Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 2 ~
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, Ye Changqing, the Chief Accountant, and ZhuJiafeng, the head of the financial department (equivalent to financial manager)hereby guarantee that the financial statements carried in this Report 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.The Board has approved a final dividend plan as follows: based on the Company’stotal shares on 31 December 2018, a cash dividend of RMB15.00 (tax inclusive) per 10shares is to be distributed to the shareholders, with no bonus issue from either profitor 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.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 3 ~
Part I Important Notes, Table of Contents and Definitions 2Part II Corporate Information and Key Financial Information 5Part III Business Summary 9Part IV Management Discussion and Analysis 10Part V Significant Events 28Part VI Share Changes and Shareholder Information 41Part VII Preferred Shares 47Part VIII Directors, Supervisors, Senior Management and Staff 48Part IX Corporate Governance 56Part X Corporate Bonds 62Part XI Financial Statements 63Part XII Documents Available for Reference 127
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 4 ~
| Term | Definition |
| The “Company”, “ Gu Jing” or “we” | Anhui Gujing Distillery Company Limited inclusive of its consolidated subsidiaries, except where the context otherwise requires |
| 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. |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 5 ~
Part II Corporate Information and Key Financial Information
I Corporate Information
| Stock name | Gujing Distillery, Gujing Distillery-B |
| Stock code | 000596, 200596 |
| 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 |
| Office address | Gujing Town, Bozhou City, Anhui Province, P.R.China |
| Zip code | 236820 |
| Company website | http://www.gujing.com |
| Email address | gjzqb@gujing.com.cn |
| Board Secretary | Securities Representative | |
| Name | Ye Changqing | 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 |
| Newspapers designated by the Company for information disclosure | China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK) |
| 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 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 6 ~
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 |
| Name | Ruihua Certified Public Accountants LLP |
| Office address | 9 F, West Tower, China Overseas Property Plaza, Building No. 7, Courtyard No. 8, Xi Binhe Road, Yong Ding Men, Dong Cheng District, Beijing, China |
| Accountants writing signatures | Ou Changxian and Gao Qiang |
| 2018 | 2017 | 2018-over-2017 change (%) | 2016 | |
| Operating revenue (RMB) | 8,686,140,336.89 | 6,968,325,048.55 | 24.65% | 6,017,143,660.56 |
| Net profit attributable to the listed company’s shareholders (RMB) | 1,695,231,643.05 | 1,148,740,644.93 | 47.57% | 829,630,063.38 |
| Net profit attributable to the listed company’s shareholders before exceptional items (RMB) | 1,638,204,454.34 | 1,069,457,368.70 | 53.18% | 792,534,098.54 |
| Net cash generated from/used in operating activities (RMB) | 1,440,881,285.95 | 930,914,712.78 | 54.78% | 1,183,231,808.06 |
| Basic earnings per share (RMB/share) | 3.37 | 2.28 | 47.81% | 1.65 |
| Diluted earnings per share (RMB/share) | 3.37 | 2.28 | 47.81% | 1.65 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 7 ~
| Weighted average return on equity (%) | 24.03% | 19.09% | 4.94% | 15.88% |
| 31 December 2018 | 31 December 2017 | Change of 31 December 2018 over 31 December 2017 (%) | 31 December 2016 | |
| Total assets (RMB) | 12,509,928,449.72 | 10,152,862,119.05 | 23.22% | 8,736,205,153.86 |
| Equity attributable to the listed company’s shareholders (RMB) | 7,601,984,024.58 | 6,459,078,378.38 | 17.69% | 5,595,121,383.96 |
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 2,559,879,006.93 | 2,223,204,888.40 | 1,979,015,719.48 | 1,924,040,722.08 |
| Net profit attributable to the listed company’s shareholders | 581,079,212.12 | 311,343,125.52 | 363,302,909.34 | 439,506,396.07 |
| Net profit attributable to the listed company’s shareholders before exceptional items | 568,229,870.99 | 304,118,603.13 | 347,165,716.83 | 418,690,263.39 |
| Net cash generated from/used in operating activities | 193,972,491.77 | 474,974,399.84 | 1,868,512,023.38 | -1,096,577,629.04 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 8 ~
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2018 | 2017 | 2016 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -10,060,019.55 | -10,659,063.45 | -6,319,619.72 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 36,041,674.45 | 34,257,968.39 | 25,336,275.56 | |
| Gain or loss on fair-value changes in trading 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) | 18,653,228.80 | 54,544,637.44 | 16,263,956.97 | |
| Reversed portion of impairment allowance for accounts receivable which are tested individually for impairment | 0.00 | 491,989.18 | 0.00 | |
| Non-operating income and expense other than the above | 32,375,890.89 | 27,140,455.30 | 14,343,655.95 | |
| Less: Income tax effects | 18,150,068.72 | 25,366,619.70 | 12,229,198.63 | |
| Non-controlling interests effects (net of tax) | 1,833,517.16 | 1,126,090.93 | 299,105.29 | |
| Total | 57,027,188.71 | 79,283,276.23 | 37,095,964.84 | -- |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 9 ~
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
Is the Company subject to any industry-specific disclosure requirements?No.The Company primarily produces and markets liquor and spirits.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 13
th
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 recent years, China’s top liquor companies have basically finished adjusting their teams, strategies, products, etc., and areexperiencing a continuous, strong recovery relying on their superior brand influence and product quality. The big picture for theliquor industry has taken shape. Regional small and medium liquor producers are in face of a reshuffle, while regionally famousliquor brands are busy dealing with competition from both larger and smaller fellow companies. As such, the liquor industry hasentered a new normal.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Not applicable.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
No material changes occurred to the Company’s core competitiveness in the Reporting Period.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 10 ~
Part IV Management Discussion and Analysis
I Overview
In 2018, under the guidance of President Xi Jinping’s thought on socialism with Chinese characteristics for a new era and the spirit ofthe 19
th
National Congress of the Communist Party of China, as well as upholding the values of “Be Honest, Offer Quality Spirits, BeStronger and Be Helpful to the Society”, the Company effectively implemented its “Distilled Spirits 5.0” strategy and “Five-StarOperational Capability” strategy. As a result, its various operating objectives have been successfully fulfilled and its operationalquality is improving.For 2018, the Company recorded operating revenue of RMB8.686 billion, up 24.65% compared to 2017; a net profit attributable tothe Company as the parent of RMB1.695 billion, rising 47.57% from the year earlier; earnings per share of RMB3.37, 47.81% higherthan 2017; and net cash generated from operating activities of RMB1.441 billion, going up 54.78% on a year-on-year basis.I. Overall Business Situation of the Company within the Reporting Period(I) The marketing and brand construction has been advancing further1. Two products interact and brand recognition has been improved continuously. The Company continued to follow a strategy of"setting a higher market positioning and meanwhile maintaining a higher quality from the international market to the domesticmarket, and focusing on both international and domestic market", the products of Gulou brand showed their debut in internationalhigh-end activities, walked into Singapore in a global patrol activity where media coverage was intensified, its brand IP was mouldedand the value of Gujing Distillery brand was assessed to be as high as RMB101.865 billion.2. Market construction has been propelled steadily. The Company concentrated its energy in precise market positioning and added itsresources continuously centering round improving its dynamic sales, removing its stock, deepening its channels, stabilizing price andcultivating consumption. It endeavored to attract big and strong merchants to build a community of common development for awin-win result between merchants and the manufacturer and speed up the nationwide investment promotion layout. The Companyspared no effort driving the Golden Triangle Strategy amid Hubei, Henan and Anhui, optimizing and adjusting its organizationstructure and the manufacturer-merchant cooperation mode, optimizing its resource allocation, and improving accuracy of capitalinput and use.3. Market penetration of the products has been improved all-roundly. It put new version of Aged Original Liquor SeriesZhongguoxiang and Gu 20 on the market and launched new series products of Xiaoleizi Liquor Series and Yellow Crane Tower andso on. It upgraded quality of original liquor products all-roundly, highlighted their taste and satisfied the market demands with thefine liquors.(II) The management tools and methods have been perfected and innovation level has been improved1. With emphasis laid on key projects, it drove mechanism innovation, process rebuilding and efficiency improvement. It plannedearlier, optimized the layout of its production line and its inventory structure, and implemented a new mode of "strategic cooperationplus bid-inviting purchase" all-roundly.2. It optimized and improved its standardization system and pushed forward its technical, management and operation standardizationcontinuously. It has taken many measures to improve its food safety and quality guarantee capability all-roundly, build a riskprevention and control system and escort quality safety of its products in the whole process. It has made fruitful quality innovationresults, and four technical innovation results reached world-leading level, seven technical innovation results won scientific andtechnological awards at home, and it has applied for 47 national patents and 4 of its scientific and research results have beentransformed in the Company.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 11 ~
3. Gathering talents and wisdom, its transformation of development momentum has been accelerated. It has implemented theconstruction of "two pools" and "two channels" deeply, deepened its dynamic talent use and assessment mechanism, implementedpersonnel and post interaction and optimization. It has enhanced building of its course system continuously and conducted talenttraining and cultivation all-roundly and purposefully at many levels.(III) Informatization construction has been propelled continuously and its business support capability has been enhancedcontinuouslyIt has been sticking to high standard and enforceability, selected to cooperate with world-class information system integrators andimplementation service providers and planned a digital enterprise information system prudently. It has been driving BPMinformatization construction and has built a user-centered uniform office portal, a uniform mobile portal and perfected its one-stopbusiness application platform. Its monitoring upgrade and renovation has been completed and achieved full coverage of key areasand key knots.(IV) It has safeguarded environment protection bottom-line and created a new situation of safety and environment protection workThe Company has strengthened check and control of potential hazards and propelled implementation of the responsibilities of safeproduction entities. It has examined and sorted strictly and implemented environment protection and control projects. Safe productionof the Company realized "four nones", its major potential safety rectification work has been pushed forward steadily and indices ofexternally discharged pollutants have been up to the standard steadily.(V) It has emphasized its political construction and strengthened its anti-corruption education1. The Company has been sticking to and enhancing the party's leadership, four-aspect awareness, four-aspect self-confidence andintensifying party-and-management-in-one. It has continued enhancing the construction of its party committee, further operating itsparty construction quality management system in a standardized and scientific manner, it has conducted its education foranti-corruption and occupational warning, and it has strengthened its political and ideological work all-roundly.2. It has conducted its political warning education deeply and strengthened cultivation of party spirit of party members and partymanagerial personnel, continued promoting and carrying forward the Nie Guangrong Spirit, breaking through idleness, laziness,reluctance, ruffian and pride, and insisted on advocating merit, morality, diligence, performance and integrity.(VI) Within the reporting period, the following pressure and shortcomings exist in the Company1. The whole industry has entered an age of famous liquor brands competing with each other, and the cost and difficulty forcompetition will be greater.2. The brand is not strong, and its market exploration still depends on traditional channels.3. The mechanism obstacle and too many rules and regulations restrain all-round release of its vitality.
II Core Business Analysis
1. Overview
See relevant contents of “I Overview” in “Management Discussion and Analysis”, herein.
2. Revenue and Cost Analysis(1) Breakdown of Operating Revenue
Unit: RMB
| 2018 | 2017 | Change (%) |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 12 ~
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 8,686,140,336.89 | 100% | 6,968,325,048.55 | 100% | 24.65% |
| By operating division | |||||
| Manufacturing | 8,686,140,336.89 | 100.00% | 6,968,325,048.55 | 100.00% | 24.65% |
| By product category | |||||
| Distilled spirits | 8,519,862,666.82 | 98.09% | 6,822,053,599.85 | 97.90% | 24.89% |
| Hotel services | 86,807,124.18 | 1.00% | 84,238,705.54 | 1.21% | 3.05% |
| Other | 79,470,545.89 | 0.91% | 62,032,743.16 | 0.89% | 28.11% |
| By operating segment | |||||
| North China | 436,508,213.35 | 5.03% | 330,003,884.22 | 4.74% | 32.27% |
| Central China | 7,867,207,092.57 | 90.57% | 6,270,100,660.83 | 89.98% | 25.47% |
| South China | 367,741,836.37 | 4.23% | 363,895,263.98 | 5.22% | 1.06% |
| Overseas | 14,683,194.60 | 0.17% | 4,325,239.52 | 0.06% | 239.48% |
| 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 | 8,686,140,336.89 | 1,932,064,837.65 | 77.76% | 24.65% | 17.62% | 1.33% |
| By product category | ||||||
| Distilled spirits | 8,519,862,666.82 | 1,871,743,548.74 | 78.03% | 24.89% | 18.03% | 1.28% |
| Hotel services | 86,807,124.18 | 38,413,320.64 | 55.75% | 3.05% | 7.52% | -1.84% |
| Other | 79,470,545.89 | 21,907,968.27 | 72.43% | 28.11% | 4.29% | 6.29% |
| By operating segment | ||||||
| North China | 436,508,213.35 | 162,547,416.58 | 62.76% | 32.27% | 27.25% | 1.47% |
| Central China | 7,867,207,092.57 | 1,647,900,501.51 | 79.05% | 25.47% | 19.48% | 1.05% |
| South China | 367,741,836.37 | 116,078,619.93 | 68.43% | 1.06% | -13.82% | 5.44% |
| Overseas | 14,683,194.60 | 5,538,299.63 | 62.28% | 239.48% | 497.30% | -16.28% |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 13 ~
(3) Whether Revenue from Physical Sales is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2018 | 2017 | Change (%) |
| Distilled spirits brewage | Sales volume | Ton | 82,818.70 | 84,034.04 | -1.45% |
| Output | Ton | 83,254.25 | 81,512.19 | 2.14% | |
| Inventory | Ton | 10,507.81 | 10,072.26 | 4.32% |
| Operating division | Item | 2018 | 2017 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Food manufacturing | Direct materials | 1,465,613,415.05 | 75.86% | 1,206,208,660.68 | 73.43% | 21.51% |
| Food manufacturing | Direct labor cost | 183,657,819.79 | 9.51% | 168,690,378.21 | 10.27% | 8.87% |
| Food manufacturing | Manufacturing expenses | 134,698,484.31 | 6.97% | 128,448,515.45 | 7.82% | 4.87% |
| Food manufacturing | Fuels | 87,773,829.59 | 4.54% | 82,508,511.22 | 5.02% | 6.38% |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 14 ~
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 1,926,682,447.91 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 22.18% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 816,876,292.40 | 9.40% |
| 2 | Customer B | 671,236,086.48 | 7.73% |
| 3 | Customer C | 177,047,832.64 | 2.04% |
| 4 | Customer D | 157,259,614.57 | 1.81% |
| 5 | Customer E | 104,262,621.82 | 1.20% |
| Total | -- | 1,926,682,447.91 | 22.18% |
| Total purchases from top five suppliers (RMB) | 571,734,042.90 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 30.55% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 0.00% |
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 241,572,847.33 | 12.91% |
| 2 | Supplier B | 157,379,332.85 | 8.41% |
| 3 | Supplier C | 65,735,684.57 | 3.51% |
| 4 | Supplier D | 62,861,266.38 | 3.36% |
| 5 | Supplier E | 44,184,911.77 | 2.36% |
| Total | -- | 571,734,042.90 | 30.55% |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 15 ~
3. Expense
Unit: RMB
| 2018 | 2017 | Change (%) | Reason for any significant change | |
| Selling expense | 2,682,535,305.26 | 2,170,081,383.54 | 23.61% | |
| Administrative expense | 644,997,046.65 | 591,058,209.64 | 9.13% | |
| Finance costs | -51,572,629.73 | -25,927,285.82 | -98.91% | Adjustment of investment strategies |
| R&D expense | 23,966,766.04 | 12,494,749.46 | 91.81% | Increase in R&D inputs for the Reporting Period |
| 2018 | 2017 | Change (%) | |
| Number of R&D personnel | 968 | 620 | 56.13% |
| R&D personnel as % of total employees | 11.63% | 7.76% | 3.87% |
| R&D expense (RMB) | 224,585,370.62 | 220,278,527.92 | 1.96% |
| R&D expense as % of operating revenue | 2.59% | 3.16% | -0.57% |
| Capitalized R&D expense (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D expense as % of total R&D expense | 0.00% | 0.00% | 0.00% |
| Item | 2018 | 2017 | Change (%) |
| Subtotal of cash generated from operating activities | 9,950,615,569.29 | 7,472,916,271.43 | 33.16% |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 16 ~
| Subtotal of cash used in operating activities | 8,509,734,283.34 | 6,542,001,558.65 | 30.08% |
| Net cash generated from/used in operating activities | 1,440,881,285.95 | 930,914,712.78 | 54.78% |
| Subtotal of cash generated from investing activities | 3,530,649,713.30 | 5,637,814,765.40 | -37.38% |
| Subtotal of cash used in investing activities | 4,656,442,207.19 | 5,770,329,877.85 | -19.30% |
| Net cash generated from/used in investing activities | -1,125,792,493.89 | -132,515,112.45 | -749.56% |
| Subtotal of cash used in financing activities | 503,616,553.34 | 302,160,000.00 | 66.67% |
| Net cash generated from/used in financing activities | -503,616,553.34 | -302,160,000.00 | -66.67% |
| Net increase in cash and cash equivalents | -188,527,761.28 | 496,239,600.33 | -137.99% |
| 31 December 2018 | 31 December 2017 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary capital | 1,705,760,865.12 | 13.64% | 1,484,088,626.40 | 14.62% | -0.98% | |
| Accounts | 29,748,068.74 | 0.24% | 22,466,143.06 | 0.22% | 0.02% | |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 17 ~
| receivable | ||||||
| Inventories | 2,407,306,664.86 | 19.24% | 2,064,130,297.51 | 20.33% | -1.09% | |
| Investment property | 5,027,228.53 | 0.04% | 5,343,777.33 | 0.05% | -0.01% | |
| Long-term equity investments | 4,900,000.00 | 0.04% | 0.00 | 0.00% | 0.04% | |
| Fixed assets | 1,763,988,530.56 | 14.10% | 1,792,254,178.56 | 17.65% | -3.55% | |
| Construction in progress | 93,320,557.56 | 0.75% | 54,496,798.56 | 0.54% | 0.21% |
| 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 | Ending amount |
| Financial assets | |||||||
| 1. Financial assets at fair value through profit or loss (excluding derivative financial assets) | 99,800.76 | -161,541.19 | 0.00 | 0.00 | 1,545,690.44 | 861,057.05 | 622,892.96 |
| 2. Available-for-sale financial assets | 517,086,347.91 | 0.00 | -37,399,293.75 | 0.00 | 0.00 | 273,293,946.70 | 206,393,107.46 |
| Subtotal of financial assets | 517,186,148.67 | -161,541.19 | -37,399,293.75 | 0.00 | 1,545,690.44 | 274,155,003.75 | 207,016,000.42 |
| Total of the above | 517,186,148.67 | -161,541.19 | -37,399,293.75 | 0.00 | 1,545,690.44 | 274,155,003.75 | 207,016,000.42 |
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 18 ~
3. Restricted Asset Rights as at the Period-End
| Item | Ending carrying value (RMB) | Reason for restriction |
| Bank deposits | 870,000,000.00 | Structural fixed time deposits not available in advance and due in three months |
| Other current assets | 18,000,000.00 | Pledged for opening bank’s acceptance bill |
| Notes receivable | 30,236,900.00 | Pledged for opening bank’s acceptance bill |
| Other monetary capital | 200,000.00 | Opening bill pledge bank deposit receipt |
| Total | 918,436,900.00 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 19 ~
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
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
4. Financial Investments
(1) Securities 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 |
| Domestic/overseas stock | 000001 | PAYH | 70,317,243.98 | Fair value method | 106,943,823.70 | -25,087,573.68 | 81,856,250.02 | 11,586,297.23 | 0.00 | Available-for-sale financial asset | Self-owned funds |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 20 ~
| Domestic/overseas stock | 601988 | ZGYH | 44,385,674.20 | Fair value method | 71,313,507.00 | -6,466,716.00 | 64,846,791.00 | 6,017,812.54 | 0.00 | Available-for-sale financial asset | Self-owned funds | ||
| Funds | GFNSTYR 1st E Securities Investment Funds | 150,000,000.00 | Fair value method | 127,154,958.08 | -564,052.40 | 126,590,905.68 | 8,841,868.22 | 0.00 | Available-for-sale financial asset | Self-owned funds | |||
| Funds | ZXYSDP 1st Assets Management Plan | 200,000,000.00 | Fair value method | 211,674,059.13 | -5,280,951.67 | 0.00 | 10,883,000.00 | 206,393,107.46 | Available-for-sale financial asset | Self-owned funds | |||
| Other ending holding securities investments | -- | -- | -- | ||||||||||
| Total | 464,702,918.18 | -- | 517,086,347.91 | 0.00 | -37,399,293.75 | 0.00 | 273,293,946.70 | 37,328,977.99 | 206,393,107.46 | -- | -- | ||
| Disclosure date of the announcement about the board’s consent for the securities investment | The Company held the 6th Meeting of the 8th Board of Directors on 27 August 2018, 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 | ||||||||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 21 ~
| 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 | 29 March 2018 | 8 January 2019 | 5,000 | 49,970 | 36,980 | 17,990 | 2.37% | 60.27 | |
| Total | 0.00 | -- | -- | 5,000 | 49,970 | 36,980 | 17,990 | 2.37% | 60.27 | ||||
| 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, credit risk, operational risk, legal risk, etc.) | The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System. | ||||||||||||
| 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 | ||||||||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 22 ~
| 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. |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 23 ~
VII Major Subsidiaries
√ Applicable □ Not applicableMajor fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
| 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 | 3,093,871,785.99 | 140,938,134.68 | 7,597,867,645.42 | 1,157,643,625.54 | 814,144,514.42 |
| Anhui Longrui Glass Co., Ltd | Subsidiary | Manufacture and sale of glass products | 86,660,268.98 | 289,315,723.90 | 243,090,486.00 | 230,615,365.63 | 44,064,402.64 | 37,251,729.78 |
| Yellow Crane Tower Wine Industry Co., Ltd | Subsidiary | Production and sales of distilled spirit | 400,000,000.00 | 926,907,099.60 | 579,184,692.84 | 866,368,765.24 | 130,155,107.42 | 99,302,371.57 |
| Shanghai Gujing | Subsidiary | Hotel management | 54,000,000.00 | 202,284,926.94 | 78,654,052.34 | 78,518,073.84 | 15,104,828.31 | 10,155,476.95 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 24 ~
| Jinhao Hotel Management Co., Ltd. | and house lease |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 25 ~
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
(I) Development Prospect of the Industry the Company is in1. The industry returns to rationality and growth speed slows downThe liquor and spirits industry is polarized continuously, and the famous liquor and spirits enterprises represented by Moutai willgrow continuously, but their growth paces will slow down and return to a rational growth. On the other hand, thanks to rise of cost ofmedium and small sized liquor and spirits enterprises, squeezing of the market and low-end influence on brands will worsen theirbusiness environment further.2. The trend of consumption upgrade and industrial concentration remain unchangedOn the background of consumption upgrade, a structural change is undergoing for consumption demands, consumption is polarizingand boosting new consumers becomes the key. The supply-side reform of liquor and spirits industry is being deepened, higher rate ofquality to price for famous liquor and spirit will be provided, and adapting to the trend of consumption upgrade becomes a commonchoice of enterprises. At the same time, consumption upgrade is also sinking to cities of lower levels, return of population to cities oflower levels becomes a trend, and consumption upgrade of tier-3 and tier-4 cities is accelerating. Moreover, famous liquor and spiritsenterprises all over the country further squeeze local enterprises through means of price, direct competition and merger andacquisition between enterprises, and industrial concentration is further intensified.3. The industry enters a famous liquor competition stage and capital input will be intensifiedIn 2019, with growth speed of the industry slowing down, competition among famous liquor and spirits brands will be keener, andhigher requirements are put forth for brand recognition and channel influence of enterprises. Many liquor enterprises conduct delicatemanagement for channels, attach importance to terminals, and enlarge capital input and improve their brand recognition to ensuretheir growth.4. With construction of digitalized enterprises being accelerated, the liquor and spirits industry is exploring new retail and newscenario applicationsIn recent years, with rapid development of internet technologies covering IOT, mega-data and cloud computing, all walks of life areaccelerating their construction of digitalized enterprises and they are exploring new retail and new scenarios constantly. While theinternet is changing the life style and consumption habit of people gradually, it is replacing the traditional offline store marketingmode gradually, and becoming a must road for transformation and upgrade of many industries. The development mode of "internet +wine" has become a key point of the layout of liquor enterprises and distributors. With advent of the times of mass consumption,consumers pay more attention to performance versus cost ratio, their brand awareness is enhancing, consumption distributiondemonstrates characteristics of being wide, scattered and of many levels, and consumption habit becomes diversified. In the future, itbecomes an inevitable trend for development of the liquor and spirits industry that the enterprises should satisfy the morepersonalized consumption demands of users through digitalized marketing and innovation.(II) Development Strategy of the Company1. Firmly boost "Strategy 5.0, Five-Star Operation” StrategyComprehensively 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
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 26 ~
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of theenterprise.3. Firmly create "Talent Highland" strategyIntensify 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.4. Firmly boost the strategy of integration of Party governanceComprehensively strengthen Party discipline, continuously strengthen"four-consciousness", and strengthen political leadership. Needto take firm political stand, strengthen political orientation, practicallystrengthen"four-consciousness". Thoroughly study andimplement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism withChinese Characteristics for a New Era, and guide all the Party members to enhance their thought and action consciousness tomaintain the core.(III) Operating Revenue Plan of the Company in 2019In 2019, the Company plans to achieve an operating revenue of RMB10.226 billion, rising 17.74% compared with that of last year;and achieve a total profit of RMB2.515 billion, rising 6.19% compared with that of last year.(IV) Operating Risk of the Company1. The adverse effect of the systematic risk in macro-economic environment on the development of the industry and the Company.2. Impact of industrial policy adjustment and change on the sustainable development of the Company.3. Impact of the change of consumption behaviors and habits on the consumption crowds and trend replacement of distilled spirits.(V) Operating Measures1. MarketingCentering round the brand rejuvenation project of Gujing Distillery, promote market balance and lay a solid foundation of the base,and speed up nationalization pace of Gujing Distillery. In terms of brand construction, set a higher market positioning and meanwhilemaintain a higher quality from the international market to the domestic market, strengthen the promotion at home and abroad, andapply internet thoughts to integrate brand promotion systematically. Centering round the project of emerging customers, strengtheninvestment promotion at home and abroad, do well the management, training and service work of customers and development andmaintenance of new customers, and push forward globalization of liquor and spirits. Centering round consumption scenarization,build first-rate cultural and consumption experience halls, improve middle-end experience, online and offline integration, enhanceinteraction and intelligence of experience shops, enhance loyalty of members and realize close-loop marketing.2. Product ManagementContinuously boost intelligent and green brewing process, enhance information, scientific and systematic management of productquality, lay a solid foundation for quality management. And continuously strengthen the research on heath factors in distilled spirits.Continue to deeply boost product, technology and operation standardization and lay a solid foundation for the Company toimplement automation and intellectualization.3. Management InnovationCentering round the users, build a digitalized Gujing. With information linking the management system, consolidate managementcontexts, optimize business efficiency and build an intelligent management enterprise. Implement integration of industry and finance,transform its financial management mode and build a close-loop financial sharing platform. With the key laid on pushing forwardconstruction of ERP system, build an integrated enterprise management platform and achieve concentrated management, control andoperation. Speed up pushing forward digitalized marketing projects of sales Company, pushing forward digitalized transformation ofmarketing, improve the system's support for core business, speed up optimization of information architecture and e-commerceadvancement. Explore internal innovation incentive mechanisms actively, build a tiny enterprise platform and a profit making centerand arouse the passion and motivation of staff members in their business starting and innovation.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 27 ~
4. Human ResourceOptimize construction of the talent team, deepen the construction of "artisan pool", "elite pool", "management channel" and"technical channel", optimize assessment of various levels and personnel management work, implement the flexible employmentmechanism and improve the multi-level talent cultivation system, further improve the assessment and appraisal system and incentiveand restraint mechanism for various kinds of talents.5. Corporate Cultural ConstructionImplementing the party construction principle of "grasp party construction work and promote development centering round businessoperation" and the core values of "being honest, offering quality liquor, being stronger and being helpful to the society", deepen partyconstruction work and construction of corporate culture, and play the guiding and promotion role of party construction and culture incorporate development. Conduct the education of anti-corruption and occupational warning, enhance ideological and political workall-roundly and build a firm ideological defense. Guided by party construction and motivated by red army's history, concentrateenergy for promoting development.In 2019, the board of directors of the Company will go on carrying out the spirit of the 19th National Congress of the CommunistParty of China, guided by the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, with "Fivemodernization" and "Six projects" as the construction drawings, advance Liquor and Spirits 5.0 Strategy, improve the enterprisemanagement level further, stimulate motive force of talents, go ahead steadily and surely to ensure transformation and upgrade of theenterprise, achieve a continuous, steady, sound and high-quality development and work hard for achieving a new digitalized,globalized and legalized Gujing.
X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
□ Applicable √ Not applicable
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 28 ~
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revisedin the Reporting Period:
√ Applicable □ Not applicableThe 2017 Annual General Meeting held on 22 May 2018 reviewed and approved the Company’s Interest Distribution Scheme in2017 that based on the total shares of 503,600,000 of the Company on 31 December 2017, cash dividends was distributed atRMB10.00 per 10 shares (tax inclusive), and the total cash dividends distributed was RMB503,600,000.00 (tax inclusive).
| 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 |
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) | Total cash dividends (including those in other forms) (D) | D as % of B (%) |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 29 ~
| statements for the year (B) | |||||||
| 2018 | 755,400,000.00 | 1,695,231,643.05 | 44.56% | 0.00 | 0.00% | 755,400,000.00 | 44.56% |
| 2017 | 503,600,000.00 | 1,148,740,644.93 | 43.84% | 0.00 | 0.00% | 503,600,000.00 | 43.84% |
| 2016 | 302,160,000.00 | 829,630,063.38 | 36.42% | 0.00 | 0.00% | 302,160,000.00 | 36.42% |
| Bonus issue from capital reserves for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 15.00 |
| Bonus issue from profit for every 10 shares (share) | 0 |
| Total shares as the basis for the final dividend plan (share) | 503,600,000 |
| Total cash dividends (RMB) (tax inclusive) | 755,400,000.00 |
| Distributable profits (RMB) | 5,162,354,747.41 |
| Percentage of cash dividends to the total distributed profits | 100% |
| Particulars about the cash dividends | |
| The minimum proportion of cash dividend to this profit distribution should be 40% when the Company distributed the profits under the condition that the Company was in mature stage with large capital cost. | |
| Details of final dividend plan for the Reporting Period | |
| The Company planned to distribute the dividends of RMB755,400,000.00 at RMB15.00 (tax inclusive) per 10 shares based on the total share capital at period-end of 503,600,000 shares. There is no bonus issue from profit and bonus issue from capital reserves in the Reporting Period. | |
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment | Term of commitment | Fulfillment |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 30 ~
| making | ||||||
| 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 RMB1,006.25 million (tax inclusive) and the net profit margin would be not lower than 11.00% in 2018. | 29 April 2016 | Y2017-Y2021 | Fulfilled in 2018 |
| Fulfilled on time | Yes | |||||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | N/A | |||||
| Period | Y2017 | Y2018 | Y2019 | Y2020 | Y2021 |
| Committed operating revenue (tax inclusive) | 80,500.00 | 100,625.00 | 130,812.50 | 170,056.25 | 204,067.50 |
| Item | Actual amount | Promised amount | Difference | Completion rate |
| Operating revenue (tax | 100,696.87 | 100,625.00 | 71.87 | 100.07% |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 31 ~
| inclusive) | ||||
| Net profit | 9,930.24 | 9,514.84 | 415.40 | 104.37% |
| Net profit ratio | 11.46% | 11.00% | 0.46% | 104.19% |
| No. | Contents and reasons | Name and amount of item materially influenced |
| 1 | (1) As for the balance sheet, “note receivable” and “accounts receivable” were incorporated into “notes receivable and accounts receivable”; “interest receivable” and “dividends receivable” were incorporated into “other receivables”; “liquidation of fixed assets” was incorporated into “fixed assets”; “engineering materials” was incorporated into “construction in progress”; “notes payable” and “accounts payable” were incorporated into “notes payable and accounts payable”; “interest payable” and “dividends payable” were incorporated into “other payables”; “specific payables” was incorporated into “long-term payables”. The comparative data were adjusted correspondingly. | The “note receivable” and “accounts receivable” were incorporated into “notes receivable and accounts receivable”, the combined amount of the Reporting Period was RMB1,377,175,880.08 and that of last year was RMB743,077,269.84; “interest receivable” and “dividends receivable” were incorporated into “other receivables”, the combine amount of the Reporting Period was RMB43,342,878.22 and that of last year was RMB29,273,284.22; “engineering materials” was incorporated into “construction in progress”, the combined amount of the Reporting Period was RMB93,320,557.56 and that of last year was RMB54,496,798.56; “notes payable” and “accounts payable” were incorporated into “notes payable and accounts payable”, the combined amount of the Reporting Period was |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 32 ~
| No. | Contents and reasons | Name and amount of item materially influenced |
| RMB834,156,012.31 and that of last year was RMB636,365,039.83; “interest payable” and “dividends payable” were incorporated into “other payables”, the combined amount of the Reporting Period was RMB1,192,020,147.82 and that of last year was RMB1,032,543,553.34. | ||
| 2 | (2) As for the income statement, the item of “R&D expense” was added and filled in with data of R&D expense originally classified into “administrative expense”; items of “of which: interest expense” and “interest income” were added under the item of “finance costs”. The comparative data were adjusted correspondingly. | The “administrative expense” for the Reporting Period and for last year were respectively decreased RMB23,966,766.04 and RMB12,494,749.46 which were reclassified into “R&D expense”. |
| Name of the domestic independent auditor | Ruihua CPAs (LLP) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 160 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 6 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Ou Changxian, Gao Qiang |
| How many consecutive years the certified public accountants have provided audit service for the Company | It is the first year for both Mr. Ou Changxian and Mr. Gao Qiang to provide audit service for the Company |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 33 ~
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.□ Yes √ NoIndependent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicableThe Company engaged Ruihua CPAs (LLP) as the internal control auditor in 2018.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XII Major Legal Matters
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XIII Punishments and Rectifications
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicableNo such cases in the Reporting Period.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 34 ~
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicableNo such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicableNo such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicableNo such cases in the Reporting Period.
5. Other Major Related-Party Transactions
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicableNo such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicableNo such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicableNo such cases in the Reporting Period.
2. Major guarantees
□ Applicable √ Not applicableNo such cases in the Reporting Period.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 35 ~
3. Cash Entrusted to Other Entities for Management(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicableOverview of cash entrusted for wealth management during the Reporting Period
Unit: RMB’0,000
| Specific type | Capital resources | Amount incurred | Undue Balance | Overdue unrecovered amount |
| Trust financial products | Self-owned funds | 125,000 | 30,000 | 0.00 |
| Bank financial products | Self-owned funds | 237,000 | 224,000 | 0.00 |
| Broker financial products | Self-owned funds | 41,000 | 0.00 | 0.00 |
| Others | Self-owned funds | 51,708 | 37,990 | 0.00 |
| Total | 454,708 | 291,990 | 0.00 | |
| 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 |
| CITIC Wings Asset Management Company Limited | Limited Liability Company | Fund | 20,000 | Self-owned funds | Purchasing new shares offline, products with fixed earnings, reverse repurchase of national debt, | 1.2% of products’ net value and 20% of excess earnings | 7.00% | 1,088.30 | N/A | Yes | Yes |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 36 ~
| and etc. | ||||||||||||||
| Total | 20,000 | -- | -- | -- | -- | -- | -- | 1,088.30 | -- | -- | -- | -- |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 37 ~
③ A student aid activity of "loving-care Gujing passes on true love" was conducted. The Company sent 556 books and 144 sets ofsports articles to the children of Bali Village Primary School, Dali Primary School, Yanglou Village Primary School and WumaVillage Primary School on the Children's Day.
(3) Subsequent Plans
① Learn the important discourse on poverty alleviation, and ensure political stand. General Party Secretary Xi Jinping's importantdiscourse on poverty alleviation work is both an ideological weapon and an action guide. The party organizations of all levels of theCompany shall work out a study plan carefully, strengthen the recognition of party members and management personnel on povertyalleviation work, and put the poverty alleviation work as a major political task, a top livelihood project and a matter of primaryimportance.② Know about targeted poverty alleviation movement and report and pass it on well. Carry out the requirements of theOrganizational Department of the Municipal Committee and the Municipal Poverty Alleviation Bureau, unite under the leadership ofheads and fulfill the poverty alleviation work all-roundly.③ Absorb aspiring youths in poverty and enlarge employment poverty alleviation and relief. Connect to three positioned assistanceand support villages and two stationed villages actively, absorb aspiring youths in poverty or children of households in poverty towork in the Company, and widen the income increase channels of households in poverty.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protectionauthorities.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 | 32.80mg/L 47.15mg/L 72.11mg/L | ≦100mg/L | 151.55t | 155.05t | Naught |
| Anbui Gujing Distillery Co., Ltd. | NH3-N | Directly discharge | 3 | Gujing plant Zhangji plant Headquarter plant | 2.27mg/L 4.54mg/L 7.43mg/L | ≦10mg/L | 14.55t | 15.53t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Smoke | Organized discharge through chimney | 3 | Gujing plant Zhangji plant | 26.86mg/m? 57.58mg/m? 40.39mg/m? | ≦80mg/m? | 38t | -- | Naught |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 38 ~
| Headquarter plant | |||||||||
| Anbui Gujing Distillery Co., Ltd. | Sulfur Dioxide | Organized discharge through chimney | 3 | Gujing plant Zhangji plant Headquarter plant | 208.53mg/m? 198.51mg/m? 193.01mg/m? | ≦400mg/m? | 198.2t | -- | Naught |
| Anbui Gujing Distillery Co., Ltd. | Nitrogen oxide | Organized discharge through chimney | 3 | Gujing plant Zhangji plant Headquarter plant | 213.94mg/m? 237.34mg/m? 215.58mg/m? | ≦400mg/m? | 217.2t | -- | Naught |
| Anhui Longrui Glass Co., Ltd | Smoke | Organized discharge through chimney | 3 | No. 1 furnace No. 2 furnace No. 3 furnace | 41.76mg/m? 32.62mg/m? 37.60mg/m? | ≦200mg/m? | 10.18t | -- | Naught |
| Anhui Longrui Glass Co., Ltd | Sulfur Dioxide | Organized discharge through chimney | 3 | No. 1 furnace No. 2 furnace No. 3 furnace | 56.8mg/m? 149.27mg/m? 134.21mg/m? | ≦850mg/m? | 33.86t | -- | Naught |
| Anhui Longrui Glass Co., Ltd | Nitrogen oxide | Organized discharge through chimney | 3 | No. 1 furnace No. 2 furnace No. 3 furnace | 395.18mg/m? 409.07mg/m? 255.98mg/m? | ≦700mg/m? | 89.64t | -- | Naught |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 39 ~
（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 2300 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 ZhangjiPlant 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, waste gas is discharged through the 80-meter-tall exhaust funnel after the waste gas treatment is up to thestandard, and discharge of flue gas meets the requirements for coal-fired boiler in Table 1 of GB13271-2014 Emission Standard ofAir Pollutants for Industrial Kiln and Furnace. In June, 2018, a super-low discharge renovation project was started, and the process ofcloth-bag dust removal (original)+Limestone-Wet flue gas Desulfurization (renovated) +SNCR Denitrification by non-catalyticreduction (original) + SCR Denitrificationby catalytic reduction (newly added) + Wet electrostatic precipitator (newly added) hasbeen adopted, and it has passed the environment assessment and approval of the Municipal Environment Protection Bureau on 2August 2018, and it is now being renovated.(2) A coal-to-gas project has been started for the thermal power station of Zhangji Plant under Anhui Gujing Distillery CompanyLimited, and it is being renovated now, and the original boiler runs normally. The process of cloth-bag dust removal +Desulfurizationin limestone furnace+SNCR Denitrification by non-catalytic reduction has been adopted, waste gas is discharged through the45-meter-tall exhaust funnel after the waste gas treatment is up to the standard, and discharge of flue gas meets the requirements forcoal-fired boiler in Table 1 of GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.（3）No.2 furnace of Anhui Longrui Glass Co., Ltd has been stopped, No.2 and No.3 furnaces have completed coal-to-gas work andare running stably. SCR Denitrification by catalytic reduction has been adopted, waste gas is discharged through the 45-meter-tallexhaust funnel after the waste gas treatment is up to the standard, and discharge of flue gas meets the requirements in GB9078-1996Emission Standard of Air Pollutants for Boiler.In 2018, the environment protection facilities of Anhui Gujing Distillery Company Limited and its subsidiaries ran normally ingeneral, main pollutants can achieve up-to-standard discharge, environment information is opened to the public normally, and theyhave performed their social responsibilities 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 | The technical renovation project of automatic 3-D fermentation intelligent brewing workroom | EIA report form | 28 March 2018 | BHB [2018] No. 18 |
| 2 | The technical upgrade and renovation project of boiler's flue gas super-low emission | EIA report form | 2 August 2018 | BHB [2018] No. 49 |
| 3 | The in-depth treatment and renovation project for sewage | EIA report form | 27 August 2018 | BHB [2018] No. 48 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 40 ~
| treatment station in Zhangji Plant area | ||||
| 4 | The automatic technical renovation project for intelligent logistic and warehousing | EIA registration form | 24 October 2018 | 201834160200000803 |
| 5 | The sewage treatment station peculiar smell control project | EIA registration form | 22 November 2018 | 201834160200000857 |
| 6 | The boiler's coal-to-gas project in Zhangji Plant area of Anhui Gujing Distillery Company Limited | EIA registration form | 22 November 2018 | 201834160200000858 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 41 ~
Part VI Share Changes and Shareholder Information
I. 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 | 0 | 0.00% | 0 | 0.00% | |||||
| II. Non-restricted shares | 503,600,000 | 100.00% | 503,600,000 | 100.00% | |||||
| 1 RMB ordinary shares | 383,600,000 | 76.17% | 383,600,000 | 76.17% | |||||
| 2 Domestically listed foreign shares | 120,000,000 | 23.83% | 120,000,000 | 23.83% | |||||
| III. Total shares | 503,600,000 | 100.00% | 503,600,000 | 100.00% | |||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 42 ~
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
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 ordinary shareholders | 29,761 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 20,097 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | 0 | |||||||
| 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 or frozen | |||||||
| Status | Shares | |||||||||||||
| ANHUI GUJING GROUP COMPANY LIMITED | State-owned legal person | 53.89% | 271,404,022 | 271,404,022 | In pledge | 114,000,000 | ||||||||
| NORGES BANK | Foreign legal person | 2.58% | 12,975,637 | 12,975,637 | ||||||||||
| GAOLING | Foreign legal | 2.47% | 12,446,408 | 12,446,408 | ||||||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 43 ~
| FUND,L.P. | person | |||||||
| CHINA INT'L CAPITAL CORP HONG KONG SECURITIES LTD | Foreign legal person | 1.59% | 7,990,369 | 7,990,369 | ||||
| AGRICULTURAL BANK OF CHINA- E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | Other | 1.49% | 7,485,278 | 7,485,278 | ||||
| UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | Foreign legal person | 1.41% | 7,096,361 | 7,096,361 | ||||
| CENTRAL HUIJIN ASSET MANAGEMENT CO., LTD. | State-owned legal person | 1.30% | 6,543,600 | 6,543,600 | ||||
| GREENWOODS CHINA ALPHA MASTER FUND | Foreign legal person | 1.12% | 5,657,150 | 5,657,150 | ||||
| UBS (LUX) EQUITY FUND - GREATER CHINA (USD) | Foreign legal person | 0.84% | 4,214,618 | 4,214,618 | ||||
| HONG KONG SECURITIES CLEARING COMPANY LTD. | Foreign legal person | 0.82% | 4,129,038 | 4,129,038 | ||||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder due to rights issue (if any) (see note 3) | N/A | |||||||
| 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 connected party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in | |||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 44 ~
| Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are connected 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 non-restricted shareholders | |||
| Name of shareholder | Non-restricted shares held at the period-end | Shares by type | |
| Type | Shares | ||
| ANHUI GUJING GROUP COMPANY LIMITED | 271,404,022 | RMB ordinary share | 271,404,022 |
| NORGES BANK | 12,975,637 | Domestically listed foreign stock | 12,975,637 |
| GAOLING FUND,L.P. | 12,446,408 | Domestically listed foreign stock | 12,446,408 |
| CHINA INT'L CAPITAL CORP HONG KONG SECURITIES LTD | 7,990,369 | Domestically listed foreign stock | 7,990,369 |
| AGRICULTURAL BANK OF CHINA- E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | 7,485,278 | RMB ordinary share | 7,485,278 |
| UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | 7,096,361 | Domestically listed foreign stock | 7,096,361 |
| CENTRAL HUIJIN ASSET MANAGEMENT CO., LTD. | 6,543,600 | RMB ordinary share | 6,543,600 |
| GREENWOODS CHINA ALPHA MASTER FUND | 5,657,150 | Domestically listed foreign stock | 5,657,150 |
| UBS (LUX) EQUITY FUND - GREATER CHINA (USD) | 4,214,618 | Domestically listed foreign stock | 4,214,618 |
| Hong Kong Securities Clearing Company Ltd. | 4,129,038 | RMB ordinary share | 4,129,038 |
| Related or acting-in-concert | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group | ||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 45 ~
| parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Company Limited—is not a connected 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 connected 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) | N/A |
| 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 companies at home or abroad in the Reporting Period | The controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly holds100,000,000 shares of Huaan Securities Co., Ltd. owning the proportion of shares of 2.76%. | |||
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| State-owned Assets Supervision and Administration | N/A | N/A | N/A |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 46 ~
| Commission of the People’s Government of Bozhou | |
| Other listed companies at home or abroad controlled by the actual controller in the Reporting Period | N/A |
State-Owned Assets Supervision and Administration Commission of
Bozhou Municipal People’s Government
Anhui Gujing Group Company Limited
Anhui Gujing Group Company Limited
Anhui Gujing Distillery Company Limited
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 47 ~
Part VII Preferred Shares
□ Applicable √ Not applicableNo preferred shares in the Reporting Period.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 48 ~
Part VIII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
| 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 | 53 | 20 June 2017 | 19 June 2020 | |||||
| Li Peihui | Director | Incumbent | Male | 46 | 20 June 2017 | 19 June 2020 | |||||
| Zhou Qingwu | Director, GM | Incumbent | Male | 45 | 20 June 2017 | 19 June 2020 | |||||
| Yan Lijun | Director, Executive Deputy GM | Incumbent | Male | 46 | 20 June 2017 | 19 June 2020 | |||||
| Xu Peng | Director, Deputy GM | Incumbent | Male | 49 | 20 June 2017 | 19 June 2020 | |||||
| Ye Changqing | Director, Deputy GM, Chief Accountant, Secretary of the Board | Incumbent | Male | 45 | 20 June 2017 | 19 June 2020 | |||||
| Wang Gao | Independent director | Incumbent | Male | 54 | 20 June 2017 | 19 June 2020 | |||||
| Song Shuyu | Independent director | Incumbent | Male | 57 | 20 June 2017 | 19 June 2020 | |||||
| Du Jie | Independen | Incumbent | Male | 49 | 20 | 19 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 49 ~
| t director | June 2017 | June 2020 | |||||||||
| Wang Feng | Chairman of the Supervisory Committee | Incumbent | Male | 54 | 20 June 2017 | 19 June 2020 | |||||
| Yang Xiaofan | Supervisor | Incumbent | Male | 52 | 20 June 2017 | 19 June 2020 | |||||
| Fu Qiangxin | Supervisor | Incumbent | Male | 50 | 20 June 2017 | 19 June 2020 | |||||
| Zhang Bo | Employee supervisor | Incumbent | Male | 54 | 20 June 2017 | 19 June 2020 | |||||
| Wang Zibin | Employee supervisor | Incumbent | Male | 49 | 20 June 2017 | 19 June 2020 | |||||
| Zhang Lihong | Deputy GM | Incumbent | Male | 51 | 20 June 2017 | 19 June 2020 | |||||
| Zhu Xianghong | GM assistant | Incumbent | Male | 45 | 20 June 2017 | 19 June 2020 | |||||
| Gao Jiakun | GM assistant | Incumbent | Male | 49 | 20 June 2017 | 19 June 2020 | |||||
| Total | -- | -- | -- | -- | -- | -- |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 50 ~
2. Mr. Li Peihui, male, born in July 1973, is a holder of master degree. He is a senior accountant, CPA and member of nationalleading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC and president of Gujing Group. He had everserved as deputy GM and GM of Financial Department, deputy chief accountant, chief accountant, Secretary of Board of Directorsand Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin FinancialInvestment Group; executive vice president and CFO of Gujing Group; and director of the 7
th
Board of Directors.3. Mr. Zhou Qingwu, male, born in February 1974, is a senior accountant and national chief sommelier with educational experienceof graduate student. At present, he is Director and General Manager of the Company, Vice Secretary of CPC of Gujing Group. Hehad ever acted as Chairman and General Manager of Bozhou Gujing Packing Material Co., Ltd., Deputy GM and deputy executiveGM of the Company and Director of the 5
th
, 6
th
and 7
th
Board of Directors of the Company.4. Mr. Yan Lijun, male, June 1973, is a holder of master degree with Senior Taster. Now he is Director, Executive Deputy GM of theCompany, member of CPC Committee of Gujing Group, Chairman of the Board and GM of Bozhou Gujing Sales Co., Ltd. He onceworked as a salesman of Sale Company, District Manager, Director of Market Research, Vice Manager of Planning Department,Director of Hefei Strategic Operations Center, Vice GM and director of the 7
th
Board of Directors of the Company.5. Mr. Xu Peng, male, born in September 1970, has educational experience of undergraduate college. He is the Director and DeputyGM of the Company, member of CPC Committee of Gujing Group, and Chairman of the Board of Yellow Crane Tower LiquorIndustry Co., Ltd. He had ever acted as Deputy Director and Director of Finance Second Office of Finance Department of theCompany, Manager of Finance Department of Anhui Laobada Co., Ltd., Vice Manager and Manager of Finance Department of theCompany, Deputy General Manager and Chief Supervisor of Market Supervision Department of Bozhou Gujing Sales Company,Chairman of the Supervisory Committee of the Company, and Chairman of the 7
th
Board of Directors.6. Mr. Ye Changqing, male, born in October 1974, is a member of national leading accounting talents (back up) with master degreeand International Certified Internal Auditor. He is the incumbent Director, Deputy GM, Chief Accountant and Secretary of Board ofDirectors of the Company. He had ever acted as Chief Auditor of Audit Department, Vice Manager of Audit Department and ViceSupervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the 4
th
Supervisory Committee of the Company;Director and Secretary of the 5
th
, 6
th
, and 7
th
Board of Directors, and Chief Accountant of the Company.7. Wang Gao, Male, born in April 1965, Doctor of Sociology，Professor of Marketing and vice dean in China Europe InternationalBusiness School., Academic Director of Chief Marketing Officer (CMO) Project, Co-Director of Chinese Enterprise GlobalizationResearch Center and independent director of GOME Holdings Co., Ltd.. He once worked as Associate Professor, Deputy Dean ofDepartment of Marketing in School of Economics and Management, Tsinghua University, deputy director of China's Retail ResearchCenter Academic Director of Harvard - central Europe - Tsinghai university senior managers (SEPC) project. Strategic AnalysisManager of Minute Maid Branch of Coca-Cola Company and senior counselor of The Information Resources Co., Ltd. (IRI).8. Song Shuyu, male, born in November 1962, is Senior Engineer and Master of Chinese Wine with educational experience ofgraduate student. Now, he is Deputy President and Secretary General of China Alcoholic Drinks Association, Secretary-general ofLiquor Branch Association, Secretary General of Market Professional Committee, Secretary General of White Wine Club TechnicalCommittee, specialist who enjoy the special allowance of the state council. He also is member of Chinese liquor standardizationtechnical committee, Deputy Secretary General of strong-flavor, Feng-flavour, soybean-flavor and rice flavour Liquor TechnicalCommittee of Chinese Liquor Standardization Technical Committee, Chairman of Committee of Te-flavour Chinese spirits andLaobaigan-flavour Chinese spirits standardization technical committee.9. Mr. Du Jie, male, born in December 1970 is a senior accountant with postgraduate degree, CPA and CTA. Now he is a advisoryservice leading partner of Huapu Tianjian Certified Public Accountants (LLP), internal control advisory expert specially hired byAnhui Provincial Department of Finance, managing accounting advisory expert specially hired by Beijing Municipal Bureau ofFinance, expert talent in Beijing CPA, master tutor specially hired by Business School of Anhui University, independent director ofShaanxi Bicon Pharmaceutical Company Limited, Beijing NAV Technology Co., Ltd., and Tianjin Lishen Battery Joint-stock Co.,Ltd. He once acted as senior manager in Business Risk Service Division of Deloitte & Touche and advisory expert in business
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 51 ~
internal control specially hired by the Ministry of Finance.10. Mr. Wang Feng, male, born in October 1965, is Senior Economic Engineer who is postgraduate degree holder, incumbent DeputySecretary of CPC of Gujing Group and Secretary of Discipline Inspection Commission. He had ever acted as Director and Secretaryof the Second Board of Directors of the Company, Vice General Manager and General Manager of the Company, Director andChairman of the 3
rd
and 4
th
Board of Directors of the Company, Director of the 5
th
, 6
th
, and 7
th
Board of Directors, and Chairman ofthe 7
th
Supervisory Committee of the Company.11. Mr. Yang Xiaofan, male, born in April 1967, is a holder of master degree. At present, he is Supervisor of the Company and VicePresident and member of CPC Committee of Gujing Group. He once acted as Vice President and General Manager of Anhui GujingReal Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5
th
, 6
th
and 7
th
Board of Directors of theCompany and Supervisor of the 7
th
Supervisory Committee.12. Mr. Fu Qiangxin, male, born in October 1969, is a senior accountant and international certified internal auditor with bachelordegree. Now he serves as Supervisor of the Company and GM of Anhui Huixin Finance Investment Group Co., Ltd. He ever tookposts of accountant of Bozhou Gujing Hotel, Manager of Finance of Bozhou Gujing Integrated Services Company and BozhouGujing Import and Export Trade Company, clerk of Planning and Finance Department, Chief Inspector of Internal Audit Center andDirector of Financial Management Center of Gujng Group and Supervisor of the 6
th
and 7
th
Supervisory Committee of the Company.13. Mr. Zhang Bo, male, born in July 1965, is an economist with bachelor degree. Now, he serves as Employee Supervisor of theCompany and Chairman of the Labor Union of Gujing Group. He once worked as Chairman of the board and GM of Bozhou GujingPrinting Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board of Bozhou Ruineng Heatand Power Co., Ltd. and Supervisor of the 7
th
Supervisory Committee of the Company.14. Mr. Wang Zibin, was born in August 1970 with college degree, CIA and CPA. Now he is Employee Supervisor of the Company,Deputy Secretary of Commission for Discipline and Inspection and Director of Audit and Supervisory Centre of Gujing Group. Heonce served as GM of Auditing Department of Gujing Group, vice director of Hefei marketing centre of Bozhou Gujing SalesCompany and Supervisor of the 7
th
Supervisory Committee of the Company.15. Mr. Zhang Lihong, male, born in October 1968, is an economist with bachelor degree. He is incumbent Deputy GM of theCompany and member of CPC Committee and deputy secretary of Commission for Discipline and Inspection of Gujing Group. Heonce acted as clerk, Secretary of Operation Department and Market Development Department, Deputy GM, Director of GeneralOffice, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HR Department and Administrative Service Centerof the Company.16. Mr. Zhu Xianghong, male, born in September 1974, is a senior Wine Taster with bachelor degree. He is incumbent assistant toGM of the Company, and GM of Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of Product Department ofBozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of Anhui Operating Centre andstanding Deputy GM of Sales Company.17. Mr. Gao Jiakun, male, born in November 1970, is a holder of bachelor degree. He is incumbent assistant to GM of the Company.He once served as GM of Production Management Department, Vice Director of Production Management Centre, Chairman of theBoard and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished Products Filling Centre and ProductionManagement Centre 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 |
| Liang Jinhui | Anhui Gujing Group Co., Ltd. | Chairman of | 1 May 2014 | Yes |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 52 ~
| the Board of Directors, Chairman of Party Committee | |||||
| Li Peihui | Anhui Gujing Group Co., Ltd. | Deputy Chairman of Party Committee,， President | 31 October 2017 | Yes | |
| Wang Feng | Anhui Gujing Group Co., Ltd. | Deputy Chairman of Party Committee, Chairman of Discipline Inspection Committee | 1 August 2010 | Yes | |
| Yang Xiaofan | Anhui Gujing Group Co., Ltd. | Vice President, member of the Party Committee | 1 November 2009 | Yes | |
| Zhang Bo | Anhui Gujing Group Co., Ltd. | Chairman of the Labor Union | 16 October 2015 | Yes | |
| Wang Zibin | Anhui Gujing Group Co., Ltd. | Deputy Chairman of Discipline Inspection Committee, Director of Auditing & Supervision Center | 27 April 2015 | 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. | ||||
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 53 ~
| the entity | |||||
| Fu Qiangxin | Anhui Huixin Finance Investment Group Co., Ltd. | GM | 27 November 2017 | Yes | |
| Notes | Anhui Huixin Finance Investment Group Co., Ltd. is a wholly-owned subsidiary of Anhui Gujing Group Co., Ltd. | ||||
| 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 | 53 | Incumbent | Yes | |
| Li Peihui | Director | Male | 46 | Incumbent | Yes | |
| Zhou Qingwu | Director, GM | Male | 45 | Incumbent | 84.87 | No |
| Yan Lijun | Director, Executive Deputy GM | Male | 46 | Incumbent | 253.32 | No |
| Xu Peng | Director, Deputy GM | Male | 49 | Incumbent | 88.56 | No |
| Ye Changqing | Director, Deputy GM, Chief | Male | 45 | Incumbent | 94.86 | No |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 54 ~
| Accountant , Secretary of the Board | ||||||
| Wang Gao | Independent director | Male | 54 | Incumbent | 7.5 | No |
| Song Shuyu | Independent director | Male | 57 | Incumbent | 7.5 | No |
| Du Jie | Independent director | Male | 49 | Incumbent | 7.5 | No |
| Wang Feng | Chairman of the Supervisory Committee | Male | 54 | Incumbent | Yes | |
| Yang Xiaofan | Supervisor | Male | 52 | Incumbent | Yes | |
| Fu Qiangxin | Supervisor | Male | 50 | Incumbent | Yes | |
| Zhang Bo | Employee supervisor | Male | 54 | Incumbent | Yes | |
| Wang Zibin | Employee supervisor | Male | 49 | Incumbent | Yes | |
| Zhang Lihong | Deputy GM | Male | 51 | Incumbent | 101.68 | No |
| Zhu Xianghong | GM assistant | Male | 45 | Incumbent | 241.21 | No |
| Gao Jiakun | GM assistant | Male | 49 | Incumbent | 82.84 | No |
| Total | -- | -- | -- | -- | 969.84 | -- |
| Number of in-service employees of the Company as the parent | 5,786 |
| Number of in-service employees of major subsidiaries | 2,537 |
| Total number of in-service employees | 8,323 |
| Total number of paid employees in the Reporting Period | 8,323 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 1,103 |
| Functions | |
| Function | Employees |
| Production | 5,357 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 55 ~
| Sales | 1,600 |
| Technical | 400 |
| Financial | 170 |
| Administrative | 796 |
| Total | 8,323 |
| Educational backgrounds | |
| Educational background | Employees |
| Master or above | 65 |
| Bachelor | 1,719 |
| Junior college | 1,591 |
| High school or below | 4,948 |
| Total | 8,323 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 56 ~
Part IX Corporate Governance
I General Information of Corporate Governance
Since foundation, the Company constantly perfects corporate governance structure and standardize its management strictly inaccordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting upIndependent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations andnormative documents.In the reporting period, the Company developed internal control activity, implemented Rules on Management of Assets Provision forImpairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in Annual Report, Rules for Management ofExternal Information User and Rules for Management of Insider of Inner Information, perfected internal control system step by step,promoted normative operation and healthy development. The Board of Directors, the Supervisory Committee and the management ofthe Company make decisions, perform rights and assume obligation strictly according to the standard operation rules and innercontrol system so as to make sure the standard operation of the Company in the frame of rules and systems.In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares inShenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed informationdisclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of theCompany.After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, furtherimprove the standard operation of the Company.Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing thegovernance of listed companies.□ Yes √ NoNo such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
The 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.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation | Date of the meeting | Disclosure date | Index to disclosed |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 57 ~
| ratio | information | ||||
| The 2017 Annual General Meeting | Annual General Meeting | 58.79% | 22 May 2018 | 23 May 2018 | Announcement on Resolutions of the 2017 Annual General Meeting disclosed on www.cninfo.com.cn |
| The 1st Extraordinary General Meeting of 2018 | Extraordinary General Meeting | 54.07% | 17 September 2018 | 18 September 2018 | Announcement on Resolutions of the 1st Extraordinary General Meeting of 2018 disclosed on www.cninfo.com.cn |
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent 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 independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Wang Gao | 4 | 0 | 4 | 0 | 0 | No | 1 |
| Song Shuyu | 4 | 1 | 3 | 0 | 0 | No | 0 |
| Du Jie | 4 | 1 | 3 | 0 | 0 | No | 1 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 58 ~
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.√ Yes □ NoSuggestions from independent directors adopted or not adopted by the Company:
During the Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company'sbusiness decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, andprovided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing adue role in safeguarding the legitimate rights and interests of the Company's shareholders.
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
1. Duty performance of the Strategy CommitteeThe Strategy Committee is under the leadership of the Board of Directors. In the Reporting Period, in strict compliance with theSpecific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making alot of constructive suggestions for the efficient execution of the Company’s strategy.2. Duty performance of the Audit CommitteeIn the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in therelevant rules of the Company:
(1) It reviewed the annual report of the Company in 2018.(2) Upon discussion with Ruihua Certified Public Accountants for the 2018 annual audit, it determined the schedule for the financialreport and internal control audit for 2018.(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company andstarted the 2018 annual audit.(4) It reviewed the short form of the preliminary financial statements of 2018 prepared by the financial department of the Companyfor the first time before the annual auditor came to the Company and made some helpful suggestions.(5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on theproblems found in the audit and the submission time of the audit report.(6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2018 annual financial statements again and made thefinal resolution.3. Duty performance of the Nomination CommitteeIn the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the NominationCommittee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired incompliance with laws and regulations.(1) In the Reporting Period, the senior management staff hired by the Company satisfied the requirements of the Company Law andother relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where theCompany Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering thesecurities market.(2) In the Reporting Period, the senior management staff of the Company were nominated and hired in line with the Company Lawand the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities orstock exchanges.4. Duty performance of Remuneration and Appraisal Committee(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 59 ~
Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal todirectors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reportingperiod.(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration levelcomplied with development of the Company; the remuneration level of directors, supervisors and senior executives accuratelyreflected the overall performance situation of the Company and individual work performance, which complied with the remunerationmanagement system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did notviolate relevant national laws and regulations.
VII 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 √ NoThe Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration ofsenior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measuresby linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,healthy and orderly development of the Company and keep the stability of the Executive Officers, the Company annually sets up theassessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration andthe rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operatingtarget.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 27 April 2019 |
| 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 | 99.13% |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 99.00% |
| Identification standards for internal control weaknesses | |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 60 ~
| 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 exceeding critical level. Minor defect: Other internal control defects not constituting critical or major defects. | 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. |
| 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; | 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 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 61 ~
| (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. | (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 | |
| 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 2018. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 27 April 2019 |
| 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 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 62 ~
Part X Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 63 ~
Part XI Financial Statements
I Independent Auditor’s Report
| Type of auditor’s opinion | Unmodified unqualified opinion |
| Date of signing the auditor’s report | 26 April 2019 |
| Name of the auditor | Ruihua Certified Public Accountants (LLP) |
| No. of the auditor’s report | Ruihua Shen Zi【2019】48440010 Hao |
| Name of CPA | Ou Changxian, Gao Qiang |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 64 ~
Our audit procedures carried out for this key audit item mainly include:
(1) Understand and assess the design for internal control of Gujing Distillery from review and approval of the sales process of liquorand spirits business of Gujing Distillery from sales orders to accounting of operating revenue, test the effectiveness of execution ofkey internal controls, and test automatic control related to general control and revenue process of Gujing Distillery's informationsystem.(2) Sample check sales contract and interview the top management, make an analysis of major risks and remuneration transfer timerelated to recognition of operating revenue, and assess the rationality of Gujing Distillery's revenue recognition policy.(3) Carry out an analysis procedure for operating revenue including analysis of increase and decrease of major clients as dealers,change of revenue and gross profit rate during the period before and after that and in the sector so as to assess rationality for revenuerecognition.(4) Select samples to check original notes for recognizing operating revenue and verify authenticity of operating revenue. At the sametime, draw part of original notes and verify them against the book record to verify intactness of operating revenue.(5) Prove major clients by letters, conduct on-site investigation into the clients with large sales volume and visit their businessoperating places and warehouses, check the original notes for their terminal sales, assess authenticity of their terminal sales so as toverify authenticity of operating revenue of Gujing Distillery.(6) Conduct a cutoff test of its operating revenue and confirm if revenue recognition of Gujing Distillery is recorded at an appropriateaccounting duration.(II) Existence, Pricing and Apportion of Stock1. Description of itemsBy 31 December 2018, the book value for the stock of Gujing Distillery was RMB2.407 billion, which occupied 19.25% of the totalamount of its assets, of which book value of homemade semi-finished products and goods in process was RMB1.957 billion,occupying 81.30% of the amount of the year-end stock. Stock, as the most important assets of liquor and spirit enterprises, itsyear-end balance is high and occupies a large proportion of the total amount of their assets. Therefore, we identify existence, pricingand apportion of the stock of Gujing Distillery as a key audit item.2. AuditingOur audit procedures carried out for this key audit item mainly include:
(1) Understand and assess the design for business process and internal control related to cost accounting, incoming and outgoing ofstock and inventory and test the effectiveness of execution of key internal controls, and test automatic control related to generalcontrol and stock of Gujing Distillery's information system.(2) Understand the accounting policies related to stock and assess if they are in line with the accounting principles and systems fit forthe enterprise, if they are consistent with those for the previous years.(3) Carry out an analysis review procedure: Calculate inventory turnover rate, compare with the previous term and compare with theother enterprises in the sector. Compare balance of stock and composition of previous and later terms and various months so as tojudge overall rationality of year-end balance and its composition.(4) Carry out a monitoring procedure for the stock and sample check quantity and status of the stock.(5) Sample check cost statement and related information, conduct a pricing test for the stock and assess accuracy of amount ofyear-end stock of Gujing Distillery.(6) Obtain the year-end inventory aging list of the stock, and carry out an analytic review of the stock with a long inventory agecombining market situation of the products, and assess if inventory falling price reserve is rational; Obtain the statement forinventory falling price reserve, review the test process for inventory impairment, sample check if it is conducted in accordance withthe accounting policy of Gujing Distillery, check the change of this term of inventory falling price accrued for previous years andverify if inventory falling price reserve is accrued adequately.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 65 ~
IV. Other InformationThe management of the Company is responsible for the other information. The other information comprises all of the informationincluded in the annual report for 2018 of the Company other than the financial statements and our auditor’s report thereon.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 orotherwise 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. Responsibility of Management and Those Charged with Governance for the Financial StatementsThe management of the Company is responsible for the preparation and fair presentation of these financial statements in accordancewith Accounting Standards for Business Enterprises to make them a fair presentation and designing, implementing and maintaininginternal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud orerror.In preparing the financial statements, the management of the Company is responsible for assessing the Company’s ability to continueas a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unlessthe management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI. CPA’s Responsibility 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. We report our opinion solely toyou, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for thecontents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these financial statements.As part of an audit in accordance with auditing standards, we exercise professional judgment and maintain professional skepticismthroughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by the management.(IV) Conclude on the appropriateness of the management’ use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attentionin our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 66 ~
(V) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theCompany to express an audit opinion on the financial statements. We are responsible for the direction, supervision and performanceof the Company’s 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 regardingindependence, 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.
| Ruihua Certified Public Accountants (LLP) | CPA (Engagementpartner): Ou Changxian |
| Beijing · China | CPA: Gao Qiang |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 67 ~
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
31 December 2018
Unit: RMB
| Item | 31 December 2018 | 31 December 2017 |
| Current assets: | ||
| Monetary capital | 1,705,760,865.12 | 1,484,088,626.40 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Financial assets at fair value through profit or loss | 622,892.96 | 99,800.76 |
| Derivative financial assets | ||
| Notes and accounts receivable | 1,377,175,880.08 | 743,077,269.84 |
| Including: Notes receivable | 1,347,427,811.34 | 720,611,126.78 |
| Accounts receivable | 29,748,068.74 | 22,466,143.06 |
| Prepayments | 182,558,000.75 | 41,729,637.34 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 43,342,878.22 | 29,273,284.22 |
| Including: Interest receivable | 24,923,178.08 | 13,883,178.08 |
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 2,407,306,664.86 | 2,064,130,297.51 |
| Assets classified as held for sale | ||
| Current portion of non-current assets | 300,000,000.00 | 0.00 |
| Other current assets | 3,012,478,687.20 | 1,772,310,946.58 |
| Total current assets | 9,029,245,869.19 | 6,134,709,862.65 |
| Non-current assets: | ||
| Loans and advances to customers |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 68 ~
| Available-for-sale financial assets | 206,393,107.46 | 517,086,347.91 |
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 4,900,000.00 | 0.00 |
| Investment property | 5,027,228.53 | 5,343,777.33 |
| Fixed assets | 1,763,988,530.56 | 1,792,254,178.56 |
| Construction in progress | 93,320,557.56 | 54,496,798.56 |
| Productive living assets | ||
| Oil and gas assets | ||
| Intangible assets | 742,083,609.10 | 691,381,442.67 |
| R&D expense | ||
| Goodwill | 478,283,495.29 | 478,283,495.29 |
| Long-term prepaid expense | 83,561,473.46 | 69,238,523.78 |
| Deferred income tax assets | 86,580,171.06 | 92,157,477.74 |
| Other non-current assets | 16,544,407.51 | 317,910,214.56 |
| Total non-current assets | 3,480,682,580.53 | 4,018,152,256.40 |
| Total assets | 12,509,928,449.72 | 10,152,862,119.05 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Borrowings from central bank | ||
| Customer deposits and interbank deposits | ||
| Interbank loans obtained | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivative financial liabilities | ||
| Notes and accounts payable | 834,156,012.31 | 636,365,039.83 |
| Advances from customers | 1,149,143,310.48 | 503,083,108.13 |
| Financial assets sold under repurchase agreements | ||
| Handling charges and commissions payable | ||
| Payroll payable | 457,299,476.43 | 372,374,014.37 |
| Taxes payable | 372,993,624.18 | 420,984,845.45 |
| Other payables | 1,192,020,147.82 | 1,032,543,553.34 |
| Including: Interest payable |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 69 ~
| Dividends payable | ||
| Reinsurance payables | ||
| Insurance contract reserve | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Liabilities directly associated with assets classified as held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 295,164,745.44 | 182,846,942.10 |
| Total current liabilities | 4,300,777,316.66 | 3,148,197,503.22 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | 76,636,500.55 | 43,706,503.22 |
| Deferred income tax liabilities | 102,764,515.11 | 119,779,105.90 |
| Other non-current liabilities | ||
| Total non-current liabilities | 179,401,015.66 | 163,485,609.12 |
| Total liabilities | 4,480,178,332.32 | 3,311,683,112.34 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 1,295,405,592.25 | 1,295,405,592.25 |
| Less: Treasury stock | ||
| Other comprehensive income | 4,794,830.59 | 53,520,827.44 |
| Specific reserve | ||
| Surplus reserves | 256,902,260.27 | 256,902,260.27 |
| General reserve |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 70 ~
| Retained earnings | 5,541,281,341.47 | 4,349,649,698.42 |
| Total equity attributable to owners of the Company as the parent | 7,601,984,024.58 | 6,459,078,378.38 |
| Non-controlling interests | 427,766,092.82 | 382,100,628.33 |
| Total owners’ equity | 8,029,750,117.40 | 6,841,179,006.71 |
| Total liabilities and owners’ equity | 12,509,928,449.72 | 10,152,862,119.05 |
| Item | 31 December 2018 | 31 December 2017 |
| Current assets: | ||
| Monetary capital | 1,078,172,917.59 | 1,276,262,109.02 |
| Financial assets at fair value through profit or loss | 622,892.96 | 99,800.76 |
| Derivative financial assets | ||
| Notes and accounts receivable | 1,265,722,336.88 | 683,031,572.43 |
| Including: Notes receivable | 1,256,336,386.34 | 674,521,654.40 |
| Accounts receivable | 9,385,950.54 | 8,509,918.03 |
| Prepayments | 10,869,911.54 | 8,534,600.82 |
| Other receivables | 110,800,665.19 | 130,357,778.75 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories | 2,125,826,967.11 | 1,818,358,884.18 |
| Assets classified as held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 1,764,267,968.83 | 1,554,870,774.98 |
| Total current assets | 6,356,283,660.10 | 5,471,515,520.94 |
| Non-current assets: | ||
| Available-for-sale financial assets | 206,393,107.46 | 516,530,547.91 |
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 1,148,213,665.32 | 1,155,089,408.32 |
| Investment property | 24,715,657.40 | 26,409,050.95 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 71 ~
| Fixed assets | 1,290,714,455.79 | 1,303,119,011.66 |
| Construction in progress | 86,634,753.93 | 44,673,219.38 |
| Productive living assets | ||
| Oil and gas assets | ||
| Intangible assets | 189,968,142.25 | 185,868,178.71 |
| R&D expense | ||
| Goodwill | ||
| Long-term prepaid expense | 56,643,945.05 | 58,563,409.89 |
| Deferred income tax assets | 37,415,458.17 | 37,996,747.93 |
| Other non-current assets | 12,474,026.00 | 12,474,026.00 |
| Total non-current assets | 3,053,173,211.37 | 3,340,723,600.75 |
| Total assets | 9,409,456,871.47 | 8,812,239,121.69 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivative financial liabilities | ||
| Notes and accounts payable | 390,939,469.93 | 347,757,180.53 |
| Advances from customers | 1,123,125,892.84 | 1,680,678,175.37 |
| Payroll payable | 117,748,485.96 | 110,435,403.45 |
| Taxes payable | 161,176,957.25 | 262,884,211.13 |
| Other payables | 372,902,293.22 | 173,250,790.29 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities directly associated with assets classified as held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 32,605,794.55 | 18,296,415.85 |
| Total current liabilities | 2,198,498,893.75 | 2,593,302,176.62 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Long-term payables |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 72 ~
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | 36,417,554.85 | 39,976,048.28 |
| Deferred income tax liabilities | 4,828,737.52 | 19,792,209.68 |
| Other non-current liabilities | ||
| Total non-current liabilities | 41,246,292.37 | 59,768,257.96 |
| Total liabilities | 2,239,745,186.12 | 2,653,070,434.58 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 1,247,162,107.35 | 1,247,162,107.35 |
| Less: Treasury stock | ||
| Other comprehensive income | 4,794,830.59 | 53,454,736.38 |
| Specific reserve | ||
| Surplus reserves | 251,800,000.00 | 251,800,000.00 |
| Retained earnings | 5,162,354,747.41 | 4,103,151,843.38 |
| Total owners’ equity | 7,169,711,685.35 | 6,159,168,687.11 |
| Total liabilities and owners’ equity | 9,409,456,871.47 | 8,812,239,121.69 |
| Item | 2018 | 2017 |
| 1. Revenue | 8,686,140,336.89 | 6,968,325,048.55 |
| Including: Operating revenue | 8,686,140,336.89 | 6,968,325,048.55 |
| Interest income | ||
| Premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 6,523,625,714.70 | 5,560,167,242.54 |
| Including: Cost of sales | 1,932,064,837.65 | 1,642,588,056.43 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 73 ~
| Net claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 1,278,907,520.09 | 1,136,317,983.99 |
| Selling expense | 2,682,535,305.26 | 2,170,081,383.54 |
| Administrative expense | 644,997,046.65 | 591,058,209.64 |
| R&D expense | 23,966,766.04 | 12,494,749.46 |
| Finance costs | -51,572,629.73 | -25,927,285.82 |
| Including: Interest expense | 15,408,022.76 | 0.00 |
| Interest income | 68,964,800.42 | 30,406,069.89 |
| Asset impairment loss | 12,726,868.74 | 33,554,145.30 |
| Add: Other income | 35,701,674.45 | 32,720,116.60 |
| Investment income (“-” for loss) | 148,215,468.62 | 153,433,358.26 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Gain on changes in fair value (“-” for loss) | -161,541.19 | -113,260.71 |
| Foreign exchange gain (“-” for loss) | ||
| Asset disposal income (“-” for loss) | 526,066.38 | 254,763.27 |
| 3. Operating profit (“-” for loss) | 2,346,796,290.45 | 1,594,452,783.43 |
| Add: Non-operating income | 35,289,980.44 | 30,141,298.15 |
| Less: Non-operating expense | 13,160,175.48 | 12,376,817.78 |
| 4. Profit before tax (“-” for loss) | 2,368,926,095.41 | 1,612,217,263.80 |
| Less: Income tax expense | 628,012,434.53 | 426,985,526.34 |
| 5. Net profit (“-” for net loss) | 1,740,913,660.88 | 1,185,231,737.46 |
| 5.1 Net profit from continuing operations (“-” for net loss) | 1,740,913,660.88 | 1,185,231,737.46 |
| 5.2 Net profit from discontinued operations (“-” for net loss) | ||
| Net profit attributable to owners of | 1,695,231,643.05 | 1,148,740,644.93 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 74 ~
| the Company as the parent | ||
| Net profit attributable to non-controlling interests | 45,682,017.83 | 36,491,092.53 |
| 6. Other comprehensive income, net of tax | -48,725,996.85 | 17,376,349.49 |
| Attributable to owners of the Company as the parent | -48,725,996.85 | 17,376,349.49 |
| 6.1 Items that will not be reclassified to profit or loss | ||
| 6.1.1 Changes caused by remeasurements on defined benefit pension schemes | ||
| 6.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method | ||
| 6.2 Items that may subsequently be reclassified to profit or loss | -48,725,996.85 | 17,376,349.49 |
| 6.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | ||
| 6.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets | -48,725,996.85 | 17,376,349.49 |
| 6.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets | ||
| 6.2.4 Effective gain/loss on cash flow hedges | ||
| 6.2.5 Differences arising from translation of foreign currency-denominated financial statements | ||
| 6.2.6 Other | ||
| Attributable to non-controlling interests | ||
| 7. Total comprehensive income | 1,692,187,664.03 | 1,202,608,086.95 |
| Attributable to owners of the Company as the parent | 1,646,505,646.20 | 1,166,116,994.42 |
| Attributable to non-controlling interests | 45,682,017.83 | 36,491,092.53 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 75 ~
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 3.37 | 2.28 |
| 8.2 Diluted earnings per share | 3.37 | 2.28 |
| Item | 2018 | 2017 |
| 1. Operating revenue | 4,255,302,263.38 | 3,789,547,842.84 |
| Less: Cost of sales | 1,772,452,588.66 | 1,481,030,950.69 |
| Taxes and surcharges | 1,074,150,390.45 | 974,280,790.69 |
| Selling expense | 177,002,048.12 | 172,260,238.41 |
| Administrative expense | 443,945,470.10 | 413,267,601.15 |
| R&D expense | 17,321,657.06 | 9,762,837.39 |
| Finance costs | -42,463,654.44 | -15,108,236.44 |
| Including: Interest expense | 15,408,022.76 | |
| Interest income | 58,659,575.81 | 19,115,343.79 |
| Asset impairment loss | 11,600,870.40 | 31,237,595.99 |
| Add: Other income | 15,340,983.23 | 20,408,700.71 |
| Investment income (“-” for loss) | 953,463,522.77 | 578,847,735.30 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Gain on changes in fair value (“-” for loss) | -161,541.19 | -113,260.71 |
| Asset disposal income (“-” for loss) | 0.00 | 23,533.98 |
| 2. Operating profit (“-” for loss) | 1,769,935,857.84 | 1,321,982,774.24 |
| Add: Non-operating income | 29,427,413.82 | 17,009,324.56 |
| Less: Non-operating expense | 9,158,255.98 | 9,222,061.73 |
| 3. Profit before tax (“-” for loss) | 1,790,205,015.68 | 1,329,770,037.07 |
| Less: Income tax expense | 227,402,111.65 | 231,661,547.32 |
| 4. Net profit (“-” for net loss) | 1,562,802,904.03 | 1,098,108,489.75 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 1,562,802,904.03 | 1,098,108,489.75 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | -48,659,905.79 | 16,139,180.74 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 76 ~
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes in caused by remeasurements on defined benefit pension schemes | ||
| 5.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method | ||
| 5.2 Items that may subsequently be reclassified to profit or loss | -48,659,905.79 | 16,139,180.74 |
| 5.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | ||
| 5.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets | -48,659,905.79 | 16,139,180.74 |
| 5.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets | ||
| 5.2.4 Effective gain/loss on cash flow hedges | ||
| 5.2.5 Differences arising from translation of foreign currency-denominated financial statements | ||
| 5.2.6 Other | ||
| 6. Total comprehensive income | 1,514,142,998.24 | 1,114,247,670.49 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 3.10 | 2.18 |
| 7.2 Diluted earnings per share | 3.10 | 2.18 |
| Item | 2018 | 2017 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 9,158,327,553.33 | 7,041,950,513.29 |
| Net increase in customer deposits and interbank deposits |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 77 ~
| Net increase in borrowings from 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 | ||
| Net increase in proceeds from disposal of financial assets at fair value through profit or loss | ||
| Interest, handling charges and commissions received | ||
| Net increase in interbank loans obtained | ||
| Net increase in proceeds from repurchase transactions | ||
| Tax rebates | 18,279,633.65 | 20,901,711.56 |
| Cash generated from other operating activities | 774,008,382.31 | 410,064,046.58 |
| Subtotal of cash generated from operating activities | 9,950,615,569.29 | 7,472,916,271.43 |
| Payments for commodities and services | 1,141,576,748.20 | 685,079,409.14 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 1,557,106,771.09 | 1,379,482,541.55 |
| Taxes paid | 3,095,830,374.91 | 2,588,903,933.28 |
| Cash used in other operating activities | 2,715,220,389.14 | 1,888,535,674.68 |
| Subtotal of cash used in operating activities | 8,509,734,283.34 | 6,542,001,558.65 |
| Net cash generated from/used in operating activities | 1,440,881,285.95 | 930,914,712.78 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 78 ~
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 3,392,057,566.06 | 5,542,089,013.38 |
| Investment income | 137,503,636.38 | 87,735,460.11 |
| Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets | 1,088,510.86 | 2,275,291.91 |
| Net proceeds from disposal of subsidiaries or other business units | ||
| Cash generated from other investing activities | 0.00 | 5,715,000.00 |
| Subtotal of cash generated from investing activities | 3,530,649,713.30 | 5,637,814,765.40 |
| Payments for acquisition of fixed assets, intangible assets and other long-lived assets | 307,319,114.99 | 200,093,340.76 |
| Payments for investments | 4,349,123,092.20 | 5,570,236,537.09 |
| Net increase in pledged loans granted | ||
| Net payments for acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 4,656,442,207.19 | 5,770,329,877.85 |
| Net cash generated from/used in investing activities | -1,125,792,493.89 | -132,515,112.45 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | ||
| Increase in borrowings obtained | ||
| Net proceeds from issuance of bonds | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | ||
| Repayment of borrowings | ||
| Payments for interest and dividends | 503,600,000.00 | 302,160,000.00 |
| Including: Dividends paid by subsidiaries to non-controlling interests | ||
| Cash used in other financing | 16,553.34 | 0.00 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 79 ~
| activities | ||
| Subtotal of cash used in financing activities | 503,616,553.34 | 302,160,000.00 |
| Net cash generated from/used in financing activities | -503,616,553.34 | -302,160,000.00 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | -188,527,761.28 | 496,239,600.33 |
| Add: Cash and cash equivalents, beginning of the period | 1,024,088,626.40 | 527,849,026.07 |
| 6. Cash and cash equivalents, end of the period | 835,560,865.12 | 1,024,088,626.40 |
| Item | 2018 | 2017 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,047,700,512.72 | 4,173,273,698.71 |
| Tax rebates | 4,523,679.80 | 13,013,817.25 |
| Cash generated from other operating activities | 744,922,683.25 | 34,644,114.33 |
| Subtotal of cash generated from operating activities | 3,797,146,875.77 | 4,220,931,630.29 |
| Payments for commodities and services | 1,151,280,535.30 | 899,290,002.74 |
| Cash paid to and for employees | 556,958,789.26 | 509,129,615.74 |
| Taxes paid | 1,875,058,501.76 | 1,745,217,861.34 |
| Cash used in other operating activities | 606,222,797.89 | 711,716,384.50 |
| Subtotal of cash used in operating activities | 4,189,520,624.21 | 3,865,353,864.32 |
| Net cash generated from/used in operating activities | -392,373,748.44 | 355,577,765.97 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 2,592,057,566.06 | 5,331,270,532.13 |
| Investment income | 956,590,486.35 | 523,008,318.40 |
| Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets | 153,914.79 | 501,088.26 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 80 ~
| Net proceeds from disposal of subsidiaries or other business units | 3,587,238.24 | 0.00 |
| Cash generated from other investing activities | 0.00 | 1,826,000.00 |
| Subtotal of cash generated from investing activities | 3,552,389,205.44 | 5,856,605,938.79 |
| Payments for acquisition of fixed assets, intangible assets and other long-lived assets | 228,181,556.23 | 141,317,744.91 |
| Payments for investments | 2,546,323,092.20 | 5,168,236,537.09 |
| Net payments for acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 2,774,504,648.43 | 5,309,554,282.00 |
| Net cash generated from/used in investing activities | 777,884,557.01 | 547,051,656.79 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Increase in borrowings obtained | ||
| Net proceeds from issuance of bonds | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | ||
| Repayment of borrowings | ||
| Payments for interest and dividends | 503,600,000.00 | 302,160,000.00 |
| Cash used in other financing activities | ||
| Sub-total of cash used in financing activities | 503,600,000.00 | 302,160,000.00 |
| Net cash generated from/used in financing activities | -503,600,000.00 | -302,160,000.00 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | -118,089,191.43 | 600,469,422.76 |
| Add: Cash and cash equivalents, beginning of the period | 826,262,109.02 | 225,792,686.26 |
| 6. Cash and cash equivalents, end of the | 708,172,917.59 | 826,262,109.02 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 81 ~
period
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 82 ~
7. Consolidated Statements of Changes in Owners’ Equity
2018
Unit: RMB
| Item | 2018 | ||||||||||||
| 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 | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 53,520,827.44 | 256,902,260.27 | 4,349,649,698.42 | 382,100,628.33 | 6,841,179,006.71 | ||||||
| Add: Adjustments for changed accounting policies | |||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||
| Adjustments for business combinations under common control | |||||||||||||
| Other adjustments | |||||||||||||
| 2. Balances as at the beginning of | 503,600,000.00 | 1,295,405,592.25 | 53,520,827.44 | 256,902,260.27 | 4,349,649,698.42 | 382,100,628.33 | 6,841,179,006.71 | ||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 83 ~
| the year | |||||||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -48,725,996.85 | 1,191,631,643.05 | 45,665,464.49 | 1,188,571,110.69 | |||||||||
| 3.1 Total comprehensive income | -48,725,996.85 | 1,695,231,643.05 | 45,682,017.83 | 1,692,187,664.03 | |||||||||
| 3.2 Capital increased and reduced by owners | -16,553.34 | -16,553.34 | |||||||||||
| 3.2.1 Ordinary shares increased by shareholders | |||||||||||||
| 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 | -16,553.34 | -16,553.34 | |||||||||||
| 3.3 Profit distribution | -503,600,000.00 | -503,600,000.00 | |||||||||||
| 3.3.1 Appropriation to surplus reserves |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 84 ~
| 3.3.2 Appropriation to general reserve | |||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -503,600,000.00 | -503,600,000.00 | |||||||||||
| 3.3.4 Other | |||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||
| 3.4.5 Other |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 85 ~
| 3.5 Specific reserve | |||||||||||||
| 3.5.1 Increase in the period | |||||||||||||
| 3.5.2 Used in the period | |||||||||||||
| 3.6 Other | |||||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 4,794,830.59 | 256,902,260.27 | 5,541,281,341.47 | 427,766,092.82 | 8,029,750,117.40 |
| Item | 2017 | ||||||||||||
| 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 | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 36,144,477.95 | 256,902,260.27 | 3,503,069,053.49 | 345,609,535.80 | 5,940,730,919.76 | ||||||
| Add: Adjustments for changed accounting policies | |||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 86 ~
| Adjustments for business combinations under common control | |||||||||||||
| Other adjustments | |||||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 36,144,477.95 | 256,902,260.27 | 3,503,069,053.49 | 345,609,535.80 | 5,940,730,919.76 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 17,376,349.49 | 846,580,644.93 | 36,491,092.53 | 900,448,086.95 | |||||||||
| 3.1 Total comprehensive income | 17,376,349.49 | 1,148,740,644.93 | 36,491,092.53 | 1,202,608,086.95 | |||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||
| 3.2.1 Ordinary shares increased by shareholders | |||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||
| 3.2.3 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 87 ~
| Share-based payments included in owners’ equity | |||||||||||||
| 3.2.4 Other | |||||||||||||
| 3.3 Profit distribution | -302,160,000.00 | -302,160,000.00 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -302,160,000.00 | -302,160,000.00 | |||||||||||
| 3.3.4 Other | |||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 88 ~
| 3.4.3 Loss offset by surplus reserves | |||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||
| 3.4.5 Other | |||||||||||||
| 3.5 Specific reserve | |||||||||||||
| 3.5.1 Increase in the period | |||||||||||||
| 3.5.2 Used in the period | |||||||||||||
| 3.6 Other | |||||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 53,520,827.44 | 256,902,260.27 | 4,349,649,698.42 | 382,100,628.33 | 6,841,179,006.71 |
| Item | 2018 | ||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | |||||||||
| 1. Balances as at the end | 503,600,000.00 | 1,247,162,107.35 | 53,454,736.38 | 251,800,000.00 | 4,103,151,843.38 | 6,159,168,687.11 | |||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 89 ~
| of the prior year | |||||||||||
| Add: Adjustments for changed accounting policies | |||||||||||
| Adjustments for corrections of previous errors | |||||||||||
| Other adjustments | |||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 53,454,736.38 | 251,800,000.00 | 4,103,151,843.38 | 6,159,168,687.11 | |||||
| 3. Increase/ decrease in the period (“-” for decrease) | -48,659,905.79 | 1,059,202,904.03 | 1,010,542,998.24 | ||||||||
| 3.1 Total comprehensive income | -48,659,905.79 | 1,562,802,904.03 | 1,514,142,998.24 | ||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||
| 3.2.1 Ordinary shares increased by shareholders | |||||||||||
| 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 | -503,600,000.00 | -503,600,000.00 | |||||||||
| 3.3.1 Appropriation |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 90 ~
| to surplus reserves | |||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -503,600,000.00 | -503,600,000.00 | |||||||||
| 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 pension schemes transferred to retained earnings | |||||||||||
| 3.4.5 Other | |||||||||||
| 3.5 Specific reserve | |||||||||||
| 3.5.1 Increase in the period | |||||||||||
| 3.5.2 Used in the period | |||||||||||
| 3.6 Other | |||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 4,794,830.59 | 251,800,000.00 | 5,162,354,747.41 | 7,169,711,685.35 |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 91 ~
2017
Unit: RMB
| Item | 2017 | ||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | |||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 37,315,555.64 | 251,800,000.00 | 3,307,203,353.63 | 5,347,081,016.62 | |||||
| Add: Adjustments for changed accounting policies | |||||||||||
| Adjustments for corrections of previous errors | |||||||||||
| Other adjustments | |||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 37,315,555.64 | 251,800,000.00 | 3,307,203,353.63 | 5,347,081,016.62 | |||||
| 3. Increase/ decrease in the period (“-” for decrease) | 16,139,180.74 | 795,948,489.75 | 812,087,670.49 | ||||||||
| 3.1 Total comprehensive income | 16,139,180.74 | 1,098,108,489.75 | 1,114,247,670.49 | ||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||
| 3.2.1 Ordinary shares increased by shareholders | |||||||||||
| 3.2.2 Capital increased by holders of | |||||||||||
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 92 ~
| other equity instruments | |||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||
| 3.2.4 Other | |||||||||||
| 3.3 Profit distribution | -302,160,000.00 | -302,160,000.00 | |||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -302,160,000.00 | -302,160,000.00 | |||||||||
| 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 pension schemes transferred to retained earnings | |||||||||||
| 3.4.5 Other |
Gujinggong Liquor Aged Original Liquor Annual Report 2018
~ 93 ~
| 3.5 Specific reserve | |||||||||||
| 3.5.1 Increase in the period | |||||||||||
| 3.5.2 Used in the period | |||||||||||
| 3.6 Other | |||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 53,454,736.38 | 251,800,000.00 | 4,103,151,843.38 | 6,159,168,687.11 |
Anhui Gujing Distillery Co., Ltd.Notes to the Financial Statementsfor the Year Ended 31 December 2018
(All amounts are expressed, unless otherwise stated, in CNY.)
Note 1 Company ProfileAnhui Gujing Distillery Co., Ltd. (hereafter “the Company” or "Company") was approved by AnhuiState-owned Assets Administration by WanGuoZiGongZi (1996) NO. 053 (皖国资工字(1996)第053号文). Anhui Gujing Group Co., Ltd. was the sole sponsor of the Company. The Company wasestablished by converting the net assets of the main production and operating assets of its coreenterprise Anhui Bozhou Gujing distillery into 155,000,000 shares of state-owned shares with a netvalue of 37,716.77 million yuan. The registered place of the Company is Bozhou City, Anhui Province,People's Republic of China. The Company was established on March 5, 1996 with the approval ofAnhui Secretary of Government (1996) No. 42 (皖政秘(1996)42 号文) by the Anhui ProvincialPeople's Government. The Company started its founding meeting on May 28, 1996, and registeredwith the Anhui Provincial Administration for Industry and Commerce on May 30, 1996.The Company issued 60,000,000 domestic listed foreign shares (hereafter “B” shares) in June 1996and 20,000,000 domestic listed CNY ordinary shares (hereafter “A” shares) in September 1996, thepar value of ordinary shares is CNY1.00 per share. Both A share and B share are listed on ShenzhenStock exchange.The headquarters of the Company is located in Gujing town, Bozhou city, Anhui province. TheCompany and the subsidiaries (collectively called “Group”) is mainly engaged in liquor production andsales; it belongs to the food manufacturing industry.The original registered capital was CNY 235 million, the total amount of shares was 235 million,including state-owned shares 155 million and domestic listed foreign shares 60 million, the par valueis CNY 1 per share.On May 29, 2006, the shareholder meeting for the Company’s shareholdings reform of A-sharemarket has discussed and approved the proposal of the shareholdings reform, and the reform wasimplemented in June 2006. After the Company’s shareholdings reform implemented, all shares ofthe Company became floating shares, which included 147,000,000 shares with restricted conditionon disposal, representing 62.55% of total share capital, and 88,000,000 shares without restrictedcondition on disposal, representing 37.45% of total share capital.
On June 27, 2007, the Company issued the Announcement of release restriction shares by AnhuiGujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with the restricted conditionon disposal became non-restricted in the stock market, and the conversion date is June 29, 2007.Hence, outstanding shares with the restrict condition on disposal are 135,250,000 shares,representing 57.55% of total share capital, the share without restricting condition on disposal are99,750,000 shares, representing 42.45% of total share capital.On July 17, 2008, the Company issued the Announcement of release restriction shares by AnhuiGujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with the restricted conditionon disposal became non-restricted in the stock market, and the conversion date is on July 18, 2008.Hence, outstanding shares with the restricted condition on disposal were 123,500,000 shares,representing 52.55% of total share capital, the share without restricting condition on disposal are111,500,000 shares, representing 47.45% of total share capital.On July 24, 2009, the Company issued the Announcement of release restriction shares by AnhuiGujing Distillery Co., Ltd., the 123,500,000 restricted outstanding shares with the restrictedcondition on disposal became non-restricted in the stock market, and the conversion date was onJuly 29, 2009. Hence, all shares of the Company became outstanding shares without restrictedcondition on disposal.According to the approval by China Securities Regulatory Commission (the authorization file No.zhengjianxuke[2011]943), on July 15, 2011, the Company privately issued 16,800,000 shares ofordinary share (A shares) to specific investors, the par value was CNY 1 per share, and the offeringprice was CNY 75 per share, the funds raised amounted to CNY 1,260 million. After deducting thesundry issuing charges amounting to CNY 32,500,549.73, the actual funds raised amounted to CNY1,227,499,450.27. The position of the above raised funds has been verified by Reanda CertifiedPublic Accountants Co., Ltd. with a Capital Verification Report (REANDA YAN ZI[2011]No.1065).After the non-public issuance, the share capital of the Company increased to CNY 251.80 million.According to the resolution of 2011 annual general meeting of stockholders, the Company converted10 shares for each10 shares from capital reserves based on the 251.80 million shares on 31December 2011, the total number of converted shares was 251.80 million, and the transfer wasimplemented in 2012. After the conversion, the registered capital increased to CNY 503.60 million.As of 31 December 2018, the accumulated number of issued capital was 503.60 million shares.Refer to Note 6.25 for details.The Company registered in Gujing town, Bozhou city, Anhui province.The approved business scope of the Company: grain procurement (operation by license),production of distilled spirits, brewing equipment, packaging materials, glass bottles, alcohol,
grease (limited to the by-products from alcohol production), high-tech development, biotechnologydevelopment, deep processing of agricultural and sideline products, sales of self-produced products.The parent company of the Company and ultimate parent company is Anhui Gujing Group Co., Ltd.incorporated in China.The financial statement is approved by the resolution of the board of directors on 26 April 2019.According to the articles of association, the financial statements will be submitted to the shareholdersmeeting for consideration.A total of 23 subsidiaries of the Company that were included in the scope of consolidation in 2018 arelisted in Note 8 “The equity in other entities”. The scope of consolidation of the Company for thecurrent year was reduced by one subsidiary from the previous year. Refer to Note 7 “Changes of thescope of consolidated financial statements” for details.
Note 2 Basis for preparation of the financial statementsThe financial statements of the Company have been prepared on basis of going concern in conformitywith Chinese Accounting Standards for Business Enterprises and the Accounting Systems forBusiness Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry ofFinance issued order No.33, the Ministry of Finance revised order No.76) on February 15, 2006, andrevised Accounting Standards (order 42 of the Ministry of Finance) and Compilation Rules forInformation Disclosure by Companies Offering Securities to the Public No.15 – General Provisions onFinancial Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC).According to the relevant accounting regulations in Chinese Accounting Standards for BusinessEnterprises, the Company has adopted the accrual basis of accounting. Held-for-sale non-currentassets are measured at the lower of its book value at its classification date and fair value minusexpected disposal costs. Where assets are impaired, provisions for asset impairment are made inaccordance with relevant requirements.
Note 3 Declaration of compliance with the CASThe financial statements of the Company are recognized and measured in accordance with theregulations in the Chinese Accounting Standards for Business Enterprises and they give a true andfair view of the financial position, business result and cash flow of the Company as of December 312018. In addition, the financial statements of the Company comply, in all material respects, with therevised disclosing requirements for financial statements and the Compilation Rules for InformationDisclosure by Companies Offering Securities to the Public No.15—General Provisions on FinancialReports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.
Note 4 Significant accounting policies and accounting estimatesThe Company and subsidiaries are mainly engaged in liquor production and sales. The Companyformulates the specific accounting policies and accounting estimates for revenue recognition andother transactions and events in accordance with the actual business operation characteristics of theCompany and subsidiaries, and provisions of the relevant accounting standard for businessenterprises, please see Note 4.23 “Revenue” for details. The description of significant accountjudgment and estimates made by management, please see Note 4.28 “Significant accountingjudgment and estimates.”4.1 Accounting periodThe accounting period of the Company is classified as interim period and annual period. Interimperiod refers to the reporting period shorter than a complete annual period. The accounting period ofthe Company is the calendar year from January 1 to December 31.4.2 Operating cycleThe normal business cycle refers to the period from the purchase of assets for processing to therealization of cash or cash equivalents. The Company takes 12 months as a business cycle and usesit as a criterion for liquidity classification of assets and liabilities.4.3 Monetary UnitYuan (CNY) is the currency of the primary economic environment in which the Company and itsdomestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose CNY astheir functional currency. The Company adopts CNY to prepare its functional statements.4.4 Accounting for business combinations under common control and under different controlA business combination is a transaction or event that brings together two or more separate entitiesinto one reporting entity. Business combinations are classified into business combinations involvingenterprises under common control and business combinations not involving enterprises undercommon control.4.4.1 Business combination involving entities under common controlA business combination involving enterprises under common control is a business combination inwhich all of the combining enterprises are ultimately controlled by the same party or parties bothbefore and after the combination, and that control is not transitory.For a business combination involving enterprises under common control, the party that, on thecombination date, obtains control of another enterprise participating in the combination is the
absorbing party, while that other enterprise participating in the combination is a party being absorbed.Combination date is the date on which the absorbing party effectively obtains control of the partybeing absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by theenterprise being combined at the combination date. The difference between the carrying amount ofthe net assets obtained and the carrying amount of consideration paid for the combination (or the totalface value of shares issued) is adjusted to the capital premium (or share premium) in the capitalreserve. If the balance of the capital premium (or share premium) is insufficient, any excess isadjusted to retained earnings.The cost of a combination incurred by the absorbing party includes any costs directly attributable tothe combination shall be recognized as an expense through profit or loss for the current period whenincurred.4.4.2 Business combination involving entities not under common controlA business combination involving enterprises not under common control is a business combination inwhich all of the combining enterprises are not ultimately controlled by the same party or parties bothbefore and after the business combination.For a business combination not involving enterprises under common control, the party that, on theacquisition date, obtains control of another enterprise participating in the combination is the acquirer,while that other enterprise participating in the combination is the acquiree. Acquisition date is the dateon which the acquirer effectively obtains control of the acquiree.For a business combination not involving enterprise under common control, the combined costincluding the sum of fair value, at the acquisition date, of the assets given, liabilities incurred orassumed, and equity securities issued by the acquirer. The intermediary expenses incurred by theacquirer in respect of auditing, legal services, valuation and consultancy services, etc. and otherassociated administrative expenses attributable to the business combination are recognized in profitor loss when they are incurred.The transaction cost arose from issuing of equity securities, or liability securities shall be initiallyrecognized as equity securities or liability securities.The contingent consideration related to the combination shall be booked as combination cost at thefair value at the acquisition date. If within the 12 months after the acquisition, additional informationcan prove the existence of related information at the acquisition date and the contingent considerationneed to be adjusted, goodwill can be adjusted.Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired throughthe business combination shall be measured by the fair value at the acquisition date. Where the cost
of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets,the difference shall be recognized as goodwill. Where the cost of combination is less than theacquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall beaccounted for according to the following requirements: (i) the acquirer shall reassess themeasurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilitiesand measurement of the cost of combination; (ii) if after that reassessment, the cost of combination isstill less than the acquirer’s interest in the fair values of the acquiree’s identifiable net assets, theacquirer shall recognize the remaining difference immediately in profit or loss for the current period.Where the temporary difference obtained by the acquirer was not recognized due to conformity withthe conditions applied for recognition of deferred income tax, if, within the 12 months after acquisition,additional information can prove the existence of related information at acquisition date and theexpected economic benefits on the acquisition date arose from temporary deductible difference by theacquiree can be achieved, relevant income tax assets can be recognized, and goodwill offset. If thegoodwill is not sufficient, the difference shall be recognized as the profit of the current period.Apart from above, the differences shall be taken into profit or loss of the current period if therecognition of deferred income tax assets is related to the combination.For a business combination not involving enterprise under common control, which achieved in stagesthat involves multiple exchange transactions, according to “The notice of the Ministry of Finance onthe issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article 51 of“Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements” on the“package deal” criterion (see Note 4.5.2), to judge the multiple exchange transactions whether theyare the "package deal". If it belongs to the “package deal” in reference to the preceding paragraphs ofthis section and the Notes described in 4.13 “long-term investment” accounting treatment, if it doesnot belong to the “package deal” to distinguish the individual financial statements and the consolidatedfinancial statements related to the accounting treatment:
In the individual financial statements, the total value of the book value of the acquiree's equityinvestment before the acquisition date and the cost of new investment at the acquisition date, as theinitial cost of the investment, the acquiree's equity investment before the acquisition date involved inother comprehensive income, in the disposal of the investment will be in other comprehensive incomeassociated with the use of infrastructure and the acquiree directly related to the disposal of assets orliabilities of the same accounting treatment (that is, except in accordance with the equity method ofaccounting in the defined benefit plan acquiree is remeasured net changes in net assets or liabilitiesother than in the corresponding share of the lead, and the rest into the current investment income).In the combination financial statements, the equity interest in the acquiree previously held before theacquisition date re-assessed at the fair value at the acquisition date, with any difference between itsfair value and its carrying amount is recorded as investment income. The previously-held equity
interest in the acquiree involved in other comprehensive income and other comprehensive incomeassociated with the purchase of the foundation should be used party directly related to the disposal ofassets or liabilities of the same accounting treatment (that is, except in accordance with the equitymethod of accounting in the acquiree is remeasured defined benefit plans other than changes in netliabilities or net assets due to a corresponding share of the rest of the acquisition date into currentinvestment income).4.5 Preparation of the consolidated financial statements4.5.1 The scope of consolidationThe scope of consolidation for the consolidated financial statements is determined on the basis ofcontrol. Control is the power to govern the financial and operating policies of an enterprise so as toobtain benefits from its operating activities. The scope of consolidation includes the Company and allof the subsidiaries. The subsidiary is an enterprise or entity under the control of the Company.Once the change in the relevant facts and circumstances leading to the definition of the relevantelements involved in the control of the change, the Company will be re-evaluated.4.5.2 Preparation of the consolidated financial statementsThe subsidiary of the Company is included in the consolidated financial statements from the datewhen the control over the net assets and business decisions of the subsidiary is effectively obtainedand excluded from the date when the control ceases.For a subsidiary disposed of by the Company, the operating results and cash flows before the date ofdisposal (the date when control is lost) are included in the consolidated income statement andconsolidated statement of cash flows, as appropriate. For a subsidiary disposed of during the period,no adjustment is made to the opening balance of the consolidated financial statements.For a subsidiary acquired through a business combination not under common control, the operatingresults and cash flows from the acquisition (the date when the control is obtained) are included in theconsolidated income statement and consolidated statement of cash flows, as appropriate; noadjustment is made to the opening balance and comparative figures in the consolidated financialstatements.Where a subsidiary was acquired during the reporting period, through a business combinationinvolving enterprises under common control, the financial statements of the subsidiary are included inthe consolidated financial statements. The results of operations and cash flow are included in theconsolidated balance sheet and the consolidated income statement, respectively, based on theircarrying amounts, from the date that common control was established, and the opening balances andthe comparative figures of the consolidated financial statements are restated.When the accounting period or accounting policies of a subsidiary are different from those of the
Company, the Company makes necessary adjustments to the financial statements of the subsidiarybased on the Company’s own accounting period or accounting policies. Where a subsidiary wasacquired during the reporting period through a business combination not under common control, thefinancial statements were reconciled on the basis of the fair value of identifiable net assets at the dateof acquisition. Intra-Group balances and transactions and any unrealized profit or loss arising fromintra-Group transactions are eliminated in preparing the consolidated financial statements.
Minority interest and the portion of the net profit or loss not attributable to the Company are presentedseparately in the consolidated balance sheet within shareholders’/ owners’ equity and net profit. Netprofit or loss attributable to minority shareholders in the subsidiaries is presented separately asminority interest in the consolidated income statement below the net profit line item.When the amount of loss for the current period attributable to the minority shareholders of a subsidiaryexceeds the minority shareholders’ portion of the opening balance of shareholders’/equity of thesubsidiary, the excess is allocated against the minority interests.When the Company loses control of a subsidiary due to the disposal of a portion of an equityinvestment or other reasons, the remaining equity investment is re-measured at its fair value at thedate when control is lost. The difference between 1) the total amount of consideration received fromthe transaction that resulted in the loss of control and the fair value of the remaining equity investmentand 2) the carrying amounts of the interest in the former subsidiary’s net assets immediately beforethe loss of the control is recognized as investment income for the current period when control is lost.Other comprehensive income related to the former subsidiary's equity investment, using thefoundation and the acquiree directly related to the disposal of the same assets or liabilities areaccounted when the control is lost (i.e., in addition to the former subsidiary, which is remeasured atthe net defined benefit plan or changes in net assets and liabilities resulting from, the rest subsidiariesare transferred to the current investment income). The retained interest is subsequently measuredaccording to the rules stipulated in the - “Chinese Accounting Standards for Business EnterprisesNo.2 - Long-term equity investment” or “Chinese Accounting Standards for Business EnterprisesNo.22 - Determination and measurement of financial instruments”. See Note 4.13 Long-term equityinvestments and Note 4.9 Financial instruments for details.Where loss of control over a subsidiary result from multiple transactions (agreements), theassessment shall be made as to whether the multiple agreements shall be viewed as a whole as asingle transaction. Multiple agreements giving rise to loss of control over a subsidiary is generallyviewed as a whole as a single transaction if the terms, conditions and economic implications of themultiple agreements satisfy one or more of the following conditions: 1) the agreements are enteredinto simultaneously or taking into account the implication of each other; 2) the business objectivecannot be achieved without successful completion of all the agreements; 3)the occurrence of one
agreement is dependent on the result of at least another one agreement; and/or 4) any one singleagreement is not recognized as economic, and the agreements as a whole is economic. Wheremultiple agreements do not satisfy the conditions of being viewed as a single transaction, eachagreement shall be treated and accounted for in accordance with the provisions of disposal oflong-term equity investments not resulting loss of control (see Note 4.13.2.4) or loss of control due todisposal of shares or other events (see the previous paragraph). Where multiple agreements satisfythe conditions of being viewed as a single transaction, each agreement shall be treated andaccounted for as a transaction which results in loss of control; differences between the considerationfor disposals prior to loss of control and the net assets proportionate to the shares disposed prior toloss of control are recognized as other comprehensive income in the consolidated financialstatements and transferred to profit or loss at the time of loss of control.4.6 Joint arrangement and accounting for joint operationsA joint arrangement is an arrangement of which two or more parties have joint control. A jointarrangement is either a joint operation or a joint venture, depending on the rights and obligation of theCompany in the joint arrangement. A joint operation is a joint arrangement whereby the Company hasrights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is ajoint arrangement whereby the Company has rights to the net assets of the arrangement.The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.The Company, a joint operator, recognizes in relation to its interest in a joint operation: (a) its assets,including its share of any assets held jointly; (b) its liabilities, including its share of any liabilitiesincurred jointly; (c) its revenue from the sale of its share of the output arising from the jointoperation;(d)its share of the revenue from the sale of the output by the joint operation; and (e)itsexpenses, including its share of any expenses incurred jointly.When the Company enters into a transaction with a joint operation in which it is a joint operator, suchas a sale or contribution of assets, the Company, prior to disposal of the assets to a third party by thejoint operation, recognizes gains and losses resulting from such a transaction only to the extent of theother parties' interests in the joint operation. When there is evidence of a reduction in the netrealizable value of the assets to be sold or contributed to the joint operation, or of an impairment lossof those assets which is in line with provision stipulated by CAS 8, those losses are recognized fullyby the Company. When there is evidence of a reduction in the net realizable value of the assets to bepurchased or of an impairment loss of those assets, the Company shall recognize its share of thoselosses.4.7 Cash equivalentCash and cash equivalents of the Company include cash on hand, ready usable deposits andinvestments having short holding term (normally will be due within three months from the day ofpurchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
measured reliably and have low risks of change.4.8 Foreign exchange4.8.1 Translation in foreign exchange transactionsTransactions denominated in foreign currencies are translated into the functional currency using thetransaction-date spot exchange rates. Where a transaction is conducted purely for the purpose ofexchange one currency into another currency, the exchange rate used to translate the foreigncurrency into the functional currency is the exchange rate that is actually used for the currencyexchange.
4.8.2 Translation of foreign monetary currency and non-monetary foreign currencyAt the balance sheet date, foreign currency monetary items are translated using the spot exchangerate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss,except for ①those relating to foreign currency borrowings specifically for construction and acquisitionof qualifying assets, which are capitalized in accordance with the principle of capitalization ofborrowing costs, ②hedging accounting, the exchange difference related to hedging instruments forthe purpose of net oversea operating investment is recorded in the comprehensive income till the dateof disposal and recognized in profit or loss of the period; exchange difference from changes of otheraccount balance of foreign currency monetary items, ③available-for-trade is recorded into profit orloss except for amortized cost.Non-monetary foreign currency items measured at historical cost shall still be translated at the spotexchange rate prevailing on the transaction date, and the amount denominated in the functionalcurrency is not changed. Non-monetary foreign currency items measured at fair value are translatedat the spot exchange rate prevailing at the date when the fair values are determined. The exchangedifference thus resulted are recognized in profit or loss for the current period or as capital reserve.4.9 Financial instrumentsThe Company recognizes the financial assets or liabilities when involved in financial instruments’agreements. The financial assets or liabilities are measured at fair value when initially recognized. Forfinancial instruments whose value is measured at fair value, the related trading fees of whom arerecorded into gains or loss; For other financial instruments, the related fees are recognized as part ofinitial value.4.9.1 Recognition of financial assets and liabilities’ fair valueFair value is the amount for which an asset could be exchanged, or a liability settled, betweenknowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has anactive market, the Company uses quoted price in the active market to establish its fair value. The
quoted price in the active market refers to the price that can be regularly obtained from exchangemarket, agencies, industry associations, pricing authorities; it represents the fair market trading pricein the actual transaction.For a financial instrument which does not have an active market, the Company establishes fair valueby using a valuation technique. Valuation techniques include using recent arm’s length markettransactions between knowledgeable, willing parties, reference to the current fair value of anotherinstrument that is substantially the same, discounted cash flow analysis and option pricing models.The Company measures initially and subsequently the fair value of an interest rate swap at the valueof a competitor’s interest rate swap quoted by a recognized financial institution as at the Company’sbalance sheet date in accordance with the principle of consistency.4.9.2 Classification, recognition and measurement of financial assetsAll regular way purchases or sales of financial assets are recognized and derecognized on a tradedate basis. On initial recognition, the Company’s financial assets are classified into one of the fourcategories, including financial assets at fair value through profit or loss, held-to-maturity investments,loans and receivables and available-for-trade financial assets. A financial asset is recognized initiallyat fair value. In the case of financial assets at fair value through profit or loss, relevant transactioncosts are immediately charged to the profit and loss of the current period; transaction costs relating tofinancial assets of other categories are included in the amount initially recognized.4.9.2.1 Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit orloss.Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in the short term;B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectivelymanaged, and there is objective evidence indicating that the enterprise recently manages this portfoliofor the purpose of short-term profits;C. the financial asset is a derivative, except for a derivative that is designated and effective hedginginstrument, or a financial guarantee contract, or a derivative that is linked to and must be settled bydelivery of an unquoted equity instrument (without a quoted price from an active market) whose fairvalue cannot be reliably measured. For such kind of financial assets, fair values are adopted forsubsequent measurement.A financial asset is designated on initial recognition as at fair value through profit or loss only when it
meets one of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement orrecognition of relevant gains or losses that would otherwise arise from measuring the financialinstruments on different bases.B. a Group of financial instruments is managed, and its performance is evaluated on a fair value basisand is reported to the enterprise’s key management personnel. Formal documentation regarding riskmanagement or investment strategy has prepared.Financial assets at fair value through profit or loss are subsequently measured at the fair value. Anygains or losses arising from changes in the fair value and any dividends or interest income earned onthe financial assets are recognized in the profit or loss.
4.9.2.2 Investment held-to-maturityHeld-to-maturity investments are non-derivative financial assets with fixed or determinable paymentsand fixed maturity that an entity has a positive intention and ability to hold to maturity. Such kind offinancial assets is subsequently measured at amortized cost using the effective interest method.Gains or losses arising from derecognition, impairment or amortization are recognized in profit or lossfor the current period.The effective interest rate is the rate that exactly discounted estimated future cash flows through theexpected life of the financial asset or financial liability or, where appropriate, a shorter period to the netcarrying amount of the financial asset or financial liability.When calculating the effective interest rate, the Company shall estimate future cash flow consideringall contractual terms of the financial asset or financial liability without considering future credit losses,and also consider all fees paid or received by the parties to the contract giving rise to the financialasset and financial liability that are an integral part of the effective interest rate, transaction costs, andpremiums or discounts, etc.4.9.2.3 Loans and receivablesLoans and receivables are non-derivative financial assets with a fixed, determinable payment that arenot quoted in an active market. Financial assets classified as loans and receivables by the Companyinclude note receivables, account receivables, interest receivable dividends receivable and otherreceivables.Loans and receivables are subsequently measured at amortized cost using the effective interestmethod. Gain or loss arising from derecognition, impairment or amortization is recognized in profit orloss.
4.9.2.4 Financial assets available-for-tradeFinancial assets available-for-trade include non-derivative financial assets that are designated oninitial recognition as available for trade, and financial assets that are not classified as financial assetsat fair value through profit or loss, loans and receivables or investment held-to-maturity.Financial assets available-for-trade are subsequently measured at fair value, and gains or lossesarising from changes in the fair value are recognized as other comprehensive income and included inthe capital reserve, except that impairment losses and exchange differences related to amortized costof monetary financial assets denominated in foreign currencies are recognized in profit or loss, untilthe financial assets are derecognized, at which time the gains or losses are released and recognizedin profit or loss.Interests obtained and dividends declared by the investee during the period in which the financialassets available-for-trade are held, are recognized as investment gains.
4.9.3 Impairment of financial assetsThe Group assesses at the balance sheet date the carrying amount of every financial asset except forthe financial assets that measured by the fair value. If there is objective evidence indicating a financialasset may be impaired, a provision is provided for the impairment.4.9.3.1 Impairment on held-to-maturity investment, loans, and receivablesThe financial assets measured by cost or amortized cost write down their carrying value by theestimated present value of future cash flow. The difference is recorded as an impairment loss. If thereis objective evidence to indicate the recovery of the value of financial assets after impairment, and it isrelated to the subsequent event after recognition of loss, the impairment loss recorded originally canbe reversed. The carrying value of financial assets after impairment loss reversed shall not exceed theamortized cost of the financial assets without provisions of impairment loss on the reserving date.4.9.3.2 Impairment loss on available-for-trade financial assetsWhere the fair value of the equity instrument investment drops significantly or not contemporarilyaccording to the integrated relevant factors, an available-for-trade financial asset is impaired.When an available-for-trade financial asset is impaired, the cumulative loss arising from declining infair value that had been recognized in the capital reserve shall be removed and recognized in profit orloss. The amount of the cumulative loss that is removed shall be the difference between theacquisition cost with a deduction of a recoverable amount less amortized cost, current fair value andany impairment loss on that financial asset previously recognized in profit or loss.If, after an impairment loss has been recognized, there is objective evidence that the value of the
financial asset is recovered, and it is objectively related to an event occurring after the impairment losswas recognized, the initial impairment loss can be reversed and the reserved impairment loss onavailable-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss onavailable-for-trade debt instrument is recorded in the current profit or loss.The equity instrument where there is no quoted price in an active market, and whose fair value cannotbe reliably measured, or impairment loss on a derivative asset that is linked to and must be settled bydelivery of such an unquoted equity instrument shall not be reversed.4.9.4 Recognition and measurement of financial assets transferThe Group derecognizes a financial asset when one of the following conditions is met:
a. the rights to receive cash flows from the asset have expired;b. the enterprise has transferred its rights to receive cash flows from the asset to a third party under apass-through arrangement; orc. the enterprise has transferred its rights to receive cash flows from the asset and either (a) hastransferred substantially all the risks and rewards of the asset, or (b) has neither transferred norretained substantially all the risks and rewards of the asset but has transferred control of the asset.If the enterprise has neither retained all the risks and rewards from the financial asset nor control overthe asset, the asset is recognized according to the extent it exists as a financial asset, andcorrespondent liability is recognized. The extent of existence refers the level of risk by the financialasset changes the enterprise is facing.For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carryingamount of the financial asset transferred; and (b) the sum of the consideration received from thetransfer and any cumulative gain or loss that had been recognized in other comprehensive income, isrecognized in profit or loss.If a part of the transferred financial asset qualifies for derecognition, the carrying amount of thetransferred financial asset is allocated between the part that continues to be recognized and the partthat is derecognized, based on the relative fair value of those parts. The difference between (a) thecarrying amount allocated to the part derecognized; and (b) the sum of the consideration received forthe part derecognized and any cumulative gain or loss allocated to the part derecognized which hasbeen previously recognized in other comprehensive income, is recognized in profit or loss.4.9.5 Classification and measurement of financial liabilitiesThe Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair valuethrough profit or loss and other financial liabilities. For financial liabilities at fair value through profit orloss, relevant transaction costs are immediately recognized in profit or loss for the current period, andtransaction costs relating to other financial liabilities are included in the initial recognition amounts.
4.9.5.1 Financial liabilities measured by the fair value and the changes recorded in profit or lossThe classification by which financial liabilities held-for-trade and financial liabilities designed at theinitial recognition to be measured by the fair value follows the same criteria as the classification bywhich financial assets held-for-trade and financial assets designed at the initial recognition to bemeasured by the fair value and their changes are recorded in the current profit or loss.For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fairvalues are adopted for subsequent measurement. All the gains or losses on the change of fair valueand the expenses on dividends or interests related to these financial liabilities are recognized in profitor loss for the current period.4.9.5.2 Other financial liabilitiesDerivative financial liabilities that linked with equity instruments, which do not have a quoted price inan active market and their fair value cannot be measured reliably, is subsequently measured by costOther financial liabilities are subsequently measured at amortized cost using the effective interestmethod. Gains or losses arising from derecognition or amortization is recognized in profit or loss forthe current period.
4.9.6 Derecognition of financial liabilitiesThe Group derecognizes a financial liability (or part of it) when the present underlying obligation (orpart of it) is discharged or canceled or has expired. An agreement between the Company (an existingborrower) and existing lender to replace original financial liability with a new financial liability withsubstantially different terms is accounted for as an extinguishment of the original financial liability andthe recognition of a new liability.When the Company derecognizes a financial liability or a part of it, it recognizes the differencebetween the carrying amount of the financial liability (or part of the financial liability) derecognized theconsideration paid (including any non-cash assets transferred or new financial liabilities assumed) inprofit or loss.4.9.7 Derivatives and embedded derivativesDerivative financial instruments include derivatives are initially measured at fair value at the date whenthe derivative contracts are entered into and are substantially re-measured at fair value. The gain orloss caused by the fair value change of the hedging instrument which the hedging is high efficiencywill be recorded into a specific period in accordance with the hedging accounting according to thehedging relationship. Except for the hedging above, the resulting gain and loss of other derivatives isrecognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is notdesignated as a financial asset or financial liability at fair value through profit or loss, and the treatedas a standalone derivative if (a) the economic characteristics and risks of the embedded derivative arenot closely related to the economic characteristics and risks of the host contract; and (b) a separateinstrument with the same terms as the embedded derivative would meet the definition of a derivative.If the Company is unable to measure the embedded derivative separately either at acquisition date orat a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset orfinancial liability at fair value through profit or loss.4.9.8 Offsetting financial assets and financial liabilitiesWhen the Company has a legal right that is currently enforceable to set off the recognized financialassets and financial liabilities, and intends either to settle on a net basis, or to realize the financialasset and settle the financial liability simultaneously, a financial asset and a financial liability shall beoffset and the net amount is presented in the balance sheet. Except for the above circumstances,financial assets and financial liabilities shall be presented separately in the balance sheet and shallnot be offset.
4.9.9 Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Companyafter deducting all of its liabilities. The consideration received from issuing equity instruments, net oftransaction costs, are added to shareholders’ equity. All types of distribution (excluding stockdividends) made by the Company to holders of equity instruments are deducted from shareholders’equity. The Company does not recognize any changes in the fair value of equity instruments.4.10 ReceivablesThe receivables by the Company include account receivables and other receivables.4.10.1 Impairment of receivablesReceivables are assessed for impairment on balance sheet dates. An impairment allowance forreceivables is recognized if any of the following is present in assessment:
a. significant financial difficulty of the issuer or obligor; orb. a breach of contract, such as a default or delinquency in interest or principal payments; orc. it is probable that the borrower will enter bankruptcy or other financial reorganization; ord. other objective evidence is indicating impairment.4.10.2 Impairment allowance for receivables
4.10.2.1 Receivables of individual significance subject to individual assessment and the relevantimpairment allowanceIndividual receivables equal to or over CNY 2,000,000.00 are classified as receivables of individualsignificance.Receivables of individual significance are individually assessed for impairment. Receivables ofindividual significance assessed as non-impaired upon individual assessment are incorporated intoportfolios of financial assets of similar credit risk characteristics for assessment for impairment byportfolio. Receivables of individual significance assessed as impaired upon individual assessment areno longer subject to assessment for impairment by portfolio.4.10.2.2 Portfolios of receivables of similar credit risk characteristics and the relevant impairmentallowanceA. Classification of portfoliosReceivables of individual insignificance and non-impaired receivables of individual significance uponindividual assessment are classified into portfolios of financial assets on the basis of similarity andrelevance of credit risk characteristics. Credit risk characteristics represent the ability of the issuers orobligors to make payments in accordance with contracts and future cash flows of the relevant assets.Evidence of portfolios：
| Portfolio | Criteria |
| Portfolio by age | Age of receivables |
| Related party portfolios | Entities within the scope of the consolidation. |
| Portfolio | Measurement method |
| Portfolio by age | Age analysis method |
| Related party portfolios | No allowance for bad debt |
| Age group | Proportion to accounts receivable (%) | Proportion to other receivables |
(%)
| (%) | ||
| Less than 1 year (inclusive, same applies to the following) | ||
| Including: 1 to 6 months | 1.00 | 1.00 |
| 7 to 12 months | 5.00 | 5.00 |
| 1 to 2 years | 10.00 | 10.00 |
| 2 to 3 years | 50.00 | 50.00 |
| Over 3 years | 100.00 | 100.00 |
consideration the purpose of holding inventories and effect of post balance sheet events.At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.If the net realizable value is below the cost of inventories, a provision for decline in value ofinventories is made. The provision for inventories decline in value is normally determined by thedifference of the cost of the individual item less its realizable value. For large quantity and low-valueitems of inventories,provision for decline in value is made based on categories of inventories. For items of inventoriesrelating to a product line that are produced and marketed in the same geographical area, have thesame or similar end users or purposes, and cannot be practicably evaluated separately from otheritems in that product line provision for decline in value is determined on an aggregate basis.After the provision for decline in value of inventories is made, if the circumstances that previouslycaused inventories to be written down below cost no longer exist so that the net realizable value ofinventories is higher than their cost, the original provision for decline in value is reversed and thereversal is included in profit or loss for the period.4.11.4 Physical inventories are managed by the perpetual inventory taking system.4.11.5 Amortisation of low-value consumables and packaging materialsLow-value consumables and packaging materials are fully amortized at the time of issuance.4.12 Held-for-sale assets and disposal groupThe Company classify a non-current asset or disposal group as held for sale if its carrying amount willbe recovered principally through a sale transaction rather than through continuing use. For this to bethe case, the following conditions shall be met: a) the asset (or disposal group) must be available forimmediate sale in its present condition subject to terms that are usual and customary for sales of suchassets or disposal groups; b) the Company has made the resolution on the disposal plan and must becommitted to a plan to sell the asset (or disposal group); c) the sale is expected to be completedwithin one year from the date of classification. A disposal group is a group of assets to be disposed of,by sale or otherwise, together as a group in a single transaction, and liabilities directly associated withthose assets that will be transferred in the transaction. The group shall include goodwill acquired in abusiness combination if the group is a cash-generating unit to which goodwill has been allocated inaccordance with the requirements of Accounting Standard for Business Enterprises No. 8 –Impairment of assets.The Company measure a non-current asset or disposal group classified as held for sale at the lowerof its carrying amount and fair value less costs to sell on initial recognition and subsequentremeasurement on the balance sheet date. An impairment loss is recognized when the carryingamount is higher than the fair value less costs to sell, and allowance for impairment is recognized
accordingly. For the disposal group, the recognized impairment loss on assets is offset against thecarrying amount of the goodwill in the disposal group, and then reduced in proportion of the bookvalue of the non-current assets applicable to "Accounting Standard for Business Enterprises No. 42 -Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter referredto as "held for sale accounting principle") measurement requirements. The Company shall recognize again during the period for any subsequent increase in fair value less costs to sell of an asset, but notin excess of the cumulative impairment loss that has been recognized after the reclassification tonon-current assets held for sale. The book value of assets in the disposal group is increasedproportionately according to the proportion of the book value of each non-current asset except forgoodwill. Impairment loss recognized before the reclassification to non-current assets held for sellshall not be recovered.Non-current asset or non-current asset in the disposal group classified as held for sale are not subjectto depreciation or amortization. The interest and other expenses on liabilities held in the disposalgroup for sale are continuously recognized.Non-current assets or disposal group that no longer meet the conditions of non-current asset held forsell shall be removed from the category, and shall be measured at the lower of the following: (a) Thecarrying amount before classification as held for sale after adjustment of depreciation, amortization orimpairment that should be recognized if it is not classified as non-current assets held for sell; (b)recoverable amount.4.13 Long-term equity investmentsLong-term equity investments in this section refer to the long-term investment through which theCompany has control, joint control, or material influence on the investee. Long-term equityinvestments through which the Company does not have control, joint control or material influence onthe investee shall be recognized as available-for-sale financial assets or financial assets measured byfair value with changes in fair value recognized in profit or loss. See Note 4.9 for details.Joint control is the contractually agreed sharing of control over economic activity and exists when thestrategic financial and operating decisions relating to the activity require the unanimous consent of theparties sharing control. Significant influence is the power to participate in the financial and operatingpolicy decisions of the investee but is not control or joint control over those policies.4.13.1 Determination of Investment costLong-term equity investment acquired through business combination under common control aremeasured at the acquirer's share of the combination date book value of the acquiree's net equity inthe ultimate controller's consolidated financial statements. The difference between the initial cost andcash paid, non-monetary assets transferred, and liabilities assumed by is adjusted to capital reserves,
and to retained earnings if capital reserves are insufficient. If the consideration is paid by issuingequity instruments, the initial cost is measured at the acquirer's share of the combination date bookvalue of the acquiree's net equity in the ultimate controller's consolidated financial statements, with theface value of the equity instruments issued recognized as share capital and the difference betweenthe initial cost and the face value of the equity instruments issued adjusted to capital reserves, and toretained earnings if capital reserves is insufficient. For business combination involving entities undercommon control achieved through multiple transactions (acquisition in stages), the multipleagreements are assessed to determine whether they should be viewed as a lump-sum purchase.Where multiple agreements of an acquisition in stages are viewed as a lump-sum purchase, thetransactions are viewed as one transaction that acquires the control power. Where multipleagreements of an acquisition fail the conditions of a lump-sum purchase, long-term equity investmentacquired through business combination under common control are measured at the acquirer's shareof the combination date book value of the acquiree's net equity in the ultimate controller's consolidatedfinancial statements. The difference between the initial cost, and the book value of the long-termequity investment before combination date and considerations paid to acquire new shares on thecombination date, is adjusted to capital reserves, and to retained earnings if capital reserves areinsufficient.Long-term equity investment acquired through business combination not under common control ismeasured at combination cost on the combination date. The combination cost includes assetscontributed by the purchaser, liabilities incurred or assumed by, and fair value of the equityinstruments issued by the acquirer. For business combination involving entities not under commoncontrol achieved through multiple transactions (acquisition in stages), the multiple agreements areassessed to determine whether they should be viewed as a lump-sum purchase. Where multipleagreements of an acquisition in stages are viewed as a lump-sum purchase, the transactions areviewed as one transaction that acquires the control power. Where multiple agreements of anacquisition fail the conditions of a lump-sum purchase, long-term equity investment acquired throughbusiness combination not under common control are measured at the sum of the original book valueof the equity investment on the investee and the new investment cost, which is regarded as the newinitial cost of the long-term investment when transferred to cost method. If the original equity ismeasured by the equity method, not accounting treatment is applied to relevant other comprehensiveincome temporarily.The audit, legal services, valuation, and other directly associated administrative expenses incurred bythe acquirer are recognized in profit or loss on the transaction dates.Long-term equity investments acquired not through business combination are measured at cost on
initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cashpaid, the fair value of equity instrument issued, the contract price, the fair value or book value of theassets given away in the case of non-monetary asset exchange, or the fair value of the relevantlong-term equity investments. The cost of acquisition of a long-term equity investment acquired notthrough business combination also includes all directly associated expenses, applicable taxes andfees, and other necessary expenses. When the Company increase investment to have materialinfluence or joint control, but not control over the investee, long-term investments are measured at thesum of the fair value of initial equity investment and cost of new investment as defined inCAS22-Recognition and Measurement of Financial Assets.4.13.2 Subsequent measurement and recognition and measurement of gain or lossWhere a long-term equity investment gives the Company either joint control or significant influenceover the respective investee, the investment is subsequently measured using the equity method.Where a long-term equity investment gives the Company control over the respective investee, theinvestment is subsequently measured at cost.4.13.2.1 Long-term equity investments measured at costA long-term equity investment is measured at the cost of investment, excluding declared cashdividends or profit pending distribution included in the consideration paid. Investment income for therelevant period from a long-term equity investment measured at cost is recognized as the Company'sshare of the cash dividends or profit declared for distribution by the investee.4.13.2.2 Long-term equity investments measured using the equity methodWhen the cost of a long-term equity investment measured using the equity method on initialrecognition exceeds the Company's share of the fair value of the respective investee's net identifiableassets, no adjustment is made to the cost of the investment for the excess. When the Company'sshare of the fair value of an investee's net identifiable assets exceeds the cost of the respectivelong-term equity investment measured using the equity method on initial recognition, adjustment ismade to the cost of the investment for the difference and the difference is carried to profit or loss forthe period during which the investment is recognized.Investment income or loss and other comprehensive income for the relevant period from a long-termequity investment measured using the equity method is measured at the Company's share of the netprofit or loss and other comprehensive income of the respective investee for the relevant period, andthe book value of long-term equity investments is adjusted accordingly. If the investee declares profitdistribution or cash dividends, long-term equity investments are reduced by the Company’s share ofdeclared profit distribution or cash dividends in the investee. Long-term equity investments will beadjusted, and capital reserves are recognized with variations other than net profit or loss, other
comprehensive income, and profit distribution. When computing the Company's share of the net profitor loss of the investee for the relevant period, net profit or loss of the investee for the relevant period isadjusted, if necessary, for the fair value of the investee's identifiable assets and identifiable liabilitieson acquisition and the Company's accounting policies and accounting period. Investment income andother comprehensive income is recognized accordingly. The computation of the Company's share ofthe net profit or loss of the investee for the relevant period also eliminates unrealized profit and lossarising from transactions between the Company and the investee (a joint venture or associate,whichever is applicable) and contributing or selling assets to the investee which forms an operation, tothe extent of the Company's share calculated by the Company's shareholding in the investee for therelevant period, except for the unrealized loss resulted from impairment of transferred assets. Whencontributing assets to the joint venture or associate by the Company forms an operation, and theinvestor acquires the long-term equity investment without control, long-term equity investments aremeasured at fair value of the contributed operations, with the difference between initial investmentcost and book value of the contributed operation fully recognized in profit or loss for the period. Whenselling assets to the joint venture or associate by the Company forms an operation, the differencebetween considerations received and book value of the operation is fully recognized in profit and lossfor the period. When purchasing assets from the joint venture or associate by the Company belongs toan operation, income and losses are fully recognized as specified in CAS20-Business Combination.When the Company's share of an investee's net loss exceeds the sum of the carrying amount of therespective long-term equity investment measured using the equity method and other investments inthe investee, the carrying amount of the long-term equity investment and other investments in theinvestee is reduced to zero. If the Company is obliged to share loss of the investee after its long-termequity investment and other investments have been reduced to zero, an investment loss and provisionis recognized to the extent of the estimated obligation. If the investee reports profits in subsequentperiods, the Company only recognizes its share of profit after its share of profit equals the share ofloss not recognized.For long-term equity investments in associates and joint ventures which had been held by theCompany before its first time adoption of new accounting standards, where the initial investment costof a long-term equity investment exceeds the Company’s share in the investee’s net assets at the timeof acquisition, the excess is amortized and is recognized in profit or loss on a straight-line basis overthe original remaining life.4.13.2.3 Acquisition of minority interestsIf minority interests in an investee is acquired by the Company, during the Company's preparation ofthe consolidated financial statements, the difference between the Company's cumulative share of theinvestees net assets calculated on the basis of the new shareholding in the investee from the
acquisition date (or combination date) and the Company's investment in the investee following theminority interest acquisition is adjusted to capital reserves, and to retained earnings if capital reservesis insufficient.4.13.2.4 Disposal of long-term equity investmentsOn the consolidated financial statements, when partly disposal of a long-term equity investment in asubsidiary which does not cause loss of control over the subsidiary, the difference between theconsideration for disposal and the net identifiable asset given away proportionate to the disposedshares in the subsidiary is recognized in equity; partly disposal of a long-term equity investment in asubsidiary which causes loss of control over the subsidiary is accounted for in accordance with Note4.5.2.The difference between the consideration for disposal of long-term equity investments and thecarrying amount of the long-term equity investments disposed of is recognized in profit or loss for theperiod during which the investments are disposed of.When a long-term equity investment measured using the equity method is disposed, and the residualequity after disposal is still measured using equity method, the respective cumulative othercomprehensive income recognized in equity proportionate to the disposed of investment shall adoptthe same accounting treatment as the investee disposes of relevant assets or liabilities directly.Movement in investee's equity other than changes in net profit or loss, other comprehensive income,and profit distribution is recognized in profit or loss proportionally.When a long-term equity investment measured using the cost method is disposed and the residualequity after disposal is still measured using cost method, other comprehensive income, which isrecognized by equity method or recognition and measurement applicable to financial instruments priorto the Company's acquisition of control over the investee, shall adopt the same accounting treatmentas the investee disposes relevant assets or liabilities directly on the date of loss of control, and profitor loss is recognized proportionally. Movement in investee's equity other than changes in net profit orloss, other comprehensive income, and profit distribution is recognized in profit or loss proportionally.Where the Company's control over an investee is lost due to partial disposal of investment in theinvestee and the Company continues to have significant influence over the investee after the partialdisposal, the investment is measured by equity method in the Company's separate financialstatements; where the Company's control over an investee is lost due to partial disposal of investmentin the investee and the Company ceases to have significant influence over the investee after thepartial disposal, the investment is measured in accordance with the recognition and measurementprinciples applicable to financial instruments in the Company's separate financial statements and thedifference between the fair value and book value of the remaining investment at the date of loss ofcontrol is recognized in profit or loss. Cumulative other comprehensive income relevant to theinvestment, which is recognized by equity method or recognition and measurement principles
applicable to financial instruments prior to the Company's acquisition of control over the investee, shalladopt the same accounting treatment as the investee disposes relevant assets or liabilities directly onthe date of loss of control, The investee's equity movement other than changes in net profit or loss,other comprehensive income and profit distribution, as a result of accounting by equity method, isrecognized in profit or loss when control is lost. Where the remaining investment is measured byequity method, the afore-mentioned other comprehensive income and other equity movement arerecognized in profit or loss proportionate to the disposal; Where the remaining investment ismeasured in accordance with the recognition and measurement principles applicable to financialinstruments, the afore-mentioned other comprehensive income and other equity movement are fullyrecognized in profit or loss.Where the Company's joint control or significant influence over an investee is lost due to partialdisposal of investment in the investee, the remaining investment in the investee is measured inaccordance with the recognition and measurement principles applicable to financial instruments, thedifference between the fair value and the book value of the remaining investment at the date of loss ofjoint control or significant influence is recognized in profit or loss. Cumulative other comprehensiveincome relevant to the investment, which is recognized by equity method or recognition andmeasurement principles applicable to financial instruments prior to the Company's acquisition ofcontrol over the investee, shall adopt the same accounting treatment as the investee disposesrelevant assets or liabilities directly on the date of loss of control, The investee's equity movementother than changes in net profit or loss, other comprehensive income and profit distribution, as a resultof accounting by equity method, is recognized in profit or loss when control is lost.Where the Company's control over an investee is lost through multiple disposals and the multipledisposals can be viewed as a lump-sum transaction, the multiple disposals are accounted for onesingle transaction which results in the Company's loss of control over the investee. Differencebetween the consideration received and the book value of the investment disposed at each time ofdisposal is recognized in other comprehensive income and reclassified in full to profit or loss at theperiod when control over the investee is lost.4.14 Investment propertyInvestment property is held to earn rentals or for capital appreciation or for both. Investment propertyincludes leased or ready to transfer after capital appreciation land use rights and leased buildings.Investment property is initially measured at cost. Subsequent expenditures related to an investmentreal estate are likely to flow about the economic benefits of the asset, and its cost can be measuredreliably, is included in the cost of investment real estate. Other subsequent expenditure in the profit orloss when it incurred.The Group uses the cost model for subsequent measurement of investment property, and inaccordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in Note 20“Non-current and non-financial assets impairment."Occupied real estate for investment property or investment property is transferred to theowner-occupied real estate or stock conversion as the recorded value after the conversion, accordingto the book value before the conversion.Investment property change into the Owner-occupied real estate, since the change of date for theinvestment property, is transferred to fixed assets or intangible assets. Change the owner-occupiedproperty held to earn rentals or for capital appreciation, since the change of date, the fixed assets orintangible assets to investment property. Conversion occurs when converted to investment propertyusing the cost model, as the book value before the conversion of the recorded value after theconversion; converted to investment property measured at fair value model, the fair value of theconversion date as the recorded value after conversion.Derecognized, when the investment property is disposed of or permanently withdrawn from use andthe expected economic benefits, cannot be obtained from the disposal of investment property.Proceeds on disposal of investment property is sold, transferred, retired or damaged through profit orloss after deducting the book value and related taxes.4.15 Fixed assets4.15.1 DefinitionFixed assets refer to the tangible assets that are held for the sake of producing commodities,rendering labor service, renting or business management and their useful life is in excess of onefiscal year.4.15.2 Depreciation of fixed assetsFixed assets are stated at cost and consider the impact of expected costs of abandoning the initialmeasurement. From the following month of a state of intended use, depreciation method of thestraight-line method is used for different categories of fixed assets to take depreciation. Therecognition of the classification, useful life and estimated residual rate are as follows:
| Category | Expected useful life | Estimated residual value (%) | Depreciation (%) |
| Houses and building | 8.00-35.00 | 3.00-5.00 | 2.70-12.10 |
| Machineries | 5.00-10.00 | 3.00-5.00 | 9.50-19.40 |
| Vehicles | 4.00 | 3.00 | 24.25 |
| Administrative equipment and others | 3.00 | 3.00 | 32.33 |
disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of usefullife and state the expected service life in the end.4.15.3 Assessment of impairment and impairment allowanceImpairment and provisions of fixed assets are disclosed on Note 4.20 Impairment of non-current andnon-financial assets.4.15.4 Recognition and measurement of fixed assets held under financial leaseA finance lease is a lease that transfers in substance all the risks and rewards incident to ownership ofan asset. The title may or may not eventually be transferred.Fixed assets that are held under finance leases shall be depreciated by applying the same policy asthat for the fixed assets owned by the Company. If it can be reasonably determined that the ownershipof the leased assets can be obtained at the end of the lease period, the leased assets are depreciatedover their useful lives; otherwise, the leased assets are depreciated over the shorter of the leaseterms and the useful lives of the leased assets.4.15.5 Other relevant informationA fixed asset is recognized only when the economic benefits associated with the asset will probablyflow to the Company and the cost of the asset can be measured reliably. Subsequent expenditureincurred for a fixed asset that meets the recognition criteria shall be included in the cost of the fixedasset, and the carrying amount of the component of the fixed asset that is replaced shall bederecognized. Otherwise, such expenditure shall be recognized in profit or loss in the period in whichthey are incurred.The revenue from selling or transferring or disposing of a fixed asset is booked into profit and lossafter deduction of carrying value and related tax.The Company conducts a review of useful life, expected net realizable value and depreciationmethods of the fixed asset at least on an annual base. Any change is regarded as a change inaccounting estimates.4.16 Construction in progressThe cost of construction in progress is measured at the actual expenditure incurred, includingconstruction expenditure and capitalization of borrowing costs and other applicable costs incurredprior to the completion. An item of construction in progress is reclassified to fixed asset uponcompletion.See Note 4.20 for details of assessment for impairment of construction in progress and impairmentallowance for construction in progress.4.17 Borrowing costsBorrowing costs include interests on loans, amortization of discount or premium, ancillary expenses,and foreign exchange difference on loans denominated in foreign currencies. Borrowing costs directly
associated with the acquisition of construction of a qualifying asset are eligible for capitalization.Capitalization starts when expenditure on the qualifying asset is incurred, borrowing costs areincurred, or production or construction of the qualifying asset for its intended use or sales is started,whichever is later. Capitalization stops when the qualifying assets reach the condition of its intendeduse or sales. All other borrowing costs are recognized in profit or loss for the period during which theyare incurred.When a loan is taken out specifically for the construction of a particular qualifying asset, the interestexpense capitalized for a particular period is the residual amount after deducting interest income fromunused facilities for the period and/or income from temporary investment of the unused facilities forthe period from the interest expense incurred for the period. Borrowing costs on general purposefinancing are calculated by multiplying the weighted average of the excess of cumulative capitalexpenditure over the designated financing facilities with the capitalization rate of general purposefinancing. The capitalisation rate of general purpose financing is calculated as the weighted averageof the interest rates of general purpose financing.Foreign exchange difference on designated financing denominated in foreign currencies incurredduring the capitalization period is wholly capitalized. Foreign exchange difference on general purposefinancing denominated in foreign currencies is recognized in profit or loss for the period during whichit is incurred.A qualifying asset is an item of fixed assets, investment property, inventories, etc. which requires asubstantial period of time for the construction or production for its intended use of sales.If the construction or production of a qualifying asset stops for a period longer than three months,capitalization of borrowing costs is suspended until the construction or production is resumed.4.18 Intangible assets4.18.1 Intangible assetAn intangible asset is an identifiable non-monetary asset without a physical form which is owned orcontrol by the Company.Intangible assets are measured at cost on initial recognition. If it is probable that economic benefitsassociated with expenditure directly associated with an item of intangible assets will flow to theCompany and the cost of the expenditure can be reliably measured, the expenditure is measured aspart of the intangible asset's initial cost; all other expenditure is recognized in profit or loss for theperiod during which it is incurred.Land use rights acquired are generally recognized as intangible assets. In the case of aself-constructed building, the costs of acquiring the respective land use right(s) and the costs ofbuilding construction are separately recognized and measured as intangible assets and fixed assetsrespectively. In the case of a purchased building, the costs of acquisition are allocated to land use
right(s) and building; if the reasonable allocation is impossible, the costs of acquisition as a whole arerecognized and measured as fixed assets.For an item of intangible assets which is with a finite useful life, the residual amount after deductingits estimated residual value and previously recognized impairment from its cost is amortized over itsestimated remaining useful life using the straight-line method starting from the month in which itreaches the conditions of its intended use of sales. Intangible assets with infinite useful life are notamortized.Useful lives of intangible assets are a review on each balance sheet date. If circumstances indicatethat there is a change in the useful life of an item of intangible assets with a finite useful life, a changein accounting estimates is carried out. If circumstances indicate that the useful life of an item ofintangible assets with infinite useful life becomes finite, the useful life of the intangible asset isestimated, and the intangible asset is amortized accordingly.4.18.2 Research and development expenditureA research and development project is divided into research stage and development stage.Expenditure incurred during the research stage is recognized in profit or loss for the period duringwhich it is incurred.Expenditure incurred during the development stage is recognized as intangible assets if all of thefollowing conditions are satisfied:
a. it is technically feasible to complete the intangible asset so that it can be used or sold; andb. the Company has clear intention to complete the intangible asset and to use it or sell it; andc. it is evidential that the intangible asset will generate economic benefits either by selling theintangible asset itself or the goods produced by the intangible asset or by using it internally; andd. there are sufficient technical, financial and other resources to complete the intangible asset andthe Company is able to use it or sell it, ande. expenditure incurred in the development stage of the intangible asset can be reliably measured.Where a research and development project cannot be separated into the research stage anddevelopment stage, all expenditure incurred for the project is recognized in profit or loss for theperiod during which it is incurred.4.18.3 Assessment of impairment and impairment allowanceSee Note 4.20 for details of assessment for impairment of intangible assets and impairmentallowance for intangible assets.4.19 Deferred chargesAn item of deferred charges is an expense incurred which brings economic benefits to the Companyfor a period exceeding one year starting from the transaction date. An item of deferred charges is
amortized over its estimated useful life using the straight-line method.4.20 Impairment of non-current assetsNon-current non-monetary assets, such as fixed assets, construction in progress, intangible assetswith finite useful life, investment property measured by cost, and long-term equity investments insubsidiaries, joint ventures, and associates, are assessed for impairment on each balance sheet date.If circumstances on a balance-sheet date indicate that a non-current non-monetary asset is impaired,the recoverable amount of the asset is estimated. The recoverable amounts of goodwill, intangibleassets with infinite useful live and intangible assets which have not yet reached the conditions of theirintended use or sales are estimated at least once a year regardless of whether there is an indicationof impairment.If the carrying amount of a non-current non-monetary asset exceeds its estimated recoverable amount,the excess of the carrying amount over the estimated recoverable amount is recognized asimpairment allowance, and an impairment loss of the same amount is recognized. The estimatedrecoverable amount of an asset is the higher of the residual amount after deducting disposal expenseof the asset from its fair value and the present value of its future cash flows. Where there is a salescontract for an asset, and the contract is entered into for an arm's length transaction, the fair value ofthe asset is the contract price; where there isn't a sales contract for an asset, but there is an activemarket for it, the fair value of the asset is price offered by the buyer; where there is neither a salescontract nor an active market for an asset, the fair value of the asset is the best estimate based on allavailable information. The disposal cost of an asset includes legal expenses, applicable taxes andfees and transportation costs directly associated with the asset's disposal and all direct costsnecessary to bring the asset to its sellable condition. The present value of an asset's future cash flowsis calculated by multiplying the cash flows arising from the continual use of the asset and its disposalat an appropriate discount rate. An impairment allowance is generally calculated on the basis ofindividual assets. If it is not possible to estimate the recoverable amount of an individual asset, therecoverable amount of a cash-generating unit to which the asset belongs is estimated. Acash-generating unit is the smallest combination of assets that are capable of cash flow generation.Goodwill separately presented on the (consolidated) financial statements is allocated tocash-generating units or groups of units that are expected to benefit from the synergy of businesscombination for impairment testing. Where the recoverable amount a cash-generating unit (or group ofunits) is lower than its carrying amount, an impairment loss is recognized. The impairment loss isfirstly allocated to the goodwill allocated to the unit (or group of units) and then to individual assets prorata on the basis of the carrying amount of each asset in the unit (or group of units)The impairment loss recognized in accordance with this section is irreversible in subsequent periods.4.21 Employee BenefitsThe employee benefits of the Company include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits:
Short-term employee benefits include wages, bonuses, allowances and subsidies, welfare, healthinsurance, maternity insurance, work injury insurance, housing funds, labor union funds, employeeeducation funds, non-monetary benefits etc. Short-term employee benefits are recognized asliabilities and profit or loss account or the costs associated with the asset during the accountingperiod when employees actually provide services. The non -monetary benefits are measured at fairvalue.Post-employment benefits include defined contribution plans and defined benefit plans. Definedcontribution plan which includes the basic pension, unemploymentinsurance and annuities shall be recognized as cost of related assets or profit or loss.When the Company terminates the labor relationship with employees prior to the employmentcontracts, or encourages employees to accept voluntary redundancy compensation proposals in thiscompany, a provision shall be recognized for the compensation arising from the termination ofemployment relationship with employees at the time when the Company cannot unilaterally withdrawlayoff proposal termination benefits provided due to termination of employment or the Companyensures the costs related to the payment for termination benefits related to the restructuring, whichone is early to confirm employee benefits liabilities, and recorded as profit or loss. However, iftermination benefits cannot be fully paid within twelve months of the reporting date the liability shallbe processed in accordance with other long-term employee benefits.Retirement plan adopts the same principles as the termination benefits. The salaries and insuranceto be paid from the date when employees stop providing services to the date of normal retirementshall be recognized in profit or loss (termination benefits) when satisfying the requirements of aprovision.Other long-term employee benefits provided by the Company to employees that are in line withdefined contribution plans shall adopt the accounting treatment in accordance with definedcontribution plans, otherwise the accounting treatment of defined benefit plans.4.22 ProvisionsA contingent liability is recognized as provision if all or the following conditions are satisfied:
a. it is a present obligation assumed by the Company; andb. it is probable that the fulfillment of the obligation will cause economic benefit flows from theCompany; andc. the amount of the obligation can be reliably measured.A provision is measured on a balance-sheet date as the best estimate of the amount that is requiredfor the fulfillment of the present obligation after considering of the risks and uncertainty associatedwith the respective contingent events and the time value of money.
If the amount required for settlement of a provision is wholly or partly reimbursed by a third party, thereimbursement is recognized separately as an asset to the extent of the carrying amount of theprovision if it is probable that the reimbursement becomes receivable.4.23 Revenue4.23.1 Revenue from sales of goodsRevenue arising from sales of goods are recognized if all of the following conditions are satisfied:
significant risks and rewards attached to the ownership of the goods have been transferred to thebuyer; and the Company neither retains continual involvement with management generallyassociated with the ownership of the goods nor exercise effective control over the goods sold; andthe amount of revenue can be reliably measured; and it is probable that economic benefits arisingfrom the sales will flow to the Company; and expenses incurred or to be incurred associated with thegoods sold can be reliably measured.Revenue arising from domestic sales of goods is recognized when goods are dispatched anddelivered to the buyer, when significant risks and rewards attached to the ownership of the goodssold are passed to the buyer, when neither continual involvement in the rights normally associatedwith the ownership of the goods sold nor effective control over the goods controls are retained, whenrevenue arising from the goods sold is reliably measurable, when inflow of future economic benefitsis probable, and when cost incurred or to be incurred associated with the goods sold is reliablymeasurable. Revenue arising from non-domestic sales of goods is recognized when goods areloaded on board and when the export clearance with the custom is completed.4.23.2 Revenue from rendering of servicesWhen the income of service rendered can be reliably estimated, revenue arising from the service isrecognized based on a percentage of completion on the respective balance sheet date. Thepercentage of completion of service rendered is determined by the proportion that costs incurred todate bear to the estimated total costs.The outcome of service rendered can be reliably estimated if all of the following conditions aresatisfied: a. the amount of revenue can be reliably measured; b. it is probable that associatedeconomic benefits will flow to the Company; c. the percentage of completion of service rendered canbe reliably measured; and d. costs incurred to date and to be incurred can be reliably measured.When the outcome of service rendered cannot be reliably estimated, revenue is recognized to theextent that costs incurred to date and to is incurred are expected to be reimbursed, and costsincurred to date are recognized in profit or loss for the periods during which they are incurred. Whencosts incurred are not expected to be reimbursed, no revenue is recognized.If a contract entered into by the Company and a counterparty involves both sales of goods and
rendering of services and revenue arising from goods sold and services rendered can bedistinguished, revenue from sales of goods and rendering of services are separately accounted for; if,however, revenue arising from goods sold and services rendered cannot be distinguished or can bedistinguished but cannot be separately measured, all revenue is accounted for as revenue arisingfrom sales of goods.4.23.3 Royalty incomeRoyalties are recognized on an accrual basis in accordance with the substance of the relevantagreement.4.23.4 Interest incomeInterest income is determined by the length of time over which the Company's financial resources areused by other parties using the effective interest rate method.4.24 Government GrantsA government grant is a transfer of monetary and non-monetary assets from the government to theCompany for no consideration, excluding resources transferred to the Company by the government inthe capacity of the shareholder. Government grants include grants related to assets and grantsrelated to income.Government grants obtained by the Company which is relevant to construction or acquisition oflong-term assets are classified as asset-related government grants; all other government grants areclassified as revenue-related government grants. For government grants without a specifiedbeneficiary, the Company performs classification in accordance with the following criteria.a. Where a grant is obtained for a specified project, the grant is spat into asset-related and revenuerelated portions proportionate to the project's investment to expense ratio; the classification isreviewed on each balance sheet date and revised if necessary.b. Where a grant is obtained for general purpose, the grant as a whole is classified as arevenue-related government grant.If a government grant is in the form of monetary assets, it is measured at the amount received orreceivable. If a government grant is in the form of non-monetary assets, it is measured by the fairvalue of the assets; if the fair value of the assets granted cannot be reliably measured, the grant ismeasured by the nominal value of the assets and is recognized immediately in profit or loss for therelevant period.In general, the Company recognizes a government grant when it is actually received, and measures atthe amount actually received. However, a government grant may be recognized as receivable if it isobjectively evidential on the reporting date that conditions for the grant receipt are satisfied and that
the grant is receivable. A government grant is recognized as receivable if all following conditions aresatisfied:
a. the amount of the grant is expressly stipulated in an official publication by the authorizedgovernmental agency or can be reasonably estimated in accordance with fiscal pronouncementissued by the authorized governmental agency, and the estimate is not subject to significantuncertainty;b. the grant is officially disclosed as part of publicly disclosed fiscal subsidized projects by the localfiscal government bodies in accordance with the Government Information Disclosure Directives and ismanaged in accordance with the fiscal plan published and the management of the grant if notentity-specific, i.e., every eligible entity is entitled to apply;c. the term for payment is expressly stipulated in the official pronouncement, and the payment isbacked by fiscal planning so that it is reasonable to expect receipt within the term of the payment; andd. other conditions (inapplicable) need to be satisfied taking into account the Company'scircumstances.Grants related to assets are recognized as deferred income and amortized over the useful life of therelevant assets using the straight-line method. A grant related to income is recognized as deferredincome if it is related to expenses or loss to be incurred in the future and is carried to profit or loss forthe period during which the relevant expenses or loss are recognized; it is recognized in profit or lossfor the period during which it is received or becomes receivable if it is related to expenses or lossalready incurred. When assets are sold, transferred, disposed or scraped before the end of useful life,the remaining differed income will be transferred to profit or loss in the current period of assetdisposal.The government grants related to the daily activities of the Company are included in other income oroffsetting the related costs according to the substance of the economic business. The governmentgrants unrelated to the daily activities are included in the non-operating income and expenses.Where a recognized grant becomes repayable, the amount repayable is firstly charged to theremaining deferred income (if any); the remaining amount after charge to deferred income isrecognized in profit or loss for the period during which it becomes repayable.4.25 Deferred tax assets and deferred tax liabilities4.25.1 Current income taxThe current income tax liability (asset) on a balance-sheet date is measured at the amount of currentincome tax payable (receivable) computed in accordance with the relevant tax law. Current incometax expense is computed on the basis of taxable profit (loss) which is the amount after the adjustmentof the relevant accounting profit (loss) in accordance with the relevant tax law.
4.25.2 Deferred tax assets and deferred tax liabilitiesDeferred tax assets and deferred tax liabilities are recognized on an accrual basis for the temporarydifference between the carrying amounts of assets and liabilities and their tax bases and thetemporary difference arising from the difference in recognition criteria for assets and liabilities betweenCAS and relevant tax provisions.No deferred tax liability is recognized for the temporary taxable difference arising from the initialrecognition of goodwill and the initial recognition of assets and liabilities acquired or assumed resultingfrom transactions which are not business combination, and which do not have impact on bothaccounting profit and taxable profit (deductible tax loss) at the time of their occurrence. Similarly, thedeferred tax liability is not recognized for temporary taxable difference associated with investments insubsidiaries, associates, and joint ventures if the Company can control the reverse of the temporarydifference and it is probable that the temporary difference is not expected to reverse in theforeseeable future. Except for the circumstances described hereabove, the deferred tax liability isrecognized for all other taxable temporary difference.No deferred tax asset is recognized for the temporary deductible difference arising from the initialrecognition of assets and liabilities acquired or assumed resulting from transactions which are not abusiness combination, and which do not have an impact on both accounting profit and taxable profit(deductible tax loss) at the time of their occurrence. Similarly, deferred tax asset is not recognized fortemporary deductible difference associated with investments in subsidiaries, associates, and jointventures if the Company can control the reverse of the temporary difference and it is probable that thetemporary difference is not expected to reverse in the foreseeable future. Except for thecircumstances described hereabove, deferred tax asset is recognized for all other deductibletemporary difference to the extent that it is probable that taxable profit will be available against whichthe temporary deductible difference can be utilized.Deferred tax asset is recognized for deductible tax loss and tax credit carrying forward to the extentthat it is probable that taxable profit will be available against which the deductible tax loss and taxcredit carryforward can be utilized.Deferred tax assets and deferred tax liabilities are measured on a balance-sheet date on the basis oftax rates expected to be applicable in accordance with relevant tax law at the time when the relevantassets are recovered, or relevant liabilities settled.The carrying amount of deferred tax assets is reviewed on each balance sheet date. If it is probablethat insufficient taxable profit is available to utilize the deferred tax assets, the carrying amount ofdeferred tax assets is reduced. When it is probable that sufficient taxable profit becomes availableafter the carrying amount of deferred tax assets has been reduced, the reduction is reversed.4.25.3 Income tax expensesIncome tax expenses include current income tax expenses and deferred income tax expenses.All current income tax expenses (credit) and deferred income tax expenses (gains) are recognized in
profit or loss for the relevant period except for a. current income tax and deferred income tax ontransactions and events which are accounted for in other comprehensive income or directly in equity,which are included in other comprehensive income or directly recognized in equity depending on thetreatment of its underlying transactions and events, and b. deferred income tax arising from businesscombination, which is accounted for as an adjustment to the carrying amount of the respectivegoodwill.4.25.4 Offsetting of income taxA current income tax liability and current income tax asset are presented on (consolidated) financialstatements after netting only if the Company is permitted by law to settle the asset and liability net incash and is planning to do so or to recover the asset and settle the liability simultaneously.A deferred tax asset and deferred tax liability are presented on (consolidated) financial statementsafter netting only if all of the following conditions are satisfied: the Company is permitted by law tosettle the current asset and liability related to an income tax net in cash; and the deferred tax assetand deferred tax liability arising from that income tax is levied by the same tax authority on the sameentity or on different entities but the relevant entities are planning to settle the underlying income taxnet in cash or simultaneously recover the relevant assets and settle the relevant liabilities during eachfuture period during which significant deferred tax assets and deferred tax liabilities are reversed.4.26 LeaseA financial lease is a lease which in substance transfers all risks and rewards attached to theownership of the leased asset to the lessee although the ownership of the leased asset ultimately mayor may not be transferred. An operating lease is any lease that does not fall within the meaning of afinancial lease.4.26.1 Operating lease to which the Company is the lesseeLease payments for an operating lease to which the Company is the lessee are amortized over thelease term using the straight-line method and recognized in the cost of the relevant asset or expense,whichever is applicable. Initial expenses incurred for activities directly attributable to the lease arerecognized in profit or loss for the period during which they are incurred. Contingent rental paymentsare recognized in profit or loss when they are incurred.4.26.2 Operating lease to which the Company is the lessorRental income from an operating lease to which the Company is the lessor is amortized over the leaseterm using the straight-line method. Significant initial expenses incurred for activities directlyattributable to the lease are capitalized at the time when they are incurred and amortized over thelease term in the same manner as the amortization of rental income; insignificant expenses initialexpenses incurred for activities directly attributable to the lease are recognized in profit or loss for theperiod during which they are incurred. Contingent rental income is recognized in profit or loss when itis received or becomes receivable.
4.26.3 Financial lease to which the Company is the lesseeAt the commencement of a financial lease to which the Company is the Lessee, the lower of thelease-commencement-date fair value of the leased asset and the present value of the minimum leasepayment is recognized as the cost of the leased asset; the minimum lease payment is recognized as along-term payable; and the excess of the long-term payable over the amount recognized as the costof the leased asset is recognized as unrecognized lease expenditure. Expenses incurred during thenegotiation and signing of the lease contract for activities directly attributable to the lease arerecognized as part of the cost of the leased asset. The residual amount after deducting theunrecognized lease expenditure from the long-term payable is divided into non-current liability andnon-current liability due within one year depending on maturity and presented on (consolidated)financial statements separately.The unrecognized lease expenditure is amortized over the lease term using the effective interest ratemethod, and the amortization is recognized as lease expense in profit or loss for the relevant period.Contingency lease rental is recognized in profit or loss when it is incurred.4.26.4 Financial lease to which the Company is the lessorAt the commencement of a financial lease to which the Company is the lessor, the sum of theminimum lease rental receivable and the initial expenses incurred for activities directly attributable tothe lease is recognized as the initial amount of the respective financial lease rental receivable;unguaranteed residual value is recorded, if any; the excess of the present value of the sum of theminimum lease rental receivable, the initial expenses incurred for activities directly attributable to thelease and the unguaranteed residual value over the sum itself is recognized as unrecognized leaseincome. The residual amount after deducting the unrecognized lease income from the financial leaserental receivable is divided into non-current receivable and non-current receivable due within one yeardepending on maturity and presented on (consolidated) financial statements separately.The unrecognized lease income is amortized over the lease term using the effective interest ratemethod, and the amortization is recognized as lease income in profit or loss for the relevant period.Contingency lease rental income is recognized in profit or loss when it is received or becomesreceivable.4.27 Changes in major accounting policies and accounting estimates4.27.1 Change of accounting policiesOn June 15, 2018, the Ministry of Finance issued the Notice on Revising and Issuing the Format ofGeneral Enterprise Financial Statements for 2018 (Accounting No. 15), which has been implementedsince June 15, 2018. The Company shall begin to implement the aforementioned accountingstandards at the time required by the Ministry of Finance.4.28 Significant account judgment and estimates
During the application of accounting policies, judgements, estimates, and presumption need to bemade for elements of financial statements, which cannot be precisely measured due to inherentuncertainty existing in operating activities. The judgments, estimates, and presumption are made onthe basis of the Company's past experience and other relevant factors. The exercise of judgements,estimates, and presumption has an impact on the measurement of revenue, expenses, assets andliabilities and the disclosure of contingent liabilities on the balance sheet date. However, the inherentuncertainty of the judgments, estimates, and presumption may result in future significant adjustmentsto be made to the measurement of the affected assets and liabilities.The judgments, estimates, and presumption are regularly reviewed on the basis of going concern.Where a change in accounting estimates is applicable, its impact on financial statements isrecognized in the period during which the change occurs if the change has an impact on the financialstatements for that period only; and in subsequent periods if the change also has an impact on thefinancial statements for subsequent periods.Significant elements of financial statements and areas that are subject to judgements, estimates andpresumption on the balance-sheet date include the following.4.28.1 Classification of leaseThe Company classifies leases as operating lease and financing lease according to the rule stipulatedin the Accounting Standard for Business Enterprises No. 21--Leasing. The management shall makeanalysis and judgment on whether the risks and rewards related to the title of leased assets has beentransferred to the leaser, or whether the Company has substantially held the risks and rewards relatedto the ownership of leased assets.4.28.2 Recognition of impairment allowance for receivablesIn accordance with accounting policies applicable to receivables, loss arising from impairment ofreceivables is accounted for by allowance. Impairment of receivables are assessed on the basis of thecollectability of receivables and the assessment requires judgements and estimates exercised by themanagement. Difference between actual results and the estimates will have impact on the carryingamount of receivables and the recognition and reverse of impairment allowance for receivable for theperiod during which the estimates are changed.4.28.3 Recognition of impairment allowance for inventoriesIn accordance with accounting policies applicable to inventories, impairment allowance for inventoriesis recognized for inventories of which the carrying amount exceeds the net realizable value andinventories which are obsolete or have impaired salability. Loss arising from impairment of inventoriesis measured on the basis of the salability and net realizable value of the respective inventories.Judgements and estimates regarding impairment allowance for inventories require conclusiveevidence obtained by the management and consideration of the purpose of inventory holding, impact
of post balance-sheet-date events and other relevant factors. Difference between actual results andthe estimates will have impact on the carrying amount of inventories and the recognition and reverseof impairment allowance for inventories for the period during which the estimates are changed.4.28.4 Fair value of financial instrumentsFair value of financial instruments which are not quoted in an active market are measured by valuationtechniques such as the discounted cash flow model, etc. Estimates of future cash flows, credit risks,market movement and relevance and choice of the appropriate discount rates are required for themeasurement. Inherent uncertainty is inevitable in making these estimates and the change ofestimates will have impact of the fair value of the respective financial instruments.4.28.5 Impairment of financial assets available-for-saleImpairment of available-for-sale financial assets and hence recognition of impairment loss recognizedin profit or loss general depend on estimates and presumption made by the management. In makingthe judgements and estimates, the Company assesses the extent and duration that the cost of anavailable-for-sale financial asset exceeding its fair value and considers the investee's financialposition and short-term prospects, including factors such as industry environment, technologyadvances, credit rating, default rates, and risks faced by peer entities.4.28.6 Impairment of non-financial, non-current assetsNon-current assets are assessed for indicators of impairment on each balance sheet date. In addition,intangible assets with infinite useful life are subject to impairment testing on each balance-sheet dateand whenever there is evidence indicating impairment; other non-financial non-current assets aresubject to impairment testing only if their evidence indicating that the carrying amount becomesnon-collectible.Impairment exists when the carrying amount of an asset or cash-generating unit exceeds itsrecoverable amount, which is higher of the residual amount after deducting necessary expenses fordisposal from its fair value and the present value of its future cash flows.An asset's residual amount after deducting necessary expenses for disposal is determined byreference to the residual amount after deducting the incremental costs to dispose the asset from theselling price provided by contracts for sales of similar assets or the observable market price of similarassets.When estimating the present value of future cash flows of an asset or cash-generating unit, significantjudgments must be made regarding the production capacity, selling price, relevant operating costs ofthe asset or cash-generating unit and relevant discount rates for discounting the cash flows. TheCompany considers all available relevant information when determining the recoverable amount,including estimates regarding future production capacity, selling price and relevant operating costsmade on the basis of reasonable and supportive presumption.Goodwill is assessed for impairment at least annually. The assessment involves an estimate of the
present value of the future cash flows associated with the assets or groups of assets to which goodwillhas been allocated. The estimate considers the future cash flows associated with the assets or groupsof assets to which goodwill has been allocated and the applicable discount rates for cash flowdiscounting.4.28.7 Depreciation and amortizationInvestment property, fixed assets, and intangible assets are depreciated (amortized) over their usefullives using the straight-line method after considering of their residual value. Useful lives of theseassets are regularly reviewed for the purpose of determining the depreciation and amortizationrecognized for each period. Useful lives are determined on the basis of the Company's pastexperience on similar assets and expected new technology development. If existing estimates changesignificantly, the adjustment is made to the depreciation and amortization for future periods.4.28.8 Deferred tax assetsAll unutilized tax loss is recognized as deferred tax assets to the extent it is probable that taxableprofit will be available against which the deductible tax loss can be utilized. Significant judgments arerequired to estimate the timing and amount of future taxable profit and to consider tax planningstrategy so as to determine the number of deferred tax assets to be recognized.4.27.9 Income taxDuring the ongoing operation of the Company, there is uncertainty in the treatment for and amounts ofcertain transactions for income tax purpose. For example, the deductibility of certain expenses forincome tax purpose is subject to the approval by the relevant tax authority. If the ultimate outcome ofthe uncertainty differs from the original estimate, the difference will have an impact on the currentincome tax expenses and deferred income tax expenses for the relevant period.4.28.10 Accrued liabilitiesProvision is recognized for product warranty, onerous contract, buy-back obligation, etc. on the basisof contract terms, current knowledge, and past experiences. A provision is recognized when acontingent event has resulted in a present obligation, the fulfillment of the present obligation will resultin an outflow of economic benefits. The amount recognized is the best estimate of expenses thatwould be incurred to fulfill the present obligation. The recognition and measurement of provisionssignificantly depend on judgments of the management. In exercising judgment, the Companyassesses risks and uncertainty associated with the contingent events and the time value of money,etc.
Note 5 Taxation5.1 Major taxes and tax rate
| Tax | Tax rate (%) |
Tax
| Tax | Tax rate (%) |
| Value-added tax | Output VAT is charged at 17% or 16% or 6% on taxable income; VAT payable is calculated at the excess of output VAT over input VAT. |
| Consumption tax | The consumption taxes have been provided at the rate of CNY 1.00 yuan per kg, or 1,000 ml follow the quantity, and the consumption tax has been provided at the rate of 20% of the taxable sales. |
| Urban maintenance and construction surcharge | Sum of VAT payable, consumption duty payable and business tax payable for the reporting period, and exempt and deductible tax at the rate of 1%, 5%, 7%. |
| Education surcharge | Sum of VAT payable, consumption duty payable and business tax payable for the reporting period, and exempt and deductible tax at the rate of 3%. |
| Local education surcharge | Sum of VAT payable, consumption duty payable and business tax payable for the reporting period, and exempt and deductible tax at the rate of 2%. |
| Corporate income tax | See the table below. |
| Entity | Income tax rate |
| Anhui Longrui Glass Co., Ltd | 15% |
| Anhui Ruisiweier Technology Co., Ltd | 15% |
| Bozhou Gujing Waste Recycling Co., Ltd. | 10% |
| Wuhan Yashibo tech. Co., Ltd. | 10% |
| Hubei Hechuyuan Commercial Co., Ltd. | 10% |
| Hubei Junhe Advertising Co., Ltd. | 10% |
| Anhui Gujing Distillery Co., Ltd and other subsidiaries | 25% |
5.2.2 Anhui Ruisiweier Technology Co., Ltd, a subsidiary of the Company, was granted the High-techEnterprise Certificate (No. GR201734000832) on October 21, 2017, upon the qualification of high-techenterprise. The certificate valid for three years and the applicable income tax rate in 2018 is 15%.5.2.3 According to the “Notice of the Ministry of Finance and the State Administration of Taxation onfurther expanding the scope of preferential income tax policies regarding small low-profit enterprises”(CaiShui [2018] No. 77), for small low-profit enterprises with an annual taxable income of less thanCNY1000,000.00 (including CNY1000,000.00), that the taxable income is calculated by 50% oforiginal taxable income, and the corporate income tax rate is 20% from January 1, 2018 to December31 2020. The subsidiaries of the Company including Bozhou Gujing Waste Reclamation Co., Ltd.,Wuhan Yashibo Technology Co., Ltd., Hubei Junhe Advertising Co., Ltd. and Hubei HechuyuanCommercial Co., Ltd. meet the conditions for small low-profit enterprises and the actual tax rate for2018 is 10%.
Note 6 Notes to significant elements of the financial statementsUnless otherwise stated, the meaning of "B/f", "C/f", "Current year", "Prior year" in the following notes(incl. Notes to elements of the separate financial statements) is "January 1, 2018", "December 31,2018", "the year ended December 31 2018", and "the year ended December 31 2017" respectively.6.1 Monetary funds
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Cash at hand | 353,429.67 | 369,197.41 |
| Bank deposit | 1,705,175,643.46 | 1,440,617,397.53 |
| Other monetary funds | 231,791.99 | 43,102,031.46 |
| Total | 1,705,760,865.12 | 1,484,088,626.40 |
| Including: The total amount of deposit abroad | 0.00 | 0.00 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Trading financial assets | 622,892.96 | 99,800.76 |
| Including: invest in equity instrument | 622,892.96 | 99,800.76 |
| Total | 622,892.96 | 99,800.76 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Notes receivable | 1,347,427,811.34 | 720,611,126.78 |
| Accounts receivable | 29,748,068.74 | 22,466,143.06 |
| Total | 1,377,175,880.08 | 743,077,269.84 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Bank acceptance | 1,347,427,811.34 | 720,611,126.78 |
| Total | 1,347,427,811.34 | 720,611,126.78 |
| Items | Amount derecognized as at 31/12/2018 | Amount not derecognized as at 31/12/2018 |
| Bank acceptance | 372,603,010.31 | 0.00 |
| Total | 372,603,010.31 | 0.00 |
| Items | Balance as at 31/12/2018 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Accounts receivable of individual significance subject to individually | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Items
| Items | Balance as at 31/12/2018 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| assessment for impairment | |||||
| Accounts receivable portfolio subject to impairment by credit risk: | 30,397,358.01 | 100.00 | 649,289.27 | 2.14 | 29,748,068.74 |
| Accounts receivable of individually insignificance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 30,397,358.01 | 100.00 | 649,289.27 | 2.14 | 29,748,068.74 |
| Items | Balance as at 31/12/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Accounts receivable of individual significance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable portfolio subject to impairment by credit risk: | 23,800,576.11 | 100.00 | 1,334,433.05 | 5.61 | 22,466,143.06 |
| Accounts receivable of individually insignificance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 23,800,576.11 | 100.00 | 1,334,433.05 | 5.61 | 22,466,143.06 |
| Age | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| Within 1 year | 29,725,877.02 | 425,642.08 | 1.43 |
| Including: within 6 months | 26,516,294.24 | 265,162.94 | 1.00 |
| 7– 12 months | 3,209,582.78 | 160,479.14 | 5.00 |
Age
| Age | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| 1-2 years | 497,593.12 | 49,759.32 | 10.00 |
| 2-3 years | 0.00 | 0.00 | 0.00 |
| Over 3 years | 173,887.87 | 173,887.87 | 100.00 |
| Total | 30,397,358.01 | 649,289.27 | 2.14 |
| Age | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||
| Amount | % of total | Amount | % of total | |
| Within 1 year | 182,122,465.92 | 99.76 | 40,817,554.03 | 97.81 |
| 1 to 2 years | 145,534.83 | 0.08 | 82,115.23 | 0.20 |
| 2 to 3 years | 0.00 | 0.00 | 828,648.08 | 1.99 |
| Over 3 years | 290,000.00 | 0.16 | 1,320.00 | 0.00 |
| Total | 182,558,000.75 | 100.00 | 41,729,637.34 | 100.00 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Interests receivable | 24,923,178.08 | 13,883,178.08 |
| Dividends receivable | 0.00 | 0.00 |
| Other receivables | 18,419,700.14 | 15,390,106.14 |
| Total | 43,342,878.22 | 29,273,284.22 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Interest on large deposit receipts | 24,923,178.08 | 13,883,178.08 |
| Total | 24,923,178.08 | 13,883,178.08 |
| Items | Balance as at 31/12/2018 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Other receivable of individual significance subject to individually assessment for impairment | 40,850,949.35 | 67.20 | 40,850,949.35 | 100.00 | 0.00 |
| Other receivable portfolio subject to impairment by credit risk: | 19,942,837.52 | 32.80 | 1,523,137.38 | 7.64 | 18,419,700.14 |
| Other receivable of individually insignificance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 60,793,786.87 | 100.00 | 42,374,086.73 | 69.70 | 18,419,700.14 |
| Items | Balance as at 31/12/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Other receivable of individual significance | 40,850,949.35 | 71.04 | 40,850,949.35 | 100.00 | 0.00 |
Items
| Items | Balance as at 31/12/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| subject to individually assessment for impairment | |||||
| Other receivable portfolio subject to impairment by credit risk: | 16,651,396.91 | 28.96 | 1,261,290.77 | 7.57 | 15,390,106.14 |
| Other receivable of individually insignificance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 57,502,346.26 | 100.00 | 42,112,240.12 | 73.24 | 15,390,106.14 |
| Debtor | Balance as at 31/12/2018 | |||
| Carrying amount | Allowance for bad debt | Rate of Allowance (%) | Reason for allowance | |
| Hengxin Securities | 29,010,449.35 | 29,010,449.35 | 100.00 | Enterprise is in the proceeding of liquidation bankruptcy |
| Jianqiao Securities | 11,840,500.00 | 11,840,500.00 | 100.00 | Enterprise is in the proceeding of liquidation bankruptcy |
| Total | 40,850,949.35 | 40,850,949.35 | 100.00 | |
| Age | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | Rate of Allowance (%) | |
| Within 1 year | 17,617,762.53 | 211,840.16 | 1.20 |
| Including: within 6 months | 16,726,199.24 | 167,261.99 | 1.00 |
| 7-12 months | 891,563.29 | 44,578.17 | 5.00 |
Age
| Age | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | Rate of Allowance (%) | |
| 1-2 years | 934,319.75 | 93,431.98 | 10.00 |
| 2-3 years | 345,780.00 | 172,890.00 | 50.00 |
| Over 3years | 1,044,975.24 | 1,044,975.24 | 100.00 |
| Total | 19,942,837.52 | 1,523,137.38 | 7.64 |
| Nature | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Investment in securities | 40,850,949.35 | 40,850,949.35 |
| Deposit and guarantee | 4,749,457.78 | 4,593,198.69 |
| Loan for business trip | 426,435.85 | 2,088,800.78 |
| Rent, utilities and gasoline charges | 6,786,659.62 | 6,241,851.35 |
| Others | 7,980,284.27 | 3,727,546.09 |
| Total | 60,793,786.87 | 57,502,346.26 |
| Debtor | Relationships | Nature | Carrying amount | Age | % of the total amount | Allowance Balance as at the year-end |
| 1st | Non-related party | Investment in securities | 29,010,449.35 | Over 3 years | 47.72 | 29,010,449.35 |
| 2nd | Non-related party | Investment in securities | 11,840,500.00 | Over 3 years | 19.48 | 11,840,500.00 |
| 3rd | Non-related party | Prepaid oil fees | 5,380,076.43 | Within 6 months | 8.85 | 53,800.76 |
| 4th | Non-related party | Deposit | 500,000.00 | Within 6 months | 0.82 | 5,000.00 |
| 5th | Non-related party | Others | 455,943.00 | Within 6 months | 0.75 | 4,559.43 |
Debtor
| Debtor | Relationships | Nature | Carrying amount | Age | % of the total amount | Allowance Balance as at the year-end |
| Total | 45,704,946.89 | 77.62 | 40,914,309.54 |
| Items | Balance as at 31/12/2018 | ||
| Carrying amount before impairment allowance | Impairment allowance | Net carrying amount | |
| Raw materials and packaging | 144,856,930.02 | 13,808,554.40 | 131,048,375.62 |
| Work in progress | 1,957,452,112.24 | 0.00 | 1,957,452,112.24 |
| Finished goods | 322,031,842.20 | 3,225,665.20 | 318,806,177.00 |
| Total | 2,424,340,884.46 | 17,034,219.60 | 2,407,306,664.86 |
| Items | Balance as at 31/12/2017 | ||
| Carrying amount before impairment allowance | Impairment allowance | Net carrying amount | |
| Raw materials and packaging | 132,151,695.59 | 17,029,623.45 | 115,122,072.14 |
| Work in progress | 1,705,396,599.74 | 0.00 | 1,705,396,599.74 |
| Finished goods | 258,007,338.23 | 14,395,712.60 | 243,611,625.63 |
| Total | 2,095,555,633.56 | 31,425,336.05 | 2,064,130,297.51 |
| Items | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2018 | ||
| Accrual | Others | Recovered or Written off | Others | |||
| Raw materials and packaging | 17,029,623.45 | 10,354,024.65 | 0.00 | 13,575,093.70 | 0.00 | 13,808,554.40 |
| Finished goods | 14,395,712.60 | 2,023,864.72 | 0.00 | 13,193,912.12 | 0.00 | 3,225,665.20 |
| Total | 31,425,336.05 | 12,377,889.37 | 0.00 | 26,769,005.82 | 0.00 | 17,034,219.60 |
Items
| Items | The basis of recognition of impairment allowance for inventories | The reason for recovering impairment allowance of inventories | The reasons for inventory impairment written-off at the current year |
| Raw materials and packaging | Net realizable value below cost | Not applicable | Raw materials impaired have been disposed |
| Finished goods | Net realizable value below cost | Not applicable | Finished goods impaired have been disposed |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Non-current assets due within 1 year | 300,000,000.00 | 0.00 |
| Total | 300,000,000.00 | 0.00 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Financial products | 2,758,000,000.00 | 1,741,000,000.00 |
| Reverse repurchase of pledged treasury bonds | 179,900,000.00 | 0.00 |
| Deductible tax | 74,578,687.20 | 31,310,946.58 |
| Total | 3,012,478,687.20 | 1,772,310,946.58 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||||
| Carrying amount | Impairment | Net carrying amount | Carrying amount | Impairment | Net carrying amount | |
| Available for sale equity instruments | 206,393,107.46 | 0.00 | 206,393,107.46 | 517,086,347.91 | 0.00 | 517,086,347.91 |
| Including: measured by fair value | 206,393,107.46 | 0.00 | 206,393,107.46 | 517,086,347.91 | 0.00 | 517,086,347.91 |
| Measured by cost | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 206,393,107.46 | 0.00 | 206,393,107.46 | 517,086,347.91 | 0.00 | 517,086,347.91 |
| Classification | Equity instrument available for sale | Debt instrument available for sale | Total |
Classification
| Classification | Equity instrument available for sale | Debt instrument available for sale | Total |
| The cost of the equity instrument or the amortized cost of the debt instrument | 200,000,000.00 | 0.00 | 200,000,000.00 |
| Fair value | 206,393,107.46 | 0.00 | 206,393,107.46 |
| The amount of the fair value change recognized into comprehensive income | 6,393,107.46 | 0.00 | 6,393,107.46 |
| Impairment allowance | 0.00 | 0.00 | 0.00 |
| Investee | Balance as at 31/12/2017 | Current year movement (+, -) | ||||
| Additional investment | Investment reduction | Investment gains and losses recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | ||
| Investment in associates | ||||||
| Beijing Guge Trading Co., Ltd. | 0.00 | 4,900,000.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 4,900,000.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Investee | Current year movement (+, -) | Balance as at 31/12/2018 | Allowance as at 31/12/2018 | ||
| Declared cash dividends or profits | Allowance recognized | Others | |||
| Investment in associates | |||||
| Beijing Guge Trading Co., Ltd. | 0.00 | 0.00 | 0.00 | 4,900,000.00 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 4,900,000.00 | 0.00 |
| Items | Houses and buildings | Land use rights | Total |
| 1. Cost: | |||
| 1.1 Balance as at 31/12/2017 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| 1.2 Increased in current year | 146,888.55 | 0.00 | 146,888.55 |
Items
| Items | Houses and buildings | Land use rights | Total |
| 1.3 Decreased in current year | 146,888.55 | 0.00 | 146,888.55 |
| 1.3.1 Reclassified to fixed assets | 146,888.55 | 0.00 | 146,888.55 |
| 1.3.2 Other transfer out | |||
| 1.4 Balance as at 31/12/2018 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| 2. Accumulated depreciation and accumulated amortization | |||
| 2.1 Balance as at 31/12/2017 | 5,393,723.68 | 587,646.74 | 5,981,370.42 |
| 2.2 Increased in current year | 287,616.21 | 56,026.56 | 343,642.77 |
| 2.2.1 Accrual or amortization | 264,677.96 | 56,026.56 | 320,704.52 |
| 2.2.1 Reclassified from fixed assets | 22,938.25 | 0.00 | 22,938.25 |
| 2.3 Decreased in current year | 27,093.97 | 0.00 | 27,093.97 |
| 2.3.1 Reclassified to fixed assets | 27,093.97 | 0.00 | 27,093.97 |
| 2.3.2 Other decreases | |||
| 2.4 Balance as at 31/12/2018 | 5,654,245.92 | 643,673.30 | 6,297,919.22 |
| 3. Impairment allowance | |||
| 3.1Balance as at 31/12/2017 | 0.00 | 0.00 | 0.00 |
| 3.2 Increased in current year | 0.00 | 0.00 | 0.00 |
| 3.2.1 Accrual | 0.00 | 0.00 | 0.00 |
| 3.3 Decreased in current year | 0.00 | 0.00 | 0.00 |
| 3.3.1 Reclassified to fixed assets | 0.00 | 0.00 | 0.00 |
| 3.3.2 Other transfer out | 0.00 | 0.00 | 0.00 |
| 3.4 Balance as at 31/12/2018 | 0.00 | 0.00 | 0.00 |
| 4. Carrying amount | |||
| 4.1 Carrying amount as at 31/12/2018 | 3,026,309.83 | 2,000,918.70 | 5,027,228.53 |
| 4.2 Carrying amount as at 31/12/2017 | 3,286,832.07 | 2,056,945.26 | 5,343,777.33 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Fixed assets | 1,763,988,530.56 | 1,792,254,178.56 |
| Disposal of fixed assets | 0.00 | 0.00 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Total | 1,763,988,530.56 | 1,792,254,178.56 |
| Items | Houses and buildings | Machinery | Vehicles | Office equipment and others | Total |
| 1. Cost: | |||||
| 1.1 Balance as at 31/12/2017 | 1,994,106,003.80 | 885,870,116.23 | 63,990,533.99 | 119,237,780.37 | 3,063,204,434.39 |
| 1.2 Increased in current year | 38,722,877.19 | 85,129,907.04 | 1,289,618.09 | 52,082,882.67 | 177,225,284.99 |
| 1.2.1 Purchase | 0.00 | 12,202,895.41 | 1,289,618.09 | 2,840,576.17 | 16,333,089.67 |
| 1.2.2 Transferred from construction in-progress | 38,575,988.64 | 72,927,011.63 | 0.00 | 49,242,306.50 | 160,745,306.77 |
| 1.2.3 Increased in mergers | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1.2.4 Recovered from rental housing | 146,888.55 | 0.00 | 0.00 | 0.00 | 146,888.55 |
| 1.3 Decreased in current year | 26,154,081.29 | 50,977,910.48 | 7,215,837.88 | 14,125,666.53 | 98,473,496.18 |
| 1.3.1 Disposal or scrap | 26,007,192.74 | 50,977,910.48 | 7,215,837.88 | 14,125,666.53 | 98,326,607.63 |
| 1.3.2 Reclassified to investment property | 146,888.55 | 0.00 | 0.00 | 0.00 | 146,888.55 |
| 1.4 Balance as at 31/12/2018 | 2,006,674,799.70 | 920,022,112.79 | 58,064,314.20 | 157,194,996.51 | 3,141,956,223.20 |
| 2. Accumulated Depreciation | |||||
| 2.1 Balance as at 31/12/2017 | 673,130,286.33 | 441,060,956.92 | 50,053,304.86 | 90,358,146.27 | 1,254,602,694.38 |
| 2.2 Increased in current year | 85,483,169.07 | 90,728,790.58 | 5,664,407.21 | 12,157,579.88 | 194,033,946.74 |
| 2.2.1 Accrual | 85,456,075.10 | 90,728,790.58 | 5,664,407.21 | 12,157,579.88 | 194,006,852.77 |
| 2.2.2 Increased in mergers | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2.2.3 Recovered from rental housing | 27,093.97 | 0.00 | 0.00 | 0.00 | 27,093.97 |
| 2.3 Decreased in current year | 20,857,231.99 | 36,078,772.60 | 6,687,514.65 | 12,055,867.23 | 75,679,386.47 |
Items
| Items | Houses and buildings | Machinery | Vehicles | Office equipment and others | Total |
| 2.3.1 Disposal or scrap | 20,834,293.74 | 36,078,772.60 | 6,687,514.65 | 12,055,867.23 | 75,656,448.22 |
| 2.3.2 Reclassified to investment property | 22,938.25 | 0.00 | 0.00 | 0.00 | 22,938.25 |
| 2.4 Balance as at 31/12/2018 | 737,756,223.41 | 495,710,974.90 | 49,030,197.42 | 90,459,858.92 | 1,372,957,254.65 |
| 3. Impairment allowance | |||||
| 3.1Balance as at 31/12/2017 | 7,061,980.08 | 8,691,493.68 | 7,047.07 | 587,040.62 | 16,347,561.45 |
| 3.2 Increased in current year | 0.00 | 184,505.54 | 0.00 | 0.00 | 184,505.54 |
| 3.2.1 Accrual | 0.00 | 184,505.54 | 0.00 | 0.00 | 184,505.54 |
| 3.3 Decreased in current year | 3,665,687.29 | 7,855,941.71 | 0.00 | 0.00 | 11,521,629.00 |
| 3.3.1 Disposal or scrap | 3,665,687.29 | 7,855,941.71 | 0.00 | 0.00 | 11,521,629.00 |
| 3.4 Balance as at 31/12/2018 | 3,396,292.79 | 1,020,057.51 | 7,047.07 | 587,040.62 | 5,010,437.99 |
| 4. Carrying amount | |||||
| 4.1 Carrying amount as at 31/12/2018 | 1,265,522,283.50 | 423,291,080.38 | 9,027,069.71 | 66,148,096.97 | 1,763,988,530.56 |
| 4.2 Carrying amount as at 31/12/2017 | 1,313,913,737.39 | 436,117,665.63 | 13,930,182.06 | 28,292,593.48 | 1,792,254,178.56 |
| Items | Carrying value | Depreciation | Impairment | Book value | Notes |
| Houses and buildings | 10,740,209.84 | 7,238,483.71 | 3,396,292.79 | 105,433.34 | |
| Machineries | 7,402,990.29 | 6,323,153.39 | 1,020,057.51 | 59,779.39 | |
| Vehicles | 58,119.66 | 49,329.00 | 7,047.07 | 1,743.59 | |
| Office equipment and others | 927,497.34 | 312,645.29 | 587,040.62 | 27,811.43 | |
| Total | 19,128,817.13 | 13,923,611.39 | 5,010,437.99 | 194,767.75 |
| Items | Book value | The reason for pending ownership registration |
| Houses and buildings | 773,281,142.56 | In the process |
Items
| Items | Book value | The reason for pending ownership registration |
| Total | 773,281,142.56 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Construction in progress | 93,320,557.56 | 54,496,798.56 |
| Engineer material | 0.00 | 0.00 |
| Total | 93,320,557.56 | 54,496,798.56 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||||
| Carrying amount before impairment allowance | Impairment allowance | Net carrying amount | Carrying amount before impairment allowance | Impairment allowance | Net carrying amount | |
| Gujing party building cultural museum | 1,435,187.95 | 0.00 | 1,435,187.95 | 0.00 | 0.00 | 0.00 |
| Renovation project of potential safety concerns | 1,263,728.57 | 0.00 | 1,263,728.57 | 20,643,371.11 | 0.00 | 20,643,371.11 |
| Sewage solution station advanced treatment renovation project | 0.00 | 0.00 | 0.00 | 3,634,231.28 | 0.00 | 3,634,231.28 |
| Yellow Crane Tower chateau and museum | 0.00 | 0.00 | 0.00 | 2,726,775.89 | 0.00 | 2,726,775.89 |
| Machine installment | 5,596,060.05 | 0.00 | 5,596,060.05 | 1,096,197.71 | 0.00 | 1,096,197.71 |
| Desulfurization and denitrification projects | 28,768,115.33 | 0.00 | 28,768,115.33 | 0.00 | 0.00 | 0.00 |
| Plant outside raindrop and waste net improvement | 0.00 | 0.00 | 0.00 | 8,529,729.73 | 0.00 | 8,529,729.73 |
| Experience center | 0.00 | 0.00 | 0.00 | 1,090,982.34 | 0.00 | 1,090,982.34 |
| Brewing automatization technological improvement project | 17,307,839.93 | 0.00 | 17,307,839.93 | 113,207.55 | 0.00 | 113,207.55 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||||
| Carrying amount before impairment allowance | Impairment allowance | Net carrying amount | Carrying amount before impairment allowance | Impairment allowance | Net carrying amount | |
| Gujing plant half-open wine cellar | 30,391,615.08 | 0.00 | 30,391,615.08 | 1,127,033.31 | 0.00 | 1,127,033.31 |
| Suizhou new plant phase I project | 2,597,498.75 | 0.00 | 2,597,498.75 | 0.00 | 0.00 | 0.00 |
| Other individual project with insignificant amounts | 5,960,511.90 | 0.00 | 5,960,511.90 | 15,535,269.64 | 0.00 | 15,535,269.64 |
| Total | 93,320,557.56 | 0.00 | 93,320,557.56 | 54,496,798.56 | 0.00 | 54,496,798.56 |
| Items | Budget (10,000 yuan) | Balance as at 31/12/2017 | Increased in current year | Transferred to fixed assets in current year | Other decreases in current year | Balance as at 31/12/2018 |
| Gujing party building cultural museum | 1,160.00 | 0.00 | 7,344,278.86 | 0.00 | 5,909,090.91 | 1,435,187.95 |
| Renovation project of potential safety concerns | 18,010.76 | 20,643,371.11 | 19,145,334.78 | 38,524,977.32 | 0.00 | 1,263,728.57 |
| Sewage solution station advanced treatment renovation project | 1,411.54 | 3,634,231.28 | 8,705,716.93 | 12,339,948.21 | 0.00 | 0.00 |
| Yellow Crane Tower chateau and museum | 2,600.00 | 2,726,775.89 | 8,975,749.44 | 0.00 | 11,702,525.33 | 0.00 |
| Machine installment | 10,834.65 | 1,096,197.71 | 13,654,819.53 | 9,154,957.19 | 0.00 | 5,596,060.05 |
| Desulfurization and denitrification | 7,176.00 | 0.00 | 28,990,337.55 | 222,222.22 | 0.00 | 28,768,115.33 |
Items
| Items | Budget (10,000 yuan) | Balance as at 31/12/2017 | Increased in current year | Transferred to fixed assets in current year | Other decreases in current year | Balance as at 31/12/2018 |
| projects | ||||||
| Plant outside raindrop and waste net improvement | 1,052.00 | 8,529,729.73 | 947,747.75 | 9,477,477.48 | 0.00 | 0.00 |
| Experience center | 2,370.00 | 1,090,982.34 | 7,943,140.82 | 0.00 | 9,034,123.16 | 0.00 |
| Brewing automatization technological improvement project | 27,430.00 | 113,207.55 | 26,198,264.71 | 9,003,632.33 | 0.00 | 17,307,839.93 |
| Gujing plant half-open wine cellar | 11,194.15 | 1,127,033.31 | 72,766,963.69 | 43,502,381.92 | 0.00 | 30,391,615.08 |
| Suizhou new plant phase I project | 26,000.00 | 0.00 | 2,597,498.75 | 0.00 | 0.00 | 2,597,498.75 |
| Network architecture optimization project | 950.00 | 0.00 | 4,358,974.36 | 4,358,974.36 | 0.00 | 0.00 |
| 4,800 tons of semi-open tank area | 955.00 | 0.00 | 8,706,679.97 | 8,706,679.97 | 0.00 | 0.00 |
| Other individual project with insignificant amounts | 7,628.67 | 15,535,269.64 | 37,343,260.57 | 25,454,055.77 | 21,463,962.54 | 5,960,511.90 |
| Total | 118,772.77 | 54,496,798.56 | 247,678,767.71 | 160,745,306.77 | 48,109,701.94 | 93,320,557.56 |
(Continued)
| Items | Accumulated project investment as a percentage of budget (%) | Stage of completion | The cumulative amount of interest capitalized | Including interests capitalized in current year | Capitalization rate applicable to the current year (%） | Financial resources |
| Gujing party building cultural museum | 63.31 | 95.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Renovation project of potential safety concerns | 82.00 | 93.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Sewage solution station advanced treatment renovation project | 87.42 | 100.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Yellow Crane Tower chateau and museum | 45.01 | 100.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Machine installment | 13.61 | 13.61 | 0.00 | 0.00 | 0.00 | Internal funds |
| Desulfurization and Denitrification Projects | 40.40 | 40.40 | 0.00 | 0.00 | 0.00 | Internal funds |
| Plant outside raindrop and waste net improvement | 90.09 | 100.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Experience center | 38.12 | 100.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Brewing automatization technological improvement project | 9.59 | 9.59 | 0.00 | 0.00 | 0.00 | Internal funds |
Items
| Items | Accumulated project investment as a percentage of budget (%) | Stage of completion | The cumulative amount of interest capitalized | Including interests capitalized in current year | Capitalization rate applicable to the current year (%） | Financial resources |
| Gujing plant half-open wine cellar | 66.01 | 66.01 | 0.00 | 0.00 | 0.00 | Internal funds |
| Suizhou new plant phase I project | 1.00 | 1.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Network architecture optimization project | 45.88 | 100.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| 4,800 tons of semi-open tank area | 91.17 | 100.00 | 0.00 | 0.00 | 0.00 | Internal funds |
| Other individual project with insignificant amounts | 69.32 | 69.32 | 0.00 | 0.00 | 0.00 | Internal funds |
| Total | —— | —— | 0.00 | 0.00 | 0.00 |
| Items | Land rights | Patents | Software | Trademark | Total |
| 1. Cost: | |||||
| 1.1 Balance as at 31/12/2017 | 628,279,302.56 | 45,889,466.19 | 16,616,834.45 | 169,116,600.00 | 859,902,203.20 |
| 1.2 Increased in current year | 55,172,000.00 | 0.00 | 15,489,351.28 | 0.00 | 70,661,351.28 |
| 1.2.1 Purchase | 55,172,000.00 | 0.00 | 3,195,363.38 | 0.00 | 58,367,363.38 |
| 1.2.2 Internal research and | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Items
| Items | Land rights | Patents | Software | Trademark | Total |
| development | |||||
| 1.2.3 Transferred from construction in progress | 0.00 | 0.00 | 12,293,987.90 | 0.00 | 12,293,987.90 |
| 1.3 Decreased in current year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1.3.1 Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1.4 Balance as at 31/12/2018 | 683,451,302.56 | 45,889,466.19 | 32,106,185.73 | 169,116,600.00 | 930,563,554.48 |
| 2. Accumulated amortization | |||||
| 2.1 Balance as at 31/12/2017 | 115,286,620.37 | 45,721,513.97 | 7,162,253.07 | 350,373.12 | 168,520,760.53 |
| 2.2 Increased in current year | 14,107,738.90 | 48,077.76 | 5,782,472.16 | 20,896.03 | 19,959,184.85 |
| 2.2.1 Accrual | 14,107,738.90 | 48,077.76 | 5,782,472.16 | 20,896.03 | 19,959,184.85 |
| 2.3 Decreased in current year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2.3.1 Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2.4 Balance as at 31/12/2018 | 129,394,359.27 | 45,769,591.73 | 12,944,725.23 | 371,269.15 | 188,479,945.38 |
| 3. Impairment allowance | |||||
| 3.1 Balance as at 31/12/2017 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3.2 Increased in current year | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3.2.1 Accrual | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3.3 Decreased in | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Items
| Items | Land rights | Patents | Software | Trademark | Total |
| current year | |||||
| 3.3.1 Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3.4 Balance as at 31/12/2018 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Carrying amount | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4.1 Carrying amount as at 31/12/2018 | 554,056,943.29 | 119,874.46 | 19,161,460.50 | 168,745,330.85 | 742,083,609.10 |
| 4.2 Carrying amount as at 31/12/2017 | 512,992,682.19 | 167,952.22 | 9,454,581.38 | 168,766,226.88 | 691,381,442.67 |
| The name of the investee or the formation of goodwill | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2018 | ||
| Business combination | Others | Disposal | Others | |||
| Yellow Crane Tower Wine Co., Ltd. | 478,283,495.29 | 0.00 | 0.00 | 0.00 | 0.00 | 478,283,495.29 |
| Total | 478,283,495.29 | 0.00 | 0.00 | 0.00 | 0.00 | 478,283,495.29 |
| Items | Balance as at 31/12/2017 | Increased in current year | Decreased by amortization in current year | Decreased by other reasons in current year | Balance as at 31/12/2018 | The reason for other decreases |
| Experience | 34,903,232.18 | 9,034,123.16 | 7,265,378.03 | 0.00 | 36,671,977.31 | 0.00 |
Items
| Items | Balance as at 31/12/2017 | Increased in current year | Decreased by amortization in current year | Decreased by other reasons in current year | Balance as at 31/12/2018 | The reason for other decreases |
| center | ||||||
| Pottery | 10,652,526.78 | 0.00 | 4,407,942.00 | 0.00 | 6,244,584.78 | 0.00 |
| Sewage treatment project | 3,650,000.00 | 0.00 | 600,000.00 | 0.00 | 3,050,000.00 | 0.00 |
| Yellow Crane Tower chateau and museum | 7,567,753.85 | 11,702,525.33 | 2,738,612.72 | 0.00 | 16,531,666.46 | 0.00 |
| Gujing party building cultural center | 0.00 | 5,909,090.91 | 0.00 | 0.00 | 5,909,090.91 | 0.00 |
| Other individual project with insignificant amounts | 12,465,010.97 | 9,169,974.64 | 6,480,831.61 | 0.00 | 15,154,154.00 | 0.00 |
| Total | 69,238,523.78 | 35,815,714.04 | 21,492,764.36 | 0.00 | 83,561,473.46 | 0.00 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Allowance for bad debts | 43,023,376.00 | 10,749,392.31 | 43,446,673.17 | 10,853,076.08 |
| Allowance for inventory impairment | 17,018,004.85 | 4,219,328.16 | 31,398,636.15 | 7,804,115.47 |
| Allowance for fixed asset impairment | 5,010,437.99 | 1,252,609.50 | 16,319,563.99 | 4,079,686.68 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Deferred income | 76,636,500.55 | 18,877,272.61 | 43,706,503.22 | 10,614,699.02 |
| Accrued expenses and discount | 153,988,413.40 | 38,497,103.35 | 170,866,990.79 | 42,716,747.69 |
| Recoverable tax loss | 111,851.71 | 5,592.58 | 36,422,859.63 | 9,100,740.51 |
| Non-realized internal profit | 16,788,054.95 | 4,181,824.54 | 8,947,215.47 | 2,236,803.87 |
| Changes in fair value of trading financial assets | 117,161.92 | 29,290.48 | 0.00 | 0.00 |
| Carry-over of payroll payables deductible during the next period | 35,071,030.14 | 8,767,757.53 | 19,804,188.04 | 4,751,608.42 |
| Total | 347,764,831.51 | 86,580,171.06 | 370,912,630.46 | 92,157,477.74 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||
| Deductible temporary difference | Deferred tax liabilities | Deductible temporary difference | Deferred tax liabilities | |
| Changes in fair value of trading financial assets | 0.00 | 0.00 | 44,379.27 | 11,094.82 |
| Changes in fair value of available-for-sale financial assets | 6,393,107.46 | 1,598,276.87 | 71,361,103.28 | 17,840,275.82 |
| Difference in accelerated depreciation of fixed assets | 12,921,842.60 | 3,230,460.65 | 7,851,477.60 | 1,962,869.40 |
| Appreciation of assets by business combination under non-common control | 391,743,110.36 | 97,935,777.59 | 399,859,463.44 | 99,964,865.86 |
| Total | 411,058,060.42 | 102,764,515.11 | 479,116,423.59 | 119,779,105.90 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Deductible temporary difference | 16,214.75 | 54,697.36 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Taxable temporary differences | 5,089,008.12 | 4,331,653.92 |
| Total | 5,105,222.87 | 4,386,351.28 |
| Year | Balance as at 31/12/2018 | Balance as at 31/12/2017 | Note |
| Year 2019 | 0.00 | 0.00 | |
| Year 2020 | 2,059,849.97 | 2,059,849.97 | |
| Year 2021 | 1,444,700.17 | 1,444,700.17 | |
| Year 2022 | 827,103.78 | 827,103.78 | |
| Year 2023 | 757,354.20 | 0.00 | |
| Total | 5,089,008.12 | 4,331,653.92 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Large amount certified savings | 0.00 | 300,000,000.00 |
| Prepayments for equipment and properties | 16,544,407.51 | 17,910,214.56 |
| Total | 16,544,407.51 | 317,910,214.56 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Notes payable | 349,203,413.72 | 200,750,000.00 |
| Accounts payable | 484,952,598.59 | 435,615,039.83 |
| Total | 834,156,012.31 | 636,365,039.83 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Bank acceptance | 320,554,500.00 | 200,750,000.00 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Trade acceptance | 28,648,913.72 | 0.00 |
| Total | 349,203,413.72 | 200,750,000.00 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Material | 277,765,943.47 | 260,407,500.55 |
| Project and Equipment | 111,498,555.89 | 89,176,879.87 |
| Others | 95,688,099.23 | 86,030,659.41 |
| Total | 484,952,598.59 | 435,615,039.83 |
| Reason(s) for unsettlement | Balance as at 31/12/2018 | Reason(s) for unsettlement |
| Company A | 7,454,526.71 | Residual project balance |
| Company B | 3,744,927.40 | Residual project balance |
| Company C | 3,445,131.03 | Residual project balance |
| Company D | 1,115,215.57 | Residual project balance |
| Company E | 1,090,000.00 | Residual equipment balance |
| Total | 16,849,800.71 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Payments for goods | 1,149,143,310.48 | 503,083,108.13 |
| Total | 1,149,143,310.48 | 503,083,108.13 |
Items
| Items | Balance as at 31/12/2017 | Increased during the current year | Decreased during the current year | Balance as at 31/12/2018 |
| 1. Short-term employee benefits | 371,459,202.44 | 1,561,557,943.08 | 1,476,081,272.58 | 456,935,872.94 |
| 2. Post-employment benefits | 914,811.93 | 81,031,913.54 | 81,583,121.98 | 363,603.49 |
| 3. Termination benefits | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Other benefits due within one year | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 372,374,014.37 | 1,642,589,856.62 | 1,557,664,394.56 | 457,299,476.43 |
| Items | Balance as at 31/12/2017 | Increased during the current year | Decreased during the current year | Balance as at 31/12/2018 |
| 1. Wages, salaries and subsidies | 298,131,004.17 | 1,381,473,440.29 | 1,307,960,973.59 | 371,643,470.87 |
| 2. Employee welfare | 3,692,980.00 | 64,378,534.03 | 61,603,351.03 | 6,468,163.00 |
| 3. Social insurance: | 236,208.08 | 36,887,387.41 | 36,890,384.58 | 233,210.91 |
| Including: Medical insurance | 196,904.35 | 31,252,541.03 | 31,222,628.48 | 226,816.90 |
| Employment injury insurance | 20,069.87 | 2,515,768.68 | 2,534,350.88 | 1,487.67 |
| Maternity insurance | 19,233.86 | 3,119,077.70 | 3,133,405.22 | 4,906.34 |
| 4. Housing provident fund | 9,051,999.88 | 47,074,411.51 | 53,259,083.93 | 2,867,327.46 |
| 5. Labor union fees and employee education fees | 60,347,010.31 | 31,744,169.84 | 16,367,479.45 | 75,723,700.70 |
| 6. Short-term paid absence | 0.00 | 0.00 | 0.00 | 0.00 |
| 7. Short-term profit sharing plan | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 371,459,202.44 | 1,561,557,943.08 | 1,476,081,272.58 | 456,935,872.94 |
| Category | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2018 |
| 1. Basic pension | 867,739.31 | 77,583,936.22 | 78,103,780.65 | 347,894.88 |
| 2. Unemployment insurance | 47,072.62 | 3,447,977.32 | 3,479,341.33 | 15,708.61 |
Category
| Category | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2018 |
| Total | 914,811.93 | 81,031,913.54 | 81,583,121.98 | 363,603.49 |
| Tax (Fees) | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| VAT | 162,028,367.23 | 78,832,243.10 |
| Consumption tax | 99,133,181.43 | 210,532,348.09 |
| Enterprise income tax | 75,107,410.70 | 92,299,563.98 |
| Personal income tax | 1,307,281.11 | 3,949,866.64 |
| Urban construction and maintenance tax | 13,142,342.60 | 11,904,195.78 |
| Stamp duty | 549,270.06 | 486,594.48 |
| Education surcharge | 12,301,477.16 | 11,127,386.19 |
| Others | 9,424,293.89 | 11,852,647.19 |
| Total | 372,993,624.18 | 420,984,845.45 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Interests payable | 0.00 | 0.00 |
| Dividends payable | 0.00 | 0.00 |
| Other payables | 1,192,020,147.82 | 1,032,543,553.34 |
| Total | 1,192,020,147.82 | 1,032,543,553.34 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Security deposit | 1,064,059,562.95 | 874,462,125.60 |
| Business trip borrowing | 145,447.82 | 702,716.60 |
| Guarantee | 14,693,150.14 | 12,061,326.71 |
| Personal housing provident fund paid by company | 2,867,327.46 | 9,051,999.88 |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Unsettled discount | 30,212,626.88 | 54,471,463.99 |
| Others | 80,042,032.57 | 81,793,920.56 |
| Total | 1,192,020,147.82 | 1,032,543,553.34 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Accrued expenses | 295,164,745.44 | 182,846,942.10 |
| Total | 295,164,745.44 | 182,846,942.10 |
| Items | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2018 | Reasons |
| Government grants | 43,706,503.22 | 39,955,200.00 | 7,025,202.67 | 76,636,500.55 | Receiving government subsidies related to assets |
| Total | 43,706,503.22 | 39,955,200.00 | 7,025,202.67 | 76,636,500.55 | — |
| Items | Balance as at 31/12/2017 | Increased in current year | Included in non-operating income in current year | Included in other income and gain in current year | Other changes | Balance as at 31/12/2018 | Related to asset or income |
| Wine production system technical transformation | 317,708.39 | 0.00 | 0.00 | 62,499.96 | 0.00 | 255,208.43 | Related to asset |
| Instrument subsidy | 1,212,750.00 | 0.00 | 0.00 | 220,500.00 | 0.00 | 992,250.00 | Related to asset |
| Intelligent solid brewing technology innovation project | 182,291.61 | 0.00 | 0.00 | 31,250.04 | 0.00 | 151,041.57 | Related to asset |
Items
| Items | Balance as at 31/12/2017 | Increased in current year | Included in non-operating income in current year | Included in other income and gain in current year | Other changes | Balance as at 31/12/2018 | Related to asset or income |
| Anhui province development of direct funds of service industry | 1,380,487.88 | 0.00 | 0.00 | 292,682.88 | 0.00 | 1,087,805.00 | Related to asset |
| Anhui province subsidy of innovative province construction capacity for independent innovation | 3,409,210.00 | 0.00 | 0.00 | 730,545.00 | 0.00 | 2,678,665.00 | Related to asset |
| Energy efficiency renovation project for coal industrial boiler and glass furnace | 165,750.00 | 0.00 | 0.00 | 153,000.00 | 0.00 | 12,750.00 | Related to asset |
| Bozhou logistics center project | 120,000.00 | 0.00 | 0.00 | 60,000.00 | 0.00 | 60,000.00 | Related to asset |
| Equipment subsidy | 865,168.63 | 592,600.00 | 0.00 | 205,706.26 | 0.00 | 1,252,062.37 | Related to asset |
| Finance subsidy for energy saving projects | 465,956.93 | 0.00 | 0.00 | 465,956.93 | 0.00 | 0.00 | Related to asset |
| Finance subsidy for technical reconstruction | 950,152.42 | 0.00 | 0.00 | 534,221.52 | 0.00 | 415,930.90 | Related to asset |
| Enterprise development funds | 82,500.00 | 0.00 | 0.00 | 30,000.00 | 0.00 | 52,500.00 | Related to asset |
Items
| Items | Balance as at 31/12/2017 | Increased in current year | Included in non-operating income in current year | Included in other income and gain in current year | Other changes | Balance as at 31/12/2018 | Related to asset or income |
| Internet traceability system project | 4,083,750.00 | 0.00 | 0.00 | 1,113,750.00 | 0.00 | 2,970,000.00 | Related to asset |
| Subsidy for suizhou new factory infrastructure | 0.00 | 35,338,000.00 | 0.00 | 0.00 | 0.00 | 35,338,000.00 | Related to asset |
| Motor and boiler energy-saving technical transformation project | 550,000.16 | 0.00 | 0.00 | 137,499.96 | 0.00 | 412,500.20 | Related to asset |
| Automation of check and storage, on-line monitoring of product quality | 453,125.00 | 0.00 | 0.00 | 93,750.00 | 0.00 | 359,375.00 | Related to asset |
| Funds for research projects of koji-making Technology | 563,400.00 | 322,800.00 | 0.00 | 0.00 | 0.00 | 886,200.00 | Related to asset |
| Gujing Zhangji wine cellar optimization and reconstruction project | 930,208.35 | 0.00 | 0.00 | 47,499.96 | 0.00 | 882,708.39 | Related to asset |
| Subsidy for food safety | 965,517.25 | 0.00 | 0.00 | 137,931.00 | 0.00 | 827,586.25 | Related to asset |
Items
| Items | Balance as at 31/12/2017 | Increased in current year | Included in non-operating income in current year | Included in other income and gain in current year | Other changes | Balance as at 31/12/2018 | Related to asset or income |
| improvement project | |||||||
| Subsidy for key technical cooperation project on the authenticity of important food isotopes | 480,000.00 | 120,000.00 | 0.00 | 0.00 | 0.00 | 600,000.00 | Related to asset |
| Comprehensive subsidy fund for air pollution prevention and control | 2,865,286.31 | 1,841,000.00 | 0.00 | 2,098,202.98 | 0.00 | 2,608,083.33 | Related to asset |
| Funds for strategic emerging industry agglomeration development base | 0.00 | 1,020,800.00 | 0.00 | 0.00 | 0.00 | 1,020,800.00 | Related to asset |
| Land repayments | 23,663,240.29 | 0.00 | 0.00 | 550,206.18 | 0.00 | 23,113,034.11 | Related to asset |
| Specific funds for side management of power demand | 0.00 | 720,000.00 | 0.00 | 60,000.00 | 0.00 | 660,000.00 | Related to asset |
| Total | 43,706,503.22 | 39,955,200.00 | 0.00 | 7,025,202.67 | 0.00 | 76,636,500.55 | Related to asset |
| Items | Balance as | Current year movement (+, -) | Balance as |
at 31/12/2017
| at 31/12/2017 | Share issue | Bonus issue | Conversion from reserves | Others | Subtotal | at 31/12/2018 | |
| Total shares | 503,600,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 503,600,000.00 |
| Items | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2018 |
| Share premium | 1,262,552,456.05 | 0.00 | 0.00 | 1,262,552,456.05 |
| Other capital reserves | 32,853,136.20 | 0.00 | 0.00 | 32,853,136.20 |
| Total | 1,295,405,592.25 | 0.00 | 0.00 | 1,295,405,592.25 |
6.28 Other comprehensive income
| Items | Balance as at 31/12/2017 | Total amount in current year | Balance as at 31/12/2018 | ||||
| The amount for the year before tax | Less: previously recognized in other comprehensive income transferred into profit or loss | Less: Income tax expense | After tax attributable to the parent company | After tax attributable to minority shareholders | |||
| 1.Other comprehensive income that will not be reclassified into income or loss in the future | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2.Other comprehensive income that will be reclassified into income or loss in the future | 53,520,827.44 | -64,967,995.80 | 0.00 | -16,241,998.95 | -48,725,996.85 | 0.00 | 4,794,830.59 |
| Including: fair value change of financial asset available for sale | 53,520,827.44 | -64,967,995.80 | 0.00 | -16,241,998.95 | -48,725,996.85 | 0.00 | 4,794,830.59 |
| Total | 53,520,827.44 | -64,967,995.80 | 0.00 | -16,241,998.95 | -48,725,996.85 | 0.00 | 4,794,830.59 |
6.29 Surplus reserves
| Items | Balance as at 31/12/2017 | Increased during the current year | Decreased during the current year | Balance as at 31/12/2018 |
| Statutory surplus reserve | 256,902,260.27 | 0.00 | 0.00 | 256,902,260.27 |
| Total | 256,902,260.27 | 0.00 | 0.00 | 256,902,260.27 |
| Items | Current year | Prior year |
| Pre-adjustment balance brought forward | 4,349,649,698.42 | 3,503,069,053.49 |
| Total adjustment to retained earnings b/f (+, -) | 0.00 | 0.00 |
| Retained earnings b/f after adjustment | 4,349,649,698.42 | 3,503,069,053.49 |
| Add: Net profit attributable to shareholders of the parent | 1,695,231,643.05 | 1,148,740,644.93 |
| Less: Appropriation to statutory surplus reserve | 0.00 | 0.00 |
| Appropriation to discretionary surplus reserve | 0.00 | 0.00 |
| Appropriation to general reserve | 0.00 | 0.00 |
| Ordinary dividends declared | 503,600,000.00 | 302,160,000.00 |
| Ordinary dividends transformed into capital share | 0.00 | 0.00 |
| Balance carrying forward | 5,541,281,341.47 | 4,349,649,698.42 |
| Items | Current year | Prior year | ||
| Operating revenues | Operating costs | Operating revenues | Operating costs | |
| Principal business | 8,643,055,572.55 | 1,902,024,741.16 | 6,929,908,097.27 | 1,621,229,551.29 |
| Other business | 43,084,764.34 | 30,040,096.49 | 38,416,951.28 | 21,358,505.14 |
Items
| Items | Current year | Prior year | ||
| Operating revenues | Operating costs | Operating revenues | Operating costs | |
| Total | 8,686,140,336.89 | 1,932,064,837.65 | 6,968,325,048.55 | 1,642,588,056.43 |
| Items | Current year | Prior year |
| Consumption tax | 1,018,772,391.98 | 904,625,930.39 |
| Urban maintenance and construction tax, education surcharges | 215,702,291.57 | 188,715,125.64 |
| Urban land used tax | 11,230,378.26 | 12,397,015.39 |
| Property tax | 16,405,271.90 | 16,060,596.57 |
| Stamp duty | 6,914,493.16 | 6,940,758.86 |
| Others | 9,882,693.22 | 7,578,557.14 |
| Total | 1,278,907,520.09 | 1,136,317,983.99 |
| Items | Current year | Prior year |
| Employment benefits | 443,674,013.14 | 364,764,051.91 |
| Travel fees | 105,558,192.51 | 90,182,846.13 |
| Advertisement fees | 643,845,577.77 | 584,523,553.79 |
| Transportation charges | 50,301,343.18 | 46,746,599.61 |
| Comprehensive promotion costs | 981,647,916.98 | 671,510,580.38 |
| Service fees | 374,712,968.67 | 332,660,815.27 |
| Others | 82,795,293.01 | 79,692,936.45 |
| Total | 2,682,535,305.26 | 2,170,081,383.54 |
| Items | Current year | Prior year |
| Employment benefits | 381,810,225.86 | 336,281,912.51 |
| Office fees | 36,115,375.96 | 21,662,534.77 |
| Maintenance expenses | 75,819,068.26 | 60,554,699.33 |
Items
| Items | Current year | Prior year |
| Depreciation | 59,437,594.57 | 56,988,816.81 |
| Amortization of intangible assets | 19,959,184.85 | 15,883,489.46 |
| Pollution discharge | 14,533,149.92 | 10,242,055.85 |
| Travel expenses | 2,868,419.04 | 2,350,858.72 |
| Water and electricity charges | 10,176,771.91 | 10,126,700.40 |
| Others | 44,277,256.28 | 76,967,141.79 |
| Total | 644,997,046.65 | 591,058,209.64 |
| Items | Current year | Prior year |
| Payroll expenses | 10,076,055.90 | 6,253,936.13 |
| Direct input costs | 2,932,841.66 | 1,111,894.55 |
| Depreciation expenses | 2,652,902.88 | 1,692,643.58 |
| Others | 8,304,965.60 | 3,436,275.20 |
| Total | 23,966,766.04 | 12,494,749.46 |
| Items | Current year | Prior year |
| Interest expenses | 15,408,022.76 | 0.00 |
| Less: Interest income | 68,964,800.42 | 30,406,069.89 |
| Exchange gain or loss | 674,321.43 | 406,630.04 |
| Others | 1,309,826.50 | 4,072,154.03 |
| Total | -51,572,629.73 | -25,927,285.82 |
| Items | Current year | Prior year |
| Allowance for bad debt | 164,473.83 | -555,400.26 |
| Allowance for inventory impairment | 12,377,889.37 | 23,255,647.09 |
| Allowance for fixed asset impairment | 184,505.54 | 10,853,898.47 |
| Total | 12,726,868.74 | 33,554,145.30 |
6.38 Other income and gain
| Items | Current year | Prior year | Recognized into current year non-recurring profit and loss |
| Tax refund | 18,279,633.65 | 20,901,711.56 | 18,279,633.65 |
| Deferred income amortization | 7,025,202.67 | 5,987,292.23 | 7,025,202.67 |
| Other government grants related to operating activities | 10,396,838.13 | 5,831,112.81 | 10,396,838.13 |
| Total | 35,701,674.45 | 32,720,116.60 | 35,701,674.45 |
| Items | Current year | Prior year |
| Investment income from disposal of financial assets measured by fair value with changes in fair value recognized in profit or loss | 1,238,951.28 | 3,782,651.28 |
| Investment income from held-to-maturity investments during the holding period | 96,034,262.28 | 77,626,230.13 |
| Investment income from available for sale financial asset during the holding period | 22,103,586.91 | 10,109,229.98 |
| Investment income from disposal of financial assets available for sale | 17,575,818.71 | 50,875,246.87 |
| Others | 11,262,849.44 | 11,040,000.00 |
| Total | 148,215,468.62 | 153,433,358.26 |
| Source of fair value change | Current year | Prior year |
| Financial assets measured by fair value with changes in fair value recognized in profit or loss | -161,541.19 | -113,260.71 |
| Including: Derivative financial assets | 0.00 | 0.00 |
| Total | -161,541.19 | -113,260.71 |
| Items | Current year | Prior year | Recognized into current year non-recurring profit and loss |
| Gain from fixed asset disposals | 526,066.38 | 254,763.27 | 526,066.38 |
| Total | 526,066.38 | 254,763.27 | 526,066.38 |
6.42 Non-operating income
| Items | Current year | Prior year | Recognized into current year non-recurring profit and loss |
| Gain on non-current asset disposals | 75,031.16 | 93,990.84 | 75,031.16 |
| Government grants related to non-operating activities | 340,000.00 | 1,537,851.79 | 340,000.00 |
| Income from penalties | 18,476,297.19 | 18,975,266.00 | 18,476,297.19 |
| Sales of wastes | 15,074,253.13 | 7,220,268.09 | 15,074,253.13 |
| Accounts payable no need to pay back | 248,222.02 | 195,283.04 | 248,222.02 |
| Others | 1,076,176.94 | 2,118,638.39 | 1,076,176.94 |
| Total | 35,289,980.44 | 30,141,298.15 | 35,289,980.44 |
| Items | Current year | Prior year | Related to asset or income | ||||
| Included in non-operating income | Included in other income and gain | Cost reduction | Included in non-operating income | Included in other income and gain | Cost reduction | ||
| High-tech enterprise recognition award | 0.00 | 0.00 | 0.00 | 600,000.00 | 0.00 | 0.00 | Related to income |
| Other incentives | 140,000.00 | 0.00 | 0.00 | 937,851.79 | 0.00 | 0.00 | Related to income |
| Taxpayer bonus in xanning high-tech district | 100,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | Related to income |
| Yaohai district shengli street awards | 100,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | Related to income |
| Total | 340,000.00 | 0.00 | 0.00 | 1,537,851.79 | 0.00 | 0.00 | |
Items
| Items | Current year | Prior year | Recognized in current year non-recurring profit and loss |
| Loss on non-current asset disposals | 10,661,117.09 | 11,007,817.56 | 10,661,117.09 |
| Others | 2,499,058.39 | 1,369,000.22 | 2,499,058.39 |
| Total | 13,160,175.48 | 12,376,817.78 | 13,160,175.48 |
| Items | Current year | Prior year |
| Current tax | 623,207,719.69 | 414,788,420.05 |
| Deferred tax | 4,804,714.84 | 12,197,106.29 |
| Total | 628,012,434.53 | 426,985,526.34 |
| Items | Current year |
| Profit before tax | 2,368,926,095.41 |
| According to the statutory/applicable tax rate calculation of the income tax expenses | 592,231,523.85 |
| Influence of different tax rates of subsidiaries | -10,281,263.00 |
| The effect of adjustment prior period income tax | -8,645,076.42 |
| The influence of the untaxable income | -2,024,760.48 |
| The influence of the undeduction of costs, expenses, and losses | 64,801,766.25 |
| The influence of using the preliminary period deductible losses of unconfirmed deferred income tax assets | 0.00 |
| The influence of the unconfirmed deferred income tax assets attributable to the temporary deductible difference or deductible losses | 189,338.55 |
| Tax rate adjustment to the beginning balance of deferred income tax assets/liabilities | 5,059.63 |
| Income tax credits | -750,000.00 |
| Collectively deductions | -7,514,153.85 |
| Income tax expenses | 628,012,434.53 |
6.46 Notes to the statement of cash flows6.46.1 Other cash receipts relating to operating activities
| Items | Current year | Prior year |
| Guarantee deposit | 159,476,594.48 | 332,307,988.61 |
| Government grants | 50,692,038.13 | 7,368,964.60 |
| Interest income | 68,964,800.42 | 30,406,069.89 |
| Release of restricted monetary funds | 460,000,000.00 | 5,060,000.00 |
| Others | 34,874,949.28 | 34,921,023.48 |
| Total | 774,008,382.31 | 410,064,046.58 |
| Items | Current year | Prior year |
| Cash paid in sales expenses and general and administrative expense | 1,837,245,742.21 | 1,423,094,520.43 |
| Time deposits or deposits pledged for the issuance of notes payable | 200,000.00 | 10,000,000.00 |
| Structured time deposits that cannot be withdrawn in advance | 870,000,000.00 | 450,000,000.00 |
| Others | 7,774,646.93 | 5,441,154.25 |
| Total | 2,715,220,389.14 | 1,888,535,674.68 |
| Items | Current year | Prior year |
| Government grants related to assets | 0.00 | 5,715,000.00 |
| Total | 0.00 | 5,715,000.00 |
| Items | Current year | Prior year |
| Logout subsidiary | 16,553.34 | 0.00 |
| Total | 16,553.34 | 0.00 |
| Items | Current year | Prior year |
| ① Reconciliation of cash flows from operating activities to net profit: | ||
| Net profit | 1,740,913,660.88 | 1,185,231,737.46 |
Items
| Items | Current year | Prior year |
| Add: Loss on asset impairment | 12,726,868.74 | 33,554,145.30 |
| Depreciation of fixed assets, oil and gas assets, biological assets held for production | 194,006,852.77 | 190,087,889.14 |
| Amortization of Investment property | 320,704.52 | 387,313.52 |
| Amortization of intangible assets | 19,959,184.85 | 15,883,489.46 |
| Amortization of Long-term deferred expenditure | 21,492,764.36 | 39,767,964.81 |
| Loss on non-current assets disposal (gain presented by "-" prefix) | -526,066.38 | -254,763.27 |
| Loss on scrap of fixed assets (gain presented by "-" prefix) | 10,586,085.93 | 10,913,826.72 |
| Loss on fair value changes (gain presented by "-" prefix) | 161,541.19 | 113,260.71 |
| Financial costs (gain presented by "-" prefix) | 15,408,022.76 | 0.00 |
| Investment loss (gain presented by "-" prefix) | -148,215,468.62 | -153,433,358.26 |
| Decrease of deferred tax assets (increase presented by "-" prefix) | 5,577,306.68 | 15,497,119.41 |
| Increase of deferred tax liabilities (increase presented by "-" prefix) | -772,591.84 | -3,300,013.12 |
| Decrease of inventories (increase presented by "-" prefix) | -328,785,250.90 | -291,841,632.64 |
| Decrease of operating receivables (increase presented by "-" prefix) | -876,884,454.15 | -204,643,428.43 |
| Increase of operating payables (decrease presented by "-" prefix) | 1,192,137,327.83 | 548,938,454.20 |
| Amortization of deferred income | -7,025,202.67 | -5,987,292.23 |
| Structured time deposits that cannot be withdrawn in advance | -410,200,000.00 | -450,000,000.00 |
| Net cash flows generated from operating activities | 1,440,881,285.95 | 930,914,712.78 |
| ② Significant investing and financing activities involve no cash: | ||
| Debt-to-capital conversion | 0.00 | 0.00 |
| Convertible loan due within one year | 0.00 | 0.00 |
| Fixed assets acquired under financial lease | 0.00 | 0.00 |
| ③ Movement of cash and cash equivalents: | ||
| Cash as at 31/12/2018 | 835,560,865.12 | 1,024,088,626.40 |
| Less: Cash as at 1/1/2018 | 1,024,088,626.40 | 527,849,026.07 |
| Add: Cash equivalents as at 31/12/2018 | 0.00 | 0.00 |
| Less: Cash equivalents as at 1/1/2018 | 0.00 | 0.00 |
Items
| Items | Current year | Prior year |
| Net increase of cash and cash equivalents | -188,527,761.28 | 496,239,600.33 |
| Items | Balance as at 31/12/2018 | Balance as at31/12/2017 |
| ① Cash | 835,560,865.12 | 1,024,088,626.40 |
| Including: Cash at hand | 353,429.67 | 369,197.41 |
| Demand bank deposit | 835,175,643.46 | 990,617,397.53 |
| Demand other monetary funds | 31,791.99 | 33,102,031.46 |
| ② Cash equivalents | 0.00 | 0.00 |
| Including: Debt instrument matured within three months | 0.00 | 0.00 |
| ③ Cash and cash equivalents as at 31/12/2018 | 835,560,865.12 | 1,024,088,626.40 |
| Items | Amounts |
| Amounts of trade acceptance endorsement | 942,921,055.90 |
| Within: Paying goods | 921,234,547.73 |
| Paying long-term assets | 13,318,643.47 |
| Other payments | 8,367,864.70 |
| Items | Book value at 12/31/2018 | Reasons for restrictions |
| Bank deposit | 870,000,000.00 | Structured time deposit which cannot be withdrawn in advance and will expire after 3 months |
| Current assets | 18,000,000.00 | Pledge financial products for opening bank acceptance |
| Notes receivable | 30,236,900.00 | Pledged for opening bank acceptance |
| Other monetary funds | 200,000.00 | Notes deposit |
| Total | 918,436,900.00 |
Items
| Items | Amount | Account | Amount included in current profits and losses |
| Tax refund | 18,279,633.65 | Other income and gain | 18,279,633.65 |
| Special funds for industrial development | 2,100,000.00 | Other income and gain | 2,100,000.00 |
| Projects funds for manufacturing strong provinces in 2018 | 1,800,000.00 | Other income and gain | 1,800,000.00 |
| Standardized reward | 1,109,249.00 | Other income and gain | 1,109,249.00 |
| National intellectual property demonstration enterprise award | 500,000.00 | Other income and gain | 500,000.00 |
| Special expenses for leading talents in special programs | 500,000.00 | Other income and gain | 500,000.00 |
| Municipal policy awards and subsidy in 2017 | 500,000.00 | Other income and gain | 500,000.00 |
| Project funds for supporting the rapid development of market participants | 500,000.00 | Other income and gain | 500,000.00 |
| Unemployment insurance funds and stabilization allowance | 409,000.00 | Other income and gain | 409,000.00 |
| Han Zhiyin talents program subsidy | 400,000.00 | Other income and gain | 400,000.00 |
| Subsidy from xianning science and technology bureau | 300,000.00 | Other income and gain | 300,000.00 |
| New registered trademark subsidy | 246,000.00 | Other income and gain | 246,000.00 |
| Subsidy for special staff workstations of the Bureau of Science and Technology | 200,000.00 | Other income and gain | 200,000.00 |
| Subsidy for academician expert station of xianning | 50,000.00 | Other income | 50,000.00 |
Items
| Items | Amount | Account | Amount included in current profits and losses |
| high-tech district management committee | and gain | ||
| Subsidy for technical projects of industrial enterprises in xianning high-tech district | 200,000.00 | Other income and gain | 200,000.00 |
| Patent product award | 200,000.00 | Other income and gain | 200,000.00 |
| Bonus of Bozhou science and technology bureau | 140,010.00 | Other income and gain | 140,010.00 |
| Taxpayer bonus in xanning high-tech district | 100,000.00 | Non-operating income | 100,000.00 |
| Annual network sales scale award | 100,000.00 | Other income and gain | 100,000.00 |
| Logistics outsourcing incentives | 100,000.00 | Other income and gain | 100,000.00 |
| Yaohai district shengli street awards | 100,000.00 | Non-operating income | 100,000.00 |
| Equipment subsidy | 592,600.00 | Deferred income | 162,166.54 |
| Subsidy for suizhou new factory infrastructure | 35,338,000.00 | Deferred income | 0.00 |
| Funds for research projects of koji-making technology | 322,800.00 | Deferred income | 0.00 |
| Subsidy for key technical cooperation project on the authenticity of important food isotopes | 120,000.00 | Deferred income | 0.00 |
| Comprehensive subsidy fund for air pollution prevention and control | 1,841,000.00 | Deferred income | 2,098,202.98 |
| Funds for strategic emerging industry agglomeration development base | 1,020,800.00 | Deferred income | 0.00 |
| Specific funds for side management of power demand | 720,000.00 | Deferred income | 60,000.00 |
| Other incentives | 1,042,579.13 | Other income and gain | 1,042,579.13 |
Items
| Items | Amount | Account | Amount included in current profits and losses |
| Standardized reward | 140,000.00 | Non-operating income | 140,000.00 |
| Total | 68,971,671.78 | —— | 31,336,841.30 |
| Subsidiaries | Place of operation | Place of registration | Nature of business | Holding proportion % | Acquired method | |
| Directly | Indirectly | |||||
| Bozhou Gujing Sales Co., Ltd. (hereafter Gujing Sales) | Anhui Bozhou | Anhui Bozhou | Commercial trade | 100.00 | Investment establishment | |
| Bozhou Gujing Transportation Co., Ltd. (hereafter Gujing Transportation) (Note) | Anhui Bozhou | Anhui Bozhou | Motor transport | 99.00 | 1.00 | Investment establishment |
| Anhui Longrui Glass Co., Ltd (hereafter Longrui Glass) | Anhui Bozhou | Anhui Bozhou | Manufacture | 100.00 | Investment establishment | |
| Bozhou Gujing Waste Reclamation Co., Ltd. (hereafter Gujing Waste) | Anhui Bozhou | Anhui Bozhou | Waste recycle | 100.00 | Investment establishment | |
| Anhui Jinyunlai Culture & Media Co., | Anhui Hefei | Anhui Hefei | Advertisement | 100.00 | Investment | |
Subsidiaries
| Subsidiaries | Place of operation | Place of registration | Nature of business | Holding proportion % | Acquired method | |
| Directly | Indirectly | |||||
| Ltd. (hereafter Jinyunlai) | marketing | establishment | ||||
| Anhui Ruisiweier Technology Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Technical research | 100.00 | Investment establishment | |
| Anhui colorful taste wine co., Ltd. | Anhui Bozhou | Anhui Bozhou | Manufacture | 100.00 | Investment establishment | |
| Shanghai Gujing Jinhao hotel management company | Shanghai | Shanghai | Hotel management | 100.00 | Business combination under common control | |
| Bozhou Gujing hotel Co., Ltd | Anhui Bozhou | Anhui Bozhou | Hotel operating | 100.00 | Business combination under common control | |
| Anhui Yuanqing environmental protection Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Sewage treatment | 100.00 | Investment establishment | |
| Anhui Gujing Yunshang Electronic Commerce Co., Ltd | Anhui Hefei | Anhui Hefei | Electronic commerce | 100.00 | Investment establishment | |
| Anhui Zhenrui Construction Engineering Co., Ltd | Anhui Bozhou | Anhui Bozhou | Construction | 100.00 | Investment establishment | |
| Anhui RunanxinkeTesting Tech. Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Food testing | 100.00 | Investment establishment | |
| Yellow Crane Tower Wine Co., Ltd | Hubei Wuhan | Hubei Wuhan | Manufacture | 51.00 | Business combination not under common control | |
| Yellow Crane Tower Wine (Xianning) Co., Ltd | Hubei Xianning | Hubei Xianning | Manufacture | 51.00 | Business combination not under common control | |
| Yellow Crane Tower Wine (Suizhou) | Hubei Suizhou | Hubei Suizhou | Manufacture | 51.00 | Business | |
Subsidiaries
| Subsidiaries | Place of operation | Place of registration | Nature of business | Holding proportion % | Acquired method | |
| Directly | Indirectly | |||||
| Co., Ltd | combination not under common control | |||||
| Wuhan Tianlong Jindi Technology Development Co., Ltd | Hubei Wuhan | Hubei Wuhan | Commercial trade | 51.00 | Business combination not under common control | |
| Xianning Junhe Sales Co., Ltd | Hubei Xianning | Hubei Xianning | Commercial trade | 51.00 | Business combination not under common control | |
| Hubei Junhe Advertising Co., Ltd | Hubei Wuhan | Hubei Wuhan | Advertisement marketing | 51.00 | Business combination not under common control | |
| Wuhan Yashibo Technology Co., Ltd. | Hubei Wuhan | Hubei Wuhan | Technology development | 51.00 | Investment establishment | |
| Wuhan Junya Sales Co., Ltd | Hubei Wuhan | Hubei Wuhan | Commercial trade | 51.00 | Investment establishment | |
| Suizhou Junhe Commercial Co., Ltd. | Hubei Suizhou | Hubei Suizhou | Commercial trade | 51.00 | Investment establishment | |
| Hubei Hechuyuan Commercial Co., Ltd. (Note) | Hubei Wuhan | Hubei Wuhan | Commercial trade | 51.00 | Investment establishment | |
Subsidiaries
| Subsidiaries | Minority shareholders’ holding portion (%) | Income or loss owned by minority shareholders | Dividends paid to minority shareholders | Minority shareholders’ equity at 12/31/2018 |
| Yellow Crane Tower Wine Co., Ltd | 49.00 | 45,682,017.83 | 0.00 | 427,766,092.82 |
| Subsidiaries | Balance as at 12/31/2018 | |||||
| Current assets | Non-current assets | Assets subtotals | Current liabilities | Non-current liabilities | Liabilities subtotals | |
| Yellow Crane Tower Wine Co., Ltd | 587,458,925.80 | 731,191,284.72 | 1,318,650,210.52 | 311,342,786.19 | 134,315,398.16 | 445,658,184.35 |
| Subsidiaries | Balance as at 12/31/2017 | |||||
| Current assets | Non-current assets | Assets subtotals | Current liabilities | Non-current liabilities | Liabilities subtotals | |
| Yellow Crane Tower Wine Co., Ltd | 441,615,299.44 | 678,572,840.91 | 1,120,188,140.35 | 239,818,614.70 | 100,576,052.97 | 340,394,667.67 |
| Subsidiaries | Current year | Last year | ||||||
| Revenue from operation | Net profit | Comprehensive income subtotal | Cash flows from operating activities | Revenue from operation | Net profit | Comprehensive income subtotal | Cash flows from operating activities | |
| Yellow Crane Tower Wine Co., Ltd | 866,368,765.24 | 93,215,106.83 | 93,215,106.83 | 172,572,976.32 | 689,103,629.96 | 74,467,889.41 | 74,467,889.41 | 107,890,980.94 |
The main financial instruments of the Company include equity investments, financial products, trustinvestments, accounts receivable, accounts payable etc., please refer to Note 6 for detail of related items. Therisk associated with financial instruments, and risk management policies which the Company uses to reducethese risks are described below. The management of the Company manages and supervises the risks toensure that the risks can be controlled within a limited range.9.1 The targets and policies of risk managementThe target of risk management is to obtain the proper balance between the risk and benefit, to reduce thenegative impact that is caused by the risk of the Company to the lowest level, and to maximize the benefits ofshareholders and other equity investors. Based on the targets of risk management, the basic strategy of theCompany’s risk management is to identify and analyze the risks which are faced by the Company, establishsuitable risk tolerance baseline and proceed the risk management, and supervise a variety of risks timely andreliably, and control the risks within a limited range.9.1.1 Market Risk9.1.1.1 Foreign exchange riskForeign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The core businessof the Company is on the mainland of China and trading with RMB. Foreign exchange risk risk is minimal.9.1.1.2 Interest rate risk - the risk of changes in cash flowThe operating fund of the Company is sufficient, and there is no loan in recent years so that the risk of interestis very small for the Company.9.1.1.3 Other price riskThe financial asset available for sale and financial asset for the trading of the Company is measured by fairvalue. So, the Company bears the risk of the change of security market. To decrease the risk, themanagement decided that the Company held a combination of several equities and securities.9.1.2. Credit RiskThe maximum risk exposure that could cause the Company’s financial losses is associated with the default bythe other party of a transaction and the financial guarantee provided by the Company as at December 31,2018. The detail is listed below:
The carrying value of the financial assets that is recognized in the consolidated financial statement. For thefinancial instrument measured by fair value, the carrying value only represents the risk exposure, but themaximum risk exposure will change with the future fair value.The Company only trade with an authorized company with high credit record and large scale. According to the
policies of the Company, the client needs to pay first, then receive the goods. Only a few companies areprovided with credit. A credit review is performed for customers trading with credit.The current asset of the Company is deposited in the bank with the high credit record. So, the credit risk of thecurrent asset is low9.1.3 Liquidity riskWhen managing liquidity risk, the Company maintains and monitors adequate cash and cash equivalentsdecided by the management to meet the needs of operation of the Company, and to reduce the impact offluctuations in cash flows.
Note 10 Disclosure of the fair value10.1 The fair value at the end of the current year of assets and liabilities which are measured by fair value
| Items | The fair value at the end of the current year | |||
| The first level measured by fair value | The second level measured by fair value | The third level measured by fair value | Total | |
| 1. Continuous measurement by fair value | ||||
| 1.1 The financial assets are measured by fair value, and the changes are recognized into current profit or loss | 622,892.96 | 622,892.96 | ||
| 1.1.1 Trading financial assets | 622,892.96 | 622,892.96 | ||
| Equity instruments investment | 622,892.96 | 622,892.96 | ||
| 1.2 Financial asset available for sale | 206,393,107.46 | 206,393,107.46 | ||
| Equity instruments investment | 206,393,107.46 | 206,393,107.46 | ||
| The total amount of liabilities continuously measured by fair value | 207,016,000.42 | 207,016,000.42 | ||
Exchange or Shenzhen Stock Exchange. The market price is confirmed on the basis of the closing price ofstocks on the balance sheet date. If the stocks held are in the restricted period, they shall be determinedaccording to the relevant valuation methods described in Accounting [2007] No. 21 of the SecuritiesRegulatory Commission.
Note 11 Related parties and related party transaction11.1 Details of the parent
| Parents | Relationship | Nature of business | Registered capital | Shareholding in the Company % | Voting right in the Company % |
| Gujing Group | Anhui | Drink, building materials, manufacture plastic products | 1,000,000,000.00 | 53.89 | 53.89 |
| Other related parties | Relationship |
| Anhui Ruifuxiang Food Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing catering management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Haochidian Catering Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Shanghai Ruiyao Hotel Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Shanghai Beihai Hotel Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Hotel Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Real Estate Group Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Orient Ruijing Enterprise Investment Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Hengxin Pawn Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Ruineng Thermal Power Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Hefei Gujing Holiday Hotel Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
Other related parties
| Other related parties | Relationship |
| Bozhou Furuixiang high protein feed Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing restaurant management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruixin pawn Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Zhongxin finance lease Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Huixin finance invest group Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Hefei Longxin Financial Management Consulting Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Bozhou Anxin Micro Finance Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Anhui gujing hotel management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Youxin Financing guarantee Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Aoxin Real estate development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lixin Electronic commerce Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Xinxin Property management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Huishenglou Catering Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Gujing Junlai Hotel Management Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Property management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Real estate development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing international tourism Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Jinzhai Gujing Real Estate Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Health Industry Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lejiu Home Tourism Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Shenglong Commercial Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
Related party
| Related party | Contents of related transactions | Current year | Prior year |
| Anhui Gujing international tourism Co., Ltd. | Labor service | 0.00 | 520,850.00 |
| Anhui Gujing international tourism Co., Ltd. | Labor and accommodation s ervice | 1,208,159.67 | 0.00 |
| Anhui Gujing Group Co., Ltd. | Labor service | 62,068.97 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Purchase of materials and labor service | 195,685.75 | 0.00 |
| Anhui gujing hotel management Co., Ltd. | Catering and accommodation service | 151,135.93 | 185,363.53 |
| Anhui Haochidian Catering Co., Ltd. | Catering and accommodation service | 558,175.10 | 40,058.55 |
| Anhui Huixin finance invest group Co. Ltd. | Labor service | 212,248.30 | 23,084.65 |
| Anhui Ruifuxiang Food Co., Ltd. | Purchase of materials | 0.00 | 493,092.81 |
| Anhui Ruijing catering management Co., Ltd. | Catering service | 51,631.00 | 99,367.00 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Purchase of materials and labor service | 43,413.71 | 0.00 |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd | Labor service | 1,173,301.27 | 1,093,701.48 |
| Bozhou Hotel Co., Ltd. | Catering and accommodation service | 5,007,403.41 | 2,018,619.83 |
| Bozhou Gujing Huishenglou Cat ering Co., Ltd. | Catering and accommodation service | 3,233,671.00 | 3,769,464.00 |
| Bozhou Gujing Junlai Hotel Management Co., Ltd | Catering and accommodation service | 703,294.46 | 286,972.87 |
| Bozhou Gujing Real Estate Development Co., Ltd. | Purchase of commercial housing | 0.00 | 574,026.00 |
| Bozhou Gujing Hotel Co., Ltd. | Purchase of commercial housing | 0.00 | 11,900,000.00 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Purchase of materials | 0.00 | 304,673.12 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Catering and accommodation service | 403,358.10 | 131,153.05 |
Related party
| Related party | Contents of related transactions | Current year | Prior year |
| Total | 13,003,546.67 | 21,440,426.89 |
| Related party | Contents of related transactions | Current year | Prior year |
| Anhui Aoxin Real estate development Co., Ltd. | Sales of liquor | 13,424.13 | 12,492.85 |
| Anhui Gujing Real Estate Group Co., Ltd. | Labor service | 397,665.85 | 456,621.63 |
| Anhui Gujing Real Estate Group Co., Ltd. | Sales of liquor | 347,880.88 | 16,247.51 |
| Anhui Gujing international tourism Co., Ltd. | Catering and accommodation service | 51,744.46 | 6,860.00 |
| Anhui Gujing Group Co., Ltd. | Catering and accommodation service | 384,753.34 | 290,036.11 |
| Anhui Gujing Group Co., Ltd. | Labor service | 16,587.36 | 24,794.28 |
| Anhui Gujing Group Co., Ltd. | Sales of small materials | 283,450.69 | 192,012.84 |
| Anhui Gujing Health Industry Co., Ltd. | Catering and accommodation service | 9,966.00 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Labor service | 226,290.57 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Sales of liquor | 6,396,104.00 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Sales of small materials | 39,450.74 | 0.00 |
| Anhui gujing hotel management Co., Ltd. | Sales of liquor | 100,393.89 | 52,606.86 |
| Anhui Haochidian Catering Co., Ltd. | Labor service | 33,962.26 | 0.00 |
| Anhui Haochidian Catering Co., Ltd. | Sales of liquor | 36,433.69 | 188,290.46 |
| Anhui Hengxin Pawn Co., Ltd. | Sales of liquor | 8,380.14 | 12,347.57 |
| Anhui Huixin finance invest group Co. Ltd. | Advertising service | 0.00 | 4,009.43 |
| Anhui Huixin finance invest group Co. Ltd. | Sales of liquor | 1,552,580.62 | 503,363.31 |
| Anhui Jinzhai Gujing Real Estate Development Co., Ltd. | Sales of liquor | 143,796.76 | 1,056.40 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of hydropower | 71,030.79 | 0.00 |
Related party
| Related party | Contents of related transactions | Current year | Prior year |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Catering and accommodation service | 5,595.00 | 0.00 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Labor service | 7,547.17 | 0.00 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of small materials | 64,006.61 | 0.00 |
| Anhui Lixin Electronic commerce Co., Ltd. | Sales of liquor | 117,628.42 | 99,880.21 |
| Anhui Ruifuxiang Food Co., Ltd. | Labor service | 0.00 | 94,727.84 |
| Anhui Ruifuxiang Food Co., Ltd. | Sales of liquor | 588,449.78 | 676,130.30 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Catering and accommodation service | 93,389.27 | 8,909.05 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Sales of liquor | 8,239,198.27 | 5,919,363.84 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Sales of packaging materials | 832.76 | 0.00 |
| Anhui Ruixin pawn Co. Ltd. | Sales of liquor | 14,452.08 | 11,030.50 |
| Anhui Shenglong Commercial Co., Ltd. | Catering and accommodation service | 16,270.00 | 6,076.00 |
| Anhui Shenglong Commercial Co., Ltd. | Sales of liquor | 470,660.35 | 48,820.52 |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd | Catering and accommodation service | 400.00 | 0.00 |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd | Sales of small materials | 30,008.04 | 16,040.56 |
| Anhui Xinxin Property management Co., Ltd. | Sales of liquor | 39,795.45 | 38,974.52 |
| Anhui Xinxin Property management Co., Ltd. | Sales of liquor | 7,672.40 | 6,440.03 |
| Anhui Zhongxin finance lease Co. Ltd. | Sales of liquor | 13,259.55 | 11,411.71 |
| Bozhou Anxin Micro Finance Co., Ltd. | Sales of liquor | 13,270.29 | 12,166.39 |
| Bozhou Hotel Co., Ltd. | Labor service | 113,206.84 | 0.00 |
Related party
| Related party | Contents of related transactions | Current year | Prior year |
| Bozhou Hotel Co., Ltd. | Sales of liquor | 61,271.22 | 68,888.89 |
| Bozhou Hotel Co., Ltd. | Sales of liquor | 16,408.09 | 47,532.12 |
| Bozhou Gujing Huishenglou Catering Co., Ltd. | Labor service | 0.00 | 97,484.94 |
| Bozhou Gujing Huishenglou Catering Co., Ltd. | Sales of liquor | 43,547.75 | 41,076.92 |
| Bozhou Gujing Junlai Hotel Management Co., Ltd | Labor service | 0.00 | 146,227.41 |
| Bozhou Gujing Junlai Hotel Management Co., Ltd | Sales of liquor | 35,546.41 | 11,230.76 |
| Bozhou Gujing Property management Co., Ltd. | Sales of liquor | 60,892.13 | 63,959.72 |
| Bozhou Gujing Real Estate Group Co., Ltd. | Catering and accommodation service | 1,360.00 | 600.00 |
| Bozhou Gujing Real Estate Group Co., Ltd. | Sales of liquor | 19,694.42 | 40,046.85 |
| Bozhou Ruifuxiang High Protein Feed Co., Ltd. | Sales of liquor | 32,141.00 | 35,036.69 |
| Bozhou Ruineng Thermal Power Co., Ltd. | Labor service | 269,024.61 | 350,450.45 |
| Bozhou Ruineng Thermal Power Co., Ltd. | Sales of liquor | 258,281.65 | 247,953.41 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | Utility fees | 64,024.27 | 147,838.04 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | Catering and accommodation service | 22,241.00 | 29,316.00 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | Labor service | 167,030.67 | 19,739.23 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | Sales of liquor | 1,959,896.18 | 1,098,508.84 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | Sales of small materials | 29,526.70 | 13,508.12 |
Related party
| Related party | Contents of related transactions | Current year | Prior year |
| Orient Ruijing Enterprise Investment Development Co., Ltd. | Labor service | 0.00 | 201,390.13 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Catering and accommodation service | 57,216.80 | 0.00 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Sales of liquor | 15,517.24 | 14,529.91 |
| Hefei Longxin Financial Management Consulting Co., Ltd | Sales of liquor | 2,684.82 | 12,463.21 |
| Shanghai Beihai Hotel Co., Ltd | Sales of liquor | 0.00 | 8,461.54 |
| Shanghai Ruiyao Hotel Management Co., Ltd. | Sales of liquor | 0.00 | 4,307.69 |
| Total | 23,065,843.41 | 11,411,261.59 |
| Lessor | Classification | Lease rental recognized in current year | Lease rental recognized in the prior year |
| Gujing Group | Buildings and constructions | 2,190,476.20 | 2,190,476.20 |
| Total | 2,190,476.20 | 2,190,476.20 |
| Lessee | Classification | Lease rental recognized in current year | Lease rental recognized in the prior year |
| Anhui gujing hotel management Co., Ltd. | Buildings and constructions | 493,611.91 | 492,380.96 |
| Items | Total amount of current year | Total amount of prior year |
| Remuneration for key management personnel | CNY 9.4734 million | CNY 6.7827 million |
| Related party | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Accounts receivable: |
Related party
| Related party | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Anhui Ruifuxiang Food Co., Ltd. | 0.00 | 5,257.31 |
| Anhui Gujing Group Co., Ltd. | 0.00 | 2,250.00 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | 0.00 | 3,860.00 |
| Total | 0.00 | 11,367.31 |
| Other receivables: | ||
| Anhui Gujing Real Estate Group Co., Ltd. | 25,342.50 | 25,342.50 |
| Bozhou Ruineng Thermal Power Co., Ltd. | 14,521.45 | 19,450.00 |
| Total | 39,863.95 | 44,792.50 |
| Related party | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Receivables in advance: | ||
| Anhui Ruijing Business Travel (Group) Co., Ltd. | 4,085,856.31 | 3,854,332.31 |
| Dazhongyuan Wine valley culture tourism development Co., Ltd. | 1,881,236.80 | 2,193,069.10 |
| Anhui Gujing Health Industry Co., Ltd. | 4,036,729.60 | 0.00 |
| Bozhou Ruineng Thermal Power Co., Ltd. | 43,200.00 | 0.00 |
| Total | 10,047,022.71 | 6,047,401.41 |
| Other payables: | ||
| Anhui Gujing Hotel Development Co., Ltd. | 50,000.00 | 0.00 |
| Anhui Ruifuxiang Food Co., Ltd. | 0.00 | 6,726.00 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | 35,000.00 | 23,678.36 |
| Total | 85,000.00 | 30,404.36 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| The minimum lease payments of irrevocable operating lease contracts: |
Items
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| 1st year after the balance sheet date | 2,300,000.00 | 2,300,000.00 |
| 2nd year after the balance sheet date | 2,300,000.00 | 2,300,000.00 |
| 3rd year after the balance sheet date | 2,300,000.00 | 2,300,000.00 |
| Subsequent years | 19,358,333.33 | 21,658,333.33 |
| Total | 26,258,333.33 | 28,558,333.33 |
| Year | 2017 | 2018 | 2019 | 2020 | 2021 |
| Promised operating revenue (Tax inclusive) | 80,500.00 | 100,625.00 | 130,812.50 | 170,056.25 | 204,067.50 |
| Items | Actual number | Commitment number | Difference | Completion rate |
| Operating revenues (including tax) | 100,696.87 | 100,625.00 | 71.87 | 100.07% |
| Net profit | 9,930.24 | 9,514.84 | 415.40 | 104.37% |
| The net profit margin on sales | 11.46% | 11.00% | 0.46% | 104.19% |
12.2 Contingencies12.2.1 Due to the existence of violations of the Company's trademark exclusive rights in the market, theCompany filed a lawsuit against the infringement of trademark exclusive rights. Since the claimed amountsare insignificant individually or in aggregate, it is not expected to have a significant impact on the Company.12.2.2 Other than the above matters, the Company has no other contingencies.
Note 13 Post reporting date eventsOn April 26, 2019, the Company held the 9th meeting of eighth session board of directors which approvedprofit distribution plan for the year of 2018. The Company plans to use the total share of 503,600,000.00 ofthe Company at 31/12/2018 as a base, to distribute CNY 15.00 (before tax) for every 10 shares, and as aresult to distribute CNY 755,400,000.00 to all shareholders. The profit distribution plan is pending theapproval of the General Meeting of stockholders of the Company.
Note 14 Other signification eventsSegment informationThe Company not confirmed the operation division in accordance with the internal organizational structure,management requirements, and internal reporting system, so there was no need to disclose segmentinformation report based on the operating segments.
Note 15 Notes to the main elements of the separate financial statement of the Company15.1 Notes receivable and accounts receivable
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Notes receivable | 1,256,336,386.34 | 674,521,654.40 |
| Accounts receivable | 9,385,950.54 | 8,509,918.03 |
| Total | 1,265,722,336.88 | 683,031,572.43 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Bank acceptance | 1,256,336,386.34 | 674,521,654.40 |
| Total | 1,256,336,386.34 | 674,521,654.40 |
Items
| Items | Amount derecognized as at 31/12/2018 | Amount not derecognized as at 31/12/2018 |
| Bank acceptance | 293,974,818.10 | 0.00 |
| Total | 293,974,818.10 | 0.00 |
| Items | Balance as at 31/12/2018 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Accounts receivable of individual significance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable portfolio subject to impairment by credit risk | 9,527,072.41 | 100.00 | 141,121.87 | 1.48 | 9,385,950.54 |
| Accounts receivable of individually insignificance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 9,527,072.41 | 100.00 | 141,121.87 | 1.48 | 9,385,950.54 |
| Items | Balance as at 31/12/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Accounts receivable of individual significance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable portfolio subject impairment by credit risk | 9,168,249.97 | 100.00 | 658,331.94 | 7.18 | 8,509,918.03 |
| Accounts receivable of individually insignificance subject to individually | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Items
| Items | Balance as at 31/12/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| assessment for impairment | |||||
| Total | 9,168,249.97 | 100.00 | 658,331.94 | 7.18 | 8,509,918.03 |
| Age | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| Within 1 year | 0.00 | 0.00 | 0.00 |
| Include：within 6 months | 0.00 | 0.00 | 0.00 |
| 7-12 months | 0.00 | 0.00 | 0.00 |
| 1 to 2 years | 0.00 | 0.00 | 0.00 |
| 2 to 3 years | 0.00 | 0.00 | 0.00 |
| Over 3 years | 141,121.87 | 141,121.87 | 100.00 |
| Total | 141,121.87 | 141,121.87 | 100.00 |
| Items | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| Related parties | 9,385,950.54 | 0.00 | 0.00 |
| Total | 9,385,950.54 | 0.00 | 0.00 |
15.2 Other receivables
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Interests receivable | 0.00 | 0.00 |
| Dividends receivable | 0.00 | 0.00 |
| Other receivables | 110,800,665.19 | 130,357,778.75 |
| Total | 110,800,665.19 | 130,357,778.75 |
| Items | Balance as at 31/12/2018 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Other receivable of individual significance subject to individually assessment for impairment | 40,850,949.35 | 26.80 | 40,850,949.35 | 100.00 | 0.00 |
| Other receivable portfolio subject to impairment by credit risk | 111,581,253.05 | 73.20 | 780,587.86 | 0.70 | 110,800,665.19 |
| Other receivable of individually insignificance subject to individually assessment for impairment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 152,432,202.40 | 100.00 | 41,631,537.21 | 27.31 | 110,800,665.19 |
| Items | Balance as at 31/21/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| Other receivable of individual significance subject to individually assessment for impairment | 40,850,949.35 | 23.76 | 40,850,949.35 | 100.00 | 0.00 |
| Other receivable portfolio subject to impairment by credit risk | 131,103,824.99 | 76.24 | 746,046.24 | 0.57 | 130,357,778.75 |
| Other receivable of individually | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Items
| Items | Balance as at 31/21/2017 | ||||
| Carrying amount | Allowance for bad debt | Book value | |||
| Amount | % of total | Amount | % of total | ||
| insignificance subject to individually assessment for impairment | |||||
| Total | 171,954,774.34 | 100.00 | 41,596,995.59 | 24.19 | 130,357,778.75 |
| Other receivables | Balance as at 31/12/2018 | |||
| Other receivable | Allowance | % of total | Reasons | |
| Hengxin securities | 29,010,449.35 | 29,010,449.35 | 100.00 | Company went through bankrupt |
| Jiaoqiao securities | 11,840,500.00 | 11,840,500.00 | 100.00 | Company went through bankrupt |
| Total | 40,850,949.35 | 40,850,949.35 | — | — |
| Age | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| Within 1 year | 1,888,231.28 | 29,510.79 | 1.56 |
| Include：within 6 months | 1,622,519.22 | 16,225.19 | 1.00 |
| 7 to 12 months | 265,712.06 | 13,285.60 | 5.00 |
| 1 to 2 years | 614,189.72 | 61,418.98 | 10.00 |
| 2 to 3 years | 0.00 | 0.00 | 0.00 |
| Over 3 years | 689,658.09 | 689,658.09 | 100.00 |
| Total | 3,192,079.09 | 780,587.86 | 24.45 |
| Items | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| Related parties | 108,389,173.96 | 0.00 | 0.00 |
Items
| Items | Balance as at 31/12/2018 | ||
| Carrying amount | Allowance for bad debt | % of total | |
| Total | 108,389,173.96 | 0.00 | 0.00 |
| Nature | Balance as at 31/12/2018 | Balance as at 31/12/2017 |
| Related party balance in consolidation | 108,389,173.96 | 128,390,563.19 |
| Investment in securities | 40,850,949.35 | 40,850,949.35 |
| Deposit and Assurant | 909,657.06 | 858,139.09 |
| Rent, water and gas | 639,732.73 | 1,023,996.61 |
| Others | 1,642,689.30 | 831,126.10 |
| Total | 152,432,202.40 | 171,954,774.34 |
| Debtor | Related party relationships | Nature | Balance as at 31/12/2018 | Age | % of the total amount | Allowance Balance as at the year-end |
| The first | Related parties within the scope of consolidation | Related party balance | 94,439,097.13 | Within 3 years | 61.95 | 0.00 |
| The second | Third party | Invest in securities | 29,010,449.35 | Over 3 years | 19.03 | 29,010,449.35 |
| The third | Related parties within the scope of consolidation | Related party balance | 13,950,076.83 | Within 3 years | 9.15 | 0.00 |
| The forth | Third party | Invest in securities | 11,840,500.00 | Over 3 years | 7.77 | 11,840,500.00 |
| The fifth | Third party | Deposit | 500,000.00 | Within 6 months | 0.33 | 5,000.00 |
Debtor
| Debtor | Related party relationships | Nature | Balance as at 31/12/2018 | Age | % of the total amount | Allowance Balance as at the year-end |
| Total | 149,740,123.31 | 98.23 | 40,855,949.35 |
| Items | Balance as at 31/12/2018 | Balance as at 31/12/2017 | ||||
| Carrying amount | Allowance for bad debts | Net carrying amount | Carrying amount | Allowance for bad debts | Net carrying amount | |
| Investment in subsidiaries | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 | 1,155,089,408.32 | 0.00 | 1,155,089,408.32 |
| Total | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 | 1,155,089,408.32 | 0.00 | 1,155,089,408.32 |
| Name | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2017 | Impairment allowance | Carrying amount of impairment allowance as at 31/12/2017 |
| Bozhou Gujing Sales Co., Ltd. | 68,949,286.89 | 0.00 | 0.00 | 68,949,286.89 | 0.00 | 0.00 |
| Anhui Longrui Glass Co., Ltd | 85,267,453.06 | 0.00 | 0.00 | 85,267,453.06 | 0.00 | 0.00 |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | 49,906,854.63 | 0.00 | 0.00 | 49,906,854.63 | 0.00 | 0.00 |
| Bozhou Gujing Hotel Co., Ltd. | 648,646.80 | 0.00 | 0.00 | 648,646.80 | 0.00 | 0.00 |
| Bozhou Gujing Automobile Transportation Company | 6,875,743.00 | 0.00 | 6,875,743.00 | 0.00 | 0.00 | 0.00 |
Name
| Name | Balance as at 31/12/2017 | Increased in current year | Decreased in current year | Balance as at 31/12/2017 | Impairment allowance | Carrying amount of impairment allowance as at 31/12/2017 |
| Anhui Ruisiweier Technology Co., Ltd | 40,000,000.00 | 0.00 | 0.00 | 40,000,000.00 | 0.00 | 0.00 |
| Anhui Baiweilu Liquor Co., Ltd. | 30,000,000.00 | 0.00 | 0.00 | 30,000,000.00 | 0.00 | 0.00 |
| Anhui Yuanqing Environmental Protection Co., Ltd. | 16,000,000.00 | 0.00 | 0.00 | 16,000,000.00 | 0.00 | 0.00 |
| Anhui Gujing Yunshang Electronic Commerce Co., Ltd. | 5,000,000.00 | 0.00 | 0.00 | 5,000,000.00 | 0.00 | 0.00 |
| Anhui Zhenrui Construction Engineering Co., Ltd | 10,000,000.00 | 0.00 | 0.00 | 10,000,000.00 | 0.00 | 0.00 |
| Yellow Crane Tower Wine Co., Ltd | 816,000,000.00 | 0.00 | 0.00 | 816,000,000.00 | 0.00 | 0.00 |
| Anhui Jinyunnan Cultural Media Co., Ltd. | 15,000,000.00 | 0.00 | 0.00 | 15,000,000.00 | 0.00 | 0.00 |
| Bozhou Gujing Waste Recycling Co., Ltd. | 1,441,423.94 | 0.00 | 0.00 | 1,441,423.94 | 0.00 | 0.00 |
| Anhui Runanxinke Testing Technology Co., Ltd. | 10,000,000.00 | 0.00 | 0.00 | 10,000,000.00 | 0.00 | 0.00 |
| Total | 1,155,089,408.32 | 0.00 | 6,875,743.00 | 1,148,213,665.32 | 0.00 | 0.00 |
| Items | Current year | Prior year | ||
| Revenues | Costs | Revenues | Costs | |
Items
| Items | Current year | Prior year | ||
| Revenues | Costs | Revenues | Costs | |
| Revenue from principal operating activities | 4,170,643,216.51 | 1,706,721,317.44 | 3,719,581,487.77 | 1,433,324,800.10 |
| Revenue from other operating activities | 84,659,046.87 | 65,731,271.22 | 69,966,355.07 | 47,706,150.59 |
| Total operating revenues | 4,255,302,263.38 | 1,772,452,588.66 | 3,789,547,842.84 | 1,481,030,950.69 |
| Items | Current year | Prior year |
| Investment income from long term equity investment using cost mothed | 838,858,228.79 | 437,724,053.00 |
| Investment income from disposal of financial assets measured by fair value with changes in fair value recognized in profit or loss | 1,238,951.28 | 3,782,651.28 |
| Investment income from held-to-maturity investments during the holding period | 75,591,043.12 | 75,286,531.06 |
| Investment income from available for sale financial asset during the holding period | 20,344,605.22 | 9,997,734.34 |
| Investment income from disposal of available for sale financial assets | 17,430,694.36 | 52,056,765.62 |
| Total | 953,463,522.77 | 578,847,735.30 |
| Supplemental information | Total amount | Explanation |
| Gains or losses arising from the disposal of non-current assets | -10,060,019.55 | |
| Tax repayments or waiving of taxes not officially authorized or not with proper authorization | 0.00 | |
| Government grants accounted for through profit or loss for the current reporting period (excl. grants directly associated with the Company’s operations and subject to national quotas) | 36,041,674.45 | |
| Cost of monetary funds charged on non-financial institutions accounted for through profit or loss for the current reporting period | 0.00 | |
| Gains from the investment costs paid less than the acquirer’s interest in the fair value of the bargainer’s identifiable net assets (During acquire subsidiary, joint venture and associates) | 0.00 | |
| Gains or losses arising from non-monetary assets exchange | 0.00 | |
| Gains or losses arising from entrusted assets and investments | 0.00 |
Supplemental information
| Supplemental information | Total amount | Explanation |
| Impairment allowances arising from force majeure, such as natural disasters | 0.00 | |
| Gain or loss arising from debt restructuring | 0.00 | |
| Restructuring expenses, such as employee settlement and relocation costs and costs of integration | 0.00 | |
| Gains or losses arising from transactions in which the prices are deemed unfair (the difference between the price and the fair value) | 0.00 | |
| Net profit or loss of subsidiaries acquired through business combination under common control from the beginning of the current reporting period to the combination dates. | 0.00 | |
| Gains or losses arising from contingent events not associated with the Company’s operating activities | 0.00 | |
| Gains or losses arising from changes in the fair values of financial instruments held for trading (excl. effective hedging instruments associated with the Company’s operating activities) or disposal of financial instruments held for trading and available-for-sale financial assets (excl. effective hedging instruments associated with the Company’s operating activities) | 18,653,228.80 | |
| Recovery of impairment allowance for receivables subject to individual assessment for impairment | 0.00 | |
| Gains or losses arising from entrusted borrowings | 0.00 | |
| Gains or losses arising from changes in the fair values of investment property measured at fair value | 0.00 | |
| Impact of one-off adjustment required by tax laws, accounting standards and relevant regulations on the profit or loss for the current reporting period | 0.00 | |
| Revenue arising from the entrusted operation | 0.00 | |
| Other non-operating revenue and non-operating expenses not listed above | 32,375,890.89 | |
| Other income and gain satisfying the definition of extraordinary gains or losses | 0.00 | |
| Subtotal | 77,010,774.59 | |
| Less: Effect of corporate income tax | 18,150,068.72 | |
| Less: Net amount attributable to minority interests (after tax) | 1,833,517.16 | |
| Total | 57,027,188.71 |
expenditure.The Company recognized non-recurring categories of activities in accordance with the ExplanatoryAnnouncement regarding Information Disclosure by Publicly Listed Company No. 1 - Non-recurring Profit andLoss (ZhengjianhuiGonggao [2008] No. 43).16.2 Yield Rate of Net Assets and Earnings per Share
| Profits for the reporting period | The weighted average yield rate of net assets | Earnings Per Share (Yuan per share) | |
| Basic EPS | Diluted EPS | ||
| Net profits attributable to ordinary shareholders | 24.03% | 3.37 | 3.37 |
| Net profits attributable to ordinary shareholders (excl. extraordinary gains or losses) | 23.22% | 3.25 | 3.25 |
Part XII Documents Available for Reference
(I) The financial statements carrying the signatures and stamps of the Company’slegal representative, Chief Accountant and head of the accounting department;(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) The originals of all the Company’s announcements and documents disclosed onmedia designated by the China Securities Regulatory Commission during theReporting Period; and(IV) The annual report disclosed in other securities markets.
Chairman of the Board:
(Liang Jinhui)
Anhui Gujing Distillery Company Limited
26 April 2019