ANHUI GUJING DISTILLERY COMPANY LIMITED
SEMI-ANNUAL FINANCIAL REPORT 2020
August 2020
I Independent Auditor’s ReportAre these interim financial statements audited by an independent auditor?
□ Yes √ No
These interim financial statements have not been audited by an independent auditor.II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
30 June 2020
Unit: RMB
| Item | 30 June 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 7,418,187,475.71 | 5,619,749,918.09 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Held-for-trading financial assets | 230,264,936.41 | 509,031,097.02 |
| Derivative financial assets | ||
| Notes receivable | 1,036,114,364.10 | 1,004,217,431.56 |
| Accounts receivable | 44,592,707.52 | 40,776,567.96 |
| Accounts receivable financing | ||
| Prepayments | 93,705,156.53 | 197,453,313.96 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 36,472,434.42 | 25,746,957.22 |
| Including: Interest receivable | 10,600,806.32 | 1,908,788.81 |
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 2,920,772,885.04 | 3,015,051,961.78 |
| Contract assets | ||
| Assets held for sale |
| Current portion of non-current assets | ||
| Other current assets | 103,093,691.95 | 114,439,167.07 |
| Total current assets | 11,883,203,651.68 | 10,526,466,414.66 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 4,624,650.90 | 4,678,282.24 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 4,551,514.78 | 4,710,086.02 |
| Fixed assets | 1,629,268,366.99 | 1,722,572,998.79 |
| Construction in progress | 258,954,824.33 | 183,984,816.07 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 890,598,069.49 | 785,717,932.76 |
| Development costs | ||
| Goodwill | 478,283,495.29 | 478,283,495.29 |
| Long-term prepaid expense | 57,681,212.58 | 70,240,106.82 |
| Deferred income tax assets | 121,949,134.77 | 90,494,544.51 |
| Other non-current assets | 574,026.00 | 4,148,686.00 |
| Total non-current assets | 3,446,485,295.13 | 3,344,830,948.50 |
| Total assets | 15,329,688,946.81 | 13,871,297,363.16 |
| Current liabilities: | ||
| Short-term borrowings | 50,094,500.00 | 0.00 |
| Borrowings from the central bank | ||
| Interbank loans obtained | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 1,020,583,475.29 | 703,679,646.86 |
| Accounts payable | 386,356,621.01 | 563,494,195.40 |
| Advances from customers | 0.00 | 529,863,011.73 |
| Contract liabilities | 727,347,929.08 | 0.00 |
| Financial assets sold under repurchase agreements | ||
| Customer deposits and interbank deposits | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Employee benefits payable | 298,227,276.86 | 454,189,532.89 |
| Taxes payable | 476,872,467.49 | 482,903,109.59 |
| Other payables | 2,190,846,597.94 | 1,315,878,229.01 |
| Including: Interest payable | ||
| Dividends payable | 755,400,000.00 | 0.00 |
| Handling charges and commissions payable | ||
| Reinsurance payables | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 306,044,574.61 | 197,484,121.41 |
| Total current liabilities | 5,456,373,442.28 | 4,247,491,846.89 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 74,384,425.08 | 72,778,437.92 |
| Deferred income tax liabilities | 115,734,840.78 | 118,872,366.61 |
| Other non-current liabilities |
| Total non-current liabilities | 190,119,265.86 | 191,650,804.53 |
| Total liabilities | 5,646,492,708.14 | 4,439,142,651.42 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 1,295,405,592.25 | 1,295,405,592.25 |
| Less: Treasury stock | ||
| Other comprehensive income | ||
| Specific reserve | ||
| Surplus reserves | 256,902,260.27 | 256,902,260.27 |
| General reserve | ||
| Retained earnings | 7,157,740,516.28 | 6,888,203,911.92 |
| Total equity attributable to owners of the Company as the parent | 9,213,648,368.80 | 8,944,111,764.44 |
| Non-controlling interests | 469,547,869.87 | 488,042,947.30 |
| Total owners’ equity | 9,683,196,238.67 | 9,432,154,711.74 |
| Total liabilities and owners’ equity | 15,329,688,946.81 | 13,871,297,363.16 |
Legal representative: Liang Jinhui The Company’s chief accountant: Ye ChangqingHead of the Company’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 30 June 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 3,777,904,155.80 | 2,919,818,830.20 |
| Held-for-trading financial assets | 220,264,936.41 | 489,861,097.02 |
| Derivative financial assets | ||
| Notes receivable | 611,813,648.59 | 378,740,100.82 |
| Accounts receivable | 1,591,313.17 | 218,558,555.07 |
| Accounts receivable financing | ||
| Prepayments | 43,507,722.75 | 17,906,999.63 |
| Other receivables | 121,302,078.58 | 125,219,213.84 |
| Including: Interest receivable | 301,888.89 | 301,888.89 |
| Dividends receivable | ||
| Inventories | 2,532,862,118.85 | 2,688,839,871.27 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 10,900,000.00 | 1,280,998.32 |
| Total current assets | 7,320,145,974.15 | 6,840,225,666.17 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 1,148,213,665.32 | 1,148,213,665.32 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 4,551,514.78 | 4,710,086.02 |
| Fixed assets | 1,230,406,181.70 | 1,310,704,771.36 |
| Construction in progress | 112,168,345.25 | 84,477,784.02 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 354,086,966.94 | 243,928,047.95 |
| Development costs | ||
| Goodwill | ||
| Long-term prepaid expense | 39,004,662.92 | 48,354,967.15 |
| Deferred income tax assets | 27,832,342.65 | 31,360,809.87 |
| Other non-current assets | 574,026.00 | 574,026.00 |
| Total non-current assets | 2,916,837,705.56 | 2,872,324,157.69 |
| Total assets | 10,236,983,679.71 | 9,712,549,823.86 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Held-for-trading financial liabilities |
| Derivative financial liabilities | ||
| Notes payable | 0.00 | 49,114,582.04 |
| Accounts payable | 313,257,868.54 | 450,303,984.53 |
| Advances from customers | 0.00 | 31,724.77 |
| Contract liabilities | 96,866,235.95 | 0.00 |
| Employee benefits payable | 107,051,733.88 | 100,357,808.20 |
| Taxes payable | 305,205,907.01 | 371,012,223.50 |
| Other payables | 1,055,693,921.51 | 274,053,511.54 |
| Including: Interest payable | ||
| Dividends payable | 755,400,000.00 | 0.00 |
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 13,957,054.12 | 11,953,800.20 |
| Total current liabilities | 1,892,032,721.01 | 1,256,827,634.78 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 31,467,109.09 | 33,229,246.47 |
| Deferred income tax liabilities | 20,344,502.23 | 22,799,814.64 |
| Other non-current liabilities | ||
| Total non-current liabilities | 51,811,611.32 | 56,029,061.11 |
| Total liabilities | 1,943,844,332.33 | 1,312,856,695.89 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares |
| Perpetual bonds | ||
| Capital reserves | 1,247,162,107.35 | 1,247,162,107.35 |
| Less: Treasury stock | ||
| Other comprehensive income | ||
| Specific reserve | ||
| Surplus reserves | 251,800,000.00 | 251,800,000.00 |
| Retained earnings | 6,290,577,240.03 | 6,397,131,020.62 |
| Total owners’ equity | 8,293,139,347.38 | 8,399,693,127.97 |
| Total liabilities and owners’ equity | 10,236,983,679.71 | 9,712,549,823.86 |
3. Consolidated Income Statement
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Revenue | 5,519,621,000.62 | 5,988,112,999.09 |
| Including: Operating revenue | 5,519,621,000.62 | 5,988,112,999.09 |
| Interest income | ||
| Insurance premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 4,162,705,858.66 | 4,416,581,005.79 |
| Including: Cost of sales | 1,313,925,592.48 | 1,394,156,734.55 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net insurance claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 887,997,040.72 | 869,527,762.04 |
| Selling expense | 1,618,049,637.27 | 1,840,489,439.70 |
| Administrative expense | 395,687,673.15 | 302,045,457.13 |
| R&D expense | 15,254,382.98 | 14,664,237.67 |
| Finance costs | -68,208,467.94 | -4,302,625.30 |
| Including: Interest expense | 28,973,275.97 | 14,173,972.09 |
| Interest income | 96,891,173.45 | 20,466,649.02 |
| Add: Other income | 14,974,353.66 | 30,783,918.68 |
| Return on investment (“-” for loss) | 18,485,972.20 | 77,347,047.53 |
| Including: Share of profit or loss of joint ventures and associates | -53,631.34 | -164,994.19 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | -3,596,160.61 | 11,320,345.56 |
| Credit impairment loss (“-” for loss) | -388,444.57 | -476,569.40 |
| Asset impairment loss (“-” for loss) | -5,693,185.77 | -5,945,248.67 |
| Asset disposal income (“-” for loss) | 77,867.25 | 119,488.56 |
| 3. Operating profit (“-” for loss) | 1,380,775,544.12 | 1,684,680,975.56 |
| Add: Non-operating income | 20,575,161.54 | 11,150,763.53 |
| Less: Non-operating expense | 24,273,656.49 | 1,737,611.07 |
| 4. Profit before tax (“-” for loss) | 1,377,077,049.17 | 1,694,094,128.02 |
| Less: Income tax expense | 370,635,522.24 | 419,145,404.31 |
| 5. Net profit (“-” for net loss) | 1,006,441,526.93 | 1,274,948,723.71 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 1,006,441,526.93 | 1,274,948,723.71 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to owners of the Company as the parent | 1,024,936,604.36 | 1,248,316,314.01 |
| 5.2.1 Net profit attributable to non-controlling interests | -18,495,077.43 | 26,632,409.70 |
| 6. Other comprehensive income, net of |
| tax | ||
| Attributable to owners of the Company as the parent | ||
| 6.1 Items that will not be reclassified to profit or loss | ||
| 6.1.1 Changes caused by remeasurements on defined benefit schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | ||
| 6.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | ||
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 6.2.7 Other | ||
| Attributable to non-controlling interests | ||
| 7. Total comprehensive income | 1,006,441,526.93 | 1,274,948,723.71 |
| Attributable to owners of the Company as the parent | 1,024,936,604.36 | 1,248,316,314.01 |
| Attributable to non-controlling interests | -18,495,077.43 | 26,632,409.70 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 2.04 | 2.48 |
| 8.2 Diluted earnings per share | 2.04 | 2.48 |
Legal representative: Liang Jinhui The Company’s chief accountant: Ye ChangqingHead of the Company’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Operating revenue | 3,297,117,172.49 | 3,144,682,463.58 |
| Less: Cost of sales | 1,317,059,263.62 | 1,277,918,576.91 |
| Taxes and surcharges | 826,730,898.61 | 764,598,846.12 |
| Selling expense | 22,901,348.42 | 45,886,471.81 |
| Administrative expense | 287,708,363.27 | 202,658,261.68 |
| R&D expense | 9,137,959.37 | 9,036,129.81 |
| Finance costs | -44,796,771.26 | -2,059,057.16 |
| Including: Interest expense | 28,288,982.29 | 14,006,847.09 |
| Interest income | 73,155,252.32 | 17,740,923.04 |
| Add: Other income | 4,622,731.11 | 3,372,718.25 |
| Return on investment (“-” for loss) | 12,434,590.21 | 31,883,868.76 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | -3,596,160.61 | 11,320,345.56 |
| Credit impairment loss (“-” for loss) | 540,745.12 | -186,067.78 |
| Asset impairment loss (“-” for loss) | -5,693,185.77 | -5,945,248.67 |
| Asset disposal income (“-” for loss) | 60,176.99 | 36,552.41 |
| 2. Operating profit (“-” for loss) | 886,745,007.51 | 887,125,402.94 |
| Add: Non-operating income | 15,201,396.26 | 9,342,723.23 |
| Less: Non-operating expense | 20,488,855.01 | 1,225,313.77 |
| 3. Profit before tax (“-” for loss) | 881,457,548.76 | 895,242,812.40 |
| Less: Income tax expense | 232,611,329.35 | 211,262,069.16 |
| 4. Net profit (“-” for net loss) | 648,846,219.41 | 683,980,743.24 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 648,846,219.41 | 683,980,743.24 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | ||
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by remeasurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | ||
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | ||
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign |
| currency-denominated financial statements | ||
| 5.2.7 Other | ||
| 6. Total comprehensive income | 648,846,219.41 | 683,980,743.24 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 1.29 | 1.36 |
| 7.2 Diluted earnings per share | 1.29 | 1.36 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 6,336,568,642.45 | 5,352,480,704.00 |
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowings from the central bank | ||
| Net increase in loans from other financial institutions | ||
| Premiums received on original insurance contracts | ||
| Net proceeds from reinsurance | ||
| Net increase in deposits and investments of policy holders | ||
| Interest, handling charges and commissions received | ||
| Net increase in interbank loans obtained | ||
| Net increase in proceeds from repurchase transactions | ||
| Net proceeds from acting trading of securities | ||
| Tax rebates | 3,020,222.21 | 15,816,253.89 |
| Cash generated from other operating activities | 1,323,750,535.31 | 276,731,904.68 |
| Subtotal of cash generated from operating activities | 7,663,339,399.97 | 5,645,028,862.57 |
| Payments for commodities and services | 733,871,614.50 | 899,005,913.59 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in the central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts | ||
| Net increase in interbank loans granted | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 1,250,084,349.76 | 1,006,137,070.65 |
| Taxes paid | 1,853,009,320.89 | 2,001,653,338.87 |
| Cash used in other operating activities | 1,484,736,014.18 | 696,498,790.63 |
| Subtotal of cash used in operating activities | 5,321,701,299.33 | 4,603,295,113.74 |
| Net cash generated from/used in operating activities | 2,341,638,100.64 | 1,041,733,748.83 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 309,070,000.00 | 2,576,300,054.88 |
| Return on investment | 18,539,603.54 | 72,002,136.32 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 92,400.01 | 33,700.00 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 327,702,003.55 | 2,648,335,891.20 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 220,906,338.24 | 152,296,054.86 |
| Payments for investments | 44,800,000.00 | 1,222,560,163.50 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing | 265,706,338.24 | 1,374,856,218.36 |
| activities | ||
| Net cash generated from/used in investing activities | 61,995,665.31 | 1,273,479,672.84 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | ||
| Borrowings raised | 50,094,500.00 | 0.00 |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 50,094,500.00 | 0.00 |
| Repayment of borrowings | ||
| Interest and dividends paid | 290,708.33 | 755,400,000.00 |
| Including: Dividends paid by subsidiaries to non-controlling interests | ||
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 290,708.33 | 755,400,000.00 |
| Net cash generated from/used in financing activities | 49,803,791.67 | -755,400,000.00 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 2,453,437,557.62 | 1,559,813,421.67 |
| Add: Cash and cash equivalents, beginning of the period | 2,944,749,918.09 | 835,560,865.12 |
| 6. Cash and cash equivalents, end of the period | 5,398,187,475.71 | 2,395,374,286.79 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,777,524,502.26 | 3,351,164,696.89 |
| Tax rebates | ||
| Cash generated from other operating activities | 936,783,738.07 | 248,907,013.29 |
| Subtotal of cash generated from operating activities | 4,714,308,240.33 | 3,600,071,710.18 |
| Payments for commodities and services | 1,149,042,873.79 | 847,532,691.56 |
| Cash paid to and for employees | 450,118,968.16 | 355,855,901.15 |
| Taxes paid | 1,415,720,556.26 | 1,260,288,640.64 |
| Cash used in other operating activities | 508,102,703.30 | 145,296,084.94 |
| Subtotal of cash used in operating activities | 3,522,985,101.51 | 2,608,973,318.29 |
| Net cash generated from/used in operating activities | 1,191,323,138.82 | 991,098,391.89 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 276,900,000.00 | 1,400,740,054.88 |
| Return on investment | 12,434,590.21 | 31,890,794.48 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 68,000.00 | 41,304.23 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 289,402,590.21 | 1,432,672,153.59 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 160,840,403.43 | 116,751,759.47 |
| Payments for investments | 21,800,000.00 | 726,900,163.50 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 182,640,403.43 | 843,651,922.97 |
| Net cash generated from/used in investing activities | 106,762,186.78 | 589,020,230.62 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings raised | ||
| Cash generated from other financing activities |
| Subtotal of cash generated from financing activities | ||
| Repayment of borrowings | ||
| Interest and dividends paid | 0.00 | 755,400,000.00 |
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 0.00 | 755,400,000.00 |
| Net cash generated from/used in financing activities | 0.00 | -755,400,000.00 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 1,298,085,325.60 | 824,718,622.51 |
| Add: Cash and cash equivalents, beginning of the period | 2,079,818,830.20 | 708,172,917.59 |
| 6. Cash and cash equivalents, end of the period | 3,377,904,155.80 | 1,532,891,540.10 |
7. Consolidated Statements of Changes in Owners’ Equity
H1 2020
Unit: RMB
| Item | H1 2020 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 6,888,203,911.92 | 8,944,111,764.44 | 488,042,947.30 | 9,432,154,711.74 | ||||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business combination under | |||||||||||||||
| common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 6,888,203,911.92 | 8,944,111,764.44 | 488,042,947.30 | 9,432,154,711.74 | ||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 269,536,604.36 | 269,536,604.36 | -18,495,077.43 | 251,041,526.93 | |||||||||||
| 3.1 Total comprehensive income | 1,024,936,604.36 | 1,024,936,604.36 | -18,495,077.43 | 1,006,441,526.93 | |||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares increased by owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity |
| instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ |
| equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to |
| retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 7,157,740,516.28 | 9,213,648,368.80 | 469,547,869.87 | 9,683,196,238.67 |
H1 2019
Unit: RMB
| Item | H1 2019 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 4,794,830.59 | 256,902,260.27 | 5,541,281,341.47 | 7,601,984,024.58 | 427,766,092.82 | 8,029,750,117.40 | |||||||
| Add: Adjustment for change in accounting policy | -4,794,830.59 | 4,794,830.59 | |||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business combination under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 5,546,076,172.06 | 7,601,984,024.58 | 427,766,092.82 | 8,029,750,117.40 | ||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 492,916,314.01 | 492,916,314.01 | 26,632,409.70 | 519,548,723.71 | |||||||||||
| 3.1 Total | 1,248,316,314. | 1,248,316,314. | 26,632,409.70 | 1,274,948,723. |
| comprehensive income | 01 | 01 | 71 | ||||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares increased by owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.1 Appropriation to surplus |
| reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 |
| Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other |
| 4. Balance as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 6,038,992,486.07 | 8,094,900,338.59 | 454,398,502.52 | 8,549,298,841.11 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2020
Unit: RMB
| Item | H1 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 6,397,131,020.62 | 8,399,693,127.97 | |||||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 6,397,131,020.62 | 8,399,693,127.97 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -106,553,780.59 | -106,553,780.59 | ||||||||||
| 3.1 Total comprehensive income | 648,846,219.41 | 648,846,219.41 | ||||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share |
| capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 6,290,577,240.03 | 8,293,139,347.38 |
H1 2019
Unit: RMB
| Item | H1 2019 |
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 4,794,830.59 | 251,800,000.00 | 5,162,354,747.41 | 7,169,711,685.35 | ||||||
| Add: Adjustment for change in accounting policy | -4,794,830.59 | 4,794,830.59 | ||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 0.00 | 251,800,000.00 | 5,167,149,578.00 | 7,169,711,685.35 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -71,419,256.76 | -71,419,256.76 | ||||||||||
| 3.1 Total comprehensive income | 683,980,743.24 | 683,980,743.24 | ||||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders | ||||||||||||
| of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss |
| offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 0.00 | 251,800,000.00 | 5,095,730,321.24 | 7,098,292,428.59 |
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Anhui Gujing Distillery Company LimitedNotes to Financial Statements for H1 2020(Currency Unit Is RMB Unless Otherwise Stated)
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
Authorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property, AnhuiGujing Distillery Company Limited (“the Company”) was established as a limited liability company with net assetsof RMB377,167,700 and state-owned shares of 155,000,000 shares and considered Anhui Gujing Company as theonly promoter. The registration place was Bozhou Anhui China. The Company was established on 5 March 1996 bydocument of WZM (1996) No.42 of Anhui People’s Government. The Company set up plenary session on 28 May1996 and registered in Anhui on 30 May 1996 with business license of 14897271-1.The Company has issued 60,000,000 domestic listed foreign shares (“B” shares) in June 1996 and 20,000,000ordinary shares (“A shares) on September 1996, ordinary shares are listed in national and par value is RMB1.00 pershare. Those A shares and B shares are listed in Shenzhen Stock exchange.Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company)specialize in producing and selling white spirit.Registered capitals of the Company were RMB235,000,000 with stocks of 235,000,000, of which 155,000,000shares were issued in China, B shares of 60,000,000 shares and A shares of 20,000,000 shares. The book value ofthe stocks of the Company was of RMB1 per share.On 29 May 2006, a shareholder meeting was held to discuss and approval a program of equity division of A share,the program was implement in June 2006. After implementation, all shares are outstanding share, which include147,000,000 shares with restrict condition on disposal, represent 62.55% of total equity, and 88,000,000 shareswithout restrict condition on disposal, represent 37.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 27 June 2007, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 29June 2007. Up to that day, outstanding shares with restrict condition on disposal are 135,250,000, representing
57.55% of total equity, the share without restrict condition are 99,750,000, representing 42.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 17 July 2008, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 18July 2008. Up to that day, outstanding shares with restrict condition on disposal are 123,500,000, representing
52.55% of total equity, the share without restrict condition are 111,500,000, representing 47.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 24 July 2009, 123,500,000 outstanding shares with restrict condition on disposal are listed in stock market on 29
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July 2009. Up to that day, the Company’s all shares are all tradable.Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943, the Company privately offered 16,800,000ordinary shares (A-shares) to special investors on 15 July 2011, with a par value of RMB1 and the price ofRMB75.00 per share, raising RMB1,260,000,000.00 in total, the net amount of raised funds stood atRMB1,227,499,450.27 after deducting RMB32,500,549.73 of various issuance expenses. Certified PublicAccountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi[2011] No. 1065. After private issuance, the share capital of the Company increased to RMB251.8 million.Pursuant to the Resolution of The 2011 Annual General Meeting, the Company that considered 251,800,000 sharesas base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 shares for per 10shares” accounting for 251,800,000 shares and implemented in the year of 2012. Upon the transference, theregistered capitals increased to RMB503,600,000.In April 2016, the Company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane TowerCo., Ltd., creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spirit inHubei Province, it features unique mellow taste, elegant appearance and tempting smell. Moreover, Yellow CraneTower White Spirit won the Golden Prize respectively in 1984 and 1989 National White Spirit AppraisalCompetition as one of the business card representing Hubei Province’s economy. At present, the Company hasestablished three major bases in Wuhan, Xianning and Suizhou, of which, Xianning Base has integrated modernism,ecologism and high technology as a new spirit-making base, known as “the most beautiful chateau in China”. In2016, Yellow Crane Tower Spirit won “2015 Top 10 Star Product in Hubei Province”.By 30 June 2020, the Company issued 503,600,000 shares.The Company is registered at Gujing Town, Bozhou City, Anhui Province.The approved business of the Company including procurement of grain (operating with business license),manufacture of distilled spirits, wine distilling facilities, packaging material, bottles, alcohol, grease (limited tobyproducts from wine manufacture), and research and development of high-tech, biotechnology development,agricultural and sideline products deep processing, as well as sale of self-manufacturing products.The Company as the parent and the final company as the parent is Anhui Gujing Company Co., Ltd in China.Financial statement of the Company will be released on 28 August 2020 by the Board of Directors.
1.2 Scope of Consolidation and Changes Thereof
(1) Incorporated subsidiaries of the Company
| Sequence Number | Name of Subsidiaries | Abbreviation of Subsidiaries | Proportion of Shareholding (or similar equity interest) (%) | |
| Direct | Indirect | |||
| 1 | Bozhou Gujing Sales Co., Ltd. | Gujing Sales | 100.00 | - |
| 2 | Anhui Jinyunlai Culture & Media Co., Ltd. | Jinyunlai | 100.00 | - |
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| Sequence Number | Name of Subsidiaries | Abbreviation of Subsidiaries | Proportion of Shareholding (or similar equity interest) (%) | |
| Direct | Indirect | |||
| 3 | Anhui Ruisiweier Technology Co., Ltd. | Ruisiweier | 100.00 | |
| 4 | Anhui Colorful Taste Wine Co., Ltd. | Colorful Taste Wine | 100.00 | |
| 5 | Anhui Longrui Glass Co., Ltd. | Longrui Glass | 100.00 | |
| 6 | Bozhou Gujing Waste Recycling Co., Ltd. | Gujing Waste | 100.00 | |
| 7 | Shanghai Gujing Jinhao hotel management company | Jinhao Hotel | 100.00 | |
| 8 | Bozhou Gujing hotel Co., Ltd | Gujing Hotel | 100.00 | |
| 9 | Anhui Yuanqing environmental protection Co., Ltd. | Yuanqing Environmental Protection | 100.00 | |
| 10 | Anhui Gujing Yunshang Electronic Commerce Co., Ltd | Gujing Electronic Commerce | 100.00 | |
| 11 | Anhui Zhenrui Construction Engineering Co., Ltd | Zhenrui Construction Engineering | 100.00 | |
| 12 | Anhui RunanxinkeTesting Tech. Co., Ltd. | Runanxinke Testing | 100.00 | |
| 13 | Yellow Crane Tower Wine Co., Ltd | Yellow Crane Tower Wine | 51.00 | |
| 14 | Yellow Crane Tower Wine (Suizhou) Co., Ltd | Suizhou Yellow Crane Tower | 51.00 | |
| 15 | Hubei Junhe Advertising Co., Ltd. | Junhe Advertising | 51.00 | |
| 16 | Hubei Yellow Crane Tower Beverage Co., Ltd. | Yellow Crane Tower Beverage | 51.00 | |
| 17 | Yellow Crane Tower Wine (Xianning) Co., Ltd. | Xianning Yellow Crane Tower | 51.00 | |
| 18 | Wuhan Yashibo tech. Co., Ltd. | Yashibo | 51.00 | |
| 19 | Wuhan Tianlong Jindi Technology Development Co., Ltd. | Tianlong Jindi | 51.00 | |
~36~
| Sequence Number | Name of Subsidiaries | Abbreviation of Subsidiaries | Proportion of Shareholding (or similar equity interest) (%) | |
| Direct | Indirect | |||
| 20 | Wuhan Junya Sales Co., Ltd. | Junya Sales | 51.00 | |
| 21 | Xianning Junhe Sales Co., Ltd. | Xianning Junhe | 51.00 | |
| 22 | Suizhou Junhe Commercial Co., Ltd. | Suizhou Junhe | 51.00 | |
For details of the subsidiaries mentioned above, please refer to Note 7 INTEREST IN OTHER ENTITIES
(2) Change of the scope of consolidation
No change comprared with that of the same period of last year.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
2.1 Basis for Preparation
On the basis of continuous operations, the Company shall confirm and measure actual transactions and events inaccordance with the Accounting Standards for Business Enterprises and its Application Guidelines andInterpretation of the Standards, and prepare financial statements. Besides, the Company also discloses relevantfinancial information in accordance with the China Securities Regulatory Commission (CSRC) Rules No. 15 on theCompilation and Reporting of Corporate Information on Public Offerings -- General Provisions on FinancialReports (2014 Revision).
2.2 Continuation
The Company has assessed its ability to continually operate for the next twelve months from the end of thereporting period, and no any matters that may result in doubt on its ability as a going concern were noted. Therefore,it is reasonable for the Company to prepare financial statements on the going concern basis.
3. Important Accounting Policies and Estimations
The following important accounting policies and estimates of the Company shall be formulated in accordance withthe Accounting Standards for Business Enterprises. The business not mentioned shall be carried out in accordancewith the relevant accounting policies in the Accounting Standards for Business Enterprises.
3.1 Statement of Compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company are in compliance with in compliance with the AccountingStandards for Business Enterprises, which factually and completely present the Company’s financial positions,changes of owners’ equity, business results and cash flows and other relevant information.
3.2 Fiscal Period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating Cycle
The normal operating cycle of the Company is one year.
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3.4 Currency Used in Bookkeeping
The Company's functional currency is RMB, and its overseas subsidiaries are operated in the currency of the maineconomic environment in which they operate.
3.5 Accounting Treatment of Business Combinations under and not under Common Control(a) Business combinations under common controlThe assets and liabilities that the Company obtains in a business combination under common control shall bemeasured at their carrying amount of the acquired entity at the combination date. If the accounting policy adoptedby the acquired entity is different from that adopted by the acquiring entity, the acquiring entity shall, according toaccounting policy it adopts, adjust the relevant items in the financial statements of the acquired party based on theprincipal of materiality. As for the difference between the carrying amount of the net assets obtained by theacquiring entity and the carrying amount of the consideration paid by it, the capital reserve (capital premium orshare premium) shall be adjusted. If the capital reserve (capital premium or share premium) is not sufficient toabsorb the difference, any excess shall be adjusted against retained earnings.For the accounting treatment of business combination under common control by step acquisitions, please refer toNote 3.6 (6).(b) Business combinations not under common controlThe assets and liabilities that the Company obtains in a business combination not under common control shall bemeasured at their fair value at the acquisition date. If the accounting policy adopted by the acquired entity isdifferent from that adopted by the acquiring entity, the acquiring entity shall, according to accounting policy itadopts, adjust the relevant items in the financial statements of the acquired entity based on the principal ofmateriality. The acquiring entity shall recognise the positive balance between the combination costs and the fairvalue of the identifiable net assets it obtains from the acquired entity as goodwill. The acquiring entity shall,pursuant to the following provisions, treat the negative balance between the combination costs and the fair value ofthe identifiable net assets it obtains from the acquired entity:
(i) It shall review the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities itobtains from the acquired entity as well as the combination costs;(ii) If, after the review, the combination costs are still less than the fair value of the identifiable net assets it obtainsfrom the acquired entity, the balance shall be recognised in profit or loss of the reporting period.For the accounting treatment of business combination under the same control by step acquisitions, please refer toNote 3.6 (f).(c) Treatment of business combination related costsThe intermediary costs such as audit, legal services and valuation consulting and other related management coststhat are directly attributable to the business combination shall be charged in profit or loss in the period in whichthey are incurred. The costs to issue equity or debt securities for the consideration of business combination shall be
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recorded as a part of the value of the respect equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements
(a) Scope of consolidationThe scope of consolidated financial statements shall be determined on the basis of control. It not only includessubsidiaries determined based on voting power (or similar) or other arrangement, but also structured entities underone or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure, or rights to variablereturns from the Company’s involvement with the investee; and the ability to use its power over the investee toaffect the amount of the investor’s returns. Subsidiaries are the entities that controlled by the Company (includingenterprise, a divisible part of the investee, and structured entity controlled by the enterprise). A structured entity(sometimes called a Special Purpose Entity) is an entity that has been designed so that voting or similar rights arenot the dominant factor in deciding who controls the entity.(b) Special requirement as the parent company is an investment entityIf the parent company is an investment entity, it should measure its investments in particular subsidiaries asfinancial assets at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated andseparate financial statements. However, as an exception to this requirement, if a subsidiary providesinvestment-related services or activities to the investment entity, it should be consolidated.The parent company is defined as investment entity when meets following conditions:
a. Obtains funds from one or more investors for the purpose of providing those investors with investmentmanagement services;b. Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation,investment income or both; andc. Measures and evaluates the performance of substantially all of its investments on a fair value basis.If the parent company becomes an investment entity, it shall cease to consolidate its subsidiaries at the date of thechange in status, except for any subsidiary which provides investment-related services or activities to theinvestment entity shall be continued to be consolidated. The deconsolidation of subsidiaries is accounted for asthough the investment entity partially disposed subsidiaries without loss of control.When the parent company previously classified as an investment entity ceases to be an investment entity, subsidiarythat was previously measured at fair value through profit or loss shall be included in the scope of consolidatedfinancial statements at the date of the change in status. The fair value of the subsidiary at the date of changerepresents the transferred deemed consideration in accordance with the accounting for business combination notunder common control.(c) Method of preparing the consolidated financial statementsThe consolidated financial statements shall be prepared by the Company based on the financial statements of the
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Company and its subsidiaries, and using other related information.When preparing consolidated financial statements, the Company shall consider the entire group as an accountingentity, adopt uniform accounting policies and apply the requirements of Accounting Standard for BusinessEnterprises related to recognition, measurement and presentation. The consolidated financial statements shallreflect the overall financial position, operating results and cash flows of the group.(i) Like items of assets, liabilities, equity, income, expenses and cash flows of the parent are combined with thoseof the subsidiaries.(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set) against the parent’sportion of equity of each subsidiary.(iii) Eliminate the impact of intragroup transactions between the Company and the subsidiaries or betweensubsidiaries, and when intragroup transactions indicate an impairment of related assets, the losses shall berecognised in full.(iv) Make adjustments to special transactions from the perspective of the group.(d) Method of preparation of the consolidated financial statements when subsidiaries are acquired ordisposed in the reporting period(i) Acquisition of subsidiaries or businessSubsidiaries or business acquired through business combination under common controlWhen preparing consolidated statements of financial position, the opening balance of the consolidated balancesheet shall be adjusted. Related items of comparative financial statements shall be adjusted as well, deeming thatthe combined entity has always existed ever since the ultimate controlling party began to control.Incomes, expenses and profits of the subsidiary incurred from the beginning of the reporting period to the end ofthe reporting period shall be included into the consolidated statement of profit or loss. Related items of comparativefinancial statements shall be adjusted as well, deeming that the combined entity has always existed ever since theultimate controlling party began to control.Cash flows from the beginning of the reporting period to the end of the reporting period shall be included into theconsolidated statement of cash flows. Related items of comparative financial statements shall be adjusted as well,deeming that the combined entity has always existed ever since the ultimate controlling party began to control.Subsidiaries or business acquired through business combination not under common controlWhen preparing the consolidated statements of financial position, the opening balance of the consolidatedstatements of financial position shall not be adjusted.Incomes, expenses and profits of the subsidiary incurred from the acquisition date to the end of the reporting periodshall be included into the consolidated statement of profit or loss.Cash flows from the acquisition date to the end of the reporting period shall be included into the consolidatedstatement of cash flows.
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(ii) Disposal of subsidiaries or businessWhen preparing the consolidated statements of financial position, the opening balance of the consolidatedstatements of financial position shall not be adjusted.Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposal date shall be includedinto the consolidated statement of profit or loss.Cash flows from the beginning of the subsidiary to the disposal date shall be included into the consolidatedstatement of cash flows.(e) Special consideration in consolidation elimination(i) Long-term equity investment held by the subsidiaries to the Company shall be recognised as treasury stock ofthe Company, which is offset with the owner’s equity, represented as “treasury stock” under “owner’s equity” in theconsolidated statement of financial position.Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equityinvestment held by the Company to its subsidiaries as reference. That is, the long-term equity investment iseliminated (off- set) against the portion of the corresponding subsidiary’s equity.(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve, and being different from retainedearnings and undistributed profit, “Specific reserves” and “General risk provision” shall be recovered based on theproportion attributable to owners of the parent company after long-term equity investment to the subsidiaries iseliminated with the subsidiaries’ equity.(iii) If temporary timing difference between the book value of the assets and liabilities in the consolidated statementof financial position and their tax basis is generated as a result of elimination of unrealized inter-companytransaction profit or loss, deferred tax assets of deferred tax liabilities shall be recognised, and income tax expensein the consolidated statement of profit or loss shall be adjusted simultaneously, excluding deferred taxes related totransactions or events directly recognised in owner’s equity or business combination.(iv) Unrealised inter-company transactions profit or loss generated from the Company selling assets to itssubsidiaries shall be eliminated against “net profit attributed to the owners of the parent company” in full.Unrealized inter-company transactions profit or loss generated from the subsidiaries selling assets to the Companyshall be eliminated between “net profit attributed to the owners of the parent company” and “non-controllinginterests” pursuant to the proportion of the Company in the related subsidiaries. Unrealized inter-companytransactions profit or loss generated from the assets sales between the subsidiaries shall be eliminated between “netprofit attributed to the owners of the parent company” and “non-controlling interests” pursuant to the proportion ofthe Company in the selling subsidiaries.(v) If loss attributed to the minority shareholders of a subsidiary in current period is more than the proportion ofnon-controlling interest in this subsidiary at the beginning of the period, non-controlling interest is still to bewritten down.
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(f) Accounting for Special Transactions(i) Purchasing of non-controlling interestsWhere, the Company purchases non-controlling interests of its subsidiary, in the separate financial statements of theCompany, the cost of the long-term equity investment obtained in purchasing non-controlling interests is measuredat the fair value of the consideration paid. In the consolidated financial statements, difference between the cost ofthe long-term equity investment newly obtained in purchasing non-controlling interests and share of thesubsidiary’s net assets from the acquisition date or combination date continuingly calculated pursuant to the newlyacquired shareholding proportion shall be adjusted into capital reserve (capital premium or share premium). Ifcapital reserve is not enough to be offset, surplus reserve and undistributed profit shall be offset in turn.(ii) Gaining control over the subsidiary in stages through multiple transactionsBusiness combination under common control in stages through multiple transactionsOn the combination date, in the separate financial statement, initial cost of the long-term equity investment isdetermined according to the share of carrying amount of the acquiree’s net assets in the ultimate controlling entity’sconsolidated financial statements after combination. The difference between the initial cost of the long-term equityinvestment and the carrying amount of the long -term investment held prior of control plus book value of additionalconsideration paid at acquisition date is adjusted into capital reserve (capital premium or share premium). If thecapital reserve is not enough to absorb the difference, any excess shall be adjusted against surplus reserve andundistributed profit in turn.In the consolidated financial statements, the assets and liabilities acquired during the combination should berecognized at their carrying amount in the ultimate controlling entity’s consolidated financial statements on thecombination date unless any adjustment is resulted from the difference in accounting policies. The differencebetween the carrying amount of the investment held prior of control plus book value of additional considerationpaid on the acquisition date and the net assets acquired through the combination is adjusted into capital reserve(capital premium or share premium). If the capital reserve is not enough to absorb the difference, any excess shallbe adjusted against retained earnings.If the acquiring entity holds equity investment in the acquired entity prior to the combination date and the equityinvestment is accounted for under the equity method, related profit or loss, other comprehensive income and otherchanges in equity which have been recognised during the period from the later of the date of the Companyobtaining original equity interest and the date of both the acquirer and the acquiree under common control of thesame ultimate controlling party to the combination date should be offset against the opening balance of retainedearnings at the comparative financial statements period respectively.Business combination not under common control in stages through multiple transactionsOn the consolidation date, in the separate financial statements, the initial cost of long-term equity investment isdetermined according to the carrying amount of the original long-term investment plus the cost of new investment.
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In the consolidated financial statements, the equity interest of the acquired entity held prior to the acquisition dateshall be re-measured at its fair value on the acquisition date. Difference between the fair value of the equity interestand its book value is recognised as investment income. The other comprehensive income related to the equityinterest held prior to the acquisition date calculated through equity method, should be transferred to currentinvestment income of the acquisition period, excluding other comprehensive income resulted from theremeasurement of the net assets or net liabilities under defined benefit plan. The Company shall discloseacquisition-date fair value of the equity interest held prior to the acquisition date, and the related gains or losses dueto the remeasurement based on fair value.(iii) Disposal of investment in subsidiaries without a loss of controlFor partial disposal of the long-term equity investment in the subsidiaries without a loss of control, when theCompany prepares consolidated financial statements, difference between consideration received from the disposaland the corresponding share of subsidiary’s net assets cumulatively calculated from the acquisition date orcombination date shall be adjusted into capital reserve (capital premium or share premium). If the capital reserve isnot enough to absorb the difference, any excess shall be offset against retained earnings.(iv) Disposal of investment in subsidiaries with a loss of controlDisposal through one transactionIf the Company loses control in an investee through partial disposal of the equity investment, when theconsolidated financial statements are prepared, the retained equity interest should be re-measured at fair value at thedate of loss of control. The difference between i) the fair value of consideration received from the disposal plusnon-controlling interest retained; ii) share of the former subsidiary’s net assets cumulatively calculated from theacquisition date or combination date according to the original proportion of equity interest, shall be recognised incurrent investment income when control is lost.Moreover, other comprehensive income and other changes in equity related to the equity investment in the formersubsidiary shall be transferred into current investment income when control is lost, excluding other comprehensiveincome resulted from the remeasurement of the movement of net assets or net liabilities under defined benefit plan.Disposal in stagesIn the consolidated financial statements, whether the transactions should be accounted for as “a single transaction”needs to be decided firstly.If the disposal in stages should not be classified as “a single transaction”, in the separate financial statements, fortransactions prior of the date of loss of control, carrying amount of each disposal of long-term equity investmentneed to be recognized, and the difference between consideration received and the carrying amount of long-termequity investment corresponding to the equity interest disposed should be recognized in current investment income;in the consolidated financial statements, the disposal transaction should be accounted for according to relatedpolicy in “Disposal of long-term equity investment in subsidiaries without a loss of control”.
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If the disposal in stages should be classified as “a single transaction”, these transactions should be accounted for asa single transaction of disposal of subsidiary resulting in loss of control. In the separate financial statements, foreach transaction prior of the date of loss of control, difference between consideration received and the carryingamount of long-term equity investment corresponding to the equity interest disposed should be recognised as othercomprehensive income firstly, and transferred to profit or loss as a whole when control is lost; in the consolidatedfinancial statements, for each transaction prior of the date of loss of control, difference between considerationreceived and proportion of the subsidiary’s net assets corresponding to the equity interest disposed should berecognised in profit or loss as a whole when control is lost.In considering of the terms and conditions of the transactions as well as their economic impact, the presence of oneor more of the following indicators may lead to account for multiple transactions as a single transaction:
(a) The transactions are entered into simultaneously or in contemplation of one another.(b) The transactions form a single transaction designed to achieve an overall commercial effect.(c) The occurrence of one transaction depends on the occurrence of at least one other transaction.(d) One transaction, when considered on its own merits, does not make economic sense, but when consideredtogether with the other transaction or transactions would be considered economically justifiable.(v) Diluting equity share of parent company in its subsidiaries due to additional capital injection by the subsidiaries’minority shareholders.Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the subsidiaries, whichresulted in the dilution of equity interest of parent company in these subsidiaries. In the consolidated financialstatements, difference between share of the corresponding subsidiaries’ net assets calculated based on the parent’sequity interest before and after the capital injection shall be adjusted into capital reserve (capital premium or sharepremium). If the capital reserve is not enough to absorb the difference, any excess shall be adjusted against retainedearnings.
3.7 Classification of Joint Arrangements and Accounting for Joint Operation
A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of theCompany is classified as either a joint operation or a joint venture.(a) Joint operationA joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights tothe assets, and obligations for the liabilities, relating to the arrangement.The Company shall recognise the following items in relation to shared interest in a joint operation, and account forthem in accordance with relevant accounting standards of the Accounting Standards for Business Enterprises:
(i) its assets, including its share of any assets held jointly;(ii) its liabilities, including its share of any liabilities incurred jointly;(iii) its revenue from the sale of its share of the output arising from the joint operation;
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(iv) its share of the revenue from the sale of the output by the joint operation; and(v) its expenses, including its share of any expenses incurred jointly.(b) Joint ventureA joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights tothe net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity method of long-term equityinvestment.
3.8 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents includeshort-term (generally within three months of maturity at acquisition), highly liquid investments that are readilyconvertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
3.9 Foreign Currency Transactions and Translation of Foreign Currency Financial Statements(a) Determination of the exchange rate for foreign currency transactionsAt the time of initial recognition of a foreign currency transaction, the amount in the foreign currency shall betranslated into the amount in the functional currency at the spot exchange rate of the transaction date, or at anexchange rate which is determined through a systematic and reasonable method and is approximate to the spotexchange rate of the transaction date (hereinafter referred to as the approximate exchange rate).(b) Translation of monetary items denominated in foreign currency on the balance sheet dateThe foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. Thebalance of exchange arising from the difference between the spot exchange rate on the balance sheet date and thespot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded into theprofits and losses at the current period. The foreign currency non-monetary items measured at the historical costshall still be translated at the spot exchange rate on the transaction date; for the foreign currency non-monetaryitems restated to a fair value measurement, shall be translated into the at the spot exchange rate at the date when thefair value was determined, the difference between the restated functional currency amount and the originalfunctional currency amount shall be recorded into the profits and losses at the current period.(c) Translation of foreign currency financial statementsBefore translating the financial statements of foreign operations, the accounting period and accounting policy shallbe adjusted so as to conform to the Company. The adjusted foreign operation financial statements denominated inforeign currency (other than functional currency) shall be translated in accordance with the following method:
(i) The asset and liability items in the statement of financial position shall be translated at the spot exchange rates atthe date of that statement of financial position.. The owners’ equity items except undistributed profit shall betranslated at the spot exchange rates when they are incurred.(ii) The income and expense items in the statement of profit and other comprehensive income shall be translated at
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the spot exchange rates or approximate exchange rate at the date of transaction.(iii)Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the spot exchange rateor approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash ispresented separately in the statement of cash flows as an adjustment item.(iv) The differences arising from the translation of foreign currency financial statements shall be presentedseparately as “other comprehensive income” under the owners’ equity items of the consolidated statement offinancial position.When disposing a foreign operation involving loss of control, the cumulative amount of the exchange differencesrelating to that foreign operation recognised under other comprehensive income in the statement of financialposition, shall be reclassified into current profit or loss according to the proportion disposed.
3.10 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liabilityor equity instrument of another entity.(a) Recognition and derecognition of financial instrumentA financial asset or a financial liability should be recognised in the statement of financial position when, and onlywhen, an entity becomes party to the contractual provisions of the instrument.A financial asset can only be derecognised when meets one of the following conditions:
(i) The rights to the contractual cash flows from a financial asset expire(ii) The financial asset has been transferred and meets one of the following derecognition conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—i.e., when theobligation specified in the contract is discharged or cancelled or expires. An exchange of the Company (borrower)and lender of debt instruments that carry significantly different terms or a substantial modification of the terms ofan existing liability are both accounted for as an extinguishment of the original financial liability and therecognition of a new financial liability.Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using trade dateaccounting. A regular-way purchase or sale of financial assets is a transaction under a contract whose terms requiredelivery of the asset within the time frame established generally by regulations or convention in the market placeconcerned. Trade date is the date at which the entity commits itself to purchase or sell an asset.(b) Classification and measurement of financial assetsAt initial recognition, the Company classified its financial asset based on both the business model for managing thefinancial asset and the contractual cash flow characteristics of the financial asset: financial asset at amortised cost,financial asset at fair value through profit or loss (FVTPL) and financial asset at fair value through othercomprehensive income (FVTOCI). Reclassification of financial assets is permitted if, and only if, the objective ofthe entity’s business model for managing those financial assets changes. In this circumstance, all affected financial
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assets shall be reclassified on the first day of the first reporting period after the changes in business model;otherwise the financial assets cannot be reclassified after initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assets measured at FVTPL,transaction costs are recognised in current profit or loss. For financial assets not measured at FVTPL, transactioncosts should be included in the initial measurement. Notes receivable or accounts receivable that arise from sales ofgoods or rendering of services are initially measured at the transaction price defined in the accounting standard ofrevenue where the transaction does not include a significant financing component.Subsequent measurement of financial assets will be based on their categories:
(i)Financial asset at amortised costThe financial asset at amortised cost category of classification applies when both the following conditions are met:
the financial asset is held within the business model whose objective is to hold financial assets in order to collectcontractual cash flows, and the contractual term of the financial asset gives rise on specified dates to cash flows thatare solely payment of principal and interest on the principal amount outstanding. These financial assets aresubsequently measured at amortised cost by adopting the effective interest rate method. Any gain or loss arisingfrom derecognition according to the amortization under effective interest rate method or impairment are recognisedin current profit or loss.(ii)Financial asset at fair value through other comprehensive income (FVTOCI)The financial asset at FVTOCI category of classification applies when both the following conditions are met: thefinancial asset is held within the business model whose objective is achieved by both collecting contractual cashflows and selling financial assets, and the contractual term of the financial asset gives rise on specified dates to cashflows that are solely payment of principle and interest on the principal amount outstanding. All changes in fairvalue are recognised in other comprehensive income except for gain or loss arising from impairment or exchangedifferences, which should be recognised in current profit or loss. At derecognition, cumulative gain or losspreviously recognised under OCI is reclassified to current profit or loss. However, interest income calculated basedon the effective interest rate is included in current profit or loss.The Company make an irrevocable decision to designate part of non-trading equity instrument investments asmeasured through FVTOCI. All changes in fair value are recognised in other comprehensive income except fordividend income recognised in current profit or loss. At derecognition, cumulative gain or loss are reclassified toretained earnings.(iii)Financial asset at fair value through profit or loss (FVTPL)Financial asset except for above mentioned financial asset at amortised cost or financial asset at fair value throughother comprehensive income (FVTOCI), should be classified as financial asset at fair value through profit or loss(FVTPL). These financial assets should be subsequently measured at fair value. All the changes in fair value areincluded in current profit or loss.
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(c) Classification and measurement of financial liabilitiesThe Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVTPL),loan commitments at a below-market interest rate and financial guarantee contracts and financial asset at amortisedcost.Subsequent measurement of financial assets will be based on the classification:
(i)Financial liabilities at fair value through profit or loss (FVTPL)Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilitiesdesignated at FVTPL are classified as financial liabilities at FVTP. After initial recognition, any gain or loss(including interest expense) are recognised in current profit or loss except for those hedge accounting is applied.For financial liability that is designated as at FVTPL, changes in the fair value of the financial liability that isattributable to changes in the own credit risk of the issuer shall be presented in other comprehensive income. Atderecognition, cumulative gain or loss previously recognised under OCI is reclassified to retained earnings.(ii)Loan commitments and financial guarantee contractsLoan commitment is a commitment by the Company to provide a loan to customer under specified contract terms.The provision of impairment losses of loan commitments shall be recognised based on expected credit lossesmodel.Financial guarantee contract is a contract that requires the Company to make specified payments to reimburse theholder for a loss it incurs because a specified debtor fails to make payment when due in accordance with theoriginal or modified terms of a debt instrument. Financial guarantee contracts liability shall be subsequentlymeasured at the higher of: The amount of the loss allowance recognised according to the impairment principles offinancial instruments; and the amount initially recognised less the cumulative amount of income recognised inaccordance with the revenue principles.(iii)Financial liabilities at amortised costAfter initial recognition, the Company measured other financial liabilities at amortised cost using the effectiveinterest method.Except for special situation, financial liabilities and equity instrument should be classified in accordance with thefollowing principles:
(i) If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill acontractual obligation, this contractual obligation meet the definition of financial liabilities. Some financialinstruments do not comprise terms and conditions related to obligations of delivering cash or another financialinstrument explicitly, they may include contractual obligation indirectly through other terms and conditions.(ii) If a financial instrument must or may be settled in the Company's own equity instruments, it should beconsidered that the Company’s own equity instruments are alternatives of cash or another financial instrument, orto entitle the holder of the equity instruments to sharing the remaining rights over the net assets of the issuer. If the
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former is the case, the instrument is a liability of the issuer; otherwise, it is an equity instrument of the issuer.Under some circumstances, it is regulated in the contract that the financial instrument must or may be settled in theCompany's own equity instruments, where, amount of contractual rights and obligations are calculated bymultiplying the number of the equity instruments to be available or delivered by its fair value upon settlement. Suchcontracts shall be classified as financial liabilities, regardless that the amount of contractual rights and liabilities isfixed, or fluctuate totally or partially with variables other than market price of the entity’s own equity instruments(d) Derivatives and embedded derivativesAt initial recognition, derivatives shall be measured at fair value at the date of derivative contracts are signed andsubsequently measured at fair value. The derivative with a positive fair value shall be recognized as an asset, andwith a negative fair value shall be recognised as a liability.Gains or losses arising from the changes in fair value of derivatives shall be recognised directly into current profitor loss except for the effective portion of cash flow hedges which shall be recognised in other comprehensiveincome and reclassified into current profit or loss when the hedged items affect profit or loss.An embedded derivative is a component of a hybrid contract with a financial asset as a host, the Company shallapply the requirements of financial asset classification to the entire hybrid contract. If a host that is not a financialasset and the hybrid contract is not measured at fair value with changes in fair value recognised in profit or loss,and the economic characteristics and risks of the embedded derivative are not closely related to the economiccharacteristics and risks of the host, and a separate instrument with the same terms as the embedded derivativewould meet the definition of a derivative, the embedded derivative shall be separated from the hybrid instrumentand accounted for as a separate derivative instrument. If the Company is unable to measure the fair value of theembedded derivative at the acquisition date or subsequently at the balance sheet date, the entire hybrid contract isdesignated as financial assets or financial liabilities at fair value through profit or loss.(e) Impairment of financial instrumentThe Company shall recognise a loss allowance based on expected credit losses on a financial asset that is measuredat amortised cost, a debt investment at fair value through other comprehensive income, a contract asset, a leasereceivable, a loan commitment and a financial guarantee contract.(i) Measurement of expected credit lossesExpected credit losses are the weighted average of credit losses of the financial instruments with the respectiverisks of a default occurring as the weights. Credit loss is the difference between all contractual cash flows that aredue to the Company in accordance with the contract and all the cash flows that the Company expects to receive,discounted at the original effective interest rate or credit- adjusted effective interest rate for purchased or originatedcredit-impaired financial assets.Lifetime expected credit losses are the expected credit losses that result from all possible default events over theexpected life of a financial instrument.
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12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected creditlosses that result from default events on a financial instrument that are possible within the 12 months after thereporting date (or the expected lifetime, if the expected life of a financial instrument is less than 12 months).At each reporting date, the Company classifies financial instruments into three stages and makes provisions forexpected credit losses accordingly. A financial instrument of which the credit risk has not significantly increasedsince initial recognition is at stage 1. The Company shall measure the loss allowance for that financial instrument atan amount equal to 12-month expected credit losses. A financial instrument with a significant increase in credit risksince initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall measure theloss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. A financialinstrument is considered to be credit-impaired as at the end of the reporting period is at stage 3. The Company shallmeasure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses.The Company may assume that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have low credit risk at the reporting date and measure theloss allowance for that financial instrument at an amount equal to 12-month expected credit losses.For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue shall be calculatedby applying the effective interest rate to the gross carrying amount of a financial asset. For financial instrument atstage 3, interest revenue shall be calculated by applying the effective interest rate to the amortised cost afterdeducting of impairment loss.For notes receivable, accounts receivable and accounts receivable financing, no matter it contains a significantfinancing component or not, the Company shall measure the loss allowance at an amount equal to the lifetimeexpected credit losses.ReceivablesFor the notes receivable, accounts receivable, other receivables, accounts receivable financing and long-termreceivables which are demonstrated to be impaired by any objective evidence, or applicable for individualassessment, the Company shall individually assess for impairment and recognise the loss allowance for expectedcredit losses. If the Company determines that no objective evidence of impairment exists for notes receivable,accounts receivable, other receivables, accounts receivable financing and long-term receivables, or the expectedcredit loss of a single financial asset cannot be assessed at reasonable cost, such notes receivable, accountsreceivable, other receivables, accounts receivable financing and long-term receivables shall be divided into severalgroups with similar credit risk characteristics and collectively calculated the expected credit loss. The determinationbasis of groups is as following:
Determination basis of notes receivable is as following:
Group 1: Commercial acceptance billsGroup 2: Bank acceptance bills
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For each group, the Company calculates expected credit losses through default exposure and the lifetime expectedcredit losses rate, taking reference to historical experience for credit losses and considering current condition andexpectation for the future economic situation.Determination basis of accounts receivable is as following:
Group 1: Accounts receivables due from the company within the scope of consolidationGroup 2: Accounts receivables due from other customersFor each group, the Company calculates expected credit losses through preparing an aging analysis schedule withthe lifetime expected credit losses rate, taking reference to historical experience for credit losses and consideringcurrent condition and expectation for the future economic situation.Determination basis of other receivables is as following:
Group 1: Other receivables due from the company within the scope of consolidationGroup 2: Other receivables due from othersFor each group, the Company calculates expected credit losses through default exposure and the 12-months orlifetime expected credit losses rate, taking reference to historical experience for credit losses and consideringcurrent condition and expectation for the future economic situation.Debt investment and other debt investmentFor debt investment and other debt investment, the Company shall calculate the expected credit loss through thedefault exposure and the 12-month or lifetime expected credit loss rate based on the nature of the investment,counterparty and the type of risk exposure.(ii) Low credit riskIf the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cashflow obligations in the near term and adverse changes in economic and business conditions in the longer term may,but will not necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations.(iii) Significant increase in credit riskThe Company shall assess whether the credit risk on a financial instrument has increased significantly since initialrecognition, using the change in the risk of a default occurring over the expected life of the financial instrument,through the comparison of the risk of a default occurring on the financial instrument as at the reporting date withthe risk of a default occurring on the financial instrument as at the date of initial recognition.To make that assessment, the Company shall consider reasonable and supportable information, that is availablewithout undue cost or effort, and that is indicative of significant increases in credit risk since initial recognition,including forward-looking information. The information considered by the Company are as following:
? Significant changes in internal price indicators of credit risk as a result of a change in credit risk sinceinception
? Existing or forecast adverse change in the business, financial or economic conditions of the borrower that
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results in a significant change in the borrower’s ability to meet its debt obligations；
? An actual or expected significant change in the operating results of the borrower; An actual or expected
significant adverse change in the regulatory, economic, or technological environment of the borrower；
? Significant changes in the value of the collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements, which are expected to reduce the borrower’s economic incentive to makescheduled contractual payments or to otherwise have an effect on the probability of a default occurring;
? Significant change that are expected to reduce the borrower’s economic incentive to make scheduledcontractual payments;
? Expected changes in the loan documentation including an expected breach of contract that may lead tocovenant waivers or amendments, interest payment holidays, interest rate step-ups, requiring additionalcollateral or guarantees, or other changes to the contractual framework of the instrument；
? Significant changes in the expected performance and behaviour of the borrower；
? Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether the credit risk hasincreased significantly since initial recognition on an individual financial instrument or a group of financialinstruments. When assessed based on a group of financial instruments, the Company can group financialinstruments on the basis of shared credit risk characteristics, for example, past due information and credit riskrating.Generally, the Company shall determine the credit risk on a financial asset has increased significantly since initialrecognition when contractual payments are more than 30 days past due. The Company can only rebut thispresumption if the Company has reasonable and supportable information that is available without undue cost oreffort, that demonstrates that the credit risk has not increased significantly since initial recognition even though thecontractual payments are more than 30 days past due.(iv) Credit-impaired financial assetThe Company shall assess at each reporting date whether the credit impairment has occurred for financial asset atamortised cost and debt investment at fair value through other comprehensive income. A financial asset iscredit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of thatfinancial asset have occurred. Evidences that a financial asset is credit-impaired include observable data about thefollowing events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as a default or past due event;the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty,having granted to the borrower a concession(s) that the lender(s) would not otherwise consider；it is becomingprobable that the borrower will enter bankruptcy or other financial reorganisation；the disappearance of an activemarket for that financial asset because of financial difficulties；the purchase or origination of a financial asset at a
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deep discount that reflects the incurred credit losses.(v) Presentation of impairment of expected credit lossIn order to reflect the changes of credit risk of financial instrument since initial recognition, the Company shall ateach reporting date remeasure the expected credit loss and recognise in profit or loss, as an impairment gain or loss,the amount of expected credit losses addition (or reversal). For financial asset at amortised cost, the loss allowanceshall reduce the carrying amount of the financial asset in the statement of financial position; for debt investment atfair value through other comprehensive income, the loss allowance shall be recognised in other comprehensiveincome and shall not reduce the carrying amount of the financial asset in the statement of financial position.(vi) Write-offThe Company shall directly reduce the gross carrying amount of a financial asset when the Company has noreasonable expectations of recovering the contractual cash flow of a financial asset in its entirety or a portionthereof. Such write-off constitutes a derecognition of the financial asset. This circumstance usually occurs when theCompany determines that the debtor has no assets or sources of income that could generate sufficient cash flow torepay the write-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment loss.(f) Transfer of financial assetsTransfer of financial assets refers to following two situations:
? Transfers the contractual rights to receive the cash flows of the financial asset;
? Transfers the entire or a part of a financial asset and retains the contractual rights to receive the cash flows ofthe financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.(i) Derecognition of transferred assetsIf the Company transfers substantially all the risks and rewards of ownership of the financial asset, or neithertransfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retainedcontrol of the financial asset, the financial asset shall be derecognised.Whether the Company has retained control of the transferred asset depends on the transferee’s ability to sell theasset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able toexercise that ability unilaterally and without needing to impose additional restrictions on the transfer, the Companyhas not retained control.The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance ofthe transfer.If the transfer of financial asset qualifies for derecognition in its entirety, the difference between the following shallbe recognised in profit or loss:
? The carrying amount of transferred financial asset;
? The sum of consideration received and the part derecognised of the cumulative changes in fair value
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previously recognised in other comprehensive income (The financial assets involved in the transfer areclassified as financial assets at fair value through other comprehensive income in accordance with Article 18of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of FinancialInstruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition, theprevious carrying amount of the larger financial asset shall be allocated between the part that continues to berecognised (For this purpose, a retained servicing asset shall be treated as a part that continues to be recognised)and the part that is derecognised, based on the relative fair values of those parts on the date of the transfer. Thedifference between following two amounts shall be recognised in profit or loss:
? The carrying amount (measured at the date of derecognition) allocated to the part derecognised；
? The sum of the consideration received for the part derecognised and part derecognised of the cumulativechanges in fair value previously recognised in other comprehensive income (The financial assets involved inthe transfer are classified as financial assets at fair value through other comprehensive income in accordancewith Article 18 of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurementof Financial Instruments).(ii) Continuing involvement in transferred assetsIf the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferredasset, and retains control of the transferred asset, the Company shall continue to recognise the transferred asset tothe extent of its continuing involvement and also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed tochanges in the value of the transferred asset(iii) Continue to recognise the transferred assetsIf the Company retains substantially all the risks and rewards of ownership of the transferred financial asset, theCompany shall continue to recognise the transferred asset in its entirety and the consideration received shall berecognised as a financial liability.The financial asset and the associated financial liability shall not be offset. In subsequent accounting period, theCompany shall continuously recognise any income (gain) arising from the transferred asset and any expense (loss)incurred on the associated liability.(g) Offsetting financial assets and financial liabilitiesFinancial assets and financial liabilities shall be presented separately in the statement of financial position and shallnot be offset. When meets the following conditions, financial assets and financial liabilities shall be offset and thenet amount presented in the statement of financial position:
The Company currently has a legally enforceable right to set off the recognised amounts; The Company intendseither to settle on a net basis, or to realise the asset and settle the liability simultaneously.
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In accounting for a transfer of a financial asset that does not qualify for derecognition, the Company shall not offsetthe transferred asset and the associated liability.(h) Determination of fair value of financial instrumentsDetermination of financial assets and financial liabilities please refer to Note 3.11
3.11 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on market value in the principalmarket, or in the absence of a principal market, in the most advantageous market price for the related asset orliability. The fair value of an asset or a liability is measured using the assumptions that market participants woulduse when pricing the asset or liability, assuming that market participants act in their economic best interest.The principal market is the market in which transactions for an asset or liability take place with the greatest volumeand frequency. The most advantageous market is the market which maximizes the value that could be receivedfrom selling the asset and minimizes the value which is needed to be paid in order to transfer a liability, consideringthe effect of transport costs and transaction costs both.If the active market of the financial asset or financial liability exists, the Company shall measure the fair valueusing the quoted price in the active market. If the active market of the financial instrument is not available, theCompany shall measure the fair value using valuation techniques.A fair value measurement of a non-financial asset takes into account a market participant’s ability to generateeconomic benefits by using the asset in its highest and best use or by selling it to another market participant thatwould use the asset in its highest and best use.
? Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data areavailable to measure fair value, including the market approach, the income approach and the cost approach. TheCompany shall use valuation techniques consistent with one or more of those approaches to measure fair value. Ifmultiple valuation techniques are used to measure fair value, the results shall be evaluated considering thereasonableness of the range of values indicated by those results. A fair value measurement is the point within thatrange that is most representative of fair value in the circumstances.When using the valuation technique, the Company shall give the priority to relevant observable inputs. Theunobservable inputs can only be used when relevant observable inputs is not available or practically would not beobtained. Observable inputs refer to the information which is available from market and reflects the assumptionsthat market participants would use when pricing the asset or liability. Unobservable Inputs refer to the informationwhich is not available from market and it has to be developed using the best information available in thecircumstances from the assumptions that market participants would use when pricing the asset or liability.
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? Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniquesused to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to theLevel 2 inputs and the lowest priority to Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in activemarkets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs areinputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directlyor indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
3.12 Inventories
(a) Classification of inventoriesInventories are finished goods or products held for sale in the ordinary course of business, in the process ofproduction for such sale, or in the form of materials or supplies to be consumed in the production process or in therendering of services, including raw materials, work in progress, semi-finished goods, finished goods, goods instock, turnover material, etc.(b) Measurement method of cost of inventories sold or usedInventories are initially measured at the actual cost. Cost of inventories includes purchase cost, processing cost, andother costs. Cost of the issue is measured using the weighted average method.(c) Inventory systemThe perpetual inventory system is adopted. The inventories should be counted at least once a year, and surplus orlosses of inventory stocktaking shall be included in current profit and loss.(d) Provision for impairment of inventoryInventories are stated at the lower of cost and net realizable value. The excess of cost over net realizable value ofthe inventories is recognised as provision for impairment of inventory, and recognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidence obtained, and factorssuch as purpose of holding the inventory and impact of post balance sheet event shall be considered.(i) In normal operation process, finished goods, products and materials for direct sale, their net realizable values aredetermined at estimated selling prices less estimated selling expenses and relevant taxes and surcharges; forinventories held to execute sales contract or service contract, their net realizable values are calculated on the basisof contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by theCompany, the net realizable value of the excess portion of inventories shall be based on general selling prices. Netrealizable value of materials held for sale shall be measured based on market price.(ii) For materials in stock need to be processed, in the ordinary course of production and business, net realisablevalue is determined at the estimated selling price less the estimated costs of completion, the estimated sellingexpenses and relevant taxes. If the net realisable value of the finished products produced by such materials is higherthan the cost, the materials shall be measured at cost; if a decline in the price of materials indicates that the cost of
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the finished products exceeds its net realisable value, the materials are measured at net realisable value anddifferences shall be recognised at the provision for impairment.(iii) Provisions for inventory impairment are generally determined on an individual basis. For inventories with largequantity and low unit price, the provisions for inventory impairment are determined on a category basis.(iv) If any factor rendering write-downs of the inventories has been eliminated at the reporting date, the amountswritten down are recovered and reversed to the extent of the inventory impairment, which has been provided for.The reversal shall be included in profit or loss.(e) Amortisation method of low-value consumablesLow-value consumables: One-off writing off method is adoptedPackage material: One-off writing off method is adopted
3.13 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor has control of, or significant influenceover, an investee, as well as equity investments in joint ventures. Associates of the Company are those entities overwhich the Company has significant influence.(a) Determination basis of joint control or significant influence over the investeeJoint control is the relevant agreed sharing of control over an arrangement, and the arranged relevant activity mustbe decided under unanimous consent of the parties sharing control. In assessing whether the Company has jointcontrol of an arrangement, the Company shall assess first whether all the parties, or a group of the parties, controlthe arrangement. When all the parties, or a group of the parties, considered collectively, are able to direct theactivities of the arrangement, the parties control the arrangement collectively. Then the Company shall assesswhether decisions about the relevant activities require the unanimous consent of the parties that collectively controlthe arrangement. If two or more groups of the parties could control the arrangement collectively, it shall not beassessed as have joint control of the arrangement. When assessing the joint control, the protective rights are notconsidered.Significant influence is the power to participate in the financial and operating policy decisions of the investee but isnot control or joint control of those policies. In determination of significant influence over an investee, theCompany should consider not only the existing voting rights directly or indirectly held but also the effect ofpotential voting rights held by the Company and other entities that could be currently exercised or converted,including the effect of share warrants, share options and convertible corporate bonds that issued by the investee andcould be converted in current period.If the Company holds, directly or indirectly 20% or more but less than 50% of the voting power of the investee, it ispresumed that the Company has significant influence of the investee, unless it can be clearly demonstrated that insuch circumstance, the Company cannot participate in the decision-making in the production and operating of theinvestee.
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(b) Determination of initial investment cost(i) Long-term equity investments generated in business combinationsFor a business combination involving enterprises under common control, if the Company makes payment in cash,transfers non-cash assets or bears liabilities as the consideration for the business combination, the share of carryingamount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controllingparty is recognised as the initial cost of the long-term equity investment on the combination date. The differencebetween the initial investment cost and the carrying amount of cash paid, non-cash assets transferred and liabilitiesassumed shall be adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributedprofit shall be offset in turn.For a business combination involving enterprises under common control, if the Company issues equity securities asthe consideration for the business combination, the share of carrying amount of the owners’ equity of the acquireein the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of thelong-term equity investment on the combination date. The total par value of the shares issued is recognised as theshare capital. The difference between the initial investment cost and the carrying amount of the total par value ofthe shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be offset,undistributed profit shall be offset in turn.For business combination not under common control, the assets paid, liabilities incurred or assumed and the fairvalue of equity securities issued to obtain the control of the acquiree at the acquisition date shall be determined asthe cost of the business combination and recognised as the initial cost of the long-term equity investment. The audit,legal, valuation and advisory fees, other intermediary fees, and other relevant general administrative costs incurredfor the business combination, shall be recognised in profit or loss as incurred.(ii) Long-term equity investments acquired not through the business combination, the investment cost shall bedetermined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is the actually paid purchase cost,including the expenses, taxes and other necessary expenditures directly related to the acquisition of long-termequity investments.For long-term equity investments acquired through issuance of equity securities, the initial cost is the fair value ofthe issued equity securities.For the long-term equity investments obtained through exchange of non-monetary assets, if the exchange hascommercial substance, and the fair values of assets traded out and traded in can be measured reliably, the initialcost of long-term equity investment traded in with non-monetary assets are determined based on the fair values ofthe assets traded out together with relevant taxes. Difference between fair value and book value of the assets tradedout is recorded in current profit or loss. If the exchange of non-monetary assets does not meet the above criterion,the book value of the assets traded out and relevant taxes are recognised as the initial investment cost.
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For long-term equity investment acquired through debt restructuring, the initial cost is determined based on the fairvalue of the equity obtained and the difference between initial investment cost and carrying amount of debts shallbe recorded in current profit or loss.(c) Subsequent measurement and recognition of profit or lossLong-term equity investment to an entity over which the Company has ability of control shall be accounted for atcost method. Long-term equity investment to a joint venture or an associate shall be accounted for at equitymethod.(i) Cost methodFor Long-term equity investment at cost method, cost of the long-term equity investment shall be adjusted whenadditional amount is invested or a part of it is withdrawn. The Company recognises its share of cash dividends orprofits which have been declared to distribute by the investee as current investment income.(ii) Equity methodIf the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in theinvestee at the date of investment, the difference shall not be adjusted to the initial cost of long-term equityinvestment; if the initial cost of the investment is in short of the share of the fair value of the net identifiable assetsin the investee at the date investment, the difference shall be included in the current profit or loss and the initial costof the long-term equity investment shall be adjusted accordingly.The Company recognises the share of the investee’s net profits or losses, as well as its share of the investee’s othercomprehensive income, as investment income or losses and other comprehensive income respectively, and adjuststhe carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by theshare of any profit or cash dividends declared to distribute by the investee. The investor’s share of the investee’sowners’ equity changes, other than those arising from the investee’s net profit or loss, other comprehensive incomeor profit distribution, shall be recognised in the investor’s equity, and the carrying amount of the long-term equityinvestment shall be adjusted accordingly. The Company recognises its share of the investee’s net profits or lossesafter making appropriate adjustments of investee’s net profit based on the fair values of the investee’s identifiablenet assets at the investment date. If the accounting policy and accounting period adopted by the investee is not inconsistency with the Company, the financial statements of the investee shall be adjusted according to theCompany’s accounting policies and accounting period, based on which, investment income or loss and othercomprehensive income, etc., shall be adjusted. The unrealized profits or losses resulting from inter-companytransactions between the company and its associate or joint venture are eliminated in proportion to the company’sequity interest in the investee, based on which investment income or losses shall be recognised. Any lossesresulting from inter-company transactions between the investor and the investee, which belong to asset impairment,shall be recognised in full.Where the Company obtains the power of joint control or significant influence, but not control, over the investee,
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due to additional investment or other reason, the relevant long-term equity investment shall be accounted for byusing the equity method, initial cost of which shall be the fair value of the original investment plus the additionalinvestment. Where the original investment is classified as available-for sale investment, difference between its fairvalue and the carrying value, in addition to the cumulative changes in fair value previously recorded in othercomprehensive income, shall be recogised into current profit or loss using equity method.If the Company loses the joint control or significant influence of the investee for some reasons such as disposal ofequity investment, the retained interest shall be measured at fair value and the difference between the carryingamount and the fair value at the date of loss the joint control or significant influence shall be recognised in profit orloss. When the Company discontinues the use of the equity method, the Company shall account for all amountspreviously recognised in other comprehensive income under equity method in relation to that investment on thesame basis as would have been required if the investee had directly disposed of the related assets or liabilities.(d) Equity investment classified as held for saleAny retained interest in the equity investment not classified as held for sale, shall be accounted for using equitymethod.When an equity investment in an associate or a joint venture previously classified as held for sale no longer meetsthe criteria to be so classified, it shall be accounted for using the equity method retrospectively as from the date ofits classification as held for sale. Financial statements for the periods since classification as held for sale shall beamended accordingly.(f) Impairment testing and provision for impairment lossFor investment in subsidiaries, associates or a joint venture, provision for impairment loss please refer to Note 3.19.
3.14 Investment Properties
(a) Classification of investment propertiesInvestment properties are properties to earn rentals or for capital appreciation or both, including:
(i)Land use right leased out(ii)Land held for transfer upon appreciation(iii)Buildings leased out(b) The measurement model of investment propertyThe Company adopts the cost model for subsequent measurement of investment properties. For provision forimpairment please refer to Note 3.20.The Company calculates the depreciation or amortization based on the net amount of investment property cost lessthe accumulated impairment and the net residual value using straight-line method.
3.15 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing commodities,rendering services, renting or business management with useful lives exceeding one year.
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(a) Recognition criteria of fixed assetsFixed assets will only be recognised at the actual cost paid when obtaining as all the following criteria are satisfied:
(i) It is probable that the economic benefits relating to the fixed assets will flow into the Company;(ii) The costs of the fixed assets can be measured reliably.Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition criteria of fixedassets are satisfied, otherwise the expenditure shall be recorded in current profit or loss when incurred.(b) Depreciation methods of fixed assetsThe Company begins to depreciate the fixed asset from the next month after it is available for intended use usingthe straight-line-method. The estimated useful life and annual depreciation rates which are determined according tothe categories, estimated economic useful lives and estimated net residual rates of fixed assets are listed asfollowings:
| Category | Depreciation method | Estimated useful life (year) | Residual rates (%) | Annual depreciation rates (%) |
| Buildings and constructions | straight-line-method | 8.00-35.00 | 3.00-5.00 | 2.70-12.10 |
| Machinery equipment | straight-line-method | 5.00-10.00 | 3.00-5.00 | 9.50-19.40 |
| Vehicles | straight-line-method | 4.00 | 3.00 | 24.25 |
| Office equipment and others | straight-line-method | 3.00 | 3.00 | 32.33 |
For the fixed assets with impairment provided, the impairment provision should be excluded from the cost whencalculating depreciation.At the end of reporting period, the Company shall review the useful life, estimated net residual value anddepreciation method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changedcompared to the original estimation.(c) Recognition criteria, valuation and depreciation methods of fixed assets obtained through a finance leaseIf the entire risk and rewards related to the leased assets have been substantially transferred, the Company shallrecognise the lease as a finance lease. The cost of the fixed assets obtained through a finance lease is determined atthe lower of the fair value of the leased assets and the present value of the minimum lease payment on the date ofthe lease. The fixed assets obtained by a finance lease are depreciated in the method which is consistent with theself-owned fixed assets of the Company. For fixed assets obtained through a finance lease, if it is reasonably certainthat the ownership of the leased assets will be transferred to the lessee by the end of the lease term, they shall bedepreciated over their remaining useful lives; otherwise, the leased assets shall be depreciated over the shorter ofthe lease terms or their remaining useful lives.
3.16 Construction in Progress
(a) Classification of construction in progressConstruction in progress is measured on an individual project basis.
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(b) Recognition criteria and timing of transfer from construction in progress to fixed assetsThe initial book values of the fixed assets are stated at total expenditures incurred before they are ready for theirintended use, including construction costs, original price of machinery equipment, other necessary expensesincurred to bring the construction in progress to get ready for its intended use and borrowing costs of the specificloan for the construction or the proportion of the general loan used for the constructions incurred before they areready for their intended use. The construction in progress shall be transferred to fixed asset when the installation orconstruction is ready for the intended use. For construction in progress that has been ready for their intended usebut relevant budgets for the completion of projects have not been completed, the estimated values of projectbudgets, prices, or actual costs should be included in the costs of relevant fixed assets, and depreciation should beprovided according to relevant policies of the Company when the fixed assets are ready for intended use. After thecompletion of budgets needed for the completion of projects, the estimated values should be substituted by actualcosts, but depreciation already provided is not adjusted.
3.17 Borrowing Costs
(a) Recognition criteria and period for capitalization of borrowing costsThe Company shall capitalize the borrowing costs that are directly attributable to the acquisition, construction orproduction of qualifying assets when meet the following conditions:
(i) Expenditures for the asset are being incurred;(ii) Borrowing costs are being incurred, and;(iii) Acquisition, construction or production activities that are necessary to prepare the assets for their intended useor sale are in progress.Other borrowing cost, discounts or premiums on borrowings and exchange differences on foreign currencyborrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or productionof a qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired, constructed or producedbecome ready for their intended use or sale. The expenditure incurred subsequently shall be recognised as expenseswhen incurred.(b) Capitalization rate and measurement of capitalized amounts of borrowing costsWhen funds are borrowed specifically for purchase, construction or manufacturing of assets eligible forcapitalization, the Company shall determine the amount of borrowing costs eligible for capitalisation as the actualborrowing costs incurred on that borrowing during the period less any interest income on bank deposit orinvestment income on the temporary investment of those borrowings.Where funds allocated for purchase, construction or manufacturing of assets eligible for capitalization are part of a
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general borrowing, the eligible amounts are determined by the weighted-average of the cumulative capitalexpenditures in excess of the specific borrowing multiplied by the general borrowing capitalization rate. Thecapitalization rate will be the weighted average of the borrowing costs applicable to the general borrowing.
3.18 Intangible Assets
(a) Measurement method of intangible assetsIntangible assets are recognised at actual cost at acquisition.(b) The useful life and amortisation of intangible assets(i) The estimated useful lives of the intangible assets with finite useful lives are as follows:
| Category | Estimated useful life | Basis |
| Land use right | 50 years | Legal life |
| Patent right | 10 years | The service life is determined by reference to the period that can bring economic benefits to the Company |
| Software | 3-5 years | The service life is determined by reference to the period that can bring economic benefits to the Company |
| Trademark | 10 years | The service life is determined by reference to the period that can bring economic benefits to the Company |
For intangible assets with finite useful life, the estimated useful life and amortisation method are reviewed annuallyat the end of each reporting period and adjusted when necessary. No change incurred in current year in theestimated useful life and amortisation method upon review.(ii) Assets of which the period to bring economic benefits to the Company are unforeseeable are regarded asintangible assets with indefinite useful lives. The Company reassesses the useful lives of those assets at every yearend. If the useful lives of those assets are still indefinite, impairment test should be performed on those assets at thebalance sheet date.(iii) Amortisation of the intangible assetsFor intangible assets with finite useful lives, their useful lives should be determined upon their acquisition andsystematically amortised on a straight-line basis over the useful life. The amortisation amount shall be recognizedinto current profit or loss according to the beneficial items. The amount to be amortised is cost deducting residualvalue. For intangible assets which has impaired, the cumulative impairment provision shall be deducted as well.The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless: there is acommitment by a third party to purchase the asset at the end of its useful life; or there is an active market for theasset and residual value can be determined by reference to that market; and it is probable that such a market willexist at the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the useful lives of
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those assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite, theuseful lives shall be estimated and the intangible assets shall be amortised systematically and reasonably within theestimated useful lives.(c) Criteria of classifying expenditures on internal research and development projects into research phaseand development phasePreparation activities related to materials and other relevant aspects undertaken by the Company for the purpose offurther development shall be treated as research phase. Expenditures incurred during the research phase of internalresearch and development projects shall be recognised in profit or loss when incurred.Development activities after the research phase of the Company shall be treated as development phase.(d) Criteria for capitalization of qualifying expenditures during the development phaseExpenditures arising from development phase on internal research and development projects shall be recognised asintangible assets only if all of the following conditions have been met:
(i) Technical feasibility of completing the intangible assets so that they will be available for use or sale;(ii) Its intention to complete the intangible asset and use or sell it;(iii) The method that the intangible assets generate economic benefits, including the Company can demonstrate theexistence of a market for the output of the intangible assets or the intangible assets themselves or, if it is to be usedinternally, the usefulness of the intangible assets;(iv) The availability of adequate technical, financial and other resources to complete the development and to use orsell the intangible asset; and(v) Its ability to measure reliably the expenditure attributable to the intangible asset.
3.19 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures, investment properties,fixed assets and constructions in progress subsequently measured at cost, intangible assets, shall be determinedaccording to following method:
The Company shall assess at the end of each reporting period whether there is any indication that an asset may beimpaired. If any such indication exists, the Company shall estimate the recoverable amount of the asset and test forimpairment. Irrespective of whether there is any indication of impairment, the Company shall test for impairmentof goodwill acquired in a business combination, intangible assets with an indefinite useful life or intangible assetsnot yet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and thepresent values of the estimated future cash flows of the long-term assets. The Company estimate the recoverableamounts on an individual basis. If it is difficult to estimate the recoverable amount of the individual asset, theCompany estimates the recoverable amount of the groups of assets that the individual asset belongs to.Identification of an group of asset is based on whether the cash inflows from it are largely independent of the cash
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inflows from other assets or groups of assets.If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying amount, the carryingamount of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall berecognised accordingly.For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date,be allocated to relevant group of assets based on reasonable method; if it is difficult to allocate to relevant group ofassets, good will shall be allocated to relevant combination of asset groups. The relevant group of assets orcombination of asset groups is a group of assets or combination of asset groups that is benefit from the synergies ofthe business combination and is not larger than the reporting segment determined by the Company.When test for impairment, if there is an indication that relevant group of assets or combination of asset groups maybe impaired, impairment testing for group of assets or combination of asset groups excluding goodwill shall beconducted first, and calculate the recoverable amount and recognize the impairment loss. Then the group of assetsor combination of asset groups including goodwill shall be tested for impairment, by comparing the carryingamount with its recoverable amount. If the recoverable amount is less than the carrying amount, the Company shallrecognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognised.
3.20 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be amortised over current andsubsequent periods with the amortisation period exceeding one year. Long-term deferred expenses are evenlyamortised over the beneficial period
3.21 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange forservice rendered by employees or for the termination of employment relationship. Employee benefits includeshort-term employee benefits, post-employment benefits, termination benefits and other long-term employeebenefits. Benefits provided to an employee's spouse, children, dependents, family members of decreased employees,or other beneficiaries are also employee benefits.According to liquidity, employee benefits are presented in the statement of financial position as “Employee benefitspayable” and “Long-term employee benefits payable”.(a) Short-term employee benefits(i) Employee basic salary (salary, bonus, allowance, subsidy)The Company recognises, in the accounting period in which an employee provides service, actually occurredshort-term employee benefits as a liability, with a corresponding charge to current profit except for thoserecognised as capital expenditure based on the requirement of accounting standards.(ii) Employee welfare
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The Company shall recognise the employee welfare based on actual amount when incurred into current profit orloss or related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary benefit.(iii) Social insurance such as medical insurance, work injury insurance and maternity insurance, housing funds,labor union fund and employee education fundPayments made by the Company of social insurance for employees, such as medical insurance, work injuryinsurance and maternity insurance, payments of housing funds, and labor union fund and employee education fundaccrued in accordance with relevant requirements, in the accounting period in which employees provide services, iscalculated according to required accrual bases and accrual ratio in determining the amount of employee benefitsand the related liabilities, which shall be recognised in current profit or loss or the cost of relevant asset.(iv) Short-term paid absencesThe company shall recognise the related employee benefits arising from accumulating paid absences when theemployees render service that increases their entitlement to future paid absences. The additional payable amountsshall be measured at the expected additional payments as a result of the unused entitlement that has accumulated.The Company shall recognise relevant employee benefit of non-accumulating paid absences when the absencesactually occurred.(v) Short-term profit-sharing planThe Company shall recognise the related employee benefits payable under a profit-sharing plan when all of thefollowing conditions are satisfied:
(i) The Company has a present legal or constructive obligation to make such payments as a result of past events;and(ii) A reliable estimate of the amounts of employee benefits obligation arising from the profit- sharing plan can bemade.(b) Post-employment benefits(i) Defined contribution plansThe Company shall recognise, in the accounting period in which an employee provides service, the contributionpayable to a defined contribution plan as a liability, with a corresponding charge to the current profit or loss or thecost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled wholly before twelve months afterthe end of the annual reporting period in which the employees render the related service, they shall be discountedusing relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds inactive market or government bonds with the currency and term which shall be consistent with the currency andestimated term of the defined contribution obligations) to measure employee benefits payable.(ii) Defined benefit planThe present value of defined benefit obligation and current service costs
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Based on the expected accumulative welfare unit method, the Company shall make estimates about demographicvariables and financial variables in adopting the unbiased and consistent actuarial assumptions and measure definedbenefit obligation, and determine the obligation period. The Company shall discount the obligation arising fromdefined benefit plan using relevant discount rate (market yields at the end of the reporting period on high qualitycorporate bonds in active market or government bonds with the currency and term which shall be consistent withthe currency and estimated term of the defined benefit obligations) in order to determine the present value of thedefined benefit obligation and the current service cost.The net defined benefit liability or assetThe net defined benefit liability (asset) is the deficit or surplus recognised as the present value of the definedbenefit obligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan, it shall measure the net defined benefit asset at thelower of the surplus in the defined benefit plan and the asset ceiling.The amount recognised in the cost of asset or current profit or lossService cost comprises current service cost, past service cost and any gain or loss on settlement. Other service costshall be recognised in profit or loss unless accounting standards require or allow the inclusion of current servicecost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on plan assets, interest cost on thedefined benefit obligation and interest on the effect of the asset ceiling, shall be included in profit or loss.The amount recognised in other comprehensive incomeChanges in the net liability or asset of the defined benefit plan resulting from the remeasurements including:
? Actuarial gains and losses, the changes in the present value of the defined benefit obligation resulting fromexperience adjustments or the effects of changes in actuarial assumptions;
? Return on plan assets, excluding amounts included in net interest on the net defined benefit liability or asset;
? Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net definedbenefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not bereclassified to profit or loss in a subsequent period. However, the Company may transfer those amounts recognisedin other comprehensive income within equity.(c) Termination benefitsThe Company providing termination benefits to employees shall recognise an employee benefits liability fortermination benefits, with a corresponding charge to the profit or loss of the reporting period, at the earlier of thefollowing dates:
(i) When the Company cannot unilaterally withdraw the offer of termination benefits because of an employmenttermination plan or a curtailment proposal.
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(ii) When the Company recognises costs or expenses related to a restructuring that involves the payment oftermination benefits.If the termination benefits are not expected to be settled wholly before twelve months after the end of the annualreporting period, the Company shall discount the termination benefits using relevant discount rate (market yields atthe end of the reporting period on high quality corporate bonds in active market or government bonds with thecurrency and term which shall be consistent with the currency and estimated term of the defined benefit obligations)to measure the employee benefits.(d) Other long-term employee benefits(i) Meet the conditions of the defined contribution planWhen other long-term employee benefits provided by the Company to the employees satisfies the conditions forclassifying as a defined contribution plan, all those benefits payable shall be accounted for as employee benefitspayable at their discounted value.(ii) Meet the conditions of the defined benefit planAt the end of the reporting period, the Company recognised the cost of employee benefit from other long-termemployee benefits as the following components:
? Service costs;
? Net interest cost for net liability or asset of other long-term employee benefits
? Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefitsIn order to simplify the accounting treatment, the net amount of above items shall be recognised in profit or loss orrelevant cost of assets.
3.22 Estimated Liabilities
(a) Recognition criteria of estimated liabilitiesThe Company recognises the estimated liabilities when obligations related to contingencies satisfy all the followingconditions:
(i) That obligation is a current obligation of the Company;(ii) It is likely to cause any economic benefit to flow out of the Company as a result of performance of theobligation; and(iii) The amount of the obligation can be measured reliably.(b) Measurement method of estimated liabilitiesThe estimated liabilities of the Company are initially measured at the best estimate of expenses required for theperformance of relevant present obligations. The Company, when determining the best estimate, has had acomprehensive consideration of risks with respect to contingencies, uncertainties and the time value of money. Thecarrying amount of the estimated liabilities shall be reviewed at the end of every reporting period. If conclusiveevidences indicate that the carrying amount fails to be the best estimate of the estimated liabilities, the carrying
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amount shall be adjusted based on the updated best estimate.
3.23 Principles and measurement methods of revenue recognition
Revenue is the total inflow of economic benefits formed in the daily activities of the Company, which will lead tothe increase of shareholders' equity and is not related to the capital invested by shareholders.The Company has fulfilled the performance obligations in the contract, that is, the revenue is recognized when thecustomer obtains the relevant commodity control rights. To gain control of relevant commodities means to be ableto dominate the use of the commodities and obtain almost all the economic benefits from them.If the contract contains two or more performance obligations, the Company shall at the beginning of the contractallocate the transaction price to each individual performance obligation according to the relative proportion of theindividual selling price of the commodities or services committed by each individual performance obligation, andmeasure the income according to the transaction price allocated to each individual performance obligation.The transaction price is the amount of consideration to which the Company is expected to be entitled as a result ofthe transfer of goods or services to the customer, excluding payments received on behalf of the third parties. Whendetermining the contract transaction price, if there is a variable consideration, the Company determines the bestestimate of the variable consideration in accordance with the expected value or the amount most likely to occur,and includes the transaction price in the amount not exceeding the amount that would most likely not result in asignificant reversal of the accumulated recognized revenue when the relevant uncertainties are eliminated. If thereis a significant composition of financing in the contract, the Company will determine the transaction price by theamount paid in cash, according to when the customer get the commodities control. The difference between thetransaction price and the contract price shall be amortized by the effective interest rate method during the contractperiod. If the interval between the transfer of control and the payment by the customer is not more than one year,the Company shall not consider the financing component.If one of the following conditions is met, the performance obligations shall be performed within a certain period oftime; Otherwise, the performance obligation shall be performed at a certain point:
①The client obtains and consumes the economic benefits brought by the Company's performance of the contract atthe same time;
②The customer can control the commodities under construction during the performance of the Company;
③The commodities produced by the Company during the performance of the contract shall have irreplaceable usesand the Company shall be entitled to receive payment for the accumulated part of the performance of the contract todate throughout the contract period.For the performance obligations performed within a certain period of time, the Company shall recognize theincome according to the performance progress within that period, except where the performance progress cannot bereasonably determined. The Company shall determine the performance progress of the service provided accordingto the input method (or output method). When the performance schedule cannot be reasonably determined and the
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Company is expected to be compensated for the costs incurred, the revenue shall be recognized according to theamount of the costs incurred until the performance schedule can be reasonably determined.For performance obligations performed at a certain point, the Company recognizes revenue at the point when thecustomer acquires control over the relevant commodities. In determining whether the customer has acquired controlover the goods or services, the Company will consider the following indications:
①The Company has a current payment right in respect of the goods or services, that is, the customer has a currentpayment obligation in respect of the goods;
②The Company has transferred the legal ownership of the commodity to the customer, that is, the customer has thelegal ownership of the commodity;
③The Company has transferred the physical goods to the customer, that is, the customer has physical possession ofthe goods;
④The Company has transferred the main risks and remuneration on the ownership of the goods to the customer,that is, the customer has acquired the main risks and remuneration on the ownership of the goods;
⑤The customer has accepted the goods.
3.24 Government Grants
(a) Recognition of government grantsA government grant shall not be recgonised until there is reasonable assurance that:
(i) The Company will comply with the conditions attaching to them; and(ii) The grants will be received.(b) Measurement of government grantsMonetary grants from the government shall be measured at amount received or receivable, and non-monetarygrants from the government shall be measured at their fair value or at a nominal value of RMB 1.00 when reliablefair value is not available.(c) Accounting for government grants(i) Government grants related to assetsGovernment grants pertinent to assets mean the government grants that are obtained by the Company used forpurchase or construction, or forming the long-term assets by other ways. Government grants pertinent to assetsshall be recognised as deferred income, and should be recognised in profit or loss on a systematic basis over theuseful lives of the relevant assets. Grants measured at their nominal value shall be directly recognised in profit orloss of the period when the grants are received. When the relevant assets are sold, transferred, written off ordamaged before the assets are terminated, the remaining deferred income shall be transferred into profit or loss ofthe period of disposing relevant assets.(ii) Government grants related to incomeGovernment grants other than related to assets are classified as government grants related to income. Government
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grants related to income are accounted for in accordance with the following principles:
If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses infuture periods, such government grants shall be recognised as deferred income and included into profit or loss inthe same period as the relevant expenses or losses are recognised;If the government grants related to income are used to compensate the enterprise’s relevant expenses or lossesincurred, such government grants are directly recognised into current profit or lossFor government grants comprised of part related to assets as well as part related to income, each part is accountedfor separately; if it is difficult to identify different part, the government grants are accounted for as governmentgrants related to income as a whole.Government grants related to daily operation activities are recognised in other income in accordance with thenature of the activities, and government grants irrelevant to daily operation activities are recognised innon-operating income.(iii) Loan interest subsidyWhen loan interest subsidy is allocated to the bank, and the bank provides a loan at lower-market rate of interest tothe Company, the loan is recognised at the actual received amount, and the interest expense is calculated based onthe principal of the loan and the lower-market rate of interest.When loan interest subsidy is directly allocated to the Company, the subsidy shall be recognised as offsetting therelevant borrowing cost.(iv) Repayment of the government grantsRepayment of the government grants shall be recorded by increasing the carrying amount of the asset if the bookvalue of the asset has been written down, or reducing the balance of relevant deferred income if deferred incomebalance exists, any excess will be recognised into current profit or loss; or directly recognised into current profit orloss for other circumstances.
3.25 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in the statement offinancial position and its tax base at the balance sheet date. The Company recognise and measure the effect oftaxable temporary differences and deductible temporary differences on income tax as deferred tax liabilities ordeferred tax assets using liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.(a) Recognition of deferred tax assetsDeferred tax assets should be recognised for deductible temporary differences, the carryforward of unused taxlosses and the carryforward of unused tax credits to the extent that it is probable that taxable profit will be availableagainst which the deductible temporary differences, the carryforward of unused tax losses and the carryforward ofunused tax credits can be utilised at the tax rates that are expected to apply to the period when the asset is realised,unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:
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(i) Is not a business combination; and(ii) At the time of the transaction, affects neither accounting profit nor taxable profit (tax loss)The Company shall recognise a deferred tax asset for all deductible temporary differences arising from investmentsin subsidiaries, associates and joint ventures, only to the extent that, it is probable that:
(i) The temporary difference will reverse in the foreseeable future; and(ii) Taxable profit will be available against which the deductible temporary difference can be utilised.At the end of each reporting period, if there is sufficient evidence that it is probable that taxable profit will beavailable against which the deductible temporary difference can be utilized, the Company recognises a previouslyunrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. The Companyshall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficienttaxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any suchreduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.(b) Recognition of deferred tax liabilitiesA deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that are expected toapply to the period when the liability is settled.(i) No deferred tax liability shall be recognised for taxable temporary differences arising from:
? The initial recognition of goodwill; or
? The initial recognition of an asset or liability in a transaction which: is not a business combination; and at thetime of the transaction, affects neither accounting profit nor taxable profit (tax loss)(ii) An entity shall recognise a deferred tax liability for all taxable temporary differences associated withinvestments in subsidiaries, associates, and joint ventures, except to the extent that both of the following conditionsare satisfied:
? The Company is able to control the timing of the reversal of the temporary difference; and
? It is probable that the temporary difference will not reverse in the foreseeable future.(c) Recognition of deferred tax liabilities or assets involved in special transactions or events(i) Deferred tax liabilities or assets related to business combinationFor the taxable temporary difference or deductible temporary difference arising from a business combination notunder common control, a deferred tax liability or a deferred tax asset shall be recognised, and simultaneously,goodwill recognised in the business combination shall be adjusted based on relevant deferred tax expense (income).(ii) Items directly recognised in equityCurrent tax and deferred tax related to items that are recognised directly in equity shall be recognised in equity.Such items include: other comprehensive income generated from fair value fluctuation of available for saleinvestments; an adjustment to the opening balance of retained earnings resulting from either a change in accounting
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policy that is applied retrospectively or the correction of a prior period (significant) error; amounts arising on initialrecognition of the equity component of a compound financial instrument that contains both liability and equitycomponent.(iii) Unused tax losses and unused tax creditsUnsused tax losses and unused tax credits generated from daily operation of the Company itselfDeductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be offsetagainst taxable income in future periods. The criteria for recognising deferred tax assets arising from thecarryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assetsarising from deductible temporary differences. The Company recognises a deferred tax asset arising from unusedtax losses or tax credits only to the extent that there is convincing other evidence that sufficient taxable profit willbe available against which the unused tax losses or unused tax credits can be utilised by the Company. Incometaxes in current profit or loss shall be deducted as well.Unsused tax losses and unused tax credits arising from a business combinationUnder a business combination, the acquiree’s deductible temporary differences which do not satisfy the criteria atthe acquisition date for recognition of deferred tax asset shall not be recognised. Within 12 months after theacquisition date, if new information regarding the facts and circumstances exists at the acquisition date and theeconomic benefit of the acquiree’s deductible temporary differences at the acquisition is expected to be realised, theCompany shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill related tothis acquisition. If goodwill is reduced to zero, any remaining deferred tax benefits shall be recognised in profit orloss. All other acquired deferred tax benefits realised shall be recognised in profit or loss.(iv) Temporary difference generated in consolidation eliminationWhen preparing consolidated financial statements, if temporary difference between carrying value of the assets andliabilities in the consolidated financial statements and their taxable bases is generated from elimination ofinter-company unrealized profit or loss, deferred tax assets or deferred tax liabilities shall be recognised in theconsolidated financial statements, and income taxes expense in current profit or loss shall be adjusted as wellexcept for deferred tax related to transactions or events recognised directly in equity and business combination.(v) Share-based payment settled by equityIf tax authority permits tax deduction that relates to share-based payment, during the period in which the expensesare recognised according to the accounting standards, the Company estimates the tax base in accordance withavailable information at the end of the accounting period and the temporary difference arising from it. Deferred taxshall be recognised when criteria of recognition are satisfied. If the amount of estimated future tax deductionexceeds the amount of the cumulative expenses related to share-based payment recognised according to theaccounting standards, the tax effect of the excess amount shall be recognised directly in equity.
3.26 Changes in Significant Accounting Policies and Accounting Estimates
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(1) Changes in accounting polices
√ Applicable □ Not applicable
| Contents of changes in accounting policies and reasons thereof | Approval procedures | Note |
| On 5 July 2017, the Ministry of Finance issued the Notice on Revising and Issuing the Accounting Standards for Business Enterprises No.14-Revenue (CK(2017)No.22 and required those enterprises both listed in domestic and aboard and those enterprises overseas listed with International Financial Reporting Standards or Accounting Standards for Business Enterprises for preparation of financial statements to implement it since 1 January 2018, required other domestically listed enterprises to implement it since 1 January 2020 and required non-listed enterprises carrying out the Accounting Standards for Business Enterprises to implement it since 1 January 2021. The Company starts to implement the new accounting policy since the date stipulated in above document and starts to implement the new standards governing revenue since 1 January 2020. | Reviewed and approved on the 14th Meeting of the 8th Board of Directors and the 11th Meeting of the 8th Supervisory Committee | For details, please refer to the announcement on changes in accounting policies disclosed on http://www.cninfo.com.cn on 27 April 2020 |
| The Ministry of Finance issued the Notice on Revising and Issuing of Formats of 2019 Financial Statements for General Enterprises (CK[2019]No.16) (hereinafter referred to as “Revising Notice”) on 19 September 2019, in which the formats of financial statements for general enterprises are revised and non-financial enterprises carrying out accounting standards for business enterprises are required to prepare the financial statements for 2019 and subsequent periods in accordance with provisions stipulated in accounting standards for business enterprises and the Revising Notice. | Reviewed and approved on the 14th Meeting of the 8th Board of Directors and the 11th Meeting of the 8th Supervisory Committee | For details, please refer to the announcement on changes in accounting policies disclosed on http://www.cninfo.com.cn on 27 April 2020 |
(2) Changes in Accounting Estimates
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□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any NewStandards Governing Revenue or Leases since 2020Whether items of balance sheets at the beginning of the year need adjustment
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Monetary assets | 5,619,749,918.09 | 5,619,749,918.09 | |
| Settlement reserve | |||
| Interbank loans granted | |||
| Held-for-trading financial assets | 509,031,097.02 | 509,031,097.02 | |
| Derivative financial assets | |||
| Notes receivable | 1,004,217,431.56 | 1,004,217,431.56 | |
| Accounts receivable | 40,776,567.96 | 40,776,567.96 | |
| Accounts receivable financing | |||
| Prepayments | 197,453,313.96 | 197,453,313.96 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 25,746,957.22 | 25,746,957.22 | |
| Including: Interest receivable | 1,908,788.81 | 1,908,788.81 | |
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 3,015,051,961.78 | 3,015,051,961.78 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 114,439,167.07 | 114,439,167.07 |
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| Total current assets | 10,526,466,414.66 | 10,526,466,414.66 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 4,678,282.24 | 4,678,282.24 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | |||
| Investment property | 4,710,086.02 | 4,710,086.02 | |
| Fixed assets | 1,722,572,998.79 | 1,722,572,998.79 | |
| Construction in progress | 183,984,816.07 | 183,984,816.07 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 785,717,932.76 | 785,717,932.76 | |
| Development costs | |||
| Goodwill | 478,283,495.29 | 478,283,495.29 | |
| Long-term prepaid expense | 70,240,106.82 | 70,240,106.82 | |
| Deferred income tax assets | 90,494,544.51 | 90,494,544.51 | |
| Other non-current assets | 4,148,686.00 | 4,148,686.00 | |
| Total non-current assets | 3,344,830,948.50 | 3,344,830,948.50 | |
| Total assets | 13,871,297,363.16 | 13,871,297,363.16 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Borrowings from the central bank | |||
| Interbank loans obtained | |||
| Held-for-trading financial liabilities |
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| Derivative financial liabilities | |||
| Notes payable | 703,679,646.86 | 703,679,646.86 | |
| Accounts payable | 563,494,195.40 | 563,494,195.40 | |
| Advances from customers | 529,863,011.73 | 0.00 | -529,863,011.73 |
| Contract liabilities | 0.00 | 529,863,011.73 | 529,863,011.73 |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and interbank deposits | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Employee benefits payable | 454,189,532.89 | 454,189,532.89 | |
| Taxes payable | 482,903,109.59 | 482,903,109.59 | |
| Other payables | 1,315,878,229.01 | 1,315,878,229.01 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance payables | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | 197,484,121.41 | 197,484,121.41 | |
| Total current liabilities | 4,247,491,846.89 | 4,247,491,846.89 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds |
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| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 72,778,437.92 | 72,778,437.92 | |
| Deferred income tax liabilities | 118,872,366.61 | 118,872,366.61 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 191,650,804.53 | 191,650,804.53 | |
| Total liabilities | 4,439,142,651.42 | 4,439,142,651.42 | |
| Owners’ equity: | |||
| Share capital | 503,600,000.00 | 503,600,000.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 1,295,405,592.25 | 1,295,405,592.25 | |
| Less: Treasury stock | |||
| Other comprehensive income | |||
| Specific reserve | |||
| Surplus reserves | 256,902,260.27 | 256,902,260.27 | |
| General reserve | |||
| Retained earnings | 6,888,203,911.92 | 6,888,203,911.92 | |
| Total equity attributable to owners of the Company as the parent | 8,944,111,764.44 | 8,944,111,764.44 | |
| Non-controlling interests | 488,042,947.30 | 488,042,947.30 | |
| Total owners’ equity | 9,432,154,711.74 | 9,432,154,711.74 | |
| Total liabilities and owners’ equity | 13,871,297,363.16 | 13,871,297,363.16 |
Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: |
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| Monetary assets | 2,919,818,830.20 | 2,919,818,830.20 | |
| Held-for-trading financial assets | 489,861,097.02 | 489,861,097.02 | |
| Derivative financial assets | |||
| Notes receivable | 378,740,100.82 | 378,740,100.82 | |
| Accounts receivable | 218,558,555.07 | 218,558,555.07 | |
| Accounts receivable financing | |||
| Prepayments | 17,906,999.63 | 17,906,999.63 | |
| Other receivables | 125,219,213.84 | 125,219,213.84 | |
| Including: Interest receivable | 301,888.89 | 301,888.89 | |
| Dividends receivable | |||
| Inventories | 2,688,839,871.27 | 2,688,839,871.27 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 1,280,998.32 | 1,280,998.32 | |
| Total current assets | 6,840,225,666.17 | 6,840,225,666.17 | |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 1,148,213,665.32 | 1,148,213,665.32 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | |||
| Investment property | 4,710,086.02 | 4,710,086.02 | |
| Fixed assets | 1,310,704,771.36 | 1,310,704,771.36 | |
| Construction in progress | 84,477,784.02 | 84,477,784.02 | |
| Productive living assets |
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| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 243,928,047.95 | 243,928,047.95 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 48,354,967.15 | 48,354,967.15 | |
| Deferred income tax assets | 31,360,809.87 | 31,360,809.87 | |
| Other non-current assets | 574,026.00 | 574,026.00 | |
| Total non-current assets | 2,872,324,157.69 | 2,872,324,157.69 | |
| Total assets | 9,712,549,823.86 | 9,712,549,823.86 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 49,114,582.04 | 49,114,582.04 | |
| Accounts payable | 450,303,984.53 | 450,303,984.53 | |
| Advances from customers | 31,724.77 | 0.00 | -31,724.77 |
| Contract liabilities | 0.00 | 31,724.77 | 31,724.77 |
| Employee benefits payable | 100,357,808.20 | 100,357,808.20 | |
| Taxes payable | 371,012,223.50 | 371,012,223.50 | |
| Other payables | 274,053,511.54 | 274,053,511.54 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | 11,953,800.20 | 11,953,800.20 | |
| Total current liabilities | 1,256,827,634.78 | 1,256,827,634.78 | |
| Non-current liabilities: | |||
| Long-term borrowings |
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| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 33,229,246.47 | 33,229,246.47 | |
| Deferred income tax liabilities | 22,799,814.64 | 22,799,814.64 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 56,029,061.11 | 56,029,061.11 | |
| Total liabilities | 1,312,856,695.89 | 1,312,856,695.89 | |
| Owners’ equity: | |||
| Share capital | 503,600,000.00 | 503,600,000.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 1,247,162,107.35 | 1,247,162,107.35 | |
| Less: Treasury stock | |||
| Other comprehensive income | |||
| Specific reserve | |||
| Surplus reserves | 251,800,000.00 | 251,800,000.00 | |
| Retained earnings | 6,397,131,020.62 | 6,397,131,020.62 | |
| Total owners’ equity | 8,399,693,127.97 | 8,399,693,127.97 | |
| Total liabilities and owners’ equity | 9,712,549,823.86 | 9,712,549,823.86 |
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any NewStandards Governing Revenue or Leases since 2020
□ Applicable √ Not applicable
4. Taxation
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4.1 Main Taxes and Tax Rate
| Category of taxes | Basis of tax assessment | Tax rate |
| VAT | Taxable sales revenue | 13%（16%）、10%、6% |
| Consumption tax | Taxable price or ex factory price | Sales of wine RMB1 per 1000 ml or per kg to calculate the amount of consumption tax, a flat rate, 20% of the annual turnover to calculate the amount of consumption tax at valorem. |
| Urban maintenance and construction tax | Urban maintenance and construction taxes are paid on turnover taxes | 7%、5% |
| Education expenses surcharge | Educational surcharges are paid on turnover taxes | 3% |
| Local education surcharge | Local educational surcharges are paid on turnover taxes | 2% |
| Enterprise income tax | Business taxes are calculated and paid on taxable revenues | See the table below |
Table of income tax rate of different entities:
| Name of the entities | Income tax rate |
| Anhui Longrui Glass Co., Ltd | 15% |
| Anhui Ruisiweier Technology Co., Ltd | 15% |
| Wuhan Yashibo Technology Co., Ltd | 15% |
| Anhui Zhenrui Construction Engineering Co., Ltd | 10% |
| Bozhou Gujin Rubbish Recycling Co., Ltd | 5% |
| Hubei Junhe Advertising Co., Ltd. | 5% |
| Hubei Yellow Crane Tower Beverage Co., Ltd. | 5% |
| Anhui Gujing gongjiu Co., Ltd. and other subsidiaries | 25% |
4.2 Tax Preference
(i) According to Response Letter for the First Batch of High-tech Enterprises to be put on record in Anhui Provincefor 2019 (guokehuozi [2019] No.216) issued by Department of Science and Technology of Anhui province,Department of Finance of Anhui province, and Anhui Provincial Taxation Bureau of State Administration ofTaxation, the subsidiary Longrui Glass was identified as a high-tech enterprise in 2019, therefore was givenHigh-tech Enterprise Certificate (Certificate Number: GR201934001625) which is valid for 3 years. According toEnterprise Income Tax Law and other relevant regulations, the company is subject to a national high-tech enterprise
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income tax rate at 15% for three years from January 1, 2019 to December 31, 2021.(ii) According to Response Letter for the First Batch of High-tech Enterprises to be put on record in AnhuiProvince for 2019 (guokehuozi [2019] No.216) issued by Department of Science and Technology of Anhuiprovince, Department of Finance of Anhui province, and Anhui Provincial Taxation Bureau of StateAdministration of Taxation, the subsidiary Ruisiweier was identified as a high-tech enterprise in 2019, thereforewas given High-tech Enterprise Certificate (Certificate Number: GR201934000355) which is valid for 3 years.According to Enterprise Income Tax Law and other relevant regulations, the company is subject to a nationalhigh-tech enterprise income tax rate at 15% for three years from January 1, 2019 to December 31, 2021.(iii) According to Response Letter for the Second Batch of High-tech Enterprises to be put on record in HubeiProvince for 2018 (guokehuozi [2019] No.43) issued by Department of Science and Technology of Hubei province,Department of Finance of Hubei province, and Hubei Provincial Taxation Bureau of State Administration ofTaxation, the subsidiary Yashibo was identified as a high-tech enterprise in 2018, therefore was given High-techEnterprise Certificate (Certificate Number:GR201842002339) which is valid for 3 years. According to EnterpriseIncome Tax Law and other relevant regulations, the company is subject to a national high-tech enterprise incometax rate at 15% for three years from January 1, 2018 to December 31, 2020.(iv) According to Notice from Ministry of Finance and State Administration of Taxation on the Implementation ofInclusive Tax Reduction Policy for Small and Micro Enterprises (Caishui [2019] No.13), from January 1, 2019 toDecember 31, 2021 the portion of the enterprise's annual taxable income which does not exceed 1 million yuan isreduced to 25% as taxable income, and income tax is paid at a tax rate of 20%. For the annual taxable income ofmore than 1 million yuan but not more than 3 million yuan, this part is reduced to 50% as taxable income, incometax is paid at the rate of 20%. The subsidiaries Gujing waste company, Junhe Advertising and Yellow Crane TowerBeverage meet the condition of annual taxable income not exceeding 1 million yuan while actual tax rate in H12020 was 5%. The subsidiary Zhenrui Construction meets the condition of annual taxable income exceeding 1million yuan but not exceeding 3 million yuan while actual tax rate for H1 2020 was 10%.
5. Notes to Major Items in the Consolidated Financial Statements of the Company
5.1 Monetary Assets
| Item | 30 June 2020 | 31 December 2019 |
| Cash on hand | 254,747.79 | 292,465.36 |
| Cash in bank | 7,417,660,747.68 | 5,618,712,121.81 |
| Other monetary assets | 271,980.24 | 745,330.92 |
| Total | 7,418,187,475.71 | 5,619,749,918.09 |
Notes: (i) At 30 June 2020, the structural deposits that cannot be withdrawn in advance amounted to RMB1,590
~83~
million, fixed deposits that cannot be withdrawn in advance totaled RMB100 million, and fixed deposits used topledge and issue bank acceptance bills totaled RMB330 million. Except for that, no other monetary assets arerestricted to use or in some potential risks of recovery due to the mortgage, pledge or freezing;
5.2 Trading Financial Assets
| Item | 30 June 2020 | 31 December 2019 |
| Financial Assets at Fair Value through Profit or Loss | 230,264,936.41 | 509,031,097.02 |
| Including: bank financial products | 10,000,000.00 | 297,146,591.78 |
| Fund investment | 220,264,936.41 | 211,884,505.24 |
| Total | 230,264,936.41 | 509,031,097.02 |
5.3 Notes Receivable
(1) Notes Receivable Listed by Category
| Category | 30 June 2020 | 31 December 2019 | ||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |
| Bank acceptance bills | 1,035,170,219.39 | 0.00 | 1,035,170,219.39 | 1,002,758,533.39 | 0.00 | 1,002,758,533.39 |
| Commercial acceptance bills | 993,836.54 | 49,691.83 | 944,144.71 | 1,493,836.54 | 34,938.37 | 1,458,898.17 |
| Total | 1,036,164,055.93 | 49,691.83 | 1,036,114,364.10 | 1,004,252,369.93 | 34,938.37 | 1,004,217,431.56 |
(2) Notes Receivable Pledged by the Company at the Period-end
| Item | Pledged amount |
| Bank acceptance bills | 382,801,475.30 |
| Total | 382,801,475.30 |
(3) Notes Receivable which Had Endorsed by the Company or had Discounted but had not Due at the Period-end
| Item | Amount of derecognition | Amount of recognition |
| Bank acceptance bills | 1,668,974,827.37 | 0.00 |
| Total | 1,668,974,827.37 | 0.00 |
The issuing banks of the bank acceptance bill of the Company for endorsement or discount are commercial bankswith higher credit. Therefore, when the bank acceptance bills are mature, they are likely to get paid. The interestrate risk related to the bill has been transferred to the bank, so it can be judged that the main risks and rewards ofthe bill ownership have been transferred, so need to be derecogised.
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(4) There Were No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute theContract or Agreement at the Period-end
(5) Notes Receivable by Bad Debt Provision Method
| Category | 30 June 2020 | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion | Amount | Withdrawal proportion | ||
| Provision for bad debt recognised individually | |||||
| Provision for bad debt recognised collectively | 1,036,164,055.93 | 100.00 | 49,691.83 | 0.00 | 1,036,114,364.10 |
| Including: Group 1 | 993,836.54 | 0.10 | 49,691.83 | 5.00 | 944,144.71 |
| Group 2 | 1,035,170,219.39 | 99.90 | 0.00 | 0.00 | 1,035,170,219.39 |
| Total | 1,036,164,055.93 | 100.00 | 49,691.83 | 0.00 | 1,036,114,364.10 |
①Notes receivable with provision for bad debt provision withdrawn by group 1
| Aging | 30 June 2020 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within 1 year | 993,836.54 | 49,691.83 | 5.00 |
| Of which:1-6 months | |||
| 7-12 months | 993,836.54 | 49,691.83 | 5.00 |
| Total | 993,836.54 | 49,691.83 | 5.00 |
②Notes receivable with bad debt provision withdrawn by group 2
On 30 June 2020, the Company measured bad debt provision of bank acceptance bill according to the duration ofexpected credit loss. The Company believes that no significant credit risk exists in the bank acceptance bills and nosignificant losses are arisen from default risk of banks or other issuer’ failure of fulfillment.Refer to Note III-10. Financial Instrument for recognition criteria and notes of withdrawal of bad debt provision bygroup.
(6) Changes of bad debt provision during the Reporting Period
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Commercial acceptance bills | 34,938.37 | 14,753.46 | 0.00 | 0.00 | 49,691.83 |
~85~
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Total | 34,938.37 | 14,753.46 | 0.00 | 0.00 | 49,691.83 |
4. Accounts Receivable
(1) Disclosure by aging
| Aging | 30 June 2020 | 31 December 2019 |
| Within one year | 43,013,302.45 | 41,004,875.62 |
| Of which:1-6 months | 31,855,517.41 | 37,333,246.24 |
| 7-12 months | 11,157,785.04 | 3,671,629.38 |
| 1-2 years | 2,728,605.43 | 365,118.07 |
| 2-3 years | 209.20 | 0.00 |
| Over 3 years | 0.00 | 141,121.87 |
| Subtotal | 45,742,117.08 | 41,511,115.56 |
| Less: Bad debt provision | 1,149,409.56 | 734,547.60 |
| Total | 44,592,707.52 | 40,776,567.96 |
(2) Disclosure by withdrawal method of bad debt provision
①30 June 2020
| Category | 30 June 2020 | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Bad debt provision withdrawn separately | |||||
| Bad debt provision withdrawn by group | 45,742,117.08 | 100.00 | 1,149,409.56 | 2.51 | 44,592,707.52 |
| Of which: Group 1 | |||||
| Group 2 | 45,742,117.08 | 100.00 | 1,149,409.56 | 2.51 | 44,592,707.52 |
| Total | 45,742,117.08 | 100.00 | 1,149,409.56 | 2.51 | 44,592,707.52 |
②31 December 2019
| Category | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Carrying value | |
~86~
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Bad debt provision withdrawn separately | |||||
| Bad debt provision withdrawn by group | 41,511,115.56 | 100.00 | 734,547.60 | 1.77 | 40,776,567.96 |
| Of which: Group 1 | |||||
| Group 2 | 41,511,115.56 | 100.00 | 734,547.60 | 1.77 | 40,776,567.96 |
| Total | 41,511,115.56 | 100.00 | 734,547.60 | 1.77 | 40,776,567.96 |
On 30 June 2020, Accounts receivable with bad debt provision withdrawn by group 2
| Aging | 30 June 2020 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | 43,013,302.45 | 876,444.43 | 2.04 |
| Of which:1-6 months | 31,855,517.41 | 318,555.18 | 1.00 |
| 7-12 months | 11,157,785.04 | 557,889.25 | 5.00 |
| 1-2 years | 2,728,605.43 | 272,860.53 | 10.00 |
| 2-3 years | 209.20 | 104.60 | 50.00 |
| Over 3 years | |||
| Total | 45,742,117.08 | 1,149,409.56 | 2.51 |
Refer to Note III-10. Financial Instrument for recognition criteria and notes of withdrawal of bad debt provision bygroup.On 31 December 2019, Accounts receivable with bad debt provision withdrawn by group 2
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | 41,004,875.62 | 556,913.92 | 1.36 |
| Of which:1-6 months | 37,333,246.24 | 373,332.45 | 1.00 |
| 7-12 months | 3,671,629.38 | 183,581.47 | 5.00 |
| 1-2 years | 365,118.07 | 36,511.81 | 10.00 |
| 2-3 years | |||
| Over 3 years | 141,121.87 | 141,121.87 | 100.00 |
~87~
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Total | 41,511,115.56 | 734,547.60 | 1.77 |
Refer to Note III-10. Financial Instrument for recognition criteria and notes of withdrawal of bad debt provision bygroup.
(3) Changes of bad debt provision during the Reporting Period
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Recovery or reversal | Write-off | |||
| Accounts receivable with insignificant amount but bad debt provision withdrawn separately | |||||
| Group 2: Bad debt provision withdrawn by group | 734,547.60 | 414,861.96 | 1,149,409.56 | ||
| Total | 734,547.60 | 414,861.96 | 1,149,409.56 | ||
(4) Top five closing balances by entity
| Entity name | Balance at 30 June 2020 | Proportion of the balance to the total accounts receivable (%) | Bad debt provision |
| No. 1 | 4,956,160.50 | 10.84 | 49,561.61 |
| No. 2 | 4,316,440.00 | 9.44 | 43,164.40 |
| No. 3 | 3,193,774.58 | 6.98 | 156,016.38 |
| No. 4 | 2,901,645.00 | 6.34 | 98,327.80 |
| No. 5 | 2,547,734.97 | 5.57 | 25,477.35 |
| Total | 17,915,755.05 | 39.17 | 372,547.54 |
5. Prepayment
(1) Disclosure by aging
| Aging | 30 June 2020 | 31 December 2019 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within one year | 90,383,425.38 | 96.45 | 196,781,962.46 | 99.66 |
| 1 to 2 years | 3,266,389.16 | 3.49 | 647,771.50 | 0.33 |
| 2 to 3 years | 31,761.99 | 0.03 | - | - |
| Over 3 years | 23,580.00 | 0.03 | 23,580.00 | 0.01 |
~88~
| Aging | 30 June 2020 | 31 December 2019 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Total | 93,705,156.53 | 100.00 | 197,453,313.96 | 100.00 |
(2) Top five closing balances by entity
| Entity name | Balance on 30 June 2020 | Proportion of the balance to the total prepayment (%) |
| No. 1 | 8,490,566.30 | 9.07 |
| No. 2 | 7,036,794.75 | 7.51 |
| No. 3 | 3,980,935.51 | 4.25 |
| No. 4 | 3,272,798.50 | 3.49 |
| No. 5 | 3,152,000.00 | 3.36 |
| Total | 25,933,095.06 | 27.68 |
6. Other Receivables
(1) Listed by category
| Item | 30 June 2020 | 31 December 2019 |
| Interest receivable | 10,600,806.32 | 1,908,788.81 |
| Dividends receivable | 0.00 | 0.00 |
| Other receivables | 25,871,628.10 | 23,838,168.41 |
| Total | 36,472,434.42 | 25,746,957.22 |
(2) Interest receivable
①Listed by category
| Item | 30 June 2020 | 31 December 2019 |
| Interest on large-denomination certificates of deposit | 10,600,806.32 | 1,908,788.81 |
| Less: Bad debt provision | 0.00 | 0.00 |
| Total | 10,600,806.32 | 1,908,788.81 |
(3) Other Receivables
① Disclosure by aging
| Aging | 30 June 2020 | 31 December 2019 |
| Within one year | 24,840,606.02 | 21,391,891.49 |
| Of which:1-6 months | 22,423,471.08 | 16,704,667.12 |
~89~
| Aging | 30 June 2020 | 31 December 2019 |
| 7-12 months | 2,417,134.94 | 4,687,224.37 |
| 1-2 years | 1,000,035.64 | 2,804,920.23 |
| 2-3 years | 951,997.22 | 646,513.23 |
| Over 3 years | 42,130,262.35 | 42,087,287.44 |
| Subtotal | 68,922,901.23 | 66,930,612.39 |
| Less: Bad debt provision | 43,051,273.13 | 43,092,443.98 |
| Total | 25,871,628.10 | 23,838,168.41 |
②Disclosure by nature
| Nature | 30 June 2020 | 31 December 2019 |
| Investment in securities | 40,850,949.35 | 40,850,949.35 |
| Deposit and guarantee | 5,011,416.41 | 5,343,741.34 |
| Borrowing for business trip expenses | 284,063.80 | 884,420.74 |
| Rent, utilities and gasoline charges | 8,139,458.33 | 8,479,446.65 |
| Other | 14,637,013.34 | 11,372,054.31 |
| Subtotal | 68,922,901.23 | 66,930,612.39 |
| Less: Bad debt provision | 43,051,273.13 | 43,092,443.98 |
| Total | 25,871,628.10 | 23,838,168.41 |
③Disclosure by withdrawal method of bad debt provision
A. As of 30 June 2020, bad debt provision withdrawn based on three stages model:
| Stage | Carrying amount | Bad debt provision | Carrying value |
| Stage 1 | 28,071,951.88 | 2,200,323.78 | 25,871,628.10 |
| Stage 2 | 0.00 | 0.00 | 0.00 |
| Stage 3 | 40,850,949.35 | 40,850,949.35 | 0.00 |
| Total | 68,922,901.23 | 43,051,273.13 | 25,871,628.10 |
A1. As of 30 June 2020, bad debt provision at stage 1:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately |
~90~
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn by group | 28,071,951.88 | 7.84 | 2,200,323.78 | 25,871,628.10 |
| Of which: Group 1 | ||||
| Group 2 | 28,071,951.88 | 7.84 | 2,200,323.78 | 25,871,628.10 |
| Total | 28,071,951.88 | 7.84 | 2,200,323.78 | 25,871,628.10 |
On 30 June 2020, other receivables with bad debt provision withdrawn by group 2
| Aging | 30 June 2020 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | 24,840,606.02 | 345,008.61 | 1.39 |
| Of which:1-6 months | 22,423,471.08 | 224,151.86 | 1.00 |
| 7-12 months | 2,417,134.94 | 120,856.75 | 5.00 |
| 1-2 years | 1,000,035.64 | 100,003.56 | 10.00 |
| 2-3 years | 951,997.22 | 475,998.61 | 50.00 |
| Over 3 years | 1,279,313.00 | 1,279,313.00 | 100.00 |
| Total | 28,071,951.88 | 2,200,323.78 | 7.84 |
A2. As of 30 June 2020, bad debt provision at stage 3:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
| Bad debt provision withdrawn by group | ||||
| Of which: Group 1 | ||||
| Group 2 | ||||
| Total | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
On 30 June 2020, other receivables with bad debt provision withdrawn separately:
| Name | 30 June 2020 | |||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | The enterprise enters the bankruptcy liquidation |
~91~
| Name | 30 June 2020 | |||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| procedure | ||||
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Total | 40,850,949.35 | 40,850,949.35 | 100.00 | -- |
B. As of 31 December 2019, bad debt provision withdrawn based on three stages model:
| Stage | Carrying amount | Bad debt provision | Carrying value |
| Stage 1 | 26,079,663.04 | 2,241,494.63 | 23,838,168.41 |
| Stage 2 | 0.00 | 0.00 | 0.00 |
| Stage 3 | 40,850,949.35 | 40,850,949.35 | 0.00 |
| Total | 66,930,612.39 | 43,092,443.98 | 23,838,168.41 |
B1. On 31 December 2019, bad debt provision at stage 1:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | ||||
| Bad debt provision withdrawn by group | 26,079,663.04 | 8.59 | 2,241,494.63 | 23,838,168.41 |
| Of which: Group 1 | 0.00 | 0.00 | 0.00 | 0.00 |
| Group 2 | 26,079,663.04 | 8.59 | 2,241,494.63 | 23,838,168.41 |
| Total | 26,079,663.04 | 8.59 | 2,241,494.63 | 23,838,168.41 |
On 31 December 2019, other receivables with bad debt provision withdrawn by group 2
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | 21,391,891.49 | 401,407.90 | 1.88 |
| Of which:1-6 months | 16,704,667.12 | 167,046.67 | 1.00 |
| 7-12 months | 4,687,224.37 | 234,361.23 | 5.00 |
| 1-2 years | 2,804,920.23 | 280,492.02 | 10.00 |
| 2-3 years | 646,513.23 | 323,256.62 | 50.00 |
~92~
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Over 3 years | 1,236,338.09 | 1,236,338.09 | 100.00 |
| Total | 26,079,663.04 | 2,241,494.63 | 8.59 |
B2. As of 31 December 2019, bad debt provision at stage 3:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
| Bad debt provision withdrawn by group | ||||
| Of which: Group 1 | ||||
| Group 2 | ||||
| Total | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
On 31 December 2019, other receivables with bad debt provision withdrawn separately:
| Name | 31 December 2019 | |||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Total | 40,850,949.35 | 40,850,949.35 | 100.00 | -- |
④Changes of bad debt provision during the Reporting Period
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Recovery or reversal | Write-off | |||
| Bad debt provision withdrawn separately | 40,850,949.35 | 0.00 | 40,850,949.35 | ||
| Bad debt provision withdrawn by group | 2,241,494.63 | 41,170.85 | 2,200,323.78 | ||
~93~
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Recovery or reversal | Write-off | |||
| Total | 43,092,443.98 | 41,170.85 | 43,051,273.13 | ||
⑤ Top five closing balances by entity
| Entity name | Nature | Balance at 30 June 2020 | Aging | Proportion of the balance to the total other receivables (%) | Bad debt provision |
| No. 1 | Securities investment | 29,010,449.35 | Over 3 years | 42.09 | 29,010,449.35 |
| No. 2 | Securities investment | 11,840,500.00 | Over 3 years | 17.18 | 11,840,500.00 |
| No. 3 | Oil cost | 6,436,108.96 | Within 6 months | 9.34 | 64,361.09 |
| No. 4 | Deposit | 3,953,761.28 | Within 6 months | 5.74 | 39,537.61 |
| No. 5 | Other | 1,576,841.20 | Within 6 months | 2.29 | 15,768.41 |
| Total | -- | 52,817,660.79 | -- | 76.64 | 40,970,616.46 |
7. Inventories
(1) Category of inventories
| Item | 30 June 2020 | ||
| Carrying amount | Falling price reserves | Carrying value | |
| Raw materials and package materials | 151,425,817.44 | 19,925,649.07 | 131,500,168.37 |
| Semi-finished goods and work in process | 2,632,022,035.43 | 0.00 | 2,632,022,035.43 |
| Finished goods | 160,297,894.70 | 3,047,213.46 | 157,250,681.24 |
| Total | 2,943,745,747.57 | 22,972,862.53 | 2,920,772,885.04 |
(Continued)
| Item | 31 December 2019 | ||
| Carrying amount | Falling price reserves | Carrying value | |
| Raw materials and package | 177,976,566.48 | 14,772,001.80 | 163,204,564.68 |
~94~
| materials | |||
| Semi-finished goods and work in process | 2,291,945,127.85 | 0.00 | 2,291,945,127.85 |
| Finished goods | 562,948,591.57 | 3,046,322.32 | 559,902,269.25 |
| Total | 3,032,870,285.90 | 17,818,324.12 | 3,015,051,961.78 |
(2) Falling price reserves of inventories
| Items | 31 December 2019 | Increase | Decrease | 30 June 2020 | ||
| Withdrawal | Other | Reversal or recovery | Other | |||
| Raw materials and package materials | 14,772,001.80 | 5,258,503.74 | 104,856.47 | 19,925,649.07 | ||
| Finished goods | 3,046,322.32 | 434,682.03 | 433,790.89 | 3,047,213.46 | ||
| Total | 17,818,324.12 | 5,693,185.77 | 538,647.36 | 22,972,862.53 | ||
8. Other Current Assets
| Item | 30 June 2020 | 31 December 2019 |
| Deductible tax | 92,193,691.95 | 114,439,167.07 |
| Pledge-style repo of treasury bonds | 10,900,000.00 | 0.00 |
| Total | 103,093,691.95 | 114,439,167.07 |
9. Long-term Equity Investment
| Investees | 31 December 2019 | Changes in the Reporting Period | ||||
| Additional investments | Reduced investments | Profit and loss on investments confirmed according to equity law | Adjustment of other comprehensive income | Changes in other equity | ||
| I. Associated enterprises | ||||||
| Beijing Guge Trading Co., Ltd. | 4,678,282.24 | -53,631.34 | ||||
| Total | 4,678,282.24 | -53,631.34 | ||||
(Continued)
| Investees | Changes in the Reporting Period | 30 June 2020 | Balance of |
~95~
| Declaration of cash dividends or distribution of profit | Withdrawal of impairment provision | Other | impairment provision | ||
| I. Associated enterprises | |||||
| Beijing Guge Trading Co., Ltd. | 4,624,650.90 | ||||
| Total | 4,624,650.90 |
10. Investment Property
(1) Investment property adopting cost measurement mode
11. Fixed Assets
(1) Listed by category
| Item | 30 June 2020 | 31 December 2019 |
| Items | Building and plants | Land use rights | Total |
| I. Original carrying value | |||
| 1. Balance on 31 December 2019 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| 2. Increase during the Reporting Period | 0.00 | 0.00 | 0.00 |
| 3. Decrease during the Reporting Period | 0.00 | 0.00 | 0.00 |
| 4. Balance on 30 June 2020 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| II. Accumulated depreciation and amortization: | |||
| 1. Balance on 31 December 2019 | 5,915,361.87 | 699,699.86 | 6,615,061.73 |
| 2. Increase during the Reporting Period | 130,557.96 | 28,013.28 | 158,571.24 |
| (1) Withdrawal or amortization | 130,557.96 | 28,013.28 | 158,571.24 |
| 3. Decrease during the Reporting Period | 0.00 | 0.00 | 0.00 |
| 4. Balance on 30 June 2020 | 6,045,919.83 | 727,713.14 | 6,773,632.97 |
| III. Impairment provision | |||
| 1. Balance on 31 December 2019 | 0.00 | 0.00 | 0.00 |
| 2. Increase during the Reporting Period | 0.00 | 0.00 | 0.00 |
| 3. Decrease during the Reporting Period | 0.00 | 0.00 | 0.00 |
| 4. Balance on 30 June 2020 | 0.00 | 0.00 | 0.00 |
| IV. Original carrying value | |||
| 1. Carrying value on 30 June 2020 | 2,634,635.92 | 1,916,878.86 | 4,551,514.78 |
| 2. Carrying value on 31 December 2019 | 2,765,193.88 | 1,944,892.14 | 4,710,086.02 |
~96~
| Item | 30 June 2020 | 31 December 2019 |
| Fixed assets | 1,629,268,366.99 | 1,722,572,998.79 |
| Disposal of fixed assets | 0.00 | 0.00 |
| Total | 1,629,268,366.99 | 1,722,572,998.79 |
(2) Fixed assets
①General information of fixed assets
| Items | Buildings and constructions | Machinery equipments | Vehicles | Office equipment and other | Total |
| I. Original carrying value | |||||
| 1. Balance on 31 December 2019 | 2,034,543,017.61 | 1,002,176,887.05 | 60,967,511.99 | 170,904,070.21 | 3,268,591,486.86 |
| 2. Increase during the Reporting Period | 0.00 | 8,118,223.00 | 2,891,743.16 | 5,906,716.55 | 16,916,682.71 |
| (1) Acquisition | 0.00 | 3,670,477.43 | 2,891,743.16 | 4,207,601.55 | 10,769,822.14 |
| (2) Transfer from construction in progress | 0.00 | 4,447,745.57 | 0.00 | 1,699,115.00 | 6,146,860.57 |
| 3. Decrease during the Reporting Period | 6,831,022.80 | 14,047,285.07 | 279,075.12 | 1,119,654.19 | 22,277,037.18 |
| (1) Disposal or scrap | 6,831,022.80 | 14,047,285.07 | 279,075.12 | 1,119,654.19 | 22,277,037.18 |
| 4. Balance on 30 June 2020 | 2,027,711,994.81 | 996,247,824.98 | 63,580,180.03 | 175,691,132.57 | 3,263,231,132.39 |
| II. Accumulated depreciation | |||||
| 1. Balance on 31 December 2019 | 810,920,134.01 | 575,262,319.33 | 51,633,020.95 | 103,244,644.01 | 1,541,060,118.30 |
| 2. Increase during the Reporting Period | 36,210,126.91 | 51,670,929.87 | 3,060,438.40 | 16,674,135.79 | 107,615,630.97 |
| (1) Withdrawal | 36,210,126.91 | 51,670,929.87 | 3,060,438.40 | 16,674,135.79 | 107,615,630.97 |
| 3. Decrease during the Reporting Period | 6,174,155.47 | 11,556,705.91 | 270,702.87 | 1,093,536.48 | 19,095,100.73 |
| (1) Disposal or scrap | 6,174,155.47 | 11,556,705.91 | 270,702.87 | 1,093,536.48 | 19,095,100.73 |
| 4. Balance on 30 June 2020 | 840,956,105.45 | 615,376,543.29 | 54,422,756.48 | 118,825,243.32 | 1,629,580,648.54 |
| III. Impairment provision | |||||
| 1. Balance on 31 December 2019 | 3,311,778.44 | 1,053,187.15 | 7,047.07 | 586,357.11 | 4,958,369.77 |
~97~
| Items | Buildings and constructions | Machinery equipments | Vehicles | Office equipment and other | Total |
| 2. Increase during the Reporting Period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Withdrawal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease during the Reporting Period | 520,414.64 | 55,838.27 | 0.00 | 0.00 | 576,252.91 |
| (1) Disposal or scrap | 520,414.64 | 55,838.27 | 0.00 | 0.00 | 576,252.91 |
| 4. Balance on 30 June 2020 | 2,791,363.80 | 997,348.88 | 7,047.07 | 586,357.11 | 4,382,116.86 |
| IV. Carrying value of fixed assets | |||||
| 1. Carrying value on 30 June 2020 | 1,183,964,525.56 | 379,873,932.81 | 9,150,376.48 | 56,279,532.14 | 1,629,268,366.99 |
| 2. Carrying value on 31 December 2019 | 1,220,311,105.16 | 425,861,380.57 | 9,327,443.97 | 67,073,069.09 | 1,722,572,998.79 |
②Idle fixed assets
| Item | Original carrying value | Accumulated depreciation | Impairment provision | Carrying value | Note |
| Buildings and constructions | 8,155,407.00 | 5,263,789.95 | 2,791,363.80 | 100,253.25 | |
| Machinery equipments | 6,398,959.48 | 5,369,319.30 | 997,348.88 | 32,291.30 | |
| Vehicles | 58,119.66 | 49,329.00 | 7,047.07 | 1,743.59 | |
| Office equipment and others | 843,135.27 | 244,860.60 | 586,357.11 | 11,917.56 | |
| Total | 15,455,621.41 | 10,927,298.85 | 4,382,116.86 | 146,205.70 |
③Fixed assets without certificate of title
| Items | Carrying value | Reason |
| Buildings and constructions | 715,850,341.33 | In process |
| Total | 715,850,341.33 | -- |
12. Construction in Progress
(1) Listed by category
| Item | 30 June 2020 | 31 December 2019 |
| Construction in progress | 258,954,824.33 | 183,984,816.07 |
~98~
| Item | 30 June 2020 | 31 December 2019 |
| Engineering materials | 0.00 | 0.00 |
| Total | 258,954,824.33 | 183,984,816.07 |
(2) Construction in progress
①General information of construction in progress
| Item | 30 June 2020 | 31 December 2019 | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Brewing automatization technological improvement project | 84,453,154.26 | 84,453,154.26 | 74,782,393.43 | 74,782,393.43 | ||
| Furnace project (No.5) | 50,058,863.82 | 50,058,863.82 | 43,893,912.18 | 43,893,912.18 | ||
| Suizhou new plant phase I project | 81,059,874.07 | 81,059,874.07 | 40,023,041.23 | 40,023,041.23 | ||
| Machine installment | 11,820,431.52 | 11,820,431.52 | 10,393,296.42 | 10,393,296.42 | ||
| Liquid filling line renovation project | 5,934,194.72 | 5,934,194.72 | 5,934,194.72 | 5,934,194.72 | ||
| Gujing digital marketing project Phase II | 6,479,804.63 | 6,479,804.63 | 2,150,943.39 | 2,150,943.39 | ||
| Renovation project of potential safety concerns | 0.00 | 0.00 | 387,770.85 | 387,770.85 | ||
| Advanced sewage treatment system | 6,262,773.98 | 6,262,773.98 | 0.00 | 0.00 | ||
| Intelligent technology renovation of brewing production | 391,792.45 | 391,792.45 | 0.00 | 0.00 | ||
| Other individual project | 12,493,934.88 | 12,493,934.88 | 6,419,263.85 | 6,419,263.85 | ||
| Total | 258,954,824.33 | 258,954,824.33 | 183,984,816.07 | 183,984,816.07 | ||
②Changes in significant projects of construction in progress
| Project | Budget (RMB’0,000) | 31 December 2019 | Increase during the Reporting Period | Amount transferred to fixed asset | Decrease during the Reporting Period | 30 June 2020 |
| Brewing automatization technological improvement project | 27,430.00 | 74,782,393.43 | 9,938,942.66 | 268,181.83 | 0.00 | 84,453,154.26 |
| Furnace project (No.5) | 7,134.35 | 43,893,912.1 | 6,164,951.64 | 0.00 | 0.00 | 50,058,863.82 |
~99~
| 8 | ||||||
| Suizhou new plant phase I project | 26,000.00 | 40,023,041.23 | 41,036,832.84 | 0.00 | 0.00 | 81,059,874.07 |
| Machine installment | 4,741.05 | 10,393,296.42 | 1,692,621.84 | 265,486.74 | 0.00 | 11,820,431.52 |
| Liquid filling line renovation project | 4,000.00 | 5,934,194.72 | 0.00 | 0.00 | 0.00 | 5,934,194.72 |
| Gujing digital marketing project Phase II | 1,656.75 | 2,150,943.39 | 4,328,861.24 | 0.00 | 0.00 | 6,479,804.63 |
| Renovation project of potential safety concerns | 67.30 | 387,770.85 | 166,187.58 | 553,958.43 | 0.00 | 0.00 |
| Advanced sewage treatment system | 2,358.98 | 0.00 | 6,262,773.98 | 0.00 | 0.00 | 6,262,773.98 |
| Intelligent technology renovation of brewing production | 828,965.74 | 0.00 | 391,792.45 | 0.00 | 0.00 | 391,792.45 |
| Other individual project | 13,018.00 | 6,419,263.85 | 11,133,904.60 | 5,059,233.57 | 0.00 | 12,493,934.88 |
| Total | 915,372.17 | 183,984,816.07 | 81,116,868.83 | 6,146,860.57 | 0.00 | 258,954,824.33 |
(Continued)
| Project | Proportion of project input to budgets (%) | Schedule (%) | Cumulative amount of interest capitalization | Of which: Interest capitalized during the reporting period | Interest capitalization during the Reporting Period (%) | Source of funds |
| Brewing automatization technological improvement project | 39.21 | 80.00 | Self-owned fund | |||
| Furnace project (No.5) | 70.17 | 100.00 | Self-owned fund | |||
| Suizhou new plant phase I project | 18.53 | 18.53 | Self-owned fund | |||
| Machine installment | 24.93 | 89.00 | Self-owned fund | |||
| Liquid filling line renovation project | 14.84 | 50.00 | Self-owned fund |
~100~
| Project | Proportion of project input to budgets (%) | Schedule (%) | Cumulative amount of interest capitalization | Of which: Interest capitalized during the reporting period | Interest capitalization during the Reporting Period (%) | Source of funds |
| Gujing digital marketing project Phase II | 39.11 | 60.00 | Self-owned fund | |||
| Renovation project of potential safety concerns | 82.31 | 100.00 | Self-owned fund | |||
| Advanced sewage treatment system | 26.55 | 8.00 | Self-owned fund | |||
| Intelligent technology renovation of brewing production | 0.01 | 1.00 | Self-owned fund | |||
| Other individual project | 62.00 | 62.00 | Self-owned fund | |||
| Total | -- | -- | -- | -- | -- | -- |
13. Intangible Assets
(1) General information of intangible assets
| Item | Land use rights | Software | Patents and trademark | Total |
| I. Original carrying value | ||||
| 1. Balance on 31 December 2019 | 683,451,302.56 | 105,085,318.08 | 215,006,066.19 | 1,003,542,686.83 |
| 2. Increase during the Reporting Period | 122,043,483.02 | 0.00 | 0.00 | 122,043,483.02 |
| (1) Acquisition | 122,043,483.02 | 0.00 | 0.00 | 122,043,483.02 |
| (2) Transfer from construction in progress | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease during the Reporting Period | 0.00 | 18,867.92 | 0.00 | 18,867.92 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 |
| (2) Other | 0.00 | 18,867.92 | 0.00 | 18,867.92 |
| 4. Balance on 30 June 2020 | 805,494,785.58 | 105,066,450.16 | 215,006,066.19 | 1,125,567,301.93 |
| II. Accumulated amortization: | ||||
| 1. Balance on 31 December 2019 | 143,777,958.04 | 27,857,857.39 | 46,188,938.64 | 217,824,754.07 |
| 2. Increase during the Reporting | 7,748,741.11 | 9,371,698.38 | 24,038.88 | 17,144,478.37 |
~101~
| Item | Land use rights | Software | Patents and trademark | Total |
| Period | ||||
| (1) Withdrawal | 7,748,741.11 | 9,371,698.38 | 24,038.88 | 17,144,478.37 |
| 3. Decrease during the Reporting Period | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance on 30 June 2020 | 151,526,699.15 | 37,229,555.77 | 46,212,977.52 | 234,969,232.44 |
| III. Impairment provision | ||||
| 1. Balance on 31 December 2019 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increase during the Reporting Period | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decrease during the Reporting Period | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Balance on 30 June 2020 | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Original carrying value | ||||
| 1. Carrying value on 30 June 2020 | 653,968,086.43 | 67,836,894.39 | 168,793,088.67 | 890,598,069.49 |
| 2. Carrying value on 31 December 2019 | 539,673,344.52 | 77,227,460.69 | 168,817,127.55 | 785,717,932.76 |
14. Goodwill
(1) Original carrying value of goodwill
| Investees or matters that goodwill arising from | 31 December 2019 | Increase | Decrease | 30 June 2020 | ||
| Formed by business combination | Other | Disposal | Other | |||
| Yellow Crane Tower Distillery Co., Ltd. | 478,283,495.29 | 0.00 | 0.00 | 0.00 | 0.00 | 478,283,495.29 |
| Total | 478,283,495.29 | 0.00 | 0.00 | 0.00 | 0.00 | 478,283,495.29 |
(2) Impairment provision of goodwill
| Investees or matters that goodwill arising from | 31 December 2019 | Increase | Decrease | 30 June 2020 | ||
| Withdrawal | Other | Disposal | Other | |||
| Yellow Crane Tower Distillery Co., Ltd. | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
~102~
According to relevant provisions of Accounting Standards for Business Enterprises No. 8-Assets Impairment andAccounting Supervision Risk Prompts No. 8-Goodwill Impairment of China Securities Regulatory Commission,the Company shall implement the impairment testing to goodwill formed by business combination and the end ofthe year.
15. Long-term Deferred Expenses
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 | |
| Amortization | Other decrease | ||||
| Experience center | 26,238,799.46 | 0.00 | 3,912,625.17 | 0.00 | 22,326,174.29 |
| Pottery | 1,836,642.57 | 0.00 | 1,836,642.57 | 0.00 | 0.00 |
| Sewage treatment project | 3,767,377.05 | 0.00 | 461,311.48 | 0.00 | 3,306,065.57 |
| Yellow Crane Tower chateau and museum | 11,496,948.62 | 0.00 | 1,757,322.57 | 0.00 | 9,739,626.05 |
| Gujing party building cultural center | 4,727,272.73 | 0.00 | 590,909.09 | 0.00 | 4,136,363.64 |
| Yantai wine museum project | 1,293,370.71 | 0.00 | 221,720.69 | 0.00 | 1,071,650.02 |
| Other individual project with insignificant amounts | 20,879,695.68 | 103,884.64 | 3,882,247.31 | 0.00 | 17,101,333.01 |
| Total | 70,240,106.82 | 103,884.64 | 12,662,778.88 | 0.00 | 57,681,212.58 |
16. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets before offsetting
| Item | 30 June 2020 | 31 December 2019 | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Asset impairment provision | 27,354,979.39 | 6,833,265.18 | 22,776,693.89 | 5,688,693.81 |
| Credit impairment provision | 44,250,374.52 | 11,046,978.77 | 43,861,929.95 | 10,955,709.29 |
| Unrealized intragroup profit | 24,800,846.93 | 6,200,211.73 | 32,086,076.52 | 8,021,519.13 |
| Deferred income | 74,384,425.08 | 18,187,119.73 | 72,778,437.92 | 17,941,534.40 |
| Deductible losses | 47,496,756.92 | 11,805,516.94 | 0.00 | 0.00 |
| Carry-over of payroll payables deductible during the next period | 0.00 | 0.00 | 32,995,460.19 | 8,248,865.05 |
| Accrued expenses and discount | 271,504,169.67 | 67,876,042.42 | 158,552,891.33 | 39,638,222.83 |
| Total | 489,791,552.51 | 121,949,134.77 | 363,051,489.80 | 90,494,544.51 |
~103~
(2) Deferred tax liabilities before offsetting
| Item | 30 June 2020 | 31 December 2019 | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Difference in accelerated depreciation of fixed assets | 61,113,072.51 | 15,278,268.13 | 73,614,107.09 | 18,403,526.77 |
| Assets appreciation arising from business combination not under the same control | 381,561,354.20 | 95,390,338.55 | 384,290,207.88 | 96,072,551.97 |
| Changes in fair value of trading financial assets | 20,264,936.41 | 5,066,234.10 | 17,585,151.48 | 4,396,287.87 |
| Total | 462,939,363.12 | 115,734,840.78 | 475,489,466.45 | 118,872,366.61 |
(3) Unrecognized deferred tax assets
| Item | 30 June 2020 | 31 December 2019 |
| Deductible losses | 8,243,989.86 | 8,072,655.25 |
| Total | 8,243,989.86 | 8,072,655.25 |
17. Other Non-current Assets
| Item | 30 June 2020 | 31 December 2019 |
| Prepayments for equipment and constructions | 574,026.00 | 4,148,686.00 |
| Total | 574,026.00 | 4,148,686.00 |
18. Short-term Borrowings
| Item | 30 June 2020 | 31 December 2019 |
| Credit borrowings | 30,094,500.00 | 0.00 |
| Guarantee borrowings | 20,000,000.00 | 0.00 |
| Total | 50,094,500.00 | 0.00 |
19. Notes Payable
| Category | 30 June 2020 | 31 December 2019 |
| Bank acceptance bills | 1,020,583,475.29 | 654,965,064.82 |
| Commercial acceptance bills | 0.00 | 48,714,582.04 |
| Total | 1,020,583,475.29 | 703,679,646.86 |
20. Accounts Payable
(1) Listed by nature
~104~
| Item | 30 June 2020 | 31 December 2019 |
| Payments for goods | 242,832,951.18 | 399,583,249.41 |
| Payments for constructions and equipment | 80,488,599.59 | 88,412,144.22 |
| Other | 63,035,070.24 | 75,498,801.77 |
| Total | 386,356,621.01 | 563,494,195.40 |
(2) Significant accounts payable aging over one year
| Item | 30 June 2020 | Reason |
| No. 1 | 2,252,093.02 | Final payment |
| No. 2 | 577,691.84 | Final payment |
| No. 3 | 393,392.70 | Final payment |
| No. 4 | 348,350.03 | Final payment |
| No. 5 | 244,906.28 | Final payment |
| Total | 3,816,433.87 | -- |
21. Advances from Customers
(1) List of Advances from Customers
| Item | 30 June 2020 | 31 December 2019 |
| Loan | 0.00 | 529,863,011.73 |
| Total | 0.00 | 529,863,011.73 |
(2) There are no significant advances from customers aging over one year.
22. Contract Liabilities
(1) List of contract liabilities
| Item | 30 June 2020 | 31 December 2019 |
| Loans | 727,347,929.08 | 0.00 |
| Total | 727,347,929.08 | 0.00 |
(2) There are no significant contract liabilities aging over one year.
23. Payroll Payable
(1) List of payroll payable
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| I. Short-term employee benefits | 453,674,655.69 | 1,071,079,133.49 | 1,227,668,307.07 | 297,085,482.11 |
| II. Post-employment | 514,877.20 | 23,661,037.84 | 23,034,120.29 | 1,141,794.75 |
~105~
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| benefits-defined contribution plans | ||||
| III. Termination benefits | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 454,189,532.89 | 1,094,740,171.33 | 1,250,702,427.36 | 298,227,276.86 |
(2) List of short-term payroll payable
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| I. Salaries, bonuses, allowances and subsidies | 357,387,670.42 | 925,474,559.57 | 1,066,882,430.78 | 215,979,799.21 |
| II. Employee benefits | 45,069.27 | 44,330,742.23 | 44,330,742.23 | 45,069.27 |
| III. Social insurance | 607,379.61 | 12,927,727.56 | 12,983,943.54 | 551,163.63 |
| Of which: Health insurance | 590,576.75 | 12,540,804.58 | 12,603,695.76 | 527,685.57 |
| Injury insurance | 5,730.43 | 384,567.63 | 378,878.03 | 11,420.03 |
| Birth insurance | 11,072.43 | 2,355.35 | 1,369.75 | 12,058.03 |
| IV. Housing accumulation fund | 4,465,854.45 | 35,906,861.82 | 36,227,524.29 | 4,145,191.98 |
| V. Labor union funds and employee education funds | 73,606,168.29 | 12,803,169.96 | 14,427,759.75 | 71,981,578.50 |
| VI. Enterprise annuity | 17,562,513.65 | 39,636,072.35 | 52,815,906.48 | 4,382,679.52 |
| Total | 453,674,655.69 | 1,071,079,133.49 | 1,227,668,307.07 | 297,085,482.11 |
(3) Defined contribution plans
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| 1. Basic endowment insurance | 509,340.98 | 22,905,408.65 | 22,287,978.80 | 1,126,770.83 |
| 2. Unemployment insurance | 5,536.22 | 755,629.19 | 746,141.49 | 15,023.92 |
| Total | 514,877.20 | 23,661,037.84 | 23,034,120.29 | 1,141,794.75 |
24. Taxes Payable
| Item | 30 June 2020 | 31 December 2019 |
| VAT | 134,321,025.20 | 16,929,480.44 |
| Consumption tax | 165,311,329.62 | 347,582,441.49 |
| Enterprise income tax | 139,093,438.30 | 94,038,327.53 |
| Individual income tax | 1,791,267.81 | 1,173,190.21 |
~106~
| Item | 30 June 2020 | 31 December 2019 |
| Urban maintenance and construction tax | 15,163,554.83 | 9,328,392.65 |
| Stamp duty | 965,306.80 | 1,058,588.17 |
| Educational surcharge | 14,929,428.45 | 7,991,963.70 |
| Other | 5,297,116.48 | 4,800,725.40 |
| Total | 476,872,467.49 | 482,903,109.59 |
25. Other Payables
(1) Listed by category
| Item | 30 June 2020 | 31 December 2019 |
| Interest payable | 0.00 | 0.00 |
| Dividends payable | 755,400,000.00 | 0.00 |
| Other payables | 1,435,446,597.94 | 1,315,878,229.01 |
| Total | 2,190,846,597.94 | 1,315,878,229.01 |
(2) Dividends payable
| Item | 30 June 2020 | 31 December 2019 |
| Ordinary stock dividends | 755,400,000.00 | 0.00 |
| Total | 755,400,000.00 | 0.00 |
(3) Other payables
①Listed by nature
| Item | 30 June 2020 | 31 December 2019 |
| Security deposit and guarantee | 1,323,160,418.91 | 1,206,935,123.77 |
| Warranty | 45,615,013.51 | 42,966,560.82 |
| Personal housing fund paid by company | 4,112,923.98 | 4,465,854.45 |
| Borrowing of business trip expenses | 0.00 | 296,993.67 |
| Other | 62,558,241.54 | 61,213,696.30 |
| Total | 1,435,446,597.94 | 1,315,878,229.01 |
②Significant other payables aging over one year
Other payables balance aging over one year totaled RMB495,549,588.71, which are mainly security deposit andwarranty not yet matured.
26. Other Current Liabilities
| Item | 30 June 2020 | 31 December 2019 |
| Accrued expenses | 306,044,574.61 | 197,484,121.41 |
~107~
| Item | 30 June 2020 | 31 December 2019 |
| Total | 306,044,574.61 | 197,484,121.41 |
27. Deferred Income
(1) General information of deferred income
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 | Reason |
| Government grants | 72,778,437.92 | 3,870,000.00 | 2,264,012.84 | 74,384,425.08 | Grants received from government |
| Total | 72,778,437.92 | 3,870,000.00 | 2,264,012.84 | 74,384,425.08 | -- |
(2) Items involved with government grants:
| Item | 31 December 2019 | Increase during the Reporting Period | Recognized in other income during the Reporting Period | Other changes | 30 June 2020 | Related to assets/related to income |
| Wine production system technical transformation | 192,708.47 | 31,249.98 | 161,458.49 | Related to assets | ||
| Instrument subsidy | 1,550,437.50 | 76,329.89 | 1,474,107.61 | Related to assets | ||
| Intelligent solid brewing technology innovation project | 119,791.53 | 15,625.02 | 104,166.51 | Related to assets | ||
| Anhui province development of direct funds of service industry | 795,122.12 | 146,341.44 | 648,780.68 | Related to assets | ||
| Anhui province subsidy of innovative province construction capacity for independent innovation | 1,948,120.00 | 365,272.50 | 1,582,847.50 | Related to assets | ||
| Equipment subsidy | 1,068,028.16 | 102,807.24 | 965,220.92 | Related to assets | ||
| Enterprise development funds | 22,500.00 | 15,000.00 | 7,500.00 | Related to assets | ||
| Internet traceability system project | 1,856,250.00 | 556,875.00 | 1,299,375.00 | Related to assets | ||
| Subsidy for Suizhou new factory infrastructure | 35,338,000.00 | 0.00 | 35,338,000.00 | Related to assets | ||
| Motor and boiler energy-saving technical transformation project | 275,000.24 | 68,749.98 | 206,250.26 | Related to assets | ||
| Automation of check and storage, on-line monitoring of product | 265,625.00 | 46,875.00 | 218,750.00 | Related to assets |
~108~
| quality | ||||||
| Funds for research projects of koji-making Technology | 1,000,000.00 | 0.00 | 1,000,000.00 | Related to assets | ||
| Gujing Zhangji wine cellar optimization and reconstruction project | 835,208.43 | 23,749.98 | 811,458.45 | Related to assets | ||
| Subsidy for food safety improvement project | 689,655.25 | 68,965.50 | 620,689.75 | Related to assets | ||
| Subsidy for key technical cooperation project on the authenticity of important food isotopes | 600,000.00 | 0.00 | 600,000.00 | Related to assets | ||
| Comprehensive subsidy fund for air pollution prevention and control | 2,345,083.29 | 131,500.02 | 2,213,583.27 | Related to assets | ||
| Funds for strategic emerging industry agglomeration development base | 798,080.00 | 2,000,000.00 | 111,360.00 | 2,686,720.00 | Related to assets | |
| Refund of Land payment | 22,562,827.93 | 275,103.09 | 22,287,724.84 | Related to assets | ||
| Specific funds for side management of power demand | 516,000.00 | 72,000.00 | 444,000.00 | Related to assets | ||
| Project subsidy for coal to gas of 1# furnace | 0.00 | 1,870,000.00 | 156,208.20 | 1,713,791.80 | Related to assets | |
| Total | 72,778,437.92 | 3,870,000.00 | 2,264,012.84 | 74,384,425.08 | -- |
28. Share Capital
| Item | 31 December 2019 | Changes during the Reporting Period (+,-) | 30 June 2020 | ||||
| New issues | Bonus issues | Capitalization of reserves | Others | Subtotal | |||
| The sum of shares | 503,600,000.00 | 503,600,000.00 | |||||
29. Capital Reserves
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| Capital premium (share premium) | 1,262,552,456.05 | 1,262,552,456.05 | ||
| Other capital reserves | 32,853,136.20 | 32,853,136.20 |
~109~
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| Total | 1,295,405,592.25 | 1,295,405,592.25 |
30. Surplus Reserves
| Item | 31 December 2019 | Increase | Decrease | 30 June 2020 |
| Statutory surplus reserve | 256,902,260.27 | 256,902,260.27 | ||
| Total | 256,902,260.27 | 256,902,260.27 |
Note: Pursuant to the Company Law of the People's Republic of China and Articles of Association, the Companyappropriates 10% of net profit to the statutory surplus reserves. If the cumulative amount of the statutory surplusreserve is more than 50% of the registered capital of the company, it can be not appropriated any more.
31. Retained Earnings
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained earnings before adjustments | 6,888,203,911.92 | 5,541,281,341.47 |
| Total beginning balance of retained earnings before adjustment (increase+, decrease-) | 0.00 | 4,794,830.59 |
| Beginning balance of retained earnings after adjustments | 6,888,203,911.92 | 5,546,076,172.06 |
| Add: Net profit attributable to owners of the Company as the parent | 1,024,936,604.36 | 2,097,527,739.86 |
| Dividend of ordinary shares payable | 755,400,000.00 | 755,400,000.00 |
| Ending retained earnings | 7,157,740,516.28 | 6,888,203,911.92 |
32. Operating Revenue and Cost of Sales
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Costs of sales | Operating revenue | Costs of sales | |
| Main operations | 5,495,370,627.67 | 1,301,529,714.81 | 5,958,624,293.86 | 1,380,565,871.04 |
| Other operations | 24,250,372.95 | 12,395,877.67 | 29,488,705.23 | 13,590,863.51 |
| Total | 5,519,621,000.62 | 1,313,925,592.48 | 5,988,112,999.09 | 1,394,156,734.55 |
33. Taxes and Surcharges
| Item | Reporting Period | Same period of last year |
| Consumption tax | 731,743,604.96 | 711,806,689.93 |
| Urban maintenance and construction tax and educational surcharge | 129,960,286.58 | 138,007,221.23 |
| Land use tax | 6,984,861.27 | 3,447,726.79 |
~110~
| Item | Reporting Period | Same period of last year |
| Property tax | 8,847,804.72 | 4,547,732.36 |
| Stamp duty | 4,724,705.33 | 5,043,756.63 |
| Other | 5,735,777.86 | 6,674,635.10 |
| Total | 887,997,040.72 | 869,527,762.04 |
34. Selling Expense
| Item | Reporting Period | Same period of last year |
| Employment benefits | 269,309,951.20 | 197,359,561.67 |
| Travel fees | 55,722,038.26 | 60,001,666.01 |
| Advertisement fees | 453,767,973.19 | 442,193,538.62 |
| Transportation charges | 24,048,795.64 | 27,580,054.90 |
| Comprehensive promotion costs | 445,968,323.13 | 787,961,795.81 |
| Service fees | 299,367,311.62 | 281,570,342.23 |
| Other | 69,865,244.23 | 43,822,480.46 |
| Total | 1,618,049,637.27 | 1,840,489,439.70 |
35. Administrative Expenses
| Item | Reporting Period | Same period of last year |
| Employee benefits | 253,062,668.21 | 180,945,738.54 |
| Office fees | 22,537,545.08 | 17,415,335.29 |
| Maintenance expenses | 26,618,712.24 | 17,708,807.57 |
| Depreciation | 36,411,144.00 | 30,873,944.56 |
| Amortization of intangible assets | 12,940,993.85 | 9,656,033.10 |
| Pollution discharge | 7,786,943.40 | 9,730,796.01 |
| Travel expenses | 3,183,652.98 | 1,375,252.69 |
| Water and electricity charges | 3,790,246.91 | 6,162,660.18 |
| Other | 29,355,766.48 | 28,176,889.19 |
| Total | 395,687,673.15 | 302,045,457.13 |
36. Development Costs
| Item | Reporting Period | Same period of last year |
| Labor cost | 11,741,116.01 | 8,702,736.52 |
| Direct input costs | 383,301.13 | 1,225,388.53 |
~111~
| Item | Reporting Period | Same period of last year |
| Depreciation expense | 1,658,315.10 | 1,633,752.38 |
| Other | 1,471,650.74 | 3,102,360.24 |
| Total | 15,254,382.98 | 14,664,237.67 |
37. Finance Costs
| Item | Reporting Period | Same period of last year |
| Interest expenses | 28,973,275.97 | 14,173,972.09 |
| Less: Interest income | 96,891,173.45 | 20,466,649.02 |
| Net interest expenses | -67,917,897.48 | -6,292,676.93 |
| Net foreign exchange losses | 13,095.11 | 1,577,281.36 |
| Bank charges and others | -303,665.57 | 412,770.27 |
| Total | -68,208,467.94 | -4,302,625.30 |
38. Other Income
| Item | Reporting Period | Same period of last year | Related to assets /related to income |
| I. Government grants recorded to other income | |||
| Of which: Government grant related to deferred income | 2,264,012.84 | 2,450,178.09 | Related to assets |
| Government grant recorded to current profit or loss | 12,710,340.82 | 28,333,740.59 | Related to income |
| Total | 14,974,353.66 | 30,783,918.68 | -- |
39. Investment Income
| Item | Reporting Period | Same period of last year |
| Investment income from long-term equity investments under equity method | -53,631.34 | -164,994.19 |
| Investment income from holding of trading financial assets | 0.00 | 0.00 |
| Other investment income | 18,539,603.54 | 77,512,041.72 |
| Total | 18,485,972.20 | 77,347,047.53 |
40. Gains on Changes in Fair Values
| Sources | 2020年1-6月 | 2019年1-6月 |
| Trading financial assets | ||
| Of which: Changes in fair value of designated as trading | -3,596,160.61 | 11,320,345.56 |
~112~
| Sources | 2020年1-6月 | 2019年1-6月 |
| financial assets | ||
| Total | -3,596,160.61 | 11,320,345.56 |
41. Credit Impairment Loss
| Item | Reporting Period | Same period of last year |
| Bad debt of notes receivable | -14,753.46 | 0.00 |
| Bad debt of accounts receivable | -414,861.96 | -75,535.11 |
| Bad debt of other receivables | 41,170.85 | -401,034.29 |
| Total | -388,444.57 | -476,569.40 |
42. Asset Impairment Loss
| Item | Reporting Period | Same period of last year |
| I. Inventory falling price loss | -5,693,185.77 | -5,945,248.67 |
| II. Impairment loss of fixed assets | 0.00 | 0.00 |
| Total | -5,693,185.77 | -5,945,248.67 |
43. Gains on Disposal of Assets
| Item | Reporting Period | Same period of last year |
| Gains/losses from disposal of fixed assets, construction in progress, productive biological assets and intangible assets not classified as held for sale | 77,867.25 | 119,488.56 |
| Of which: Fixed assets | 77,867.25 | 119,488.56 |
| Total | 77,867.25 | 119,488.56 |
44. Non-operating Income
(1) Details of non-operating income
| Item | Reporting Period | Same period of last year | Recognized in current non-recurring profit or loss |
| Gains from damage or scrapping of non-current asset | 588.35 | 146,982.76 | 588.35 |
| Government grants irrelevant to daily operation activities | 6,377.80 | 20,000.00 | 6,377.80 |
| Income from penalties and compensation | 14,641,373.42 | 9,154,446.13 | 14,641,373.42 |
| Sales of wastes | 3,144,859.28 | 1,527,143.43 | 3,144,859.28 |
| Other | 2,781,962.69 | 302,191.21 | 2,781,962.69 |
~113~
| Item | Reporting Period | Same period of last year | Recognized in current non-recurring profit or loss |
| Total | 20,575,161.54 | 11,150,763.53 | 20,575,161.54 |
(2) Government grants irrelevant to daily operation activities
| Item | Reporting Period | Same period of last year | Related to assets/related to income |
| Other rewards | 6,377.80 | 20,000.00 | Related to income |
| Total | 6,377.80 | 20,000.00 | -- |
45. Non-operating Expenses
| Item | Reporting Period | Same period of last year | Recognized in current non-recurring profit or loss |
| Loss from damage or scrapping of non-current assets | 2,296,765.56 | 576,926.25 | 2,296,765.56 |
| Other | 21,976,890.93 | 1,160,684.82 | 21,976,890.93 |
| Total | 24,273,656.49 | 1,737,611.07 | 24,273,656.49 |
46. Income Tax Expenses
(1) Details of income tax expenses
| Item | Reporting Period | Same period of last year |
| Current tax expenses | 405,227,638.33 | 479,158,161.69 |
| Deferred tax expenses | -34,592,116.09 | -60,012,757.38 |
| Total | 370,635,522.24 | 419,145,404.31 |
(2) Reconciliation of accounting profit and income tax expenses
| Item | Reporting Period |
| Profit before taxation | 1,377,077,049.17 |
| Current income tax expense accounted at applicable tax rate of the Company as the parent | 344,269,262.29 |
| Influence of applying different tax rates by subsidiaries | -2,506,979.36 |
| Influence of income tax before adjustment | 20,003,127.36 |
| Influence of non-taxable income | 0.00 |
| Influence of non-deductable costs, expenses and losses | 11,060,996.69 |
| Influence of deductable losses of unrecognized deferred income tax at the beginning of the Reporting Period | 0.00 |
~114~
| Influence of deductable temporary difference or deductable losses of unrecognized deferred income tax in the Reporting Period | 42,833.65 |
| Influence of development expense deduction | -2,233,718.39 |
| Tax rate adjustment to the beginning balance of deferred income tax assets/liabilities | 0.00 |
| Income tax credits | 0.00 |
| Total | 370,635,522.24 |
47. Notes to the Statement of Cash Flows
(1) Other cash received relating to operating activities
| Item | Reporting Period | Same period of last year |
| Security deposit, guarantee and warranty | 118,873,747.83 | 103,959,881.28 |
| Government grants | 11,109,436.15 | 11,786,600.00 |
| Interest income | 88,199,155.94 | 20,466,649.02 |
| Release of restricted monetary assets | 1,085,000,000.00 | 100,200,000.00 |
| Other | 20,568,195.39 | 40,318,774.38 |
| Total | 1,323,750,535.31 | 276,731,904.68 |
(2) Other cash payments relating to operating activities
| Item | Reporting Period | Same period of last year |
| Cash paid in sales and distribution expenses and general and administrative expense | 1,031,070,499.98 | 657,188,029.24 |
| Time deposits or deposits pledged for the issuance of notes payable | 30,000,000.00 | 13,960,226.78 |
| Structured time deposits that cannot be withdrawn in advance | 400,000,000.00 | 0.00 |
| Other | 23,665,514.20 | 25,350,534.61 |
| Total | 1,484,736,014.18 | 696,498,790.63 |
48. Supplementary Information to the Statement of Cash Flows
(1) Supplementary information to the statement of cash flows
| Supplementary information | Reporting Period | Same period of last year |
| 1. Reconciliation of net profit to net cash flows generated from operating activities: | ||
| Net profit | 1,006,441,526.93 | 1,274,948,723.71 |
| Add: Provisions for impairment of assets | 6,081,630.34 | 6,421,818.07 |
~115~
| Supplementary information | Reporting Period | Same period of last year |
| Depreciation of fixed assets, investment properties, oil and gas assets and productive biological assets | 107,774,202.21 | 102,235,366.57 |
| Amortization of intangible assets | 17,144,478.37 | 12,195,535.21 |
| Amortization of long-term deferred expenses | 12,662,778.88 | 13,486,720.57 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (gains: negative) | -77,867.25 | -119,488.56 |
| Losses on scrapping of fixed assets (gains: negative) | 2,296,177.21 | 429,943.49 |
| Losses on changes in fair value (gains: negative) | 3,596,160.61 | -11,320,345.56 |
| Finance costs (gains: negative) | 290,708.33 | 14,173,972.09 |
| Investment losses (gains: negative) | -18,485,972.20 | -77,347,047.53 |
| Decreases in deferred tax assets (increase: negative) | -31,454,590.26 | -63,337,537.53 |
| Increases in deferred tax liabilities (decrease: negative) | -3,137,525.83 | 3,324,780.16 |
| Decreases in inventories (increase: negative) | 88,585,890.97 | -14,040,094.66 |
| Decreases in operating receivables (increase: negative) | -350,818,607.86 | 146,484,134.95 |
| Increases in operating payables (decrease: negative) | 413,475,097.35 | -463,552,554.06 |
| Amortization of deferred income | 2,264,012.84 | -2,450,178.09 |
| Other*1 | 1,085,000,000.00 | 100,200,000.00 |
| Net cash flows from operating activities | 2,341,638,100.64 | 1,041,733,748.83 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | ||
| Conversion of debt into capital | ||
| Current portion of convertible corporate bonds | ||
| Fixed assets acquired under finance leases | ||
| 3. Net increase/decrease of cash and cash equivalents: | ||
| Ending balance of cash | 5,398,187,475.71 | 2,395,374,286.79 |
| Less: Beginning balance of cash | 2,944,749,918.09 | 835,560,865.12 |
| Add: Ending balance of cash equivalents | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 2,453,437,557.62 | 1,559,813,421.67 |
*1: Refer to impact of restricted funds on net cash flow generated from operating activities of the reporting period.
(2) The components of cash and cash equivalents
~116~
| Item | Reporting Period | Same period of last year |
| I. Cash | 5,398,187,475.71 | 2,395,374,286.79 |
| Including: Cash on hand | 254,747.79 | 374,122.81 |
| Bank deposit on demand | 5,397,660,747.68 | 2,394,869,696.55 |
| Other monetary assets on demand | 271,980.24 | 130,467.43 |
| II. Cash equivalents | 0.00 | 0.00 |
| Of which: Bond investments maturing within three months | 0.00 | 0.00 |
| III. Ending balance of cash and cash equivalents | 5,398,187,475.71 | 2,395,374,286.79 |
| Of which: cash and cash equivalents with restriction to use in the subsidies of the Company as the parent or Group | 0.00 | 0.00 |
49. Assets with Restricted Ownership or Right of Use
| Item | Carrying value on 30 June 2020 | Reason |
| Bank deposits | 2,020,000,000.00 | Structured deposit and fixed deposit which cannot be withdrawn in advance as well as time deposits pledged for issuance of bank acceptance bills |
| Notes receivable | 382,801,475.30 | Pledged for issuance of bank acceptance bills |
| Total | 2,402,801,475.30 | -- |
50. Government Grants
(1) Government grants related to assets
| Item | Amount | Item presented in the statement of financial position | Recognized in current profit or loss or as deduct of related cost | Presented item recorded to current profit or loss or as deduct of related cost | |
| Reporting Period | Same period of last year | ||||
| Technical transformation of brewing production system | 161,458.49 | Deferred income | 31,249.98 | 31,249.98 | Other income |
| Equipment subsidy | 1,474,107.61 | Deferred income | 76,329.89 | 110,250.00 | Other income |
| Intelligent solid brewing technology innovation project | 104,166.51 | Deferred income | 15,625.02 | 15,625.02 | Other income |
| Guiding funds for the development of service industry in Anhui | 648,780.68 | Deferred | 146,341.44 | 146,341.44 | Other income |
~117~
| Province | income | ||||
| Subsidy for the construction of independent innovation capacity of Anhui Province | 1,582,847.50 | Deferred income | 365,272.50 | 365,272.50 | Other income |
| Energy saving transformation project of coal-fired industrial boiler and glass furnace | 0.00 | Deferred income | 0.00 | 12,750.00 | Other income |
| Project fund of Bozhou logistics center | 0.00 | Deferred income | 0.00 | 30,000.00 | Other income |
| Equipment subsidy | 965,220.92 | Deferred income | 102,807.24 | 101,399.82 | Other income |
| Financial subsidy for technological transformation | 0.00 | Deferred income | 0.00 | 267,110.76 | Other income |
| Special funds for enterprise development | 7,500.00 | Deferred income | 15,000.00 | 15,000.00 | Other income |
| Internet of things traceability system project | 1,299,375.00 | Deferred income | 556,875.00 | 556,875.00 | Other income |
| Electric motor and boiler energy saving technology transformation project | 206,250.26 | Deferred income | 68,749.98 | 68,749.98 | Other income |
| Whole process online monitoring of hook and store automation and product quality | 218,750.00 | Deferred income | 46,875.00 | 46,875.00 | Other income |
| Gujing Zhangji liquor warehouse optimization and transformation project | 811,458.45 | Deferred income | 23,749.98 | 23,749.98 | Other income |
| Subsidy for food safety improvement project | 620,689.75 | Deferred income | 68,965.50 | 68,965.50 | Other income |
| Comprehensive subsidy fund for air pollution prevention and control | 2,213,583.27 | Deferred income | 131,500.02 | 131,500.02 | Other income |
| Funds for strategic emerging industry agglomeration development base | 2,686,720.00 | Deferred income | 111,360.00 | 111,360.00 | Other income |
| Refund for land payment | 22,287,724.84 | Deferred income | 275,103.09 | 275,103.09 | Other income |
~118~
| Suizhou new plant construction subsidy | 35,338,000.00 | Deferred income | 0.00 | 0.00 | Other income | |
| Funds for research projects of koji-making technology | 1,000,000.00 | Deferred income | 0.00 | 0.00 | Other income | |
| Subsidy for key technical cooperation project on the authenticity of important food isotopes | 600,000.00 | Deferred income | 0.00 | 0.00 | Other income | |
| Specific funds for side management of power demand | 444,000.00 | Deferred income | 72,000.00 | 72,000.00 | Other income | |
| Project subsidy of coal to gas in 1# | 1,713,791.80 | Deferred income | 156,208.20 | 0.00 | Other income | |
| Total | 74,384,425.08 | -- | 2,264,012.84 | -- | ||
(2) Government grants related to income
| Item | Amount | Item presented in the statement of financial position | Recognized in current profit or loss or as deduct of related cost | Presented item recorded to current profit or loss or as deduct of related cost | |
| Reporting Period | Same period of last year | ||||
| Tax refund | 2,937,700.91 | Other income | 2,937,700.91 | 15,816,253.89 | Other income |
| 2019 subsidy fund and reward for being manufacture province and development policy of private economy | 600,000.00 | Other income | 600,000.00 | 0.00 | Other income |
| Subsidy from Social Security Bureau | 910,749.30 | Other income | 910,749.30 | 0.00 | Other income |
| Agriculture and Rural Areas award of Xianning | 50,000.00 | Other income | 50,000.00 | 0.00 | Other income |
| Unemployment insurance premium refund | 2,314,709.05 | Other income | 2,314,709.05 | 2,000.00 | Other income |
| Provincial Skilled Master Award | 250,000.00 | Other income | 250,000.00 | 0.00 | Other income |
| Tourism entrepreneurship marketing subsidy | 100,000.00 | Other income | 100,000.00 | 0.00 | Other income |
| Fund of Wuhan Hanyang Industrial and Commercial | 50,000.00 | Other income | 50,000.00 | 0.00 | Other income |
~119~
| Association | |||||
| Financial support of Wuhan Hanyang Treasury Collection and Payment Center | 2,364,000.00 | Other income | 2,364,000.00 | 0.00 | Other income |
| Subsidies for statisticians of the Management Committee of Xianning Hi-tech Industrial Development Zone | 3,600.00 | Other income | 3,600.00 | 0.00 | Other income |
| Tax breaks for veterans | 90,000.00 | Other income | 90,000.00 | 0.00 | Other income |
| Local financial funds of Xianning High-tech Industrial Development Zone | 350,000.00 | Other income | 350,000.00 | 0.00 | Other income |
| Fund of Xianning Economy and information Bureau | 100,000.00 | Other income | 100,000.00 | 0.00 | Other income |
| Subsidies for the municipal Innovation Platform of Xianning Science and Technology Bureau in 2019 | 50,000.00 | Other income | 50,000.00 | 0.00 | Other income |
| Additional deduction of VAT | 2,539,581.56 | Other income | 2,539,581.56 | 864,686.70 | Other income |
| 2018 project funds for being manufacture province | 0.00 | Other income | 0.00 | 9,180,000.00 | Other income |
| The State intellectual property rights demonstration enterprises award | 0.00 | Other income | 0.00 | 1,200,000.00 | Other income |
| Grant from Xianning Science and Technology Bureau | 0.00 | Other income | 0.00 | 50,000.00 | Other income |
| Subsidy for Wuhan Science and Technology Bureau commissioner workstation | 0.00 | Other income | 0.00 | 200,000.00 | Other income |
| Subsidy for Xianning High-tech Zone industrial enterprise technology project | 0.00 | Other income | 0.00 | 200,000.00 | Other income |
| Bozhou Science and | 0.00 | Other income | 0.00 | 50,000.00 | Other income |
~120~
| Technology Bureau award | |||||
| Robot project subsidy of Commission of Economy and Information Technology | 0.00 | Other income | 0.00 | 300,000.00 | Other income |
| Other | 0.00 | Other income | 0.00 | 470,800.00 | Other income |
| Other not related to daily operation | 0.00 | Non-operating income | 0.00 | 20,000.00 | Non-operating income |
| Total | 12,710,340.82 | -- | 12,710,340.82 | 28,353,740.59 | -- |
VI. Changes of Consolidation ScopeThere was no change in the Reporting Period compared with the prior period.VII. Equity in Other Entities
1. Equity in Subsidiaries
(1) Subsidiaries
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Bozhou Gujing Sales Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Commercial trade | 100.00 | Investment establishment | |
| Anhui Longrui Glass Co., Ltd | Anhui Bozhou | Anhui Bozhou | Manufacture | 100.00 | Investment establishment | |
| BozhouGujing Waste Reclamation Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Waste recycle | 100.00 | Investment establishment | |
| Anhui Jinyunlai Culture & Media Co., Ltd. | Anhui Hefei | Anhui Hefei | Advertisement marketing | 100.00 | Investment establishment | |
| Anhui Ruisiweier Technology Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Technical research | 100.00 | Investment establishment | |
| Anhui Baiweilu Liquor Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Manufacture | 100.00 | Investment establishment | |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Shanghai | Shanghai | Hotel management | 100.00 | Business combination under the same control | |
| Bozhou Gujing Hotel Co., Ltd | Anhui Bozhou | Anhui Bozhou | Hotel operating | 100.00 | Business | |
~121~
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| combination under the same control | ||||||
| Anhui Yuanqing Environmental Protection Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Sewage treatment | 100.00 | Investment establishment | |
| Anhui Gujing Yunshang E-commerce Co., Ltd. | Anhui Hefei | Anhui Hefei | Electronic commerce | 100.00 | Investment establishment | |
| Anhui Zhenrui Construction Engineering Co., Ltd | Anhui Bozhou | Anhui Bozhou | Construction | 100.00 | Investment establishment | |
| Anhui RunAnXinKe Testing Technology Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Food testing | 100.00 | Investment establishment | |
| Yellow Crane Tower Distillery Co., Ltd. | Hubei Wuhan | Hubei Wuhan | Manufacture | 51.00 | Business combination not under the same control | |
| Yellow Crane Tower Distillery (Xianning) Co., Ltd. | Hubei Xianning | Hubei Xianning | Manufacture | 51.00 | Business combination not under the same control | |
| Yellow Crane Tower Distillery (Suizhou) Co., Ltd. | Hubei Suizhou | Hubei Suizhou | Manufacture | 51.00 | Business combination not under the same control | |
| Hubei Junhe Advertising Co., Ltd. | Hubei Wuhan | Hubei Wuhan | Advertisement marketing | 51.00 | Business combination not under the same control | |
| Hubei Yellow Crane Tower Beverage Co., Ltd. | Hubei Xianning | Hubei Xianning | Manufacture | 51.00 | Investment establishment | |
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| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Wuhan Yashibo Technology Co., Ltd. | Hubei Wuhan | Hubei Wuhan | Technology development | 51.00 | Investment establishment | |
| Wuhan Tianlong Jindi Technology Development Co., Ltd | Hubei Wuhan | Hubei Wuhan | Commercial trade | 51.00 | Business combination not under the same control | |
| Xianning Junhe Sales Co., Ltd | Hubei Xianning | Hubei Xianning | Commercial trade | 51.00 | Business combination not under the same control | |
| Wuhan Junya Sales Co., Ltd | Hubei Wuhan | Hubei Wuhan | Commercial trade | 51.00 | Investment establishment | |
| Suizhou Junhe Commercial Co., Ltd. | Hubei Suizhou | Hubei Suizhou | Commercial trade | 51.00 | Investment establishment | |
(2) Significant non-wholly owned subsidiaries
| Name | Shareholding proportion of non-controlling interests | The profit or loss attributable to the non-controlling interests | Declaring dividends distributed to non-controlling interests | Balance of non-controlling interests at the period-end |
| Yellow Crane Tower Distillery Co., Ltd. | 49.00 | -18,495,077.43 | 0.00 | 469,547,869.87 |
(3) Main financial information of significant non-wholly owned subsidiaries
| Name | 30 June 2020 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Yellow Crane Tower Distillery Co., Ltd. | 686,235,476.83 | 777,112,835.05 | 1,463,348,311.88 | 373,556,283.73 | 131,531,069.23 | 505,087,352.96 |
(Continued)
| Name | 31 December 2019 |
~123~
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Yellow Crane Tower Distillery Co., Ltd. | 755,439,438.85 | 742,229,246.05 | 1,497,668,684.90 | 369,369,757.38 | 132,292,912.62 | 501,662,670.00 |
(Continued)
| Name | Reporting Period | |||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Yellow Crane Tower Distillery Co., Ltd. | 181,381,939.34 | -37,745,055.98 | -37,745,055.98 | -107,245,907.79 |
(Continued)
| Name | Same period of last year | |||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Yellow Crane Tower Distillery Co., Ltd. | 457,947,025.03 | 54,351,856.52 | 54,351,856.52 | 39,866,055.42 |
VIII. The Risk Related to Financial InstrumentsRisks related to the financial instruments of the Company arise from the recognition of various financial assets andfinancial liabilities during its operation, including credit risk, liquidity risk and market risk.Management of the Company is responsible for determining risk management objectives and policies related tofinancial instruments. Operational management is responsible for the daily risk management through functionaldepartments. Internal audit department is responsible for the daily supervision of implementation of the riskmanagement policies and procedures, and report their findings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies to minimize the riskswithout unduly affecting the competitiveness and resilience of the Company.
1. Credit Risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because the other party of thefinancial instrument fails to fulfill its obligation. The credit risk of the Company is related to cash and equivalent,notes receivable, accounts receivables, other receivables and long-term receivables. Credit risk of these financialassets is derived from the counterparty’s breach of contract. The maximum risk exposure is equal to the carryingamount of these financial instruments.Cash and cash equivalent of the Company has lower credit risk, as they are mainly deposited in such financial
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institutions as commercial bank, of which the Company thinks with higher reputation and financial position.For notes receivable, other receivables and long-term receivables, the Company establishes related policies tocontrol their credit risk exposure. The Company assesses credit capability of its customers and determines theircredit terms based on their financial position, possibility of the guarantee from third party, credit record and otherfactors. The Company monitors its customers’ credit record periodically, and for those customers with poor creditrecord, the Company will take measures such as written call, shortening or cancelling their credit terms so as toensure the overall credit risk of the Company is controllable.
2. Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by delivering cash or otherfinancial assets. The Company is responsible for the capital management of all of its subsidiaries, includingshort-term investment of cash surplus and dealing with forecasted cash demand by raising loans. The Company’spolicy is to monitor the demand for short-term and long-term floating capital and whether the requirement of loancontracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.
3. Market Risk
(1) Foreign currency risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The core business of theCompany is on the mainland of China and trading with RMB. Foreign exchange risk is minimal.
(2) Interest rate risk
The operating fund of the Company is sufficient, and there is no loan in recent years so that the risk of interest isvery small for the Company.
(3) Other price risk
The trading financial assets of the Company are measured by fair value. Therefore, the Company bears the risk ofthe change of security market. To decrease the risk, the management decided that the Company held a combinationof several equities and securities.IX. The Disclosure of Fair ValueThe inputs used in the fair value measurement in its entirety are to be classified in the level of the hierarchy inwhich the lowest level input that is significant to the measurement is classified.Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 2: Inputs for the assets or liabilities (other than those included in Level 1) that are directly or indirectlyobservable.Level 3: Inputs are unobservable inputs for the assets or liabilities
1. Assets and liabilities measured at fair value on 30 June 2020
| Item | Fair value on 30 June 2020 |
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| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | ||||
| (I) Trading financial assets | ||||
| 1. Financial assets assigned measured by fair value and the changes be included in the current gains and losses | 230,264,936.41 | 230,264,936.41 | ||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | 230,264,936.41 | 230,264,936.41 | ||
| (3) Derivative financial assets | ||||
| Total assets consistently measured at fair value | 230,264,936.41 | 230,264,936.41 |
The fair value of financial instruments traded in an active market is based on quoted market prices at the reportingdate. The fair value of financial instruments not traded in an active market is determined by using valuationtechniques. Specific valuation techniques used to value the above financial instruments include discounted cashflow and market approach to comparable company model. Inputs in the valuation technique include risk-freeinterest rates, benchmark interest rates, exchange rates, credit spreads, liquidity premiums, discount for lack ofliquidity.
2. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters forConsistent and Inconsistent Fair Value Measurement Items at Level 2The items of fair value measurement in Level 2 of the Company are mainly about bank financial products and fundinvestments. For bank financial products, the Company shall calculate its rate of return based on the observablemarket rate of return on the financial products so as to determine the gains or losses arising from the changes in fairvalue, and then finally recognize the value of trading financial assets. For fund investment, the Company shalldetermine the gains or losses arising from changes in fair value and the value of trading financial assets accordingto the valuation table of securities investment fund provided by the asset management company.X. Related Party and Related-party TransactionsThe recognition criteria of related party: related party is that one party controls or jointly controls the other party orexerts significant influence on the other party, and two or more parties are controlled by the same controller, jointlycontrolled or exerted significant influence.
1. General Information of the Parent Company
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| Name | Registration place | Nature of business | Registered capital | Proportion of share held by the Company as the parent against the Company (%) | Proportion of voting rights owned by the Company as the parent against the Company (%) |
| Anhui Gujing Group Co., Ltd. | Anhui Bozhou | Beverages, construction materials, manufacturing plastic production | 1,000,000,000.00 | 53.89 | 53.89 |
① The ultimate controller of the Company: The ultimate controller is State-owned Assets Supervision andAdministration Commission of Bozhou, Anhui.
2. General Information of Subsidiaries
Refer to Note VII-1. Equity in subsidiaries for details.
3. Other Related Parties of the Company
| Name | Relationship with the Company |
| Anhui Ruifuxiang Food Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing Catering Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Haochidian Catering Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Shanghai Beihai Hotel Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Hotel Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Orient Ruijing Enterprise Investment Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Hengxin Pawn Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Ruineng Thermal Power Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Hefei Gujing Holiday Hotel Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Ruifyxiang High Protein Feed Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Hotel Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruixin Pawn Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Zhongxin Finance Leasing Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Huixin Finance Investment Group Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Hefei Longxin Financial Management Consulting Co., Ltd | An affiliate of the actual controller and controlling shareholder |
~127~
| Name | Relationship with the Company |
| Bozhou Anxin Micro Finance Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Youxin Financing Guarantee Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lixin E-commerce Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Huishenglou Catering Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Gujing Junlai Hotel Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing International Tourism Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Health Industry Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lejiu Home Tourism Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Shenglong Commercial Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
4. Related Party Transactions
(1) Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
| Related party | Content | Reporting Period | Same period of last year |
| Anhui Gujing International Tourism Co., Ltd. | Labor service | 0.00 | 786,329.00 |
| Anhui Gujing International Development Co., Ltd. | Labor service | 103,773.58 | 0.00 |
| Anhui Gujing Group Co., Ltd. | Labor service | 0.00 | 63,716.81 |
| Anhui Gujing Group Co., Ltd. | Purchase of materials | 56,952.00 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Purchase of materials | 191,893.81 | 19,433.63 |
| Anhui Gujing Hotel Development Co., Ltd. | Catering and accommodation service | 121,508.00 | 16,766.00 |
| Anhui Gujing Hotel Development Co., Ltd. | Labor service | 3,413.21 | 31.51 |
| Anhui Haochidian Catering Co., Ltd. | Labor service | 991,145.50 | 0.00 |
| Anhui Haochidian Catering Co., Ltd. | Catering and accommodation service | 884,017.40 | 34,440.00 |
| Anhui Haochidian Catering Co., Ltd. | Purchase of materials | 8,757,860.85 | 245,594.50 |
| Anhui Huixin Finance Investment Group Co., Ltd | Labor service | 0.00 | 55,722.40 |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | Labor service | 0.00 | 25,821.13 |
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| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | Afforestation fees | 0.00 | 404,865.62 |
| Anhui Ruijing Catering Management Co., Ltd. | Catering and accommodation service | 0.00 | 33,725.00 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Purchase of materials | 525,535.82 | 3,076,852.09 |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd | Afforestation fees | 0.00 | 31,849.06 |
| Beijing Anhui Building | Catering and accommodation service | 0.00 | 1,285.00 |
| Bozhou Hotel Co., Ltd. | Catering and accommodation service | 1,439,005.95 | 3,257,170.88 |
| Anhui Gujing Huishenglou Catering Co., Ltd. | Catering and accommodation service | 416,771.00 | 2,695,540.00 |
| Bozhou Gujing Junlai Hotel Co., Ltd | Catering and accommodation service | 0.00 | 234,710.54 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Purchase of materials and labor service | 201,143.63 | 0.00 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Purchase of materials and labor service | 99,546.43 | 0.00 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Purchase of materials | 149,618.90 | 387,017.20 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Catering and accommodation service | 63,570.78 | 14,865.26 |
| Total | -- | 14,005,756.86 | 11,385,735.63 |
Sales of goods and rendering of services:
| Related party | Content | Reporting Period | Same period of last year |
| Anhui Gujing International Tourism Co., Ltd. | Catering and accommodation service | 0.00 | 206.00 |
| Anhui Gujing International Tourism Co., Ltd. | Sales of small materials | 0.00 | 404.78 |
| Anhui Gujing International Tourism Co., Ltd. | Sales of liquor | 0.00 | 389.36 |
| Anhui Gujing Group Co., Ltd. | Catering and accommodation service | 28,125.00 | 87,090.19 |
| Anhui Gujing Group Co., Ltd. | Sales of small materials | 35,549.10 | 63,778.94 |
| Anhui Gujing Health Industry Co., Ltd. | Catering and accommodation service | 1,250.00 | 29,059.00 |
| Anhui Gujing Health Industry Co., Ltd. | Labor service | 232,430.19 | 501,596.23 |
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| Anhui Gujing Health Industry Co., Ltd. | Sales of liquor | 5,738,435.24 | 5,473,459.08 |
| Anhui Gujing Health Industry Co., Ltd. | Sales of small materials | 1,314.60 | 3,136.93 |
| Anhui Gujing Hotel Development Co., Ltd. | Sales of liquor | 94,938.00 | 45,325.31 |
| Anhui Haochidian Catering Co., Ltd. | Sales of liquor | 48,584.08 | 0.00 |
| Anhui Hengxin Pawn Co., Ltd. | Sales of liquor | 6,244.25 | 0.00 |
| Anhui Huixin Finance Investment Group Co., Ltd | Sales of liquor | 21,225.67 | 452,567.02 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of hydropower | 51,180.85 | 179,311.29 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Labor service | 7,620.00 | 0.00 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of small materials | 0.00 | 5,849.50 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of liquor | 4,539.82 | 3,114.91 |
| Anhui Lixin E-commerce Co., Ltd. | Sales of liquor | 7,461.93 | 63,756.26 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Catering and accommodation service | 600.00 | 22,829.26 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Sales of liquor | 251,495.58 | 2,979,148.41 |
| Anhui Ruixin Pawn Co. Ltd. | Sales of liquor | 3,512.39 | 2,731.85 |
| Anhui Shenglong Commercial Co., Ltd. | Catering and accommodation service | 3,800.00 | 5,909.00 |
| Anhui Shenglong Commercial Co., Ltd. | Sales of liquor | 1,450,295.22 | 6,206.90 |
| Anhui Youxin Financing Guarantee Co., Ltd. | Sales of liquor | 3,122.12 | 2,203.45 |
| Anhui Zhongxin Finance Leasing Co. Ltd. | Sales of liquor | 8,115.92 | 3,956.90 |
| Bozhou Anxin Micro Finance Co., Ltd. | Sales of liquor | 8,506.19 | 3,724.14 |
| Bozhou Hotel Co., Ltd. | Sales of liquor | 50,575.23 | 17,379.31 |
| Anhui Gujing Huishenglou Catering Co., Ltd. | Sales of liquor | 68,654.87 | 17,767.24 |
| Bozhou Gujing Junlai Hotel Co., Ltd | Sales of liquor | 0.00 | 4,655.17 |
| Bozhou Ruifyxiang High Protein Feed Co. Ltd. | Sales of liquor | 0.00 | 11,405.17 |
| Bozhou Ruineng Thermal Power Co., Ltd. | Sales of liquor | 74,150.45 | 190,103.02 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Sales of small materials | 2,631.13 | 841.63 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Catering and accommodation service | 420.00 | 2,735.00 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Labor service | 2,889.91 | 15,665.68 |
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| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Sales of liquor | 88,799.29 | 902,976.02 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Sales of hydropower | 0.00 | 36,105.11 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Catering and accommodation service | 0.00 | 2,937.76 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Sales of liquor | 14,336.28 | 0.00 |
| Shanghai Beihai Hotel Co., Ltd | Sales of liquor | 8,601.77 | 7,964.60 |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | Sales of small materials | 0.00 | 3,724.33 |
| Anhui Gujing International Development Co., Ltd. | Sales of small materials | 5,437.89 | 0.00 |
| Anhui Gujing International Development Co., Ltd. | Catering and accommodation service | 2,820.00 | 0.00 |
| Anhui Gujing International Development Co., Ltd. | Sales of liquor | 1,700,563.88 | 0.00 |
| Total | -- | 10,028,226.85 | 11,150,014.75 |
(2) Related-party leases
The Company as lessor:
| Name of lessee | Category of leased assets | The lease income confirmed in the Reporting Period | The lease income confirmed in the same period of last year |
| Anhui Gujing Hotel Development Co., Ltd. | Houses and buildings | 417,153.83 | 689,124.81 |
| Total | -- | 417,153.83 | 689,124.81 |
The Company as lessee:
| Name of lessor | Category of leased assets | The lease fee confirmed in the Reporting Period | The lease fee confirmed in the same period of last year |
| Anhui Gujing Group Co., Ltd. | Houses and buildings | 749,786.08 | 1,095,238.10 |
| Total | -- | 749,786.08 | 1,095,238.10 |
5. Receivables and Payables with Related Parties
(1) Payables
| Item | Related party | 30 June 2020 | 31 December 2019 |
| Accounts payable | Anhui Ruijing Business Travel (Group) Co., Ltd. | 147,120.00 | 147,120.00 |
| Accounts payable | Anhui Haochidian Catering Co., Ltd. | 280,520.87 | 0.00 |
| Advances from customers | Anhui Ruijing Business Travel (Group) Co., Ltd. | 788,175.25 | 913,047.40 |
~131~
| Item | Related party | 30 June 2020 | 31 December 2019 |
| Advances from customers | Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | 0.00 | 490,292.90 |
| Advances from customers | Anhui Gujing Health Industry Co., Ltd. | 704,379.00 | 6,625,624.40 |
| Advances from customers | Bozhou Ruineng Thermal Power Co., Ltd. | 0.00 | 2,883.84 |
| Advances from customers | Anhui Gujing International Development Co., Ltd. | 128,004.36 | 1,038,479.00 |
| Advances from customers | Anhui Shenglong Commercial Co., Ltd. | 0.00 | 144,580.50 |
| Other receivables | Anhui Gujing Hotel Development Co., Ltd. | 100,000.00 | 50,000.00 |
| Other receivables | Anhui Ruijing Business Travel (Group) Co., Ltd. | 123,500.00 | 85,000.00 |
| Other receivables | Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | 0.00 | 50,000.00 |
| Other receivables | Anhui Gujing International Development Co., Ltd. | 0.00 | 16,200.00 |
| Other receivables | Anhui Shenglong Commercial Co., Ltd. | 0.00 | 4,300.00 |
XI. Commitments and Contingency
1. Significant Commitments
As of 30 June 2020, there was no significant commitment for the Company to disclose.
2. Contingency
As of 30 June 2020, there was no contingency for the Company to disclose.XII. Events after Balance Sheet DateAs of 30 June 2020, there was no event after balance sheet date to disclose.XIII. Other Significant EventsSegment InformationThe Company did not determine the operating segment in accordance with the internal organizational structure,management requirements, and internal reporting system, so there was no need to disclose segment informationreport based on the operating segments.XIV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Disclosure buy aging
| Aging | 30 June 2020 | 31 December 2019 |
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| Aging | 30 June 2020 | 31 December 2019 |
| Within one year | 1,591,313.17 | 218,558,555.07 |
| Of which:1-6 months | 1,591,313.17 | 218,558,555.07 |
| 7-12 months | 0.00 | 0.00 |
| 1-2 years | 0.00 | 0.00 |
| 2-3 years | 0.00 | 0.00 |
| Over 3 years | 0.00 | 141,121.87 |
| Subtotal | 1,591,313.17 | 218,699,676.94 |
| Less: Bad debt provision | 0.00 | 141,121.87 |
| Total | 1,591,313.17 | 218,558,555.07 |
(2) Disclosure by withdrawal method of bad debt provision
| Item | 30 June 2020 | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Bad debt provision withdrawn separately | |||||
| Bad debt provision withdrawn by group | 1,591,313.17 | 100.00 | 0.00 | 0.00 | 1,591,313.17 |
| Of which: Group 1 | 1,591,313.17 | 100.00 | 0.00 | 0.00 | 1,591,313.17 |
| Group 2 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 1,591,313.17 | 100.00 | 0.00 | 0.00 | 1,591,313.17 |
(Continued)
| Item | 31 December 2019 | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Bad debt provision withdrawn separately | |||||
| Bad debt provision withdrawn by group | 218,699,676.94 | 100.00 | 141,121.87 | 0.06 | 218,558,555.07 |
~133~
| Item | 31 December 2019 | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Bad debt provision withdrawn separately | |||||
| Of which: Group 1 | 218,558,555.07 | 99.94 | 0.00 | 0.00 | 218,558,555.07 |
| Group 2 | 141,121.87 | 0.06 | 141,121.87 | 100.00 | 0.00 |
| Total | 218,699,676.94 | 100.00 | 141,121.87 | 0.06 | 218,558,555.07 |
On 30 June 2020, accounts receivable with bad debt provision withdrawn by group 1
| Aging | 30 June 2020 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Related parties within the scope of consolidation | 1,591,313.17 | 0.00 | 0.00 |
| Total | 1,591,313.17 | 0.00 | 0.00 |
On 30 June 2020, there was no account receivable with bad debt provision withdrawn by group 2.On 31 December 2019, accounts receivable with bad debt provision withdrawn by group 1
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Related parties within the scope of consolidation | 218,558,555.07 | 0.00 | 0.00 |
| Total | 218,558,555.07 | 0.00 | 0.00 |
On 31 December 2019, accounts receivable with bad debt provision withdrawn by group 2
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | |||
| Of which:1-6 months | |||
| 7-12 months | |||
| 1-2 years | |||
| 2-3 years | |||
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| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Over 3 years | 141,121.87 | 141,121.87 | 100.00 |
| Total | 141,121.87 | 141,121.87 | 100.00 |
Refer to Note III-10. Financial Instrument for recognition criteria and notes of withdrawal of bad debt provision bygroup.
(3) Changes of bad debt provision during the Reporting Period
| Investees | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Bad debt provision withdrawn separately | |||||
| Bad debt provision withdrawn by group | 141,121.87 | 141,121.87 | |||
| Total | 141,121.87 | 141,121.87 | |||
(4) On 30 June 2020, top five ending balances by entity
| Entity name | Balance on 30 June 2020 | Proportion of the balance to the total accounts receivable (%) | Bad debt provision |
| No. 1 | 728,777.34 | 45.80 | |
| No. 2 | 430,560.24 | 27.06 | |
| No. 3 | 328,613.03 | 20.65 | |
| No. 4 | 75,977.37 | 4.77 | |
| No. 5 | 27,385.19 | 1.72 | |
| Total | 1,591,313.17 | 100.00 |
2. Other Receivables
(1) Listed by category
| Item | 30 June 2020 | 31 December 2019 |
| Interest receivable | 301,888.89 | 301,888.89 |
| Dividends receivable | 0.00 | 0.00 |
| Other receivables | 121,000,189.69 | 124,917,324.95 |
~135~
| Item | 30 June 2020 | 31 December 2019 |
| Total | 121,302,078.58 | 125,219,213.84 |
(2) Other receivables
①Disclosure by aging
| Aging | 30 June 2020 | 31 December 2019 |
| Within one year | 120,530,314.73 | 64,773,476.22 |
| Of which:1-6 months | 39,092,200.18 | 50,595,906.92 |
| 7-12 months | 81,438,114.55 | 14,177,569.30 |
| 1-2 years | 355,158.20 | 59,983,186.13 |
| 2-3 years | 392,570.00 | 525,794.00 |
| Over 3 years | 41,228,262.35 | 41,540,607.44 |
| Subtotal | 162,506,305.28 | 166,823,063.79 |
| Less: Bad debt provision | 41,506,115.59 | 41,905,738.84 |
| Total | 121,000,189.69 | 124,917,324.95 |
②Disclosure by nature
| Nature | 30 June 2020 | 31 December 2019 |
| Related parties within the scope of consolidation | 117,715,798.06 | 120,200,301.28 |
| Security investment | 40,850,949.35 | 40,850,949.35 |
| Security deposit and guarantee | 1,882,139.09 | 1,850,139.09 |
| Rent, water, electricity and gas | 277,104.86 | 853,843.90 |
| Other | 1,780,313.92 | 3,067,830.17 |
| Total | 162,506,305.28 | 166,823,063.79 |
③Disclosure by withdrawal method of bad debt provision
A. As of 30 June 2020, bad debt provision withdrawn based on three stages model:
| Stage | Carrying amount | Bad debt provision | Carrying value |
| Stage 1 | 121,655,355.93 | 655,166.24 | 121,000,189.69 |
| Stage 2 | 0.00 | 0.00 | 0.00 |
| Stage 3 | 40,850,949.35 | 40,850,949.35 | 0.00 |
| Total | 162,506,305.28 | 41,506,115.59 | 121,000,189.69 |
A1. As of 30 June 2020, bad debt provision at stage 1:
~136~
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | ||||
| Bad debt provision withdrawn by group | 121,655,355.93 | 0.54 | 655,166.24 | 121,000,189.69 |
| Of which: Group 1 | 117,715,798.06 | 0.00 | 0.00 | 117,715,798.06 |
| Group 2 | 3,939,557.87 | 16.63 | 655,166.24 | 3,284,391.63 |
| Total | 121,655,355.93 | 0.54 | 655,166.24 | 121,000,189.69 |
On 30 June 2020, other receivables with bad debt provision withdrawn by group 2
| Aging | 30 June 2020 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | 2,814,516.67 | 46,052.42 | 1.64 |
| Of which:1-6 months | 2,366,835.25 | 23,668.35 | 1.00 |
| 7-12 months | 447,681.42 | 22,384.07 | 5.00 |
| 1-2 years | 355,158.20 | 35,515.82 | 10.00 |
| 2-3 years | 392,570.00 | 196,285.00 | 50.00 |
| Over 3 years | 377,313.00 | 377,313.00 | 100.00 |
| Total | 3,939,557.87 | 655,166.24 | 16.63 |
A2. As of 30 June 2020, bad debt provision at stage 2:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
| Bad debt provision withdrawn by group | 0.00 | 0.00 | 0.00 | 0.00 |
| Of which: Group 1 | 0.00 | 0.00 | 0.00 | 0.00 |
| Group 2 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
On 30 June 2020, other receivables with bad debt provision withdrawn separately:
| Name | 30 June 2020 |
~137~
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Total | 40,850,949.35 | 40,850,949.35 | -- | -- |
B. As of 31 December 2019, bad debt provision withdrawn based on three stages model:
| Stage | Carrying amount | Bad debt provision | Carrying value |
| Stage 1 | 125,972,114.44 | 1,054,789.49 | 124,917,324.95 |
| Stage 2 | 0.00 | 0.00 | 0.00 |
| Stage 3 | 40,850,949.35 | 40,850,949.35 | 0.00 |
| Total | 166,823,063.79 | 41,905,738.84 | 124,917,324.95 |
B1. On 31 December 2019, bad debt provision at stage 1:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | ||||
| Bad debt provision withdrawn by group | 125,972,114.44 | 0.84 | 1,054,789.49 | 124,917,324.95 |
| Of which: Group 1 | 120,200,301.28 | 0.00 | 0.00 | 120,200,301.28 |
| Group 2 | 5,771,813.16 | 18.27 | 1,054,789.49 | 4,717,023.67 |
| Total | 125,972,114.44 | 0.84 | 1,054,789.49 | 124,917,324.95 |
On 31 December 2019, other receivables with bad debt provision withdrawn by group 2
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| Within one year | 4,312,272.07 | 77,825.50 | 1.80 |
| Of which:1-6 months | 3,444,702.77 | 34,447.03 | 1.00 |
| 7-12 months | 867,569.30 | 43,378.47 | 5.00 |
| 1-2 years | 244,089.00 | 24,408.90 | 10.00 |
~138~
| Aging | 31 December 2019 | ||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | |
| 2-3 years | 525,794.00 | 262,897.00 | 50.00 |
| Over 3 years | 689,658.09 | 689,658.09 | 100.00 |
| Total | 5,771,813.16 | 1,054,789.49 | 18.27 |
B2. As of 31 December 2019, bad debt provision at stage 3:
| Category | Carrying amount | 12-month expected credit losses rate (%) | Bad debt provision | Carrying value |
| Bad debt provision withdrawn separately | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
| Bad debt provision withdrawn by group | 0.00 | 0.00 | 0.00 | 0.00 |
| Of which: Group 1 | 0.00 | 0.00 | 0.00 | 0.00 |
| Group 2 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 40,850,949.35 | 100.00 | 40,850,949.35 | 0.00 |
On 31 December 2019, other receivables with bad debt provision withdrawn separately:
| Name | 31 December 2019 | |||
| Carrying amount | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Total | 40,850,949.35 | 40,850,949.35 | -- | -- |
④Changes of bad debt provision during the Reporting Period
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Bad debt provision withdrawn separately | 40,850,949.35 | 0.00 | 0.00 | 0.00 | 40,850,949.35 |
~139~
| Category | 31 December 2019 | Changes in the Reporting Period | 30 June 2020 | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Bad debt provision withdrawn by group | 1,054,789.49 | 0.00 | 399,623.25 | 0.00 | 655,166.24 |
| Total | 41,905,738.84 | 0.00 | 399,623.25 | 0.00 | 41,506,115.59 |
⑤On 30 June 2020, top five ending balance by entity
| Nature | Balance at 30 June 2020 | Aging | Proportion of the balance to the total other receivables (%) | Bad debt provision | |
| No. 1 | Related party within the scope of consolidation | 89,300,433.13 | Within 1 year | 54.95 | 0.00 |
| No. 2 | Security Investment | 29,010,449.35 | Over 3 years | 17.85 | 29,010,449.35 |
| No. 3 | Related party within the scope of consolidation | 27,950,553.93 | Within 1 year | 17.20 | 0.00 |
| No. 4 | Security Investment | 11,840,500.00 | Over 3 years | 7.29 | 11,840,500.00 |
| No. 5 | Related party within the scope of consolidation | 464,811.00 | Within 1 year | 0.29 | 0.00 |
| Total | -- | 158,566,747.41 | -- | 97.58 | 40,850,949.35 |
3. Long-term Equity Investments
| Item | 30 June 2020 | 31 December 2019 | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Investment in subsidiaries | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 |
| Total | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 |
(1) Investments in subsidiaries
| Investees | 31 December 2019 | Increase during the Reporting Period | Decrease during the Reporting Period | 30 June 2020 | Impairment provision during the Reporting Period | Provision for impairment at 30 June 2020 |
| Bozhou Gujing Sales Co., | 68,949,286.89 | 0.00 | 0.00 | 68,949,286.89 | 0.00 | 0.00 |
~140~
| Investees | 31 December 2019 | Increase during the Reporting Period | Decrease during the Reporting Period | 30 June 2020 | Impairment provision during the Reporting Period | Provision for impairment at 30 June 2020 |
| Ltd. | ||||||
| Anhui Longrui Glass Co., Ltd. | 85,267,453.06 | 0.00 | 0.00 | 85,267,453.06 | 0.00 | 0.00 |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | 49,906,854.63 | 0.00 | 0.00 | 49,906,854.63 | 0.00 | 0.00 |
| BozhouGujing Hotel Co., Ltd. | 648,646.80 | 0.00 | 0.00 | 648,646.80 | 0.00 | 0.00 |
| Anhui Ruisiweier Technology Co., Ltd. | 40,000,000.00 | 0.00 | 0.00 | 40,000,000.00 | 0.00 | 0.00 |
| Anhui Baiweilu Liquor Co., Ltd. | 30,000,000.00 | 0.00 | 0.00 | 30,000,000.00 | 0.00 | 0.00 |
| Anhui Yuanqing Environmental Protection Co., Ltd. | 16,000,000.00 | 0.00 | 0.00 | 16,000,000.00 | 0.00 | 0.00 |
| Anhui Gujing Yunshang E-commerce Co., Ltd. | 5,000,000.00 | 0.00 | 0.00 | 5,000,000.00 | 0.00 | 0.00 |
| Anhui Zhenrui Construction Engineering Co., Ltd. | 10,000,000.00 | 0.00 | 0.00 | 10,000,000.00 | 0.00 | 0.00 |
| Yellow Crane Tower Distillery Co., Ltd. | 816,000,000.00 | 0.00 | 0.00 | 816,000,000.00 | 0.00 | 0.00 |
| Anhui Jinyunnlai Cultural Media Co., Ltd. | 15,000,000.00 | 0.00 | 0.00 | 15,000,000.00 | 0.00 | 0.00 |
| Bozhou Gujing Waste Recycling Co., Ltd. | 1,441,423.94 | 0.00 | 0.00 | 1,441,423.94 | 0.00 | 0.00 |
| Anhui RunanXinke Testing Technology Co., Ltd. | 10,000,000.00 | 0.00 | 0.00 | 10,000,000.00 | 0.00 | 0.00 |
| Total | 1,148,213,665.32 | 0.00 | 0.00 | 1,148,213,665.32 | 0.00 | 0.00 |
4. Operating Revenue and Cost of Sales
~141~
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 3,264,418,953.05 | 1,298,189,995.07 | 3,104,047,962.07 | 1,254,351,553.67 |
| Other operations | 32,698,219.44 | 18,869,268.55 | 40,634,501.51 | 23,567,023.24 |
| Total | 3,297,117,172.49 | 1,317,059,263.62 | 3,144,682,463.58 | 1,277,918,576.91 |
5. Investment Income
| Item | Reporting Period | Same period of last year |
| Gains on disposal of available-for-sale financial assets | ||
| Investment income from trading financial assets during the holding period | ||
| Other investment income | 12,434,590.21 | 31,883,868.76 |
| Total | 12,434,590.21 | 31,883,868.76 |
XV. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
| Item | Amount | Note |
| Gains/losses on the disposal of non-current assets | -2,218,309.96 | |
| Tax rebates, reductions or exemptions due to approval beyond authority or the lack of official approval documents | ||
| Government grants recognized in the Current Period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards | 14,980,731.46 | |
| Capital occupation charges on non-financial enterprises that are recorded into current gains and losses | ||
| Gains due to that the investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the enjoyable fair value of the identifiable net assets of the investees when making the investments | ||
| Gain/loss on non-monetary asset swap | ||
| Gain/loss on entrusting others with |
~142~
| investments or asset management | ||
| Asset impairment provisions due to acts of God such as natural disasters | ||
| Gains and losses from debt restructuring | ||
| Expenses on business reorganization, such as expenses on staff arrangements, integration, etc. | ||
| Gain/loss on the part over the fair value due to transactions with distinctly unfair prices | ||
| Current net gains and losses of subsidiaries acquired in business combination under the same control from period-begin to combination date | ||
| Profit and loss from contingencies irrelative to the normal business operations of company | ||
| Gain/loss from change of fair value of trading financial assets and liabilities, and derivative financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities, and derivative financial assets and liabilities, and investment in other debt obligations, other than valid hedging related to the Company’s common businesses | 14,943,442.93 | |
| Depreciation reserves returns of receivables and contract assets with separate depreciation test | ||
| Gain/loss on entrustment loans | ||
| Gain/loss on change of the fair value of investing real estate of which the subsequent measurement is carried out adopting the fair value method | ||
| Effect on current gains/losses when a one-off adjustment is made to current gains/losses according to requirements of taxation, accounting and other relevant laws and regulations | ||
| Custody fee income when entrusted with operation |
~143~
| Other non-operating income and expense other than the above | -1,408,695.54 | |
| Project confirmed with the definition of non-recurring gains and losses | ||
| Less: Income tax effects | 7,739,708.20 | |
| Non-controlling interests effects | 1,539,724.85 | |
| Total | 17,017,735.84 | -- |
2. Return on Net Assets and Earnings Per Share
| Profit as of Reporting Period | Weighted average ROE (%) | EPS (Yuan/share) | |
| EPS-basic | EPS-diluted | ||
| Net profit attributable to ordinary shareholders of the Company | 10.84 | 2.04 | 2.04 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit and loss | 10.66 | 2.00 | 2.00 |