co., Ltd. | 10,000.00 | 10,000.00 | ||
| Other receivables | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 3,590,728.58 | 349,958.05 | 3,268,472.46 | 163,423.62 |
| Other receivables | Sichuan Development Wine Investment Co., Ltd. | 102,670.32 | 5,133.52 |
11.6.2. Payables
Monetary Unit: CNY
| Item | Related party | Closing Balance | Opening Balance |
| Accounts payable | Guangzhou Zhongying Gongyuan Energy Saving Technology Co Ltd | 355,312.88 | |
| Accounts payable | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 135,001.58 | |
| Contractual liabilities (tax inclusive) | Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 161,562.88 | |
| Contractual liabilities (tax inclusive) | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 150,721.78 | 35,798.45 |
| Contractual liabilities (tax inclusive) | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 7,887,586.46 | 4,704,408.00 |
| Contractual liabilities (tax inclusive) | Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | 4,065,243.22 | |
| Other payables | Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | 1,500,000.00 | 1,500,000.00 |
| Other payables | Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 150,000.00 | |
| Other payables | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 1,684,148.00 | 2,384,148.00 |
| Other payables | Luzhou XingLu Property Management Co., Ltd. | 100,000.00 | |
| Other payables | Sichuan Kangrun Group Construction and Installation Engineering Co., Ltd. | 34,175.78 | 34,175.78 |
| Other payables | Luzhou COSCO Lianzhong Logistics Co., Ltd. | 200,200.00 | 200,200.00 |
12. Commitments and contingencies
12.1. Contingencies
12.1.1. Significant contingencies at the balance sheet date
On 15 October 2014 and 10 January 2015, the Company disclosed three saving deposits involvingcontract disputes in Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial andCommercial Bank of China Nanyang Zhongzhou Sub-branch and another bank, with a total amount ofCNY 500 million. The public security organization has investigated, and the investigation of relatedcases and the preservation of assets are under way. The Company has initiated a civil procedure torecover the loss from the responsible unit, among them:
The criminal case with saving deposits involving contract disputes in Agricultural Bank of ChinaChangsha Yingxin Sub-branch with amount of CNY 150 million was concluded, and the amount involvedin the case was ultimately determined to be CNY 149.425 million, which was executed by criminal case.The Company applied to Hunan Province Higher People's Court for enforcement of the verdict. HunanProvince Higher People's Court has filed the case and ruled that Hunan Changsha IntermediatePeople’s Court should see to the execution of the verdict. As of 30 June 2021, CNY 20.3353 million wasrecovered.
The Company has filed a lawsuit with Sichuan Higher People's Court about the saving deposits involvingcontract disputes in Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou Sub-branch withamount of 150 million. Sichuan Higher People's Court ruled that the case should be transferred to theHenan Higher People's Court. Henan Higher People's Court considered that due to the involvement ofcriminal cases, its trial should be based on the results of criminal case, and judged to suspend in 2015.Now the case has been settled, and the case of civil action is reopened, which is under trial of HenanHigher People's Court.
Another deposit in the Notice of Significant Events No. 2015-1 has been recovered a total of CNY
194.6198 million as of the period-end, and the residual amount is recovering actively.
The Company has recovered the abovementioned saving deposits involving contract disputes with CNY
214.9551 million, and the relevant progress will be announced subsequently.
Except for the above matters, the Company has no other significant contingencies that need to bedisclosed as the end of 30 June 2021.
13. Post balance sheet event
13.1. Significant non-adjustment matters
(1) According to the Company's Announcement on the Resolutions of the 26
th Meeting of the 9
thBoard of
Directors, in order to strengthen the linkage of shareholder resources and promote the sales of theCompany’s products, the Company has agreed that it will acquire 5% equity of Luzhou SanrenxuanLiquor Industry Co., Ltd. (hereinafter referred to as "Sanrenxuan Company") held by Beijing LongyuYixiang Sales Co., Ltd. with its own funds of CNY 542,400. Luzhou Laojiao Group Co., Ltd., theCompany's controlling shareholder, is a shareholder of Sanrenxuan Company and holds 30% of itsshares. Therefore, this equity acquisition constitutes a related transaction.
(2) According to the 14
thannouncement on the Company’s major litigation progress issued on 6 July2021, upon compulsory enforcement by Changsha Intermediate People’s Court, both Changsha KaifuSub-branch and Changsha Hongxing Sub-branch of Agricultural Bank of China have partially fulfilled theliability for compensation determined by the civil judgment (paid partial compensation to ChangshaIntermediate People's Court), and the Company has received CNY 52,812,061.75 of execution paymentfrom Changsha Intermediate People's Court in early July 2021. The dispute over the savings depositcontract between the Company and Nanyang Zhongzhou Sub-branch of Industrial and CommercialBank of China is still in the second instance of civil litigation. The Company has recovered a total of CNY267,767,200 in dispute under three savings contracts.
13.2. Profit distribution
Monetary Unit: CNY
| Profits or dividends planned to distribute | 3,004,207,328.28 |
| Reviewed and approved profits or dividends declared to distribute | 3,004,207,328.281 |
Note: 1. According to the resolutions of the annual shareholders' meeting, the Company distributed acash dividend of CNY 20.51 (tax inclusive) per 10 shares to all shareholders, which has beenimplemented on 20 August 2021.
13.3. Statement for other post balance sheet events
(1) According to Announcement on the Resolutions of the 2
nd Meeting of the 10
thBoard of Directors ofLuzhou Laojiao Co., Ltd., "Proposal on Implementing Donations to Support Flood Prevention andDisaster Relief in Henan Province" has been approved upon deliberation. The Company has decided todonate CNY 30 million of cash to Henan Province Charity Association to support Henan Province's floodprevention and disaster relief, post-disaster reconstruction, and local pandemic prevention and control inthe disaster area.
(2) On 29 January 2021, the 24th Meeting of the 9
th
Board of Directors of the Company reviewed andapproved the proposal on the cancellation of subsidiaries Chengdu Tianfu Panda Whitail Liquor IndustryCo., Ltd. According to business development circumstances, the Company decided to cancel the abovesubsidiary, which will not have a significant impact on the Company's financial status and operatingresults. The Company received the notice of approval of cancellation registration on 14 July 2021.The Company has no other post balance sheet events that need to be disclosed as of 30 June 2021.
14. Other important information
14.1. Annuity plan
The Company carried out the enterprise annuity payment work normally during the reporting period. Theenterprise annuity funds are paid by both the Company and employees. The Company's contributionshall not exceed 8% of the Company's total salary in the previous year as stipulated by the state, and theindividual contribution shall be withheld by the Company according to 1% of total salary of the employeein the previous year.
14.2. Segment information
14.2.1. If the Company has no reporting segment or cannot disclose total assets and totalliabilities of reporting segments, the reason should be disclosed.Except for the business on wine sales, the Company does not operate other businesses that have asignificant impact on operation results. In addition, the Company operates mainly in one area, revenuemainly from China and main assets also located in China, so the Company does not need to disclosesegment data.
14.3. Other significant events that can affect investors’ decision
(1) Saving deposits involving contract disputes
As stated in Note 12.2, three saving deposits involved contract disputes in Agricultural Bank of ChinaChangsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang ZhongzhouSub-branch and another bank, with a total amount of CNY 500 million. At present, the investigation ofrelated cases and the preservation of assets have been under way. The Company has initiated a civilprocedure to recover the loss from the responsible unit.Based on the amount of assets preserved by the public security organization at present and professionallegal opinions issued by Beijing Weiheng (Chengdu) Law Firm on 10 March 2021, the Company hasmade provision for bad debts on savings deposits involving contract disputes of CNY 200 million.
Except for the above matter, the Company has no other significant events that can affect investors’decision that need to be disclosed as of 30 June 2021.
15. Notes to the main Items of the financial statements of parentcompany (all currency 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 the portfolio | 733,128.65 | 100.00% | 825.10 | 11.00% | 732,303.55 | 3,927.50 | 100.00% | 3,927.50 | ||
| Including: | ||||||||||
| Accounts receivables tested for impairment on the portfolio with characteristics of credit risk | 733,128.65 | 100.00% | 825.10 | 11.00% | 732,303.55 | 3,927.50 | 100.00% | 3,927.50 | ||
| Total | 733,128.65 | 100.00% | 825.10 | 11.00% | 732,303.55 | 3,927.50 | 100.00% | 3,927.50 | ||
Accounts receivables tested for impairment by the portfolio:
Monetary Unit: CNY
| Item | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 733,128.65 | 825.10 | 0.11% |
| Other portfolios | |||
| Total | 733,128.65 | 825.10 | -- |
Please refer to the relevant information of disclosure of provision for bad debt of other accountsreceivable if adopting the general mode of expected credit loss to withdraw provision for bad debt ofaccounts receivable.? Applicable √ N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 733,128.65 |
| Total | 733,128.65 |
15.1.2. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Accounts receivables tested for impairment by the portfolio | 825.10 | 825.10 | ||||
| Total | 825.10 | 825.10 | ||||
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 Pinchuang Technology Co., Ltd. | 709,970.93 | 96.84% | |
| Luo Daichuan | 20,305.32 | 1.57% | 574.65 |
| Chen Maolin | 3,809.00 | 0.52% | 190.45 |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | 3,494.28 | 0.48% | |
| Sales Company of Luzhou Laojiao Co., Ltd. | 3,161.44 | 0.43% |
| Total | 740,740.97 | 99.84% |
15.2. Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividends receivable | 36,941,917.50 | 1,407,900.00 |
| Other receivables | 9,312,029,052.07 | 7,051,341,794.83 |
| Total | 9,348,970,969.57 | 7,052,749,694.83 |
15.2.1. Interest receivable
15.2.1.1. Classification of interest receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| North Chemical Industries Co., Ltd | 62,542.20 | |
| Guotai Junan Securities Co., Ltd. | 6,595,118.32 | 1,407,900.00 |
| Huaxi Securities Co., Ltd. | 30,284,256.98 | |
| Total | 36,941,917.50 | 1,407,900.00 |
15.2.2. Other receivables
15.2.2.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds of subsidiaries receivable | 9,219,801,499.66 | 6,957,047,554.34 |
| Intercourse funds and others | 7,646,238.43 | 9,599,994.92 |
| Petty cash | 507,942.93 | 393,142.93 |
| Saving deposits involving contract disputes | 285,044,911.68 | 285,044,911.68 |
| Total | 9,513,000,592.70 | 7,252,085,603.87 |
15.2.2.2. Provision for bad and doubtful other receivables in the current period
Monetary Unit: CNY
| Provision for bad debt | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 743,809.04 | 200,000,000.00 | 200,743,809.04 | |
| Balance of 1 January 2021 in the current period | —— | —— | —— | —— |
| Allowance of the current period | 227,731.59 | 227,731.59 | ||
| Balance of 31 December 2020 | 971,540.63 | 200,000,000.00 | 200,971,540.63 |
Changes of carrying amount with significant amount changed of loss provision in the current period? Applicable √ N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 9,222,183,194.93 |
| 1-2 years | 3,649,428.93 |
| 2-3 years | 2,044,430.23 |
| Over 3 years | 285,123,538.61 |
| Over 5 years | 285,123,538.61 |
| Total | 9,513,000,592.70 |
15.2.2.3. Provision and recovery for bad and doubtful other receivables in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Other receivables tested for impairment individually Note 1 | 200,000,000.00 | 200,000,000.00 | ||||
| Other | 743,809.04 | 227,731.59 | 971,540.63 | |||
| receivables tested for impairment by the portfolio | ||||||
| Total | 200,743,809.04 | 227,731.59 | 200,971,540.63 |
15.2.2.4. Top five entities with the largest balances of the other receivables
Monetary Unit: CNY
| Company Name | Nature | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
| Luzhou Laojiao Brewing Co., Ltd. | Internal transactions | 8,805,071,030.02 | Within 1 year | 92.56% | |
| 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 | 285,044,911.68 | Over 5 years | 3.00% | 200,000,000.00 |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Internal transactions | 167,247,557.78 | Within 1 year | 1.76% | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Internal transactions | 149,824,476.65 | Within 1 year | 1.57% | |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | Internal transactions | 46,137,248.79 | Within 1 year | 0.48% | |
| Total | -- | 9,453,325,224.92 | -- | 99.37% | 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 | 2,551,183,697.71 | 2,567,098.80 | 2,548,616,598.91 | 2,472,698,683.16 | 2,567,098.80 | 2,470,131,584.36 |
| Total | 5,965,143,825.82 | 2,567,098.80 | 5,962,576,727.02 | 5,886,658,811.27 | 2,567,098.80 | 5,884,091,712.47 |
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 Electronic Commerce Co., Ltd. | 51,604,800.00 | 51,604,800.00 | |||||
| Luzhou Baonuo | 20,000,000.00 | 20,000,000.00 | |||||
| Biotechnology Co., Ltd. | |||||||
| 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 combinationunder the same control. The net assets of Health Liquor Industry were negative on the M&A date, andthe book cost of long-term equity investment 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 | |||||||||||
| 2. Associate | |||||||||||
| Huaxi Securities Co., Ltd. | 2,383,550,372.50 | 101,879,949.05 | 3,634,687.85 | 30,284,256.98 | 2,458,780,752.42 | 2,567,098.80 | |||||
| Sichuan Development Wine Investment Co., Ltd. | 6,854,471.67 | -985,886.58 | 5,868,585.09 | ||||||||
| CTS | 79,726,7 | 4,240,52 | 83,967,2 | ||||||||
| Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 40.19 | 1.21 | 61.40 | ||||||||
| Subtotal | 2,470,131,584.36 | 105,134,583.68 | 3,634,687.85 | 30,284,256.98 | 2,548,616,598.91 | 2,567,098.80 | |||||
| Total | 2,470,131,584.36 | 105,134,583.68 | 3,634,687.85 | 30,284,256.98 | 2,548,616,598.91 | 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 | 2,646,531,785.60 | 1,928,435,115.76 | 1,486,572,539.81 | 1,040,786,248.30 |
| Other business | 30,959,887.70 | 491,858.13 | 16,349,153.58 | |
| Total | 2,677,491,673.30 | 1,928,926,973.89 | 1,502,921,693.39 | 1,040,786,248.30 |
15.5. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under equity method | 105,134,583.68 | 94,958,932.04 |
| Dividends income gained during the period of holding other equity instrument investment | 6,657,660.52 | 9,379,824.36 |
| Total | 111,792,244.20 | 104,338,756.40 |
16. Supplementary information
16.1. Detailed statement of non-recurring gains and losses in the current period (+for gain, - for loss)
√ Applicable ? N/A
Monetary Unit: CNY
| Item | Amount | Note |
| Gain or loss from disposal of non-current assets (including the write-off portion of the impairment provision) | 180,849.31 | See "Note 5.42" 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) | 7,226,821.19 | See "Note 5.39" for details. |
| Other non-operating income and expenditure except above-mentioned items | 17,427,895.75 | See "Note 5.43, 5.44" for details. |
| Less: Corporate income tax | 6,139,307.70 | |
| Minority interests (after tax) | 1,029,669.18 | |
| Total | 17,666,589.37 | -- |
Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies OfferingTheir Securities to the Public-Non-Recurring Gains and Losses, or classifies any non-recurring gain/lossitem mentioned in the said explanatory announcement as a recurring gain/loss item.? 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 | 16.78% | 2.89 | 2.89 |
| Net profits attributable to ordinary shareholders of the Company before non-recurring gains and losses | 16.71% | 2.87 | 2.87 |