Anhui Gujing Distillery Company Limited
Annual Report 2021
April 2022
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Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as thedirectors, supervisors and senior management of Anhui Gujing Distillery CompanyLimited (hereinafter referred to as the “Company”) hereby guarantee the factuality,accuracy and completeness of the contents of this Report and its summary, and shallbe jointly and severally liable for any misrepresentations, misleading statements ormaterial omissions therein.Liang Jinhui, the legal representative, and Zhu Jiafeng, the Deputy Chief Accountantand Board Secretary, hereby guarantee that the financial statements carried in thisReport are factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of thisReport and its summary.Any plans for the future and other forward-looking statements mentioned in thisReport shall NOT be considered as absolute promises of the Company to investors.Investors, among others, shall be sufficiently aware of the risk and shall differentiatebetween plans/forecasts and promises. Again, investors are kindly reminded to payattention to possible investment risks.Investors’ attention is kindly directed to the detailed description of possible risks inthe Company’s operations in “XI Prospects” under “Part III Management Discussionand Analysis”.The Board has approved a final dividend plan as follows: based on the Company’stotal share capital of 528,600,000 shares, a cash dividend of RMB22.00 (tax inclusive)per 10 shares is to be distributed to the shareholders, with no bonus issue from eitherprofit or capital reserves.This Report and its summary have been prepared in both Chinese and English.Should there be any discrepancies or misunderstandings between the two versions,the Chinese versions shall prevail.
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Table of Contents
Part I Important Notes, Table of Contents and Definitions 2Part II Corporate Information and Key Financial Information 6Part III Management Discussion and Analysis 11Part IV Corporate Governance 38Part V Environmental and Social Responsibility 59Part VI Significant Events 64Part VII Share Changes and Shareholder Information 71Part VIII Preferred Shares 81Part IX Corporate Bonds 82Part X Financial Statements 83
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Documents Available for Reference
(I) Financial statements signed and sealed by the Company’s legal representative, theCompany’s Chief Accountant and the head of the Company’s financial department(equivalent to financial manager);(II) The original copy of the Independent Auditor's Report stamped by the CPA firmas well as signed and stamped by the engagement certified public accountants;(III) All originals of the Company’s documents and announcements that have beenpublicly disclosed in the Reporting Period on the media designated by the ChinaSecurities Regulatory Commission; and(IV) This Report disclosed in other securities markets.
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Term | Definition |
The “Company”, “ Gu Jing” or “we” | Anhui Gujing Distillery Company Limited inclusive of its consolidated subsidiaries, except where the context otherwise requires |
Gujing Sales | Bozhou Gujing Sales Co., Ltd. |
The Company as the parent | Anhui Gujing Distillery Company Limited exclusive of subsidiaries, except where the context otherwise requires |
Gujing Group | Anhui Gujing Group Co., Ltd. |
Yellow Crane Tower | Yellow Crane Tower Distillery Co., Ltd. |
Mingguang | Anhui Mingguang Distillery Co., Ltd. |
Definitions
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Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name | Gujing Distillery, Gujing Distillery-B | Stock code | 000596, 200596 |
Changed stock name (if any) | |||
Stock exchange for stock listing | Shenzhen Stock Exchange | ||
Company name in Chinese | 安徽古井贡酒股份有限公司 | ||
Abbr. | 古井 | ||
Company name in English (if any) | ANHUI GUJING DISTILLERY COMPANY LIMITED | ||
Abbr. (if any) | GU JING | ||
Legal representative | Liang Jinhui | ||
Registered address | Gujing Town, Bozhou City, Anhui Province, P.R.China | ||
Zip code | 236820 | ||
Change of registered address | N/A | ||
Office address | Gujing Industrial Park, Gujing Town, Bozhou City, Anhui Province, P.R.China | ||
Zip code | 236820 | ||
Company website | http://www.gujing.com | ||
Email address | gjzqb@gujing.com.cn |
II Contact Information
Board Secretary | Securities Representative | |
Name | Zhu Jiafeng | Mei Jia |
Address | Gujing Town, Bozhou City, Anhui Province, P.R.China | Gujing Town, Bozhou City, Anhui Province, P.R.China |
Tel. | (0558)5712231 | (0558)5710057 |
Fax | (0558)5710099 | (0558)5710099 |
Email address | gjzqb@gujing.com.cn | gjzqb@gujing.com.cn |
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for | China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK) |
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information disclosure | |
Website designated by CSRC for publication of this Report | http://www.cninfo.com.cn |
Place where this Report is lodged | The Board Secretary’s Office |
IV Change to Company Registered Information
Unified social credit code | 913400001519400083 |
Change to principal activity of the Company since going public (if any) | No change |
Every change of controlling shareholder since incorporation (if any) | No change |
V Other Information
The independent audit firm hired by the Company:
Name | RSM China |
Office address | Suite 901-22 to 901-26, Wai Jing Mao Building (Tower 1), No. 22 Fuchengmen Wai Street, Xicheng District, Beijing, China |
Accountants writing signatures | Zhang Liping, and Han Songliang |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
Sponsor | Office address | Representatives | Supervision period |
China International Capital Corporation Limited | 27-28/F, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | Fang Lei, and Chen Jingjing | 2021.7.22-2022.12.31 |
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
Financial Advisor | Office address | Representatives | Supervision period |
China International Capital Corporation Limited | 27-28/F, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | Fang Lei, and Chen Jingjing | 2021.7.22-2022.12.31 |
VI Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2021 | 2020 | 2021-over-2020 | 2019 |
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change (%) | ||||
Operating revenue (RMB) | 13,269,826,266.04 | 10,292,064,534.41 | 28.93% | 10,416,961,584.23 |
Net profit attributable to the listed company’s shareholders (RMB) | 2,297,894,413.25 | 1,854,576,249.29 | 23.90% | 2,097,527,739.86 |
Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 2,186,239,468.68 | 1,773,011,307.05 | 23.31% | 1,891,097,157.37 |
Net cash generated from/used in operating activities (RMB) | 5,254,308,127.79 | 3,624,543,525.53 | 44.96% | 192,447,063.45 |
Basic earnings per share (RMB/share) | 4.45 | 3.68 | 20.92% | 4.17 |
Diluted earnings per share (RMB/share) | 4.45 | 3.68 | 20.92% | 4.17 |
Weighted average return on equity (%) | 21.25% | 19.53% | 1.72% | 25.55% |
31 December 2021 | 31 December 2020 | Change of 31 December 2021 over 31 December 2020 (%) | 31 December 2019 | |
Total assets (RMB) | 25,418,086,447.80 | 15,186,625,708.79 | 67.37% | 13,871,297,363.16 |
Equity attributable to the listed company’s shareholders (RMB) | 16,537,389,443.64 | 10,043,288,013.73 | 64.66% | 8,944,111,764.44 |
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there wasuncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
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2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
Q1 | Q2 | Q3 | Q4 | |
Operating revenue | 4,130,015,502.32 | 2,877,480,965.42 | 3,094,775,914.80 | 3,167,553,883.50 |
Net profit attributable to the listed company’s shareholders | 814,470,363.67 | 564,333,464.79 | 590,128,559.28 | 328,962,025.51 |
Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 801,677,741.93 | 536,607,519.06 | 563,373,758.33 | 284,580,449.36 |
Net cash generated from/used in operating activities | -1,373,645,850.02 | 1,637,612,982.28 | 3,688,705,129.87 | 1,301,635,865.66 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from whathave been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item | 2021 | 2020 | 2019 | Note |
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -5,976,856.98 | -3,692,640.09 | -7,615,741.56 | |
Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per governmental policies or standards) | 55,274,502.42 | 48,617,479.37 | 98,293,177.32 | |
Gain or loss on fair-value changes in trading | 34,792,433.45 | 21,490,043.05 | 144,234,319.52 |
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financial assets and liabilities & investment income from disposal of trading financial assets and liabilities and available-for-sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | ||||
Reversed portion of impairment allowance for receivables which are tested individually for impairment | 1,949,809.53 | 43,554.94 | 0.00 | |
Non-operating income and expense other than the above | 77,025,619.76 | 44,100,616.61 | 57,215,092.96 | |
Less: Income tax effects | 40,243,159.73 | 27,033,395.22 | 71,418,613.38 | |
Non-controlling interests effects (net of tax) | 11,167,403.88 | 1,960,716.42 | 14,277,652.37 | |
Total | 111,654,944.57 | 81,564,942.24 | 206,430,582.49 | -- |
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Part III Management Discussion and AnalysisI Industry Overview for the Reporting Period
(I) Principal Activity of the CompanyThe Company primarily produces and markets liquor and spirits. According to the Industry Categorization Guide for ListedCompanies (Revised in 2012) issued by the CSRC, liquor and spirits making belongs to the “liquor, beverage and refined tea makingindustry" (C15). The Company’s principal operations remained unchanged in the Reporting Period.(II) Status of the Industry and Position of the Company in the Industry
1. Status of the Liquor and Spirits Industry
Since the beginning of the 21st century, China's liquor and spirits industry has experienced three development stages. Before 2012,with rapid economic growth, the income of urban and rural residents rose fast, and the demand for liquor and spirits continued toincrease, while production and sales of liquor and spirits continuously expanded at a fast pace. As a result, the liquor and spiritsindustry witnessed booming supply and demand. During that period, national liquor and spirits brands and local regional renownedliquor enterprises achieved rapid development. In the context of the rise in both the demand and price of liquor and spirits, the salesincome and total profits of liquor enterprises increased quickly.From the second half of 2012 to 2016, China's economy once again entered a period of adjustment, as the Chinese governmentintroduced a string of policies to restrict the spending on official overseas visits, official vehicles and official hospitality, such as the"Eight-point Decision" and "Six Prohibitions", which include restrictions on the consumption of high-end alcohol with public funds.Consumption scenarios such as commercial consumption and government consumption were limited, leading to a drop in consumerdemand in a short time. Moreover, liquor prices were under huge pressure. China's liquor and spirits industry entered a period ofprofound adjustment. After 2012, both the output growth and income growth of China's liquor and spirits industry slowed down.The liquor and spirits industry began to recover in the second half of 2016, with a rise in consumption demand by end-users,propelling the growth of the overall income and profits of the industry. Since 2017, the overall demand and price of liquor and spiritshave increased, and the recovery of mid- and high-end liquor and spirits has picked up. In the future, benefiting from theconsumption upgrade and the change of consumption concept, the growth of sub-high-end liquor and spirits will be the key driver forthe development of the liquor and spirits industry. The consumption upgrade is the major driving force for the development of theliquor and spirits industry. Liquor enterprises need to fully grasp the great opportunities from the extensive consumption upgrade andstrive to better meet the consumption needs of the market through quality improvement, market segmentation and product innovationand other means, so as to advance the transformation and upgrade of the product structure.From January to December 2021, in China, the total output of alcoholic beverage made and brewed by the enterprises above thedesignated size in the alcoholic beverages industry was 54,068,500 kiloliter, increased by 3.95% year on year, of which, the output ofliquor and spirits was 7,156,300 kiloliter, decreased by 0.59% year on year. With the acceleration of consumption upgrading, amongChinese residents, it gradually shows such a trend of consumption upgrading that "you should drink less liquor, but you should drinkbetter liquor". During the period of the 14th Five-year Plan, the consumption growth of sub-high-end liquor and spirits will bringmore fierce competition in the sector of high-end liquor and spirits.
2. Position of the Company in the Industry
China has a long history of liquor. There are a large number of liquor production enterprises in the country, but the regionaldistribution of liquor consumers is particularly evident. The liquor and spirits industry is characterized by full competition, with ahigh degree of marketization. The market competition is fierce, and the industry adjustments are constantly deepening. In the nationalmarket, the competitive edges of the enterprises come from their brand influence, product style and marketing & operation models. In
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a single regional market, the competitive strengths of the enterprises depend on their brand influence in the region, the recognition ofthe companies by regional consumers and comprehensive marketing capacity.As one of China’s traditional top eight liquor brands, the Company is the first listed liquor and spirits company with both A and Bstocks. It is located in Bozhou City, Anhui Province in China, the hometown of historic figures Cao Cao and Hua Tuo, as well as oneof the world’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period.As the main product of the Company, the Gujing spirit originated as a “JiuYunChun Spirit”, together with its making secrets, beingpresented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingeringaftertaste, the Gujing spirit has helped the Company win four national distilled spirit golden awards, a golden award at the 13th SIALParis, the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the StateProtection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhuiprovincial government, a title of “National Quality Benchmark”, among other honors. In 2021, Gujing Distillery ranked fourth inChina's liquor and spirits industry with a brand value of RMB200.672 billion in the 13
th
"Hua Liquor Cup" (list of Chinese liquorbrands by value).In April 2016, Gujing Distillery signed a strategic cooperation agreement with Huanghelou Liquor Co., Ltd., opening a new era ofcooperation in China's famous liquor industry. Yellow Crane Tower Baijiu is the only famous Chinese liquor in Hubei. Its uniquestyle is "soft, mellow, elegant and cool, and has a long lingering fragrance". It won the two China gold medal in liquor appreciation in1984 and 1989. At present, Huanghelou liquor industry has three bases: Wuhan, Xianning and Suizhou. Among them, HuanghelouLiquor Culture Expo Park in Wuhan base has been approved as national AAA scenic spot, and Huanghelou forest wine town inXianning base has been approved as national AAA scenic spot.In January 2021, Gujing Distillery and Mingguang signed a strategic cooperation agreement. The unique mung bean flavor adds tothe famous liquor family of Gujing. Anhui Mingguang Distillery Co., Ltd. has such representative products as Mingguang Jianiang,Mingguang Daqu, Mingguang Youye, Mingguang Tequ, and 53% alcohol Minglueye. In December, the ancient Mingguangliquor-making technique was selected into the six batch of provincial intangible cultural heritage list.II Principal Activity of the Company in the Reporting Period
The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Food and Liquor & Wine Production.Main sales modelThe Company's key sales model is dealer model. Under the dealer model, the Company will select one or more dealers for sales of aproduct brand (or product sub-brand) according to the market capacity.Distribution model:
√ Applicable □ Not applicable
1. Operating Performance by Distribution Channel and Product Category
Unit: RMB
By | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
Channel |
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Online | 531,343,420.84 | 121,945,000.89 | 77.05% | 41.43% | 32.58% | 1.53% |
Offline | 12,738,482,845.20 | 3,182,132,011.03 | 75.02% | 28.46% | 29.47% | -0.19% |
Total | 13,269,826,266.04 | 3,304,077,011.92 | 75.10% | 28.93% | 29.58% | -0.13% |
By | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
Product series | ||||||
Aged Original Liquor | 9,307,819,185.05 | 1,563,365,943.45 | 83.20% | 18.81% | 7.86% | 1.70% |
Gujinggong Liquor | 1,609,244,106.16 | 666,012,511.39 | 58.61% | 16.62% | 21.39% | -1.63% |
Yellow Crane Tower | 1,133,924,525.09 | 282,351,666.86 | 75.10% | 168.69% | 112.94% | 6.52% |
Total | 12,050,987,816.30 | 2,511,730,121.70 | 79.16% | 25.06% | 17.88% | 1.27% |
2. Number of Distributors by Geographical Segment
Segment | Increase | Decrease | Ending number |
North China | 307 | 148 | 1,005 |
South China | 163 | 91 | 452 |
Central China | 799 | 418 | 2,538 |
International | 4 | 0 | 12 |
Total | 1,273 | 657 | 4,007 |
Proportion of store sales terminal exceeds 10%
□ Applicable √ Not applicable
Online direct sales
√ Applicable □ Not applicable
The major product varieties sold online are Aged Original Liquor Series, and Gujinggong Liquor Series, among others. The mainonline sales platforms are Gujing Distillery platform, Tmall, JD.com, and Suning.com.Any over 30% YoY movements in the selling price of main products contributing over 10% of current total operating revenue
□ Applicable √ Not applicable
Model and contents of purchaseThe Company primarily adopts the bidding and strategic cooperation models. It also adopts the base planting model in order toensure the quality of some raw materials.Major suppliers:
Purchase contents
Purchase contents | Purchase model | Amount (RMB’0,000) | |
1 | Raw materials | Strategic purchasing | 62,982.75 |
Tendering purchasing | 89,722.26 |
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2 | Packing materials | Tendering purchasing | 215,928.61 |
Total | 368,633.62 |
The proportion of raw materials purchased from cooperations or farmers to total purchase amount exceeds 30%
□ Applicable √ Not applicable
Any over 30% YoY movements in prices of main purchased raw materials
□ Applicable √ Not applicable
Main production modelThe Company's existing production model is sales-based production. Specifically, the Logistics Control Center is responsible forcoordinating the implementation of production plans, release of material production plans, and delivery and tracking of products, andprepares balanced production plans on a quarterly basis according to the product inventory. The logistics distribution system iscoordinated according to the production schedule and inventory with a view to ensuring timely delivery of products.Commissioned production
□ Applicable √ Not applicable
Breakdown of cost of sales
Item | 2021 | 2020 | Change (%) | ||
Cost of sales (RMB) | As % of total cost of sales | Cost of sales (RMB) | As % of total cost of sales | ||
Direct materials | 2,321,320,105.47 | 70.26% | 1,857,491,476.93 | 72.85% | 24.97% |
Direct labor cost | 285,205,229.63 | 8.63% | 261,553,817.02 | 10.26% | 9.04% |
Manufacturing expenses | 210,507,603.20 | 6.37% | 201,171,173.25 | 7.89% | 4.64% |
Fuels | 91,709,296.08 | 2.78% | 89,428,707.39 | 3.51% | 2.55% |
Total | 2,908,742,234.38 | 88.04% | 2,409,645,174.59 | 94.51% | 20.71% |
Output and inventory
1. Output, sales volume and inventory of main products for the Reporting Period and respective YoY changes thereof
Unit: ton
Main product | Output | Sales volume | inventory | YoY changes of output | YoY changes of sales volume | YoY changes of inventory |
Aged Original Liquor Series | 50,488.82 | 43,216.05 | 13,809.65 | 26.84% | 1.40% | 111.26% |
Gujinggong Liquor Series | 29,066.16 | 28,269.08 | 2,875.28 | 30.19% | 24.93% | 38.35% |
Yellow Crane Tower Liquor Series | 8,350.52 | 9,183.42 | 782.04 | 52.89% | 100.52% | -51.57% |
Other series | 22,042.26 | 20,386.15 | 2,151.69 | 37.11% | 19.21% | 334.18% |
2. Ending inventory of finished liquor and semi-product
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Category | Ending quantity (ton) |
Finished liquor | 19,618.66 |
Semi-product (including base liquor) | 183,264.17 |
3. Capacity
Unit: ton
Main product | Designed capacity | Actual capacity | Capacity in progress |
Finished liquor | 115,000 | 109,948 | 130,000 |
III Core Competitiveness Analysis
No significant changes occurred to the Company’s core competitiveness in the Reporting Period.IV Analysis of Core Businesses
1. Overview
The year 2021 marks the beginning of the "14th Five-Year Plan", and the normalization of the prevention and control of COVID-19.In the face of complex external environment and all the more fierce competition in the industry, the Company continued to follow theguidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implemented the guidingprinciple of the 19th CPC National Congress and the various plenary sessions of the 19th CPC Central Committee, the guidingprinciple of the Central Economic Work Conference, and the guiding principle of the provincial and municipal Party congresses,implemented the new concept for development, centered on the annual objectives of the Company, and adhered to long-termperspective mindset, the concept of excellence, and the awareness of high-quality products, to successfully complete variousobjectives and tasks throughout the year.For 2021, the Company recorded operating revenue of RMB13.27billion, up 28.93% compared to the prior year; a net profitattributable to the Company as the parent of RMB2.298billion, increasing 23.90% from the year earlier; earnings per share ofRMB4.45, 20.92% higher than last year; and net cash generated from operating activities of RMB5.254 billion, going up 44.96% ona year-on-year basis. In the 13th "Hua Zun Cup" Chinese liquor brand valuation, the brand value of "Gujinggong" reached a recordhigh of RMB200.672 billion.The overall operating performance of the Company in the Reporting Period(I) The Company rapidly promoted the “nationwide, sub-high-end” strategy, and reached a new high of brand valueThe Company adhered to the nationwide, sub-high-end, and "Gu 20+" development strategy, and continuously intensified "ThreeOnes Project". It continuously intensified efforts for brand building, adhered to the brand orientation of "liquor made in China isfavored in the world", and grandly held the activities of the Corporate Day of Gujinggong Liquor in Expo 2020 Dubai. The brandinfluence of "liquor made in China is favored in the world" was continuously increased.(II) Higher efficiency and higher qualityThe Company continuously optimized its liquor-making process, comprehensively promoted liquor-making standardized production,and steadily improved the quality of its original liquor. Quality was improved and efficiency was increased for filling production offinished liquor products, and the project of automatic filling was steadily promoted.(III) The Company continuously intensified research and development, and further increased strength for research anddevelopment
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The Company carried out experiments and research for liquor-making, further optimized and improved production process. It wasgranted three patents of invention, and 55 patents of utility models; it successively and honorably won the "Prize for OutstandingContribution in Science and Technology of China's Liquor and Spirits industry", and the "Second Prize of Anhui Science andTechnology Progress Award", which was a breakthrough in provincial major special projects. Once again, the Company won "AnhuiProvincial People's Government Quality Award".(IV) The Company accelerated promotion of digital construction, and new accomplishment was displayed with integration of“information technology and industrialization”The Company intensified efforts to promote and apply systems, comprehensively empowered digital marketing, scenario-basedapplications, intelligent parks, and informationized procedures, so as to boost comprehensive management efficacy. In 2021, Gujing'sdigital construction achievements were successfully selected into the industry-level platform of industrial Internet of things.(V) The Company continuously promoted mechanism innovation, and enhanced organizing vitalityThe Company continuously optimized and vitalized appraisal mechanism, and delegated more power to grassroots level for makingself-decisions on appraisal. Besides, it realized the match of remuneration with performance in market-oriented pilot units. Itestablished a normalized exit mechanism of personnel, adhered to the practice that the person ranking the last place in appraisal willbe laid off, and that positions will be rotated for improving multiple skills. Thus, it further stimulated management vitality, andpromoted the cultivation of comprehensive talents.(VI) The Company maintained the integrity of thoughts to vitalize the driving force of Party buildingThe Company promoted its high-quality development with high-quality Party-building. Its staff members at various levels solidlycarried out the learning and education of Party history, earnestly implemented the guiding principle of the important "July 1” remarksmade by General Secretary Xi Jinping, and that of the Sixth Plenary Session of the 19th CPC Central Committee, made in-depthunderstanding of the decisive significance of the “Two Establishments", enhanced the "Four Consciousnesses", firmly believed in the"Four Self-confidences", and implemented the "Two Maintenances". The Company carried forward the great spirit of Party-buildingand used it into the whole process of corporate operation and management. As a result, work style in the Company was continuouslyimproved, and ideological and political awareness and the self-consciousness for actions constantly became better.(VII) In the Reporting Period, the Company was still under pressure and had deficiencies as follows.
(1) Brand driving force was not strong enough, and nationwide promotion was yet to be intensified.
(2) The internal management system of the Company was not excellent, the mechanism was not vigorous, and its internal power wasyet to be stimulated.
(3) The supply chain management was not fully modernized, its service was not sound, and its efficiency was not high.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2021 | 2020 | Change (%) | |||
Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
Total | 13,269,826,266.04 | 100% | 10,292,064,534.41 | 100% | 28.93% |
By operating division |
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Manufacturing | 13,269,826,266.04 | 100.00% | 10,292,064,534.41 | 100.00% | 28.93% |
By product category | |||||
Distilled spirits | 12,760,915,418.70 | 96.16% | 10,074,148,990.37 | 97.88% | 26.67% |
Hotel services | 75,349,826.75 | 0.57% | 63,321,699.07 | 0.62% | 19.00% |
Other | 433,561,020.59 | 3.27% | 154,593,844.97 | 1.50% | 180.45% |
By operating segment | |||||
North China | 1,070,574,558.72 | 8.07% | 692,953,553.05 | 6.73% | 54.49% |
Central China | 11,311,204,419.40 | 85.24% | 9,015,585,004.98 | 87.60% | 25.46% |
South China | 877,937,089.22 | 6.62% | 579,972,219.24 | 5.64% | 51.38% |
Overseas | 10,110,198.70 | 0.08% | 3,553,757.14 | 0.03% | 184.49% |
By sales model | |||||
Online | 531,343,420.84 | 4.00% | 375,683,415.01 | 3.65% | 41.43% |
Offline | 12,738,482,845.20 | 96.00% | 9,916,381,119.40 | 96.35% | 28.46% |
(2) Operating Division, Product Category, Operating Segment or Sales Model Contributing over 10% ofOperating Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
By operating division | ||||||
Manufacturing | 13,269,826,266.04 | 3,304,077,011.92 | 75.10% | 28.93% | 29.58% | -0.13% |
By product category | ||||||
Distilled spirits | 12,760,915,418.70 | 2,908,742,234.38 | 77.21% | 26.67% | 20.71% | 1.13% |
Hotel services | 75,349,826.75 | 41,333,869.68 | 45.14% | 19.00% | 24.38% | -2.38% |
Other | 433,561,020.59 | 354,000,907.86 | 18.35% | 180.45% | 231.04% | -12.48% |
By operating segment | ||||||
North China | 1,070,574,558.72 | 269,682,095.69 | 74.81% | 54.49% | 42.47% | 2.13% |
Central China | 11,311,204,419.40 | 2,836,727,062.69 | 74.92% | 25.46% | 28.39% | -0.57% |
South China | 877,937,089.22 | 194,916,297.30 | 77.80% | 51.38% | 30.67% | 3.52% |
Overseas | 10,110,198.70 | 2,751,556.24 | 72.78% | 184.49% | 39.87% | 28.14% |
By sales model | ||||||
Online | 531,343,420.84 | 121,945,000.89 | 77.05% | 41.43% | 32.58% | 1.53% |
Offline | 12,738,482,845.20 | 3,182,132,011.03 | 75.02% | 28.46% | 29.47% | -0.19% |
~ 18 ~
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales is Higher than Service Revenue
√ Yes □ No
Operating division | Item | Unit | 2021 | 2020 | Change (%) |
Distilled spirits brewage | Sales volume | Ton | 101,054.70 | 86,930.68 | 16.25% |
Output | Ton | 109,947.76 | 83,668.45 | 31.41% | |
Inventory | Ton | 19,618.66 | 10,725.60 | 82.91% |
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
Output increased 31.41% compared to 2020, primarily driven by the increased inventories prepared for the Spring Festival.Inventory increased 82.91% compared to 2020, primarily driven by the increased inventories prepared for the Spring Festival.
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
Operating division | Item | 2021 | 2020 | Change (%) | ||
Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
Food manufacturing | Direct materials | 2,321,320,105.47 | 70.26% | 1,857,491,476.93 | 72.85% | 24.97% |
Food manufacturing | Direct labor cost | 285,205,229.63 | 8.63% | 261,553,817.02 | 10.26% | 9.04% |
Food manufacturing | Manufacturing expenses | 210,507,603.20 | 6.37% | 201,171,173.25 | 7.89% | 4.64% |
Food manufacturing | Fuels | 91,709,296.08 | 2.78% | 89,428,707.39 | 3.51% | 2.55% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√Yes □ No
Compared with the prior year, the following subsidiaries were added to the consolidated financial statements of the Reporting Period:
Anhui Mingguang Distillery Co., Ltd., Renhuai Maotai Town Zhencang Winery Industry Co., Ltd., Mingguang Tiancheng Ming
~ 19 ~
Wine Sales Co., Ltd., Fengyang Xiaogang Village Ming Wine Distillery Co., Ltd., Anhui Jiuhao China Railway ConstructionEngineering Co., Ltd., and Anhui Jiuan Mechanical Electrical Equipment Co., Ltd. Meanwhile, Bozhou Gujing Waste Recycling Co.,Ltd. has been de-registered during the Reporting Period.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) | 1,845,323,034.24 |
Total sales to top five customers as % of total sales of the Reporting Period (%) | 13.91% |
Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Information about top five customers:
No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
1 | Distributor A | 658,146,119.50 | 4.96% |
2 | Distributor B | 496,463,500.64 | 3.74% |
3 | Distributor C | 319,902,346.49 | 2.41% |
4 | Distributor D | 194,693,089.35 | 1.47% |
5 | Distributor E | 176,117,978.26 | 1.33% |
Total | -- | 1,845,323,034.24 | 13.91% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) | 1,089,038,984.77 |
Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 29.55% |
Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 0.00% |
Information about top five suppliers:
No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
1 | Supplier A | 297,710,603.31 | 8.08% |
2 | Supplier B | 290,714,378.92 | 7.89% |
~ 20 ~
3 | Supplier C | 215,756,887.60 | 5.85% |
4 | Supplier D | 161,148,582.38 | 4.37% |
5 | Supplier E | 123,708,532.56 | 3.36% |
Total | -- | 1,089,038,984.77 | 29.55% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2021 | 2020 | Change (%) | Reason for any significant change | |
Selling expense | 4,008,075,483.08 | 3,120,977,163.32 | 28.42% | |
Administrative expense | 1,022,181,419.74 | 802,201,580.48 | 27.42% | |
Finance costs | -204,055,657.06 | -260,836,456.07 | 21.77% | |
R&D expense | 51,449,475.36 | 40,590,136.46 | 26.75% |
The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Food and Liquor & Wine Production.Breakdown of selling expense:
Unit: RMB
Item | 2021 | 2020 | Change (%) | Reason |
Employment benefits | 863,583,183.40 | 723,874,977.05 | 19.30% | |
Travel fees | 161,091,812.25 | 133,511,390.56 | 20.66% | |
Advertisement fees | 900,546,437.33 | 840,407,171.96 | 7.16% | |
Comprehensive promotion costs | 1,268,396,513.56 | 755,941,972.88 | 67.79% | More sales promotion activities |
Service fees | 705,368,563.00 | 578,401,082.92 | 21.95% | |
Others | 109,088,973.54 | 88,840,567.95 | 22.79% | |
Total | 4,008,075,483.08 | 3,120,977,163.32 | 28.42% |
Details about advertisement
No. | Main way | Amount (RMB’0,000) |
1 | TV | 41,466.82 |
2 | Offline | 36,967.85 |
3 | Online | 11,619.97 |
Total | 90,054.64 |
~ 21 ~
4. R&D Investments
√ Applicable □ Not applicable
Names of main R&D projects | Project objectives | Project progress | Objectives to be achieved | Expected impact on the future development of the Company |
Research of process and experiments on original grain for liquor distillation | Aiming at different types of raw materials, the process and experiments of liquor making are conducted to provide the Company with data support for the selection of original grain for liquor-making. | Promoted and applied. | The process of liquor-making with different types of original grain is explored to expand the scope of using original grain. | The experimental research on liquor making with different types of original grain will play an important role in optimized selection of original grain, and improvement of quality of original liquor. |
Research and application of process and experiments for making strongly fragrant liquor | The experiments systematically optimize the production process of making strongly fragrant liquor, improve the sensory quality of Gujinggong liquor, making the product No. 1 in China in terms of strongly fragrant liquor. | The process and experiments have been carried out for many times, and part of the experimental achievements have been promoted and applied. | Theoretically and practically, the various parameters of the strongly fragrant liquor are revealed to be scientific and reasonable, and the self-consciousness of process performance is improved. | The quality of Gujinggong liquor will be steadily improved to maintain the continuously improving quality of the brand. |
Research on and application of the process of making compound fragrant liquor | The process of producing compound fragrant liquor is explored to prepare for the development of new products and the design of liquor body of the Company. | Promoted and applied. | The high-quality flavoring liquor with unique flavor is produced to prepare for the development of new products and the design of liquor body of the Company. | The exploring of the production process of compound fragrant liquor will enable the production of the high-quality flavoring liquor with unique flavor, further enrich the product system of Gujinggong Liquor, and strengthen its competitiveness. |
Optimization and regularization of the production process of high-temperature Qu liquor | The production process of high-temperature Qu liquor is standardized to form standard operation documents and further improve the quality of high-temperature Qu liquor. | Promoted and applied. | The parameters of the production process of high-temperature Qu liquor are determined, the quality of the liquor is improved, and the richness of original liquor is increased. | Standardized documents for operation and process will be provided for the Company to improve the production quality of high-temperature Qu liquor, and to stabilize the quality of the liquor. |
Research with optimized experiments on the method of collecting scums floated in liquid in a micro-recirculation way | The taste and quality of original liquor is improved to enhance the overall quality of liquor samples. | Part of the achievements of the project have been promoted. | The quality of the original liquor on the high level of a liquor pit is improved | The taste of liquor body is enriched to provide the Company with an exploration on optimizing process. |
Research on the means to add syrup to strongly fragrant liquor | Different means to add syrup is comprehensively assessed to provide technical support for the Company regarding the | Promoted and applied. | The impact on the quality of original liquor caused by different means to add syrup is judged to choose relatively | The technical and operational foundation will be laid for the improvement of quality of original liquor. |
~ 22 ~
usage of adding syrup to liquor-making process. | better syrup adding way. |
Details about R&D personnel:
2021 | 2020 | Change (%) | |
Number of R&D personnel | 978 | 1,014 | -3.35% |
R&D personnel as % of total employees | 9.10% | 10.21% | -1.11% |
Educational background of R&D personnel | —— | —— | —— |
Bachelor’s degree | 211 | 228 | -7.46% |
Master’s degree | 41 | 43 | -4.65% |
Other | 726 | 743 | -2.29% |
Age structure of R&D personnel | —— | —— | —— |
Below 30 | 164 | 168 | -2.38% |
30~40 | 321 | 391 | -17.90% |
Over 40 | 493 | 455 | 8.35% |
Details about R&D investments:
2021 | 2020 | Change (%) | |
R&D investments (RMB) | 300,602,964.92 | 300,404,769.73 | 0.07% |
R&D investments as % of operating revenue | 2.27% | 2.92% | -0.65% |
Capitalized R&D investments (RMB) | 0.00 | 0.00 | 0.00% |
Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% | 0.00% |
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reasons for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item | 2021 | 2020 | Change (%) |
Subtotal of cash generated from operating activities | 16,698,641,516.83 | 13,919,228,342.47 | 19.97% |
Subtotal of cash used in operating activities | 11,444,333,389.04 | 10,294,684,816.94 | 11.17% |
~ 23 ~
Net cash generated from/used in operating activities | 5,254,308,127.79 | 3,624,543,525.53 | 44.96% |
Subtotal of cash generated from investing activities | 721,528,559.15 | 372,197,845.63 | 93.86% |
Subtotal of cash used in investing activities | 9,582,979,679.33 | 603,414,750.96 | 1,488.12% |
Net cash generated from/used in investing activities | -8,861,451,120.18 | -231,216,905.33 | -3,732.53% |
Subtotal of cash generated from financing activities | 5,165,337,169.81 | 130,665,500.00 | 3,853.10% |
Subtotal of cash used in financing activities | 1,137,547,692.56 | 831,838,344.55 | 36.75% |
Net cash generated from/used in financing activities | 4,027,789,477.25 | -701,172,844.55 | 674.44% |
Net increase in cash and cash equivalents | 420,646,484.86 | 2,692,153,775.65 | -84.38% |
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
(1) Net cash generated from operating activities stood at RMB5,254,308,127.79 in the Reporting Period, up 44.96% year-on-year,primarily driven by the increased sales revenue.
(2) Subtotal of cash used in investing activities stood at RMB9,582,979,679.33 in the Reporting Period, up 1,488.12% year-on-year,the main reason is the impact of purchasing financial products.
(3) Net cash generated from financing activities stood at RMB4,027,789,477.25 in the Reporting Period, up 674.44% year-on-year,primarily driven by the arrival of funds raised through a private placement.
(4) Net increase in cash and cash equivalents stood at RMB420,646,484.86 in the Reporting Period, down 84.38% year-on-year, themain reason is the impact of purchasing financial products.Reasons for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
V Analysis of Non-Core Businesses
□ Applicable √ Not applicable
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2021 | 31 December 2020 | Change in percentage (%) | Reason for any significant change | |||
Amount | As % of total assets | Amount | As % of total assets |
~ 24 ~
Monetary assets | 11,924,922,771.76 | 46.92% | 5,971,212,569.66 | 39.18% | 7.74% | |
Accounts receivable | 89,005,804.17 | 0.35% | 67,933,735.91 | 0.45% | -0.10% | |
Inventories | 4,663,456,672.30 | 18.35% | 3,416,880,808.96 | 22.42% | -4.07% | |
Investment property | 4,075,801.06 | 0.02% | 4,392,943.54 | 0.03% | -0.01% | |
Long-term equity investments | 5,312,600.78 | 0.02% | 4,915,575.83 | 0.03% | -0.01% | |
Fixed assets | 1,984,063,975.87 | 7.81% | 1,797,789,271.62 | 11.80% | -3.99% | |
Construction in progress | 1,064,134,904.21 | 4.19% | 279,169,201.60 | 1.83% | 2.36% | |
Right-of-use assets | 43,927,228.97 | 0.17% | 57,402,412.53 | 0.38% | -0.21% | |
Short-term borrowings | 30,035,138.89 | 0.12% | 70,665,500.00 | 0.46% | -0.34% | |
Contract liabilities | 1,825,447,705.85 | 7.18% | 1,206,573,886.26 | 7.92% | -0.74% | |
Long-term borrowings | 172,356,255.83 | 0.68% | 60,117,638.89 | 0.39% | 0.29% | |
Lease liabilities | 28,107,223.18 | 0.11% | 53,226,677.43 | 0.35% | -0.24% |
Indicate whether overseas account for a larger proportion in the total assets.
□ Applicable √ Not applicable
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending amount |
Financial assets |
~ 25 ~
1.Held-for-trading financial assets (excluding derivative financial assets) | 203,877,915.51 | 7,225,961.17 | 0.00 | 2,450,000,000.00 | 2,661,103,876.68 | |||
2. Investment in other equity instruments | 0.00 | 0.00 | 693,720.70 | 53,848,697.80 | 54,542,418.50 | |||
Subtotal of financial assets | 203,877,915.51 | 7,225,961.17 | 693,720.70 | 2,503,848,697.80 | 2,715,646,295.18 | |||
Total of the above | 203,877,915.51 | 7,225,961.17 | 693,720.70 | 2,503,848,697.80 | 2,715,646,295.18 | |||
Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
Item | Ending carrying value (RMB) | Reason for restriction |
Monetary assets | 5,867,372,593.16 | Structured deposits and time deposits that cannot be withdrawn in advance and time deposits that are pledged for issuing bank acceptance drafts |
Fixed assets | 4,225,738.45 | Mortgage secured borrowing. |
Intangible assets | 2,780,644.18 | Mortgage secured borrowing. |
Total | 5,874,378,975.79 | -- |
VII Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
~ 26 ~
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Item | Way of investment | Fixed assets investment or not | Industry involved | Input amount in the Reporting Period | Accumulative actual input amount as of the period-end | Capital resources | Progress | Estimated return on investment | Accumulative realized revenues as of the period-end | Reason for not reaching the schedule and anticipated income | Disclosure date (if any) | Disclosure index (if any) |
The smart technology transformation project for liquor production | Self-built | Yes | Liquor production | 841,790,505.09 | 1,001,582,020.44 | Self-owned funds and raised funds | 11.22% | N/A | N/A | N/A | 3 March 2020 | For details, please refer to the Announcement on Investment in the Smart Technology Transformation Project for Liquor Production disclosed by the Company on the website of Cninfo |
~ 27 ~
dated 3 March 2020. | ||||||||||||
Total | -- | -- | -- | 841,790,505.09 | 1,001,582,020.44 | -- | -- | N/A | N/A | -- | -- | -- |
4. Financial Investments
√ Applicable □ Not applicable
Unit: RMB
Variety of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement model | Beginning carrying value | Gain/loss on fair value changes in the Reporting Period | Cumulative fair value changes charged to equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying value | Accounting title | Source of funds |
Fund | DAPU Asset Management | 200,000,000.00 | Fair value method | 203,877,915.51 | -339,271.15 | 14,393,316.21 | 203,538,644.36 | Held-for-trading financial assets | Self-owned funds | ||||
Other ending holding securities investments | -- | -- | |||||||||||
Total | 200,000,000.00 | -- | 203,877,915.51 | -339,271.15 | 14,393,316.21 | 203,538,644.36 | -- | -- | |||||
Disclosure date of the announcement about the board’s consent for the securities investment | The Company held the 8th Meeting of the 9th Board of Directors on 27 August 2021, reviewed and approved the proposal on carrying out securities investment business. | ||||||||||||
Disclosure date of the announcement about the general meeting’s consent for the securities investment (if any) | N/A |
~ 28 ~
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Operator | Relationship with the Company | Connected transaction | Type of derivative | Initial investment amount | Starting date | Ending date | Beginning investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment provision (if any) | Ending investment amount | Proportion of closing investment amount in the Company’s ending net assets | Actual gain/loss in the Reporting Period |
Reverse repurchase of national debt | Naught | No | Reverse repurchase of national debt | 0.00 | 27 January 2021 | 5 January 2022 | 0.00 | 60,970.20 | 53,349.70 | 7,620.50 | 0.44% | 67.35 | |
Total | 0.00 | -- | -- | 0.00 | 60,970.20 | 53,349.70 | 7,620.50 | 0.44% | 67.35 | ||||
Capital source for derivative investment | Company’s own funds | ||||||||||||
Lawsuits involved (if applicable) | N/A | ||||||||||||
Disclosure date of board announcement approving derivative investment (if any) | 30 August 2013 | ||||||||||||
Disclosure date of shareholders’ meeting announcement approving derivative investment (if any) | |||||||||||||
Analysis of risks and control measures associated with derivative investments held in the Reporting Period (including but not limited to market risk, liquidity risk, | The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System. |
~ 29 ~
credit risk, operational risk, legal risk, etc.) | |
Changes in market prices or fair value of derivative investments during the Reporting Period (fair value analysis should include measurement method and related assumptions and parameters) | Naught |
Significant changes in accounting policies and specific accounting principles adopted for derivative investments in the Reporting Period compared to previous reporting period | Naught |
Opinion of independent directors on derivative investments and risk control | Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits through investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle funds; in order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of financial accounting; the derivative Investment business developed separately took national debts as mortgage object, which was met with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3 billion. |
5. Use of Funds Raised
√ Applicable □ Not applicable
(1) Overall Usage of Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
Year | Way of raising | Total funds raised | Total funds used in the Current | Accumulative fund used | Total funds with usage changed | Accumulative funds with | Proportion of accumulative | Total unused funds | The usage and destination of | Amount of funds raised idle |
~ 30 ~
Period | usage changed | funds with usage changed | unused funds | for over two years | ||||||
2021 | Private placement of stocks | 495,434.21 | 43,076.74 | 43,076.74 | 0.00 | 0.00 | 0.00% | 452,357.47 | Deposited in fund raising account and cash management | 0.00 |
Total | -- | 495,434.21 | 43,076.74 | 43,076.74 | 0.00 | 0.00 | 0.00% | 452,357.47 | -- | 0.00 |
Explanation of overall usage of funds raised | ||||||||||
Through this issuance, the Company raised total proceeds of RMB5,000,000,000.00. After deducting the expenses related to the issuance of RMB45,657,925.15 (excluding VAT), the actual net proceeds raised were RMB4,954,342,074.85, the actual amount of funds received is RMB 4,957,547,169.81. During 2021, the Company used raised funds of RMB430.7674 million in total, paid issuance costs of RMB1.2514 million, received income revenue of RMB16.6838 million in the raised funds account (deducting the issuance costs and used raised funds), and used temporarily idle raised funds to purchase structured deposits of RMB4,420 million. At 31 December 2021, the balance of the raised funds account stood at RMB4,542.2122 million. |
(2) Commitment Projects of Fund Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
Committed investment project and super raise fund arrangement | Changed or not (including partial changes) | Committed investment amount | Investment amount after adjustment (1) | Investment amount in the Reporting Period | Accumulative investment amount as of the period-end (2) | Investment schedule as the period-end (3)=(2)/(1) | Date of reaching intended use of the project | Realized income in the Reporting Period | Whether reached anticipated income | Whether occurred significant changes in project feasibility |
Committed investment project | ||||||||||
The smart technology | Not | 495,434.21 | 495,434.21 | 43,076.74 | 43,076.74 | 8.69% | 31 December | N/A | Not |
~ 31 ~
transformation project for liquor production | 2024 | |||||||||
Subtotal of committed investment project | -- | 495,434.21 | 495,434.21 | 43,076.74 | 43,076.74 | -- | -- | -- | -- | |
Total | -- | 495,434.21 | 495,434.21 | 43,076.74 | 43,076.74 | -- | -- | -- | -- | |
Condition and reason for not reaching the schedule and anticipated income (by specific items) | N/A | |||||||||
Notes of condition of significant changes occurred in project feasibility | N/A | |||||||||
Amount, usage and schedule of super raise fund | N/A | |||||||||
Changes in implementation address of investment project | N/A | |||||||||
Adjustment of implementation mode of investment project | N/A | |||||||||
Advance investments in projects financed with raised funds and swaps of such advance investments with subsequent raised funds | N/A | |||||||||
Idle fund supplementing the current capital temporarily | N/A |
~ 32 ~
Amount of surplus in project implementation and the reasons | N/A |
Usage and destination of unused funds | As of December 31, 2021, the unused raised funds and interest were stored in the special account, the idle raised funds were used for cash management, and the purchase of financial products had not been redeemed by 44.20 million yuan. |
Problems incurred in fund using and disclosure or other condition | N/A |
(3) Changes in Items of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
IX Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:
Unit: RMB
~ 33 ~
Company name | Relationship with the Company | Main business scope | Registered capital | Total assets | Net assets | Operating revenues | Operating profit | Net profit |
Bozhou Gujing Sales Co., Ltd | Subsidiary | Wholesales of distilled spirit, construction materials, feeds and assistant materials | 84,864,497.89 | 4,809,706,779.15 | 127,377,019.76 | 11,364,553,622.12 | 840,739,673.81 | 625,815,758.69 |
Anhui Longrui Glass Co., Ltd | Subsidiary | Manufacture and sale of glass products | 86,660,268.98 | 427,785,997.39 | 357,183,946.32 | 321,096,222.99 | 46,908,148.94 | 40,890,221.16 |
Yellow Crane Tower Wine Industry Co., Ltd | Subsidiary | Production and sales of distilled spirit | 400,000,000.00 | 1,735,601,365.26 | 712,095,045.65 | 1,458,982,962.92 | 221,500,064.26 | 171,059,692.48 |
Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Subsidiary | Hotel management and house lease | 54,000,000.00 | 194,348,147.99 | 77,011,449.84 | 67,349,141.24 | 21,002,505.46 | 19,134,556.66 |
Subsidiaries obtained or disposed in the Reporting Period:
√Applicable □Not applicable
The name of the company | Acquisition and disposal of subsidiaries during the reporting period | The impact on the overall production operation and performance |
Anhui Mingguang Distillery Co., Ltd. | Business combination not under the same control | Strengthen the development of the Company’s main business of liquor, accelerate the national layout of the product market, and enhance the Company’s brand influence and business scale |
Mingguang Tiancheng Ming Wine Sales Co., Ltd. | Business combination not under the same control | Strengthen the development of the Company’s main business |
~ 34 ~
of liquor, accelerate the national layout of the product market, and enhance the Company’s brand influence and business scale | ||
Fengyang Xiaogang Village Ming Wine Distillery Co., Ltd. | Business combination not under the same control | Strengthen the development of the Company’s main business of liquor, accelerate the national layout of the product market, and enhance the Company’s brand influence and business scale |
Renhuai Maotai Town Zhencang Winery Industry Co., Ltd. | Business combination not under the same control | Strengthen the development of the Company’s main business of liquor, accelerate the national layout of the product market, and enhance the Company’s brand influence and business scale |
Anhui Jiuan Mechanical Electrical Equipment Co., Ltd. | Set up | Optimize the internal management structure and enhance the internal driving force. |
Anhui Jiuhao China Railway Construction Engineering Co., Ltd. | Set up | Optimize the internal management structure and enhance the internal driving force. |
Bozhou Gujing Waste Recycling Co., Ltd. | Cancel |
Other information on principal subsidiaries and joint stock companies:
N/A
X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
~ 35 ~
XI Prospects(I) Development Prospect of the Industry the Company is in
1. The tightening regulation has promoted the sound development of the liquor and spirits industrySince the National Development and Reform Commission issued the Catalogue for Guiding Industry Restructuring in 2019, "theproduct line of liquor and spirits" has been deleted from "restricted" items. This has released the "trammels" besetting thedevelopment of this industry for many years, and has brought a period of rapid development for the liquor and spirits industry. In2021, the regulatory authorities intensified the regulation on the liquor and spirits industry. The government and relevant departmentssuccessively issued a number of policies, and the State Administration for Market Regulation regulated and guided the developmentof the industry through multiple channels, all of which have promoted the sound development of the liquor and spirits industry.
2. The exacerbating differentiation has further increased the brand concentration among liquor enterprisesChina's liquor and spirits industry is moving faster to transform from an expanding market to a competitive market, and as a result,the strong have become stronger and the weak have become weaker. The "Matthew Effect" has become intensified. The marketshares of leading liquor enterprises above the designated size have kept rising, but the overall number of liquor enterprises has keptdeclining. Meanwhile, the consumption philosophies of rational drinking and healthy drinking have been gradually deeply rooted inpeople's hearts, and when making choices of consuming liquor and spirits, consumers have gradually strengthened their brandawareness.
3. Channel transformation, particularly digital transformation, has enabled liquor enterprises to enhance their corecompetitivenessDue to the pandemic, channel transformation has been intensified, digital trend has emerged, the online and offline closed-loop flowhas offered all-channel shopping experience to consumers, and the penetration rate in such digital channels as E-commerce, O2O,live streaming, and community group purchasing has been increased. Thus, the concentration in the liquor and spirits industry hasbeen further strengthened, and the enterprises, in order to enhance their core competitiveness, have relied on digital platforms torefine the management of supply side, internal procedures of enterprises, and customer operations in the whole process of operations,which enables the enterprises to reduce their operation costs and improve their operation efficiency.
4. The alternating pattern of the consumer groups of the liquor and spirits industry is being transformedYoung consumer groups constitute the future main consumption force of the liquor and spirits industry, and the future new growthpoints in the sector of China's liquor and spirits. In consideration of the alternation toward younger consumers, in which theconsumption of liquor and spirits is being more rapidly transformed toward the new generation of consumers, many renowned liquorenterprises have made their overall arrangements for their brand promotion and the packing and appearance of products with thesymbols and expression of a younger and more fashionable orientation. In such manners as online marketing and offline branding,brand promotion has redefined the cognition of younger consumption groups to the brands and products of liquor and spirits, whichhas realized the market education to young consumer groups through brand promotion of liquor and spirits.(II) Development Strategy of the Company
1. Firmly boost "Strategy 5.0, Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidlycreate the "Five-Star Operation", enhance competitive force, improve quality and efficiency, optimize services and promote healthyand efficient operation of the enterprise.
2. Firmly boost reform and innovation strategy
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of theenterprise.
3. Firmly create “Talent Highland” strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism.Innovate talent training mode and promote independent cultivation & development and absorption & attraction simultaneously.
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(III) Operating Revenue Plan of the Company in 2022In 2022, the Company plans to achieve the operating revenue of RMB15.3 billion, rising 15.30% compared with that of last year; andachieve a total profit of RMB3.55 billion, rising 11.94% compared with that of last year.(IV) Operating Risk of the Company
1. The adverse effect of the systematic risk in the macro-economic environment on the development of the industry and theCompany.
2. The strengthened concentration, intensified polarization, and continuously escalated competition in the liquor and spirits industry
3. The normalization of the COVID-19 pandemic, and the more complex, severe and uncertain external environment.(V) Operating Measures
1. Marketing
The Company made all efforts to push forward market and brand building, optimized the supply of resources, intensified thedissemination via Internet and new media, upgraded its brand IP, and increased the influence of Gujinggong brand. It was determinedto carry out unswervingly its "nationwide, sub-high-end, and Gu 20+" strategy, and to push forward the re-optimization of its productstructure and market structure.
2. Product Management
The Company strictly kept carrying out its production processes, continuously optimized its production operations, further exploredthe improvement of its key processes, and constantly improved the quality of its original liquor. It established a sound managementsystem standard for planting of grain bases, prevented and controlled bio-safety risks, carried out an exploratory reformation formanagement mode of quality check, and intensified the control and supervision on production processes, so that the quality oforiginal grain can be controlled well from the source.
3. Engineering Construction
The Company accelerated the construction of the smart technology transformation project (smart park) for liquor production, andadhered to high standards and high quality to promote the construction of smart park projects.
4. Informatization Construction
The Company intensified digital construction. Aided by modern technological means, the Company centered on smart manufacturingand green liquor making, set up an Internet platform for the liquor and spirits industry, and built a lighthouse factory of Gujing "5G+industrial Internet", to comprehensively promote the digital transformation of Gujing. It proactively pushed forward big data building,strengthened business data analysis, promoted procedure optimization, and improved the Company's operation efficiency andmanagement standard.
5. Safety and Environmental Protection
The Company comprehensively consolidated safety responsibility system, and continuously made great efforts to investigate andcontrol hazards, identify dangerous sources, and conduct safety education; it intensified fire-fighting management by specifying thespot checks of facilities, monitoring precautions, and fire control drills; it broadened thinking of safety work to build a steady safetydefense line with the aid of the information system of safety prevention. Under the premise of ensuring up-to-standard pollutantdischarge, and compliant waste disposal, the Company explored ways to comprehensively utilize the by-product of liquor-making, toimprove energy service efficiency, increase the proportion of new energy, further conserve energy and reduce carbon emission, andpursue green development.
6. Internal Management
The Company improved its incentive mechanism, and continuously promoted "separate legal entity system", and "creating platformsfor innovation and entrepreneurship". It delegated powers to lower levels to stimulate vitality, and balanced powers withresponsibilities, thus gradually realizing market-oriented distribution of such key factors as personnel, expenses, and remuneration.The measures also further vitalized the operation mechanism of grass-roots units, and stimulated the motivation and creativity of staffmembers. The Company also comprehensively sorted out such risk matters as its business, operating model, and financialmanagement, optimizing its internal control system. Meanwhile, it deepened the internal control assessment, and effectively
~ 37 ~
integrated internal control assessment with performance auditing and special auditing, thus intensifying the supervision on internalcontrol.
7. Corporate Culture Construction
The Company adhered to the principle that "Party-building helps build, vitalize, and stabilize the enterprise", and increased itscohesion through high-quality Party-building and cultural work, thus providing a strong political assurance for its high-qualitydevelopment, and forming a firm ideological front line that helped build, revitalize, and strengthen the enterprise. The Companydeepened and promoted the learning and education of Party history. It focused on the in-depth integration and mutual promotion ofParty-building and production and operation, normally carried out the activities of "I do practical things for the masses", conducted"Party-building brand" creation activities, deepened co-built Party-building, consolidated the building achievements ofstandardization within Party branches, and optimized the Party-building training system. The Company strictly implemented thespirit of Eight-point Decision issued by the CPC Central Committee, and constantly improved the supervision and governanceefficiency. It continuously integrated the Gujing Values into each aspect of the Company including production, operation, andmanagement.In 2022, the Company will continue to be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,thoroughly implement the spirit of the 19th CPC National Congress and the various plenary sessions of the 19th CPC CentralCommittee, enhance the "Four Consciousnesses", firmly believe in the "Four Self-confidences", implement the "Two Maintenances",carry forward the great Party-building spirit, and adhere to the general principle of pursuing progress while ensuring stability. Underthe strong leadership of the municipal CPC committee and the municipal government, the Company will implement the spirit of theprovincial and municipal Party congresses, adhere to "three Stricts and Three Honests", and "do things immediately, genuinely, andsolidly", gather strength to build "China Liquor Town", continuously implement long-term perspective mindset, the concept ofexcellence, and the awareness of high-quality products, maintain integrity and innovation, pursue progress while ensuring stability,and once again build a new "Gujing", an enterprise with digital and global operations and law-based management, enabling theCompany to boast excellent achievements to celebrate the 20th CPC National Congress to be successfully held.XII Communications with the Investment Community such as Researches, Inquiries andInterviews
□ Applicable √ Not applicable
~ 38 ~
Part IV Corporate GovernanceI General Information of Corporate GovernanceIndicate by tick market whether there is any material in-compliance with laws, administrative regulations and the regulatorydocuments issued by the CSRC governing the governance of listed companies.
□ Yes √ No
The Company has enabled the General Meeting, the Board of Directors, the Board of Supervisors and the management to form astandardized and scientific decision-making mechanism of operation to sufficiently protect the rights and interests of investors, andsmall and medium investors in particular, and to intensify the standardized operation of the Company, in strict accordance withrelevant laws and regulations such as the Company Law, the Securities Law, the Code of Corporate Governance for ListedCompanies, the Rules for Stock Listing of Shenzhen Stock Exchange, and the Guidelines of the Shenzhen Stock Exchange for theStandard Operation of Listed Companies. During the Reporting Period, the Company's actual situation of corporate governance metthe relevant requirements of the normative documents on the governance of listed companies issued by the China SecuritiesRegulatory Commission. In strict accordance with the relevant laws and regulations, and the Company's requirements on internalrules, regulations, and management system, each of the directors, supervisors and senior managers of the Company executed his orher rights and obligations, to ensure transparent disclosure of the Company's information, its operation according to law, and honestyand trustworthiness.
1. Shareholders and General Meeting of Shareholders
The Company regulates the convening, holding, and voting procedures of the general meeting of shareholders in strict accordancewith the provisions and requirements of the Company Law, the Articles of Association, and the Rules of Procedure of the GeneralMeeting. During the Reporting Period, the convening and holding procedures of general meetings of shareholders, the qualificationsof attendants to the meetings and the voting procedures of the meetings all met the provisions of the Company Law, Rules ofProcedure of the General Meeting, and other laws and regulations. The Company equally treated all of its shareholders, and smalland medium shareholders in particular, to ensure full execution of rights of all shareholders.
2. The Company and Controlling Shareholders
The Company's controlling shareholders are able to strictly regulate their own behaviors, without any violation of provisions ofrelevant laws, regulations, and the Company's Articles of Association. They have not directly or indirectly interfered with theCompany's decision-making, and production and operation activities, nor have they occupied the Company's funds; the Company hasnot provided its controlling shareholders with any form of guarantee.
3. Directors and Board of Directors
The Company's Board of Directors consists of nine directors, three of whom are independent directors. The number of directors andthe personnel composition of the Board of Directors comply with the requirements of laws, regulations, and the Articles ofAssociation. All directors act in accordance with the Articles of Association, Rules of Procedure of the Board of Directors, and theWork Policy for Independent Directors, etc., attend the meetings of the Board of Directors and general meetings of shareholders,diligently and faithfully perform their duties and obligations. Meanwhile, they actively participate in relevant training, and getfamiliar with relevant laws and legislations. Under the Board of Directors, there are four special committees, i.e., the AuditCommittee, the Nominating Committee, the Remuneration and Appraisal Committee, and the Strategy Committee, which performtheir normal duties, to provide scientific and professional comments and references for decision-making of the Board of Directors.
4. Supervisors and Board of Supervisors
There are five supervisors in the Company's Board of Supervisors, including two employee supervisors. The number and
~ 39 ~
composition of the Board of Supervisors are in compliance with the requirements of laws and regulations. All supervisors are able toconscientiously perform their duties in accordance with the requirements of the Rules of Procedure of the Board of Supervisors,earnestly perform their duties, and supervise the major events, related-party transactions, financial status, law-and-regulationcompliance of performance of duties of directors and senior managers of the Company.
5. The Mechanism of Performance Appraisal, and Incentive and Constraint
The procedures for appointment and removal of directors, supervisors, and senior managers of the Company shall be open andtransparent, and in line with the relevant provisions of laws, regulations, and the Articles of Association; the Company's remunerationappraisal scheme shall specifically stipulate the evaluation to the Company's management team. The Company shall constantlyimprove the performance evaluation standard and incentive and constraint mechanism of directors, supervisors, and senior managers.
6. Fulfillment of Social Responsibilities, and Stakeholders
The Company is able to fully respect and protect the legitimate rights and interests of relevant stakeholders, achieve a balance ofinterests between the society, shareholders, the Company, suppliers, customers, employees, and other relevant parties, to promote thesustainable, stable, and healthy development of the Company.
7. Information Disclosure and Transparency
The Company faithfully performs the obligation of information disclosure in strict accordance with the Articles of Association of theCompany, Listing Rules of Shenzhen Stock Exchange, Self-Regulatory Guidelines No. 1 for Companies Listed on Shenzhen StockExchange - Standard Operation of Listed Companies on the Main Board, Self-regulatory Guidelines No. 5 for Companies Listed onShenzhen Stock Exchange - Management of Information Disclosure Affairs, and the relevant laws and regulations of China'sSecurities Regulatory Commission and Shenzhen Stock Exchange. The Company designates China Securities Journal, ShanghaiSecurities News, Ta Kung Pao, and Cninfo (http://www.cninfo.com.cn) as its information disclosure media and website, to guaranteeinvestors' right to know, and to ensure that all shareholders of the Company have a fair opportunity to obtain information of theCompany. Meanwhile, the Company has established diversified communication channels for investors, including special telephoneline, exclusive mailbox, and interactive platform for investors, and many other forms, to fully guarantee the right of a large numberof investors to know.
8. The formulation and implementation of the registration and management system on inside information and insidersIn accordance with the requirements of regulatory authorities, the Company and all of its controlling shareholders have formulatedthe system for registration and record on inside information and insiders, regulated the acts of managing inside information of theCompany and its controlling shareholder, strengthened the classification of inside information, and safeguarded the principle offairness for information disclosure. During the Reporting Period, in strict accordance with the Management System on InsideInformation and Insiders, the Company has made well classification of inside information, and registration and record on insiders.II The Company’s Independence from Its Controlling Shareholder and Actual Controller inBusiness, Personnel, Asset, Organization and Financial AffairsThe Company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities,and there is no same trade competition state of the same products between the company and majority shareholders.
1. Independence of Business
The Company is mainly engaged in the production and sale of liquor and spirits, and the Company's business is mutually independentof its controlling shareholder Gujing Group and other enterprises controlled by the Group. The issuer owns independent research anddevelopment system, purchasing system, production system, and sale system, forming a complete business chain, all of which do notrely on its shareholders and their subordinate enterprises. Therefore, the issuer's business is independent of its controlling
~ 40 ~
shareholders.
2. Independence of Personnel
The Company has independent management systems of labor, personnel, salary, etc., and independent staff teams, in which the salarypayment and welfare expenditure of the Company are strictly independent of those of its shareholders and related parties. Thedirectors, supervisors and senior managers of the Company are all selected in strict accordance with the relevant provisions of theCompany Law and the Company's Articles of Association. All senior managers do not take other positions than directors orsupervisors in any of other entities controlled by the controlling shareholders or actual controllers of the Company, nor do theyreceive salary from any other entities controlled by the controlling shareholders or actual controllers of the Company. None of thefinancial staff members of the Company takes part-time positions in any of other entities controlled by the controlling shareholders oractual controllers of the Company.
3. Independence of Assets
The Company has its production system, auxiliary production system, and supporting facilities related to its production and operation;and legally has the ownership or use rights of the land, plants, machines, trademarks, and patents in relation to its production andoperation. Therefore, there is not any damage to the Company's interests in such a way that the assets and funds of the Company areoccupied by the Company's controlling shareholders and their related parties.
4. Independence of Organization
The Company has established a sound and integral governance structure of general meeting of shareholders, the Board of Directors,and the Board of Supervisors, and formulated the corresponding internal control management system. The Company independentlyexercises the duties and rights of operation and management, in which the Company's units of production, operation, and office arecompletely separated from the shareholding entities. Therefore, the Company does not make mixed operation and has mixed officewith its shareholding entities; the Company's shareholding entities and their related entities or persons do not interfere with theCompany's structural setup; there is not any subordinate relationship between the Company and its controlling shareholders, orbetween their functional departments.
5. Independence of Finance
The Company has set up an independent finance department with full-time personnel; and established an independent accountingsystem and financial management system, independently making financial decisions, and implementing a strict internal audit system.An independent bank account has been opened for the Company, without sharing the account with the Company's shareholdingentities or any other entity or person. The Company, as an independent taxpayer, declares taxes and fulfills tax payment obligationsindependently according to law, and does not pay taxes together with its shareholding entities.III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
The 2020 Annual General Meeting | Annual General Meeting | 59.34% | 25 May 2021 | 26 May 2021 | Announcement on Resolutions of the 2020 Annual |
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General Meetingdisclosed onwww.cninfo.com.cn
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with ResumedVoting Rights
□ Applicable √ Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
Liang Jinhui | Chairman of the Board | Incumbent | Male | 56 | 19 June 2020 | 18 June 2023 | |||||
Li Peihui | Director | Incumbent | Male | 49 | 19 June 2020 | 18 June 2023 | |||||
Zhou Qingwu | Director, GM | Incumbent | Male | 48 | 19 June 2020 | 18 June 2023 | |||||
Yan Lijun | Director, Executive Deputy GM | Incumbent | Male | 49 | 19 June 2020 | 18 June 2023 | |||||
Xu Peng | Director, Deputy GM | Incumbent | Male | 52 | 19 June 2020 | 18 June 2023 | |||||
Ye Changqing | Director | Incumbent | Male | 48 | 19 June 2020 | 18 June 2023 | |||||
Zhang Guiping | Independent director | Incumbent | Male | 71 | 19 June 2020 | 18 June 2023 | |||||
Wang Ruihua | Independent director | Incumbent | Male | 60 | 19 June | 18 June |
~ 42 ~
2020 | 2023 | ||||||||||
Xu Zhihao | Independent director | Incumbent | Male | 46 | 19 June 2020 | 18 June 2023 | |||||
Sun Wanhua | Chairman of Supervisory Committee | Incumbent | Male | 57 | 19 June 2020 | 18 June 2023 | |||||
Yang Xiaofan | Supervisor | Incumbent | Male | 55 | 19 June 2020 | 18 June 2023 | |||||
Wang Zibin | Employee supervisor | Incumbent | Male | 52 | 19 June 2020 | 10 March 2022 | |||||
Lu Duicang | Supervisor | Incumbent | Male | 42 | 19 June 2020 | 18 June 2023 | |||||
Zhang Bo | Employee supervisor | Incumbent | Male | 57 | 19 June 2020 | 18 June 2023 | |||||
Zhang Lihong | Deputy GM | Incumbent | Male | 54 | 19 June 2020 | 18 June 2023 | |||||
Zhu Xianghong | Deputy GM | Incumbent | Male | 48 | 19 June 2020 | 18 June 2023 | |||||
Gao Jiakun | Deputy GM | Incumbent | Male | 52 | 19 June 2020 | 18 June 2023 | |||||
Li Anjun | Deputy GM | Incumbent | Male | 52 | 28 August 2020 | 18 June 2023 | |||||
Kang Lei | GM assistant | Incumbent | Male | 44 | 28 August 2020 | 18 June 2023 | |||||
Zhu Jiafeng | GM assistant, Deputy | Incumbent | Male | 45 | 28 August 2020 | 18 June 2023 |
~ 43 ~
Chief Accountant | |||||||||||
Zhu Jiafeng | Secretary of the Board | Incumbent | Male | 45 | 29 October 2021 | 18 June 2023 | |||||
Total | -- | -- | -- | -- | -- | -- |
Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the ReportingPeriod
□ Yes √ No
Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name | Office title | Type of change | Date of change | Reason for change |
Ye Changqing | Deputy GM, Chief Accountant, Secretary of the Board | Left | 13 August 2021 | Job change |
Zhu Jiafeng | Secretary of the Board | Appointed | 29 October 2021 | Appointment |
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors andsenior management:
1. Mr. Liang Jinhui, male, born in October 1966, member of CPC, is Political Engineer and a deputy to the 13
thNational People’sCongress with MBA degree, incumbent Secretary of CPC and president of the Company and president and Secretary of CPC ofGujing Group. He ever took the post of MD, GM, Deputy GM, GM of Bozhou Gujing Sales Co., Ltd., Supervisor of ThirdSupervisory Committee, Director of the 4
th
, 5
th and 6th
Board of Directors and Chairman of the 7
th and 8th
Board of Directors of theCompany.
2. Mr. Li Peihui, male, born in July 1973, member of CPC, is a holder of master degree. He is a senior accountant, CPA and memberof national leading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC and president of Gujing Group.He had ever served as deputy GM and GM of Financial Department, deputy chief accountant, chief accountant, Secretary of Board ofDirectors and Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui HuixinFinancial Investment Group; executive vice president and CFO of Gujing Group; and director of the 7
th and 8thBoard of Directors.
3. Mr. Zhou Qingwu, male, born in February 1974, member of CPC, is a senior engineer, and China Chief Liquor and Spirits Tasterwith educational experience of graduate student. At present, he is Vice Secretary of CPC, Director and General Manager of theCompany, Vice Secretary of CPC of Gujing Group. He had ever acted as Deputy GM and deputy executive GM of the Company andDirector of the 5
th
, 6th, 7th and 8thBoard of Directors of the Company.
4. Mr. Yan Lijun, male, June 1973, member of CPC, is a holder of master degree with Senior Taster. Now he is Vice Secretary ofCPC, Director, Executive Deputy GM of the Company, member of CPC Committee of Gujing Group, Chairman of the Board andGM of Bozhou Gujing Sales Co., Ltd. He once worked as a salesman of Sale Company, District Manager, Director of Market
~ 44 ~
Research, Vice Manager of Planning Department, Director of Hefei Strategic Operations Center, Vice GM and director of the 7
thand
thBoard of Directors of the Company.
5. Mr. Xu Peng, male, born in September 1970, member of CPC, has educational experience of undergraduate college. He is themember of CPC Committee, Director and Deputy GM of the Company, member of CPC Committee of Gujing Group, and Chairmanof the Board of Yellow Crane Tower Liquor Industry Co., Ltd. He had ever acted as Deputy Director and Director of Finance SecondOffice of Finance Department of the Company, Manager of Finance Department of Anhui Laobada Co., Ltd., Vice Manager andManager of Finance Department of the Company, Deputy General Manager and Chief Supervisor of Market Supervision Departmentof Bozhou Gujing Sales Company, Chairman of the 7
th Supervisory Committee and Director of the 7
th and 8thBoard of Directors ofthe Company.
6. Mr. Ye Changqing, male, born in October 1974, member of CPC, is a member of national leading accounting talents with masterdegree and International Certified Internal Auditor. He is the incumbent Director of the Company and CFO of Gujing Group. He hadever acted as Chief Auditor of Audit Department, Vice Manager of Audit Department and Vice Supervisor and Supervisor ofAuditing& Supervision Department; and Supervisor of the 4
th
Supervisory Committee of the Company; Director and Secretary of the
th, 6th
, 7th and 8thBoard of Directors, and Chief Accountant of the Company.
7. Zhang Guiping, male, born in August 1951, is a member of the Revolutionary Committee of the Chinese Kuomintang and abachelor's degree holder. He is currently a member of the 13
thCPPCC National Committee, Chairman of Sunning Global, Chairmanof Suning Universal Co., Ltd., Independent Director of the Company, President of Commercial Culture Association of China,Director of Anhui International Huishang Exchange Association, Director of Southeast University, Director and Professor at NanjingNormal University, and other social positions. Many awards have been bestowed upon him, including “Excellent Contributor toBuilding of Socialism with Chinese Characteristics”, “China Outstanding Private Entrepreneur”, “China Most Influential BusinessLeader”, “Chinese Talent with Great Integrity”, “Top Ten Influential People in China Real Estate Industry”, and “OutstandingIndividual Contributor to China Charity”.
8. Wang Ruihua, male, born in January 1962, member of CPC, is a non-practicing Chinese CPA with a doctor’s degree inmanagement. Now he acts as a professor and doctoral advisor in the Business School of Central University of Finance andEconomics, the independent director in the Company, BCEG Environmental Remediation Co., Ltd., and Bank Of Beijing Co., Ltd.,member of Independent Director Committee of China Association for Public Companies.
9. Xu Zhihao, male, born in June 1976, is a senior engineer who graduated from Renmin University of China. He also holds amaster's degree from the PBC School of Finance, Tsinghua University, and is studying for a doctorate at Zhejiang University andSingapore Management University. He possesses the professional qualifications to engage in fund and securities businesses. He iscurrently Independent Director of the Company, CEO of Geely Technology Group Co., Ltd., Chairman of QJMOTOR, and Chairmanof Lifan Technology.
10. Sun Wanhua, male, was born in October 1965, member of CPC, with a bachelor degree. Now he acts as the Chairman of theSupervisory Committee of the Company, member of the Party Committee and vice president in Gujing Group. He once held the postsof the member of Standing Committee of CPC County Committee, the Party Secretary of People’s Armed Forces Department andpolitical commissar in Minquan County, Henan Province, member of Standing Committee of Discipline Inspection Committee inBozhou, Deputy Director of Bozhou Supervision Bureau and Deputy Secretary of Bozhou Discipline Inspection Committee,Chairman of the 8
thSupervisory Committee of the Company.
11. Mr. Yang Xiaofan, male, born in April 1967, member of CPC, is a holder of master degree. At present, he is Supervisor of theCompany and Vice President and member of CPC Committee of Gujing Group. He once acted as Vice President and GeneralManager of Anhui Gujing Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5
th, 6
th and 7thBoardof Directors of the Company and Supervisor of the 7
th
and 8
thSupervisory Committee of the Company.
12. Wang Zibin, male, born in August 1970, member of CPC, a senior auditor, certified internal auditor and CPA with a collegedegree. Now he acts as the Employee Supervisor of the Company, member of the Party Committee in Gujing Group. He once held
~ 45 ~
the posts of the GM of Audit Department in Gujing Group, Assistant GM in Bozhou Construction Investment Real EstateDevelopment Co., Ltd., CFO and Deputy GM in Hefei Marketing Center of Bozhou Gujing Sales Company, the Supervisor of the 7
th
and 8
th
Supervisory Committee of the Company and Director in Audit Supervision Center and Secretary of the Discipline InspectionCommittee in Gujing Group.
13. Lu Duicang, male, born in March 1980, member of CPC, a senior accountant with a master degree. Now he serves as thesupervisor of the Company, the Chairman of Anhui Longrui Glass Co., Ltd. and director of Mengcheng Rural Commercial Bank Co.,Ltd. He once acted as the accountant, deputy director, and director of No.1 Center of Finance Department, factory director of theLiquor and Spirits Bottling Branch and Manager of Finished Product Department in the Company, Controller of the FinancialManagement Center in Gujing Group, GM of Anhui Huixin Finance Investment Group Co., Ltd. Assistant Financial Controller inGujing Group and the Supervisor of the 5
th, 6th, 7th and 8thSupervisory Committee of the Company.
14. Mr. Zhang Bo, male, born in July 1965, member of CPC, is an economist with bachelor degree. Now, he serves as EmployeeSupervisor of the Company and director of 5A Management Committee (preparatory). He once worked as Chairman of the board andGM of Bozhou Gujing Printing Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board ofBozhou Ruineng Heat and Power Co., Ltd., Supervisor of the 7
th
and 8th
Supervisory Committee of the Company, Chairman of theLabor Union of Gujing Group and Chairman of the Board & GM of Anhui Mingguang Distillery Co., Ltd.
15. Mr. Zhang Lihong, male, born in October 1968, member of CPC, is an economist with bachelor degree. He is incumbent ViceSecretary of CPC and Deputy GM of the Company and member of CPC Committee and deputy secretary of Commission forDiscipline and Inspection of Gujing Group. He once acted as clerk, Secretary of Operation Department and Market DevelopmentDepartment, Deputy GM, Director of General Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HRDepartment and Administrative Service Center and GM Assistant of the Company.
16. Mr. Zhu Xianghong, male, born in September 1974, member of CPC, is a senior Wine Taster with bachelor degree. He isincumbent Deputy GM of Company, GM of Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of ProductDepartment of Bozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of AnhuiOperating Centre, standing Deputy GM of Sales Company and assistant to GM of the Company.
17. Mr. Gao Jiakun, male, born in November 1970, member of CPC, is a holder of bachelor degree. He is incumbent member of theCPC and Deputy GM of the Company. He once served as GM of Production Management Department, Vice Director of ProductionManagement Centre, Chairman of the Board and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished ProductsFilling Centre and Production Management Centre, and assistant to GM of the Company.
18. Li Anjun, male, born in May 1970, is a member of CPC with a master's degree. He is currently a member of the Party Committee,Deputy General Manager, Chief Engineer, and Director of the Technical Quality Center of the Company. He served as the DeputyDirector of the Company's Technical Quality Center.
19. Kang Lei, male, born in July 1978, is a member of CPC with a college degree. He is currently Assistant to General Manager, andDirector of the Enterprise Management Center of the Company. He served as Deputy Director of the Financial Management Centerof Bozhou Gujing Sales Company, Director of the Company's Administrative Service Center, and Deputy Director of the President'sExecutive Office of Gujing Group.
20. Zhu Jiafeng, male, born in August 1977, is a member of CPC with a college degree. He is currently assistant to General Manager,Deputy Chief Accountant, Secretary of the Board and Director of the Financial Management Center of the Company. He served asthe Manager and Deputy Director of the Financial Management Center of the Company.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding entity |
~ 46 ~
Liang Jinhui | Anhui Gujing Group Co., Ltd. | Chairman of the Board of Directors | 1 May 2014 | Yes | |
Li Peihui | Anhui Gujing Group Co., Ltd. | President | 31 October 2017 | Yes | |
Sun Wanhua | Anhui Gujing Group Co., Ltd. | Vice President | 31 October 2017 | Yes | |
Yang Xiaofan | Anhui Gujing Group Co., Ltd. | Vice President | 1 November 2009 | Yes | |
Ye Changqing | Anhui Gujing Group Co., Ltd. | CFO | 13 August 2021 | Yes | |
Notes | The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant employment requirements of Company Law, Securities Law and never disciplined by CSRC, other relevant departments and the Stock Exchange. |
Offices held concurrently in other entities:
√Applicable □Not applicable
Name | Other entity | Office held in other entity | Start of tenure | End of tenure | Remuneration or allowance from other entity |
Zhang Guiping | Suning Universal Group Co.,Ltd | Chairman of the Board | December 2005 | No | |
Suning Universal Co.,Ltd | Chairman of the Board, President | October 2017 | October 2023 | Yes | |
Xu Zhihao | Geely Technology Group Co., Ltd. | CEO | January 2018 | Yes | |
Zhejiang Qjiang Motorcycle Co.,Ltd. | Chairman of the Board | February 2020 | May 2024 | No | |
Lifan Technology (Group) Co.,Ltd. | Chairman of the Board | January 2021 | January 2024 | No | |
Mingtai Investment Development Group Co., Ltd | Chairman of the Board | August 2021 | No | ||
Wang Ruihua | Central University of Finance and Economics | Professor | July 1983 | Yes | |
Bank Of Beijing Co., Ltd. | Independent director | December 2019 | December 2022 | Yes | |
BCEG Environmental Remediation Co., Ltd. | Independent director | March 2020 | March 2023 | Yes | |
Lu Duicang | Mengcheng Rural Commercial Bank Co., Ltd. | Director | March 2018 | No | |
Notes | Zhang Guiping, Wang Ruihua and Xu Zhihua are independent directors of the Company. |
~ 47 ~
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
(I) Decision-making procedure of remuneration for Directors, Supervisors and Executive OfficersThe remuneration of independent directors is decided through the general meeting of shareholders, and the remuneration of thedirectors, supervisors, and senior managers assuming positions in the Company is defined in accordance with the relevant regulationsof the State-owned Assets Supervision and Administration Commission (the "SASAC") of Haozhou Municipal People's Government,and the relevant policies of the Company.(II) Determination basis of remuneration for Directors, Supervisors and Executive OfficersThe remuneration is determined based on the annual performance of the Company and the appraisal result in accordance with thespirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in Provincial Enterprises(WF[2015] No. 28), and the Interim Procedures of Remuneration Management of Chargers in Municipal Enterprises (GZG[2017] No.
21) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui.(III) Actual Payment of remuneration for Directors, Supervisors and Executive OfficersPart of basic remuneration is paid on a monthly basis, and according to appraisal, performance-based remuneration is paid at the endof the year.Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
Liang Jinhui | Chairman of the Board | Male | 56 | Incumbent | Yes | |
Li Peihui | Director | Male | 49 | Incumbent | Yes | |
Zhou Qingwu | Director, GM | Male | 48 | Incumbent | 183.13 | No |
Yan Lijun | Director, Executive Deputy GM | Male | 49 | Incumbent | 348.47 | No |
Xu Peng | Director, Deputy GM | Male | 52 | Incumbent | 134.24 | No |
Ye Changqing | Director | Male | 48 | Incumbent | 107.38 | Yes |
Zhang Guiping | Independent director | Male | 71 | Incumbent | 7.5 | No |
Wang Ruihua | Independent | Male | 60 | Incumbent | 7.5 | No |
~ 48 ~
director | ||||||
Xu Zhihao | Independent director | Male | 46 | Incumbent | 7.5 | No |
Sun Wanhua | Chairman of Supervisory Committee | Male | 57 | Incumbent | Yes | |
Yang Xiaofan | Supervisor | Male | 55 | Incumbent | Yes | |
Wang Zibin | Employee supervisor | Male | 52 | Incumbent | Yes | |
Lu Duicang | Supervisor | Male | 42 | Incumbent | 64.60 | No |
Zhang Bo | Employee supervisor | Male | 57 | Incumbent | Yes | |
Zhang Lihong | Deputy GM | Male | 54 | Incumbent | 163.61 | No |
Zhu Xianghong | Deputy GM | Male | 48 | Incumbent | 278.18 | No |
Gao Jiakun | Deputy GM | Male | 52 | Incumbent | 139.86 | No |
Li Anjun | Deputy GM | Male | 52 | Incumbent | 146.76 | No |
Kang Lei | GM assistant | Male | 44 | Incumbent | 143.93 | No |
Zhu Jiafeng | GM assistant, Deputy Chief Accountant, Secretary of the Board | Male | 45 | Incumbent | 142.81 | No |
Total | -- | -- | -- | -- | 1,875.47 | -- |
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
Meeting | Date of the meeting | Disclosure date | Meeting resolutions |
The 7th Meeting of the 9th Board of Directors | 29 April 2021 | 30 April 2021 | Announcement on Resolutions of the 7th Meeting of the 9th Board of Directors of Anhui Gujing Distillery Company Limited (No.: 2021-012) disclosed on the website of Cninfo (www.cninfo.com.cn). |
The 8th Meeting of the 9th Board of Directors | 27 August 2021 | 28 August 2021 | Announcement on Resolutions of the 8th Meeting of the 9th Board of Directors of Anhui |
~ 49 ~
Gujing Distillery Company Limited (No.: 2021-026) disclosed on the website of Cninfo (www.cninfo.com.cn). | |||
The 9th Meeting of the 9th Board of Directors | 29 October 2021 | 30 October 2021 | Announcement on Resolutions of the 9th Meeting of the 9th Board of Directors of Anhui Gujing Distillery Company Limited (No.: 2021-035) disclosed on the website of Cninfo (www.cninfo.com.cn). |
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings | |||||||
Director | Total number of board meetings the director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the director failed to attend | The director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
Liang Jinhui | 3 | 1 | 2 | 0 | 0 | No | 1 |
Li Peihui | 3 | 1 | 2 | 0 | 0 | No | 1 |
Zhou Qingwu | 3 | 1 | 2 | 0 | 0 | No | 1 |
Yan Lijun | 3 | 1 | 2 | 0 | 0 | No | 1 |
Xu Peng | 3 | 1 | 2 | 0 | 0 | No | 1 |
Ye Changqing | 3 | 1 | 2 | 0 | 0 | No | 1 |
Zhang Guiping | 3 | 0 | 3 | 0 | 0 | No | 0 |
Wang Ruihua | 3 | 0 | 3 | 0 | 0 | No | 1 |
Xu Zhihao | 3 | 1 | 2 | 0 | 0 | No | 0 |
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
~ 50 ~
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the CompanyDuring the Reporting Period, the directors of the Company carried out their work diligently and conscientiously in strict accordancewith the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies, the Guidelines of theShenzhen Stock Exchange for the Standard Operation of Listed Companies, the Articles of Association, and Rules of Procedure of theBoard of Directors. Based on the Company's reality, they put forward relevant opinions on the Company's major governance andoperation decisions, and reached consensus through full communication and discussion. They resolutely supervised and promoted theimplementation of the resolutions of the Board of Directors to ensure scientific, timely, and efficient decision-making and safeguardthe legitimate rights and interests of the Company and all of its shareholders.VII Performance of Duty by Specialized Committees under the Board in the Reporting Period
Committee | Members | Number of meetings convened | Convened date | Content | Important opinions and suggestions raised | Other information about the performance of duty | Details about issues with objections (if any) |
The Audit Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | 1 | 26 March 2021 | Review the Audit Plan for Annual Report 2020 of the Company | The Audit Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||
The Audit Committee | Zhang Guiping, Wang Ruihua, | 1 | 26 April 2021 | Review the Company’s Financial Report for | The Audit Committee carried out its work |
~ 51 ~
under the Board | Xu Zhihao, Xu Peng, Ye Changqing | 2020 and Auditor’s Report, the Internal Control Evaluation Report for 2020, the Proposal on Contract Renewal of the CPAs Firm and the First Quarterly Report 2021 | diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||||
The Audit Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | 1 | 25 August 2021 | Review the Interim Report 2021 of the Company | The Audit Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||
The Audit Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | 1 | 25 October 2021 | Review the Third Quarterly Report 2021 and the Usage of Raised Funds of the Company | The Audit Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of |
~ 52 ~
Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | |||||||
The Nomination Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Liang Jinhui, Li Peihui | 1 | 25 October 2021 | Review the Proposal on the Nomination of the Company’s Secretary of the Board | The Nomination Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. |
VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
IX Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent at the period-end | 5,671 |
Number of in-service employees of major subsidiaries at the period-end | 5,074 |
~ 53 ~
Total number of in-service employees | 10,745 |
Total number of paid employees in the Reporting Period | 10,745 |
Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 1,370 |
Functions | |
Function | Employees |
Production | 5,387 |
Sales | 2,911 |
Technical | 586 |
Financial | 217 |
Administrative | 966 |
Other | 678 |
Total | 10,745 |
Educational backgrounds | |
Educational background | Employees |
Master or above | 99 |
Bachelor | 2,663 |
Junior college | 2,355 |
High school or below | 5,628 |
Total | 10,745 |
2. Employee Remuneration Policy
The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operationperformance and profits of the Company and the relevant remuneration policy management.
3. Employee Training Plans
Employee training is significant in the Human resource management. The Company always pay high attention to the employeetraining and development, the Company sets up effective training plan combining with the current situation of the Company, annualplan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,front-line employee operating skills training, management improvement training and part-time study. Continuously improve thewhole quality of the employees, realized a win-win situation and progress between the Company and the employees.
4. Labor Outsourcing
√ Applicable □ Not applicable
Total man-hours (hour) | 3,005,548 |
~ 54 ~
Total remuneration paid (RMB) | 54,929,711.75 |
X Profit Distributions (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting Period:
√ Applicable □ Not applicable
The 2020 Annual General Meeting held on 25 May 2021 reviewed and approved the Company’s Interest Distribution Scheme in2020 that based on the total shares of 503,600,000 of the Company on 31 December 2020, cash dividends was distributed atRMB15.00 per 10 shares (tax inclusive), and the total cash dividends distributed was RMB755,400,000.00 (tax inclusive), which hasbeen carried out completely in June 2021.
Special statement about the cash dividend policy | |
In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
Specific and clear dividend standard and ratio | Yes |
Complete decision-making procedure and mechanism | Yes |
Independent directors faithfully performed their duties and played their due role | Yes |
Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | No adjustments or changes |
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders arepositive.
□ Applicable √ Not applicable
Final dividend plan for the Reporting Period
√ Applicable □ Not applicable
Bonus issue from capital reserves for every 10 shares (share) | 0 |
Dividend for every 10 shares (RMB) (tax inclusive) | 22.00 |
Bonus issue from profit for every 10 shares (share) | 0 |
Total shares as the basis for the final dividend plan (share) | 528,600,000 |
Total cash dividends (RMB) (tax inclusive) | 1,162,920,000.00 |
Cash dividends in other ways (such as share repurchase) (RMB) | 0.00 |
Total cash bonus (including other methods) (RMB) | 1,162,920,000.00 |
~ 55 ~
Distributable profits (RMB) | 8,904,467,073.30 |
Percentage of cash dividends (including other methods) to the total distributed profits | 100.00% |
Particulars about the cash dividends | |
If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of cash dividends in the profit allocation shall be 40% or above. | |
Details of final dividend plan for the Reporting Period | |
The Company intends to distribute RMB22.00 (tax included) per 10 shares based on the total shares of 528,600,000 at the end of the year, totaling RMB1,162,920,000.00. This year does not send bonus, does not transfer to increase capital stock with accumulation fund. |
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
In accordance with the provisions of the Basic Code for Internal Control of Enterprises and its supporting guidelines, the Companyhas set up a complete procedure system for internal control system, in which the assessment incorporates the entities, business,matters, and high risk fields, covering all major aspects of the Company's operation and management, without material omissions.The Company's internal control is designed soundly and reasonably, and basically implemented effectively, without materialomissions. Through the operation, analysis, and assessment of the internal control system, the Company has effectively preventedrisks in operation and management, and promoted the realization of internal control objectives.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
XIII Management and Control over Subsidiaries by the Company for the Reporting PeriodDuring the Reporting Period, In accordance with the relevant requirements for standard operation of listed companies, and therelevant internal control system of the Company, and by dispatching directors and supervisors to subsidiary companies, the Companyparticipated in the daily operation of the Board of Directors and the Board of Supervisors, thus realized the effective managementand supervision on such matters as overseas investment, related-party transactions, development planning, compliant operation, andhuman resources of subsidiary companies, specified the reporting system and deliberation procedure of major events, and in a timelymanner, followed up such major events as financial status, business operation, and investment operation of subsidiary companies.
~ 56 ~
XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on InternalControl
1. Internal Control Self-Evaluation Report
Disclosure date of the internal control self-evaluation report | 30 April 2022 | |
Index to the disclosed internal control self-evaluation report | See www.cninfo.com.cn for the Anhui Gujing Distillery Company Limited Self-assessment Report of Internal Control | |
Evaluated entities’ combined assets as % of consolidated total assets | 95.36% | |
Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 99.87% | |
Identification standards for internal control weaknesses | ||
Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
Nature standard | Critical defect: Separate defect or other defects that result in failure in preventing, finding out and correcting major wrong reporting in financial report in time. The following circumstances are deemed as critical defects: (1) Ineffective in controlling the environment; (2) Malpractice of directors, supervisors and senior management officers; (3) According to external auditing, there’s major wrong reporting in current financial report, which fails to be found by the company in its operating process; (4) Major defects found and reported to the top management fail to be corrected within a reasonable period of time; (5) The supervision of audit committee of the company and its internal audit department for internal control is ineffective; (6) Other defects that may affect correct judgment of users of statements. Major defect: Separate defect or other defects that result in failure in preventing, finding out and correcting wrong reporting in financial report in time, which shall be noted by the top management despite of not attaining or | Any of the following circumstances shall be deemed as a critical defect, and other circumstances shall be deemed as major or minor defects according to their degree of impact. (1) Violate national laws, regulations or standardized documents; (2) Major decision making procedure is not scientific; (3) Lack of systems results in systematic failure; (4) Critical or major defects fail to be rectified; (5) Other circumstances that have major impact on the company. |
~ 57 ~
exceeding critical level. Minor defect: Other internal control defects not constituting critical or major defects. | ||
Quantitative standard | Critical defect: (1) Wrong reporting ≥0.5% of total operating revenue; (2) Wrong reporting ≥5% of total profit; (3) Wrong reporting ≥0.5% of total assets; (4) Wrong reporting ≥0.5% of total owner’s equity. Major defect: (1) Wrong reporting ≥0.2% but <0.5% of total operating revenue; (2) Wrong reporting ≥2% but <5% of total profit; (3) Wrong reporting ≥0.2% but <0.5% of total assets; (4) Wrong reporting ≥0.2% but <0.5% of total owner’s equity. Minor defect: (1) Wrong reporting<0.2% of total operating revenue; (2) Wrong reporting<2% of total profit; (3) Wrong reporting<0.2% of total assets; (4) Wrong reporting<0.2% of total owner’s equity. | Critical defect: The defect with direct property loss amounting to over RMB10 million, has great negative impact on the company and is disclosed in public in the form of announcement. Major defect: The defect with direct property loss amounting to RMB1 million to RMB10 million (included), or is penalized by governmental authority of the country but has not resulted in negative impact on the company. Minor defect: The defect with direct property loss no more than RMB1 million (included), or is penalized by governmental authority of the provincial-level or below but has not resulted in negative impact on the company. |
Number of material weaknesses in internal control over financial reporting | 0 | |
Number of material weaknesses in internal control not related to financial reporting | 0 | |
Number of serious weaknesses in internal control over financial reporting | 0 | |
Number of serious weaknesses in internal control not related to financial reporting | 0 |
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control |
We believe that the Company has maintained effective internal control on financial report in all significant respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on 31 December 2021. |
~ 58 ~
Independent auditor’s report on internal control disclosed or not | Disclosed |
Disclosure date | 30 April 2022 |
Index to such report disclosed | See www.cninfo.com.cn for Audit Report of Internal Control |
Type of the auditor’s opinion | Unmodified unqualified opinion |
Material weaknesses in internal control not related to financial reporting | None |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.
√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for ListedCompany Governance
On 10 December 2020, the China Securities Regulatory Commission issued Announcement on Launching a Special Campaign toImprove the Governance of Listed Companies; and to implement the requirements of the Opinions of the State Council on FurtherImproving the Quality of Listed Companies, in 2021, the Company organized and carried out self-inspection on the special actions ofcorporate governance of the Company from 2018 to 2020. The self-inspection list involves the Company in regard to its basicinformation, the operation and decision-making of organization structure, controlling shareholders, actual controllers and their relatedparties, the system construction for standardizing internal control, information disclosure and transparency, institutional and overseasinvestors, and other issues, which are the matters of a total of seven aspects. The conclusion of the self-inspection is as follows:
Through comprehensive self-inspection of the Company's self-governance, it is not identified that there is any violation of relevantlaws and regulations, and such internal system as the Articles of Association.
~ 59 ~
Part V Environmental and Social ResponsibilityI Major Environmental Issues
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmentalprotection authorities of China.Yes
Name of polluter | Name of major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Discharge standards implemented | Total discharge | Approved total discharge | Excessive discharge |
Anbui Gujing Distillery Co., Ltd. | COD | Directly discharge | 3 | Gujing plant, Zhangji plant, Headquarter plant | 24.93mg/L 33.31mg/L 25.60mg/L | Gujing plant≦50mg/L Zhangji plant、Headquarter plant≦100mg/L | Gujing plant: 23.39t Zhangji plant: 6.64t Headquarter plant: 40.74t | Gujing plant: 105.916t Zhangji plant: 26.504t Headquarter plant: 116.0596t | Naught |
Anbui Gujing Distillery Co., Ltd. | NH3-N | Directly discharge | 3 | Gujing plant, Zhangji plant, Headquarter plant | 0.51mg/L 0.63mg/L 0.48mg/L | Gujing plant≦5mg/L Zhangji plant、Headquarter plant≦10mg/L | Gujing plant: 0.48t Zhangji plant: 0.13t Headquarter plant: 0.76t | Gujing plant: 10.5916t Zhangji plant: 2.6504t Headquarter plant: 11.60596t | Naught |
Anbui Gujing Distillery Co., Ltd. | Smoke | Organized discharge through chimney | 3 | Gujing plant, Zhangji plant, Headquarter plant | 0.79mg/m? 1.58mg/m? 1.16mg/m? | Gujing plant、Headquarter plant≦10mg/m3 Zhangji plant≦20mg/ m3 | Gujing plant: 0.22t Zhangji plant: 0.04t Headquarter plant: 0.64t | Gujing plant: 4.301t Zhangji plant: / Headquarter plant: 5.01t | Naught |
Anbui Gujing Distillery Co., Ltd. | Sulfur Dioxide | Organized discharge through | 3 | Gujing plant, Zhangji plant, Headquarter plant | 3.41mg/m? 0.84mg/m? 8.01mg/m? | Gujing plant、Headquarter plant≦35m | Gujing plant: 0.96t Zhangji plant: 0.02t | Gujing plant: 15.055t Zhangji plant: / Headquarter | Naught |
~ 60 ~
chimney | g/m3 Zhangji plant≦50mg/ m3 | Headquarter plant: 4.45t | plant: 17.536t | ||||||
Anbui Gujing Distillery Co., Ltd. | Nitrogen oxide | Organized discharge through chimney | 3 | Gujing plant, Zhangji plant, Headquarter plant | 10.95mg/m? 24.21mg/m? 23.30mg/m? | Gujing plant、Headquarter plant≦50mg/m3 Zhangji plant≦150mg/ m3 | Gujing plant: 3.10t Zhangji plant: 0.63t Headquarter plant: 12.95t | Gujing plant: 21.056t Zhangji plant: 10.318t Headquarter plant: 25.051t | Naught |
Anhui Longrui Glass Co., Ltd | Smoke | Organized discharge through chimney | 2 | 1# furnace 2# furnace | 0.74mg/m? 0.81mg/m? | ≦10mg/m? | 1# furnace:0.244t 2# furnace:0.38t | / | Naught |
Anhui Longrui Glass Co., Ltd | Sulfur Dioxide | Organized discharge through chimney | 2 | 1# furnace 2# furnace | 9.63mg/m? 14mg/m? | ≦50mg/m? | 1# furnace:3.158t 2# furnace:6.535t | / | Naught |
Anhui Longrui Glass Co., Ltd | Nitrogen oxide | Organized discharge through chimney | 2 | 1# furnace 2# furnace | 56mg/m? 49mg/m? | ≦200mg/m? | 1# furnace:18.357t 2# furnace:22.847t | / | Naught |
Construction and operation of facilities for preventing pollution:
1. Construction and operation of the sewage control facilities of the listed Company and its subsidiary companies
(1) The sewage treatment capacity of the sewage treatment station of Zhangji plant of Anhui Gujing Distillery Co., Ltd is about 550tons per day. IC anaerobic jar, improved A?/O and in-depth treatment process has been adopted. The sewage is discharged aftertreatment and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(2) The sewage treatment capacity of the sewage treatment station of the headquarters of Anhui Gujing Distillery Co., Ltd is about4300 tons per day. IC anaerobic jar, A?/O and in-depth treatment process has been adopted. The sewage is discharged after treatmentand up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 DischargeStandard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(3) The sewage treatment capacity of the sewage treatment station of Gujing Subsidiary under Anhui Gujing Distillery Co., Ltd isabout 2600 tons per day. IC anaerobic jar, A?/O and in-depth treatment process is adopted. The sewage is discharged after treatmentand up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 DischargeStandard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(4) The production and living sewage of Anhui Longrui Glass Co., Ltd is discharged into the sewage treatment station of Zhangji
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Plant under Anhui Gujing Distillery Company Limited, and it is discharged after treatment and up to the standard.
2. Construction and operation situation of waste gas control facilities of the listed Company and its subsidiaries
(1) The flue gas control facilities of thermal power stations of the Headquarters and Gujing Subsidiary of Anhui Gujing DistilleryCompany Limited run well, and waste gas is discharged through the 65-meter-tall exhaust funnel after the waste gas treatment is upto the standard, adopting the process of cloth-bag dust removal + Limestone - Wet flue gas Desulfurization+ SNCR Denitrification bynon-catalytic reduction + SCR Denitrification by catalytic reduction + Wet electrostatic precipitator, and discharge of flue gas meetsthe super-low discharge requirements (smoke ≤10mg/m
, SO2≤35mg/m
, NOx≤50mg/m
).
(2) The gas-fired boilers at Zhangji Plant under Anhui Gujing Distillery Company Limited operate in a steady manner, and waste gasis discharged through the 20-meter-tall exhaust funnel, of which and discharge of flue gas meets the requirements for gas-fired boilerin GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
(3) 1#, 2# furnace flue gas treatment facilities of Anhui Longrui Glass Co., Ltd. are operating well. For 1# furnace, the company usesbag dust removal + dry desulfurization + SCR catalytic reduction denitrification process. After it meets the standard, the exhaust gaswill be discharged through a 48-meter high exhaust pipe. The flue gas emission is in line with the glass industry A-class enterpriseemission requirements as set out in Technical Guide for the Development of Emergency Emission Reduction Measures for KeyIndustries in Heavy Pollution Weather (soot ≤ 10 mg/m
, SO2 ≤ 50 mg/m
, NOx ≤ 200 mg/m
). For 2# furnace, the company adoptsbag dust removal + desulfurization tank + SCR low-temperature denitrification process, and the exhaust gas is discharged through a50-meter high exhaust pipe after it meets the standard. The flue gas emission meets the glass industry A-class enterprise emissionrequirements as set out in Technical Guide for the Development of Emergency Emission Reduction Measures for Key Industries inHeavy Pollution Weather (soot ≤ 10 mg/m
, SO2 ≤ 50mg/m
, NOx ≤ 200 mg/m
).
(4) The Headquarter of Anhui Gujing Distillery Company Limited and Gujing Branch finished product coding machine exhaust gastreatment facilities are operating well. By adopting photocatalytic oxidation technology, the Company’s flue gas emissions complywith the Table 1 standard requirements of DB12/524-2014 Emission Standard for Industrial Enterprises Volatile Organic Compounds.
(5) The Headquarters of Anhui Gujing Distillery Company Limited and the odor treatment facilities of Zhangji Sewage Station areoperating well. By adopting technologies like photocatalytic oxidation and activated carbon adsorption, and the Company’s emissionof exhaust gas meets the requirements of Table 2 of the Standard for Emission of Pollutants.In 2021, the environment protection facilities of the Company and its subsidiaries ran normally in general, main pollutants canachieve up-to-standard discharge, environment information is opened to the public normally, and they have performed their socialresponsibilities properly.Environmental impact assessment of construction project and other administrative license situation in respect ofenvironmental protection
No. | Item | Category of EIA | EIA approval (filing) time | EIA approval (filing) number |
1 | Intelligent Technical Transformation Project of Liquor Production of Anhui Gujing Distillery Co., Ltd. | Environment affection report | 2 February 2021 | BHS【2021】No. 4 |
2 | 12# Intelligent Integrated Storage Center Construction Project of Anhui Gujing Distillery Co., Ltd. | Environment affection form | 17 March 2021 | BHB【2021】No. 5 |
3 | VOCs Advanced Treatment Project of Anhui Longrui Glass Co., Ltd | Environment affection form | 14 April 2021 | 20213416000100000018 |
Emergency plan for sudden environment affairs
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The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental PollutionAccident, which has been filed with Bureau of Ecology and Environment of Bozhou (File No. 341602-2021-006-H). Emergency plandrills have been carried out as planned.Anhui Longrui Glass Co., Ltd has formulated the Emergency Plan of Anhui Longrui Glass Co., Ltd for Sudden EnvironmentalPollution Accident, which has been filed with Bureau of Ecology and Environment of Bozhou (File No. 341602-2021-006-M).Emergency plan drills have been carried out as planned.Environmental self-monitoring schemeAnhui Gujing Distillery Co., Ltd. has formulated the Self-Monitoring Scheme of Anhui Gujing Distillery Company Limited andpublished it on the relevant website of Anhui Province.Anhui Longrui Glass Co., Ltd has formulated the Self-Monitoring Scheme of Anhui Longrui Glass Co., Ltd and published it on therelevant website of Anhui Province.Administrative punishments received with respect to environmental issues in the Reporting PeriodNaughtOther environment information that should be disclosedNaughtMeasures taken to reduce carbon emission and effects during the Reporting Period
√ Applicable □ Not applicable
1. Balanced production of thermal power plant: In order to improve the operation efficiency of a boiler, and reduce carbon emission,in September 2021, balanced production was first conducted in Gujing plant area. After the execution of balanced production, theefficiency of coal burning was increased by 13% year on year. Calculated on the basis of the coal consumption from September toDecember, fire coal was conserved by approximately 1,500 tons year on year, converted to the standard coal of 1,070 tons, andcarbon dioxide emission was reduced by approximately 2,900 tons.
2. Intensified power conservation of the Company: (1) The Company organized 440 battery-driven vehicles of various types andvarious entities for peak-shifting charge. (2) The Company conserved power in offices, sufficiently utilized natural light, andprohibited lamps from shining all the time, replaced lamps in passageways with sound-controlled types, and strictly implemented therequirements of temperature setting on air-conditioners. (3) The Company conserved power used by street lamps, and strictlyspecified turn-off and turn-on time; through the above-mentioned measures, power wasted in offices has been greatly reduced, whichhas played an active role in the energy conservation and carbon reduction of the Company.Other related environment protection informationNaughtII Social Responsibility
For details, please refer to the Corporate Social Responsibility Report for 2021 disclosed by the Company on the website Cninfodated 30 April 2022.III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural Revitalization
The Company organized and carried out the activities tackling difficulties in poverty alleviation, activities with the theme of"Appreciating CPC, and Striding toward New Times", visited and conveyed greetings to the appointed cadres and poverty-strickenhouseholds and their children; organized Party members and management personnel to go to Wuma Town to express regards to thefinancially difficult households of the three villages under the assistance, and sent medicines, clinical thermometers, and masks to
~ 63 ~
give aid for fighting pandemic. The goods for poverty alleviation were bought. The Company helped the poverty-stricken villages inXingyuan Subdistrict in Woyang to sell tomatoes and celery; helped poverty-stricken households in Wuma to promote peaches; andhelped Pishan County in Khotan Prefecture, Xinjiang to sell walnuts and Chinese dates.
~ 64 ~
Part VI Significant EventsI Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
Commitments made in acquisition documents or shareholding alteration documents | Anhui Gujing Distillery Company Limited | Performance commitment | The Company promised that Yellow Crane Tower Distillery Co., Ltd. would realize the operating revenue of RMB1,700.5625 million (tax inclusive) and the net profit margin would be not lower than 11.00% in 2021. | 29 April 2016 | Y2017-Y2021 | Complete the performance commitment of the supplementary agreement in 2021. |
Fulfilled on time | Yes | |||||
Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | Before and after the Spring Festival in 2020, the COVID-19 pandemic occurred and spread to many places across China (hereinafter referred to as the "pandemic"), and all provinces and municipalities successively launched the highest level of response for major public health emergencies. Hubei Province, where Yellow Crane Tower locates, was materially adversely affected by the pandemic. Annual performance: Revenue stood at RMB583,131,800, down 55.27% year on year. Due to the force majeure of the COVID-19 pandemic, market trading activities were seriously affected, resulting in part of the terms of the original agreement unable to be fulfilled on schedule. To this end, upon consultation by all parties, the Supplementary Agreement on Equity Transfer was entered into. For the commitments in respect of net sales interest rate, net sales profit and expected distributable profit of Yellow Crane Tower, the assessment period has been extended by one year from |
~ 65 ~
the execution date of the Supplementary Agreement. In other words, the year 2020 will notbe regarded as the assessment year, and 2021 will be taken as the fourth assessment yearand 2022 as the fifth assessment year.
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”on the Financial Statements
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material AccountingErrors
√ Applicable □ Not applicable
Contents of changes in accounting policies and reasons thereof | Approval procedures | Note |
On 7 December 2018, the Ministry of Finance revised and issued the Accounting Standards for Business Enterprises No.21-Leases (CK(2018)No.35) (hereinafter referred to as the new standards governing leases) and required those enterprises both listed in domestic and aboard and those enterprises overseas listed with International Financial | Reviewed and approved on the 7th Meeting of the 9th Board of Directors and the 5th Meeting of the 9th Supervisory Committee | For details, please refer to the announcement on changes in accounting policies disclosed on http://www.cninfo.com.cn dated 30 April 2021. |
~ 66 ~
Reporting Standards or AccountingStandards for Business Enterprises forpreparation of financial statements toimplement it since 1 January 2019,required other enterprises carrying out theAccounting Standards for BusinessEnterprises to implement it since 1 January2021.
VII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
Name of subsidiary | Principal place of business | Registered place | Nature of the business | Stake(%) | Make way | |
Directly | Indirect | |||||
Anhui Mingguang Distillery Co., Ltd. | Chuzhou, Anhui | Mingguang, Anhui | Manufacturing | 60.00 | Business combination not under the same control | |
Mingguang Tiancheng Ming Wine Sales Co., Ltd. | Chuzhou, Anhui | Mingguang, Anhui | Trade and business | 60.00 | Business combination not under the same control | |
Fengyang Xiaogang Village Ming Wine Distillery Co., Ltd. | Chuzhou, Anhui | Fengyang, Anhui | Manufacturing | 42.00 | Business combination not under the same control | |
Anhui Jiuhao China Railway Construction Engineering Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Engineering construction | 52.00 | Incorporation through investment | |
Anhui Jiuan Mechanical Electrical Equipment Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Engineering construction | 100.00 | Incorporation through investment | |
Renhuai Maotai Town Zhencang Winery Industry Co., Ltd. | Renhuai, Guizhou | Renhuai, Guizhou | Manufacturing | 60.00 | Business combination not under the same control |
~ 67 ~
VIII Engagement and Disengagement of Independent AuditorCurrent independent auditor
Name of the domestic independent auditor | RSM Certified Public Accountants (LLP) |
The Company’s payment to the domestic independent auditor (RMB’0,000) | 200.00 |
How many consecutive years the domestic independent auditor has provided audit service for the Company | 3 |
Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Zhang Liping, Han Songliang |
How many consecutive years the certified public accountants have provided audit service for the Company | 1 |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
In 2021, the Company engaged RSM Certified Public Accountants (LLP) as the internal control auditor and China InternationalCapital Corporation Limited as the sponsor for the Company’s private placement of stocks with the payment of RMB1 million (taxinclusive).
IX Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
XI Major Legal Matters
□ Applicable √ Not applicable
XII Punishments and Rectifications
□ Applicable √ Not applicable
XIII Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
~ 68 ~
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
5. Transactions with Related Finance Companies
□ Applicable √ Not applicable
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□ Applicable √ Not applicable
7. Other Major Related-Party Transactions
□ Applicable √ Not applicable
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
(2) Contracting
□ Applicable √ Not applicable
(3) Leases
□ Applicable √ Not applicable
~ 69 ~
2. Major Guarantees
□ Applicable √ Not applicable
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0,000
Specific type | Capital resources | Amount incurred | Undue balance | Unrecovered overdue amount | Unrecovered overdue amount with provision for impairment |
Bank financial products | Raised funds | 442,000.00 | 442,000.00 | 0.00 | 0.00 |
Others | Self-owned funds | 20,000.00 | 20,000.00 | 0.00 | 0.00 |
Total | 462,000.00 | 462,000.00 | 0.00 | 0.00 |
Particulars of cash entrusted for wealth management with single significant amount or low security, bad liquidity, and no capitalpreservation
Unit: RMB’0,000
Name of the trustee | Type of the trustee | Type of the product | Amount | Capital resource | Start date | End date | Use of fund | Determination method of remuneration | Annual yield for reference | Estimate profit (if any) | Amount of actual profit or loss in Reporting Period | Actual recovery of profit or loss in Reporting Period | Allowance for impairment (if any) | Legal procedures or not | Plan for entrusted asset management in the future or not | Overviews of events and query index (if any |
DAPU Asset Management | Private fund manager | Fund | 20,000 | Self-funded | Purchasing new shares offline, products with fixed earnings, reverse | 1.2% of products’ net value and 20% of excess earnings | 7.00% | 1,439.33 | Recovered | Yes | Yes |
~ 70 ~
repurchase of national debt, and etc. | ||||||||||||||
Total | 20,000 | -- | -- | -- | -- | -- | -- | 1,439.33 | -- | -- | -- | -- |
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for cashentrusted for wealth management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
4. Other Major Contracts
□ Applicable √ Not applicable
XVI Other Significant Events
□ Applicable √ Not applicable
XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
~ 71 ~
Part VII Share Changes and Shareholder InformationI Share Changes
1. Share Changes
Unit: share
Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
I. Restricted shares | 25,000,000 | 25,000,000 | 25,000,000 | 4.73% | |||||
1. Shares held by the state | |||||||||
2. Shares held by state-owned corporations | 1,900,000 | 1,900,000 | 1,900,000 | 0.36% | |||||
3. Shares held by other domestic investors | 21,600,000 | 21,600,000 | 21,600,000 | 4.09% | |||||
Among which: Shares held by domestic corporations | 21,600,000 | 21,600,000 | 21,600,000 | 4.09% | |||||
Shares held by domestic individuals | |||||||||
4. Shares held by foreign investors | 1,500,000 | 1,500,000 | 1,500,000 | 0.28% | |||||
Among which: Shares held by foreign corporations | 1,500,000 | 1,500,000 | 1,500,000 | 0.28% | |||||
Shares held by foreign individuals | |||||||||
II. Non-restricted shares | 503,600,000 | 100.00% | 503,600,000 | 95.27% | |||||
1. RMB ordinary shares | 383,600,000 | 76.17% | 383,600,000 | 72.57% | |||||
2. Domestically listed foreign shares | 120,000,000 | 23.83% | 120,000,000 | 22.70% | |||||
3. Overseas listed foreign shares | |||||||||
4. Other |
~ 72 ~
III. Total shares | 503,600,000 | 100.00% | 25,000,000 | 25,000,000 | 528,600,000 | 100.00% |
Reasons for share changes:
√ Applicable □ Not applicable
On 23 June 2021, the Company issued 25,000,000 ordinary shares (A shares) denominated in Renminbi to specific targets in anon-public manner.Approval of share changes:
√ Applicable □ Not applicable
Approved by the China Securities Regulatory Commission under CSRC Permit [2021] No. 1422, the Company issuedRMB25,000,000 ordinary shares (A shares) to specific targets on 23 June 2021. The above shares were registered with the ShenzhenBranch of CSDC on 12 July 2021 and listed on the Shenzhen Stock Exchange on 22 July 2021.Transfer of share ownership:
√ Applicable □ Not applicable
The relevant matters of the 25,000,000 shares of the Company issued in a non-public manner were audited and confirmed with theShenzhen Branch of China Securities Depository and Clearing Corporation Limited, registered with the Branch on 12 July 2021, andlisted on the Shenzhen Stock Exchange on 22 July 2021. Upon completion of this share issuance in a non-public manner, the totalshares of the Company were changed from 503,600,000 shares to 528,600,000 shares.Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders and other financial indicators of the prior year and the prior accounting period, respectively:
√ Applicable □ Not applicable
During the Reporting Period, the total share capital of the Company was changed from 503,600,000 shares at the beginning of theperiod to 528,600,000 shares at the end of the period, which has diluted to a certain degree the earnings per share and the net assetper share owned by the shareholders of ordinary shares of the Company.Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: Share
Name of the shareholders | Restricted shares amount at the period-begin | Restricted shares increased of the period | Restricted shares relieved of the period | Restricted shares amount at the period-end | Restricted reasons | Restricted shares relieved date |
JPMorgan Chase Bank, National Association | 0 | 750,000 | 0 | 750,000 | Private placement | 22 January 2022 |
Guotai Junan Securities Co., Ltd. | 0 | 1,125,000 | 0 | 1,125,000 | Private placement | 22 January 2022 |
E Fund Management Co., | 0 | 12,750,000 | 0 | 12,750,000 | Private placement | 22 January 2022 |
~ 73 ~
Ltd. | ||||||
Caitong Fund Management Co., Ltd. | 0 | 1,130,000 | 0 | 1,130,000 | Private placement | 22 January 2022 |
Taiping Fund Management Company Limited | 0 | 750,000 | 0 | 750,000 | Private placement | 22 January 2022 |
Fullgoal Fund Management Co., Ltd. | 0 | 1,275,000 | 0 | 1,275,000 | Private placement | 22 January 2022 |
Huatai Securities Co., Ltd. | 0 | 775,000 | 0 | 775,000 | Private placement | 22 January 2022 |
Huatai Securities Asset Management Co., Ltd. | 0 | 750,000 | 0 | 750,000 | Private placement | 22 January 2022 |
ICBC Credit Suisse Asset Management Co., Ltd. | 0 | 2,150,000 | 0 | 2,150,000 | Private placement | 22 January 2022 |
Morgan Stanley & Co. International Plc | 0 | 750,000 | 0 | 750,000 | Private placement | 22 January 2022 |
China Life Asset Management Co., Ltd. | 0 | 750,000 | 0 | 750,000 | Private placement | 22 January 2022 |
China Merchants Fund Management Co., Ltd. | 0 | 2,000,000 | 0 | 2,000,000 | Private placement | 22 January 2022 |
China Universal Asset Management Co., Ltd. | 0 | 45,000 | 0 | 45,000 | Private placement | 22 January 2022 |
Total | 0 | 25,000,000 | 0 | 25,000,000 | -- | -- |
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
√ Applicable □ Not applicable
Name of stock and its derivative | Issue date | Issue price (or interest rate) | Issued number | Listing date | Number approved for public trading | Termination date of transaction | Index to disclosed information | Disclosure date |
~ 74 ~
securities | ||||||||
Stocks | ||||||||
Private placement | 23 June 2021 | RMB200/share | 25,000,000 | 22 July 2021 | 25,000,000 | For details, see the Report on the Issuance of the Private Placement of A-shares & Announcement on the Listing of These Shares disclosed by the Company on www.cninfo.com.cn | 21 July 2021 |
Particulars about the securities (exclusive of preferred shares) issued in the Reporting Period:
Approved by the China Securities Regulatory Commission under CSRC Permit [2021] No. 1422, the Company issuedRMB25,000,000 ordinary shares (A shares) to specific targets on 23 June 2021 at an issuing price of RMB200.00 per share, raisingtotal proceeds of RMB5,000,000,000.00. After deducting the expenses related to the issue of RMB45,657,925.15 (excluding VAT),the actual net proceeds raised were RMB4,954,342,074.85. RSM (special ordinary partnership) has audited the availability of thefunds raised from the non-public offering of shares of the Company on 29 June 2021 and issued Capital Verification Report R.C.Y.Z[2021] No. 518Z0050. The above shares were registered with the Shenzhen Branch of CSDC on 12 July 2021 and listed on theShenzhen Stock Exchange on 22 July 2021.
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
Upon completion of this share issuance of the Company in a non-public manner, the total share capital of the Company was changedfrom 503,600,000 shares to 528,600,000 shares, with the total assets increased, and the asset-liability ratio decreased accordingly.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of | 31,645 | Number of | 35,931 | Number of | 0 | Number of | 0 |
~ 75 ~
ordinary shareholders | ordinary shareholders at the month-end prior to the disclosure of this Report | preferred shareholders with resumed voting rights (if any) (see note 8) | preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | ||||||||||||
5% or greater shareholders or top 10 shareholders | |||||||||||||||
Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Non-restricted shares held | Shares in pledge, marked or frozen | ||||||||
Status | Shares | ||||||||||||||
ANHUI GUJING GROUP COMPANY LIMITED | State-owned legal person | 51.12% | 270,234,022 | 270,234,022 | In pledge | 114,000,000 | |||||||||
GAOLING FUND,L.P. | Foreign legal person | 2.35% | 12,446,408 | 12,446,408 | |||||||||||
BANK OF CHINA-CHINA MERCHANTS CHINA SECURITIES LIQUOR INDEX CLASSIFICATION SECURITIES INVESTMENT FUND | Other | 2.10% | 11,110,421 | 1,900,000 | 9,210,421 | ||||||||||
AGRICULTURAL BANK OF CHINA-E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | Other | 1.92% | 10,128,102 | 1,000,000 | 9,128,102 | ||||||||||
INDUSTRIAL | Other | 1.89% | 9,999,951 | 9,999,951 |
~ 76 ~
AND COMMERCIAL BANK OF CHINA LIMITED- INVESCO GREAT WALL EMERGING GROWTH HYBRID SECURITIES INVESTMENT FUND | ||||||||
CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LTD | Foreign legal person | 1.65% | 8,707,752 | 8,707,752 | ||||
HONG KONG SECURITIES CLEARING COMPANY LTD. | Foreign legal person | 1.53% | 8,086,818 | 8,086,818 | ||||
UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | Foreign legal person | 1.42% | 7,505,261 | 7,505,261 | ||||
BANK OF CHINA- INVESCO GREAT WALL DINGYI HYBRID SECURITIES INVESTMENT FUND (LOF) | Other | 0.95% | 4,995,403 | 4,995,403 | ||||
GREENWOODS CHINA ALPHA MASTER FUND | Foreign legal person | 0.87% | 4,614,326 | 4,614,326 | ||||
Strategic investor or general legal person becoming a top-10 ordinary shareholder due to rights issue (if any) (see note 3) | N/A |
~ 77 ~
Related or acting-in-concert parties among the shareholders above | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a related party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are related parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. | ||
Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | N/A | ||
Special account for share repurchases (if any) among the top 10 shareholders (see note 10) | N/A | ||
Top 10 non-restricted shareholders | |||
Name of shareholder | Non-restricted shares held at the period-end | Shares by type | |
Type | Shares | ||
ANHUI GUJING GROUP COMPANY LIMITED | 270,234,022 | RMB-denominated ordinary share | 270,234,022 |
GAOLING FUND,L.P. | 12,446,408 | Domestically listed foreign share | 12,446,408 |
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED- INVESCO GREAT WALL EMERGING GROWTH HYBRID SECURITIES INVESTMENT FUND | 9,999,951 | RMB-denominated ordinary share | 9,999,951 |
BANK OF CHINA-CHINA MERCHANTS CHINA SECURITIES LIQUOR INDEX CLASSIFICATION SECURITIES INVESTMENT FUND | 9,210,421 | RMB-denominated ordinary share | 9,210,421 |
AGRICULTURAL BANK OF CHINA-E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | 9,128,102 | RMB-denominated ordinary share | 9,128,102 |
CHINA INTERNATIONAL CAPITAL CORPORATION | 8,707,752 | Domestically listed foreign | 8,707,752 |
~ 78 ~
HONG KONG SECURITIES LTD | share | ||
HONG KONG SECURITIES CLEARING COMPANY LTD. | 8,086,818 | RMB-denominated ordinary share | 8,086,818 |
UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | 7,505,261 | Domestically listed foreign share | 7,505,261 |
BANK OF CHINA- INVESCO GREAT WALL DINGYI HYBRID SECURITIES INVESTMENT FUND (LOF) | 4,995,403 | RMB-denominated ordinary share | 4,995,403 |
GREENWOODS CHINA ALPHA MASTER FUND | 4,614,326 | Domestically listed foreign share | 4,614,326 |
Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a related party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are related parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. | ||
Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | Since October 2021, the Company's controlling shareholder Gujing Group has conducted the business of "Refinancing by Lending Securities", and as of 31 December 2021, 1,170,000 lent shares were outstanding,the ownership of the shares lent by the refinancing securities will not be transferred. |
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by a local state-owned legal personType of the controlling shareholder: legal person
Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
ANHUI GUJING GROUP COMPANY LIMITED | Liang Jinhui | 16 January 1995 | 91341600151947437P | Making beverage, construction materials and plastic products, etc. |
Controlling shareholder’s holdings in other listed | As of 31 December 2021, the controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly holds 99,220,400 shares of Huaan Securities Co., Ltd. owning the proportion of |
~ 79 ~
companies at home or abroad in the Reporting Period | shares of 2.11%. |
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Information about the Actual Controller and Acting-in-concert Parties
Nature of the actual controller: Local administrator for state-owned assetsType of the actual controller: legal person
Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
State-owned Assets Supervision and Administration Commission of the People’s Government of Bozhou | Zhao Liang | N/A | 113416007316875206 | N/A |
Other listed companies at home or abroad controlled by the actual controller in the Reporting Period | N/A |
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
~ 80 ~
□ Applicable √ Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the LargestShareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company heldby Them
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Specific Implementation of Share Repurchase during the Reporting PeriodProgress on any share repurchase
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
~ 81 ~
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
~ 82 ~
Part IX Bonds
□ Applicable √ Not applicable
~ 83 ~
Part X Financial StatementsI Independent Auditor’s Report
Type of auditor’s opinion | Unmodified unqualified opinion |
Date of signing the auditor’s report | 29 April 2022 |
Name of the auditor | RSM China |
No. of the auditor’s report | Rongcheng audit character [2022] 518Z0165 |
Name of CPA | Zhang Liping, Han Songliang |
Text of the Auditor’s ReportTo the Shareholders of Anhui Gujing Distillery Company Limited:
I. OpinionWe have audited the financial statements of Anhui Gujing Distillery Co., Ltd. (hereafter referred to as “Anhui Gujing”), whichcomprises the consolidated and the parent company’s statement of financial position as at 31 December 2021, the consolidated andthe parent company’s statement of profit or loss and other comprehensive income, the consolidated and the parent company’sstatement of cash flows, the consolidated and the parent company’s statement of changes in equity for the year then ended, and thenotes to the financial statements.In our opinion, the accompanying Anhui Gujing’s financial statements present fairly, in all material respects, the consolidated and thecompany’s financial position as at 31 December 2021 and of their financial performance and cash flows for the year then ended inaccordance with Accounting Standards for Business Enterprises.II. Basis for OpinionWe conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independentof Anhui Gujing in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified PublicAccountants, and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient andappropriate to provide a basis for our opinion.III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of the most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, andinforming our opinion thereon, and we do not provide a separate opinion on these matters.(I) Revenue recognition
1. Description
Refer to notes to the consolidated financial statements "3. 27. Revenue" and "5. 37. Revenue and Cost of Sales ".In 2021, the Company achieved revenue of RMB13.27 billion, an increase of 28.93% compared with the same period in 2020. Asrevenue is one of the key performance indicators of the company, there may be the risk of material misstatement in whether therevenue is recognized in an appropriate accounting period. Therefore, we regard revenue recognition as a key audit matter.
2. Audit response
~ 84 ~
Our procedures for revenue recognition include:
(1) Understand the internal control process design related to the sales business, and execute the walk-through test, perform thecontrol test on the identified key control points;
(2) Interview with the management, check the samples of sales contract, analyze the significant risk and reward transferring pointrelated to revenue recognition of liquor sales, and then evaluate whether the company's sales revenue recognition policy isreasonable;
(3) Sampling inspection of supporting documents related to liquor sales revenue recognition, including sales orders, sales invoices,outbound orders, etc.;
(4) Compared with the liquor sales data of other enterprises in the same industry, compared the liquor sales data of the last periodwith the current period, analyzed the overall rationality of revenue and gross margin;
(5) For the liquor sales revenue recognized before and after the balance sheet date, select samples to check the sales orders, salesinvoices, outbound orders, etc., in order to evaluate whether the sales revenue is recorded in an appropriate accounting period;
(6) Confirm the amount of liquor sold and the closing balance of the advance payment to the main distributor by sendingconfirmation letter.(II) Accuracy of inventory balances
1. Description
Refer to notes to the consolidated financial statements "3 12. Inventory" and "5. 7. Inventory".Anhui Gujing has a large inventory balance and needs to maintain an appropriate level of inventory to meet future market orproduction demand. The inventory balance accounts for 18.35% of the Company's total assets, and most of the inventory issemi-finished products and work in progress products. As the most important asset of liquor production enterprises, inventory has ahigh balance at the end of the year and a large proportion of the total assets. Therefore, we regard the accuracy of the Company'sinventory balance as a key audit matter.
2. Audit response
Our procedures for the accuracy of inventory balances include:
(1) Understand the internal control process design related to inventory business, and carry out walk-through test, carry out controltests for identified key control points;
(2) Obtain the stocktaking plan and stocktaking results of the company, understand the stocktaking methods and review procedures ofthe company, and supervise the stocktaking;
(3) Understand the company's inventory cost accounting method, select several months of cost calculation sheet to review, and selectthe main categories of inventory to carry out valuation test;
(4) To understand the provision method of the company's inventory impairment, evaluate the appropriateness of the provision method,and review whether the provision amount is correct;
(5) Perform analytical procedures and compare with companies in the same industry.
IV. Other informationManagement of Anhui Gujing is responsible for the other information. The other information comprises the information included inthe Annual Report of Anhui Gujing for the year of 2021, but does not include the financial statements and our auditor’s reportthereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
~ 85 ~
otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are requiredto report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Those Charged with Governance for the Financial StatementsManagement of Anhui Gujing is responsible for the preparation and fair presentation of the financial statements in accordance withAccounting Standards of Business Enterprises, and for the design, implementation and maintenance of such internal control asmanagement determines is necessary to enable the preparation of financial statements that are free from material misstatement,whether due to fraud or error.In preparing the financial statements, management is responsible for assessing Anhui Gujing’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management eitherintends to liquidate Anhui Gujing or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing Anhui Gujing’s financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraudmay involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Anhui Gujing’sability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions maycause Anhui Gujing to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within AnhuiGujing to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of thegroup audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
~ 86 ~
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
RSM China CPA LLP | [Name of CPA]:Zhang Liping (Engagement Partner) |
China·Beijing | [Name of CPA]:Han Songliang |
[Date] 29 April 2022
~ 87 ~
II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
31 December 2021
Unit: RMB
Item | 31 December 2021 | 31 December 2020 |
Current assets: | ||
Monetary assets | 11,924,922,771.76 | 5,971,212,569.66 |
Settlement reserve | ||
Interbank loans granted | ||
Held-for-trading financial assets | 2,661,103,876.68 | 203,877,915.51 |
Derivative financial assets | ||
Notes receivable | ||
Accounts receivable | 89,005,804.17 | 67,933,735.91 |
Accounts receivable financing | 545,204,103.42 | 1,673,510,794.51 |
Prepayments | 156,570,970.99 | 55,575,543.21 |
Premiums receivable | ||
Reinsurance receivables | ||
Receivable reinsurance contract reserve | ||
Other receivables | 71,753,212.24 | 33,451,121.48 |
Including: Interest receivable | ||
Dividends receivable | ||
Financial assets purchased under resale agreements | ||
Inventories | 4,663,456,672.30 | 3,416,880,808.96 |
Contract assets | ||
Assets held for sale | ||
Current portion of non-current assets | ||
Other current assets | 178,222,222.56 | 97,412,681.26 |
Total current assets | 20,290,239,634.12 | 11,519,855,170.50 |
Non-current assets: | ||
Loans and advances to customers |
~ 88 ~
Investments in debt obligations | ||
Investments in other debt obligations | ||
Long-term receivables | ||
Long-term equity investments | 5,312,600.78 | 4,915,575.83 |
Investments in other equity instruments | 54,542,418.50 | 0.00 |
Other non-current financial assets | ||
Investment property | 4,075,801.06 | 4,392,943.54 |
Fixed assets | 1,984,063,975.87 | 1,797,789,271.62 |
Construction in progress | 1,064,134,904.21 | 279,169,201.60 |
Productive living assets | ||
Oil and gas assets | ||
Right-of-use assets | 43,927,228.97 | 0.00 |
Intangible assets | 1,063,468,842.61 | 934,711,977.79 |
Development costs | ||
Goodwill | 561,364,385.01 | 478,283,495.29 |
Long-term prepaid expense | 55,908,338.03 | 64,591,933.65 |
Deferred income tax assets | 283,828,000.24 | 96,972,421.95 |
Other non-current assets | 7,220,318.40 | 5,943,717.02 |
Total non-current assets | 5,127,846,813.68 | 3,666,770,538.29 |
Total assets | 25,418,086,447.80 | 15,186,625,708.79 |
Current liabilities: | ||
Short-term borrowings | 30,035,138.89 | 70,665,500.00 |
Borrowings from the central bank | ||
Interbank loans obtained | ||
Held-for-trading financial liabilities | ||
Derivative financial liabilities | ||
Notes payable | 127,114,336.16 | 140,614,535.60 |
Accounts payable | 1,020,437,321.89 | 505,206,561.86 |
Advances from customers | ||
Contract liabilities | 1,825,447,705.85 | 1,206,573,886.26 |
Financial assets sold under repurchase agreements | ||
Customer deposits and interbank deposits |
~ 89 ~
Payables for acting trading of securities | ||
Payables for underwriting of securities | ||
Employee benefits payable | 709,671,787.74 | 498,129,114.76 |
Taxes payable | 873,270,986.71 | 349,142,692.10 |
Other payables | 2,280,937,078.12 | 1,396,599,161.14 |
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 | 13,190,399.32 | 0.00 |
Other current liabilities | 799,522,562.60 | 320,792,383.03 |
Total current liabilities | 7,679,627,317.28 | 4,487,723,834.75 |
Non-current liabilities: | ||
Insurance contract reserve | ||
Long-term borrowings | 172,356,255.83 | 60,117,638.89 |
Bonds payable | ||
Including: Preferred shares | ||
Perpetual bonds | ||
Lease liabilities | 28,107,223.18 | 0.00 |
Long-term payables | ||
Long-term employee benefits payable | ||
Provisions | ||
Deferred income | 91,101,512.05 | 75,111,997.53 |
Deferred income tax liabilities | 194,033,257.93 | 114,821,451.24 |
Other non-current liabilities | ||
Total non-current liabilities | 485,598,248.99 | 250,051,087.66 |
Total liabilities | 8,165,225,566.27 | 4,737,774,922.41 |
Owners’ equity: | ||
Share capital | 528,600,000.00 | 503,600,000.00 |
Other equity instruments |
~ 90 ~
Including: Preferred shares | ||
Perpetual bonds | ||
Capital reserves | 6,224,747,667.10 | 1,295,405,592.25 |
Less: Treasury stock | ||
Other comprehensive income | -2,735,058.19 | 0.00 |
Specific reserve | ||
Surplus reserves | 269,402,260.27 | 256,902,260.27 |
General reserve | ||
Retained earnings | 9,517,374,574.46 | 7,987,380,161.21 |
Total equity attributable to owners of the Company as the parent | 16,537,389,443.64 | 10,043,288,013.73 |
Non-controlling interests | 715,471,437.89 | 405,562,772.65 |
Total owners’ equity | 17,252,860,881.53 | 10,448,850,786.38 |
Total liabilities and owners’ equity | 25,418,086,447.80 | 15,186,625,708.79 |
Legal representative: Liang Jinhui The Company’s chief accountant: Zhu JiafengHead of the Company’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item | 31 December 2021 | 31 December 2020 |
Current assets: | ||
Monetary assets | 6,701,949,499.06 | 4,287,808,756.66 |
Held-for-trading financial assets | 2,611,037,013.67 | 203,877,915.51 |
Derivative financial assets | ||
Notes receivable | ||
Accounts receivable | 0.00 | 494,976.27 |
Accounts receivable financing | 269,471,899.40 | 1,399,214,331.97 |
Prepayments | 85,579,299.60 | 11,737,580.47 |
Other receivables | 290,480,736.49 | 141,378,010.40 |
Including: Interest receivable | ||
Dividends receivable | ||
Inventories | 3,667,928,608.55 | 2,976,360,208.66 |
Contract assets |
~ 91 ~
Assets held for sale | ||
Current portion of non-current assets | ||
Other current assets | 142,527,867.24 | 9,734,249.41 |
Total current assets | 13,768,974,924.01 | 9,030,606,029.35 |
Non-current assets: | ||
Investments in debt obligations | ||
Investments in other debt obligations | ||
Long-term receivables | ||
Long-term equity investments | 1,547,415,641.38 | 1,118,213,665.32 |
Investments in other equity instruments | ||
Other non-current financial assets | ||
Investment property | 4,075,801.06 | 4,392,943.54 |
Fixed assets | 1,375,344,792.42 | 1,322,818,855.86 |
Construction in progress | 692,315,065.86 | 139,865,487.21 |
Productive living assets | ||
Oil and gas assets | ||
Right-of-use assets | 40,811,867.62 | 0.00 |
Intangible assets | 437,919,619.31 | 369,163,089.18 |
Development costs | ||
Goodwill | ||
Long-term prepaid expense | 41,319,866.13 | 44,072,241.78 |
Deferred income tax assets | 28,775,933.22 | 30,716,488.80 |
Other non-current assets | 0.00 | 75,999.80 |
Total non-current assets | 4,167,978,587.00 | 3,029,318,771.49 |
Total assets | 17,936,953,511.01 | 12,059,924,800.84 |
Current liabilities: | ||
Short-term borrowings | ||
Held-for-trading financial liabilities | ||
Derivative financial liabilities | ||
Notes payable | 0.00 | 74,535.60 |
Accounts payable | 672,018,963.99 | 397,554,006.51 |
Advances from customers | ||
Contract liabilities | 23,438,890.01 | 1,130,074,436.39 |
~ 92 ~
Employee benefits payable | 160,404,100.41 | 127,974,331.78 |
Taxes payable | 473,881,384.92 | 200,876,134.49 |
Other payables | 632,857,371.46 | 524,000,730.59 |
Including: Interest payable | ||
Dividends payable | ||
Liabilities directly associated with assets held for sale | ||
Current portion of non-current liabilities | 11,633,827.85 | 0.00 |
Other current liabilities | 15,080,461.56 | 160,738,917.51 |
Total current liabilities | 1,989,315,000.20 | 2,541,293,092.87 |
Non-current liabilities: | ||
Long-term borrowings | ||
Bonds payable | ||
Including: Preferred shares | ||
Perpetual bonds | ||
Lease liabilities | 26,476,999.19 | 0.00 |
Long-term payables | ||
Long-term employee benefits payable | ||
Provisions | ||
Deferred income | 27,176,546.19 | 31,601,732.51 |
Deferred income tax liabilities | 21,499,021.71 | 19,407,895.89 |
Other non-current liabilities | ||
Total non-current liabilities | 75,152,567.09 | 51,009,628.40 |
Total liabilities | 2,064,467,567.29 | 2,592,302,721.27 |
Owners’ equity: | ||
Share capital | 528,600,000.00 | 503,600,000.00 |
Other equity instruments | ||
Including: Preferred shares | ||
Perpetual bonds | ||
Capital reserves | 6,176,504,182.20 | 1,247,162,107.35 |
Less: Treasury stock | ||
Other comprehensive income | -1,385,311.78 | 0.00 |
Specific reserve |
~ 93 ~
Surplus reserves | 264,300,000.00 | 251,800,000.00 |
Retained earnings | 8,904,467,073.30 | 7,465,059,972.22 |
Total owners’ equity | 15,872,485,943.72 | 9,467,622,079.57 |
Total liabilities and owners’ equity | 17,936,953,511.01 | 12,059,924,800.84 |
3. Consolidated Income Statement
Unit: RMB
Item | 2021 | 2020 |
1. Revenue | 13,269,826,266.04 | 10,292,064,534.41 |
Including: Operating revenue | 13,269,826,266.04 | 10,292,064,534.41 |
Interest income | ||
Insurance premium income | ||
Handling charge and commission income | ||
2. Costs and expenses | 10,213,542,938.71 | 7,878,036,538.50 |
Including: Cost of sales | 3,304,077,011.92 | 2,549,814,944.76 |
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 | 2,031,815,205.67 | 1,625,289,169.55 |
Selling expense | 4,008,075,483.08 | 3,120,977,163.32 |
Administrative expense | 1,022,181,419.74 | 802,201,580.48 |
R&D expense | 51,449,475.36 | 40,590,136.46 |
Finance costs | -204,055,657.06 | -260,836,456.07 |
Including: Interest expense | 7,036,575.14 | 876,815.80 |
Interest income | 210,634,326.57 | 261,861,342.00 |
Add: Other income | 55,269,628.48 | 47,474,532.19 |
~ 94 ~
Return on investment (“-” for loss) | 4,692,379.15 | 6,787,443.77 |
Including: Share of profit or loss of joint ventures and associates | 397,024.95 | 237,293.59 |
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) | 7,225,961.17 | -19,983,181.51 |
Credit impairment loss (“-” for loss) | -6,492,841.44 | -933,752.84 |
Asset impairment loss (“-” for loss) | -16,738,156.85 | -14,095,047.32 |
Asset disposal income (“-” for loss) | 1,368,763.13 | 1,223,536.53 |
3. Operating profit (“-” for loss) | 3,101,609,060.97 | 2,434,501,526.73 |
Add: Non-operating income | 80,358,158.20 | 66,597,288.07 |
Less: Non-operating expense | 10,673,284.61 | 27,262,848.08 |
4. Profit before tax (“-” for loss) | 3,171,293,934.56 | 2,473,835,966.72 |
Less: Income tax expense | 796,962,295.09 | 625,947,783.69 |
5. Net profit (“-” for net loss) | 2,374,331,639.47 | 1,847,888,183.03 |
5.1 By operating continuity | ||
5.1.1 Net profit from continuing operations (“-” for net loss) | 2,374,331,639.47 | 1,847,888,183.03 |
5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
5.2 By ownership | ||
5.2.1 Net profit attributable to shareholders of the Company as the parent | 2,297,894,413.25 | 1,854,576,249.29 |
5.2.1 Net profit attributable to non-controlling interests | 76,437,226.22 | -6,688,066.26 |
6. Other comprehensive income, net of tax | -2,702,255.36 | 0.00 |
Attributable to owners of the Company as the parent | -2,735,058.19 | 0.00 |
6.1 Items that will not be reclassified to profit or loss | 312,174.31 | 0.00 |
~ 95 ~
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 | 312,174.31 | 0.00 |
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 | -3,047,232.50 | 0.00 |
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 | -3,047,232.50 | 0.00 |
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 | 32,802.83 | 0.00 |
7. Total comprehensive income | 2,371,629,384.11 | 1,847,888,183.03 |
Attributable to owners of the Company as the parent | 2,295,159,355.06 | 1,854,576,249.29 |
Attributable to non-controlling interests | 76,470,029.05 | -6,688,066.26 |
8. Earnings per share | ||
8.1 Basic earnings per share | 4.45 | 3.68 |
8.2 Diluted earnings per share | 4.45 | 3.68 |
~ 96 ~
Legal representative: Liang Jinhui The Company’s chief accountant: Zhu JiafengHead of the Company’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
Item | 2021 | 2020 |
1. Operating revenue | 6,861,927,173.56 | 5,879,367,295.74 |
Less: Cost of sales | 2,685,143,091.93 | 2,404,770,507.12 |
Taxes and surcharges | 1,709,930,259.58 | 1,486,154,736.28 |
Selling expense | 57,374,585.54 | 51,077,418.28 |
Administrative expense | 638,615,142.40 | 573,997,212.59 |
R&D expense | 24,789,072.53 | 26,372,590.76 |
Finance costs | -146,376,995.59 | -147,492,851.31 |
Including: Interest expense | 2,057,303.09 | |
Interest income | 148,286,685.55 | 147,976,230.15 |
Add: Other income | 12,884,387.21 | 22,085,298.08 |
Return on investment (“-” for loss) | 740,925,389.76 | 703,295,993.73 |
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) | 7,159,098.16 | -19,983,181.51 |
Credit impairment loss (“-” for loss) | 1,569,395.15 | 381,399.86 |
Asset impairment loss (“-” for loss) | -9,447,015.13 | -8,393,409.55 |
Asset disposal income (“-” for loss) | 1,217,988.71 | 60,176.99 |
2. Operating profit (“-” for loss) | 2,646,761,261.03 | 2,181,933,959.62 |
Add: Non-operating income | 45,118,776.84 | 38,145,926.01 |
Less: Non-operating expense | 5,010,863.26 | 22,352,299.16 |
3. Profit before tax (“-” for loss) | 2,686,869,174.61 | 2,197,727,586.47 |
~ 97 ~
Less: Income tax expense | 479,562,073.53 | 374,398,634.87 |
4. Net profit (“-” for net loss) | 2,207,307,101.08 | 1,823,328,951.60 |
4.1 Net profit from continuing operations (“-” for net loss) | 2,207,307,101.08 | 1,823,328,951.60 |
4.2 Net profit from discontinued operations (“-” for net loss) | ||
5. Other comprehensive income, net of tax | -1,385,311.78 | 0.00 |
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 | -1,385,311.78 | 0.00 |
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 | -1,385,311.78 | 0.00 |
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 | 2,205,921,789.30 | 1,823,328,951.60 |
~ 98 ~
7. Earnings per share | ||
7.1 Basic earnings per share | 4.18 | 3.62 |
7.2 Diluted earnings per share | 4.18 | 3.62 |
5. Consolidated Cash Flow Statement
Unit: RMB
Item | 2021 | 2020 |
1. Cash flows from operating activities: | ||
Proceeds from sale of commodities and rendering of services | 15,533,370,561.71 | 10,807,605,859.36 |
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 | 10,939,461.17 | 7,344,191.33 |
Cash generated from other operating activities | 1,154,331,493.95 | 3,104,278,291.78 |
Subtotal of cash generated from operating activities | 16,698,641,516.83 | 13,919,228,342.47 |
Payments for commodities and services | 2,476,695,652.35 | 2,216,094,155.87 |
Net increase in loans and advances to customers | ||
Net increase in deposits in the central bank and in interbank loans granted |
~ 99 ~
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 | 2,764,878,720.68 | 2,377,569,201.11 |
Taxes paid | 3,745,603,413.41 | 3,323,475,922.81 |
Cash used in other operating activities | 2,457,155,602.60 | 2,377,545,537.15 |
Subtotal of cash used in operating activities | 11,444,333,389.04 | 10,294,684,816.94 |
Net cash generated from/used in operating activities | 5,254,308,127.79 | 3,624,543,525.53 |
2. Cash flows from investing activities: | ||
Proceeds from disinvestment | 685,446,809.53 | 326,968,000.00 |
Return on investment | 27,570,964.03 | 41,473,224.56 |
Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 8,510,785.59 | 3,756,621.07 |
Net proceeds from the disposal of subsidiaries and other business units | ||
Cash generated from other investing activities | ||
Subtotal of cash generated from investing activities | 721,528,559.15 | 372,197,845.63 |
Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 578,154,171.08 | 561,616,750.96 |
Payments for investments | 8,939,702,000.00 | 41,798,000.00 |
Net increase in pledged loans granted | ||
Net payments for the acquisition of subsidiaries and other business units | 65,123,508.25 | 0.00 |
Cash used in other investing activities | ||
Subtotal of cash used in investing activities | 9,582,979,679.33 | 603,414,750.96 |
Net cash generated from/used in investing activities | -8,861,451,120.18 | -231,216,905.33 |
3. Cash flows from financing activities: |
~ 100 ~
Capital contributions received | 4,962,827,169.81 | 0.00 |
Including: Capital contributions by non-controlling interests to subsidiaries | 5,280,000.00 | 0.00 |
Borrowings raised | 202,510,000.00 | 130,665,500.00 |
Cash generated from other financing activities | ||
Subtotal of cash generated from financing activities | 5,165,337,169.81 | 130,665,500.00 |
Repayment of borrowings | 357,436,327.65 | 0.00 |
Interest and dividends paid | 760,093,886.59 | 831,838,344.55 |
Including: Dividends paid by subsidiaries to non-controlling interests | 0.00 | 75,792,108.39 |
Cash used in other financing activities | 20,017,478.32 | 0.00 |
Subtotal of cash used in financing activities | 1,137,547,692.56 | 831,838,344.55 |
Net cash generated from/used in financing activities | 4,027,789,477.25 | -701,172,844.55 |
4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
5. Net increase in cash and cash equivalents | 420,646,484.86 | 2,692,153,775.65 |
Add: Cash and cash equivalents, beginning of the period | 5,636,903,693.74 | 2,944,749,918.09 |
6. Cash and cash equivalents, end of the period | 6,057,550,178.60 | 5,636,903,693.74 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item | 2021 | 2020 |
1. Cash flows from operating activities: | ||
Proceeds from sale of commodities and rendering of services | 6,255,940,908.12 | 6,224,786,292.61 |
Tax rebates | 136,317.05 | 367,573.41 |
Cash generated from other operating activities | 1,011,350,323.14 | 1,055,973,163.52 |
Subtotal of cash generated from operating activities | 7,267,427,548.31 | 7,281,127,029.54 |
Payments for commodities and services | 1,619,308,652.04 | 1,620,053,478.29 |
~ 101 ~
Cash paid to and for employees | 893,957,837.80 | 785,902,280.22 |
Taxes paid | 2,421,277,549.92 | 2,490,592,485.18 |
Cash used in other operating activities | 257,177,069.10 | 235,549,046.19 |
Subtotal of cash used in operating activities | 5,191,721,108.86 | 5,132,097,289.88 |
Net cash generated from/used in operating activities | 2,075,706,439.45 | 2,149,029,739.66 |
2. Cash flows from investing activities: | ||
Proceeds from disinvestment | 546,849,809.53 | 306,970,000.00 |
Return on investment | 43,845,258.48 | 738,058,038.36 |
Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 6,000,032.69 | 5,535,791.98 |
Net proceeds from the disposal of subsidiaries and other business units | 13,673,346.37 | 0.00 |
Cash generated from other investing activities | ||
Subtotal of cash generated from investing activities | 610,368,447.07 | 1,050,563,830.34 |
Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 793,665,435.61 | 414,403,643.54 |
Payments for investments | 8,151,105,000.00 | 21,800,000.00 |
Net payments for the acquisition of subsidiaries and other business units | 440,643,400.00 | 0.00 |
Cash used in other investing activities | ||
Subtotal of cash used in investing activities | 9,385,413,835.61 | 436,203,643.54 |
Net cash generated from/used in investing activities | -8,775,045,388.54 | 614,360,186.80 |
3. Cash flows from financing activities: | ||
Capital contributions received | 4,957,547,169.81 | 0.00 |
Borrowings raised | ||
Cash generated from other financing activities | ||
Subtotal of cash generated from financing activities | 4,957,547,169.81 | 0.00 |
Repayment of borrowings |
~ 102 ~
Interest and dividends paid | 755,400,000.00 | 755,400,000.00 |
Cash used in other financing activities | 18,667,478.32 | 0.00 |
Subtotal of cash used in financing activities | 774,067,478.32 | 755,400,000.00 |
Net cash generated from/used in financing activities | 4,183,479,691.49 | -755,400,000.00 |
4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
5. Net increase in cash and cash equivalents | -2,515,859,257.60 | 2,007,989,926.46 |
Add: Cash and cash equivalents, beginning of the period | 4,087,808,756.66 | 2,079,818,830.20 |
6. Cash and cash equivalents, end of the period | 1,571,949,499.06 | 4,087,808,756.66 |
~ 103 ~
7. Consolidated Statements of Changes in Owners’ Equity
2021
Unit: RMB
Item | 2021 | ||||||||||||||
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 | 7,987,380,161.21 | 10,043,288,013.73 | 405,562,772.65 | 10,448,850,786.38 | ||||||||
Add: Adjustment for change in accounting policy | |||||||||||||||
Adjustment for correction of previous error | |||||||||||||||
~ 104 ~
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 | 7,987,380,161.21 | 10,043,288,013.73 | 405,562,772.65 | 10,448,850,786.38 | ||||||||
3. Increase/ decrease in the period (“-” for decrease) | 25,000,000.00 | 4,929,342,074.85 | -2,735,058.19 | 12,500,000.00 | 1,529,994,413.25 | 6,494,101,429.91 | 309,908,665.24 | 6,804,010,095.15 | |||||||
3.1 Total comprehensive income | -2,735,058.19 | 2,297,894,413.25 | 2,295,159,355.06 | 76,470,029.05 | 2,371,629,384.11 | ||||||||||
3.2 Capital increased and reduced by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | 233,438,636.19 | 5,187,780,711.04 | ||||||||||
3.2.1 Ordinary shares increased by | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | 4,954,342,074.85 |
~ 105 ~
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 | 233,438,636.19 | 233,438,636.19 | |||||||||||||
3.3 Profit distribution | 12,500,000.00 | -767,900,000.00 | -755,400,000.00 | -755,400,000.00 | |||||||||||
3.3.1 Appropriation to surplus reserves | 12,500,000.00 | -12,500,000.00 | |||||||||||||
3.3.2 Appropriation to general reserve | |||||||||||||||
3.3.3 Appropriation to owners | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 |
~ 106 ~
(or shareholders) | |||||||||||||||
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 |
~ 107 ~
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 | 528,600,000.00 | 6,224,747,667.10 | -2,735,058.19 | 269,402,260.27 | 9,517,374,574.46 | 16,537,389,443.64 | 715,471,437.89 | 17,252,860,881.53 |
2020
~ 108 ~
Unit: RMB
Item | 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 |
~ 109 ~
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) | 1,099,176,249.29 | 1,099,176,249.29 | -82,480,174.65 | 1,016,696,074.64 | |||||||||||
3.1 Total comprehensive income | 1,854,576,249.29 | 1,854,576,249.29 | -6,688,066.26 | 1,847,888,183.03 | |||||||||||
3.2 Capital increased and reduced by owners | |||||||||||||||
3.2.1 Ordinary shares increased by owners | |||||||||||||||
3.2.2 Capital increased by |
~ 110 ~
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 | -75,792,108.39 | -831,192,108.39 | |||||||||||
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 | -75,792,108.39 | -831,192,108.39 | |||||||||||
3.3.4 Other |
~ 111 ~
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 |
~ 112 ~
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 | 7,987,380,161.21 | 10,043,288,013.73 | 405,562,772.65 | 10,448,850,786.38 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2021
Unit: RMB
Item | 2021 |
~ 113 ~
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 | 7,465,059,972.22 | 9,467,622,079.57 | |||||||
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 | 7,465,059,972.22 | 9,467,622,079.57 | |||||||
3. Increase/ decrease in the period (“-” for decrease) | 25,000,000.00 | 4,929,342,074.85 | -1,385,311.78 | 12,500,000.00 | 1,439,407,101.08 | 6,404,863,864.15 | ||||||
3.1 Total comprehensive income | -1,385,311.78 | 2,207,307,101.08 | 2,205,921,789.30 | |||||||||
3.2 Capital increased and reduced by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | |||||||||
3.2.1 Ordinary shares increased by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | |||||||||
3.2.2 Capital increased by holders of other equity instruments |
~ 114 ~
3.2.3 Share-based payments included in owners’ equity | ||||||||||||
3.2.4 Other | ||||||||||||
3.3 Profit distribution | 12,500,000.00 | -767,900,000.00 | -755,400,000.00 | |||||||||
3.3.1 Appropriation to surplus reserves | 12,500,000.00 | -12,500,000.00 | ||||||||||
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 |
~ 115 ~
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 | 528,600,000.00 | 6,176,504,182.20 | -1,385,311.78 | 264,300,000.00 | 8,904,467,073.30 | 15,872,485,943.72 |
2020
Unit: RMB
Item | 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 |
~ 116 ~
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) | 1,067,928,951.60 | 1,067,928,951.60 | ||||||||||
3.1 Total comprehensive income | 1,823,328,951.60 | 1,823,328,951.60 | ||||||||||
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 |
~ 117 ~
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 |
~ 118 ~
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 | 7,465,059,972.22 | 9,467,622,079.57 |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statementsfor the Year Ended 31 December 2021(Unless otherwise stated, all amounts are expressed in CNY Yuan.)
Note 1 Company profile
1.1 Company profile
The Anhui State-owned Asset Management Bureau approved through WanGuoZiGongZi(1996) Di 053 Hao the incorporation of Anhui Gujing Distillery Company Limited (theCompany and GJ Distillery) by Anhui Gujing Group Company Limited (GJ Group), as the solefounder, by the operating assets of Anhui Bozhou Gujing Distillery Factory (GJ DistilleryFactory), which is the core operating unit of GJ Group. The incorporation was furtherapproved by the Anhui People's Government through WanZhengMi (1996) 42 Hao. Theincorporation General Meeting was held on 28 May 1996 and the incorporation wasregistered with the Anhui Admistration Bureau for Commerce and Industry on 30 May1996 with the registered address at Bozhou, Anhui, the People’s Republic of China (thePRC). At incorporation, the Company’s total number of shares stood at 155 million with avaluation of CNY 377 .17million, which was the fair value of the operating assets of GJDistillery Factory upon appraisal.The Company initiated public offering of 60 million domestic listed shares held by foreigninvestors (known as “B share(s)”) in June 1996 and 20 million domestic listed CNY ordinaryshares (known as “A share(s)”) in September 1996. The par value of both the B share and Ashare is CNY 1.00 per share. The B shares and A shares issued were listed on the ShenzhenStock Exchange.The Company is headquartered at Gujing, Bozhou, Anhui. The Company and its subsidiaries(collectively, the Group) operates in the food manufacturing sector and engages in theproduction and sales of distilled wine.As of the public listing, the Company has 235 million shares in total with the share capitalat CNY 235 million. The Company’s at public listing comprised 155 million state-ownedshares, 60 million B shares and 20 million A shares. Each of the Company’s shares has a parvalue at CNY 1.00 per share.In accordance with the resolution of the General Meeting held on 29 May 2006, theCompany exercised the share reorganisation plan in June 2006. Immediately after the
implementation of the share reorganisation plan, the Company had in total 235 millionshares, comprising 147 million shares with restriction of disposal (equal to 62.55% of totalshares) and 88 million free-floating shares (equal to 37.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 27 June2007, the restriction on disposal on 11.75 million shares was lifted on 29 June 2007.Immediately after the lifting, the Company had in total 235 million shares, comprising
135.25 million shares with restriction of disposal (equal to 57.55% of total shares) and
99.75 million free-floating shares (equal to 42.45% of total shares).
Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 17 July2008, the restriction on disposal on 11.75 million shares was lifted on 18 July 2008.Immediately after the lifting, the Company had in total 235 million shares, comprising
123.5 million shares with restriction of disposal (equal to 52.55% of total shares) and 111.5million free-floating shares (equal to 47.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 24 July2009, the restriction on disposal on 123.5 million shares was lifted on 29 July 2009.Immediately after the lifting, the Company had in total 235 million shares, comprising 235million free-floating shares (equal to 100% of total shares).Upon approval by the China Securities Regulatory Commission (CSRC) throughZhengJianXuKe [2011] 943 Hao, the Company issued on 15 July 2011 through privateoffering of 16.8 million A shares with the par value at CNY 1.00 to designated investors.The shares were issued at CNY 75.00 per share. Gross proceeds from this issuance was CNY1,260 million and the respective net proceeds after deduction of the cost of issuance (CNY
32.5 million) was CNY 1,227.5 million. The subscription for the issuance was verified byReanda CPAs Co., Ltd. through Reanda YanZi [2011] Di 1065 Hao. Immediately after thisprivate offering, the share capital of the Company increased to CNY 251.8 million.In accordance with the resolution of the Company’s 2011 General Meeting, a bonus issueof 10 shares for every 10 shares held at 31 December 2011 through utilisation of capitalreserves was exercised in 2012. 251.8 bonus shares were issued in total. Immediately afterthe exercise of the bonus issue, the Company’s share capital increased to CNY 503.6million.Upon approval by the CSRC through ZhengJianXuKe [2021] 1422 Hao, the Company issuedon 22 July 2021 through private offering of 25 million A shares with the par value at CNY
1.00 to designated investors. The shares were issued at CNY 200.00 per share. Grossproceeds from this issuance was CNY 5,000 million and the respective net proceeds after
deduction of the cost of issuance (CNY 45.66 million) was CNY 4,954.34 million. Thesubscription for the issuance was verified by RSM China CPAs LLP through RSM Yan [2021]No. 518Z0050. Immediately after this private offering, the share capital of the Companyincreased to CNY 528.6 million.As of 31 December 2021, total number of the Company’s shares stood at 528.6 million. SeeNote 5.32 for further details.Place of registration: Gujing, Bozhou, Anhui.Registered scope of operation: grain purchase (operation under permit), production ofdistilled wine, brewery equipments, packaging materials, glass bottles, alcohol, fat (asby-product of alcohol production), development of innovative technology and biologicaltechnology, deep processing of agricultural and auxillary products, and sales of ownedproduced goods.These financial statements are approved on 29 April 2022 by the Company’s Board ofDirectors for publication.
1.2 Scope of consolidation
1.2.1 Subsidiaries included in the Company’s scope of consolidation as of the statementdate
Subsidiary | Abbreviation | Shareholding % | ||
Direct | Indirect | |||
1 | Bozhou Gujing Sales Co., Ltd. | GJ Sales | 100 | - |
2 | Anhui Jinyunlai Culture Media Co., Ltd. | Jinyunlai | 100 | - |
3 | Anhui Ruisi Weier Technology Co., Ltd. | Ruisi Weier | 100 | - |
4 | Anhui Longrui Glass Co., Ltd. | Longrui Glass | 100 | - |
5 | Bozhou Gujing Waste Recycle Co., Ltd. (Dissolved) | Waste Recycle | 100 | - |
6 | Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Jinhao Hotel | 100 | - |
7 | Baozhou Gujing Guest House Co., Ltd. | GJ Guest House | 100 | - |
8 | Anhui Yuanqing Environment Protection Co., Ltd. | YQ Environment Protection | 100 | - |
9 | Anhui Gujing Yunshang E-Commerce Co., Ltd. | GJ E-Commerce | 100 | - |
10 | Anhui Runan Xinke Testing Technology Co., Ltd. | Runan Xinke | 100 | - |
11 | Anhui Jiuan Electric Equipments Co., Ltd. | Jiuan Electric | 100 | - |
12 | Anhui Jiudao Culture Media Co., Ltd. | Jiudao Media | 100 | - |
13 | Anhui Jiuhao ChinaRail Construction Engineering Co., Ltd. | Jiuhao ChinaRail | 52 | - |
14 | Anhui Zhenrui Construction Engineering Co., Ltd. | Zhenrui Construction | - | 52 |
Subsidiary | Abbreviation | Shareholding % | ||
Direct | Indirect | |||
15 | Huanghelou Distillery Co., Ltd. | HHL Distillery | 51 | - |
16 | HHL Distillery (Suizhou) Co., Ltd. | HHL Suizhou | - | 51 |
17 | Hubei Junlou Culture Travel Co., Ltd. | Junlou Culture | - | 51 |
18 | Hubei HHL Beverage Co., Ltd. | HHL Beverage | - | 51 |
19 | HHL Distillery (Xianning) Co., Ltd. | HHL Xianning | - | 51 |
20 | Wuhan Yashibo Technology Co., Ltd. | Yashibo | - | 51 |
21 | Hubei Xinjia Testing Technology Co., Ltd. | Xinjia Testing | - | 51 |
22 | Wuhan Tianlong Jindi Technology Development Co., Ltd. | Tianlong Jindi | - | 51 |
23 | Wuhan Junya Sales Co., Ltd. | Junya Sales | - | 51 |
24 | Xianning Junhe Sales Co., Ltd. | Xianning Junhe | - | 51 |
25 | Suizhou Junhe Trading Co., Ltd. | Suizhou Junhe | - | 51 |
26 | Guizhou Huairen Maotai Treasure Distillery Co., Ltd. | Treasure Distillery | 60 | - |
27 | Anhui Mingguang Distillery Co., Ltd. | Mingguang Distillery | 60 | - |
28 | Mingguang Tiancheng Mingjiu Sales Co., Ltd. | Tiancheng Sales | - | 60 |
29 | Fengyang Xiaogangcun Mingjiu Distillery Co., Ltd. | FY Xiaogangcun | - | 42 |
See Note 7 for further details.
1.2.2 Change of the scope of consolidation in the period
See Note 7 for further details. Mingguang Distillery, Tiancheng Sales, FY Xiaogangcun,Treasure Distillery, Jiuhao ChinaRail and Jiuan Electric were included in the Company’sscope of consolidation in the period for the first time. Waste Recylce was excluded fromthe Company’s scope of consolidation in the period upon dissolution.
Note 2 Basis of preparation for the financial statements
2.1 Basis of preparation
Based on going concern, according to actually occurred transactions and events, theCompany prepares its financial statements in accordance with the Accounting Standardsfor Business Enterprises – Basic standards and concrete accounting standards, AccountingStandards for Business Enterprises – Application Guidelines, Accounting Standards forBusiness Enterprises – Interpretations and other relevant provisions (collectively known as“Accounting Standards for Business Enterprises” or ASBE(s)). At the same time, theCompany discloses relevant financial information in accordance with Disclosure Rule forCompanies with Publicly Traded Securities No. 15 – General Provisions for Financial
Statements (Revised in 2014) issued by the CSRC.
2.2 Going concern
The Company has assessed its ability to continually operate for the next twelve monthsfrom the end of the reporting period, and no any matters that may result in doubt on itsability as a going concern were noted. Therefore, it is reasonable for the Company toprepare financial statements on the going concern basis.
Note 3 Significant account policies and accounting estimatesThe following significant accounting policies and accounting estimates of the Company areformulated in accordance with the Accounting Standards for Business Enterprises.Businesses not mentioned are complied with relevant accounting policies of theAccounting Standards for Business Enterprises.
3.1 Statement of compliance with the Accounting Standards for Business EnterprisesThe Company prepares its financial statements in accordance with the requirements of theAccounting Standards for Business Enterprises, truly and completely reflecting theCompany’s financial position as at 31 December 2021, and its operating results, changes inshareholders' equity, cash flows and other related information for the year then ended.
3.2 Accounting 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 twelve months.
3.4 Functional currency
The functional currency of the Company is CNY Yuan. An Overseas subsidiary (or branch)uses the currency prominent in its business activities as its functional currency.
3.5 Business combination under common control and business combination not undercommon contorl
3.5.1 Business combination under common control
The assets and liabilities that the Company obtains in a business combination undercommon control are measured at their carrying amounts as consolidated in the ultimatecontroller’s consolidated statement of financial position at the combination date. If theaccounting policy adopted by the acquired entity is different from that adopted by theCompany, the Company, according to accounting policy it adopts, adjusts the relevantitems in the financial statements of the acquired entity based on the principle ofmateriality. the Company’s capital reserve (capital premium or share premium) is adjusted
by the difference between the carrying amount of the net assets obtained by the Companyand the carrying amount of the consideration paid for the combination; where the capitalreserve (capital premium or share premium) is not sufficient to absorb the difference, theexcess is adjusted to the Company’s surplus reserves, and retained earnings if needed.See Note 3.6.6 for business combination under common control through multipletransactions.
3.5.2 Business combination not under common control
The identifiable assets and liabilities that the Company obtains in a business combinationnot under common control are measured at their fair value at the acquisition date. If theaccounting policy adopted by the acquired entity is different from that adopted by theCompany, the Company, according to accounting policy it adopts, adjusts the relevantitems in the financial statements of the acquired entity based on the principle ofmateriality. The Company recognises the excess of the cost of combination over the fairvalue of the identifiable net assets it obtains from the acquired entity as goodwill. Wherethe fair value of the identifiable net assets obtained by the Company is higher than thecost of combination, the Company review the measurement of the fair values of theidentifiable assets, liabilities and contingent liabilities it obtains from the acquired entity aswell as the cost of combination; where the excess remains upon the review, the Companyrecognises the excess through profit or loss for the period in which the combinationoccurs.See Note 3.6.6 for business combination not under common control through multipletransactions.
3.5.3 Transaction costs of a business combination
The intermediary costs such as audit, legal services and valuation consulting and otherrelated management costs that are directly attributable to the business combination arecharged to profit or loss in the period in which they are incurred. The costs to issue equityor debt securities for the consideration of business combination are recorded as a part ofthe value of the respect equity or debt securities upon initial recognition.
3.6 Consolidated financial statements
3.6.1 Scope of consolidation
The scope of consolidation is determined on the basis of control. It not only includessubsidiaries determined based on voting power (or similar) or other arrangement, but alsostructured entities under one or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure,
or rights to variable returns from the Company’s involvement with the investee; and theability to use its power over the investee to affect the amount of the investor’s returns.Subsidiaries are the entities that controlled by the Company (including a legal entity, adivisible part of the investee, and a structured entity controlled by a legal entity). Astructured entity (sometimes called a Special Purpose Entity) is an entity that has beendesigned so that voting or similar rights are not the dominant factor in deciding whocontrols the entity.
3.6.2 Accounting policies applicable to an investing entity
Where an entity is an investing entity, it consolidates its subsidiaries to the extent that thesubsidiaries which provide services to the investing entity; investment by the investingentity in other subsidiaries of the investing entity which are not consolidated by theinvesting entity is reocgnised as financial assets at fair value through profit or loss.An entity is an investing entity is all of the following conditions are satisfied:
I. the entity obtains funds from one or more investors for the purpose of providingthose investors with investment management services;II. the entity commits to its investors that its business purpose is to invest funds solelyfor returns from capital appreciation, investment income or both; andIII. the entity measures and evaluates the performance of substantially all of itsinvestments on a fair value basis.Where a non-investing entity becomes an investing entity, subsidiaries excluded fromconsolidation upon the change in status are accounted for in accordance with the principleof partial disposal not giving rise to loss of control.Where an investing entity becomes a non-investing entity, subsidiairies which were notpreviously consolidated are consolidated into the non-investing entity upon the change instatus in accordance with the principle of business combination not under common controlwhile their fair value as of the date of change in status is recognised by the non-investingentity as cost of combination.
3.6.3 Preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financialstatements of the Company and its subsidiaries, and using other related information.When preparing consolidated financial statements, the Company considers the entiregroup as an accounting entity, adopts uniform accounting policies and applies therequirements of Accounting Standard for Business Enterprises related to recognition,measurement and presentation. The consolidated financial statements reflect 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 parentare combined with those of the subsidiaries.II. The carrying amount of the parent’s investment in each subsidiary is eliminated(off-set) against the parent’s portion of equity of each subsidiary.III. The impact of intragroup transactions between the Company and the subsidiariesor between subsidiaries are eliminated, and when intragroup transactions indicate animpairment of related assets, the losses are recognised in full.IV. Adjustments are made for special transactions from the perspective of the group.
3.6.4 Accounting for inclusion into and exclusion from the scope of consolidation
3.6.4.1 Inclusion into the scope of consolidation
I. Subsidiaries or businesses acquired through business combination under commoncontrolWhen preparing the consolidated statements of financial position, the openingbalances are adjusted. Related items of comparative financial statements are adjustedas well, deeming that the combined entity has always existed ever since the ultimatecontrolling party began to control.Incomes, expenses and profits of the subsidiary arising from the beginning of thereporting period to the end of the reporting period are included into the consolidatedstatement of comprehensive income. Related items of comparative financialstatements are adjusted as well, deeming that the combined entity has always existedever since the ultimate controlling party began to control.Cash flows from the beginning of the reporting period to the end of the reportingperiod are included into the consolidated statement of cash flows. Related items ofcomparative financial statements are adjusted as well, deeming that the combinedentity has always existed ever since the ultimate controlling party began to control.II. Subsidiaries or businesses acquired through business combination not undercommon controlWhen preparing the consolidated statements of financial position, the openingbalances of the consolidated statements of financial position are not adjusted.Incomes, expenses and profits of the subsidiary arising from the acquisition date to theend of the reporting period are included into the consolidated statement ofcomprehensive income.Cash flows from the acquisition date to the end of the reporting period are included
into the consolidated statement of cash flows.
3.6.4.2 Exclusion from the scope of consolidation resulted from disposal of subsidiaries orbusinessesWhen preparing the consolidated statements of financial position, the opening balances ofthe consolidated statements of financial position are not adjusted.Incomes, expenses and profits incurred from the beginning of the subsidiary to thedisposal date are included into the consolidated statement of comprehensive income.Cash flows from the beginning of the subsidiary to the disposal date are included into theconsolidated statement of cash flows.
3.6.5 Special consideration in consolidation elimination
3.6.5.1 Long-term equity investment held by the subsidiaries to the Company is recognisedas treasury stock of the Company, which is offset with equity, represented as “treasurystock” under “equity” in the consolidated statement of financial position.Long-term equity investment held by subsidiaries between each other is accounted fortaking long-term equity investment held by the Company to its subsidiaries as reference.That is, the long-term equity investment is eliminated (off- set) against the portion of thecorresponding subsidiary’s equity.
3.6.5.2 Due to not belonging to share capital and capital reserve, and being different fromretained earnings and undistributed profit, “Specific reserves” is recovered based on theproportion attributable to owners of the parent company after long-term equityinvestment to the subsidiaries is eliminated with the subsidiaries’ equity.
3.6.5.3 If temporary timing difference between the book value of the assets and liabilitiesin the consolidated statement of financial position and their tax basis is generated as aresult of elimination of unrealised inter-company transaction profit or loss, deferred taxassets of deferred tax liabilities are recognised, and income tax expense in theconsolidated statement of comprehensive income is adjusted simultaneously, excludingdeferred taxes related to transactions or events directly recognised in equity or businesscombination.
3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Companyselling assets to its subsidiaries is eliminated against “net profit attributable to theshareholders of the parent company” in full. Unrealised inter-company transactions profitor loss generated from the subsidiaries selling assets to the Company is eliminatedbetween “net profit attributable to the shareholders of the parent company” and “netprofit attributable to non-controlling shareholders” pursuant to the proportion of the
Company in the related subsidiaries. Unrealised inter-company transactions profit or lossgenerated from the assets sales between the subsidiaries is eliminated between “net profitattributable to the shareholders of the parent company” and “net profit attributable tonon-controlling shareholders” pursuant to the proportion of the Company in the sellingsubsidiaries.
3.6.5.5 If loss attributable to the non-controlling shareholders of a subsidiary in currentperiod is more than the proportion of non-controlling interest in this subsidiary at thebeginning of the period, non-controlling interest is still to be written down.
3.6.6 Accounting for special transactions
3.6.6.1 Acquiring shares from non-controlling shareholders
Where, the Company purchases non-controlling interests of its subsidiary, in the separatefinancial statements of the Company, the cost of the long-term equity investment obtainedin purchasing non-controlling interests is measured at the fair value of the considerationpaid. In the consolidated financial statements, difference between the cost of thelong-term equity investment newly obtained in purchasing non-controlling interests andshare of the subsidiary’s net assets from the acquisition date or combination datecontinuingly calculated pursuant to the newly acquired shareholding proportion shall beadjusted into capital reserve (capital premium or share premium). If capital reserve isinsufficient for offset, surplus reserve and retained earnings shall be offset in turn.
3.6.6.2 Gaining control over a subsidiary in stages through multiple transactionsI. Business combination under common control through multiple transactionsOn the combination date, in the separate financial statement, initial cost of thelong-term equity investment is determined according to the share of carrying amountof the acquiree’s net assets in the ultimate controlling entity’s consolidated financialstatements after combination. The difference between the initial cost of the long-termequity investment and the carrying amount of the long -term investment held prior ofcontrol plus book value of additional consideration paid at acquisition date is adjustedinto capital reserve (capital premium or share premium). If the capital reserve is notenough to absorb the difference, any excess is adjusted against surplus reserve andundistributed profit in turn.In the consolidated financial statements, the assets and liabilities acquired during thecombination are recognised at their carrying amounts in the ultimate controllingentity’s consolidated financial statements on the combination date unless anyadjustment 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 consideration paid on the acquisition date and the net assets acquiredthrough the combination is adjusted into capital reserve (capital premium or sharepremium). If the capital reserve is not enough to absorb the difference, any excess isadjusted against retained earnings.If the acquiring entity holds equity investment in the acquired entity prior to thecombination date and the equity investment is accounted for under the equity method,related profit or loss, other comprehensive income and other changes in equity whichhave 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 acquireeunder common control of the same ultimate controlling party to the combination isoffset against the opening balance of retained earnings at the comparative financialstatements period respectively.II. Business combination not under common control through multiple transactionsOn the consolidation date, in the separate financial statements, the initial cost oflong-term equity investment is determined according to the carrying amount of theoriginal long-term investment plus the cost of new investment.In the consolidated financial statements, the equity interest of the acquired entity heldprior to the acquisition date is re-measured at its fair value on the acquisition date.Difference between the fair value of the equity interest and its book value isrecognised as investment income. Other comprehensive income related to the equityinterest held prior to the acquisition date calculated through equity method istransferred to current investment income of the acquisition period, excluding othercomprehensive income resulted from the remeasurement of defined benefit plans.The Company discloses acquisition-date fair value of the equity interest held prior tothe acquisition date, and the related gains or losses due to the remeasurement basedon fair value.
3.6.6.3 Disposal of investment in subsidiaries without a loss of controlFor partial disposal of a long-term equity investment in a subsidiary without a loss ofcontrol, when the Company prepares consolidated financial statements, differencebetween consideration received from the disposal and the corresponding share ofsubsidiary’s net assets cumulatively calculated from the acquisition date or combinationdate is adjusted into capital reserve (capital premium or share premium). If the capitalreserve is not enough to absorb the difference, any excess is adjusted against retainedearnings.
3.6.6.4 Disposal of investment in subsidiaries with a loss of control
I. Loss of control through one single transactionIf the Company loses control in an investee through partial disposal of the equityinvestment, when the consolidated financial statements are prepared, the retainedequity interest is re-measured at fair value at the date of loss of control. Thedifference between i) the fair value of consideration received from the disposal plusnon-controlling interest retained; ii) share of the former subsidiary’s net assetscumulatively calculated from the acquisition date or combination date according tothe original proportion of equity interest, is recognised in current investment incomewhen control is lost.Moreover, other comprehensive income and other changes in equity related to theequity investment in the former subsidiary is transferred into current investmentincome when control is lost, excluding other comprehensive income resulted from theremeasurement of defined benefit plans.II. Loss of control through multiple transactionsIn the consolidated financial statements, whether the transactions should beaccounted for as “a single transaction” needs to be decided firstly.If the disposal through multiple transactions is not classified as “a single transaction”,in the separate financial statements, for transactions prior to the date of loss ofcontrol, carrying amount of each disposal of long-term equity investment isde-recognised at upon disposal, and the difference between consideration receivedand the carrying amount of long-term equity investment corresponding to the equityinterest disposed is recognised in current investment income; in the consolidatedfinancial statements, the disposal transaction is accounted for in accordance with
3.6.6.3.
If the disposal through multiple transactions is classified as “a single transaction”,these transactions should be accounted for as one single transaction of disposal ofsubsidiary resulting in loss of control. In the separate financial statements, for eachtransaction prior to the date of loss of control, difference between considerationreceived and the carrying amount of long-term equity investment corresponding tothe equity interest disposed is recognised in other comprehensive income firstly, andtransferred to profit or loss as a whole when control is lost; in the consolidatedfinancial statements, for each transaction prior to the date of loss of control,difference between consideration received and proportion of the subsidiary’s netassets corresponding to the equity interest disposed is recognised in profit or loss as a
whole when control is lost.In considering of the terms and conditions of the transactions as well as theireconomic impact, the presence of one or more of the following indicators may lead toaccount for multiple transactions as a single transaction:
i. The transactions are entered into simultaneously or in contemplation of oneanother.ii. The transactions form a single transaction designed to achieve an overallcommercial effect.iii. The occurrence of one transaction depends on the occurrence of at least oneother transaction.iv. One transaction, when considered on its own merits, does not make economicsense, but when considered together with the other transaction or transactionswould be considered economically justifiable.
3.6.6.5 Diluting equity share of parent company in its subsidiaries due to additional capitalcontribution by the subsidiaries’ non-controlling shareholders.Other shareholders (non-controlling shareholders) of the subsidiaries inject additionalcapital in the subsidiary, which results in the dilution of equity interest of parent companyin the subsidiary. In the consolidated financial statements, difference between share of thecorresponding subsidiary’s net assets calculated based on the parent’s equity interestbefore and after the capital injection is adjusted into capital reserve (capital premium orshare premium). If the capital reserve is not enough to absorb the difference, any excess isadjusted against retained earnings.
3.7 Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control.Joint arrangement of the Company is classified as either a joint operation or a jointventure.
3.7.1 Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the assets, and obligations for the liabilities, relating to thearrangement.The Company recognises the following items in relation to shared interest in a jointoperation, and accounts for them in accordance with relevant accounting standards of theAccounting 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;IV. its share of the revenue from the sale of the output by the joint operation; andV. its expenses, including its share of any expenses incurred jointly.
3.7.2 Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equitymethod of long-term equity investment.
3.8 Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cashequivalents include short-term (generally within three months of maturity at acquisition),highly liquid investments that are readily convertible into known amounts of cash andwhich are subject to an insignificant risk of changes in value.
3.9 Foreign currency
3.9.1 Translation of a transaction denominated in a foreign currencyAt the time of initial recognition of a foreign currency transaction, the amount in theforeign currency is translated into the amount in the functional currency at the spotexchange rate of the transaction date, or at an exchange rate which is determined througha systematic and reasonable method and is approximate to the spot exchange rate of thetransaction date (hereinafter referred to as the approximate exchange rate).
3.9.2 Translation of monetary items denominated in foreign currencies on a balance-sheetdateThe foreign currency monetary items are translated at the spot exchange rate on thebalance sheet date. The balance of exchange arising from the difference between the spotexchange rate on the balance sheet date and the spot exchange rate at the time of initialrecognition or prior to the balance sheet date shall be recorded into the profits and lossesat the current period. The foreign currency non-monetary items measured at the historicalcost are translated at the spot exchange rate on the transaction date; the foreign currencynon-monetary items restated to a fair value measurement are translated at the spotexchange rate at the date when the fair value was determined, the difference between therestated functional currency amount and the original functional currency amount shall berecorded into the profits and losses at the current period.
3.9.3 Translation of financial statements denominated in a foreign currency
Before translating the financial statements of foreign operations, the accounting periodand accounting policies are adjusted so as to conform to the Company’s accounting periodand accounting policies. The adjusted foreign operation financial statements denominatedin foreign currency (other than functional currency) are translated in accordance with thefollowing method:
I. The asset and liability items in the statement of financial position shall be translatedat the spot exchange rates at the date of that statement of financial position. Theequity items except retained earnings are translated at the spot exchange rates whenthey are incurred.II. The income and expense items in the statement of comprehensive income aretranslated at the spot exchange rates or approximate exchange rate at the date oftransaction.III. Foreign currency cash flows and cash flows of foreign subsidiaries are translated atthe spot exchange rate or approximate exchange rate when the cash flows are incurred.The effect of exchange rate changes on cash is presented separately in the statementof cash flows as an adjustment item.IV. The differences arising from the translation of foreign currency financial statementsare presented separately as “other comprehensive income” under the equity items ofthe consolidated statement of financial position.When disposing a foreign operation involving loss of control, the cumulative amount of theexchange differences relating to that foreign operation recognised under othercomprehensive income in the statement of financial position are reclassified into currentprofit or loss according to the proportion disposed.
3.10 Financial instruments
A financial instrument is any contract which gives rise to both a financial asset of one entityand a financial liability or equity instrument of another entity.
3.10.1 Recognition and derecognition of a financial instrument
A financial asset or a financial liability is recognised in the statement of financial positionwhen, and only when, an entity becomes party to the contractual provisions of theinstrument.A financial asset can only be derecognised when the rights to the contractual cash flowsfrom the financial asset expire; orA financial liability (or a part of a financial liability) is derecognised in on of the followingways:
I. a financial liability (or a part of the financial liability) is derecognised when the
obligation associated with the financial liability (or the part of the financial liability) isreleased;II. Where an existing financial liability is replaced by a new financial liability by anagreement with the counter party and the new financial liability is substantiallydifferent from the existing financial liability, the existing financial liability isderecognised while the new financial liablity is recognised;III. Where the contractual terms of a financial liability (or a part of a financial liability)are substantially altered, the financial liablity is dercognised in full and a new financialliablity reflecting the contractual terms after alteration is recognised.Purchase or sale of a financial instrument in a regular-way is recognised and derecognisedusing trade date accounting. A regular-way purchase or sale of a financial instrument is atransaction under a contract whose terms require delivery of the instrument within thetimeframe established generally by regulations or convention in the market placeconcerned. Trade date is the date on which the entity commits itself to purchase or sell aAfinancial instrument.
3.10.2 Classification and measurement of financial assets
A financial asset is recognised as one of the following upon initial recognition based onboth the business model for managing the financial asset and the contractual cash flowcharacteristics of the financial asset:
I. a financial asset at amortised cost;II. a financial asset at fair value through profit or loss (FVATPL); orIII. a financial asset at fair value through other comprehensive income (FVATOCI).Reclassification of a financial asset is permitted if, and only if, the objective of the entity’sbusiness model for managing the financial asset changes. In this circumstance, all affectedfinancial assets are reclassified on the first day of the first reporting period after thechanges in business model; otherwise a financial asset cannot be reclassified after initialrecognition.Financial assets shall be measured at initial recognition at fair value. For financial assetsmeasured at fair value through profit or loss, transaction costs are recognised in currentprofit or loss. For financial assets not measured at fair value through profit or loss,transaction costs should be included in the initial measurement. Notes receivable oraccounts receivable that arise from sales of goods or rendering of services are initiallymeasured at the transaction price defined in the accounting standard of revenue wherethe transaction does not include a significant financing component.Subsequent measurement of financial assets will be based on their categories:
I. Financial assets at amortised costA financial asset is classified as a financial asset at amortised cost when both thefollowing conditions are satisfied:
i. the financial asset is held within the business model whose objective is to holdthe financial asset in order to collect contractual cash flows; andii. the contractual term of the financial asset gives rise to cash flows on specifieddates that are solely payment of principal and interest on the outstandingprincipal amount.A financial asset at amortised cost is subsequently measured at amortised cost byadopting the effective interest rate method. Any gain or loss arising fromderecognition, amortisation computed using the effective interest rate method, andimpairment are recognised in current profit or loss.II. Financial assets at fair value through other comprehensive income (FVATOCI)A financial asset is classified as a FVATOCI when both the following conditions aresatisfied:
i. the financial asset is held within the business model whose objective is achievedby both collecting contractual cash flows and selling financial asset; andii. the contractual term of the financial asset gives rise to cash flows on specifieddates that are solely payment of principal and interest on the outstandingprincipal amount.A FVATOCI is subsequently measured at fair value with changes in fair valuerecognised in other comprehensive income excep for the following gain or loss, whichis recognised in current profit or loss:
i. gain or loss arising from impairment or exchange differences; andii. interest income calculated based on the effective interest rateWhere a non-trading equity instrument investment is irrevocably designated as aFVTAOCI, fair value change is recognised in other comprehensive income and dividendincome is recognised in current profit or loss. Upon derecognised, cumulative gain orloss previously recognised in other comprehensive income is reclassified to retainedearnings.III Financial assets at fair value through profit or loss (FVATPL)A financial asset which is neither a financial asset at amortised cost nor a FVATOCI isclassified as a FVATPL. A FVATPL is subsequently measured as fair value with changesin fair value recognised in current profit or loss.
3.10.3 Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value throughprofit or loss (FVLTPL), loan commitments at a below-market interest rate, financialguarantee contracts, and financial liablities at amortised cost.Subsequent measurement of financial assets will be based on the classification:
I. Financial liabilities at fair value through profit or loss (FVLTPL)Held-for-trading financial liabilities (including derivatives that are financial liabilities)and financial liabilities designated as FVLTPL are classified as financial liabilities atFVLTPL. After initial recognition, any gain or loss (including interest expense) arerecognised in current profit or loss except for those to which hedge accounting isapplied. For a financial liability that is designated as a FVLTPL, changes in the fair valueof the financial liability that is attributable to changes in the own credit risk of theissuer is recognised in other comprehensive income. At derecognition, cumulative gainor loss previously recognised under other comprehensive income is reclassified toretained earnings.II. Loan commitments and financial guarantee contractsA loan commitment is a commitment by the Company to provide a loan to customerunder specified contract terms. The provision of impairment losses of loancommitments is recognised based on expected credit losses model.A financial guarantee contract is a contract that requires the Company to makespecified payments to reimburse the holder for a loss it incurs because a specifieddebtor fails to make payment when due in accordance with the original or modifiedterms of a debt instrument. A financial guarantee contract liability shall besubsequently measured at the higher of the amount determined in accordance withthe accounting policies applicable to impairment of a financial asset and the amountinitially recognised less the cumulative amortisation calculated in accordance with theaccounting policies applicable to revenue.III. Financial liabilities at amortised costA financial liability at amortised cost is subsequently measured at its amortised costcalculated using the effective interest rate method.Unless in exceptional case, financial liabilities and equity instruments are classfified in thefollowing ways:
I. Where the issuer of a financial instrument has no uncondintional right to avoiddeliverying cash or another financial asset(s) to fulfill an obligation, this obligationmeets the definition of a financial liablity. A contract of a financial instrument may not
explicitly comprise terms and conditions relating to a obligation of delivery cash oranother financial asset(s), it may implicitly include such obligation through other termsand conditions.II. Where a financial instrument can only or may be settled by the issuer’s own equityinstruments:
i. if the issuer’s equity instruments are a substitution of cash or other financialasset(s), the financial instrument is the issuer’s liability;ii. if the issuer’s equity instruments enable the holder to the issuer’s residualinterest after deducting all of the issuer’s liabilities from all of the issuer’s assets,the financial instrument is the issuer’s equity instrument.In certain cases, a financial instrument can only or may be settled by the issuer’s ownequity instruments and the settlement amount is calculated by multiplying the number ofequity instruments deliverable with the fair value of the equity instrument at thesettlement date, the instrument is the issuer’s financial liablity regardless of whether thesettlement amount is fixed or determinable wholly or partly by variables other than themarket price of the issuer’s own equity instrument (such as interest rate, market price of acommodity, or price of a financial instrument).
3.10.4 Derivatives and embedded derivatives
A financial derivative is initially measured at its fair value at the inception date of thederivative contract and subsequently measured at fair value. At initial recognition, afinancial deriivative with fair value at positive amount is recognised as an asset and as aliability is the fair value is at negative amount.Except for the change of fair value of the effective portion of a cash flow hedge, which isrecognised other comprehensive income and reclassified to profit or loss upon cease ofhedging effectiveness, change of fair value of a financial financial derivative in recognisedin current profit or loss.Where the non-derivative part of a hybrid instrument is a financial asset, the hybridinstrument is as a whole accounted for a financial asset.Where the non-derivative part of a hybrid instrument is a non-financial asset, thederivative part is separately accounted for as a financial derivative if all of the followingconditions are satisfied:
I. the hybrid instrument is not accounted for at fair value through profit or loss;II. the economic characteristics and risks of the derivative part is not closely related tothose of the non-derivative part; andIII. a stand-alone instrument with characteristics similar to the derivative part is a
financial derivative.Where the fair value of the derivative part of a hybrid instrument with the non-derivativepart being a non-financial asset cannot be inidividually measured either upon orsubsequent to initial recognition, the hybrid instrument as a whole is accounted as either aFVATPL or FVLTPL.
3.10.5 Impairment of financial instruments
Impairment allowance for financial assets at amortised costs, FVATOCI, contract assets,lease receivables, loan commitments and financial guarantee contracts is recognised onthe basis of their expected credit loss.
I. Measurement of expected credit loss
Expected credit loss are the weighted average of credit loss of a financial instrument
with the respective risks of a default occurring as the weights. Credit loss is the
difference between all contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that the Company expects to
receive (ie all cash shortfalls), discounted at the original effective interest rate or
credit-adjusted effective interest rate in the case of purchased credit-impaired
financial assets or financial assets with origninated credit impairment.
Lifetime expected credit losses are the expected credit losses that result from all
possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that
represent the expected credit losses that result from default events on a financial
instrument that are possible within the 12 months after the reporting 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 for expected credit losses accordingly. A financial instrument of
which the credit risk has not significantly increased since initial recognition is at stage 1.
The Company shall measure the loss allowance for that financial instrument at an
amount equal to 12-month expected credit losses. A financial instrument with a
significant increase in credit risk since initial recognition but is not considered to be
credit-impaired is at stage 2. The Company shall measure the loss allowance for that
financial instrument at an amount equal to the lifetime expected credit losses. A
financial instrument is considered to be credit-impaired as at the end of the reporting
period is at stage 3. The Company shall measure 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 initial recognition if the financial instrument is determinedto have low credit risk at the reporting date and measure the loss allowance for thatfinancial 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 interestrevenue shall be calculated by applying the effective interest rate to the gross carryingamount of a financial asset (ie, impairment loss not been deducted). For financialinstrument at stage 3, interest revenue shall be calculated by applying the effectiveinterest rate to the amortised cost after deducting of impairment loss.For notes receivable, accounts receivable and accounts receivable financing, no matterit contains a significant financing component or not, the Company shall measure theloss allowance at an amount equal to the lifetime expected credit losses.i. ReceivablesFor the notes receivable, accounts receivable, other receivables, accountsreceivable financing and long-term receivables which are demonstrated to beimpaired by any objective evidence, or applicable for individual assessment, theCompany shall individually assess for impairment and recognise the loss allowancefor expected credit losses. If the Company determines that no objective evidence ofimpairment exists for notes receivable, accounts receivable, other receivables,accounts receivable financing and long-term receivables, or the expected credit lossof a single financial asset cannot be assessed at reasonable cost, such notesreceivable, accounts receivable, other receivables, accounts receivable financingand long-term receivables shall be divided into several groups with similar creditrisk characteristics and collectively calculated the expected credit loss. Thedetermination basis of groups is as following:
A. Notes receivables:
Group 1: Commercial acceptanceGroup 2: Bank acceptanceFor each group, the Company calculates expected credit losses throughdefault exposure and the lifetime expected credit losses rate, taking referenceto historical experience for credit losses and considering current conditionand expectation for the future economic situation.B. Accounts receivable:
Group 1: Related parties within the scope of consolidationGroup 2: Receivables due from third partiesThe expected credit loss for a portfolio of accounts receivable is computed
using the expected credit loss rate over the entire lifes of the accountsreceivable and the age groups of these accouns receivable while taking intoconsideration of their historical credit loss and the assessment for current andexpected general economic conditions.
C. Other receivables:
Group 1: Related parties within the scope of consolidationGroup 2: Receivables due from third partiesThe expected credit loss for a portfolio of other receivables is computed usingthe expected credit loss rate over the next 12 months of the other receivablesand their exposure to default risk while taking into consideration of theirhistorical credit loss and the assessment for current and expected generaleconomic conditions.ii. Debts investment and other debt investmentsThe expected credit loss for a debt investment or other debt investment iscomputed using the expected credit loss rate over the next 12 months or theentire life of the investment and its exposure to default risk while taking intoconsideration of its nature.II. Low credit riskIf the financial instrument has a low risk of default, the borrower has a strong capacityto meet its contractual cash flow obligations in the near term and adverse changes ineconomic 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 hasincreased significantly since initial recognition, using the change in the risk of a defaultoccurring over the expected life of the financial instrument, through the comparison ofthe 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 initialrecognition.To make that assessment, the Company shall consider reasonable and supportableinformation, that is available without undue cost or effort, and that is indicative ofsignificant increases in credit risk since initial recognition, including forward-lookinginformation. The information considered by the Company are as following:
i. significant changes in internal price indicators of credit risk as a result of achange in credit risk since inception;
ii. existing or forecast adverse change in the business, financial or economicconditions of the borrower that results in a significant change in the borrower’sability to meet its debt obligations;iii. an actual or expected significant change in the operating results of theborrower; An actual or expected significant adverse change in the regulatory,economic, or technological environment of the borrower;iv. significant changes in the value of the collateral supporting the obligation or inthe quality of third-party guarantees or credit enhancements, which are expectedto reduce the borrower’s economic incentive to make scheduled contractualpayments or to otherwise have an effect on the probability of a default occurring;v. significant change that are expected to reduce the borrower’s economicincentive to make scheduled contractual paymentsvi. expected changes in the loan documentation including an expected breach ofcontract that may lead to covenant waivers or amendments, interest paymentholidays, interest rate step-ups, requiring additional collateral or guarantees, orother changes to the contractual framework of the instrument;vii. significant changes in the expected performance and behaviour of theborrowerviii. contractual payments are not less than 30 days past due.Depending on the nature of the financial instruments, the Company shall assesswhether the credit risk has increased significantly since initial recognition on anindividual financial instrument or a group of financial instruments. When assessedbased on a group of financial instruments, the Company can group financialinstruments on the basis of shared credit risk characteristics, for example, past dueinformation and credit risk rating.Generally, the Company shall determine the credit risk on a financial asset hasincreased significantly since initial recognition when contractual payments are morethan 30 days past due. The Company can only rebut this presumption if the Companyhas reasonable and supportable information that is available without undue cost oreffort, that demonstrates that the credit risk has not increased significantly since initialrecognition even though the contractual payments are more than 30 days past due.IV. Credit-impaired financial assetThe Company shall assess at each reporting date whether the credit impairment hasoccurred for financial asset at amortised cost and debt investment at fair valuethrough other comprehensive income. A financial asset is credit-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-impairedinclude observable data about the following events:
Significant financial difficulty of the issuer or the borrower;a breach of contract, suchas a default or past due event; the lender(s) of the borrower, for economic orcontractual reasons relating to the borrower’s financial difficulty, having granted tothe borrower a concession(s) that the lender(s) would not otherwise consider;it isbecoming probable that the borrower will enter bankruptcy or other financialreorganisation;the disappearance of an active market for that financial asset becauseof financial difficulties;the purchase or origination of a financial asset at a deepdiscount 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 initialrecognition, the Company shall at each reporting date remeasure the expected creditloss and recognise in profit or loss, as an impairment gain or loss, the amount ofexpected credit losses addition(or reversal). For financial asset at amortised cost, theloss allowance shall reduce the carrying amount of the financial asset in the statementof financial position; for debt investment at fair value through other comprehensiveincome, the loss allowance shall be recognised in other comprehensive income andshall not reduce the carrying amount of the financial asset in the statement of financialposition.VI. Write-offThe Company shall directly reduce the gross carrying amount of a financial asset whenthe Company has no reasonable expectations of recovering the contractual cash flowof a financial asset in its entirety or a portion thereof. Such write-off constitutes aderecognition of the financial asset. This circumstance usually occurs when theCompany determines that the debtor has no assets or sources of income that couldgenerate sufficient cash flow to repay the write-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal ofimpairment loss.
3.10.6 Transfer of financial assets
An entity may transfer a financial asset by either transferring the contractual rights to thecash flows of the financial asset to another party or transferring the financial asset toanother party while retaining the contractual rights to the cash flows of the financial assetand assuming the contractual obligations to deliver cash flows received to one or multiple
parties.I. Derecognition of transferred assetsIf the Company transfers substantially all the risks and rewards of ownership of thefinancial asset, or neither transfers nor retains substantially all the risks and rewards ofownership of the financial asset but has not retained control of the financial asset, thefinancial asset shall be derecognised.Whether the Company has retained control of the transferred asset depends on thetransferee’s ability to sell the asset. If the transferee has the practical ability to sell theasset in its entirety to an unrelated third party and is able to exercise that abilityunilaterally and without needing to impose additional restrictions on the transfer, theCompany has not retained control.The Company judges whether the transfer of financial asset qualifies for derecognitionbased on the substance of the transfer.If the transfer of financial asset qualifies for derecognition in its entirety, thedifference between the following shall be recognised in profit or loss:
i. the carrying amount of transferred financial asset;ii. the sum of consideration received and the part derecognised of the cumulativechanges in fair value previously recognised in other comprehensive income (Thefinancial assets involved in the transfer are classified as financial assets at fairvalue through other comprehensive income in accordance with Article 18 of theAccounting Standards for Business Enterprises - Recognition and Measurement ofFinancial Instruments).If the transferred asset is a part of a larger financial asset and the part transferredqualifies for derecognition, the previous carrying amount of the larger financial assetshall be allocated between the part that continues to be recognised (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 onthe date of the transfer. The difference between following two amounts shall berecognised in profit or loss:
i. the carrying amount (measured at the date of derecognition) allocated to thepart derecognisedii. the sum of the consideration received for the part derecognised and partderecognised of the cumulative changes in fair value previously recognised inother comprehensive income (The financial assets involved in the transfer areclassified as financial assets at fair value through other comprehensive income in
accordance with Article 18 of the Accounting Standards for Business Enterprises -Recognition and Measurement of Financial Instruments).II. Continuing involvement in transferred assetsIf the Company neither transfers nor retains substantially all the risks and rewards ofownership of a transferred asset, and retains control of the transferred asset, theCompany shall continue to recognise the transferred asset to the extent of itscontinuing involvement and also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is theextent to which it is exposed to changes 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 thetransferred financial asset, the Company shall continue to recognise the transferredasset in its entirety and the consideration received shall be recognised as a financialliability.The financial asset and the associated financial liability shall not be offset. Insubsequent accounting period, the Company shall continuously recognise any income(gain) arising from the transferred asset and any expense (loss) incurred on theassociated liability.
3.10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement offinancial position and shall not be offset. When meets the following conditions, financialassets and financial liabilities shall be offset and the net amount presented in thestatement of financial position:
The Company currently has a legally enforceable right to set off the recognised amounts;The Company intends either to settle on a net basis, or to realise the asset and settle theliability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition, theCompany shall not offset the transferred asset and the associated liability.
3.10.8 Determination of fair value of financial instruments
See Note 3.11 for determination of fair value of financial instruments.
3.11 Determination of fair value
Fair value refers to the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on marketvalue in the principal market, or in the absence of a principal market, in the most
advantageous market price for the related asset or liability. The fair value of an asset or aliability is measured using the assumptions that market participants would use whenpricing the asset or liability, assuming that market participants act in their economic bestinterest.The principal market is the market in which transactions for an asset or liability take placewith the greatest volume and frequency. The most advantageous market is the marketwhich maximizes the value that could be received from selling the asset and minimizes thevalue which is needed to be paid in order to transfer a liability, considering the effect oftransport costs and transaction costs both.If the active market of the financial asset or financial liability exists, the Company shallmeasure the fair value using the quoted price in the active market. If the active market ofthe financial instrument is not available, the Company shall measure the fair value usingvaluation techniques.A fair value measurement of a non-financial asset takes into account a market participant’sability to generate economic benefits by using the asset in its highest and best use or byselling it to another market participant that would use the asset in its highest and best use.
3.11.1 Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and forwhich sufficient data are available to measure fair value, including the market approach,the income approach and the cost approach. The Company shall use valuation techniquesconsistent with one or more of those approaches to measure fair value. If multiplevaluation techniques are used to measure fair value, the results shall be evaluatedconsidering the reasonableness of the range of values indicated by those results. A fairvalue measurement is the point within that range that is most representative of fair valuein the circumstances.When using the valuation technique, the Company shall give the priority to relevantobservable inputs. The unobservable inputs can only be used when relevant observableinputs is not available or practically would not be obtained. Observable inputs refer to theinformation which is available from market and reflects the assumptions that marketparticipants would use when pricing the asset or liability. Unobservable Inputs refer to theinformation which is not available from market and it has to be developed using the bestinformation available in the circumstances from the assumptions that market participantswould use when pricing the asset or liability.
3.11.2 Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs
to valuation techniques used to measure fair value. The fair value hierarchy gives thehighest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority toLevel 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identicalassets 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 orliability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset orliability.
3.12 Inventories
3.12.1 Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business,in the process of production for such sale, or in the form of materials or supplies to beconsumed in the production process or in the rendering of services, including rawmaterials, semi-finished goods, work in progress, finished goods, merchandises,consumables, etc.
3.12.2 Measurement method applicable to issuance of inventories
Inventories are measured at actual cost at recognition. The actual cost of an item ofinventories comprises the purchase cost, cost of processing and other costs. Inventoriesare issued at weighted average cost.
3.12.3 Inventory system
The perpetual inventory system is adopted. The inventories should be counted at leastonce a year, and surplus or losses of inventory stocktaking shall be included in currentprofit and loss.
3.12.4 Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost overnet realisable value of the inventories is recognised as provision for impairment ofinventory, and recognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliableevidence obtained, and factors such as purpose of holding the inventory and impact ofpost balance sheet event shall be considered.
3.12.4.1 In normal operation process, finished goods, products and materials for direct sale,their net realizable values are determined at estimated selling prices less estimated sellingexpenses and relevant taxes and surcharges; for inventories held to execute sales contractor service contract, their net realizable values are calculated on the basis of contract price.If the quantities of inventories specified in sales contracts are less than the quantities heldby the Company, the net realizable value of the excess portion of inventories shall be
based on general selling prices. Net realizable value of materials held for sale shall bemeasured based on market price.
3.12.4.2 For materials in stock need to be processed, in the ordinary course of productionand business, net realisable value is determined at the estimated selling price less theestimated costs of completion, the estimated selling expenses and relevant taxes. If thenet realisable value of the finished products produced by such materials is higher than thecost, the materials shall be measured at cost; if a decline in the price of materials indicatesthat the cost of the finished products exceeds its net realisable value, the materials aremeasured at net realisable value and differences shall be recognised at the provision forimpairment.
3.12.4.3 Provisions for inventory impairment are generally determined on an individualbasis. For inventories with large quantity and low unit price, the provisions for inventoryimpairment are determined on a category basis.
3.12.4.4 If any factor rendering write-downs of the inventories has been eliminated at thereporting date, the amounts written down are recovered and reversed to the extent of theinventory impairment, which has been provided for. The reversal shall be included in profitor loss.
3.12.5 Amortisation method of low-value consumables
A low-value consumable is amortised in full upon issuance. A packaging material isamortised in full upon issuance.
3.13. Contract assets and contract liabilities
Effective on 1 January 2020Contract assets and contract liabilities are reocgnised on the basis of fulfilment ofperformance obligations and payment received from clients. A right to receive a promisedconsideration from a client resulting from goods transferred to or services provided to theclient (where the right to consideration is dependent on factors other than the passage oftime) is reocgnised a contract asset. A payment received from a client for which goodsshall be transferred to or services shall be provided to the client is recognised as a contractliability.See Note 3.10 for impairment of contract assets.Contract assets and contract liabilities are presentd as line items on the statement offinancial position. A contract asset and contract liability arising from one contract arepresented in net; while the net amount is a debit balance, it is presented in contract assetsor other non-current assets depending on liquidity; while the net amount is a creditbalance, it is presented in contract liabilities or other non-current liabilities depending on
liquidity. Contract assets and contract liabilities arising form different contracts are not beoffset.
3.14 Contract costs
Effective on 1 January 2020Costs for a contract include costs to fulfill the contract and costs to obtain the contract.An asset is recognised for the costs incurred to fulfill a contract on if those costs meet all ofthe following criteria:
I. the costs are directly associated with a contract or an anticipated contract, explicitlychargeable to the client under the contract, incurred only for the contract;II. the costs generate or enhance resouces of the Company that will be used insatisfying performance obligations in the future; andIII. the costs are expected to be recovered.An asset is recognised for the costs incurred to obtain a contract with a client if those costsare expected to be recovered.An asset recognised for the costs of a contract are amortised on a systematic basis that isconsistent with recognition of revenue arising from the contract. Where the costs incurredto obtain a contract would be amortised for a period less than one year should they berecognised as an asset, the costs are recognised in the current profit or loss as incurred.An impairment is recognised for an asset recognised for the costs of a contract to theextent that the carrying amount of the asset exceeds:
I. the remaining amount of consideration that is expected to be received in exchangefor the goods or services to which the asset relates; lessII. the costs that relate directly to providing those goods or services and that have notbeen recognised as expenses.Upon recognition of the impairment, further consideration is given for provision for anonerous contract, in necessary.A reversal of some or all of an impairment loss previously recognised for an asset for thecosts of a contract when the impairment conditions no longer exist or have improved. Theincreased carrying amount of the asset is cappted by the amount that would have beendetermined (net of amortisation) if no impairment loss had been recognised previously.An asset recognised for the costs to fulfill a contract is presented in inventories if itsamortisation is not longer than 1 year or an operating cycle upon initial recognition;otherwise, it is presented in other non-current assets.An asset recognised for the costs to obtain a contract is presented in other current assets ifits amortisation is not longer than 1 year or an operating cycle upon initial recognition;
otherwise, it is presented in other non-current assets.
3.15 Long-term equity investments
Long-term equity investments refer to equity investments where an investor has control of,or significant influence over, an investee, as well as equity investments in joint ventures.Associates of the Company are those entities over which the Company has significantinfluence.
3.15.1 Determination basis of joint control or significant influence over the investeeJoint control is the relevant agreed sharing of control over an arrangement, and thearranged relevant activity must be decided under unanimous consent of the partiessharing control. In assessing whether the Company has joint control of an arrangement,the Company shall assess first whether all the parties, or a group of the parties, control thearrangement. When all the parties, or a group of the parties, considered collectively, areable to direct the activities of the arrangement, the parties control the arrangementcollectively. Then the Company shall assess whether decisions about the relevant activitiesrequire the unanimous consent of the parties that collectively control the arrangement. Iftwo or more groups of the parties could control the arrangement collectively, it shall notbe assessed as have joint control of the arrangement. When assessing the joint control, theprotective rights are not considered.Significant influence is the power to participate in the financial and operating policydecisions of the investee but is not control or joint control of those policies. Indetermination of significant influence over an investee, the Company should consider notonly the existing voting rights directly or indirectly held but also the effect of potentialvoting rights held by the Company and other entities that could be currently exercised orconverted, including the effect of share warrants, share options and convertible corporatebonds that issued by the investee and could be converted in current period.If the Company holds, directly or indirectly 20% or more but less than 50% of the votingpower of the investee, it is presumed that the Company has significant influence of theinvestee, unless it can be clearly demonstrated that in such circumstance, the Companycannot participate in the decision-making in the production and operating of the investee.
3.15.2 Determination of initial investment cost
3.15.2.1 Long-term equity investments arising from business combination
3.15.2.1.1 For a business combination involving enterprises under common control, if theCompany makes payment in cash, transfers non-cash assets or bears liabilities as theconsideration for the business combination, the share of carrying amount of the owners’equity of the acquiree in the consolidated financial statements of the ultimate controlling
party is recognised as the initial cost of the long-term equity investment on thecombination date. The difference between the initial investment cost and the carryingamount of cash paid, non-cash assets transferred and liabilities assumed shall be adjustedagainst the capital reserve; if capital reserve is not enough to be offset, undistributed profitshall be offset in turn.
3.15.2.1.2 For a business combination involving enterprises under common control, if theCompany issues equity securities as the consideration for the business combination, theshare of carrying amount of the owners’ equity of the acquiree in the consolidatedfinancial 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 sharesissued is recognised as the share capital. The difference between the initial investmentcost and the carrying amount of the total par value of the shares issued shall be adjustedagainst the capital reserve; if capital reserve is not enough to be offset, undistributed profitshall be offset in turn.
3.15.2.1.3 For business combination not under common control, the assets paid, liabilitiesincurred or assumed and the fair value of equity securities issued to obtain the control ofthe acquiree at the acquisition date shall be determined as the cost of the businesscombination and recognised as the initial cost of the long-term equity investment. Theaudit, legal, valuation and advisory fees, other intermediary fees, and other relevantgeneral administrative costs incurred for the business combination, shall be recognised inprofit or loss as incurred.
3.15.2.2 Long-term equity investments not arising from business combination
3.15.2.2.1 For long-term equity investments acquired by payments in cash, the initial costis the actually paid purchase cost, including the expenses, taxes and other necessaryexpenditures directly related to the acquisition of long-term equity investments.
3.15.2.2.2 For long-term equity investments acquired through issuance of equity securities,the initial cost is the fair value of the issued equity securities.
3.15.2.2.3 For the long-term equity investments obtained through exchange ofnon-monetary assets, if the exchange has commercial substance, and the fair values ofassets traded out and traded in can be measured reliably, the initial cost of long-termequity investment traded in with non-monetary assets are determined based on the fairvalues of the assets traded out together with relevant taxes. Difference between fair valueand book value of the assets traded out is recorded in current profit or loss. If theexchange of non-monetary assets does not meet the above criterion, the book value of theassets traded out and relevant taxes are recognised as the initial investment cost.
3.15.2.2.4 For long-term equity investment acquired through debt restructuring, the initialcost is measured at the fair value of the equity investment obtained. Difference betweenthe fair value of the equity investment obtained and the book value of the debt given awayis recognised in current profit or loss.
3.15.3 Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of controlshall be accounted for at cost method. Long-term equity investment to a joint venture oran associate shall be accounted for at equity method.
3.15.3.1 Cost method
For Long-term equity investment at cost method, cost of the long-term equity investmentshall be adjusted when additional amount is invested or a part of it is withdrawn. TheCompany recognises its share of cash dividends or profits which have been declared todistribute by the investee as current investment income.
3.15.3.2 Equity method
If the initial cost of the investment is in excess of the share of the fair value of the netidentifiable assets in the investee at the date of investment, the difference shall not beadjusted to the initial cost of long-term equity investment; if the initial cost of theinvestment is in short of the share of the fair value of the net identifiable assets in theinvestee at the date investment, the difference shall be included in the current profit orloss and the initial cost of 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 itsshare of the investee’s other comprehensive income, as investment income or losses andother comprehensive income respectively, and adjusts the carrying amount of theinvestment 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’sshare of the investee’s owners’ equity changes, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution, shall berecognised in the investor’s equity, and the carrying amount of the long-term equityinvestment shall be adjusted accordingly. The Company recognises its share of theinvestee’s net profits or losses after making appropriate adjustments of investee’s netprofit based on the fair values of the investee’s identifiable net assets at the investmentdate. 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 adjustedaccording to the Company’s accounting policies and accounting period, based on which,investment income or loss and other comprehensive income, etc., shall be adjusted. The
unrealized profits or losses resulting from inter-company transactions between thecompany 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 berecognised. Any losses resulting from inter-company transactions between the investorand 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 notcontrol, over the investee, due to additional investment or other reason, the relevantlong-term equity investment shall be accounted for by using the equity method, initial costof which shall be the fair value of the original investment plus the additional investment.Where the original investment is classified as other equity investment, difference betweenits fair value and the carrying value, in addition to the cumulative gain or loss previouslyrecorded in other comprehensive income, shall be recogised into current profit or loss atthe time when the equity method becomes applicable.If the Company loses the joint control or significant influence of the investee for somereasons such as disposal of equity investment, the retained interest shall be measured atfair value and the difference between the carrying amount and the fair value at the date ofloss the joint control or significant influence shall be recognised in profit or loss. When theCompany discontinues the use of the equity method, the Company shall account for allamounts previously recognised in other comprehensive income under equity method inrelation to that investment on the same basis as would have been required if the investeehad directly disposed of the related assets or liabilities.
3.15.4 Held-for-sale equity investments
The remaining equity investment after partial disposal, which is not classified asheld-for-sale, is accounted for by the equity method.If a held-for-sale equity investment no longer satisfies the conditions for classifying asheld-for-sale, it is retrospectively adjusted from the date on which it was classified asheld-for-sale using the equity method. The financial statements for the period duringwhich the investment was classified as held-for-sale are respectively restated.
3.15.5 Impairment of long-term equity investments
See Note 3.22 for details.
3.16 Investment properties
3.16.1 Classification
Investment 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.
3.16.2 Measurement
Investment properties are subsequently measured by the cost method. See Note 3.22 forimpairment of investment properties.The residual after deducting the scrap value and cumulative impairment from the historicalcost of an item of investment properties is depreciated or amortised using the straight-linemethod.
3.17 Fixed assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose ofproducing commodities, rendering services, renting or business management with usefullives exceeding one year.
3.17.1 Recognition
Fixed assets will only be recognised at the actual cost paid when obtaining as all thefollowing criteria are satisfied:
I. It is probable that the economic benefits relating to the fixed assets will flow into theCompany;II. The costs of the fixed assets can be measured reliably.Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, ifrecognition criteria of fixed assets are satisfied, otherwise the expenditure shall berecorded in current profit or loss when incurred.
3.17.2 Depreciation
The Company begins to depreciate the fixed asset from the next month after it is availablefor intended use using the straight-line-method. The estimated useful life and annualdepreciation rates which are determined according to the categories. The estimatedeconomic useful lives and estimated net residual rates of fixed assets are listed asfollowings:
Category | Depreciation method | Useful life in years | Scrap value rate (%) | Annual depreciation rate (%) |
Houses and buildings | Straight line | 8.00-35.00 | 3.00-5.00 | 2.70-12.10 |
Machinery | Straight line | 5.00-10.00 | 3.00-5.00 | 9.50-19.40 |
Transportation vehicles | Straight line | 4.00 | 3.00 | 24.25 |
Administrative and other devices | Straight line | 4.00 | 3.00 | 32.33 |
For the fixed assets with impairment provided, the impairment provision should beexcluded from the cost when calculating depreciation.
At the end of reporting period, the Company shall review the useful life, estimated netresidual value and depreciation method of the fixed assets. Estimated useful life of thefixed assets shall be adjusted if it is changed compared to the original estimation.
3.17.3 Fixed assets acquired through financial lease
Where a leasing arrangement transfers substantially all risks and rewards associated withthe leased item to the Group, the lease is regarded as a finance lease and the leased itemis recognised as an item of fixed assets. An item of fixed asset obtained from a financelease is measured upon recognition at the lower of the fair value of the leased item andthe present value of the minimum lease payment as of the lease inception date. An item offixed asset obtained through a finance lease is depreciated in accordance with thedepreciation method applicable to the category of fixed assets to which the lease itembelongs. If it is reasonably certain that ownership of the lease item will transfer to theGroup upon expiry of the lease, the leased item is depreciated over its useful life; if,however, transfer of ownership of the leased item upon expiry of the lease to the Groupcannot be reasonably expected, the leased item is depreciated over the shorter of itsuseful life and the lease term.
3.18 Construction in progress
3.18.1 Construction in progress is measured on an individual project basis.
3.18.2 Transfer to fixed assets
The initial book values of the fixed assets are stated at total expenditures incurred beforethey are ready for their intended use, including construction costs, original price ofmachinery equipment, other necessary expenses incurred to bring the construction inprogress to get ready for its intended use and borrowing costs of the specific loan for theconstruction or the proportion of the general loan used for the constructions incurredbefore they are ready for their intended use. The construction in progress shall betransferred to fixed asset when the installation or construction is ready for the intendeduse. For construction in progress that has been ready for their intended use but relevantbudgets for the completion of projects have not been completed, the estimated values ofproject budgets, prices, or actual costs should be included in the costs of relevant fixedassets, and depreciation should be provided according to relevant policies of the Companywhen the fixed assets are ready for intended use. After the completion of budgets neededfor the completion of projects, the estimated values should be substituted by actual costs,but depreciation already provided is not adjusted.
3.19 Right-of-use assets
At the lease commencement date, a right-of-use asset is measured at cost. The cost of a
right-of-use asset comprise:
I. the amount of the initial measurement of the lease liability;II. any lease payments made at or before the commencement date, less any leaseincentives received;III. any initial direct costs incurred by the Group; andIV. an estimate of costs to be incurred by the Group in dismantling and removing theunderlying asset, restoring the site on which it is located or restoring the underlyingasset to the condition required by the terms and conditions of the lease, unless thosecosts are incurred to produce inventories.A right-of-use asset is subsequently measured at cost. If it is reasonably certain thatownership of the lease item will transfer to the Group upon expiry of the lease, the leaseditem is depreciated over its useful life; if, however, transfer of ownership of the leaseditem upon expiry of the lease to the Group cannot be reasonably expected, the leased itemis depreciated over the shorter of its useful life and the lease term. Where a leased itemhas recorded impairment, its residual value after deducting the impairment allowance isdepreciated in accordance the principle described in this paragraph.
3.20 Borrowing costs
3.20.1 Capitalisation
The Company shall capitalize the borrowing costs that are directly attributable to theacquisition, construction or production of qualifying assets when meet the followingconditions:
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 theassets for their intended use or sale are in progress.Other borrowing cost, discounts or premiums on borrowings and exchange differences onforeign currency borrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally and theinterruption is for a continuous period of more than 3 months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired,constructed or produced become ready for their intended use or sale. The expenditureincurred subsequently shall be recognised as expenses when incurred.
3.20.2 Capitalisation rate and capitalised amount
When funds are borrowed specifically for purchase, construction or manufacturing of
assets eligible for capitalization, the Company shall determine the amount of borrowingcosts eligible for capitalisation as the actual borrowing costs incurred on that borrowingduring the period less any interest income on bank deposit or investment income on thetemporary investment of those borrowings.Where funds allocated for purchase, construction or manufacturing of assets eligible forcapitalisation are part of a general borrowing, the eligible amounts are determined by theweighted-average of the cumulative capital expenditures in excess of the specificborrowing multiplied by the general borrowing capitalization rate. The capitalization ratewill be the weighted average of the borrowing costs applicable to the general borrowing.
3.21 Intangible assets
3.21.1 Initial measurement
An intangible assets is initial measured at the actual cost of acquisition
3.21.2 Useful lives
3.21.2.1 Intangible assets with define useful lives
Category | Useful life in years | Basis for useful life determination |
Land use rights | 50 | Legal right to use |
Patents | 10 | Period that the asset can generate economic benefits |
Software | 3-5 | Period that the asset can generate economic benefits |
Trademarks | 10 | Period that the asset can generate economic benefits |
For intangible assets with finite useful life, the estimated useful life and amortisationmethod are reviewed annually at the end of each reporting period and adjusted whennecessary. No change incur in current year in the estimated useful life and amortisationmethod upon review.
3.21.2.2 Assets of which the period to bring economic benefits to the Company areunforeseeable are regarded as intangible assets with indefinite useful lives. The Companyreassesses the useful lives of those assets at every year end. If the useful lives of thoseassets are still indefinite, impairment test should be performed on those assets at thebalance sheet date.
3.21.2.3 Amortisation
For intangible assets with finite useful lives, their useful lives should be determined upontheir acquisition and systematically amortised on a straight-line basis [units of productionmethod] over the useful life. The amortisation amount shall be recognized into currentprofit or loss according to the beneficial items. The amount to be amortised is costdeducting residual value. For intangible assets which has impaired, the cumulativeimpairment 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 a commitment by athird party to purchase the asset at the end of its useful life; or there is an active marketfor the asset and residual value can be determined by reference to that market; and it isprobable that such a market will exist at the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortised. The Companyreassesses the useful lives of those assets at every year end. If there is evidence to indicatethat the useful lives of those assets become finite, the useful lives shall be estimated andthe intangible assets shall be amortised systematically and reasonably within theestimated useful lives.
3.21.3 Research and development expenditure
3.21.3.1 Preparation activities related to materials and other relevant aspects undertakenby the Company for the purpose of further development shall be treated as research phase.Expenditures incurred during the research phase of internal research and developmentprojects shall be recognised in profit or loss when incurred.
3.21.3.2 Development activities after the research phase of the Company shall be treatedas development phase.
3.21.4 Capitalisation of research and development expenditure
Expenditures arising from development phase on internal research and developmentprojects shall be recognised as intangible assets only if all of the following conditions havebeen met:
I. Technical feasibility of completing the intangible assets so that they will be availablefor 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 theCompany can demonstrate the existence of a market for the output of the intangibleassets or the intangible assets themselves or, if it is to be used internally, theusefulness of the intangible assets;IV. The availability of adequate technical, financial and other resources to completethe development and to use or sell the intangible asset; andV. Its ability to measure reliably the expenditure attributable to the intangible asset.
3.22 Impairment of long-term assets
Impairment loss of long-term equity investment in subsidiaries, associates and jointventures, investment properties, fixed assets, constructions in progress, and intangibleassets subsequently measured at cost shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any
indication that an asset may be impaired. If any such indication exists, the Company shallestimate the recoverable amount of the asset and test for impairment. Irrespective ofwhether there is any indication of impairment, the Company shall test for impairment ofgoodwill acquired in a business combination, intangible assets with an indefinite useful lifeor intangible assets not yet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values lesscosts to dispose and the present values of the estimated future cash flows of the long-termassets. The Company estimate the recoverable amounts on an individual basis. If it isdifficult to estimate the recoverable amount of the individual asset, the Companyestimates the recoverable amount of the groups of assets that the individual asset belongsto. Identification of an group of asset is based on whether the cash inflows from it arelargely independent of the cash 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 itscarrying amount, the carrying amount of the asset shall be reduced to its recoverableamount and the provision for impairment loss shall be recognised 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 reasonablemethod; if it is difficult to allocate to relevant group of assets, good will shall be allocatedto relevant combination of asset groups. The relevant group of assets or combination ofasset groups is a group of assets or combination of asset groups that is benefit from thesynergies of the business combination and is not larger than the reporting segmentdetermined by the Company.When test for impairment, if there is an indication that relevant group of assets orcombination of asset groups may be impaired, impairment testing for group of assets orcombination of asset groups excluding goodwill shall be conducted first, and calculate therecoverable amount and recognize the impairment loss. Then the group of assets orcombination of asset groups including goodwill shall be tested for impairment, bycomparing the carrying amount with its recoverable amount. If the recoverable amount isless than the carrying amount, the Company shall recognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period onceit had been recognised.
3.23 Long-term deferred expenses
Long-term deferred expenses are various expenses already incurred, which shall beamortised over current and subsequent periods with the amortisation period exceedingone year. Long-term deferred expenses are evenly amortised over the beneficial period.
3.24 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by theCompany in exchange for service rendered by employees or for the termination ofemployment relationship. Employee benefits include short-term employee benefits,post-employment benefits, termination benefits and other long-term employee benefits.Benefits provided to an employee's spouse, children, dependents, family members ofdecreased employees, or other beneficiaries are also employee benefits.According to liquidity, employee benefits are presented in the statement of financialposition as “Employee benefits payable” and “Long-term employee benefits payable”.
3.24.1 Short-term employee benefits
3.24.1.1 Salaries, wages, allowances and subsidies
The Company recognises, in the accounting period in which an employee provides service,actually occurred short-term employee benefits as a liability, with a corresponding chargeto current profit except for those recognised as capital expenditure based on therequirement of accounting standards.
3.24.1.2 Welfare
The Company shall recognise the employee welfare based on actual amount whenincurred into current profit or loss or related capital expenditure. Employee welfare shallbe measured at fair value as it is a non-monetary benefits.
3.24.1.3 Social securities such as medical insurance and work-place injury insurance,housing funds, labor union fund and employee education fundPayments made by the Company of social insurance for employees, such as medicalinsurance and work-place injury insurance, payments of housing funds, and labor unionfund and employee education fund accrued in accordance with relevant requirements, inthe accounting period in which employees provide services, is calculated according torequired 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 ofrelevant asset.
3.24.1.4 Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paidabsences when the employees render service that increases their entitlement to futurepaid absences. The additional payable amounts shall be measured at the expectedadditional payments as a result of the unused entitlement that has accumulated. TheCompany shall recognise relevant employee benefit of non-accumulating paid absenceswhen the absences actually occurred.
3.24.1.5 Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharingplan when all of the following conditions are satisfied:
I. The Company has a present legal or constructive obligation to make such paymentsas a result of past events; andII. A reliable estimate of the amounts of employee benefits obligation arising from theprofit- sharing plan can be made.
3.24.2 Post-employement benefits
3.24.2.1 Defined contribution plans
The Company shall recognise, in the accounting period in which an employee providesservice, the contribution payable to a defined contribution plan as a liability, with acorresponding charge to the current profit or loss or the cost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled whollybefore twelve months after the end of the annual reporting period in which the employeesrender the related service, they shall be discounted using relevant discount rate (marketyields at the end of the reporting period on high quality corporate bonds in active marketor government bonds with the currency and term which shall be consistent with thecurrency and estimated term of the defined contribution obligations) to measureemployee benefits payable.
3.24.2.2 Defined benefit plans
I. Present value of defined benefit obligation and current service costsBased on the expected accumulative welfare unit method, the Company shall makeestimates about demographic variables and financial variables in adopting theunbiased and consistent actuarial assumptions and measure defined benefit obligation,and determine the obligation period. The Company shall discount the obligationarising from defined benefit plan using relevant discount rate (market yields at the endof the reporting period on high quality corporate bonds in active market orgovernment bonds with the currency and term which shall be consistent with thecurrency and estimated term of the defined benefit obligations) in order to determinethe present value of the defined benefit obligation and the current service cost.II. Net assets or liabilities of a defined benefit planThe net defined benefit liability (asset) is the deficit or surplus recognised as thepresent value of the defined benefit 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 netdefined benefit asset at the lower of the surplus in the defined benefit plan and the
asset ceiling.III. Amount recognised as plan assets or charged to the current profit or lossService cost comprises current service cost, past service cost and any gain or loss onsettlement. Other service cost shall be recognised in profit or loss unless accountingstandards require or allow the inclusion of current service cost within the cost ofassets.Net interest on the net defined benefit liability (asset) comprising interest income onplan assets, interest cost on the defined benefit obligation and interest on the effect ofthe asset ceiling, shall be included in profit or loss.IV. Amount recognised in other comprehensive incomeChanges in the net liability or asset of the defined benefit plan resulting from theremeasurements including:
i. Actuarial gains and losses, the changes in the present value of the definedbenefit obligation resulting from experience adjustments or the effects of changesin actuarial assumptions;ii. Return on plan assets, excluding amounts included in net interest on the netdefined benefit liability or asset;iii. Any change in the effect of the asset ceiling, excluding amounts included in netinterest on the net defined benefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in othercomprehensive income shall not be reclassified to profit or loss in a subsequent period.However, the Company may transfer those amounts recognised in othercomprehensive income within equity.
3.24.3 Termination benefits
The Company providing termination benefits to employees shall recognise an employeebenefits liability for termination benefits, with a corresponding charge to the profit or lossof the reporting period, at the earlier of the following dates:
I. When the Company cannot unilaterally withdraw the offer of termination benefitsbecause of an employment termination plan or a curtailment proposal; orII. When the Company recognises costs or expenses related to a restructuring thatinvolves the payment of termination benefits.If the termination benefits are not expected to be settled wholly before twelve monthsafter the end of the annual reporting period, the Company shall discount the terminationbenefits using relevant discount rate (market yields at the end of the reporting period onhigh quality corporate bonds in active market or government bonds with the currency and
term which shall be consistent with the currency and estimated term of the definedbenefit obligations) to measure the employee benefits.
3.24.4 Other long-term employee benefits
3.24.4.1 Other long-term employee beneifts satisfying the recognition conditionsapplicable to defined contribution plansWhen other long-term employee benefits provided by the Company to the employeessatisfies the conditions for classifying as a defined contribution plan, all those benefitspayable shall be accounted for as employee benefits payable at their discounted value.
3.24.4.2 Other long-term employee benefits satisfying the recognition conditionsapplicable to defined benefit plansAt the end of the reporting period, the Company recognised the cost of employee benefitfrom other long-term employee benefits as the following components:
I. Service costs;II. Net interest cost for net liability or asset of other long-term employee benefits;III. Changes resulting from the remeasurements of the net liability or asset of otherlong-term employee benefits.In order to simplify the accounting treatment, the net amount of above items shall berecognised in profit or loss or relevant cost of assets.
3.25 Lease liabilities
At the commencement date, the Group measures the lease liability at the present value ofthe lease payments that are not paid at that date. The lease payments comprise:
I. fixed payments, or in-substance fixed payments, less any lease incentives receivable;II. variable lease payments that depend on an index or a rate;III. the exercise price of a purchase option if the Group is reasonably certain toexercise that option;IV. payments of penalties for terminating the lease, if the lease term reflects theGroup exercising an option to terminate the lease; andV. amounts expected to be payable by the Group under residual value guarantees.The lease payments shall be discounted using the interest rate implicit in the lease, if thatrate can be readily determined. If that rate cannot be readily determined, the lessee shalluse the lessee’s incremental borrowing rate. The excess of the lease payments over itspresent value is amortised over the lease term as interest expenses using the discount rate.A variable lease payment which is not included in the initial measurement of the leaseliability is recognised in profit or loss when incurred.
3.26 Provisions
3.26.1 Recognition
A provision is recognised for an obligation associated with a contingent event when thefollowing conditions are satisfied:
I. The obligation is a present obligation assumed by the entity;II. It is probable that fulfillment of the obligation will result in outflows of economicbenefits from the entity;III. The amount of the obligation can be reliably measured.
3.26.2 Measurement
A provision is initially measured at the best estimate of expenses required for theperformance of relevant present obligations. The Company, when determining the bestestimate, has had a comprehensive consideration of risks with respect to contingencies,uncertainties and the time value of money. The carrying amount of the provision shall bereviewed at the end of every reporting period. If conclusive evidences indicate that thecarrying amount fails to be the best estimate of the provision, the carrying amount shall beadjusted based on the updated best estimate.
3.27 Revenue
Effective on 1 January 2020
3.27.1 General policy
Revenue is total economic inflows arising from the Company’s daily operation which resultin increases in equity, other than those relating to contributions from holders of equityclaims.The Company recognises revenue when (or as) the Company satisfies a performanceobligation by transferring a promised good or service (ie an asset) to a customer. An assetis transferred when (or as) the customer obtains control of that asset. A customer hascontrol of an asset when (or as) the customer has the ability to direct the use of, andobtain substantially all of the remaining benefits from, the asset.Where a contract include two or more performance obligations, the Company allocate thetransaction price, upon inception of the contract, to each performanceobligation identified in the contract on a relative stand-alone selling price basis, revenueassociated with each performance obligation is measured at the allocated price.The transaction price is the amount of consideration to which the Company expects to beentitled in exchange for transferring promised goods or services to a customer, excludingamounts collected on behalf of third parties. If the consideration promised in
a contract includes a variable amount, the Company estimates the amount ofconsideration to which the Company will be entitled in exchange for transferring thepromised goods or services to a customer to the extent that it is highly probable that asignificant reversal in the amount of cumulative revenue recognised will not occur whenthe uncertainty associated with the variable consideration is subsequently resolved. Wherea contract contains a significant financing component, the Company recognises revenue atan amount that reflects the price that a customer would have paid for the promised goodsor services if the customer had paid cash for those goods or services when (or as) theytransfer to the customer (ie the cash selling price); the difference between the amount ofpromised consideration and the cash selling price of the promised goods or services isamortised over the life of the contract using the effective interest rate method. TheCompany does not adjust the promised amount of consideration for the effects of asignificant financing component if the Comopany expects, at contract inception, that theperiod between when the Company transfers a promised good or service to a customerand when the customer pays for that good or service will be one year or less.The Company transfers control of a good or service over time and, therefore, satisfiesa performance obligation and recognises revenue over time, if one of the following criteriais met:
I. the customer simultaneously receives and consumes the benefits provided by theCompany’s performance as the entity performs;II. the Company’s performance creates or enhances an asset that the customer controlsas the asset is created or enhanced; orIII. the Company’s performance does not create an asset with an alternative use to theCompany and the Company has an enforceable right to payment for performancecompleted to date.For each performance obligation satisfied over time, the Companyrecognises revenue over time by measuring the progress towards complete satisfaction ofthat performance obligation, unless the progress towards complete satisfaction cannot bereliably measured. The Company uses either the input method or output method tomeasure the progress towards complete satisfaction of a performance obligation. Whenthe progress towards complete satisfaction of a performance obligation cannot be reliablymeasured, the Company recognises revenue only to the extent of the costs incurred untilsuch time that it can reasonably measure the outcome of the performance obligation.Where a performance obligation is satisfied at a point in time, the Company recognisesrevenue when (or as) the customer obtains control of the transferred asset (either goods
or service). To determine the point in time at which a customer obtains control of apromised asset, the Company considers the following indicators:
I. The Company has a present right to payment for the asset, ie. the customer has thepresent obligation to pay for the asset.II. The legal title to the asset has been transferred to the customer, ie. the customerhas the legal title to the asset.III. The Company has transferred physical possession of the asset, ie. the customer hasphysical possession of the asset.IV. The significant risks and rewards of ownership of the asset has been transferred tothe customer, ie. the customer has obtained the significant risks and rewards ofownership of the asset.V. The customer has accepted the asset.VI. Other indication that the customer has obtained control over the asset.
3.27.2 Specific policies
3.27.2.1 Revenue from sales of goods
Revenue from sales of goods is recognised if all of following conditions are satisfied:
I. Substantially all risks and rewards associated with the ownership of the goods aretransferred to the customer.II. The Company retains neither continuous management associated with theownership of the goods nor effective control over the goods.III. Revenue from the sales can be realiably measured.IV. It is probable that the associated economic benefits will flow to the Company.V. Costs incurred and expected to be incurred can be realiably measured.With regards to domestic sales, revenue is recognised upon dispatch of the goods anddelivery of the goods to the customer if all of following conditions are satisfied:
I. Substantially all risks and rewards associated with the ownership of the goods aretransferred to the customer.II. The Company retains neither continuous management associated with theownership of the goods nor effective control over the goods.III. Revenue from the sales can be realiably measured.IV. It is probable that the associated economic benefits will flow to the Company.V. Costs incurred and expected to be incurred can be realiably measured.With regards to export sales, revenue is recognised upon the presence of the respectivebill of lading and custom clearance.
3.27.2.2 Revenue from rendering of services
Where the outcome of a service rendered by the Company can be reliably estimated on astatement date, revenue arising from the rendering of the service is recognised using thepercentage of completion method.The outcome of a service rendered by the Company can be reliably estimated if all of thefollowing conditions are satisfied:
I. The revenue can be reliably measured.II. It is probable that the associated economic benefits will flow to the Company.III. The percentage of completion can be reliably determined.IV. Costs incurred and expected to be incurred can be realiably measured.Total revenue of a service rendered is determined by the respective contract price, unlessthe contract price is not fair. Revenue from a service rendered recognised for a particularperiod is computed as the residual after deducting revenue from that service cumulativelyrecognised in prior periods from the product of multiplying the service’s total revenue withthe percentage of completion as of the statement date. Costs for a service renderedrecognised for a particular period are computed as the residual after deducting costs forthat service cumulatively recognised in prior periods from the product of multiplying theservice’s total budgeted costs with the percentage of completion as of the statement date.Where the outcome of a service rendered by the Company can not be reliably estimatedon a statement date, costs incurred are recognised in profit or loss upon occurrence andrevenue is recognised to the extent that costs incurred can be recovered.
3.27.2.3 Revenue from usage of assets
Revenue from usage of the Group’s assets is recognised if the revenue can be reliablymeasured and it is probable that the associated economic benefits will flow to the Group.Interest income is measured using the effective interest rate method on the basis of theperiod during which the Group monetary funds are used by the user.Royalty income is measured in accordance with the method determined by the respectivecontracts.
3.28 Government grants
3.28.1 Recognition
A government grant shall not be recgonised until there is reasonable assurance that:
I. The Company will comply with the conditions attaching to them; andII. The grants will be received.
3.28.2 Measurement
Monetary grants from the government shall be measured at amount received or receivable,and non-monetary grants from the government shall be measured at their fair value or at a
nominal value of CNY 1.00 when reliable fair value is not available.
3.28.3 Accounting for government grant
3.28.3.1 Asset-related government grants
Government grants pertinent to assets mean the government grants that are obtained bythe Company used for purchase or construction, or forming the long-term assets by otherways. Government grants pertinent to assets shall be recognised as deferred income, andshould be recognised in profit or loss on a systematic basis over the useful lives of therelevant assets. Grants measured at their nominal value shall be directly recognised inprofit or loss of the period when the grants are received. When the relevant assets are sold,transferred, written off or damaged before the assets are terminated, the remainingdeferred income shall be transferred into profit or loss of the period of disposing relevantassets.
3.28.3.2 Income-related government grants
Government grants other than related to assets are classified as government grantsrelated to income. Government grants related to income are accounted for in accordancewith the following principles:
If the government grants related to income are used to compensate the enterprise’srelevant expenses or losses in future periods, such government grants shall be recognisedas deferred income and included into profit or loss in the same period as the relevantexpenses or losses are recognised;If the government grants related to income are used to compensate the enterprise’srelevant expenses or losses incurred, such government grants are directly recognised intocurrent profit or loss.For government grants comprised of part related to assets as well as part related toincome, each part is accounted for separately; if it is difficult to identify different part, thegovernment grants are accounted for as government grants related to income as a whole.Government grants related to daily operation activities are recognised in other income inaccordance with the nature of the activities, and government grants irrelevant to dailyoperation activities are recognised in non-operating income.
3.28.3.3 Loan interest subsidies
When loan interest subsidy is allocated to the bank, and the bank provides a loan atlower-market rate of interest to the Company, the loan is recognised at the actual receivedamount, and the interest expense is calculated based on the principal of the loan and thelower-market rate of interest.When loan interest subsidy is directly allocated to the Company, the subsidy shall be
recognised as offsetting the relevant borrowing cost.
3.28.3.4 Repayment of government grants
Repayment of the government grants shall be recorded by increasing the carrying amountof the asset if the book value of the asset has been written down, or reducing the balanceof relevant deferred income if deferred income balance exists, any excess will berecognised into current profit or loss; or directly recognised into current profit or loss forother circumstances.
3.29 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amount of an asset or liabilityin the statement of financial position and its tax base at the balance sheet date. TheCompany recognises and measures the effect of taxable temporary differences anddeductible temporary differences on income tax as deferred tax liabilities or deferred taxassets using liability method. Deferred tax assets and deferred tax liabilities shall not bediscounted.
3.29.1 Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, thecarryforward of unused tax losses and the carryforward of unused tax credits to the extentthat it is probable that taxable profit will be available against which the deductibletemporary 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 periodwhen the asset is realised, unless the deferred tax asset arises from the initial recognitionof an asset or liability in a transaction that:
I. is not a business combination; andII. 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 differencesarising from investments in subsidiaries, associates and joint ventures, only to the extentthat, it is probable that:
I. the temporary difference will reverse in the foreseeable future; andII. taxable profit will be available against which the deductible temporary differencecan be utilised.At the end of each reporting period, if there is sufficient evidence that it is probable thattaxable profit will be available against which the deductible temporary difference can beutilized, the Company recognises a previously unrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting
period. The Company shall reduce the carrying amount of a deferred tax asset to theextent that it is no longer probable that sufficient taxable profit will be available to allowthe benefit of part or all of that deferred tax asset to be utilised. Any such reduction shallbe reversed to the extent that it becomes probable that sufficient taxable profit will beavailable.
3.29.2 Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the taxrate that are expected to apply to the period when the liability is settled.No deferred tax liability shall be recognised for taxable temporary differences arising from:
I. the initial recognition of goodwill; orII. the initial recognition of an asset or liability in a transaction which: is not a businesscombination; and at the time of the transaction, affects neither accounting profit nortaxable profit (tax loss)An entity shall recognise a deferred tax liability for all taxable temporary differencesassociated with investments in subsidiaries, associates, and joint ventures, except to theextent that both of the following conditions are satisfied:
I. the Company is able to control the timing of the reversal of the temporary difference;andII. it is probable that the temporary difference will not reverse in the foreseeablefuture.
3.29.3 Recognition of deferred tax liabilities or assets involved in special transactions orevents
3.29.3.1 Deferred tax liabilities or assets related to business combinationFor the taxable temporary difference or deductible temporary difference arising from abusiness combination not under common control, a deferred tax liability or a deferred taxasset shall be recognised, and simultaneously, goodwill recognised in the businesscombination shall be adjusted based on relevant deferred tax expense (income).
3.29.3.2 Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall berecognised in equity. Such items include: other comprehensive income generated from fairvalue fluctuation of other debt investments; an adjustment to the opening balance ofretained earnings resulting from either a change in accounting policy that is appliedretrospectively or the correction of a prior period (significant) error; amounts arising oninitial recognition of the equity component of a compound financial instrument thatcontains both liability and equity component.
3.29.3.3 Unused tax losses and unused tax credits
3.29.3.3.1 Unsused tax losses and unused tax credits generated from daily operation of theCompany itselfDeductible loss refers to the loss calculated and permitted according to the requirement oftax law that can be offset against taxable income in future periods. The criteria forrecognising deferred tax assets arising from the carryforward of unused tax losses and taxcredits are the same as the criteria for recognising deferred tax assets arising fromdeductible temporary differences. The Company recognises a deferred tax asset arisingfrom unused tax losses or tax credits only to the extent that there is convincing otherevidence that sufficient taxable profit will be available against which the unused tax lossesor unused tax credits can be utilised by the Company. Income taxes in current profit or lossshall be deducted as well.
3.29.3.3.2 Unsused tax losses and unused tax credits arising from a business combinationUnder a business combination, the acquiree’s deductible temporary differences which donot satisfy the criteria at the acquisition date for recognition of deferred tax asset shall notbe recognised. Within 12 months after the acquisition date, if new information regardingthe facts and circumstances exists at the acquisition date and the economic benefit of theacquiree’s deductible temporary differences at the acquisition is expected to be realised,the Company shall recognise acquired deferred tax benefits and reduce the carryingamount of any goodwill related to this acquisition. If goodwill is reduced to zero, anyremaining deferred tax benefits shall be recognised in profit or loss. All other acquireddeferred tax benefits realised shall be recognised in profit or loss.
3.29.3.4 Temporary difference generated in consolidation eliminationWhen preparing consolidated financial statements, if temporary difference betweencarrying value of the assets and liabilities in the consolidated financial statements and theirtaxable bases is generated from elimination of inter-company unrealized profit or loss,deferred tax assets or deferred tax liabilities shall be recognised in the consolidatedfinancial statements, and income taxes expense in current profit or loss shall be adjustedas well except for deferred tax related to transactions or events recognised directly inequity and business combination.
3.29.3.5 Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during theperiod in which the expenses are recognised according to the accounting standards, theCompany estimates the tax base in accordance with available information at the end of theaccounting period and the temporary difference arising from it. Deferred tax shall be
recognised when criteria of recognition are satisfied. If the amount of estimated future taxdeduction exceeds the amount of the cumulative expenses related to share-basedpayment recognised according to the accounting standards, the tax effect of the excessamount shall be recognised directly in equity.
3.30 Leases
3.30.1 Identifying a lease contract
Upon contract inception, the Company assesses whether a contract is a lease contract or acontract with embedded leasing arrangement. Where a party to a contract transfers theuse right of one or more identified asset over a period for consideration, the contract iseither a lease contract or a contract with embedded leasing arrangement. A party to acontract transfers the use right of one or more identified asset over a period when the twoconditions as follow are present:
I. the counter party is entitled to obtain substantially all economic benefits arisingfrom the use of the identified asset over the period specified by the contact; andII. the counter party is entitled to direct the use of the identified asset during theperiod period specified by the contract.
3.30.2 Identifying individual leases
Where a contract comprises multiple leases, the contract is separated and each lease isaccounted for separately. A leasing arrangement in a contract is a separately identifiablelease if:
I. the leasee can obtain economic benefits by using the assets covered by the leasingarrangement alone or in combination with other resources obtainable by the leasee;andII. the assets covered by the leasing arrangement has no close dependence on or closeconnection to other assets specified by the contract.
3.30.3 Accounting for a lease as the lessee
A lease which has a lease term of 12 months or less at the commencement date is ashort-term lease. A lease for which the underlying asset is of low value when it is new is alow-value lease. Where an asset of low value when it is new obtained from a lease isintended to be subleased, the lease for which such asset is not a low-value lease.A right to use asset and lease liability is recognised for a lease, which is neither ashort-term lease nor a low-value lease, at its commencement.
3.30.4 Accounting for a lease as the lessor
A lease which substantially transfers all the risks and rewards incidental to ownership of anunderlying asset is classified as a finance lease at its commencement; a lease which is not a
finance lease is classified as an operating lease at it commencement.
3.30.4.1 Operating lease
When the Company as a lessor, lease income should be recognised over the lease terms ona straight-line basis. Where the Company offers rental-free period in a lease, theamortisation period is the lease term inclusive of the rental free period. Where certaincosts incurred by the lessee are reimbursed by the Company, rental income recognised isreduced proportionately by the reimbursement.Substantial initial direct costs relating to lease transactions incurred by the Company shallbe capitalised and amortised over the lease terms on the same basis as the recognition oflease income. Contingent rental, if included in the lease contract, shall be recognised intoprofit or loss upon occurrence.
3.30.4.2 Finance lease
The sum of initial direct costs and minimum lease rentals receivable is recognised as leaserentals receivable at the commencement date. The excess of the sum of unguaranteedresidual value of the leased item, intial direct costs and minimum lease rentals receivableover the present value of the sum is reocgnised as unrealised financing gain at thecommencement date and subsequently amortised using the effective interest ratemethod.
3.31 Change of significant accounting policies and significant accounting estimates
3.31.1 Change of significant accounting policies
ASBE 21 – Leases (Revised in 2018) (ASBE 21 (2018)) was issued by the Ministry of Financeon 7 December 2018 through CaiKuai [2018] No. 35. Companies with both domestic andforeign listing which prepare the financial statements in accordance with either theInternational Financial Reporting Standards or ASBEs shall adopt ASBE 21 (2018) on 1January 2019. Other companies which prepare the financial statements in accordance withASBEs shall adopt ASBE 21 (2018) on 1 January 2021.In accordance with ASBE 21 (2018):
I. A lessee shall recognise a right-of-use asset and lease liability for a lease except inthe case that the lease in question is either a short-term lease or low-value lease.II. A right-of-use asset shall be depreciated over the useful life of the underlying assetif it is reasonably certain that the ownership of the underlying asset will transfer to thelessee upon lease expiry; it shall be depreciated over the shorter of the useful life ofthe underlying asset and the lease term if transfer of ownership of the underlyingasset to the lessee upon lease expiry is not reasonably certain. A right-of-use asset issubject is impairment assessment and impairment, is any, shall be properly accounted
for.III. A lessee shall establish interest expense in connection with the lease liabilityapplicable to each period within the lease term and recognise the interest expense inprofit or loss for the respective period.IV. A lessee may elect not to recognise a right-of-use asset and lease liability for ashort-term lease or low-value lease. In such case, the lease rental of the short-termlease or low value lease shall be recognised in profit or loss or as part of the cost of therespective asset using the straight-line method or another reasonable systematicmethod.Resulting from the adoption of ASBE 21 (2018), the following adjustments were made tothe Company’s consolidated statement of financial position as of 1 January 2021: increaseof right-of-use assets at CNY 57.4 million, increase of lease liabilities at CNY 53.2 million,and decrease of prepayments at CNY 4.2 million. These adjustments had no impact on theCompany’s consolidated equity attributable to shareholders of the Company; nor did theyhave impact on the Company’s consolidated surplus reserves or consolidated retainedearnings. These adjustments had no impact on the Company’s consolidatednon-controlling interests. The following adjustments were made to the Company’sstatement of financial position as of 1 January 2021: increase of right-of-use assets at CNY
52.7 million, increase of lease liabilities at CNY 48.6 million, and decrease of prepaymentsat CNY 4.2 million. These adjustments had no impact on the Company’s equity; nor didthey have impact on the Company’s surplus reserves or retained earnings. See Note 3.31.2for further information.
3.31.2 Impact on the financial statements as a result of adoption of ASBE 21 (2018)Consolidated Statement of Financial Position
Currency unit: CNY million
Affected line item | 31/12/2020 | 1/1/2021 | Adjustment |
Right-of-use assets | 0.00 | 57.4 | 57.4 |
Lease liabilities | 0.00 | 53.2 | 53.2 |
Prepayments | 55.6 | 51.4 | -4.2 |
Statement of Financial Position
Currency unit: CNY million
Affected line item | 31/12/2020 | 1/1/2021 | Adjustment |
Right-of-use assets | 0.00 | 52.7 | 52.7 |
Lease liabilities | 0.00 | 48.6 | 48.6 |
Affected line item | 31/12/2020 | 1/1/2021 | Adjustment |
Prepayments | 11.7 | 7.6 | -4.1 |
3.31.3 Change of significant accounting estimates
There is no change of significant accounting estimates in the current period.
Note 4 Taxes
4.1 Major taxes and tax rates
Tax | Tax base | Tax rate |
Value added tax (VAT) | Valur added in the course of sales of goods and rendering of services | 13%, 9%, 6% |
Consumption duty | Taxable revnue | Tax by quantity: CNY 1.00 per kilogram or litre of distrilled wine sold; Tax by revenue: 20% on taxable revenue from sale of distrilled wine |
Urban maintenance and construction tax | Transaction tax payable | 7%, 5% |
Education surcharge | Transaction tax payable | 3% |
Local education surcharge | Transaction tax payable | 2% |
Corporate income tax (CIT) | Taxable income | 25% |
The CIT rate applicable to the Company is 25%. The CIT rates applicable to certainsubsidiaries are presented below.
Entity | CIT rate |
Longrui Glass | 15.00% |
Ruisi Weier | 15.00% |
Runan Xinke | 15.00% |
Yashibo | 2.5% |
GJ Guest House | 2.5% |
Junlou Culture | Taxable income up to CNY 1 million: 2.5% Taxable income between CNY 1 million and CNY 3 million: 10% |
HHL Beverage | 2.5% |
Xinjia Testing | Taxable income up to CNY 1 million: 2.5% Taxable income between CNY 1 million and CNY 3 million: 10% |
Jiuan Electric | 2.5% |
4.2 Preferential tax treatments
4.2.1 Longrui Glass’s High-Tech Enterprise Status was jointly approved by the Anhui Scienceand Technology Department (Anhui STD), Anhui Finance Department (Anhui FiD) and AnhuiTax Office (Anhui PAT) through GuoKeHuoZi [2019] No. 216 and was issued the High-TechEnterprise Certificate (GR201934001625) with the validity term of 3 years. In accordancewith the Corporate Income Tax Law of the People’s Republic of China, the CIT rate
applicable to Longrui Glass for the period from 1 January 2019 to 31 Decmeber 2021 is15%.
4.2.2 Ruisi Weier’s High-Tech Enterprise Status was jointly approved by the Anhui STD,Anhui FiD and Anhui PAT through GuoKeHuoZi [2019] No. 216 and was issued theHigh-Tech Enterprise Certificate (GR201934000355) with the validity term of 3 years. Inaccordance with the Corporate Income Tax Law of the People’s Republic of China, the CITrate applicable to Ruisi Weier for the period from 1 January 2019 to 31 Decmeber 2021 is15%.
4.2.3 Runan Xinke’s High-Tech Enterprise Status was jointly approved by the Anhui STD,Anhui FiD and Anhui PAT through WanKeGaoMi [2022] No. 49 and was issued theHigh-Tech Enterprise Certificate (GR202134004920) with the validity term of 3 years. Inaccordance with the Corporate Income Tax Law of the People’s Republic of China, the CITrate applicable to Runan Xinke for the period from 1 January 2021 to 31 Decmeber 2023 is15%.
4.2.4 In accordance with MoF&SAT Announcement [2021] No. 12 jointly issued by theMinistry for Finance and State Administration of Taxation, 87.5% of the first CNY 1 millionannual taxable income of a qualified small entreprise with small profit for the period from 1January 2021 to 31 Dcember 2022 is exempted from CIT and the CIT rate applicable to theremaining 12.5% is 20%; 50% of the annual taxable income between CNY 1 million and CNY3 million of a qualified small entreprise with small profit for the period from 1 January 2021to 31 Dcember 2022 is exempted from CIT and the CIT rate applicable to the remaining
12.5% is 20%; GJ Guest House, Junlou Culture, HHL Beverage, Xinjia Testing, Jiuan Electricand Yashibo are eligible to this preferential tax treatment.
Note 5 Notes to the consolidated financial statements
5.1 Monetary funds
31/12/2021 | 31/12/2020 | |
Cash on hand | 135,129.66 | 178,127.77 |
Cash at bank | 11,891,283,646.58 | 5,936,406,199.84 |
Other monetary funds | 33,503,995.52 | 34,628,242.05 |
Total | 11,924,922,771.76 | 5,971,212,569.66 |
Cash at bank as of the statement date included fixed term deposits pledged for bankacceptance at CNY 100 million, deposits pledged for guarantee letters at CNY 4 million andstructural deposits not eligible for early redemption at CNY 573 thousand; other monetaryfunds as of the statement date included margin deposits not eligible for early redemption
at CNY 33.4 million. Except for the pre-mentioned, monetary funds as of the statementdate was not subject to limitation on usage such as pledging or freezing or risk on recovery.
5.2 Financial assets held for trading
31/12/2021 | 31/12/2020 | |
FVTPL | 2,661,103,876.68 | 203,877,915.51 |
T/o: Structural financial products | 2,457,565,232.32 | - |
T/o: Fund investments | 203,538,644.36 | 203,877,915.51 |
Total | 2,661,103,876.68 | 203,877,915.51 |
Increase of financial assets held for trading for CNY 2,457 million, or 1,205.24% year overyear was mainly due to the Company’s purchase of structural financial products close tothe statement date.
5.3 Accounts receivable
5.3.1 Disclosure by age group
Age group | 31/12/2021 | 31/12/2020 |
Within 1 year | 97,023,731.05 | 64,157,166.51 |
T/o: Within 6 months | 92,114,086.85 | 61,367,773.81 |
T/o: 7 months to 1 years | 4,909,644.20 | 2,789,392.70 |
1 to 2 years | 883,133.28 | 4,953,687.55 |
2 to 3 years | 137,464.27 | 142,796.00 |
Over 3 years | 1,146,581.68 | - |
Gross | 99,190,910.28 | 69,253,650.06 |
Less: Impairment allowance | 10,185,106.11 | 1,319,914.15 |
Net | 89,005,804.17 | 67,933,735.91 |
5.3.2 Dislcosure by method of impairment
31/12/2021 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % | ||
Individual assessment | 7,792,783.72 | 7.86 | 7,792,783.72 | 100.00 | - |
Portfolio assessment | 91,398,126.56 | 92.14 | 2,392,322.39 | 2.62 | 89,005,804.17 |
T/o: Group 1 | |||||
T/o: Group 2 | 91,398,126.56 | 92.14 | 2,392,322.39 | 2.62 | 89,005,804.17 |
Total | 99,190,910.28 | 100.00 | 10,185,106.11 | 10.27 | 89,005,804.17 |
(Continued)
31/12/2020 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % |
31/12/2020 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % | ||
Individual assessment | - | - | - | - | - |
Portfolio assessment | 69,253,650.06 | 100.00 | 1,319,914.15 | 1.91 | 67,933,735.91 |
T/o: Group 1 | - | - | - | - | - |
T/o: Group 2 | 69,253,650.06 | 100.00 | 1,319,914.15 | 1.91 | 67,933,735.91 |
Total | 69,253,650.06 | 100.00 | 1,319,914.15 | 1.91 | 67,933,735.91 |
Group 2 Receivables
Age group | 31/12/2021 | ||
Gross | Impairment allowance | Impairment % | |
Within 1 year | 89,230,947.33 | 1,088,695.25 | 1.22 |
T/o: Within 6 months | 84,321,303.13 | 843,213.03 | 1.00 |
T/o: 7 months to 1 years | 4,909,644.20 | 245,482.22 | 5.00 |
1 to 2 years | 883,133.28 | 88,313.32 | 10.00 |
2 to 3 years | 137,464.27 | 68,732.14 | 50.00 |
Over 3 years | 1,146,581.68 | 1,146,581.68 | 100.00 |
Total | 91,398,126.56 | 2,392,322.39 | 2.62 |
(Continued)
Age group | 31/12/2020 | ||
Gross | Impairment allowance | Impairment % | |
Within 1 year | 64,157,166.51 | 753,147.38 | 1.17 |
T/o: Within 6 months | 61,367,773.81 | 613,677.74 | 1.00 |
T/o: 7 months to 1 years | 2,789,392.70 | 139,469.64 | 5.00 |
1 to 2 years | 4,953,687.55 | 495,368.77 | 10.00 |
2 to 3 years | 142,796.00 | 71,398.00 | 50.00 |
Over 3 years | - | - | - |
Total | 69,253,650.06 | 1,319,914.15 | 1.91 |
See Note 3.10 for recognition and measurement of impairment by portfolio.
5.3.3 Movement of impairment allowance
31/12/2020 | Movement | ||
Provision | Business combination not under common control | ||
Individually significant receivables subject to individual impairment assessment | 7,792,783.72 | ||
Individually insignificant receivables subject to individual impairment assessment | |||
Group 2 | 1,319,914.15 | 546,297.81 | 1,166,733.53 |
Total | 1,319,914.15 | 8,339,081.53 | 1,166,733.53 |
(Continued)
Movement | 31/12/2021 | ||
Reversal or recovery | Release or write-off | ||
Individually significant receivables subject to individual impairment assessment | 7,792,783.72 | ||
Individually insignificant receivables subject to individual impairment assessment | - | ||
Group 2 | 640,623.10 | 2,392,322.39 | |
Total | 640,623.10 | 10,185,106.11 |
5.3.4 Top-five accounts receivable as of the statement date
Gross | % of gross accounts receivable | Impairment allowance | |
Top 1 | 14,642,996.21 | 14.76 | 146,429.96 |
Top 2 | 13,949,950.50 | 14.06 | 139,499.51 |
Top 3 | 13,469,384.49 | 13.58 | 134,693.84 |
Top 4 | 7,792,783.72 | 7.86 | 7,792,783.72 |
Top 5 | 5,350,431.84 | 5.39 | 53,504.32 |
Total | 55,205,546.76 | 55.65 | 8,266,911.35 |
5.3.5 Increase of accounts receivable for 31.02% year over year was mainly resulted fromthe increase of accounts receivable due to Tianlong Jindi.
5.4 Receivables held for factoring
5.4.1 General disclosure
Type | 31/12/2021 | ||
Gross | Impairment allowance | Net | |
Bank acceptance | 545,204,103.42 | 545,204,103.42 | |
Commercial acceptance | - | - | - |
Total | 545,204,103.42 | 545,204,103.42 |
(Continued)
Type | 31/12/2020 | ||
Gross | Impairment allowance | Net | |
Bank acceptance | 1,673,510,794.51 | - | 1,673,510,794.51 |
Commercial acceptance | - | - | - |
Total | 1,673,510,794.51 | - | 1,673,510,794.51 |
5.4.2 Notes receivable transferred by endorsement or cashed by discount which are notmatured as of the statement date
Type | Amount derecognised | Amount not derecognised |
Bank acceptance | 2,692,765,337.03 |
Notes receivable cashed with discount or transferred with endorsement were originally
issued by banks with advanced credit rating. Due the credit rating of the issuing banks,credit risks and risks of delayed payment are relatively low and transferred from theCompany upon cashing or transfer. These notes receivable were therefore derecognisedupon cashing or transfer.
5.4.3 No accounts receivable were resulted from reclassification of notes receivables due toissuers’ default.
5.4.4 Dislcosure by method of impairment
31/12/2021 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % | ||
Individual assessment | - | - | - | - | - |
Portfolio assessment | 545,204,103.42 | 100.00 | - | - | 545,204,103.42 |
T/o: Group 1 | - | ||||
T/o: Group 2 | 545,204,103.42 | 100.00 | - | - | 545,204,103.42 |
Total | 545,204,103.42 | 100.00 | - | - | 545,204,103.42 |
(Continued)
31/12/2020 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % | ||
Individual assessment | - | - | - | - | - |
Portfolio assessment | 1,673,510,794.51 | 100.00 | - | - | 1,673,510,794.51 |
T/o: Group 1 | - | - | |||
T/o: Group 2 | 1,673,510,794.51 | 100.00 | - | - | 1,673,510,794.51 |
Total | 1,673,510,794.51 | 100.00 | - | - | 1,673,510,794.51 |
Note 1: No Group 1 receivable was subject to impairment assessment.Note 2: The Company assessed impairment for Group 2 receivables as of the statementdate. Upon the assessment, the Company believed that Group 2 receivables were unlikelysubject to loss resulted from the default by issuing banks or other issuers and thereforenot subject to significant credit risk.
5.4.5 Movement of impairment allowance
Not applicable.
5.5 Prepayments
5.5.1 Disclosure by age group
Age group | 31/12/2021 | 31/12/2020 | ||
Amount | % of total | Amount | % of total | |
Within 1 year | 156,395,547.90 | 99.89 | 55,069,897.85 | 99.09 |
1 to 2 years | 173,426.53 | 0.11 | 505,645.36 | 0.91 |
2 to 3 years | 1,996.56 | - | - | - |
Over 3 years | - | - | - | - |
Total | 156,570,970.99 | 100.00 | 55,575,543.21 | 100.00 |
5.5.2 Top-five venders as of the statement date by prepayment balance
31/12/2021 | % of total | |
Top 1 | 102,458,395.34 | 65.44 |
Top 2 | 14,684,191.29 | 9.38 |
Top 3 | 6,632,298.50 | 4.24 |
Top 4 | 6,214,000.00 | 3.97 |
Top 5 | 4,309,993.84 | 2.75 |
Total | 134,298,878.97 | 85.78 |
5.6 Other receivables
5.6.1 General disclosure
31/12/2021 | 31/12/2020 | |
Interests receivable | - | |
Dividends receivable | - | |
Other receivables | 71,753,212.24 | 33,451,121.48 |
Total | 71,753,212.24 | 33,451,121.48 |
5.6.2 Other receivables
(1) Disclosure by age group
Age group | 31/12/2021 | 31/12/2020 |
Within 1 year | 68,887,383.04 | 31,014,800.18 |
T/o: Within 6 months | 62,942,239.54 | 29,186,461.60 |
T/o: 7 months to 1 years | 5,945,143.50 | 1,828,338.58 |
1 to 2 years | 2,808,217.47 | 2,842,287.06 |
2 to 3 years | 2,530,226.11 | 523,089.00 |
Over 3 years | 43,669,449.88 | 42,535,188.41 |
Gross | 117,895,276.50 | 76,915,364.65 |
Less: Impairment allowance | 46,142,064.26 | 43,464,243.17 |
Age group | 31/12/2021 | 31/12/2020 |
Net | 71,753,212.24 | 33,451,121.48 |
(2) Disclosure by nature
31/12/2021 | 31/12/2020 | |
Security investments | 38,857,584.88 | 40,807,394.41 |
Margin deposits | 8,788,917.25 | 5,266,477.91 |
Advanced travel expenses | 1,219,958.15 | 795,646.51 |
Rentals and utilities receivable | 7,910,881.41 | 8,962,876.17 |
Others | 61,117,934.81 | 21,082,969.65 |
Gross | 117,895,276.50 | 76,915,364.65 |
Less: Impairment allowance | 46,142,064.26 | 43,464,243.17 |
Net | 71,753,212.24 | 33,451,121.48 |
(3) Disclosure by method of impairment
A. Disclosure by the 3-stage m odel as of the statement date
Gross | Impairment allowance | Net | |
Stage 1 | 79,037,691.62 | 7,284,479.38 | 71,753,212.24 |
Stage 2 | |||
Stage 3 | 38,857,584.88 | 38,857,584.88 | - |
Total | 117,895,276.50 | 46,142,064.26 | 71,753,212.24 |
Details of Stage 1 receivables as of the statement date
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | ||||
Portfolio assessment | 79,037,691.62 | 9.22 | 7,284,479.38 | 71,753,212.24 |
T/o: Group 1 | ||||
T/o: Group 2 | 79,037,691.62 | 9.22 | 7,284,479.38 | 71,753,212.24 |
Total | 79,037,691.62 | 9.22 | 7,284,479.38 | 71,753,212.24 |
Details of Group 2 receivables as of the statement date
Age group | 31/12/2021 | ||
Gross | Impairment allowance | Impairment % | |
Within 1 year | 68,887,383.04 | 926,679.58 | 1.35 |
T/o: Within 6 months | 62,942,239.54 | 629,422.41 | 1.00 |
T/o: 7 months to 1 years | 5,945,143.50 | 297,257.17 | 5.00 |
1 to 2 years | 2,808,217.47 | 280,821.74 | 10.00 |
2 to 3 years | 2,530,226.11 | 1,265,113.06 | 50.00 |
Over 3 years | 4,811,865.00 | 4,811,865.00 | 100.00 |
Age group | 31/12/2021 | ||
Gross | Impairment allowance | Impairment % | |
Total | 79,037,691.62 | 7,284,479.38 | 9.22 |
Details of Stage 3 receivables as of the statement date
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | 38,857,584.88 | 100.00 | 38,857,584.88 | |
Portfolio assessment | ||||
T/o: Group 1 | ||||
T/o: Group 2 | ||||
Total | 38,857,584.88 | 100.00 | 38,857,584.88 |
Details of receivables subject to individual assessment as of the statement date
31/12/2021 | ||||
Gross | Impairment allowance | Impairment % | Reason for impairment | |
Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | In bankruptcy |
Jianqiao Securities Co., Ltd. | 9,890,690.47 | 9,890,690.47 | 100.00 | In bankruptcy |
Total | 38,857,584.88 | 38,857,584.88 | 100.00 | - |
B. Disclosure by the 3-stage model as of 31 December 2020
Gross | Impairment allowance | Net | |
Stage 1 | 36,107,970.24 | 2,656,848.76 | 33,451,121.48 |
Stage 2 | - | - | - |
Stage 3 | 40,807,394.41 | 40,807,394.41 | - |
Total | 76,915,364.65 | 43,464,243.17 | 33,451,121.48 |
Details of Stage 1 receivables as of 31 December 2020
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | - | - | - | - |
Portfolio assessment | 36,107,970.24 | 7.36 | 2,656,848.76 | 33,451,121.48 |
T/o: Group 1 | - | - | - | - |
T/o: Group 2 | 36,107,970.24 | 7.36 | 2,656,848.76 | 33,451,121.48 |
Total | 36,107,970.24 | 7.36 | 2,656,848.76 | 33,451,121.48 |
Details of Group 2 receivables as of 31 December 2020
Age group | 31/12/2020 | ||
Gross | Impairment allowance | Impairment % | |
Within 1 year | 31,014,800.18 | 383,281.55 | 1.24 |
T/o: Within 6 months | 29,186,461.60 | 291,864.62 | 1.00 |
Age group | 31/12/2020 | ||
Gross | Impairment allowance | Impairment % | |
T/o: 7 months to 1 years | 1,828,338.58 | 91,416.93 | 5.00 |
1 to 2 years | 2,842,287.06 | 284,228.71 | 10.00 |
2 to 3 years | 523,089.00 | 261,544.50 | 50.00 |
Over 3 years | 1,727,794.00 | 1,727,794.00 | 100.00 |
Total | 36,107,970.24 | 2,656,848.76 | 7.36 |
Details of Stage 3 receivables as of 31 December 2020
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | 40,807,394.41 | 100.00 | 40,807,394.41 | - |
Portfolio assessment | - | - | - | - |
T/o: Group 1 | - | - | - | - |
T/o: Group 2 | - | - | - | - |
Total | 40,807,394.41 | 100.00 | 40,807,394.41 | - |
Details of receivables subject to individual assessment as of 31 December 2020
31/12/2020 | ||||
Gross | Impairment allowance | Impairment % | Reason for impairment | |
Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | In bankruptcy |
Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | In bankruptcy |
Total | 40,807,394.41 | 40,807,394.41 | 100.00 | - |
(4) Movement of impairment allowance
31/12/2020 | Movement | 31/12/2021 | ||||
Provision | Business combination not under common control | Reversal or recovery | Release or write-off | |||
Individual assessment | 40,807,394.41 | 1,949,809.53 | 38,857,584.88 | |||
Portfolio assessment | 2,656,848.76 | 1,392,920.96 | 3,883,438.08 | 648,728.42 | 7,284,479.38 | |
Total | 43,464,243.17 | 1,392,920.96 | 3,883,438.08 | 2,598,537.95 | 46,142,064.26 |
(5) Top-five other receivables as of the statement date
Debtor | Nature | 31/12/2021 | Age group | % of total gross other receivables | Impairment allowance |
Top 1 | Security investment | 28,966,894.41 | Over 3 years | 24.57 | 28,966,894.41 |
Top 2 | Other | 18,255,567.00 | Within 6 months | 15.48 | 182,555.67 |
Top 3 | Security investment | 9,890,690.47 | Over 3 years | 8.39 | 9,890,690.47 |
Debtor | Nature | 31/12/2021 | Age group | % of total gross other receivables | Impairment allowance |
Top 4 | Other | 7,318,942.51 | Within 1 year | 6.21 | 97,193.84 |
Top 5 | Other | 6,499,462.17 | Within 6 months | 5.51 | 64,994.62 |
Total | 70,931,556.56 | 60.16 | 39,202,329.01 |
5.6.3 Increase of other receivables for 114.50% year over year was mainly resulted fromincrease in prepaid expenses.
5.7 Inventories
5.7.1 General disclosure
31/12/2021 | |||
Gross | Impairment allowance | Net | |
Raw materials and packaging | 236,485,211.32 | 22,919,192.93 | 213,566,018.39 |
Semi-finished goods and work in progress | 3,680,675,328.83 | 0.00 | 3,680,675,328.83 |
Merchandises | 776,158,681.46 | 6,943,356.38 | 769,215,325.08 |
Total | 4,693,319,221.61 | 29,862,549.31 | 4,663,456,672.30 |
(Continued)
31/12/2020 | |||
Gross | Impairment allowance | Net | |
Raw materials and packaging | 191,873,650.49 | 13,274,081.73 | 178,599,568.76 |
Semi-finished goods and work in progress | 2,861,343,683.53 | - | 2,861,343,683.53 |
Merchandises | 387,506,042.80 | 10,568,486.13 | 376,937,556.67 |
Total | 3,440,723,376.82 | 23,842,567.86 | 3,416,880,808.96 |
5.7.2 Movement of impairment allowance
31/12/2020 | Increase | Decrease | 31/12/2021 | |||
Provision | Business combination not under common control | Reversal and release | Other | |||
Raw materials and packaging | 13,274,081.73 | 11,527,075.19 | 8,134,202.39 | 10,016,166.38 | - | 22,919,192.93 |
Merchandises | 10,568,486.13 | 5,331,142.92 | 2,607.59 | 8,958,880.26 | - | 6,943,356.38 |
Total | 23,842,567.86 | 16,858,218.11 | 8,136,809.98 | 18,975,046.64 | - | 29,862,549.31 |
5.8 Other current assets
31/12/2021 | 31/12/2020 | |
Loans securied by treasury bonds | 76,205,000.00 | - |
Interests on deposits | 54,529,762.09 | 19,563,936.43 |
31/12/2021 | 31/12/2020 | |
Deductible taxes | 47,487,460.47 | 77,848,744.83 |
Total | 178,222,222.56 | 97,412,681.26 |
Increase of other current assets for 82.96% year over year was mainly resulted fromincrease in loans securied by treasury bonds and interests on deposits.
5.9 Long-term equity investments
Investee | 31/12/2020 | Movement | ||||
Contribution | Investment withdrawal | Investment income at equity | OCI adjustment | Other equity movement | ||
A. Associates | - | |||||
Beijing Guge Trading Co., Ltd. (Guge Trading) | 4,915,575.83 | 397,024.95 | ||||
Total | 4,915,575.83 | 397,024.95 | - | - |
(Continued)
Investee | Movement | 31/12/2021 | Cumulative impairment allowance | ||
Dividend or profit appropriation declared | Impairment allowance recognised | Others | |||
A. Associates | - | ||||
Guge Trading | - | - | - | 5,312,600.78 | - |
Total | - | - | - | 5,312,600.78 | - |
5.10 Other equity investments
31/12/2021 | 31/12/2020 | |
Anhui Mingguang Village Commercial Bank (Mingguang VCB) | 54,542,418.50 | |
Total | 54,542,418.50 |
Supplementary disclosure
Dividend income recognised in the period | Cumulative gain | Cumulative loss | Reclassification from OCI to retained earnings | Reason for designation as FVTOCI | |
Mingguang VCB | 809,860.62 | 693,720.70 | On the basis of purpose of investment |
5.11 Investment properties
Houses and buildings | Land use rights | Total | |
A. Costs | |||
1. 31/12/2020 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
2. Increase | - | - | - |
3. Decrease | - | - | - |
4. 31/12/2021 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
Houses and buildings | Land use rights | Total | |
B. Cumulative depreciation | |||
1. 31/12/2020 | 6,176,477.79 | 755,726.42 | 6,932,204.21 |
2. Increase | 261,115.92 | 56,026.56 | 317,142.48 |
(1) Recognition | 261,115.92 | 56,026.56 | 317,142.48 |
3. Decrease | - | - | - |
4. 31/12/2021 | 6,437,593.71 | 811,752.98 | 7,249,346.69 |
C. Impairment allowance | |||
1. 31/12/2020 | - | - | - |
2. Increase | - | - | - |
3. Decrease | - | - | - |
4. 31/12/2021 | - | - | - |
D. Net value | |||
1. As of the statement date | 2,242,962.04 | 1,832,839.02 | 4,075,801.06 |
2. As of 31/12/2020 | 2,504,077.96 | 1,888,865.58 | 4,392,943.54 |
5.12 Fixed assets
5.12.1 Disclosure by category
31/12/2021 | 31/12/2020 | |
Fixed assets | 1,984,063,975.87 | 1,797,789,271.62 |
Fixed asset disposals | - | - |
Total | 1,984,063,975.87 | 1,797,789,271.62 |
5.12.2 Fixed assets
5.12.2.1 General disclosure
Houses and buildings | Machinery | Transportation vehicles | Administrative and other devices | Total | |
A. Costs | |||||
1. 31/12/2020 | 2,110,023,036.54 | 1,137,831,234.61 | 63,055,889.31 | 202,211,609.80 | 3,513,121,770.26 |
2. Increase | 180,129,304.08 | 225,064,092.92 | 13,431,756.86 | 81,405,165.78 | 500,030,319.64 |
(1) Purchase | 12,028,973.66 | 23,895,869.67 | 5,082,033.26 | 19,273,732.23 | 60,280,608.82 |
(2) Reclassification from construction in progress | 40,268,524.79 | 148,773,794.01 | - | 36,731,276.67 | 225,773,595.47 |
(3) Business combination | 127,441,392.30 | 46,747,037.26 | 8,269,210.78 | 7,457,866.92 | 189,915,507.26 |
(4) Others | 390,413.33 | 5,647,391.98 | 80,512.82 | 17,942,289.96 | 24,060,608.09 |
3. Decrease | 62,328,761.51 | 31,975,682.30 | 5,254,418.05 | 14,647,711.05 | 114,206,572.91 |
(1) Disposal or scrap | 50,289,570.30 | 20,561,493.46 | 5,254,418.05 | 8,274,628.89 | 84,380,110.70 |
(2) Others | 12,039,191.21 | 11,414,188.84 | - | 6,373,082.16 | 29,826,462.21 |
4. 31/12/2021 | 2,227,823,579.11 | 1,330,919,645.23 | 71,233,228.12 | 268,969,064.53 | 3,898,945,516.99 |
B. Cumulative depreciation |
Houses and buildings | Machinery | Transportation vehicles | Administrative and other devices | Total | |
1. 31/12/2020 | 887,885,451.17 | 652,893,081.63 | 54,246,302.02 | 115,239,124.54 | 1,710,263,959.36 |
2. Increase | 100,743,005.66 | 127,047,360.43 | 11,938,113.54 | 47,675,329.27 | 287,403,808.90 |
(1) Recognition | 82,594,638.72 | 106,147,587.41 | 5,614,356.78 | 30,141,917.34 | 224,498,500.25 |
(2) Business combination | 17,769,678.01 | 15,507,216.88 | 6,249,135.23 | 4,805,171.31 | 44,331,201.43 |
(3) Others | 378,688.93 | 5,392,556.14 | 74,621.53 | 12,728,240.62 | 18,574,107.22 |
3. Decrease | 48,672,755.95 | 23,688,674.55 | 4,797,006.03 | 10,598,210.13 | 87,756,646.66 |
(1) Disposal or scrap | 44,602,165.53 | 15,272,988.76 | 4,797,006.03 | 4,510,379.11 | 69,182,539.43 |
(2) Others | 4,070,590.42 | 8,415,685.79 | - | 6,087,831.02 | 18,574,107.23 |
4. 31/12/2021 | 939,955,700.88 | 756,251,767.51 | 61,387,409.53 | 152,316,243.68 | 1,909,911,121.60 |
C. Impairment allowance | |||||
1. 31/12/2020 | 2,804,324.86 | 1,674,420.09 | 7,047.07 | 582,747.26 | 5,068,539.28 |
2. Increase | 611,808.94 | - | - | - | 611,808.94 |
(1) Recognition | 611,808.94 | - | - | - | 611,808.94 |
3. Decrease | 299,539.41 | 403,328.74 | 7,047.07 | 13.48 | 709,928.70 |
(1) Disposal or scrap | 299,539.41 | 403,328.74 | 7,047.07 | 13.48 | 709,928.70 |
4. 31/12/2021 | 3,116,594.39 | 1,271,091.35 | - | 582,733.78 | 4,970,419.52 |
D. Net value | |||||
1. As of the statement date | 1,284,751,283.84 | 573,396,786.37 | 9,845,818.59 | 116,070,087.07 | 1,984,063,975.87 |
2. As of 31/12/2020 | 1,219,333,260.51 | 483,263,732.89 | 8,802,540.22 | 86,389,738.00 | 1,797,789,271.62 |
5.12.2.2 Temporarily idle fixed assets
Cost | Cumulative depreciation | Cumulative impairment allowance | Net value | Note | |
Houses and buildings | 10,582,609.55 | 7,282,125.83 | 3,116,594.39 | 183,889.33 | |
Machinery | 9,002,312.33 | 7,610,219.08 | 1,271,091.35 | 121,001.90 | |
Transportation vehicles | - | - | - | - | |
Administrative and other devices | 874,608.18 | 265,657.69 | 582,733.78 | 26,216.71 | |
Total | 20,459,530.06 | 15,158,002.60 | 4,970,419.52 | 331,107.94 |
5.12.2.3 Fixed assets with uncompleted ownership registration
Net value | Remark | |
Houses and buildings | 638,158,624.34 | Registration in progress |
Total | 638,158,624.34 | —— |
5.12.2.4 Fixed assets with restriction as of the statement date
Cost | Cumulative depreciation | Cumulative impairment allowance | Net value | Note |
Cost | Cumulative depreciation | Cumulative impairment allowance | Net value | Note | |
Houses and buildings | 8,982,726.64 | 4,756,988.19 | - | 4,225,738.45 | |
Total | 8,982,726.64 | 4,756,988.19 | - | 4,225,738.45 |
5.13 Construction in progress
5.13.1 Disclosure by category
31/12/2021 | 31/12/2020 | |
Construction in progress | 1,064,134,904.21 | 279,169,201.60 |
Materials held for construction | - | - |
Total | 1,064,134,904.21 | 279,169,201.60 |
5.13.2 Construction in progress
5.13.2.1 General disclosure
31/12/2021 | 31/12/2020 | |||||
Gross | Impairment allowance | Net | Gross | Impairment allowance | Net | |
Smart Zone | 700,794,613.29 | - | 700,794,613.29 | 54,494,827.90 | - | 54,494,827.90 |
Theme Hotel | 61,431,126.99 | - | 61,431,126.99 | 5,538,005.31 | - | 5,538,005.31 |
Automated Brewery | 0.00 | - | 0.00 | 42,832,649.99 | - | 42,832,649.99 |
Automated Bottling System Renovation | 0.00 | - | 0.00 | 14,835,486.72 | - | 14,835,486.72 |
GJ Plant #11 Wine Cellar | - | - | - | 11,166,144.14 | - | 11,166,144.14 |
GJ Plant #12 Wine Cellar | 10,666,666.95 | - | 10,666,666.95 | - | ||
Experience Centre | - | - | - | 8,064,287.27 | - | 8,064,287.27 |
Suizhou Plant | 266,102,852.17 | - | 266,102,852.17 | 135,930,812.66 | - | 135,930,812.66 |
Other projects | 25,139,644.81 | - | 25,139,644.81 | 6,306,987.61 | - | 6,306,987.61 |
Total | 1,064,134,904.21 | - | 1,064,134,904.21 | 279,169,201.60 | - | 279,169,201.60 |
5.13.2.2 Detailed disclosure
Budget CNY million | 31/12/2020 | Increase | |
Smart Zone | 8,289.66 | 54,494,827.90 | 648,404,140.96 |
Theme Hotel | 499.00 | 5,538,005.31 | 55,893,121.68 |
Automated Brewery | 274.30 | 42,832,649.99 | 77,555,002.43 |
Automated Bottling System Renovation | 40.00 | 14,835,486.72 | 15,164,247.79 |
GJ Plant #11 Wine Cellar | 90.00 | 11,166,144.14 | 48,281,006.51 |
GJ Plant #12 Wine Cellar | 162.50 | - | 10,666,666.95 |
Experience Centre | 29.50 | 8,064,287.27 | 9,544,855.31 |
Suizhou Plant | 600.00 | 135,930,812.66 | 130,320,712.07 |
Other projects | 51.71 | 6,306,987.61 | 39,649,557.36 |
Budget CNY million | 31/12/2020 | Increase | |
Total | 10,036.67 | 279,169,201.60 | 1,035,479,311.06 |
(Continued)
Reclassification to fixed assets | Other decrease | 31/12/2021 | |
Smart Zone | 2,104,355.57 | - | 700,794,613.29 |
Theme Hotel | - | - | 61,431,126.99 |
Automated Brewery | 120,387,652.42 | - | - |
Automated Bottling System Renovation | 29,999,734.51 | - | 0.00 |
GJ Plant #11 Wine Cellar | 59,447,150.65 | - | - |
GJ Plant #12 Wine Cellar | 10,666,666.95 | ||
Experience Centre | - | 17,609,142.58 | - |
Suizhou Plant | 148,672.56 | - | 266,102,852.17 |
Other projects | 13,686,029.76 | 7,130,870.40 | 25,139,644.81 |
Total | 225,773,595.47 | 24,740,012.98 | 1,064,134,904.21 |
(Continued)
% of budget | % of completion | Cumulative capitalisation of borrowing costs | T/o: Borrowing costs capitalised in the period | |
Smart Zone | 8.48 | 11.22 | - | - |
Theme Hotel | 12.31 | 24.37 | - | - |
Automated Brewery | 95.85 | 100.00 | - | - |
Automated Bottling System Renovation | 76.74 | 100.00 | - | - |
GJ Plant #11 Wine Cellar | 66.05 | 100.00 | - | - |
GJ Plant #12 Wine Cellar | 6.56 | 6.56 | - | - |
Experience Centre | 86.93 | 100.00 | ||
Suizhou Plant | 44.38 | 44.38 | 2,527,982.73 | 2,527,982.73 |
Other projects | 88.87 | 88.87 | - | - |
Total | 2,527,982.73 | 2,527,982.73 |
(Continued)
Current period capitalisation rate | Source of funding | |
Smart Zone | - | Self-funded, public financing |
Theme Hotel | - | Self-funded |
Automated Brewery | - | Self-funded |
Automated Bottling System Renovation | - | Self-funded |
GJ Plant #11 Wine Cellar | - | Self-funded |
GJ Plant #12 Wine Cellar | - | Self-funded |
Experience Centre | Self-funded |
Current period capitalisation rate | Source of funding | |
Suizhou Plant | 3.45 | Self-funded, loans |
Other projects | - | Self-funded |
Total | - |
Increase of construction in progress for 281.18% year over year was mainly resulted frominvestment in Smart Zone and Suizhou Plant in the period.
5.14 Right-of-use assets
Houses and buildings | Machinery | Total | |
A. Costs | - | ||
1. 31/12/2020 | - | ||
Change of accounting policies | - | ||
1/1/2021 | 56,071,482.96 | 1,330,929.57 | 57,402,412.53 |
2. Increase | 978,998.78 | 978,998.78 | |
3. Decrease | - | - | - |
4. 31/12/2021 | 57,050,481.74 | 1,330,929.57 | 58,381,411.31 |
B. Cumulative depreciation | - | ||
1. 31/12/2020 | - | ||
Change of accounting policies | - | ||
1/1/2021 | - | - | - |
2. Increase | 14,010,539.12 | 443,643.22 | 14,454,182.34 |
3. Decrease | - | - | - |
4. 31/12/2021 | 14,010,539.12 | 443,643.22 | 14,454,182.34 |
C. Impairment allowance | - | ||
1. 31/12/2020 | - | ||
Change of accounting policies | - | ||
1/1/2021 | - | ||
2. Increase | - | ||
3. Decrease | - | ||
4. 31/12/2021 | - | - | - |
D. Net value | - | ||
1. As of the statement date | 43,039,942.62 | 887,286.35 | 43,927,228.97 |
2. As of 01/01/2021 | 56,071,482.96 | 1,330,929.57 | 57,402,412.53 |
5.15 Intangible assets
5.15.1 General disclosure
Land use rights | Software | Patents and trademarks | Total | |
A. Costs | ||||
1. 31/12/2020 | 846,743,730.35 | 125,206,832.57 | 215,006,066.19 | 1,186,956,629.11 |
2. Increase | 155,302,466.40 | 5,495,369.70 | 38,039,080.00 | 198,836,916.10 |
Land use rights | Software | Patents and trademarks | Total | |
(1) Purchase | 103,066,353.81 | 2,201,787.53 | 26,992.33 | 105,295,133.67 |
(2) Internal development | - | - | - | - |
(3) Reclassification from construction in progress | - | 3,293,582.17 | - | 3,293,582.17 |
(4) Business combination | 52,236,112.59 | - | 38,012,087.67 | 90,248,200.26 |
3. Decrease | 282,456.00 | 1,451,037.06 | - | 1,733,493.06 |
(1) Disposal | 282,456.00 | 1,451,037.06 | - | 1,733,493.06 |
4. 31/12/2021 | 1,001,763,740.75 | 129,251,165.21 | 253,045,146.19 | 1,384,060,052.15 |
B. Cumulative amortisation | - | - | ||
1. 31/12/2020 | 158,016,689.40 | 48,008,475.16 | 46,219,486.76 | 252,244,651.32 |
2. Increase | 23,935,548.47 | 22,301,486.24 | 23,335,984.15 | 69,573,018.86 |
(1) Recognition | 19,804,993.98 | 22,301,486.24 | 46,904.15 | 42,153,384.37 |
(2) Business combination | 4,130,554.49 | - | 23,289,080.00 | 27,419,634.49 |
3. Decrease | 282,456.00 | 944,004.64 | - | 1,226,460.64 |
(1) Disposal | 282,456.00 | 944,004.64 | 1,226,460.64 | |
4. 31/12/2021 | 181,669,781.87 | 69,365,956.76 | 69,555,470.91 | 320,591,209.54 |
C. Impairment allowance | - | - | ||
1. 31/12/2020 | - | - | - | - |
2. Increase | - | - | - | - |
3. Decrease | - | - | - | - |
4. 31/12/2021 | - | - | - | - |
D. Net value | - | - | ||
1. As of the statement date | 820,093,958.88 | 59,885,208.45 | 183,489,675.28 | 1,063,468,842.61 |
2. As of 31/12/2020 | 688,727,040.95 | 77,198,357.41 | 168,786,579.43 | 934,711,977.79 |
5.15.2 Intangible assets pledged as of the statement date
Cost | Cumulative amortisation | Impairment allowance | Net value | Note | |
Land use rights | 4,029,919.10 | 1,249,274.92 | 2,780,644.18 | ||
Total | 4,029,919.10 | 1,249,274.92 | 2,780,644.18 |
5.15.3 No intangible assets as of the statement date was with pending ownershipregistration.
5.16 Goodwill
5.16.1 General disclosure
Investee | 31/12/2020 | Increase | Decrease | 31/12/2021 | ||
Business combination | Other | Disposal | Other | |||
HHL Distillery | 478,283,495.29 | 478,283,495.29 | ||||
Mingguang Distillery | - | 60,686,182.07 | 60,686,182.07 | |||
Treasure Distillery | - | 22,394,707.65 | 22,394,707.65 | |||
Total | 478,283,495.29 | 83,080,889.72 | 561,364,385.01 |
5.16.2 Asset groups associated with goodwill
Investee | Composition of asset group | Asset group CNY million | Determination | Change in the period | |||
Book value | Allocated goodwill | Unrecognised goodwill attributable to non-controlling interest | Total | ||||
HHL Distillery | Operating assets of HHL Distillery | 974.08 | 478.28 | 459.53 | 1,911.89 | Active markets are available for the products of the asset group to which goodwill is allocated and hence the asset group is capable of generating identifiable separate cash flows. | No |
Mingguang Distillery | Operating assets of Mingguang Distillery | 187.13 | 60.68 | 40.46 | 288.27 | Active markets are available for the products of the asset group to which goodwill is allocated and hence the asset group is capable of generating identifiable separate cash flows. | Recognition in the period |
Treasure Distillery | Operating assets of Treasure Distillery | 69.85 | 22.39 | 14.93 | 107.17 | Active markets are available for the products of the asset group to which goodwill is allocated and hence the asset group is capable of generating identifiable separate cash flows. | Recognition in the period |
Note: The book value of HHL Distillery asset group did not include surplus assets andnon-operating liabilities of HHL Distillery.
5.16.3 Impairment assessment
The recoverable amounts of the asset groups were determined by the present value oftheir respective future cash flows. Detailed forecasted cash flows for the next 5 years and
further forecasted cash flows for periods starting from the 6
thyear from the statement dateapplicable to each asset group was approved by the management of the Company. Thediscount rates adopted reflect the current time value of money and the specific risks of theasset groups. Key assumptions such revenue, cost of sales, growth rate and expenses wereused in the forecast. These key assumptions had been developed by taking intoconsideration factors such as historical profitability, growth trend, sector conditions andmanagement expection for future market development.Following the impairment test and with reference to the Appraisal Reports(HuayaZhengxinPingBaoZi [2022] No. A07-0006 and HuayaZhengxinPingBaoZi [2022] No.A07-0007) issued by Beijing Huaya Zhengxin Assets Appraisal Co., Ltd., the recoverableamounts of the asset groups were not lower than their respective value inclusive ofgoodwill as of the statement date. No impairment was identified upon the impairment test.
5.16.4 Impact of impairment assessment
See Note 11.1 for further details.
5.17 Long-term deferred expenses
31/12/2020 | Capitalisation | Amortisation | Other decrease | 31/12/2021 | |
Experience Centre | 25,368,080.45 | 17,682,269.18 | 12,597,202.10 | - | 30,453,147.53 |
Waste Water Plant | 2,844,754.10 | - | 922,622.95 | - | 1,922,131.15 |
HHL Winery and Museum | 7,937,278.72 | - | 3,466,982.03 | - | 4,470,296.69 |
GJCCP Culture Centre | 3,545,454.55 | - | 1,181,818.18 | - | 2,363,636.37 |
Yantai Distilled Wine Culture Project | 937,109.64 | - | 488,926.78 | - | 448,182.86 |
Miscellaneous | 23,959,256.19 | 7,357,775.48 | 15,066,088.24 | - | 16,250,943.43 |
Total | 64,591,933.65 | 25,040,044.66 | 33,723,640.28 | - | 55,908,338.03 |
5.18 Deferred tax assets (DTAs) and deferred tax liabilities (DTLs)
5.18.1 DTAs before offset
31/12/2021 | 31/12/2020 | |||
Deductible temporary difference | DTA | Deductible temporary difference | DTA | |
Asset impairment allowance | 34,832,968.83 | 8,597,940.21 | 28,911,107.14 | 7,211,407.41 |
Credit impairment allowance | 56,327,170.37 | 14,078,521.69 | 44,784,157.32 | 11,179,541.79 |
Unrealised profit | 89,880,690.08 | 22,470,172.52 | 31,616,173.72 | 7,904,043.43 |
Deferred income | 91,101,512.05 | 22,355,416.63 | 75,111,997.53 | 18,270,618.94 |
Recoverable loss | 3,275,424.29 | 235,799.84 | 43,272,801.87 | 10,777,899.23 |
Accrued employee benefits | 14,728,894.07 | 3,682,223.52 | 21,874,338.70 | 5,468,584.68 |
Accrued expenses | 845,357,525.22 | 211,333,743.87 | 144,731,955.22 | 36,160,326.47 |
31/12/2021 | 31/12/2020 | |||
Deductible temporary difference | DTA | Deductible temporary difference | DTA | |
and rebates | ||||
Fair value change or receivables held for factoring | 4,296,727.84 | 1,074,181.96 | ||
Total | 1,139,800,912.75 | 283,828,000.24 | 390,302,531.50 | 96,972,421.95 |
5.18.2 DTLs before offset
31/12/2021 | 31/12/2020 | |||
Taxable temporary difference | DTL | Taxable temporary difference | DTL | |
Fixed asset depreciation | 74,959,073.18 | 18,739,768.30 | 73,753,668.04 | 18,438,417.01 |
Purchase price allocation | 689,376,361.16 | 172,344,090.29 | 381,654,221.40 | 95,413,555.35 |
Fair value change of financial asset held for trading | 11,103,876.68 | 2,775,969.16 | 3,877,915.51 | 969,478.88 |
Fair value change of other equity investments | 693,720.70 | 173,430.18 | ||
Total | 776,133,031.72 | 194,033,257.93 | 459,285,804.95 | 114,821,451.24 |
5.19 Other non-current assets
31/12/2021 | 31/12/2020 | |
Prepayment for machinery | 7,220,318.40 | 5,943,717.02 |
Total | 7,220,318.40 | 5,943,717.02 |
5.20 Short-term borrowings
31/12/2021 | 31/12/2020 | |
Credit loans | 70,665,500.00 | |
Loans with securities by physical assets | 10,008,555.55 | |
Loans with securities by intangible assets | 20,026,583.34 | |
Total | 30,035,138.89 | 70,665,500.00 |
5.21 Notes payable
5.21.1 Disclosure by type
Type | 31/12/2021 | 31/12/2020 |
Bank acceptance | 127,114,336.16 | 140,540,000.00 |
Commercial acceptance | - | 74,535.60 |
Total | 127,114,336.16 | 140,614,535.60 |
5.21.2 No overdue note payable as of the statement date.
5.21.3 Decrease of notes payable for 9.60% year over year was mainly resulted fromsettlement of mature notes payable prior to the year end.
5.22 Accounts payable
5.22.1 Disclosure by nature
31/12/2021 | 31/12/2020 | |
Payable for goods | 605,774,178.94 | 299,936,875.62 |
Payable for construction and machinery | 253,893,258.27 | 135,720,442.04 |
Others | 160,769,884.68 | 69,549,244.20 |
Total | 1,020,437,321.89 | 505,206,561.86 |
5.22.2 Top-five venders as of the statement date by account payable balance
31/12/2021 | Reason for remaining unsettled | |
Top 1 | 505,111.19 | Payable for goods |
Top 2 | 393,392.70 | Tail payment for construction |
Top 3 | 348,350.03 | Other |
Top 4 | 312,248.05 | Tail payment for construction |
Top 5 | 244,906.28 | Tail payment for construction |
Total | 1,804,008.25 |
5.23 Contract liabilities
31/12/2021 | 31/12/2020 | |
Advanced receipts for goods | 1,825,447,705.85 | 1,206,573,886.26 |
Total | 1,825,447,705.85 | 1,206,573,886.26 |
Increase of contract liabilities for 51.29% year over year was mainly resulted from increaseof advanced receipts for goods by GJ Sales.
5.24 Employee benefits payable
5.24.1 General disclosure
31/12/2020 | Accrual | Decrease | 31/12/2021 | |
A. Short-term benefits | 496,473,581.57 | 2,847,457,558.70 | 2,634,468,000.81 | 709,463,139.46 |
B. Post-employment benefits –Defined comtribution plans | 1,655,533.19 | 127,559,816.28 | 129,006,701.19 | 208,648.28 |
C. Termination benefits | - | 1,111,573.22 | 1,111,573.22 | - |
D. Other long-term benefits due within 1 year | - | - | - | - |
Total | 498,129,114.76 | 2,976,128,948.20 | 2,764,586,275.22 | 709,671,787.74 |
5.24.2 Short-term benefits
31/12/2020 | Accrual | Decrease | 31/12/2021 | |
A. Salaries, wages allowances and subsidies | 418,034,813.69 | 2,502,957,312.68 | 2,290,212,301.09 | 630,779,825.28 |
B. Welfare | 101,477,123.04 | 101,477,123.04 | - | |
C. Social securities | 486,019.58 | 57,776,560.68 | 57,817,118.04 | 445,462.22 |
T/o: Medical insurance | 486,019.58 | 55,629,075.40 | 55,669,667.26 | 445,427.72 |
T/o: Work-place injury insurance | 2,147,485.28 | 2,147,450.78 | 34.50 |
31/12/2020 | Accrual | Decrease | 31/12/2021 | |
D. Housing funds | 4,342,621.32 | 82,964,882.88 | 81,654,033.80 | 5,653,470.40 |
E. Union fund and education fund | 70,812,311.30 | 27,042,198.40 | 28,333,852.22 | 69,520,657.48 |
F. Annuity | 2,797,815.68 | 75,239,481.02 | 74,973,572.62 | 3,063,724.08 |
Total | 496,473,581.57 | 2,847,457,558.70 | 2,634,468,000.81 | 709,463,139.46 |
5.24.3 Post-employement benefits – Defined contribution plans
31/12/2020 | Accrual | Decrease | 31/12/2021 | |
A. Basic pension | 1,655,533.19 | 123,493,690.55 | 124,940,575.46 | 208,648.28 |
B. Job-loss insurance | - | 4,066,125.73 | 4,066,125.73 | - |
Total | 1,655,533.19 | 127,559,816.28 | 129,006,701.19 | 208,648.28 |
5.25 Taxes and fees payable
31/12/2021 | 31/12/2020 | |
VAT | 154,597,583.14 | 93,836,793.23 |
Consumption duty | 406,331,487.38 | 144,069,975.35 |
CIT | 255,882,481.65 | 78,334,425.91 |
Individual income tax | 2,674,057.91 | 2,966,503.37 |
Urban maintenance and construction tax | 20,431,543.35 | 12,449,531.95 |
Stamp duty | 2,882,861.65 | 909,983.20 |
Education surcharge | 18,506,770.12 | 11,829,108.81 |
Others | 11,964,201.51 | 4,746,370.28 |
Total | 873,270,986.71 | 349,142,692.10 |
5.26 Other payables
5.26.1 General disclosure
31/12/2021 | 31/12/2020 | |
Interests payable | - | |
Dividends payable | - | - |
Other payables | 2,280,937,078.12 | 1,396,599,161.14 |
Total | 2,280,937,078.12 | 1,396,599,161.14 |
5.26.2 Other payables
31/12/2021 | 31/12/2020 | |
Margin deposits | 1,845,795,843.02 | 1,280,042,883.26 |
Quality warranty | 48,556,830.53 | 41,210,694.26 |
Withheld housing fund payable | 4,722,066.45 | 4,342,621.32 |
Others | 381,862,338.12 | 71,002,962.30 |
Total | 2,280,937,078.12 | 1,396,599,161.14 |
Other payables aged over 1 year as of the statement date mainly comprised pre-maturemargin deposits and quality warranty.
5.27 Non-current liabilities due within 1 year
31/12/2021 | 31/12/2020 | |
Lease liabilities due within 1 year | 13,190,399.32 | |
Total | 13,190,399.32 |
5.28 Other current liabilities
31/12/2021 | 31/12/2020 | |
Accruals | 562,547,100.62 | 164,008,324.26 |
Pre-mature output VAT | 236,975,461.98 | 156,784,058.77 |
Total | 799,522,562.60 | 320,792,383.03 |
5.29 Long-term borrowings
31/12/2021 | 31/12/2020 | |
Credit loans | 60,000,000.00 | 60,000,000.00 |
Interests | 176,255.83 | 117,638.89 |
Guaranteed loans | 112,180,000.00 | |
Total | 172,356,255.83 | 60,117,638.89 |
5.30 Lease liabilities
31/12/2021 | 31/12/2020 | |
Gross lease payments | 45,436,263.46 | |
Less: Unrecognised financing costs | 4,138,640.96 | |
Net | 41,297,622.50 | - |
T/o: Due within 1 year | 13,190,399.32 | |
T/o: Due after 1 year | 28,107,223.18 | - |
5.31 Deferred income
5.31.1 General disclosure
31/12/2020 | Increase | Decrease | 31/12/2021 | Reason for recognition | |
Government grants | 75,111,997.53 | 23,193,903.44 | 7,204,388.92 | 91,101,512.05 | Receipt of asset-related government grants |
Total | 75,111,997.53 | 23,193,903.44 | 7,204,388.92 | 91,101,512.05 |
5.31.2 Government grants
31/12/2020 | Receipt | Reclassified to other income | Other movement | 31/12/2021 | Nature | |
Subsidy on Construction of Suizhou Plant | 35,338,000.00 | - | - | - | 35,338,000.00 | Asset-related |
Refund of Land Fee | 22,032,186.60 | 22,208,000.00 | 1,539,876.31 | - | 42,700,310.29 | Asset-related |
Fund for Clustered Development Base for Strategic Innovative Sectors | 2,375,360.02 | - | 622,719.96 | - | 1,752,640.06 | Asset-related |
31/12/2020 | Receipt | Reclassified to other income | Other movement | 31/12/2021 | Nature | |
Subsidy Fund for Air Pollution Prevention | 2,379,469.47 | - | 294,364.80 | - | 2,085,104.67 | Asset-related |
Subsidy on Devices | 1,681,178.20 | - | 401,472.41 | - | 1,279,705.79 | Asset-related |
Subsidy of 2019 Leading Manufacturing Province and Non-state-owned Economy Development | 1,558,837.69 | - | 308,654.28 | - | 1,250,183.41 | Asset-related |
Anhui Innovation Subsidy for Development of Owned Innovation Capacity | 1,217,575.00 | - | 730,545.00 | - | 487,030.00 | Asset-related |
R&D Fund for Smart Distilling Yeast Fabrication | 1,130,000.00 | - | 1,130,000.00 | - | - | Asset-related |
Subsidy on Renovation of #2 Furnace | 981,481.48 | - | 222,222.24 | - | 759,259.24 | Asset-related |
Subsidy on Equipments | 795,911.83 | - | 127,004.59 | - | 668,907.24 | Asset-related |
Renovation of GJ Zhangji Cellar | 787,708.47 | - | 47,499.96 | - | 740,208.51 | Asset-related |
Subsidy for Corporation on Key Technology of Key Food Isotope Authenticity | 600,000.00 | - | 600,000.00 | - | - | Asset-related |
Subsidy for Improvement of Food Safety | 551,724.25 | - | 137,931.00 | - | 413,793.25 | Asset-related |
Anhui Leading Capital for Service Sector | 502,439.24 | - | 292,682.88 | - | 209,756.36 | Asset-related |
Subsidy for Electricity Demand-side Adminsitration | 372,000.00 | - | 144,000.00 | - | 228,000.00 | Asset-related |
Full-time Online Supervision on Automated Blending Storage and Product Quality | 171,875.00 | - | 93,749.68 | - | 78,125.32 | Asset-related |
Energy Saving Renovation for Electric Motors and Furnaces | 137,500.28 | - | 137,500.28 | - | 0.00 | Asset-related |
31/12/2020 | Receipt | Reclassified to other income | Other movement | 31/12/2021 | Nature | |
Technological Renovation for Distilling System | 2,410,208.51 | - | 229,487.88 | - | 2,180,720.63 | Asset-related |
Smart Fermentation Innovation | 88,541.49 | - | 31,250.04 | - | 57,291.45 | Asset-related |
Designated Fund for Furnace Renovation | - | 232,500.00 | 35,000.00 | - | 197,500.00 | Asset-related |
Bonus for Technological Improvement Investment | - | 631,049.92 | 78,427.61 | - | 552,622.31 | Asset-related |
Subsidy to the Technical and Quality Department | - | 122,353.52 | - | - | 122,353.52 | Asset-related |
Total | 75,111,997.53 | 23,193,903.44 | 7,204,388.92 | 91,101,512.05 |
5.32 Share capital
31/12/2020 Qty | Movement | 31/12/2021 | |||||
Issue Qty. | Bonus issue Qty. | Reserve conversion Qty | Others Qty. | Total Qty. | |||
Shares | 503,600,000.00 | 25,000,000.00 | - | - | - | - | 528,600,000.00 |
5.33 Capital reserves
31/12/2020 | Increase | Decrease | 31/12/2021 | |
Share premium | 1,262,552,456.05 | 4,929,342,074.85 | 6,191,894,530.90 | |
Other capital reserves | 32,853,136.20 | 32,853,136.20 | ||
Total | 1,295,405,592.25 | 4,929,342,074.85 | 6,224,747,667.10 |
5.34 Other comprehensive income (OCI)
31/12/2020 | Movement | ||
Before tax | Less: Income tax | ||
A. Not reclassifiable to profit or loss | 693,720.70 | 173,430.18 | |
Change in the fair value of other equity investments | 693,720.70 | 173,430.18 | |
B. Reclassifiable to profit or loss | -4,296,727.84 | -1,074,181.96 | |
Gain from reclassification of financial assets | -4,296,727.84 | -1,074,181.96 | |
Total | -3,603,007.14 | -900,751.78 |
(Continued)
Movement | 31/12/2021 | ||
After tax attributable to shareholders of the Company | After tax attributable to non-controlling interests |
Movement | 31/12/2021 | ||
After tax attributable to shareholders of the Company | After tax attributable to non-controlling interests | ||
A. Not reclassifiable to profit or loss | 312,174.31 | 208,116.21 | 312,174.31 |
Change in the fair value of other equity investments | 312,174.31 | 208,116.21 | 312,174.31 |
B. Reclassifiable to profit or loss | -3,047,232.50 | -175,313.38 | -3,047,232.50 |
Gain from reclassification of financial assets | -3,047,232.50 | -175,313.38 | -3,047,232.50 |
Total | -2,735,058.19 | 32,802.83 | -2,735,058.19 |
5.35 Surplus reserves
31/12/2020 | Increase | Decrease | 31/12/2021 | |
Statutory reserve | 256,902,260.27 | 12,500,000.00 | 269,402,260.27 | |
Total | 256,902,260.27 | 12,500,000.00 | 269,402,260.27 |
10% of the current year’s net profit was transferred to surplus reserves in accordance withthe Company Law and the Company’s Article of Association.
5.36 Retained earnings
Y/e 31/12/2021 | Y/e 31/12/2020 | |
As of 31/12/2020 | 7,987,380,161.21 | 6,888,203,911.92 |
Total adjustment of retained earnings brought forward | - | - |
As of 1/1/2021 | 7,987,380,161.21 | 6,888,203,911.92 |
Add: Net profit attributable to shareholders of the Company | 2,297,894,413.25 | 1,854,576,249.29 |
Less: Transfer to statutory reserve | 12,500,000.00 | |
Less: Dividends on ordinary shares payable | 755,400,000.00 | 755,400,000.00 |
As of 31/12/2021 | 9,517,374,574.46 | 7,987,380,161.21 |
5.37 Revenue and cost of sales
Y/e 31/12/2021 | Y/e 31/12/2020 | |||
Revenue | Cost of sales | Revenue | Cost of sales | |
Primary operation | 13,180,706,416.64 | 3,271,880,424.79 | 10,236,883,038.46 | 2,522,906,977.56 |
Other operation | 89,119,849.40 | 32,196,587.13 | 55,181,495.95 | 26,907,967.20 |
Total | 13,269,826,266.04 | 3,304,077,011.92 | 10,292,064,534.41 | 2,549,814,944.76 |
5.38 Taxes and surcharges
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Consumption duty | 1,669,063,914.39 | 1,343,748,348.14 |
Urban construction and maintenance tax and education surcharges | 300,643,974.00 | 231,441,505.09 |
Urban land use tax | 15,985,317.49 | 13,696,863.78 |
Property tax | 18,286,057.72 | 17,123,738.65 |
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Stamp duty | 11,749,843.93 | 8,853,581.53 |
Others | 16,086,098.14 | 10,425,132.36 |
Total | 2,031,815,205.67 | 1,625,289,169.55 |
5.39 Selling expenses
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Personnel costs | 863,583,183.40 | 723,874,977.05 |
Travel | 161,091,812.25 | 133,511,390.56 |
Advertisement | 900,546,437.33 | 840,407,171.96 |
Comprehensive promotion | 1,268,396,513.56 | 755,941,972.88 |
Services | 705,368,563.00 | 578,401,082.92 |
Others | 109,088,973.54 | 88,840,567.95 |
Total | 4,008,075,483.08 | 3,120,977,163.32 |
5.40 Administrative expenses
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Personnel costs | 647,493,344.01 | 507,634,459.19 |
Office costs | 61,116,360.31 | 60,807,905.04 |
Repairs | 59,205,451.47 | 46,267,736.17 |
Depreciation | 76,054,616.50 | 67,142,270.79 |
Amortisation | 34,799,459.54 | 31,267,096.32 |
Sewage | 27,191,838.92 | 17,742,036.94 |
Travel | 11,420,677.10 | 10,324,813.18 |
Utilities | 11,157,257.56 | 7,613,501.49 |
Others | 93,742,414.33 | 53,401,761.36 |
Total | 1,022,181,419.74 | 802,201,580.48 |
5.41 R&D expenses
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Personnel costs | 32,495,950.89 | 24,471,993.23 |
Direct costs | 9,389,089.92 | 3,988,348.08 |
Depreciation | 3,230,977.28 | 3,084,671.65 |
Overheads | 6,333,457.27 | 9,045,123.50 |
Total | 51,449,475.36 | 40,590,136.46 |
5.42 Financial costs
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Interest expenses | 7,036,575.14 | 876,815.80 |
Less: Interest income | 210,634,326.57 | 261,861,342.00 |
Net interest expenses | -203,597,751.43 | -260,984,526.20 |
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Net exchange loss | -168,340.77 | 51,764.56 |
Bank charges and others | -289,564.86 | 96,305.57 |
Total | -204,055,657.06 | -260,836,456.07 |
Increase of financial costs for 21.77% year over year was mainly resulted from reduction ininterest income in the period.
5.43 Other income
Y/e 31/12/2021 | Y/e 31/12/2020 | Nature | |
Government grants | |||
T/o: Transfer from deferred income | 7,204,388.92 | 5,548,440.39 | Asset-related |
T/o: Government grants directly recognised in P&L | 48,065,239.56 | 41,926,091.80 | Revenue-related |
Total | 55,269,628.48 | 47,474,532.19 |
Increase of other income for 16.42% year over year was mainly resulted from receipt of theHubei University of Science and Technology Industrialisation Fund in the period.
5.44 Investment income
Y/e 31/12/2021 | Y/e 31/12/2020 |
Investment income from long-term equity investments at equity
Investment income from long-term equity investments at equity | 397,024.95 | 237,293.59 |
Gain from disposal of FVTPLs | 11,855,405.29 | |
Gain from holding of debt instruments |
Gain from holding of other equity investments
Gain from holding of other equity investments | 809,860.62 | |
Gain from disposal of FVTOCIs | -23,271,118.08 | -34,923,074.38 |
Gain from holding of financial assets held for trading | 14,393,316.21 | 41,473,224.56 |
Others
Others | 507,890.16 | |
Total | 4,692,379.15 | 6,787,443.77 |
Decrease of investment income for 30.87% year over year was mainly resulted fromreduction in Gain from holding of financial assets held for trading in the period.
5.45 Gain from fair value changes
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Financial assets held for trading | 7,225,961.17 | -19,983,181.51 |
T/o: Derivative financial assets | - | - |
Total | 7,225,961.17 | -19,983,181.51 |
5.46 Credit impairment loss
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Notes receivable | - | 34,938.37 |
Accounts receivable | -7,698,458.43 | -596,892.02 |
Other receivables | 1,205,616.99 | -371,799.19 |
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Total | -6,492,841.44 | -933,752.84 |
5.47 Asset impairment loss
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Inventories | -16,126,347.91 | -13,182,487.48 |
Fixed assets | -611,808.94 | -912,559.84 |
Total | -16,738,156.85 | -14,095,047.32 |
5.48 Gain from asset disposals
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Gain or loss from disposal of fixed assets, construction in progress and intangible assets not classified as held for sale | 1,368,763.13 | 1,223,536.53 |
T/o: Fixed assets | 1,368,763.13 | 1,223,536.53 |
Total | 1,368,763.13 | 1,223,536.53 |
5.49 Non-operating income
5.49.1 General disclosure
Y/e 31/12/2021 | Y/e 31/12/2020 | Current period non-recurring | |
Damage and scrapping of non-current assets | 12,541.54 | 178.25 | 12,541.54 |
Government grants not related to ordinary operating activities | 4,873.94 | 150,000.00 | 4,873.94 |
Fine and compensation | 43,776,517.37 | 34,815,119.51 | 43,776,517.37 |
Wastes | 4,549,768.93 | 5,743,313.19 | 4,549,768.93 |
Release of payables | 30,649,702.32 | 23,936,972.51 | 30,649,702.32 |
Others | 1,364,754.10 | 1,951,704.61 | 1,364,754.10 |
Total | 80,358,158.20 | 66,597,288.07 | 80,358,158.20 |
5.49.2 Government grants not related to ordinary operating activities
Y/e 31/12/2021 | Y/e 31/12/2020 | Nature | |
Other bonuses | 4,873.94 | 150,000.00 | Revenue related |
Total | 4,873.94 | 150,000.00 | - |
5.50 Non-operating expenses
Y/e 31/12/2021 | Y/e 31/12/2020 | Current period non-recurring | |
Damage and scrapping of non-current assets | 7,358,161.65 | 4,916,354.87 | 7,358,161.65 |
Donations | 21,405,652.43 | ||
Others | 3,315,122.96 | 940,840.78 | 3,315,122.96 |
Total | 10,673,284.61 | 27,262,848.08 | 10,673,284.61 |
5.51 Income tax expenses
5.51.1 General disclosure
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Current income tax | 903,705,314.91 | 636,476,576.50 |
Deferred income tax | -106,743,019.82 | -10,528,792.81 |
Total | 796,962,295.09 | 625,947,783.69 |
5.51.2 Reconciliation of profit before tax and income tax expenses
Y/e 31/12/2021 | |
Profit before tax | 3,171,293,934.56 |
Income tax calcuated by the applicable tax rate | 792,823,483.64 |
Impact of different tax rates applicable to subsidiaries | -10,694,115.33 |
Adjustment for prior period | 28,428,411.94 |
Non-taxable income | -2,437,521.86 |
Non-deductible costs, expenses and loss | 1,328,323.89 |
Utilisation of prior period recoverable tax loss with no DTA recognised | - |
Impact of current period recoverable tax loss and temporary differences with no DTA recognised | - |
Progressive deduction for R&D expenses | -12,486,287.19 |
Impact of tax rate changes | - |
Exemption | |
Income tax expenses | 796,962,295.09 |
5.52 Notes to the consolidated cash flow statements
5.52.1 Other cash receipts in relation to operating activities
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Margin deposits and quality warranty | 573,099,096.03 | 71,271,892.53 |
Government grants received | 59,512,598.91 | 42,815,381.22 |
Bank interests received | 175,668,500.91 | 244,206,194.38 |
Release of restricted cash | 334,308,875.92 | 2,675,000,000.00 |
Others | 11,742,422.18 | 70,984,823.65 |
Total | 1,154,331,493.95 | 3,104,278,291.78 |
5.52.2 Other cash payments for operating activities
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Paid expenses | 2,252,989,080.36 | 1,947,222,615.61 |
Margin deposits and quality warranty | 7,522,439.34 | 7,848,981.62 |
Cash restricted for bank acceptance and guarantee letters | 133,372,593.16 | 134,308,875.92 |
Structural desposits and fixed term deposits not eligible for early redemption | 200,000,000.00 | |
Others | 63,271,489.74 | 88,165,064.00 |
Total | 2,457,155,602.60 | 2,377,545,537.15 |
5.52.3 Other cash receipts in relation to financing activities
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Financing costs paid | 4,587,264.16 | |
Rentals paid | 15,430,214.16 | |
Total | 20,017,478.32 |
5.53 Supplemenatry information to the consolidated cash flow statement
5.53.1 Suppplementary information to the consolidated cash flow statement
Y/e 31/12/2021 | Y/e 31/12/2020 | |
A. Reconciliation between net profit and net cash flows from operating activities | ||
Net profit | 2,374,331,639.47 | 1,847,888,183.03 |
Add: Asset impairment loss | 16,738,156.85 | 15,028,800.16 |
Add: Credit impairment loss | 6,492,841.44 | |
Add: Fixed asset depreciation and investment property depreciation | 224,815,642.73 | 214,098,270.11 |
Add: Right-of-use asset depreciation | 14,454,182.34 | |
Add: Intangible asset amortisation | 42,153,384.37 | 34,419,897.25 |
Add: Long-term deferred expense amortisation | 33,723,640.28 | 23,731,383.35 |
Add: Loss from disposal of fixed assets, intangible assets and other long-term assets (gain with “–”) | -1,368,763.13 | -1,223,536.53 |
Add: Loss from scrapping of fixed assets (gain with “–”) | 7,345,620.11 | 4,916,176.62 |
Add: Loss from fair value changes (gain with “–”) | -7,225,961.17 | 19,983,181.51 |
Add: Financial costs (income with “–”) | -47,493,186.95 | 928,580.36 |
Add: Investment loss (gain with “–”) | -4,692,379.15 | -6,787,443.77 |
Add: DTA decrease (increase with “–”) | -186,855,578.29 | -6,477,877.44 |
Add: DTL increase (decrease with “–”) | 79,211,806.69 | -4,050,915.37 |
Add: Inventory decrease (increase with “–”) | -1,252,595,844.79 | -415,011,334.66 |
Add: Operating receivable decrease (increase with “–”) | 868,490,814.49 | -548,002,635.36 |
Add: Operating payable increase (decrease with “–”) | 2,752,473,236.58 | 104,411,672.19 |
Add: Others (Note) | 334,308,875.92 | 2,340,691,124.08 |
Net cash flows from operating activities | 5,254,308,127.79 | 3,624,543,525.53 |
B. Significant investing and financing activities not involving cash | ||
Debt-to-equity conversion | - | |
Corporate bonds convertible within 1 year | - | |
Fixed asset acquired through financial leasing | - | |
C. Movement of cash and cash equivalents | ||
Cash as of 31/12/2021 | 6,057,550,178.60 | 5,636,903,693.74 |
Less: Cash as of 31/12/2020 | 5,636,903,693.74 | 2,944,749,918.09 |
Add: Cash equivalents as of 31/12/2021 | - | |
Less: Cash equivalents as of 31/12/2020 | - |
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Net increase of cash and cash equivalents | 420,646,484.86 | 2,692,153,775.65 |
Note: Others represented impact of restricted cash on the net cash flows from operatingactivities for the period.
5.53.2 Composition of cash and cash equivalents
31/12/2021 | 31/12/2020 | |
A. Cash | 6,057,550,178.60 | 5,636,903,693.74 |
T/o: Cash in hand | 135,129.66 | 178,127.77 |
T/o: Cash at bank usable on demand | 6,057,283,646.58 | 5,636,406,199.84 |
T/o: Other monetary funds usable on demand | 131,402.36 | 319,366.13 |
B. Cash equivalents | - | - |
T/o: Investment in debt instruments mature in 3 months | - | - |
C. Cash and cash equivalents as of 31 December | 6,057,550,178.60 | 5,636,903,693.74 |
T/o: Cash and cash equivalents held by group companies with restriction on use | - |
5.54 Assets with restriction on ownership or disposal
Book value as of 31/12/2021 | Restriction | |
Notes receivable | 5,867,372,593.16 | Structural deposits not eligible for early redemption and fixed term deposits and margin deposits for bank acceptance |
Fixed assets | 4,225,738.45 | Securities for loans |
Intangible assets | 2,780,644.18 | Securities for loans |
Total | 5,874,378,975.79 | —— |
5.55 Government grants
5.55.1 Asset related government grants
Grant amount | Balance sheet item | Amount recognised in the income statement | Income statement item | ||
Y/e 31/12/2021 | Y/e 31/12/2020 | ||||
Subsidy on Construction of Suizhou Plant | 35,338,000.00 | Deferred income | - | - | Other income |
Refund of Land Fee | 42,700,310.29 | Deferred income | 1,539,876.31 | 530,641.33 | Other income |
Fund for Clustered Development Base for Strategic Innovative Sectors | 1,752,640.06 | Deferred income | 622,719.96 | 422,719.98 | Other income |
Subsidy Fund for Air Pollution Prevention | 2,085,104.67 | Deferred income | 294,364.80 | 265,613.82 | Other income |
Subsidy on Devices | 1,279,705.79 | Deferred income | 401,472.41 | 155,259.30 | Other income |
Subsidy of 2019 Leading Manufacturing Province and Non-state-owned Economy Development | 1,250,183.41 | Deferred income | 308,654.28 | 311,162.31 | Other income |
Grant amount | Balance sheet item | Amount recognised in the income statement | Income statement item | ||
Y/e 31/12/2021 | Y/e 31/12/2020 | ||||
Anhui Innovation Subsidy for Development of Owned Innovation Capacity | 487,030.00 | Deferred income | 730,545.00 | 730,545.00 | Other income |
R&D Fund for Smart Distilling Yeast Fabrication | - | Deferred income | 1,130,000.00 | - | Other income |
Subsidy on Renovation of #2 Furnace | 759,259.24 | Deferred income | 222,222.24 | 18,518.52 | Other income |
Subsidy on Equipments | 668,907.24 | Deferred income | 127,004.59 | 288,116.33 | Other income |
Renovation of GJ Zhangji Cellar | 740,208.51 | Deferred income | 47,499.96 | 47,499.96 | Other income |
Subsidy for Corporation on Key Technology of Key Food Isotope Authenticity | - | Deferred income | 600,000.00 | - | Other income |
Subsidy for Improvement of Food Safety | 413,793.25 | Deferred income | 137,931.00 | 137,931.00 | Other income |
Anhui Leading Capital for Service Sector | 209,756.36 | Deferred income | 292,682.88 | 292,682.88 | Other income |
Subsidy for Electricity Demand-side Adminsitration | 228,000.00 | Deferred income | 144,000.00 | 144,000.00 | Other income |
Full-time Online Supervision on Automated Blending Storage and Product Quality | 78,125.32 | Deferred income | 93,749.68 | 93,750.00 | Other income |
Energy Saving Renovation for Electric Motors and Furnaces | 0.00 | Deferred income | 137,500.28 | 137,499.96 | Other income |
Technological Renovation for Distilling System | 2,180,720.63 | Deferred income | 229,487.88 | 62,499.96 | Other income |
Smart Fermentation Innovation | 57,291.45 | Deferred income | 31,250.04 | 31,250.04 | Other income |
Designated Fund for Company Development | - | Deferred income | - | 22,500.00 | Other income |
IOT Souce Tracing System | - | Deferred income | - | 1,856,250.00 | Other income |
Designated Fund for Furnace Renovation | 197,500.00 | Deferred income | 35,000.00 | Other income | |
Bonus for Technological Improvement Investment | 552,622.31 | Deferred income | 78,427.61 | Other income | |
Subsidy to the Technical and Quality Department | 122,353.52 | Deferred income | - | Other income | |
Total | 91,101,512.05 | - | 7,204,388.92 | 5,548,440.39 | —— |
5.55.2 Revenue related government grants
Grant amount | Income statement item | Amount recognised in the income statement | Income statement item | ||
Y/e 31/12/2021 | Y/e 31/12/2020 | ||||
Tax Refund | 10,939,461.17 | Other income | 10,939,461.17 | 7,142,710.58 | Other income |
Grant amount | Income statement item | Amount recognised in the income statement | Income statement item | ||
Y/e 31/12/2021 | Y/e 31/12/2020 | ||||
Hubei University of Science and Technology Industrialisation Fund | 9,541,000.00 | Other income | 9,541,000.00 | 2,180,000.00 | Other income |
Subsidy for Suizhou Relocation and Renovation Project | 6,946,300.00 | Other income | 6,946,300.00 | Other income | |
Xianning Fiscal Incentive for 0 Fiscal Account Balance | 2,300,000.00 | Other income | 2,300,000.00 | Other income | |
Job-loss Insurance Refund | 1,504,366.43 | Other income | 1,504,366.43 | 2,280,389.84 | Other income |
2021 Training Subsidy for Workplace Skill Improvement | 1,226,000.00 | Other income | 1,226,000.00 | Other income | |
2021 Substantial Fund for Innovative Province | 1,200,000.00 | Other income | 1,200,000.00 | Other income | |
2020 Designated Fund for Provincial Manufacturing Development with High Quality | 1,000,000.00 | Other income | 1,000,000.00 | Other income | |
Fiscal Bonus for Digital Economy Development offered by Construction Fund of Leading Manufacturing Province | 1,000,000.00 | Other income | 1,000,000.00 | Other income | |
Subsidies by Local Finance Supervision Authorities | 1,000,000.00 | Other income | 1,000,000.00 | Other income | |
Bonus for Strategic Innovative Base | 1,000,000.00 | Other income | 1,000,000.00 | Other income | |
2020 Construction Fund of Leading Manufacturing Province | Other income | 5,160,000.00 | Other income | ||
2020 Designated Fund for Development of Emerging Leading Manufacturing City | Other income | 4,600,000.00 | Other income | ||
Fiscal Subsidy offered by Cashing Centre of Wuhan Hanyang Treasury | Other income | 2,364,000.00 | Other income | ||
Subsidy for Wuhan Class A Scenic Site Free Entrance offered by Wuhan Culture and Travel Bureau | Other income | 2,220,000.00 | Other income |
Grant amount | Income statement item | Amount recognised in the income statement | Income statement item | ||
Y/e 31/12/2021 | Y/e 31/12/2020 | ||||
Subsidy for Air Pollution Prevention offered by Environmental Protection Bureau | Other income | 1,000,000.00 | Other income | ||
AMR Bonus for Standardisation | Other income | 900,000.00 | Other income | ||
Trademark Bonus by Bozhou Treasury | Other income | 895,000.00 | Other income | ||
Other grants related to ordinary operating activities | 10,408,111.96 | Other income | 10,408,111.96 | 13,183,991.38 | Other income |
Grants related to ordinary operating activities | 4,873.94 | Non-operating income | 4,873.94 | 150,000.00 | Non-operating income |
Interest subsidies | 874,116.13 | Financial costs | 874,116.13 | 992,947.18 | Financial costs |
Total | 48,944,229.63 | —— | 48,944,229.63 | 43,069,038.98 | —— |
Note 6 Change in the scope of consolidation
6.1 Business combination not under common control
6.1.1 General disclosure
Subsidiary | Date of acquisition | Purchase price | Shareholding acquired | Type of transaction | Combination date | Determination of combination date | Revenue for the period from the combination date to the statement date | Net profit for the period from the combination date to the statement date |
Mingguang Distillery | 2021.1.10 | 200,200,000.00 | 60% | Purchase | 2021.1.10 | Purchase price paid, transfer of ownership of shares, transfer of control over assets | 295,308,911.41 | -11,423,106.29 |
Treasure Distillery | 2021.9.15 | 224,723,400.00 | 60% | Additional investment | 2021.9.15 | Completion of regulatory registration | 0.00 | -914,211.68 |
6.1.2 Cost of acquisition and goodwill
Mingguang Distillery | Treasure Distillery | |
Cost of acquisition | ||
Cash | 200,200,000.00 | 224,723,400.00 |
Total cost of acquisition | 200,200,000.00 | 224,723,400.00 |
Less: Fair value of net identifiable assets acquired | 139,513,817.93 | 202,328,692.35 |
Goodwill | 60,686,182.07 | 22,394,707.65 |
6.1.3 Net identifiable assets of the acquirees as of the combination datesMingguang Distillery
Fair value | Book value | |
Monetary funds | 135,013,666.90 | 135,013,666.90 |
Accounts receivable | 10,711,363.41 | 10,711,363.41 |
Prepayments | 1,596,899.47 | 1,596,899.47 |
Other receivables | 6,122,501.16 | 6,122,501.16 |
Inventories | 281,633,786.01 | 211,852,592.58 |
Other current assets | 2,546.37 | 2,546.37 |
Other equity investments | 53,848,697.80 | 14,530,000.00 |
Fixed assets | 119,631,918.83 | 72,638,969.35 |
Construction in progress | 557,987.45 | 557,987.45 |
Intangible assets | 56,327,165.76 | 9,123,081.42 |
Long-term deferred expenses | 2,929,439.00 | 2,929,439.00 |
Deferred tax assets | 3,498,516.13 | 3,498,516.13 |
Short-term borrowings | 94,000,000.00 | 94,000,000.00 |
Accounts payable | 43,654,530.85 | 43,654,530.85 |
Contract liabilities | 46,956,781.25 | 46,956,781.25 |
Employee benefits payable | 4,147,589.59 | 4,147,589.59 |
Taxes and fees payable | 38,825,770.24 | 38,825,770.24 |
Other payables | 141,767,461.40 | 141,767,461.40 |
Other current liabilities | 18,104,381.56 | 18,104,381.56 |
Deferred income | 807,082.92 | 807,082.92 |
Deferred tax liabilities | 50,824,231.26 | 0.00 |
Net Assets | 232,786,659.22 | 80,313,965.43 |
Less: Non-controlling interests | 93,272,841.29 | 32,283,763.77 |
Fair value | Book value | |
Net assets acquired | 139,513,817.93 | 48,030,201.66 |
Treasure Distillery
Fair value | Book value | |
Monetary funds | 62,824.85 | 62,824.85 |
Accounts receivable | 303,593.00 | 303,593.00 |
Other receivables | 224,723,400.00 | 224,723,400.00 |
Inventories | 162,938,624.00 | 28,256,221.73 |
Other current assets | 2,970.29 | 2,970.29 |
Fixed assets | 25,952,387.00 | 11,875,869.22 |
Intangible assets | 6,501,400.00 | 5,962,094.20 |
Short-term borrowings | 6,200,000.00 | 6,200,000.00 |
Taxes and fees payable | 16,882.41 | 16,882.41 |
Other payables | 39,729,273.01 | 39,729,273.01 |
Deferred tax liabilities | 37,324,556.46 | |
Net Assets | 337,214,487.26 | 225,240,817.87 |
Less: Non-controlling interests | 134,885,794.91 | 90,096,327.15 |
Net assets acquired | 202,328,692.35 | 135,144,490.72 |
6.2 Other changes
Jiuhao ChinaRail and Jiuan Electric were included in the Company’s scope of consolidation for thefirst time in the period as a result of incorporation. Waste Recycle was excluded from theCompany’s scope of consolidation in the period as a result of dissolution.Note 7 Interests in other entities
7.1 Interests in subsidiaries
7.1.1 General disclosure
Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
Direct | Indirect | |||||
GJ Sales | Bozhou, Anhui | Bozhou, Anhui | Trading | 100.00 | —— | Incorporation |
Longrui Glass | Bozhou, Anhui | Bozhou, Anhui | Production | 100.00 | —— | Incorporation |
Waste Recycle | Bozhou, Anhui | Bozhou, Anhui | Waste recycling | 100.00 | —— | Incorporation |
Jiuan Electric | Bozhou, Anhui | Bozhou, Anhui | Machinery production | 100.00 | —— | Incorporation |
Jinyunlai | Hefei, Anhui | Hefei, Anhui | Advertising | 100.00 | —— | Incorporation |
Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
Direct | Indirect | |||||
Ruisi Weier | Bozhou, Anhui | Bozhou, Anhui | R&D | 100.00 | —— | Incorporation |
Jinhao Hotel | Shanghai | Shanghai | Hotel management | 100.00 | —— | Business combination under common control |
GJ Guest House | Bozhou, Anhui | Bozhou, Anhui | Hotel operation | 100.00 | —— | Business combination under common control |
YQ Environment Protection | Bozhou, Anhui | Bozhou, Anhui | Sewage processing | 100.00 | —— | Incorporation |
GJ E-Commerce | Hefei, Anhui | Hefei, Anhui | E-commerce | 100.00 | —— | Incorporation |
Runan Xinke | Bozhou, Anhui | Bozhou, Anhui | Food testing | 100.00 | —— | Incorporation |
Jiudao Media | Hefei, Anhui | Hefei, Anhui | Advertising | 100.00 | —— | Incorporation |
HHL Distillery | Wuhan, Hubei | Wuhan, Hubei | Production | 51.00 | Business combination not under common control | |
HHL Xianning | Xianning, Hubei | Xianning, Hubei | Production | —— | 51.00 | Business combination not under common control |
HHL Suizhou | Suizhou, Hubei | Suizhou, Hubei | Production | —— | 51.00 | Business combination not under common control |
Junlou Culture | Wuhan, Hubei | Wuhan, Hubei | Advertising | —— | 51.00 | Business combination not under common control |
HHL Beverage | Xianning, Hubei | Xianning, Hubei | Production | —— | 51.00 | Incorporation |
Yashibo | Wuhan, Hubei | Wuhan, Hubei | R&D | —— | 51.00 | Incorporation |
Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
Direct | Indirect | |||||
Xinjia Testing | Xianning, Hubei | Xianning, Hubei | Food testing | —— | 51.00 | Incorporation |
Tianlong Jindi | Wuhan, Hubei | Wuhan, Hubei | Trading | —— | 51.00 | Business combination not under common control |
Xianning Junhe | Xianning, Hubei | Xianning, Hubei | Trading | —— | 51.00 | Business combination not under common control |
Junya Sales | Wuhan, Hubei | Wuhan, Hubei | Trading | —— | 51.00 | Incorporation |
Suizhou Junhe | Suizhou, Hubei | Suizhou, Hubei | Trading | —— | 51.00 | Incorporation |
Mingguang Distillery | Chuzhou, Anhui | Mingguang, Anhui | Production | 60.00 | Business combination not under common control | |
Tiancheng Sales | Chuzhou, Anhui | Mingguang, Anhui | Trading | 60.00 | Business combination not under common control | |
FY Xiaogangcun | Chuzhou, Anhui | Fengyang Anhui | Production | 42.00 | Business combination not under common control | |
Jiuhao ChinaRail | Bozhou, Anhui | Bozhou, Anhui | Construction | 52.00 | Incorporation | |
Zhenrui Construction | Bozhou, Anhui | Bozhou, Anhui | Construction | 52.00 | Incorporation | |
Treasure Distillery | Renhuai, Guizhou | Renhuai, Guizhou | Production | 60.00 | Business combination not under common control |
7.1.2 Significant partially owned subsidiaries
Subsidiary | Non-controlling shareholding % | Profit or loss attributable to minority shareholders for the period | Dividends declared for minority shareholders | Minority interest as of the statement date |
HHL Distillery | 49.00 | 81,338,863.48 | 486,726,322.76 |
7.1.3 Key Significant partially owned subsidiaries
Subsidiary | 31/12/2021 | |||||
Current assets | Non-current assets | Total | Current liabilities | Non-current liabilities | Total liabilities | |
HHL Distillery | 1,106,087,761.34 | 1,004,277,608.57 | 2,110,365,369.91 | 792,402,887.81 | 324,643,456.05 | 1,117,046,343.86 |
(Continue)
Subsidiary | 31/12/2020 | |||||
Current assets | Non-current assets | Total | Current liabilities | Non-current liabilities | Total liabilities | |
HHL Distillery | 633,542,317.24 | 868,332,173.16 | 1,501,874,490.40 | 482,603,067.57 | 191,592,294.97 | 674,195,362.54 |
(Continue)
Subsidiary | Y/e 31/12/2021 | |||
Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
HHL Distillery | 1,458,982,962.92 | 165,997,680.58 | 165,639,898.18 | 386,107,248.19 |
(Continue)
Subsidiary | Y/e 31/12/2020 | |||
Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
HHL Distillery | 516,045,801.88 | -13,649,114.81 | -13,649,114.81 | -22,001,852.09 |
7.2 Significant joint ventures and associates
The Company had no significant joint venture or associate.
Note 8 Risks associated with financial instrumentsRisks related to the financial instruments of the Company arise from the recognition of variousfinancial assets and financial liabilities during its operation, including credit risk, liquidity risk andmarket risk.Management of the Company is responsible for determining risk management objectives andpolicies related to financial instruments. Operational management is responsible for the daily riskmanagement through functional departments (e.g. credit management department of the
Company reviews each credit sale). Internal audit department is responsible for the dailysupervision of implementation of the risk management policies and procedures, and report theirfindings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies tominimize the risks without unduly affecting the competitiveness and resilience of the Company.
8.1 Credit risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because theother party of the financial instrument fails to fulfill its obligation. The credit risk of the Company isrelated to monetary funds, notes receivable, accounts receivables, other receivables and long-termreceivables. Credit risk of these financial assets is derived from the counterparty’s breach ofcontract. The maximum risk exposure is equal to the carrying amount of these financialinstruments.Monetary funds of the Company has lower credit risk, as they are mainly deposited in financialinstitutions such as commercial banks, of which the Company believes with higher reputation andfinancial position.Notes receivable held by the Company mainly comprise bank acceptance which have relativelyhigh liquidity. The Company has established necessary internal control policies that can ensure thesafety of the maintenance and usage of notes and such policies have been implemented effectively.The Company believes that notes receivable have low credit risk.Accounts receivable mainly arising from sales. The Company makes sales only to customers withadvanced credit worthiness and monitors accounts receivable on a continuous basis to ensure theoccurrence of significant bad debts. The maximum risk exposure brought by financial instrumentsis their book value. The Company believes that the credit risk is relatively low.
8.2 Liquidity risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement bydelivering cash or other financial assets. The Company is responsible for the capital managementof all of its subsidiaries, including short-term investment of cash surplus and dealing withforecasted cash demand by raising loans. The Company’s policy is to monitor the demand forshort-term and long-term floating capital and whether the requirement of loan contracts issatisfied so as to ensure to maintain adequate cash and cash equivalents.
8.3 Market risk
The market risk of a financial instrument refers to the risk on the fair value or future cash flows ofthe financial instrument brought by market factors. Market risk mainly comprises foreign exchangerisk and interest risk.
8.3.1 Foreign currency risk
Foreign currency risk of the Company mainly arise from foreign currency assets and liabilitiesdenominated in currency other than the Company’s functional currency. As the Company mainlyoperate in Mainland China with transactions mostly settled in CNY and very limited exportactivities, foreign currency risk is insignificant.
8.3.2 Interest risk
Interest risk refers to the risk on the fair value or future cash flows of a financial instrumentbrought by the change of market interest rate. Interest risk mainly arises from bank loans. As of thestatement date, the Company had no bank loan with a floating interest rate.
8.3.2 Other price risk
Investments held for trading were measured at fair value. As such, these investments are subjectto the risk brought by the change of security prices. The Company controls this risk to theacceptable level by utilising multiple investment mix.Note 9 Fair value disclosureThe inputs used in the fair value measurement in its entirety are to be classified in the level of thehierarchy in which 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 orliabilitiesLevel 2: Inputs for the assets or liabilities (other than those included in Level 1) that are eitherdirectly or indirectly observable.Level 3: Inputs are unobservable inputs for the assets or liabilities
9.1 Fair value of assets and liabilities measured by fair value as of the statement date
Fair value as of the statement date | ||||
Level 1 | Level 2 | Level 3 | Total | |
Continously measured by fair value | ||||
A. Financial assets held for trading | 2,661,103,876.68 | 2,661,103,876.68 | ||
a. FATPLs | 2,661,103,876.68 | 2,661,103,876.68 | ||
1. Debt instruments | - | |||
2. Structural financial products | 2,457,565,232.32 | 2,457,565,232.32 | ||
3. Investment in funds | - | 203,538,644.36 | 203,538,644.36 | |
B. FATOCIs | 54,542,418.50 | 545,204,103.42 | 599,746,521.92 | |
a. Receivables held for factoring | - | 545,204,103.42 | 545,204,103.42 | |
b. Other equity investments | 54,542,418.50 | 54,542,418.50 | ||
Total | 2,715,646,295.18 | 545,204,103.42 | 3,260,850,398.60 |
The fair value of financial instruments traded in an active market was based on quoted marketprices at the reporting date. The fair value of financial instruments not traded in an active marketwas determined by using valuation techniques. Specific valuation techniques used to value theabove financial instruments include discounted cash flow and market approach to comparablecompany model. Inputs in the valuation technique include risk-free interest rates, benchmarkinterest rates, exchange rates, credit spreads, liquidity premiums, discount for lack of liquidity.
9.2 Qualitative and quantitative information of key inputs and valuation methods applicable toLevel 2 financial instruments continuously measured by fair valueAs of the statement date, the Company’s Level 3 financial instruments comprised mainlyinvestment in funds and structural financial products. The fair value of investment in funds wasdetermined by the valuation offered by the asset management companies. The fair value ofstructural financial products were computed in accordance with the terms of the respectivecontracts.
9.3 Qualitative and quantitative information of key inputs and valuation methods applicable toLevel 3 financial instruments continuously measured by fair valueAs of the statement date, the Company’s Level 3 financial instruments comprised solelypre-mature notes receivable. Issuers of the notes had healthy credit worthiness. The fair value ofthese receivables as of the statement date was measured at the recoverable amount of thesereceivables as of the statement date, which was computed using the respective discount ratesoffered by banks for cashing.Note 10 Related partiesAn entity or individual is a related party to the Company if the entity or individual:
a. is controlled or jointly controlled by the Company;b. over which the Company has significant influence;c. controls or jointly controls the Company; ord. is subject to the same control or joint control over the Company.
10.1 Controlling shareholder of the Company
Place of registration | Nature of business | Registered capital | Shareholding in the Company in % | Voting right in the Company in % | |
GJ Group | Bozhou, Anhui | Production of beverage, construction materials, plastic products. | 1,000 million | 51.34 | 51.34 |
The Company’s ultimate controller is the State-owned Asset Management Commission of the
People's Government of Baozhou, Anhui
10.2 Subsidiaries
See Note 7 for details.
10.3 Joint ventures and associates
See Note 7 for details.
10.4 Other related parties of the Company
Relationship to the Company | |
Anhui Ruifuxiang Food Co., Ltd. (Ruifuxiang Food) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Ruijing Catering Co., Ltd. (Ruijing Catering) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Haochidian Catering Co., Ltd. (Haochidian Catering) | Controlled by the Company's controlling shareholder or ultimate controller |
Shanghai Beihai Hotel Co., Ltd. (Beihai Hotel) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Ruijing Shanglv (Group) Co., Ltd. (RJSL Group) | Controlled by the Company's controlling shareholder or ultimate controller |
Bozhou Guest House Co., Ltd. (Bozhou Guest House) | Controlled by the Company's controlling shareholder or ultimate controller |
Dongfang Ruijing Enterprise Investment Co., Ltd. (Dongfang Ruijing) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Hengxin Pawnshop Co., Ltd. (Hengxin Pawnshop) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Ruijing Shanglv (Group) Co., Ltd. Hefei Gujing Holiday Inn (RJSL Holiday Inn) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Gujing Hotel Development Co., Ltd. (GJ Hotel Development) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Ruixin Pawnshop Co., Ltd. (Ruixin Pawnshop) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Zhongxin Financial Leasing Co., Ltd. (Zhongxin Financial Leasing) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Huixin Financial Investment Group Co., Ltd. (Huixin Financial Investment) | Controlled by the Company's controlling shareholder or ultimate controller |
Hefei Longxin Corporate Management Advisory Co., Ltd. (Longxin Advisory) | Controlled by the Company's controlling shareholder or ultimate controller |
Bozhou Anxin Small Loan Co., Ltd. (Anxin Small Loan) | Controlled by the Company's controlling shareholder or ultimate controller |
Dazhongyuan Wine Valley Culture Travel Development Co., Ltd. (Dazhongyuan) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Youxin Financing Guarantee Co, Ltd. (Youxin Guarantee) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Lixin E-Commerce Co., Ltd. (Lixin E-Commerce) | Controlled by the Company's controlling shareholder or ultimate controller |
Bozhou Gujing Huuishenglou Catering Co., Ltd. | Controlled by the Company's controlling |
Relationship to the Company | |
(GJ Huishenglou Catering) | shareholder or ultimate controller |
Anhui Gujing Health Industry Co., Ltd. (Health Industry) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Lejiu Jiayuan Travel Management Co., Ltd. (Lejiu Jiayuan) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Shenglong Trading Co., Ltd. (Longsheng Trading) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Gujing International Development Co., Ltd. (GJ International) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Lvyuan Ecological Agriculture Development Co., Ltd. (Ecological Agriculture) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Jiuan Construction Management Advisory Co., Ltd. (Jiuan Advisory) | Controlled by the Company's controlling shareholder or ultimate controller |
Nanjing Suning Property Development Co., Ltd. (Suning Property Development) | Controlled by ZHANG Guiping, the non-executive director of the Company |
10.5 Related party transactions
10.5.1 Goods and services
Purchase of goods and services
Related party | Transaction | Y/e 31/12/2021 | Y/e 31/12/2020 |
Haochidian Catering | Purchase of materials and services | 16,752,135.81 | 22,586,183.13 |
GJ Group | Houses and buildings | - | 9,608,025.00 |
Bozhou Guest House | Receiving catering and accommodation | 5,276,946.76 | 6,540,711.38 |
GJ Huishenglou Catering | Receiving catering and accommodation | 1,697,688.00 | 2,309,426.00 |
Haochidian Catering | Receiving catering and accommodation | 2,800,831.40 | 1,419,119.70 |
GJ Hotel Development | Receiving catering and accommodation | 1,195,369.24 | 1,124,539.94 |
RJSL Group | Purchase of materials | 96,890.00 | 623,966.45 |
RJSL Group | Receiving catering and accommodation | 658,611.03 | 24,820.00 |
RJSL Holiday Inn | Receiving catering and accommodation | 113,524.00 | 405,725.64 |
RJSL Holiday Inn | Purchase of materials and services | 871,614.88 | 653,730.07 |
Dazhongyuan | Purchase of materials and services | - | 215,018.51 |
Health Industry | Purchase of materials and services | - | 191,893.81 |
Related party | Transaction | Y/e 31/12/2021 | Y/e 31/12/2020 |
GJ International | Receiving services | - | 103,773.58 |
Lejiu Jiayuan | Purchase of materials | - | 99,546.43 |
GJ Group | Purchase of materials | - | 56,952.00 |
Youxin Guarantee | Receiving services | 49,504.95 | 47,169.81 |
Ruifuxiang Food | Purchase of materials | - | 31,130.76 |
Ecological Agriculture | Purchase of materials and services | - | 19,562.48 |
GJ Hotel Development | Purchase of materials and services | 2,735.85 | 3,413.21 |
Haochidian Catering | Purchase of assets | 135,398.23 | - |
Jiuan Advisory | Advisory and assurance | 3,427,517.43 | - |
Total | —— | 33,078,767.58 | 46,064,707.90 |
Sales of goods and rendering of services
Related party | Transaction | Y/e 31/12/2021 | Y/e 31/12/2020 |
Longsheng Trading | Sales of distilled wine | 1,506,569.89 | 1,456,440.72 |
RJSL Group | Sales of distilled wine | 1,125,056.17 | 649,884.96 |
GJ Hotel Development | Provision of utilities | 290,336.98 | - |
GJ Group | Provision of catering and accommodation | 279,597.00 | 184,013.00 |
GJ Group | Sales of small materials | 223,523.11 | 94,174.07 |
GJ Hotel Development | Sales of distilled wine | 146,484.95 | 122,893.76 |
RJSL Group | Provision of catering and accommodation | 121,295.14 | 70,217.96 |
RJSL Holiday Inn | Sales of distilled wine | 81,451.34 | 30,265.48 |
Bozhou Guest House | Sales of distilled wine | 55,274.34 | 74,628.33 |
Huixin Financial Investment | Sales of distilled wine | 38,500.88 | 39,836.29 |
GJ Huishenglou Catering | Sales of distilled wine | 30,106.20 | 77,893.81 |
Anxin Small Loan | Sales of distilled wine | 19,656.64 | 15,330.09 |
Haochidian Catering | Sales of distilled wine | 19,115.04 | 71,283.20 |
Zhongxin Financial Leasing | Sales of distilled wine | 11,572.57 | 14,939.82 |
Hengxin Pawnshop | Sales of distilled wine | 11,405.32 | 11,207.09 |
Jiuan Advisory | Sales of distilled wine | 8,968.14 | - |
Beihai Hotel | Sales of distilled wine | 8,601.77 | 17,203.54 |
Lejiu Jiayuan | Sales of distilled wine | 8,235.39 | 8,261.95 |
Longsheng Trading | Provision of catering and accommodation | 7,084.00 | 14,470.00 |
Lejiu Jiayuan | Provision of utilities | 6,545.75 | 56,413.97 |
Related party | Transaction | Y/e 31/12/2021 | Y/e 31/12/2020 |
Ruixin Pawnshop | Sales of distilled wine | 6,443.36 | 6,614.16 |
Youxin Guarantee | Sales of distilled wine | 3,082.30 | 4,983.18 |
Haochidian Catering | Provision of services | 2,547.17 | - |
Bozhou Guest House | Provision of services | 707.55 | - |
Jiuan Advisory | Provision of catering and accommodation | 2,230.00 | - |
Longxin Advisory | Sales of distilled wine | 1,194.69 | - |
Jiuan Advisory | Sales of small materials | 778.68 | - |
GJ International | Sales of distilled wine | - | 1,649,076.57 |
Health Industry | Provision of services | - | 232,430.19 |
Bozhou Ruineng Thermal Electricity Co., Ltd. | Sales of distilled wine | - | 74,150.45 |
Dazhongyuan | Sales of distilled wine | - | 44,674.42 |
Lejiu Jiayuan | Provision of services | - | 7,620.00 |
Lixin E-Commerce | Sales of distilled wine | - | 7,461.93 |
GJ International | Sales of small materials | - | 5,437.89 |
Dazhongyuan | Provision of services | - | 2,889.91 |
GJ International | Provision of catering and accommodation | - | 2,820.00 |
Dazhongyuan | Sales of small materials | - | 2,631.13 |
Health Industry | Sales of small materials | - | 1,314.60 |
Health Industry | Provision of catering and accommodation | - | 1,250.00 |
Dazhongyuan | Provision of catering and accommodation | - | 420.00 |
Health Industry | Sales of distilled wine | -797,129.56 | 5,254,234.43 |
Total | —— | 3,219,234.81 | 10,307,366.90 |
10.5.2 Leases
The Company as the Lessor
Lessee | Leased item | Rental income Y/e 31/12/2021 | Rental income Y/e 31/12/2020 |
GJ Hotel Development | Houses and buildings | 1,379,517.44 | 670,730.21 |
Total | —— | 1,379,517.44 | 670,730.21 |
The Company as the Lessee
Lessor | Leased item | Rental cost Y/e 31/12/2021 | Rental cost Y/e 31/12/2020 |
GJ Group | Houses and buildings | 1,197,761.12 | 1,850,265.66 |
Suning Property Development | Houses and buildings | 2,050,000.00 | 1,583,333.32 |
Total | 3,247,761.12 | 3,433,598.98 |
10.5.3 Key management remuneration
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Key management remuneration | 18.53 million | 14.18 million |
10.6 Related party balances - Liabilities
Related party | 31/12/2021 | 31/12/2020 | |
Contract liabilities | Health Industry | 617,959.73 | 658,339.50 |
Contract liabilities | RJSL Group | 92.04 | 342,484.96 |
Contract liabilities | GJ International | 164,675.75 | 186,083.60 |
Contract liabilities | GJ Huishenglou Catering | 15,300.00 | |
Accounts payable | GJ Group | 4,804,012.50 | |
Accounts payable | Haochidian Catering | 2,479,131.69 | |
Other payables | GJ Group | 1,050,004.75 | |
Other payables | RJSL Group | 115,533.60 | 114,660.00 |
Other payables | GJ Hotel Development | 50,000.00 | 100,000.00 |
Note 11 Commitments and contingencies
11.1 Significant commitments
In accordance with the agreement entered into by the Company, Wuhan Tianlong InvestmentGroup Co., Ltd, and YAN Hongye on the transfer of the shareholding in HHL Distillery, the Companymade a commitment for the tax inclusive revenue performance of HHL Distillery as follow:
2017 | 2018 | 2019 | 2020 | 2021 | |
Committed tax inclusive revenue | 805.00 million | 1,006.25 million | 1,308.13 million | 1,700.56 million | 2,040.68 million |
The Company also committed that in the five consecutive years following the year in which theownership transaction is completed, the net profit ratio of HHL Distillery for each year shall not beless than 11.00%. If in any of the 5 consecutive year, the audited net profit ratio of HHL Distillery isless than 11.00%, the Company shall compensate the sellers the difference between thecommitted net profit and the actual net profit. If the audited net profit ratio for any 2 consecutiveyears with the 5-year period is lower than 11.00%, the sellers are entitled to repurchase allshareholding sold to the Company at the repurchase price of CNY 816.00 million.The operating performance of HHL Distillery for 2020, as reported by its financial statements forthat period, is presented as below:
Actual | Commited | Difference | % of Committed performance | |
Revenue (tax inclusive) | 583.13 million | 1,700.56 million | -1,117.43 million | 34.29% |
Net profit | -11.72 million | 165.54 million | -177.26 million | Loss |
Net profit ratio | -2.27% | 11.00% | -13.27% | Loss |
The operation of HHL Distillery was significant impacted by the COVID-19 pandemic. Upon mutualnegotiation, the performance commitment was altered with 2020 excluded from the performanceassessment period.
1) Committed before tax revenue for the assessment period
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
Committed tax inclusive revenue | 805.00 million | 1,006.25 million | 1,308.13 million | Excluded | 1,700.56 million | 2,040.68 million |
2) The committed net profit ratio, net profit and estimated profit available for distribution asagreed by the orginal agreement for 2020 and 2021 become applicable for 2021 and 2022respectively.
3) No party to the agreement shall have the right to demand reimbursement, compensation orother liabilities to any other party to the agreement on the basis of the performance of HHLDistillery for 2020.The operating performance of HHL Distillery for 2021, as reported by its financial statements forthat period, is presented as below:
Actual | Commited | Difference | % of Committed performance | |
Revenue (tax inclusive) | 1,707.01 million | 1,700.56 million | 6.45 million | 100.38% |
Net profit | 171.06 million | 165.54 million | 5.52 million | 103.33% |
Net profit ratio | 11.32% | 11.00% | 0.32% | 102.91% |
11.2 Contingencies
No contingency as of the statement date was required for disclosure.Note 12 Subsequent eventsExcept for the matters described in Note 11, as of the date of these financial statements, nosubsequent event is required for disclosure.Note 13 Other significant matters – Segment reportingIn accordance with the Company’s internal management and reporting structure, segmentreporting is not applicable.Note 14 Notes to the separate financial statements of the Company
14.1 Accounts receivable
14.1.1 Disclosure by age group
Age group | 31/12/2021 | 31/12/2020 |
Within 1 year | 494,976.27 |
Age group | 31/12/2021 | 31/12/2020 |
T/o: Within 6 months | 494,976.27 | |
T/o: 7 months to 1 years | - | |
1 to 2 years | - | |
2 to 3 years | - | |
Over 3 years | - | |
Gross | 494,976.27 | |
Less: Impairment allowance | 0.00 | |
Net | 494,976.27 |
14.1.2 Dislcosure by method of impairment
31/12/2021 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % | ||
Individual assessment | - | - | - | - | - |
Portfolio assessment | - | - | - | - | - |
T/o: Group 1 | - | - | - | - | - |
T/o: Group 2 | - | - | - | - | - |
Total | - | - | - | - | - |
(Continued)
31/12/2020 | |||||
Gross | Impairment allowance | Net | |||
Amount | % of total | Amount | Impairment % | ||
Individual assessment | - | - | - | - | - |
Portfolio assessment | 494,976.27 | 100.00 | - | - | 494,976.27 |
T/o: Group 1 | 494,976.27 | 100.00 | - | - | 494,976.27 |
T/o: Group 2 | - | - | - | - | - |
Total | 494,976.27 | 100.00 | - | - | 494,976.27 |
Group 1 Receivables as of 31 December 2020
31/12/2020 | |||
Gross | Impairment allowance | Impairment % | |
Related parties within the scope of consolidation | 494,976.27 | - | - |
Total | 494,976.27 | - | - |
Group 2 Receivables had no balance as of 31 December 2020.
14.1.3 Impairment movement for the period was not applicable for accounts receivable.
14.1.4 No account receivable as of the statement date.
14.2 Other receivables
14.2.1 General disclosure
31/12/2021 | 31/12/2020 | |
Interests receivable | - | |
Dividends receivable | - | |
Other receivables | 290,480,736.49 | 141,378,010.40 |
Total | 290,480,736.49 | 141,378,010.40 |
14.2.2 Other receivables
(1) Disclosure by age group
Age group | 31/12/2021 | 31/12/2020 |
Within 1 year | 289,632,069.08 | 140,143,887.64 |
T/o: Within 6 months | 289,213,314.37 | 139,805,782.01 |
T/o: 7 months to 1 years | 418,754.71 | 338,105.63 |
1 to 2 years | 763,921.03 | 1,322,306.20 |
2 to 3 years | 797,227.20 | 244,089.00 |
Over 3 years | 39,383,584.88 | 41,333,188.41 |
Gross | 330,576,802.19 | 183,043,471.25 |
Less: Impairment allowance | 40,096,065.70 | 41,665,460.85 |
Net | 290,480,736.49 | 141,378,010.40 |
(2) Disclosure by nature
31/12/2021 | 31/12/2020 | |
Due from related party within the scope of consolidation | 267,559,576.83 | 133,696,578.89 |
Security investments | 38,857,584.88 | 40,807,394.41 |
Margin deposits | 3,330,794.09 | 1,879,230.29 |
Rentals and utilities receivable | 472,547.89 | 1,275,238.93 |
Others | 20,356,298.50 | 5,385,028.73 |
Total | 330,576,802.19 | 183,043,471.25 |
(3) Disclosure by method of impairment
A. Disclosure by the 3-stage m odel as of the statement date
Gross | Impairment allowance | Net | |
Stage 1 | 291,719,217.31 | 1,238,480.82 | 290,480,736.49 |
Stage 2 | - | ||
Stage 3 | 38,857,584.88 | 38,857,584.88 | - |
Total | 330,576,802.19 | 40,096,065.70 | 290,480,736.49 |
Details of Stage 1 receivables as of the statement date
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | ||||
Portfolio assessment | 291,719,217.31 | 0.42 | 1,238,480.82 | 290,480,736.49 |
T/o: Group 1 | 267,559,576.83 | - | 267,559,576.83 | |
T/o: Group 2 | 24,159,640.48 | 5.13 | 1,238,480.82 | 22,921,159.66 |
Total | 291,719,217.31 | 0.42 | 1,238,480.82 | 290,480,736.49 |
Details of Group 2 receivables as of the statement date
Age group | 31/12/2021 | ||
Gross | Impairment allowance | Impairment % | |
Within 1 year | 22,072,492.25 | 237,475.12 | 1.08 |
T/o: Within 6 months | 21,653,737.54 | 216,537.38 | 1.00 |
T/o: 7 months to 1 years | 418,754.71 | 20,937.74 | 5.00 |
1 to 2 years | 763,921.03 | 76,392.10 | 10.00 |
2 to 3 years | 797,227.20 | 398,613.60 | 50.00 |
Over 3 years | 526,000.00 | 526,000.00 | 100.00 |
Total | 24,159,640.48 | 1,238,480.82 | 5.13 |
Details of Stage 3 receivables as of the statement date
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | 38,857,584.88 | 100.00 | 38,857,584.88 | - |
Portfolio assessment | ||||
T/o: Group 1 | ||||
T/o: Group 2 | ||||
Total | 38,857,584.88 | 100.00 | 38,857,584.88 | - |
Details of receivables subject to individual assessment as of the statement date
31/12/2021 | ||||
Gross | Impairment allowance | Impairment % | Reason for impairment | |
Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | In bankruptcy |
Jianqiao Securities Co., Ltd. | 9,890,690.47 | 9,890,690.47 | 100.00 | In bankruptcy |
Total | 38,857,584.88 | 38,857,584.88 | 100.00 |
B. Disclosure by the 3-stage model as of 31 December 2020
Gross | Impairment allowance | Net | |
Stage 1 | 142,236,076.84 | 858,066.44 | 141,378,010.40 |
Stage 2 | - | - | - |
Gross | Impairment allowance | Net | |
Stage 3 | 40,807,394.41 | 40,807,394.41 | - |
Total | 183,043,471.25 | 41,665,460.85 | 141,378,010.40 |
Details of Stage 1 receivables as of 31 December 2020
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | - | - | - | - |
Portfolio assessment | 142,236,076.84 | 0.60 | 858,066.44 | 141,378,010.40 |
T/o: Group 1 | 133,696,578.89 | - | - | 133,696,578.89 |
T/o: Group 2 | 8,539,497.95 | 10.05 | 858,066.44 | 7,681,431.51 |
Total | 142,236,076.84 | 0.60 | 858,066.44 | 141,378,010.40 |
Details of Group 2 receivables as of 31 December 2020
Age group | 31/12/2020 | ||
Gross | Impairment allowance | Impairment % | |
Within 1 year | 6,447,308.75 | 77,997.31 | 1.21 |
T/o: Within 6 months | 6,109,203.12 | 61,092.03 | 1.00 |
T/o: 7 months to 1 years | 338,105.63 | 16,905.28 | 5.00 |
1 to 2 years | 1,322,306.20 | 132,230.63 | 10.00 |
2 to 3 years | 244,089.00 | 122,044.50 | 50.00 |
Over 3 years | 525,794.00 | 525,794.00 | 100.00 |
Total | 8,539,497.95 | 858,066.44 | 10.05 |
Details of Stage 3 receivables as of 31 December 2020
Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
Individual assessment | 40,807,394.41 | 100.00 | 40,807,394.41 | 0.00 |
Portfolio assessment | - | - | - | - |
T/o: Group 1 | - | - | - | - |
T/o: Group 2 | - | - | - | - |
Total | 40,807,394.41 | 100.00 | 40,807,394.41 | 0.00 |
Details of receivables subject to individual assessment as of 31 December 2020
31/12/2020 | ||||
Gross | Impairment allowance | Impairment % | Reason for impairment | |
Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | In bankruptcy |
Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | In bankruptcy |
Total | 40,807,394.41 | 40,807,394.41 | 100.00 | - |
(4) Movement of impairment allowance
31/12/2020 | Movement | 31/12/2021 | |||
Provision | Reversal or recovery | Release or write-off | |||
Individual assessment | 40,807,394.41 | 1,949,809.53 | 38,857,584.88 | ||
Portfolio assessment | 858,066.44 | 380,414.38 | 1,238,480.82 | ||
Total | 41,665,460.85 | 380,414.38 | 1,949,809.53 | 40,096,065.70 |
(5) Top-five other receivables as of the statement date
Debtor | Nature | 31/12/2021 | Age group | % of total gross other receivables | Impairment allowance |
Top 1 | Due from related party within the scope of consolidation | 97,207,352.12 | Within 6 months | 29.41 | - |
Top 2 | Due from related party within the scope of consolidation | 90,000,000.00 | Within 6 months | 27.23 | - |
Top 3 | Due from related party within the scope of consolidation | 78,961,561.36 | Within 6 months | 23.89 | - |
Top 4 | Security investment | 28,966,894.41 | Over 3 years | 8.76 | 28,966,894.41 |
Top 5 | Other | 18,255,567.00 | Within 6 months | 5.52 | 182,555.67 |
Total | 313,391,374.89 | 94.81 | 29,149,450.08 |
14.3 Long-term equity investments
14.3.1 General disclosure
31/12/2021 | 31/12/2020 | |||||
Gross | Impairment allowance | Impairment % | Gross | Impairment allowance | Impairment % | |
Investment in subsidiaries | 1,547,415,641.38 | - | 1,547,415,641.38 | 1,118,213,665.32 | - | 1,118,213,665.32 |
Total | 1,547,415,641.38 | - | 1,547,415,641.38 | 1,118,213,665.32 | - | 1,118,213,665.32 |
14.3.2 Investment in subsidiaries
Subsidiary | 31/12/2020 | Increase | Decrease | 31/12/2021 | Impairment recognised in the period | Cumulative impairment as of 31/12/2021 |
GJ Sales | 68,949,286.89 | - | - | 68,949,286.89 | - | - |
Longrui Glass | 85,267,453.06 | - | 85,267,453.06 | - | - | |
Jinhao Hotel | 49,906,854.63 | - | - | 49,906,854.63 | - | - |
Subsidiary | 31/12/2020 | Increase | Decrease | 31/12/2021 | Impairment recognised in the period | Cumulative impairment as of 31/12/2021 |
GJ Guest House | 648,646.80 | - | - | 648,646.80 | - | - |
Ruisi Weier | 40,000,000.00 | - | - | 40,000,000.00 | - | - |
YQ Environment Protection | 16,000,000.00 | - | - | 16,000,000.00 | ||
GJ E-Commerce | 5,000,000.00 | - | - | 5,000,000.00 | - | - |
Zhenrui Construction | 10,000,000.00 | - | 10,000,000.00 | - | - | - |
HHL Distillery | 816,000,000.00 | - | - | 816,000,000.00 | - | - |
Jinyunlai | 15,000,000.00 | - | - | 15,000,000.00 | - | - |
Waste Recycle | 1,441,423.94 | - | 1,441,423.94 | - | - | - |
Runan Xinke | 10,000,000.00 | - | - | 10,000,000.00 | - | - |
Jiuan Electric | 10,000,000.00 | - | 10,000,000.00 | - | - | |
Mingguang Distillery | 200,200,000.00 | 200,200,000.00 | ||||
Treasure Distillery | 224,723,400.00 | 224,723,400.00 | ||||
Jiuhao ChinaRail | 5,720,000.00 | 5,720,000.00 | ||||
Total | 1,118,213,665.32 | 440,643,400.00 | 11,441,423.94 | 1,547,415,641.38 | - | - |
14.4 Revenue and cost of sales
Y/e 31/12/2021 | Y/e 31/12/2020 | |||
Revenue | Cost of sales | Revenue | Cost of sales | |
Primary operation | 6,756,444,863.19 | 2,623,827,961.16 | 5,806,187,227.99 | 2,359,384,925.04 |
Other operation | 105,482,310.37 | 61,315,130.77 | 73,180,067.75 | 45,385,582.08 |
Total | 6,861,927,173.56 | 2,685,143,091.93 | 5,879,367,295.74 | 2,404,770,507.12 |
14.5 Investment income
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Investment income from long-term equity investments at cost | 737,875,260.92 | 707,487,107.56 |
Gain from disposal of long-term equity investments | 2,670,112.66 | |
Gain from disposal of FVTPLs | 8,072,295.21 | - |
Y/e 31/12/2021 | Y/e 31/12/2020 | |
Gain from holding of debt instruments | - | |
Gain from holding of other debt like investments | - | |
Gain from disposal of FVTOCIs | -22,496,045.46 | -34,762,044.63 |
Gain from holding of financial assets held for trading | 14,393,316.21 | 30,570,930.80 |
Others | 410,450.22 | - |
Total | 740,925,389.76 | 703,295,993.73 |
Note 15 Supplementary information
15.1 Non-recurring gain or loss
Y/e 31/12/2021 | Y/e 31/12/2020 | Note | |
Gain or loss from disposal of non-current assets | -5,976,856.98 | -3,692,640.09 | |
Government grants included in current profit or loss (excluding government grants closely associated with the Company’s operation and granted in accordance with national standard quota or quantity | 55,274,502.42 | 48,617,479.37 | |
Gain or loss from changes in fair value of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities and gain from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt-like investments, excluding instruments held for effective hedging associated with the Company’s operation | 34,792,433.45 | 21,490,043.05 | |
Reversal of impairment allowance for accounts receivable previously recognised upon individual assessment | 1,949,809.53 | 43,554.94 | |
Non-operating income and non-operating expenses not included in above categories | 77,025,619.76 | 44,100,616.61 | |
Other items falling into the definition of non-recurring gain or loss | - | ||
Total non-recurring gain or loss | 163,065,508.18 | 110,559,053.88 | |
Less: Impact on income tax | 40,243,159.73 | 27,033,395.22 | |
Total non-recurring gain or loss (net of income tax) | 11,167,403.88 | 1,960,716.42 | |
T/o: Attributable to non-controlling interests | 111,654,944.57 | 81,564,942.24 |
15.2 Return on net assets (RONA) and earnings per share (EPS)
15.2.1 Year ened 31 December 2021
Net profit | Weighted average RONA in % | EPS | |
Basic EPS | Diluted EPS | ||
Net profit attributable to shareholders of the Company | 21.25 | 4.45 | 4.45 |
Net profit post adjustment for non-recurring gain or loss attributable to shareholders of the Company | 20.22 | 4.24 | 4.24 |
15.2.2 Year ened 31 December 2020
Net profit | Weighted average RONA in % | EPS | |
Basic EPS | Diluted EPS | ||
Net profit attributable to shareholders of the Company | 19.53 | 3.68 | 3.68 |
Net profit post adjustment for non-recurring gain or loss attributable to shareholders of the Company | 18.68 | 3.52 | 3.52 |
Anhui Gujing Distillery Company Limited
29 April 2022
Chairman of the Board:
(Liang Jinhui)Anhui Gujing Distillery Company Limited
29 April 2022