2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Luzhou Laojiao Co., Ltd.
2018 Annual Report
April 2019
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section I Important Statements, Contents and
Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior
management guarantee that the information presented in this report is free of any false
records, misleading statements or material omissions, and shall Individually and together
be legally liable for truthfulness, accuracy and completeness of its contents.
Mr. Liu Miao, responsible person for the Company, Ms. Xie Hong, responsible person for
accounting work and Mr. Yan Li, responsible person for the Company’s financial affairs
(Accounting Supervisor) have warranted that the financial statements in this report are
true and complete.
Other directors attended the board meeting to deliberate this report by themselves except
the following directors.
Name of directors who did not Position of directors who did not Reason for not attending Name of
attend the meeting in person attend the meeting in person the meeting in person deputies
Liu Miao Chairman of the Board work Lin Feng
Shen Caihong Director work Jiang Yuhui
Affected by risks, uncertainties and assumptions, the forward-looking statements
concerning business objectives and future plans made in this report based on the
subjective assumptions and judgments of the future policies and economic conditions may
be significantly different from the actual results. Such statements shall not be considered
as virtual promises of the Company to investors, and the investors and relevant persons
shall maintain adequate risk awareness and shall understand the differences between
plans, forecasts and commitments.
In the annual report, the potential risks in the operation of the Company have been
disclosed. Investors are kindly reminded to pay attention to possible investment risks.
The profit distribution plan approved by the board of directors: based on 1,464,752,476
shares, a cash dividend of CNY 15.50 (tax inclusive) will be distributed for every 10
existing shares held, 0 shares of bonus shares (tax inclusive), and reserves would not be
converted into share capital.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Contents
Section I Important Statements, Contents and Definitions 2
Section II Company Profile and Key Financial Results ......5
Section III Business Profile .................................................10
Section IV Performance Discussion and Analysis............12
Section V Significant Events ...............................................33
Section VI Changes in Shares and Information about
Shareholders.........................................................................50
Section VII Preference Shares ............................................60
Section VIII Profiles of Directors, Supervisory, Senior
Management and Employees ..............................................61
Section IX Corporate Governance ......................................73
Section X Information about Corporate Bond ...................79
Section XI Financial Report .................................................80
Section XII Documents Available for Preference ............ 211
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Definitions
Term Reference Definition
Company, the Company, Luzhou Laojiao Refer to Luzhou Laojiao Co.,Ltd.
Laojiao Group Refer to Luzhou Laojiao Group Co., Ltd.
Xinglu Group Refer to Luzhou Xinglu Touzi Jituan Co., Ltd.
State-owned Assets Supervision and
SASAC of Luzhou Refer to
Administration Commission of Luzhou
Huaxi Securities Refer to Huaxi Securities Co.,Ltd.
China International Capital
CICC Refer to
Corporation Limited
Luzhou Bank Refer to Luzhou City Commercial Bank
Sales Company of Luzhou Laojiao
Sales Company Refer to
Co., Ltd.
Brewing Company Refer to Luzhou Laojiao Brewing Co., Ltd.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section II Company Profile and Key Financial Results
1. Corporate information
Stock abbreviation Luzhou Laojiao Stock code 000568
Stock exchange where
Shenzhen Stock Exchange
the shares of the
Company are listed
Name of the Company
泸州老窖股份有限公司
in Chinese
Abbr. of the Company
泸州老窖
name in Chinese
Name of the Company
Luzhou Laojiao Co.,Ltd.
in English (if any)
Abbr. of the Company
LZLJ
name in English (if any)
Legal representative Liu Miao
Registered address Guojiao Square,Luzhou City, Sichuan Province, China
Postal code 646000
Luzhou Laojiao Marketing Network Command Center,
Business address
Nanguang Road, Luzhou City, Sichuan Province, China
Postal code 646000
Company website http://www.lzlj.com
E-mail lzlj@lzlj.com
2. Contact us
Secretary of the board Representative for securities affairs
Name Wang Hongbo Wang Chuan
Luzhou Laojiao Marketing Network Command Center, Nanguang Road,
Address
Luzhou City, Sichuan Province, China
Tel. (0830)2398826 (0830)2398826
Fax (0830)2398864 (0830)2398864
E-mail dsb@lzlj.com dsb@lzlj.com
3. Information disclosure and place where the annual report is
kept
Newspaper designated by the
China Securities Journal, Securities Times, Securi
Company for information
ties Daily
disclosure
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Website designated by the China
Securities Regulatory Commission
http://www. cninfo.com.cn
(CSRC) for the publication of the
Annual Report
Place where the annual report of
Board office
the Company is kept
4. Company registration and alteration
Organization code 91510500204706718H
Changes in main business
activities since the Company None
was listed (if any)
Before September 2009, the controlling shareholder was
Changes of controlling the SASAC of Luzhou. After the equity transfer in
shareholders of the Company September 2009, the controlling shareholder was
(if any) changed to Laojiao Group, but the actual controller is still
the SASAC of Luzhou.
5. Other relevant information
Accounting firm engaged by the Company
Name of the accounting firm Sichuan Huaxin (Group) CPA Firm
Business address of the 28/F., South Jinmaolidu, NO.18 Ximianqiao Street, Chengdu
accounting firm City, Sichuan Province.
Name of accountants for
Feng Yuan, He Shoufu
writing signature
Sponsors engaged by the Company to continuously perform its supervisory function
during the reporting period
√ Applicable N/A
Name of sponsor Continuous
Name of sponsor Sponsor office address
representative supervision period
27-28/F., China World
China International 14 September 2017
Office 2, No. 1 Liu Zhiyang, Yu
Capital Corporation to 31 December
Jianguomenwai Avenue, Yan
Limited 2018
Chaoyang District, Beijing
14 September 2017
Huaxi Securities No.198, Tianfu 2nd Street, Wan Jiayou,
to 31 December
Co.,Ltd. High-tech Zone, Chengdu Wang Yuxiang
2018
Financial adviser engaged by the Company to continuously perform its supervisory
function during the reporting period.
Applicable √ N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
6. Key accounting data and financial indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting
data due to changes of accounting policies and correction of accounting errors.
Yes √ No
YoY
2018 2017 2016
Change
Operating revenues (CNY) 13,055,465,761.55 10,394,867,493.46 25.60% 8,626,696,462.91
Net profits attributable to
3,485,643,008.98 2,557,944,598.97 36.27% 1,957,193,264.50
shareholders of the Company (CNY)
Net profits attributable to
shareholders of the Company
3,483,173,302.46 2,539,601,364.06 37.15% 1,937,347,061.00
before non-recurring gains and
losses (CNY)
Net cash flows from operating
4,297,916,018.24 3,703,734,061.89 16.04% 2,749,562,800.75
activities (CNY)
Basic earnings per share
2.380 1.798 32.37% 1.396
(CNY/share)
Diluted earnings per share
2.380 1.798 32.37% 1.396
(CNY/share)
Weighted average ROE 21.81% 20.30% 1.51% 18.12%
At the end of At the end of YoY At the end of
2018 2017 Change 2016
Total assets (CNY) 22,604,929,596.42 19,755,761,074.20 14.42% 13,965,550,665.32
Net assets attributable to
16,964,671,475.96 15,171,448,756.68 11.82% 11,009,813,755.50
shareholders of the Company (CNY)
7. Differences in accounting data under domestic and
overseas accounting standards
7.1. Differences in the net profits and net assets disclosed in the financial
reports prepared under the international and China accounting
standards
Applicable √ N/A
No such differences for the reporting period.
7.2. Differences in the net profits and net assets disclosed in the financial
reports prepared under the overseas and China accounting standards
Applicable √ N/A
No such differences for the reporting period.
8. Key financial results by quarter
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Unit:CNY
Q1 Q2 Q3 Q4
Operating revenues 3,369,965,694.45 3,050,367,825.98 2,842,562,257.01 3,792,569,984.11
Net profits attributable to
1,058,558,935.72 908,416,686.04 771,586,329.98 747,081,057.24
shareholders of the Company
Net profits attributable to
shareholders of the Company
1,053,576,596.46 915,518,134.14 761,785,406.41 752,293,165.45
before non-recurring gains and
losses
Net cash flows from operating
348,487,394.03 61,433,161.33 1,852,622,168.94 2,035,373,293.94
activities
Whether there are any material differences between the financial indicators above or their
summations and those which have been disclosed in quarterly or semi-annual reports
Yes √ No
9. Non-recurring profits and losses
√ Applicable N/A
Unit:CNY
Item 2018 2017 2016 Note
Profit or loss from disposal of non-current See "Section XI
assets(including the write-off portion of the -13,885,991.18 -4,256,543.78 -18,725,437.47 Note 7.35, 7.37"
impairment provision) for details.
Government grants accounted for, in the
profit or loss for the current period (except
for the government grants closely related See "Section XI
to the business of the Company and given 22,342,598.30 27,087,985.92 23,093,620.00 Note 7.33" for
at a fixed amount or quantity in details.
accordance with the national uniform
standards)
Net profit and loss of subsidiaries arising
from business combination under the
-269,195.68 28,973,078.45
common control from the beginning of the
period to the date of merger
Other non-operating income and See "Section IX
expenditure except above-mentioned -4,902,369.83 5,512,918.43 -14,466,203.67 Note 7.36, 7.37"
items for details.
Less: Corporate income tax 316,133.32 5,357,931.72 -3,386,951.90
Minority interests (after tax) 768,397.45 4,373,998.26 2,415,805.71
Total 2,469,706.52 18,343,234.91 19,846,203.50 --
Explain the reasons if the Company classifies an item as a non-recurring profit/loss
according to the definition in the Explanatory Announcement No. 1 on Information
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Disclosure for Companies Offering Their Securities to the Public-Non-Recurring Profits
and Losses, or classifies any non-recurring profit/loss item mentioned in the said
explanatory announcement as a recurring profit/loss item.
Applicable √ N/A
No such cases for the reporting period.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section III Business Profile
1. Business scope in the reporting period
Whether the Company needs to comply with the required disclosure of special industry.
No
The Company stands on liquor subdivision industry which belongs to liquor, beverage and
refined tea manufacturing industry with the specialized liquor product design, production
and sales as the main business model. The main business is the research and
development, production and sales of liquor series such as "National Cellar 1573" and
"Luzhou Laojiao", and the main comprehensive performance indicators rank high in the
liquor industry.
Since 2018, the domestic liquor market has presented the characteristics of "intensifying
competition, significant concentration and industry growth slowing down". Facing such
industry development trends, the Company insisted on building the "Four Pillars" system
including "Big brand", "Big innovation", "Big project" and "Big expansion" to promote the
solid and rapid development. During the reporting period, the Company made new
achievements in brand building, and firmly occupied the brand commanding heights of
strong-flavor originator, strong-flavor national liquor and strong-flavor authentic brand. The
scale of the Company has reached a new level. The sales scale, total assets and
shareholders' equity have all exceeded the historical best level. New breakthroughs have
been made in innovation and development. Progress has been made in the building of
science and technology platforms in quality and product innovation, and in the
construction of major projects. Corporate governance and team building have taken on a
new look, and the fine style of "one team, one department, one staff" has been well
maintained and carried forward. At the same time of accelerating development, the
Company takes the initiative to shoulder the social responsibility of listed companies, and
continues to make outstanding contributions to poverty alleviation and economic and
social development.
2. Significant changes in the main assets
2.1. Significant changes in the main assets
Main assets Reasons for any significant change
Equity assets N/A
Fixed assets N/A
Intangible assets N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Main assets Reasons for any significant change
The closing balance increased by CNY 1,433,225,253.91
compared to opening balance, indicating an increase of
Construction in progress
91.45 percent. It was mainly due to the construction of
technical renovation project of brewing industry according to
the plan and the project input increases year by year.
2.2. Main assets overseas
Applicable √ N/A
3. Analysis of core competitiveness
Whether the Company needs to comply with the required disclosure of special industry.
No
The core competitiveness of the company has not changed during the reporting period.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section IV Performance Discussion and Analysis
1. Overview
In 2018, the Company insisted on Xi Jinping Thought on Socialism with Chinese
Characteristics for a New Era as the guidance and took determination and courage of
"reform and opening up and starting again" to implement the development theme of
"firmness, scale, innovation, efficiency, implementation". The Company forged ahead,
strove to sprint, kept the solid and rapid development, and realized operating revenue of
CNY 13.055 billion, up 25.60% year on year. The net profit attributable to the shareholders
of the listed company reached CNY 3.486 billion, up 36.27% year on year, exceeding the
annual development target and achieving a record high sales performance! Over the past
year, the Company's main work and performance included:
A. Quality-oriented and accelerated technical innovation
The Company fully implements the development concept of "Ten years' brand relies
on marketing. Hundred years' brand relies on quality. Thousand years' brand relies on
culture". The Company carried out implementation of “Product Shelf-life Management
above Tequ” and continuous improvement of the whole process of production quality
supervision system. It takes the lead in publishing the domestic first white paper on
product quality and safety, which leads the development direction of Chinese liquor
quality. Meanwhile, the Company has made great progress in the technical
renovation project of brewing. The construction of various supporting facilities such
as automatic brewing group and semi-open warehouse have been promoted orderly.
The core production area of solid grain brewing in China is about to be built.
B. Brand revival and value return
The Company firmly promotes the dual brand operation of "National Cellar 1573" and
"Luzhou Laojiao". "National Cellar 1573" occupies the position of "Luzhou National
Liquor" and "Luzhou Laojiao" launches the campaign of "brand revival". The
Company carried out a series of publicity activities such as "sealing ceremony",
"national tour and appraisal meeting of bottle-storage liquor", "international
poetry-liquor culture conference" and "sorghum is red". The promotion activities in
BRICS Business Forum, World Cup in Russia and Australian open were successful.
To further promote the brand "slimming down", the barcode of products has been
reduced by more than 90%. "Luzhou Laojiao”brand has been highly recognized by its
partners and consumers.
C. Focus on single product and upgrade marketing
The Company firmly implements the competitive marketing strategy and big single
product strategy, and“National Cellar 1573”achieved the solid growth of sell-through
and profits. “Luzhou Laojiao Tequ” and “Jiaolingjiu” maintained the rapid
development momentum, and “Touqu” and “Erqu” achieved recovery successfully.
The Company resolutely pushes forward the "Double 124" project, effectively controls
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
the core network, comprehensively consolidates the traditional "grain-warehouse
market", and implements the "east to south" project. The Company has established a
distribution network in more than 50 countries and regions in the world, realized the
rapid expansion of overseas markets, and achieved a record high sales performance.
D. Technological innovation driven by intelligence
The Company promotes the liquor production technology revolution. The intelligent
projects in aspect of qu-making, brewing and packaging achieved positive progress.
It fully relies on scientific and technological innovation platforms such as national
solid state fermentation engineering technology research center and national industry
design center. The Company continues to deepen the cooperation with Chinese
Academy of Sciences, Jiangnan University and other colleges and universities and
research institutes. The Company undertook dozens of national and provincial
projects, and obtained hundreds of patents for invention and utility model patents, and
won science and technology innovation award awarded by the Chinese Institute of
Food Science and Technology. The Company was selected into the first batch of top
ten tourism demonstration base of science and technology in Sichuan. The
Company’s industry influence was improved greatly.
E. Top-level design and efficiency improvement
The Company firmly maintains the leading role of the party committee in political
construction, ideological construction, organizational construction, style construction
and management decision-making, and organizes the management to carry out
activities such as "Big study, Big research and Big implementation". It helps maintain
the strong cohesion and combat effectiveness of the team. The Company gives full
play to the strategic decision-making mechanism of the general office meeting,
marketing joint meeting and production and operation dispatch meeting so as to
ensure scientific, democratic and efficient decision-making. The Company actively
promotes special audit, internal audit and supervision and inspection work,
strengthens financial vertical management and comprehensive budget management,
carries out process cleaning and optimization, and builds the "five flows" mechanism
of order flow, capital flow, logistics, administrative flow and information flow.
F. Talent cultivation and scientific motivation
The Company has built a "dual channel" career promotion mechanism for both
professional and administrative staff, and formed a human resource management
model of fixed posts, classification, regular inventory, smooth promotion, orderly exit,
and matching income with value contribution, thus releasing the Company's
development vitality. The "Commander Plan" training project was launched to
strengthen the reserve talent team, and the Company took the lead in exploring the
implementation of enterprise annuity, bonus sharing and other reform measures in
the industry to further strengthen the care for employees.
G. Taking responsibilities and giving back to the society
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
The Company carried out targeted poverty alleviation work in more than 10 poor
villages such as Gullin county, Xuyong county and Hongyuan county, Aba prefecture,
which effectively helps the local people get rid of poverty to become rich. The
Company won widespread praise from all walks of life as a result of “Pillar Project of
Donation", establishment of "Luzhou Laojiao Scholarship" , "Luzhou Laojiao Golden
Pointer Award" and "Luzhou Laojiao Golden Shield Award", and sponsoring "Looking
for the best doctor" and "Looking for most beautiful teacher" activities, and a
charitable subscription of "Children Love Growth Plan", which boosts the local health
care and education career development. During the reporting period, the Company
won the annual poverty alleviation award of the people's enterprise, and the title of
"advanced unit of pillar project donation for education" and other honors.
2. Analysis of main business
2.1. Overview
Same with the contents presented in “1.Overview” of this section.
2.2. Revenues and cost of sales
2.2.1. Breakdown of operating revenues
Unit：CNY
2018 2017
As a percentage of As a percentage of YoY Change
Amount Amount
operating revenues operating revenues
Total 13,055,465,761.55 100% 10,394,867,493.46 100% 25.60%
By business segment
Liquor 12,859,523,825.56 98.50% 10,114,600,585.81 97.30% 27.14%
Other 195,941,935.99 1.50% 280,266,907.65 2.70% -30.09%
By product
High-grade 6,377,822,866.84 48.85% 4,648,164,314.50 44.72% 37.21%
Mid-grade 3,674,967,125.89 28.15% 2,874,921,442.63 27.66% 27.83%
Low-grade 2,806,733,832.83 21.50% 2,591,514,828.68 24.93% 8.30%
Other 195,941,935.99 1.50% 280,266,907.65 2.70% -30.09%
By geographical segment
Domestic 12,950,439,919.30 99.20% 10,330,659,791.50 99.38% 25.36%
Overseas 105,025,842.25 0.80% 64,207,701.96 0.62% 63.57%
2.2.2. Business segment, products or geographical segments
contributing over 10% of the operating revenues or profits
√ Applicable N/A
Whether the Company needs to comply with disclosure requirements of special industry
No
Unit：CNY
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
YoY change YoY change YoY change
Operating Gross profit
Cost of sales of operating of cost of of gross profit
Revenue margin
revenue sales margin
By business segment
Liquor 12,859,523,825.56 2,878,994,470.11 77.61% 27.14% 0.67% 5.89%
By product
High-end
6,377,822,866.84 519,910,461.52 91.85% 37.21% 15.98% 0.62%
liquor
Mid-end
3,674,967,125.89 745,485,548.38 79.71% 27.83% 4.29% 7.29%
liquor
Low-end
2,806,733,832.83 1,613,598,460.21 42.51% 8.30% -4.90% 21.96%
liquor
By geographical segment
Domestic 12,950,439,919.30 2,893,588,473.22 77.66% 25.36% 0.40% 5.55%
Under the circumstances that the statistical standards for the Company’s main business
data adjusted in the reporting period, the Company’s main business data in the current
year is calculated based on adjusted statistical standards at the end of the reporting
period
√ Applicable □N/A
Unit：CNY
Gross YoY change of YoY change
Operating YoY change of
Cost of sales profit operating of gross profit
Revenue cost of sales
margin revenue margin
By business segment
By product
By geographical segment
Domestic 10,330,659,791.50 2,881,974,733.24 72.10% 29.30% -4.56% 9.90%
Overseas 64,207,701.96 35,840,323.28 44.18% -23.20% -41.44% 17.39%
Reason for change
The Company expanded the international market. In order to clearly report the situation of
international market, the Company adjusted the geographical segment.
2.2.3. Whether revenue from sales of goods is higher than revenue of
rendering services
√ Yes No
By business
Item Unit 2018 2017 YoY Change
segment
Sales volume ton 146,426.14 154,120.92 -4.99%
Liquor Output volume ton 156,750.50 160,760.38 -2.49%
Stock ton 50,169.95 39,845.59 25.91%
Reason for any over 30% YoY movements in the data above
Applicable √ N/A
2.2.4. Execution of significant sales contracts in the reporting period
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Applicable √ N/A
2.2.5. Breakdown of cost of sales
By business and product segment
Unit：CNY
2018 2017
By
As a As a YoY
business Item
Amount percentage of Amount percentage of Change
segment
cost of sales cost of sales
Liquor Raw materials 2,493,466,778.30 84.99% 2,465,720,490.49 84.51% 1.13%
Liquor Labor costs 176,446,424.13 6.01% 184,843,134.82 6.33% -4.54%
Manufacturing
Liquor 263,794,683.61 8.99% 265,781,739.82 9.11% -0.75%
overhead
2.2.6. Change in the scope of the consolidated financial statements for
the reporting period
√ Yes No
On 12 September 2017, the 21st meeting of the eighth board of directors reviewed and
approved the “Proposal about establishment of Luzhou Laojiao fruit wine industry Co., Ltd.
invested by subsidiary”. The joint investment establishment of Luzhou Laojiao fruit wine
industry Co., Ltd. was about to be implemented by Sales Company, a wholly owned
subsidiary of the Company, and Sichuan Meihe wine Co., Ltd. and Luzhou Juhe wine
development Co., Ltd.. In January 2018, the fruit wine industry was registered and
established with a registered capital of CNY 50 million. Sales Company, a wholly-owned
subsidiary of the Company, subscribed CNY 20.5 million of investment and held 41% of
the shares. Although the shareholding ratio of the Company is less than 51%, among the
five members of the board of directors, the Company has sent three members, and the
chairman (legal representative) is the director sent by the Company. The Company has
the actual control over the company, so it is included in the scope of consolidation.
On 12 September 2017, the 21st meeting of the eighth board of directors of the Company
reviewed and approved the "Proposal on the establishment of Mingjiang Co., Ltd. by
subsidiary investment", and Sales Company, a wholly-owned subsidiary of the Company,
planned to establish Mingjiang company in the United States with Luzhou Jiutai Liquor
Sales Co., Ltd.. In January 2018, Mingjiang company was registered and established with
a registered capital of USD 6 million. Sales Company, a wholly-owned subsidiary of the
Company, subscribed USD 3.24 million and held 54% of the shares. In addition, among
the five members of the board of directors, the Company has sent three people to have
actual control over the company, so it is included in the scope of consolidation.
Guibin company is a controlling subsidiary of Boda Marketing. The Company has decided
to cancel Guibin company due to the increasingly prominent limitations of the special
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
circulation channel model of single product. Guibin company has obtained the notice of
approval of cancellation registration on 12 March 2018.
2.2.7. Major changes in the business, products or services in the
reporting period
Applicable √ N/A
2.2.8. Main customers and suppliers
Sales to major customers of the Company
Total sales from top five customers（CNY） 8,721,259,517.26
Total sales from top five customers as a percentage of
66.80%
the total sales
Total sales from related parties among top five
0.00%
customers as a percentage of the total sales
Information on top five customers
As a percentage of the total
No. Customer Sales amount(CNY)
sales for the year
1 Customer A 5,475,737,368.50 41.94%
2 Customer B 1,814,384,710.30 13.90%
3 Customer C 915,402,066.09 7.01%
4 Customer D 418,166,236.17 3.20%
5 Customer E 97,569,136.20 0.75%
Total -- 8,721,259,517.26 66.80%
Other information on major customers
Applicable √ N/A
Major suppliers of the Company
Total sales from top five suppliers（CNY） 1,295,485,397.83
Total sales from top five suppliers as a percentage of the
35.55%
total sales
Total sales from related parties among top five suppliers
0.00%
as a percentage of the total purchase
Information on top five suppliers
As a percentage of the total
No. Supplier Purchases(CNY)
purchase for the year
1 Supplier A 434,092,654.87 11.91%
2 Supplier B 316,331,999.00 8.68%
3 Supplier C 223,761,979.53 6.14%
4 Supplier D 174,468,718.17 4.79%
5 Supplier E 146,830,046.26 4.03%
Total -- 1,295,485,397.83 35.55%
Other information on major suppliers
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Applicable √ N/A
2.3. Expenses
Unit：CNY
YoY Reason for any significant
2018 2017
Change change
Mainly due to increase
Selling and
advertising and marketing
distribution 3,392,721,432.33 2,411,884,522.31 40.67%
promotion to improve brand
expenses
influence.
Mainly due to scale expansion
General and
and increase in the number of
administrative 722,448,972.80 518,463,705.99 39.34%
employees, leading to increased
expenses
accrued salary and bonus.
Mainly due to increased savings
in the current period, leading to
Finance expenses -215,066,482.79 -106,898,022.70
increased deposit interest
income.
R&D expenses 62,172,210.70 50,990,507.33 21.93%
2.4. R&D expenses
√ Applicable N/A
In 2018, the Company's research and development direction: research on raw grain
breeding and standardized cultivation, development of new health liquor products,
research and application of liquor food safety prevention and control technology, research
on fermentation mechanism and application of brewing microorganisms, and research on
production technology of different styles of base liquor, etc.. The Company has completed
the application of 10 government science and technology projects, the appraisal and
acceptance of 9 government science and technology projects, and won 6 scientific
research achievements awards, including 1 second prize for scientific and technological
progress of Sichuan province in 2018, 3 technical progress awards of China liquor
industry association, and 2 technical progress awards of China food science and
technology association. After the promotion and application of relevant technical
achievements in the Company, it has played a role in enriching the Company's product
categories, which ensures product quality, improves the rate of alcohol and high-quality
alcohol, saving labor force and lays a technical foundation for the benign and scientific
development of the Company.
Information about R&D input
2018 2017 YoY Change
Number of R&D personnel 452 449 0.67%
R&D personnel as a percentage
15.69% 18.32% -2.63%
in total employees
18
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
2018 2017 YoY Change
R&D input(CNY) 85,334,100.70 84,810,942.37 0.62%
R&D personnel as a percentage
0.65% 0.82% -0.17%
in operating revenues
Capitalized R&D input(CNY) 0.00 0.00 0.00%
Capitalized R&D input
0.00% 0.00% 0.00%
percentage in total R&D input
Note: R&D expenses include that recorded in cost of production and salary of
researchers.
Reason for any significant YoY change in the percentage of the R&D input in the operating
revenues
Applicable √ N/A
Reason for any sharp variation in the percentage of the capitalized R&D input and
rationale
Applicable √ N/A
2.5. Cash flows
Unit：CNY
Item 2018 2017 YoY Change
Subtotal of cash inflows from
15,316,815,981.72 12,675,841,810.22 20.83%
operating activities
Subtotal of cash outflows from
11,018,899,963.48 8,972,107,748.33 22.81%
operating activities
Net cash flows from operating
4,297,916,018.24 3,703,734,061.89 16.04%
activities
Subtotal of cash inflows from
19,702,964.73 19,963,102.88 -1.30%
investing activities
Subtotal of cash outflows from
1,485,118,936.65 1,426,727,363.84 4.09%
investing activities
Net cash flows from investing
-1,465,415,971.92 -1,406,764,260.96 4.17%
activities
Subtotal of cash inflows from
4,482,764.00 2,957,910,377.36 -99.85%
financing activities
Subtotal of cash outflows from
1,921,149,867.51 1,631,555,816.61 17.75%
financing activities
Net cash flows from financing
-1,916,667,103.51 1,326,354,560.75 -244.51%
activities
Net increase in cash and cash
916,564,472.77 3,623,174,123.17 -74.70%
equivalents
Explanation of why the data above varied significantly
√ Applicable N/A
Net cash flows from financing activities and net increase in cash and cash equivalent
decreased 244.51% and 74.70% separately year-on-year, mainly due to receipt of
19
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
non-public offering fund last year.
Explanation of main reasons leading to the material difference between net cash flows
from operating activities during the reporting period and net profit for the year
Applicable √ N/A
3. Analysis of non-core business
Applicable √ N/A
4.Assets and liabilities
4.1 Significant change of asset items
Unit：CNY
At the end of 2018 At the end of 2017
As a As a Change in Explanation about any
Amount percentage of Amount percentage of percentage material change
total assets total assets
Cash and cash
9,367,386,627.68 41.44% 8,449,622,154.91 42.77% -1.33%
equivalents
Accounts
10,333,728.87 0.05% 8,008,857.20 0.04% 0.01%
receivable
Inventories 3,230,415,749.95 14.29% 2,811,866,523.26 14.23% 0.06%
Long-term equity
2,091,103,348.61 9.25% 1,824,893,972.85 9.24% 0.01%
investments
Fixed assets 1,029,666,915.47 4.56% 1,129,894,772.60 5.72% -1.16%
Mainly due to the
construction of
technical renovation
Construction in project of brewing
3,000,489,249.86 13.27% 1,567,263,995.95 7.93% 5.34%
progress industry according to
the plan and the
project input increases
year by year.
4.2 Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit：CNY
Changes in
Changes in fair Amount
cumulative fair Provision for Amount Closing
Item Opening balance value through of
value recorded impairment of sale balance
profit or loss purchase
into equity
Financial asset
3.Available-for-sale 237,513,702.02 -46,755,009.43 177,009,535.83 0.00 0.00 0.00 190,758,692.59
20
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Changes in
Changes in fair Amount
cumulative fair Provision for Amount Closing
Item Opening balance value through of
value recorded impairment of sale balance
profit or loss purchase
into equity
financial assets
Total 237,513,702.02 -46,755,009.43 177,009,535.83 0.00 0.00 0.00 190,758,692.59
Financial liability 0.00 0.00
Whether measurement attribution of main assets changes significantly in this year
Yes √ No
4.3 Restricted asset rights as of the end of this reporting period
Item Closing Balance Reason
According to regulations of Tourism
Other cash and cash
1,400,000.00 Bureau, the travel service deposit was
equivalents
deposited in a designated bank
Total 1,400,000.00
5. Investment
5.1. Total investment
√ Applicable N/A
Investment made in the reporting Investment made in the prior
YoY change
period (CNY) year (CNY)
1,527,400,090.76 1,503,709,847.70 1.58%
5.2. Significant equity investment made in the reporting period
Applicable √ N/A
21
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
5.3. Significant ongoing non-equity investment in the reporting period
√ Applicable □ N/A
Unit:CNY
Accumulated Reasons for
Industry of Accumulated actual
Whether it is a Amount of input in actual income not meeting Date of
the input amount by the Capital Project Projected Disclosure index
Investment form fixed asset the reporting by the end of the schedule disclosure (if
Item investment end of the reporting source progress income (if any)
investment period the reporting and projected any)
project period
period income
Announcement of
About subsidiary
Technical technical
renovation Fund-raising April 28 renovation project
Self-built Yes Liquor 1,203,223,850.04 2,362,483,702.39 40.00% 0.00 0.00 N/A
project of +self-finance 2016 of brewing No：
brewing 2016-12
（http://www.cnin
fo.com.cn/）
Total -- -- -- 1,203,223,850.04 2,362,483,702.39 -- -- 0.00 0.00 -- -- --
5.4. Financial assets investment
√ Applicable □ N/A
22
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
5.4.1. Securities investment
√ Applicable □ N/A
Unit: CNY
Changes in fair Changes in the Profit and loss
Abbreviati Initial Accounting
Category of Beginning book value cumulative fair Amount of Amount during the Closing book Accounting
Stock code on of investment measurement Capital source
securities balance recognized in value recorded purchase of sale reporting balance item
securities cost model
profit or loss into equity period
Available-for-s
Domestic and Fair value
601211 GTJA 12,719,156.76 218,109,984.47 -37,686,390.43 167,704,437.28 0.00 0.00 4,710,798.80 180,423,594.04 ale financial Owned fund
foreign stock measurement
asset
Available-for-s
Domestic and Cost method
01983.HK LZBANK 51,120,000.00 51,120,000.00 N/A N/A 0.00 0.00 4,339,200.00 51,120,000.00 ale financial Owned fund
foreign stock measurement
asset
Available-for-s
Domestic and Fair value
002246 SNC 1,030,000.00 19,403,717.55 -9,068,619.00 9,305,098.55 0.00 0.00 62,542.20 10,335,098.55 ale financial Owned fund
foreign stock measurement
asset
Total 64,869,156.76 288,633,702.02 -46,755,009.43 177,009,535.83 0.00 0.00 9,112,541.00 241,878,692.59 -- --
5.4.2. Derivative investment
□Applicable √ N/A
No such cases in the reporting period
5.5. Use of fund-raising
√ Applicable N/A
23
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
5.5.1. General use of fund-raising
√ Applicable □ N/A
Unit：CNY 10,000
Accumulated
Total amount Total amount Total amount
Total amount of re-purposed Purpose and Amount of
of of re-purposed of Total amount
Total amount used fund-raising fund-raising as direction of fund-raising
Year Method accumulated fund-raising in accumulated of unused
of fund-raising in the reporting a percentage unused idle for more
used the reporting re-purposed fund-raising
period in total fund-raising than two years
fund-raising period fund-raising
fund-raising
Stock option
2012, 2013 10,240.61 6,361.29 10,713.85 0 6,152.06 60.08% 0 N/A 0
incentive
Deposited in
special
account of
Non-public fund-raising
2017 295,273.5 78,712.87 138,027.47 0 0 0.00% 167,649.07 0
offering and purchase
of structured
deposit
products
Total -- 305,514.11 85,074.16 148,741.32 0 6,152.06 2.01% 167,649.07 -- 0
Notes for general use of fund-raising
1. The amount of fund-raising used for stock option incentive is more than the difference of total amount of fund-raising, mainly due to the input including interest income
deducting commission charge.
2. The total amount of unused fund-raising used for non-public offering includes funds interests.
24
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
5.5.2. fund-raising for committed projects
√ Applicable □ N/A
Unit：CNY
Investment
Whether the Date of the Realized Whether the
Committed Total amount Adjusted Investment Accumulated progress by the Whether the
project has projects reach the benefits feasibility of the
investment projects of fund-raising Investment total amount in the input by the end end of expected
been changed working condition during the project has
and direction of for committed amount reporting of the reporting reporting benefits have
(including for their intended reporting changed
over-raised funds investment (1) period period (2) period (3)＝ been achieved
partial change) use period significantly
(2)/(1)
Committed investment projects
China Liquor City
Yes 10,240.61 4,088.55 0 4,088.55 100.00% 22 June 2016 108.26 Yes Yes
Laojiu Town Phrase I
Cellar Construction
No 6,152.06 6,152.06 6,361.29 6,625.3 107.69% 0 N/A No
Project
Technical Renovation
Project of Brewing No 295,273.5 295,273.5 78,712.87 138,027.47 46.75% 31 December 2020 0 N/A No
Phrase I
Subtotal of
committed -- 311,666.17 305,514.11 85,074.16 148,741.32 -- -- 108.26 -- --
investment projects
Direction of over-raised funds
None
Total -- 311,666.17 305,514.11 85,074.16 148,741.32 -- -- 108.26 -- --
Situation and reason 1. China Liquor City Laojiu Town Phrase I：According to the resolution of the general meeting of shareholders in 2015, the Company changed the purpose of fund-raising
for not reaching plan for stock option incentive. See details in the Announcement About Purpose Change of fund-raising (No: 2016-11 http://www.cninfo.com.cn/) issued on 28 April 2016.
progress or expected 2. Cellar Construction Project：The project is used for brand publicity and improving liquor storage capacity. It cannot generate economic benefit directly and
25
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
benefits (by specific individually. The Company cannot account for the realized economic benefits individually and promise the economic benefits.
items)
Significant changes of China Liquor City Laojiu Town Phrase I：The reason for feasibility changed significantly as described in the Announcement About Purpose Change of fund-raising
project feasibility (No:2016-11 http://www.cninfo.com.cn/) issued on 28 April 2016.
Amount, propose N/A
and progress of
over-raised funds
Change of N/A
implementation site
of investment
projects
Adjustment of the N/A
implementation
mode of raised funds
investment projects
Situation of Applicable
prior-period
On 30 November 2017, the 24th meeting of the eighth board of directors reviewed and approved the Proposal About fund-raising Used for Replacement of Prior-period
investment and
Investment. The Company decided to use fund-raising used for non-public offering amounted CNY 581,774,996.30 to replace the self-financed funds invested at earlier
replacement of the
stage in the Technical Renovation Project of Brewing Phrase I.
projects
Idle fund-raising used N/A
for temporary
supplementary
liquidity
Amount and reason N/A
for surplus of
26
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
fund-raising
Propose and
Idle fund-raising deposited in special accounts, namely the account (account number: 606036135) opened in CMSC Chengdu Branch and the account (account number:
direction of unused
028900178710606) opened in CMBC Xiti North Road Branch.
fund-raising
Problems and other
situation when
N/A
fund-raising is used
and disclosed
5.5.3. Change the use for fund-raising
Applicable √ N/A
No such cases in the reporting period
6. Sale of major assets and equity interests
6.1. Sale of major assets
Applicable √ N/A
No such cases in the reporting period
6.2. Sale of major equity interests
Applicable √ N/A
7. Analysis of major subsidiaries
√ Applicable N/A
Main subsidiaries and joint companies with an over 10% influence on the Company’s net profit
27
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Unit：CNY
Company name Company type Business scope Registered capital Total assets Net assets Operating Revenue Operating profit Net profit
Luzhou Laojiao
Sales Company of
series unified
Luzhou Laojiao Subsidiary 100,000,000.00 5,148,402,191.56 1,458,990,115.71 12,743,309,108.03 3,702,880,002.83 2,770,784,102.55
package liquor
Co.,Ltd.
sales
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable N/A
How subsidiary was acquired or disposed during the
Subsidiary name Impact on overall operation and results
reporting period
Luzhou Laojiao fruit wine industry Co., Ltd. Establishment No significant impact
Mingjiang Co., Ltd. Establishment No significant impact
Luzhou Laojiao Guibin Service Co.,Ltd. Liquidation and cancellation No significant impact
Notes for major holding companies and joint stock companies
The operating profit and net profit of Sales Company increased 38.41% and 37.96% year on year, mainly due to increased sale revenue during the
reporting period.
8. Structured entities controlled by the Company
Applicable √ N/A
28
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
9. Outlook for the future development of the Company
9.1 Industry pattern and trends
In recent years, China's liquor industry has sped up the transformation from an expanding
market to a competitive market. "Matthew effect" highlights “the strong gets stronger, the
weak gets weaker, with diversified recovery”. We believe that the adjustment of
liquor-making industry will continue in the next five years trend with "Four Focus" and
"Four Directions" as the main characteristics. “Four Focus” refer to focus on brand, quality,
culture, and origin. “Four Directions” refer to the directions of youth, fashion, health and
international development. Chinese liquor industry will gradually enter the era of
"oligarchs".
9.2 Company’s development strategy
9.2.1. Development opportunities in the future
A. Luzhou Laojiao, as one of China's most ancient "four famous liquor", has a long history,
profound culture, superior quality and strong brand. In recent years, as the continuous
optimization and improvement of scientific decision-making, internal management, team
building, product quality control, competitive sales system construction, the Company’s
competitiveness has been further enhanced.
B. China has been implementing a proactive fiscal policy, increasing opening-up,
improving the business environment, and implementing tax cuts and fee reductions, which
are good for economic development in the medium and long term. The industry is facing
multiple development opportunities such as the rise of the middle class, overall poverty
alleviation, industrial upgrading and accelerated urbanization.
C. With the continuous adjustment of liquor industry and the significantly accelerated
concentration, the Company ushers into the expansion of the proportion and strength and
faces the historical opportunity.
9.2.2. Possible challenges and risks in the future
A. In 2019, the international political and economic situation is complex and contradictory.
The process of economic globalization and international trade division of labor will
continue to undergo major adjustments.
B. The domestic macro-economy has entered a relatively long period of medium and
low-speed development, and faced multiple pressures, including financial risks,
supply-side reform, conversion of old and new drivers of growth, ecological and
environmental protection, and Sino-US trade frictions.
C. In a long period, the aging population in the liquor industry may lead to a decline in the
demand, thus affecting the market sales scale and intensifying competition.
9.2.3. The Company's "13th five-year" development strategy
29
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
During the Company's "13th five-year" period, the overall plan is "12345" strategy, namely
the clear return to China's liquor industry "top three" as one goal; adhering to "profession
and strength" and "harmonious coexistence" as two principles; thoroughly carrying out the
"three strengthening" including strengthening sales, strengthening management and
strengthening talent team construction; Grasping the four key development steps of
stability period, adjustment period, sprint period and achievement period between 2015
and 2020; Achieving the leading in China's liquor industry market, corporate governance,
brand culture, quality and technology, and talent resources.
9.3 Completion of the business plan in 2018
In 2018, the Company achieved an operating revenue of CNY 13.055 billion and 100.35%
of the target. The net profit attributable to shareholders of the listed company reached
CNY 3.486 billion and 104.91% of the planned amount. Targets set at the beginning of the
year was successfully achieved.
9.4 Business plan in 2019
In 2019, it is a deciding year for the Company's “13th Five-Year Plan” strategy. In the third
year of sprint period, it will have a profound and significant influence on the future
development of Luzhou Laojiao. The Company will be closely around the development
theme of "firmness, management, scale", firmly determined to win, and adhere to
independent development, seize the development opportunity, sprint to realizing leaping
development. According to the "Outline of Production and Operation in 2019" reviewed
and approved by the board of directors, the Company will strive to achieve a year-on-year
increase in operating revenue of 15%-25%. (2019 business plan is prepared based on
“13th Five-Year Plan” strategy combined with the Company's ability, not presenting the
earning forecast for 2019, nor the company promise. Whether it can be realized, it
depends on market conditions change, the management team effort, and many other
factors. There are a lot of uncertainties and investors should pay special attention to it.)
The main measures are as follows:
1. Keep five resolutions
First, adhering to the development orientation of “profession and strength”. The Company
will focus on the development of liquor industry without distractions, concentrate on
"double brands", and build "three lines" and "five single products". Second, adhering to a
forward-looking pragmatic strategic vision. The Company will focus on strengthening the
dynamic analysis of external competition and internal work, keeping strategic decisions
forward-looking, systematic and scientific, and following through with the blueprint. Third,
adhering to a scientific and efficient governance model. The Company will constantly
improve the decision-making authorization system, adhere to scientific and democratic
decision-making, and apply advanced management concepts, mechanisms and tools.
Fourth, adhering to the path of innovation-driven development. The Company will promote
high-quality development through scientific and technological innovation, adapt to
consumption upgrading and the rise of the new generation of consumers with product
innovation, empower the brand with concept innovation, and realize channel innovation
30
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
and service innovation through cross-border integration. Fifth, adhering to take a
responsibility for harmonious coexistence. The Company will take the initiative to fulfill the
social responsibility of large-scale backbone brewing enterprises, and continue to make
contributions to targeted poverty alleviation, social public welfare, corporate tax and
employment expansion. The Company also should strictly abide by the bottom line of
environmental protection and safety red line, and maintain the unity and harmony of the
industry, and the healthy development of the upstream and downstream industrial chain.
2. Strengthen the five-item management
First, strengthening strategic management. The consistent strategy execution system is
constructed based on the principles of "strategy and corporate culture integration,
matching with organizational functions, correlation with assessment and incentive,
correspondence with distribution of rights and responsibilities, and linkage with resource
allocation". Second, strengthening system management. The Company will accelerate the
establishment of a management system with clear responsibilities, clear levels, and
closed-loop management, and a management chain that goes horizontally to the edge
and vertically to the end, so as to enhance synergy. Third, strengthening accurate
management. According to the requirements of standardization, specialization,
digitalization and refinement, the management refinement project should be implemented
to establish and enhance the authority, guidance and practical operation of management.
Fourth, strengthening risk management. The Company will guard against decision-making,
market, management, business and integrity risks. Fifth, strengthening people-oriented
management. The Company will enhance employees’ sense of belonging, implement goal
motivation and growth motivation, and stimulate employees’ subjective initiative of active
performance and happy growth.
3. Expand the five scales
First, expanding market scale. The Company will deepen push forward to developing
overall region-oriented markets, and accelerate the nationwide distribution, attack and
seize blank markets, and consolidate mature markets. Second, expanding the scale of
resources. The Company will give full play to the core competitive advantages of Luzhou
Laojiao culture, quality and technology and the overall advantages of the Company's
brand pyramid, so that it can be transformed into brand resources and marketing
resources, and corporate influence can be used to gather social resources. Third,
expanding production scale. Technical renovation projects will be promoted with all efforts,
and quality traceability management will be implemented. Quality management will be
extended to the upstream and downstream of the industrial chain. Fourth, expanding
enterprise scale. The Company should do a good job in major strategic investment and
financing research and market value management, strengthen investor relationship
management, constantly consolidate and improve Luzhou Laojiao's good image in the
capital market, and timely promote the Company's expansion and development. Fifth,
expanding the scale of talent. The Company should plan and build a “talent team pyramid”
with enterprise leaders, industry experts and other high-level talents as the top;
management, marketing and production composite talents and professional technical
31
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
backbone as the tower; and front-line basic business professionals as the base.
10. Visits paid to the Company for purposes of research,
communication, interview, etc.
10.1 In the reporting period
√ Applicable N/A
Date of visit Way of visit Type of visitor Index to main inquiry information
Production and Business Operation
31 January 2018 Field survey Institution
（http://www.cninfo.com.cn/）
Industry Trends and Company
27 June 2018 Field survey Institution Performance
（http://www.cninfo.com.cn/）
Production and Business Operation
25 September 2018 Field survey Institution
（http://www.cninfo.com.cn/）
Industry Trends and Company
31 October 2018 Field survey Institution Performance
（http://www.cninfo.com.cn/）
Industry Trends and Company
6 November 2018 Field survey Institution Performance
（http://www.cninfo.com.cn/）
Industry Trends and Company
7 November 2018 Field survey Institution Performance
（http://www.cninfo.com.cn/）
Production and Business Operation
29 November 2018 Field survey Institution
（http://www.cninfo.com.cn/）
Industry Trends and Company
19 December 2018 Field survey Institution Performance
（http://www.cninfo.com.cn/）
Number of reception 8
Number of reception of institutions 261
Number of reception of individuals 5
Number of reception of others 7
Whether to disclose or divulge material
NO
information that has not been made public
32
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section V Significant Events
10. Profit distribution and converting capital reserves into
share capital for common shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash
dividend policy, for common shareholders in the reporting period.
√ Applicable N/A
According to the plan for profit distribution for 2017 was deliberated and approved by 2017
annual shareholders' meeting. Based on its total of 1,464,752,476 shares, the Company
distributed a cash dividend of CNY 12.50 (tax inclusive) per 10 shares to all shareholders.
The distribution plan was implemented on 16 July 2018.
A special statement of the policy of cash dividends
Whether it meets the requirements of the articles
of corporation or the resolution of shareholders' Yes
meeting:
Whether the standard and proportion of
Yes
dividends are clear:
Whether the relevant decision-making process
Yes
and systems are complete:
Whether non-executive directors perform their
Yes
duties and play their due role:
Whether the minority shareholders have the
opportunity to fully express their opinions and
Yes
appeals and whether their legitimate rights and
interests have been adequately protected:
Whether the conditions and procedures are The Company's cash dividend policy
compliant and transparent and whether the cash has not been adjusted or changed in
dividend policy is adjusted or changed: the reporting period
Plans (or preliminary plans) for profit distribution and converting capital reserves into
share capital for common shareholders for the recent three years (including the reporting
period) are as following:
Preliminary plan for profit distribution for 2018: Based on its total shares , the Company is
to distribute a cash dividend of CNY 15.50 (tax inclusive) per 10 shares to all
shareholders.
Plan for profit distribution for 2017: Based on its total shares, the Company distributed a
cash dividend of CNY 12.50 (tax inclusive) per 10 shares to all shareholders.
33
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Plan for profit distribution for 2016: Based on its total shares, the Company distributed a
cash dividend of CNY 9.60 (tax inclusive) per 10 shares to all shareholders.
Cash dividend distribution over the recent three years (including the reporting period)
Unit: CNY
Net profit Ratio to net profit
attributable to attributable to
Ratio of Ratio of cash
common common Cash Total cash
Cash dividends cash dividends
shareholders in the shareholders in dividends dividends
Year (tax included) dividends (including
consolidated the consolidated in other (including other
in other other forms)
statement in the statement in the forms forms)
forms
year year
2018 2,270,366,337.80 3,485,643,008.98 65.13% 0.00 0.00% 2,270,366,337.80 65.13%
2017 1,830,940,595.00 2,557,944,598.97 71.58% 0.00 0.00% 1,830,940,595.00 71.58%
2016 1,346,162,376.96 1,957,193,264.50 68.78% 0.00 0.00% 1,346,162,376.96 68.78%
The Company made a profit in the reporting period and the profit distributed to common
shareholders of the Company was positive, but it did not put forward a preliminary plan for
cash dividend distribution to common shareholders.
Applicable √ N/A
11. Preliminary plan for profit distribution and converting
capital reserves into share capital for the reporting period
√ Applicable N/A
Bonus shares for every 10 shares (share) 0
Dividends for every 10 shares (CNY) (tax included) 15.50
Total shares as the basis for the preliminary plan for
1,464,752,476
profit distribution (share)
Total cash dividends (CNY) (tax included) 2,270,366,337.80
Cash dividends in other forms (e.g. repurchase
0.00
share)
Total cash dividends (CNY) (including other forms) 2,270,366,337.80
Distributable profit (CNY) 10,181,899,224.84
Percentage of cash dividends in the total distributed
100%
profit (including other forms)
Information of the cash dividends
The development stage of the Company is mature and the Company has major fund expenditure
arrangement. When the profit distribution is carried out, the proportion of cash dividends in this profit
distribution should at least reach 40%.
34
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Details of preliminary plan for profit distribution and converting capital reserves into share capital
After taking minority shareholders’ advice, the board of directors plans to distribute a cash dividend of
CNY 15.50 (tax inclusive) per 10 shares to all shareholders based on its total of 1,464,752,476 shares,
according to the Company's actual conditions. The remaining undistributed profit shall be carried
forward for future distribution.
3. Performance of undertakings
3.1. Undertakings of the Company's actual controller, shareholders,
related parties and acquirer, as well as the Company and other
commitment makers fulfilled in the reporting period or ongoing by the
end of this reporting period
√ Applicable N/A
Particulars
Undertaking Type of Undertaking on the
Undertaking giver Details of undertakings Term
reasons undertakings date performance
Stock reform
undertaking
Undertaking made
in the report of
acquisition or
change of interest
Undertaking made
in the
reorganization of
assets
For the shares of
E Fund Management
Luzhou Laojiao by
Co., Ltd.,China
non-public offering
Universal Asset
purchased, I/The unit
Management
undertakes that the
Company Limited,
shares will be not
Bosera Asset
transferred within 12
Management Co., Restricted
Undertakings months from new
Limited,Ping An Asset shares 2017.09.14 12 months Fulfilled
given in time of shares offering,
Management Co. Ltd.,
IPO or refinancing including but not limited
Caitong Fund
to public transfer and
Management Co.,Ltd.,
negotiating transfer. If
Minsheng Royal Fund
laws and regulations
Management Co.,Ltd.
have other rules on
restricted period, it
follows the rules.
Luzhou Liquor Restricted For the shares of 2017.09.14 36 months In progress
35
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Particulars
Undertaking Type of Undertaking on the
Undertaking giver Details of undertakings Term
reasons undertakings date performance
Industry Investment shares Luzhou Laojiao by
Co.,Ltd. non-public offering
purchased, I/The unit
undertakes that the
shares will be not
transferred within 12
months from new
shares offering,
including but not limited
to public transfer and
negotiating transfer. If
laws and regulations
have other rules on
restricted period, it
follows the rules.
1. Don’t interfere in the
Company’s operation
and management
activities beyond its
authority, and don’t
encroach on the
Company’s interests.
SASAC of Luzhou, Other
2. If any party violates 2016.05.11 2018.12.31 Fulfilled
Laojiao Group undertaking
this commitment and
causes losses to the
company or other
shareholders, it shall be
liable according to law.
3. This commitment is
irrevocable.
1. Promise not to
Liu Miao, Lin Feng,
transfer benefits to other
Wang Hongbo,
units or individuals free
Jiang Yuhui, Shen
of charge or under unfair
Caihong, Zhang Ling,
Other conditions, nor to
Du Shenlun, Xu 2016.05.11 2018.12.31 Fulfilled
undertaking damage the interests of
Guoxiang, Tan Lili,
the Company in any
Qian Xu, Ying Hanjie,
other way.
He Cheng, Zhang
2. Commitment to
Suyi, Xie Hong
restrain the
36
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Particulars
Undertaking Type of Undertaking on the
Undertaking giver Details of undertakings Term
reasons undertakings date performance
position-related
consumption behavior of
directors and senior
managers.
3. Promise not to use
the Company’s assets to
engage in investment
and consumption
activities unrelated to its
performance of duties.
4. Commit that the
compensation system
established by the board
directors or the
compensation
committee will be linked
to the implementation of
the Company’s
compensation
measures.
5. Promise that if the
Company implements
the equity incentive plan
in the future, the
exercise conditions of
the Company’s equity
incentive will be linked
to the implementation of
the Company’s
compensation
measures.
6. If any party violates
this commitment and
causes losses to the
Company or
shareholders, it shall be
liable according to law.
7. This commitment is
irrevocable.
Equity incentive
37
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Particulars
Undertaking Type of Undertaking on the
Undertaking giver Details of undertakings Term
reasons undertakings date performance
commitment
Other undertakings
to non-controlling
shareholders
Whether the
undertaking is Yes
fulfilled on time
Specific reasons
for failing to fulfill
any undertakings None
and plan for the
next step
3.2. Where any earnings forecast was made for any of the Company's
assets or projects and the reporting period is still within the forecast
period, the Company shall explain whether the performance of the asset
or project reaches the earnings forecast and reasons
Applicable √ N/A
4. Occupation of the Company's fund by the controlling
shareholder or its related parties for non-operating purposes
Applicable √ N/A
No such cases in the reporting period.
5. Explanation of the board of directors, the supervisory
committee and non-executive directors (If Any) regarding the
"Non-standard audit opinion" for the reporting period
Applicable √ N/A
6. Reason for changes in accounting policies, accounting
estimates and accounting methods compared to the financial
report for the prior year
Applicable √ N/A
7. Reason for retrospective restatement of major accounting
errors during the reporting period
Applicable √ N/A
38
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
No such cases in the reporting period.
8. Reason for changes in scope of the consolidated financial
statements compared to the financial report for the prior year
√ Applicable N/A
Newly incorporated subsidiaries in this period
Name Reason for change
Luzhou Laojiao Fruit Wine Industry Co., Establishment
Ltd.
Mingjiang Co., Ltd. Establishment
Liquidation and cancellation for subsidiaries in this period
Name Reason for change
Luzhou Laojiao Guibin Service Co.,Ltd. Liquidation and cancellation
On 12 September 2017, the 21st meeting of the eighth board of directors reviewed and
approved the “Proposal about establishment of Luzhou Laojiao fruit wine industry Co., Ltd.
invested by subsidiary”. The joint investment establishment of Luzhou Laojiao fruit wine
industry Co., Ltd. was about to be implemented by Sales Company, a wholly owned
subsidiary of the Company, and Sichuan Meihe wine Co., Ltd. and Luzhou Juhe wine
development Co., Ltd.. In January 2018, the fruit wine industry was registered and
established with a registered capital of CNY 50 million. Sales Company, a wholly-owned
subsidiary of the Company, subscribed CNY 20.5 million of investment and held 41% of
the shares. Although the shareholding ratio of the Company is less than 51%, among the
five members of the board of directors, the Company has sent three members, and the
chairman of the board (legal representative) is the director sent by the Company. The
Company has the actual control over the company, so it is included in the scope of
consolidation.
On 12 September 2017, the 21st meeting of the eighth board of directors of the Company
reviewed and approved the "Proposal on the establishment of Mingjiang Co., Ltd. By
subsidiary investment", and Sales Company, a wholly-owned subsidiary of the Company,
planned to establish Mingjiang company in the United States with Luzhou Jiutai Liquor
Sales Co., Ltd.. In January 2018, Mingjiang company was registered and established with
a registered capital of USD 6 million. Sales Company, a wholly-owned subsidiary of the
Company, subscribed USD 3.24 million and held 54% of the shares. In addition, among
the five members of the board of directors, the Company has sent three people to have
actual control over the company, so it is included in the scope of consolidation.
Guibin company is a controlling subsidiary of Boda Marketing. The Company has decided
to cancel Guibin company due to the increasingly prominent limitations of the special
circulation channel model of single product. Guibin company has obtained the notice of
approval of cancellation registration on 12 March 2018.
39
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
9. Engagement and disengagement of CPAs firm
CPAs firm at present
Name of the domestic CPAs firm Sichuan Huaxin (Group) CPA Firm
The Company’s payment for the domestic CPAs
80
firm (CNY’0,000)
Consecutive years of the audit service provided
20
by the domestic CPAs firm
Names of the certified public accountants from
Feng Yuan, He Fushou
the domestic CPAs firm
Consecutive years of the audit service provided
1
by the certified public accountants
Whether the CPAs firm was changed in the current period
Yes √ No
Engagement of any CPAs firm for internal control audit, financial advisor or sponsor
√ Applicable N/A
The Company appointed Sichuan Huaxin (Group) CPA Firm as the internal control auditor
for this year. The remuneration of audit in total paid by the Company was CNY 400
thousand.
10. Possibility of listing suspension and termination after
disclosure of this annual report
Applicable √ N/A
11. Bankruptcy and reorganization
Applicable √ N/A
No such cases in the reporting period.
12. Material litigation and arbitration
√ Applicable N/A
Amount Whether it Trial results Execution of
Progress in
Profile of litigation involved in forms an and impacts of judgment of Disclosure
litigation Date of disclosure
(arbitration) the case estimate litigation litigation index
(arbitration)
(CNY’ 0,000) liability (arbitration) (arbitration)
The Company filed a
lawsuit with ABC See
Changsha Yingxin Section V
Abatement Abatement of Abatement of 15 October 2014
Branch over a 14,942.5 No “Other
of action action action
deposit dispute, and significant
the case has been events”
transferred to Hunan
40
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Amount Whether it Trial results Execution of
Progress in
Profile of litigation involved in forms an and impacts of judgment of Disclosure
litigation Date of disclosure
(arbitration) the case estimate litigation litigation index
(arbitration)
(CNY’ 0,000) liability (arbitration) (arbitration)
Province Higher
People’s Court.
The Company filed a
lawsuit with ICBC
See
Nanyang Zhongzhou
Section V
Branch over a
Abatement Abatement of Abatement of “Other
deposit dispute, and 15,000 No 10 January 2015
of action action action significant
the case has been
events”
transferred to Henan
Province Higher
People’s Court.
13. Punishments and rectifications
Applicable √ N/A
No such cases in the reporting period.
14. Credit conditions of the Company as well as its controlling
shareholder and actual controller
Applicable √ N/A
15. Implementation of any equity incentive plan, employee
stock ownership plan or other incentive measures for
employees
Applicable √ N/A
No such cases in the reporting period.
16. Significant related party transactions
16.1. Related party transactions arising from routine operation
Applicable √ N/A
During the reporting period, the Company does not have any related party transactions
with a total of more than CNY 30 million and accounting for more than 5% of the
Company’s audited net assets in the latest period.
The Company’s 2018 daily affiliated transactions shall be implemented in accordance with
the “Proposal on the estimated 2018 annual daily affiliated transactions” reviewed and
41
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
approved at the 26th meeting of the eighth board of directors. For details, please refer to
Section XI “12. Related parties and related party transactions”
16.2. Related party transactions regarding purchase or sales of assets or
equity interests
Applicable √ N/A
No such cases in the reporting period.
16.3. Related party transitions arising from joint investments in external
parties
Applicable √ N/A
No such cases in the reporting period.
16.4. Credits and liabilities with related parties
Applicable √ N/A
No such cases in the reporting period.
16.5. Other significant related party transactions
Applicable √ N/A
No such cases in the reporting period.
17. Significant contracts and their execution
17.1. Trusteeship, contracting and leasing
17.1.1. Trusteeship
Applicable √ N/A
No such cases in the reporting period.
17.1.2. Contracting
Applicable √ N/A
No such cases in the reporting period.
17.1.3. Leasing
Applicable √ N/A
No such cases in the reporting period.
17.2. Major guarantees
Applicable √ N/A
No such cases in the reporting period.
42
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.3. Entrusted cash asset management
17.3.1. Entrust assets management
□ Applicable √ N/A
17.3.2 Entrust loans
Applicable √ N/A
No such cases in the reporting period.
17.4 Other significant contracts
Applicable √ N/A
No such cases in the reporting period.
18. Social Responsibilities
18.1 Information about taking social responsibilities
See details in 2018 Annual Social Responsibilities Report on the same date of the
announcement.
18.2 Information about targeted poverty alleviation
18.2.1 Targeted poverty alleviation plan
Overall goals: the Company adheres to the enterprise concept of "heaven and earth with
liquor, living symbiosis". In the anti-poverty battle, the Company strengthens the political
responsibility and social responsibility, actively support three poverty-stricken counties
and eleven poverty-stricken villages successively in two national poverty-stricken areas,
namely Wumengshan District and Yi area and Tibetan area of Sichuan province. It
focuses on precise poverty alleviation in Xiangtian village, Gulin county and Guntang
village, Hongyuan county, Aba prefecture. The Company gives comprehensive support on
manpower, material resources and financial resources in aspect of the industrial
development, infrastructure construction, education and health and other key projects. In
the process of work, it is necessary to highlight precise assistance and precise poverty
alleviation, pay attention to improving the quality of poverty alleviation and consolidating
the achievements of poverty alleviation, and earnestly implement policies, measures,
funds, projects and responsibilities to ensure real poverty alleviation, and ensure the
acceptance of poverty alleviation in whole by the end of 2018.
Main task: (1) poverty households out of poverty. According to the poverty alleviation
standard of CNY 3,600 per capita per year per family, the cultivation and breeding industry
are developed to ensure and improve industrial achievements. Focusing on the standard
of "three guarantees", the poor households with safe housing are upgraded to improve
their living conditions. Around the "three have" standard, cooperating with the party
committee and government of Maiwa town in Hongyuan county and Longshan town in
Gulin county, the Company realized the full coverage of water grid in two villages, and
ensured the standard of living water, safe electricity and agricultural network signals. (2)
The poor village out of poverty. Centering on the standard of "four good new villages", the
43
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
peripheral environment of Xiangtian village and Wentang village is upgraded to cultivate
good habits of farmers and form a good atmosphere. The Company guides and supports
the village collective economy, consolidates and improves the village collective economy
by means of donation and collective management, share dividends, asset leasing and
other forms, and ensures that the income is up to the standard. The Company supports
the construction of village-to-village highways, production roadways and motor-plow
roadbeds, and improves the working and living conditions of poor households.
Safeguard measures: the Company gives strong support to the two villages in terms of
technical guidance, project funds, skill training and industrial development. Members of
the Company's leadership team focus on helping poor villages out of poverty once every
two months to solve practical difficulties and problems. The Company, together with the
village working group, the first secretary and agricultural technicians, conducts quarterly
analysis, research and implementation of poverty alleviation projects, livelihood projects
and infrastructure construction in the two villages. The Company organizes party
members and cadres to participate in pairing assistance, "one-to-one" establishment of
pairing assistance ledger. In this year, they helped contact poor households to solve 2-3
specific problems. If it is not out of poverty, they will not quit.
18.2.2 Outline of annual targeted poverty alleviation
In 2018, targeted poverty alleviation work has entered the phase of the sprint of "solving
tough issue and assaulting fortified positions" . The Company’s counterparts in targeted
poverty alleviation are Longshan town, Gulin county and Guntang village, Hongyuan
county, Aba prefecture. It has entered the years of poverty alleviation acceptance. The
Company further clears thinking, strengthens the responsibility, and takes bigger, stronger,
more directly, more efficient and more sustainable measures in targeted poverty
alleviation work. The Company solves the difficult problem as an emphasis and
breakthrough of poverty alleviation work with actively planning and vigorously
implementation. The two key villages have been out of poverty, and the poverty alleviation
efforts have achieved remarkable results.
18.2.3 Poverty alleviation achievement
Indicator Unit Amount/Implementation situation
A. Overall situation —— ——
Including：1.Fund CNY 100,000 2,072.21
3.Number of establishing card for
Person 437
archives of poor people out of poverty
B. Input by project —— ——
1.Industrial development —— ——
Including：1.1 Type of poverty alleviation projects for Poverty alleviation through
——
industrial development agriculture and forestry
1.2Number of poverty alleviation projects
Item 7
for industrial development
1.3Amount invested in poverty alleviation CNY 100,000 303
44
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Indicator Unit Amount/Implementation situation
projects for industrial development
1.4 Number of establishing card for
Person 437
archives of poor people out of poverty
2.Transfer and employment —— ——
3.Removal and relocation —— ——
4.Educational poverty alleviation —— ——
Including：4.1 Input of aiding poor students CNY 100,000 40
4.2 Number of aiding poor students Person 22
5.Health poverty alleviation —— ——
Including:5.1 Input of medical and health resources
CNY 100,000 1,600
in poverty-stricken area
6.Ecological protection —— ——
7.Basic guarantee —— ——
8.Social poverty alleviation —— ——
9.Other project —— ——
Including：9.1.Item Item 3
9.2.Input amount CNY 100,000 129.21
C. Awards（content and level） —— ——
“Poverty alleviation of the year
National level award” awarded by
people.com.cn
Advanced Unit of "Five One"
Poverty Alleviation awarded by
Provincial level Sichuan provincial party
committee and provincial
government
Advanced Unit of Donation
awarded by Luzhou poverty
Municipal level
alleviation and development
association
18.2.4 Fellow-up poverty alleviation plan
In 2019, comprehensive rectification and improvement will be made based on the two
villages out of poverty. The Company regards “"Civilized new village" and "Four good new
village” as goals. It focuses on consolidating the results of poverty alleviation work and
further improve the infrastructure and villagers’ quality, optimize the village environment,
enhance the hard power of growing rich and help to achieve the leaping and high-quality
development of the village, guided by Xi Jinping Thought on Socialism with Chinese
Characteristics for a New Era and “Rural Revitalization Strategy”.
Key work: the Company adheres to “Real Poverty Alleviation” and works with “1573”
poverty alleviation plan, namely adhering to one goal, carrying out five support teams,
refining seven supporting measures and ultimately achieving three great results. The
45
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Company pushes forward poverty alleviation according to the sustainable development
concept and the slogan that “what you lack, I will supply. What you need, I will help”.
Safeguard measures: the Company adheres to policy implementation as the basic
guarantee and industrial development as the main path. Fostering the will and wisdom is
the fundamental measure, and the building of a new civilized village is a booster. The
Company gives strong support to these two villages in aspect of technical guidance,
project funds, skill training, industrial development and quality education.
18.3 Information about environment protection
Whether the listed company and its subsidiaries belong to heavy polluting industries
prescribed by the environmental protection department
Yes
46
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Name of main Pollution
Discharge Number of Distribution of Emission Approved total Excessive
Company name pollutant and discharge Total emission
type discharge outlet discharge outlet concentration emission discharge
particular pollutant standard
Luzhou Laojiao Continuous
COD 1 Luohan Base 23.999 100mg/L 5.978t 50t No
Co.,Ltd. discharge
Luzhou Laojiao Continuous
Ammonia nitrogen 2 Luohan Base 1.36 10mg/L 0.401t 3t No
Co.,Ltd. discharge
Luzhou Laojiao Continuous
Sulfur dioxide 2 Luohan Base 344 550mg/m 15.513t 125t No
Co.,Ltd. discharge
Luzhou Laojiao Continuous
Oxynitride 2 Luohan Base 275 400mg/m 39.695t 50t No
Co.,Ltd. discharge
Luzhou Laojiao Continuous
Smoke 2 Luohan Base 57.9 80mg/m 1.326 20t No
Co.,Ltd. discharge
Information about construction and operation of anti-pollution installations
Waste water: The Company has a sewage treatment station in Luohan Base, which is equipped with an automatic online monitoring instrument for
COD, ammonia nitrogen, total phosphorus, total nitrogen and flow. The real-time monitoring data is connected with the superior environmental
protection department for operation. The pollution treatment facilities are in normal operation, and the waste water discharge indexes are up to the
standard. All production areas of the Company have implemented the rainwater and sewage diversion, and the high-concentration waste-water from
the old brewery workshops in the urban area has been treated by the truck transportation to the Luohan sewage station for discharge up to the
standard.
Waste gas: The Company's old brewery in the urban area adopts clean fuel and natural gas for brewing. In view of the Luohan brewery base, natural
gas fuel is adopted after the technical transformation from coal to gas for boilers. The online automatic monitoring instrument for waste gas is installed
and the dust remover facilities are in normal operation.
47
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
All construction projects are in accordance with the requirements of the state
environmental protection laws and regulations. The Company carries out environmental
impact assessment and obtains the environmental protection administrative permission,
such as the brewing engineering technical upgrading project, Luzhou Laojiao intelligent
packaging center technological upgrading project, sewage station technical upgrading
project, boiler upgrading project, and application of new model of solid-state method liquor
production workshop. These projects were carried out environment impact assessment
and the Company obtained environmental protection administrative permission.
Emergency plan for environmental emergencies
The Company has prepared the "Emergency plan for environmental emergencies" and
reported it to Luzhou environmental emergency center for the record. The Company
organizes all departments (units) to study the emergency plan, and carries out a
comprehensive emergency plan drill every year to improve the emergency handling
capacity of all staff.
Environmental self-monitoring program
The Company has developed an environmental self-monitoring program and reported it to
the superior environmental protection department for the record. The automatic
monitoring data will be connected with the superior environmental protection department
for operation. Relevant self-monitoring information will be disclosed on the "pollution
source monitoring information disclosure platform of key monitoring enterprises in
Sichuan province" as required to receive social supervision.
There is no other environmental information that should be disclosed, in accordance with
the requirements of environmental protection timely and truthfully.
Other information about environment protection
N/A
19. Other significant events
√ Applicable N/A
The Company’s three savings deposits of CNY 500 million, including ABC Changsha
Yingxin Branch and ICBC Nanyang Zhongzhou Branch are involved in contract disputes.
The Company has reported to the public security authorities for intervention with the
assets preservation measure and filed civil claims for two contract disputes among the
three cases. Combined with the assets preservation situation of the public security
authorities and professional legal advice issued by lawyers, the Company has made a
provision of CNY 200 million for bad debts for the deposit of CNY 500 million for contract
disputes. As of December 31, 2018, the Company has collected a total of CNY
192,543,724.75 related to three deposit contract disputes. Due to the criminal case
48
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
involved, the case is still in the state of suspension of civil litigation. As the case
progresses, the amount of bad provision may be adjusted.
See details in the Company’s announcements:
Date of announcement No. Catalogue Official website
15 October 2014 2014-35 Announcement of significant litigation http://www.cninfo.com.cn/
12 November 2014 2014-41 Announcement of significant litigation
progress
6 December 2014 2014-43 Announcement of significant litigation
progress part II
10 January 2015 2015-1 Announcement of significant events
4 February 2015 2015-4 Announcement of significant events
progress
25 March 2015 2015-11 Announcement of significant litigation
progress part III
18 April 2015 2015-20 Announcement of significant litigation
progress part IV
22 April 2015 2015-21 Announcement of significant events
progress part II
24 April 2015 2015-25 Announcement of significant litigation
progress part V
15 July 2015 2015-44 Announcement of significant litigation
progress part VI
22 July 2015 2015-45 Announcement of significant litigation
progress part VII
6 June 2018 2018-17 Announcement of significant litigation
progress part VIII
20. Significant events of subsidiaries
√ Applicable □ N/A
The Company disclosed the technical renovation project of brewing invested by Brewing
Company, a subsidiary of the Company. The total investment amount is CNY 741,428.
See details in the announcement About subsidiary technical renovation project of brewing ,
No：2016-12（http://www.cninfo.com.cn/）. At present, this project is under construction
and the progress refers to Section IV 5. Investment.
49
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section VI Changes in Shares and Information about Shareholders
1. Changes in shares
1.1 Changes in shares
Unit：Share
Before Changes in this year (＋，－) After
Issuance of new Capitalization of
Number Proportion Bonus shares Other Subtotal Number Proportion
shares capital reserves
I.Restricted shares 62,980,515 4.30% -58,333,334 -58,333,334 4,647,181 0.32%
2.Shares held by state-owned
4,166,666 0.28% 4,166,666 0.28%
corporations
3.Shares held by other domestic investors 58,813,849 4.02% -58,333,334 -58,333,334 480,515 0.03%
Including：shares held by domestic
58,333,334 3.98% -58,333,334 -58,333,334
corporations
Shares held by domestic individuals 480,515 0.03% 480,515 0.03%
II.Non-restricted shares 1,401,771,961 95.70% 58,333,334 58,333,334 1,460,105,295 99.68%
1.CNY common shares 1,401,771,961 95.70% 58,333,334 58,333,334 1,460,105,295 99.68%
III.Total shares 1,464,752,476 100.00% 0 0 1,464,752,476 100.00%
Reasons for the change in shares
√ Applicable N/A
The Company's 2016 non-public offering of shares issuance objects are E Fund Management Co., Ltd., China Universal Asset Management Co., Ltd.,
Bosera Asset Management Co., Ltd., Ping An Asset Management Limited, Caitong Fund Management Co., Ltd. and Minsheng Royal Fund
Management Co., Ltd.. They held a total amount of 58,333,334 shares and the restricted shares can be unlocked on 14 September 2018.
50
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Approval of share changes
Applicable √ N/A
Transfer of share ownership
Applicable √ N/A
Implementation progress of shares repurchases
□ Applicable √ N/A
Implementation progress of share buyback reduction through centralized bidding
□ Applicable √ N/A
Effects of changes in shares on the basic EPS, diluted EPS, net assets per share
attributable to common shareholders of the Company and other financial indexes over the
last year and the last reporting period
Applicable √ N/A
Other contents that the Company considers it necessary or required by the securities
regulatory authorities to disclose
Applicable √ N/A
1.2 Changes in restricted shares
√ Applicable N/A
Unit：Share
Opening Closing balance
Unlocked in Increased in Reason for Date of
Name of shareholder balance of of restricted
current period current period restriction unlocking
restricted shares shares
Non-public
E Fund Management
21,874,999 21,874,999 0 0 offering of new 2018-09-14
Co., Ltd.
shares
Non-public
China Universal Asset
6,666,666 6,666,666 0 0 offering of new 2018-09-14
Management Co., Ltd.
shares
Non-public
Bosera Asset
9,583,333 9,583,333 0 0 offering of new 2018-09-14
Management Co., Ltd.
shares
Non-public
Ping An Asset
6,666,666 6,666,666 0 0 offering of new 2018-09-14
Management Limited
shares
Non-public
Caitong Fund
7,083,333 7,083,333 0 0 offering of new 2018-09-14
Management Co., Ltd.
shares
Non-public
Minsheng Royal Fund
6,458,337 6,458,337 0 0 offering of new 2018-09-14
Management Co., Ltd.
shares
Total 58,333,334 58,333,334 0 0 -- --
51
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
2. Issuance and listing of securities
2.1 Securities（excluding preference shares） issued in the reporting
period
Applicable √ N/A
2.2 Changes in total shares of the Company and the shareholder
structure, as well as the asset and liability structure
Applicable √ N/A
2.3 Existing staff-held shares
Applicable √ N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
3. Shareholders and actual controller
3.1 Total number of shareholders and their shareholdings
Unit：Share
Total number of common
Total number of Total number of preference
shareholders at the prior
common shareholders Total number of preference shareholders with resumed voting rights shareholders with resumed voting
70,896 month-end before the 57,427 0 0
at the end of the by the end of the reporting period (if any)(see Note 8) rights by the end of the reporting
disclosure date of the
reporting period period (if any)(see Note 8)
annual report
Shareholdings of shareholders with a shareholding percentage over 5% or the top 10 shareholders
Total shares held Increase/decrease Pledged or frozen shares
Nature of Shareholding Number of holding Number of holding
Name of shareholder by the end of the during the
shareholder percentage restricted shares non-restricted shares Status of shares Number of shares
reporting period reporting period
Luzhou Laojiao Group State-owned
26.02% 381,088,389 0 381,088,389
Co.,Ltd. corporation
Luzhou Xinglu Touzi State-owned
24.99% 365,971,142 0 365,971,142 Pledged 165,980,000
Jituan Co., Ltd. corporation
Hong Kong Securitues
Outbound
Clearing Company 3.27% 47,941,180 24,241,380 47,941,180
corporation
Limited
China Securities
State-owned
Finance Corporation 2.31% 33,842,059 8,628,402 33,842,059
corporation
limited
Agricultural Bank of
China Co.,Ltd. - Other 1.69% 24,704,591 8,518,928 24,704,591
Consumption industry
53
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
stock - based securities
investment fund by E
fund
Central Huijin Asset
State-owned 1.43% 20,937,500 0 20,937,500
Management Co.,Ltd.
Bank of China Co.,Ltd. –
Middle and small capital
stock s hybrid securities Other 1.40% 20,458,383 13,790,017 20,458,383
investment fund by E
fund
Bank of China Co.,Ltd. –
Liquor index
classification securities Other 1.37% 20,132,357 8,463,715 20,132,357
investment fund by
China Merchants Fund
China Life Insurance
Co.,Ltd. - Traditional -
general insurance Other 1.08% 15,853,102 12,821,436 15,853,102
products -005L-CT001
SHEN
National Social Security
Other 0.71% 10,457,657 6,088,803 10,457,657
Fund-109 portfolio
Strategic investors or general
corporations become the top-ten
N/A
shareholders due to placing of new
shares（if any）（see note 3）
54
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
1. Laojiao Group and Xinglu Group are both wholly state-owned companies under the jurisdiction of SASAC of Luzhou. The two companies signed the agreement of
persons acting in concert on 31 December 31 2015. For details, please refer to the announcement of the Company on 5 January 2016 - Announcement on the agreement
of persons acting in concert signed by shareholders. The announcement number is 2016-1 (http://www.cninfo. com.cn/)
Related parties or acting-in-concert
2. During the reporting period, Sichuan Jintuo Investment Co., Ltd., a wholly-owned subsidiary of Laojiao Group, reduced its shares of the Company by 5,574,478 shares.
By the end of the reporting period, Sichuan Jintuo investment Co., Ltd. no longer held shares of the Company.
3. In addition, whether there is an association between the remaining shareholders or they belong to persons acting in concert is unknown.
Shareholdings of the top 10 non-restricted shareholders
Number of non-restricted shares held in by the end of the Type of shares
Name of shareholder
reporting period Type Number
Luzhou Laojiao Group Co.,Ltd. 381,088,389 CNY common shares 381,088,389
Luzhou Xinglu Touzi Jituan Co., Ltd. 365,971,142 CNY common shares 365,971,142
Hong Kong Securitues Clearing
47,941,180 CNY common shares 47,941,180
Company Limited
China Securities Finance Corporation
33,842,059 CNY common shares 33,842,059
limited
Agricultural bank of China Co.,Ltd. -
Consumption industry stock - based 24,704,591 CNY common shares 24,704,591
securities investment fund by E fund
Central Huijin Asset Management
20,937,500 CNY common shares 20,937,500
Co.,Ltd.
Bank of China Co.,Ltd. – Middle and
small capital stock s hybrid securities 20,458,383 CNY common shares 20,458,383
investment fund by E fund
Bank of China Co.,Ltd. – Liquor index
classification securities investment fund 20,132,357 CNY common shares 20,132,357
by China Merchants Fund
55
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
China Life Insurance Co.,Ltd. -
Traditional - general insurance products 15,853,102 CNY common shares 15,853,102
-005L-CT001 SHEN
National Social Security Fund 109
10,457,657 CNY common shares 10,457,657
portfolio
The statement of association or
acting-in-concert between the top 10
shareholders of unrestricted shares and
See the table above
between the top 10 shareholders of
unrestricted shares and top 10
shareholders
Explanation on the top 10 common
shareholders participating in the During the reporting period, Xinglu Group took its 57,000,000 shares of our company as collateral to participate in financing business through Citic Securities Company
securities margin trading（if any）(see Limited
Note 4)
Did any of the top 10 common shareholders or the top non-restricted common shareholders of the Company conduct any promissory repurchase during
the reporting period.
Yes √ No
The top 10 non-restricted common shareholders, the top10 common shareholders did not conduct any promissory repurchase during the reporting
period.
56
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
3.2 Controlling shareholder
Nature of controlling shareholder：Local state-owned
Type of controlling shareholder：Corporation
Legal
Name of controlling Date of
representative/Compa Credibility code Main business scope
shareholder establishment
ny principal
Investment and asset management;
Investment in wine, food, finance,
trade, logistics, education, medical
and health care, cultural tourism and
Internet industries; Holding company
services; Social and economic
Luzhou Laojiao consulting, enterprise management
Zhang Liang 2000-12-21 91510500723203346U
Group Co.,Ltd. consulting, enterprise management
services; Supply chain management
services; Import and export business
and trade agents; Food production
and sales (including online); Crop
cultivation and marketing services
(including online).
1. As of 30 June 2018, Laojiao Group holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co.,
Shareholdings of the
Ltd. (02281.HK), accounting for 8.19% of the total issued shares.
controlling
2. As of 19 November 2018, Laojiao Group holds 191,604,159 shares of Hongli Zhihui Group Co., Ltd.
shareholder in other
(300219.SZ) through its wholly-owned subsidiary, Sichuan Jintuo investment Co., Ltd., accounting for
controlled or
26.88% of the total issued shares.
non-controlled listed
3. As of 31 December 2018, Laojiao Group holds 475,940,143 shares of Huaxi Securities Co., Ltd.
companies at home
(002926.SZ), accounting for 18.13% of the total issued shares.
or abroad during the
4. As of 31 December 2018, Laojiao Group holds 325,440,000 shares of Luzhou Bank (01983.HK),
reporting period
accounting for 14.91% of the total issued shares.
Change of the controlling shareholder during the reporting period
Applicable √N/A
No such cases in the reporting period
3.3 Actual controller and its persons acting in concert
Nature of actual controller：Local State-owned Assets Supervision and Administration
Commission
Type of actual controller：Corporation
Legal
Name of actual Date of
representative/Company Credibility code Main business scope
controller establishment
principal
State-owned assets supervision
SASAC of Luzhou Yu Zhiqiang 2005-03-01 11510400771686813T
and administration department
Share holdings of the 1. As of 30 June 2018, Luzhou Group, a wholly-owned subsidiary of SASAC of Luzhou, holds
controlling 511,654,127 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 59.52% of
57
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
shareholder in other the total issued shares. Luzhou Infrastructure Construction Investment Co., Ltd., a holding subsidiary
controlled or of Luzhou Group, holds 62,709,563 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK),
non-controlled listed and accounting for 7.29% of the total issued shares. Laojiao Group, a wholly-owned subsidiary under
companies at home or SASAC of Luzhou, holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK),
abroad during the accounting for 8.19% of the total issued shares.
reporting period. 2. As of 19 November 2018, Laojiao Group holds 191,604,159 shares of Hongli Zhihui Group Co.,
Ltd. (300219.SZ) through its wholly-owned subsidiary, Sichuan Jintuo investment Co., Ltd.,
accounting for 26.88% of the total shares issued.
3. As of 31 December 2018, Luzhou Industrial Investment Group Co.,Ltd., a holding Company under
the jurisdiction of SASAC of Luzhou, holds 115,064,610 shares of Sichuan Lutianhua Company
Limited (000912.SZ), accounting for 7.34% of the total shares issued. Sichuan Lutianhua Company
Limited, a wholly-owned subsidiary of Luzhou Industrial Investment Group Co., Ltd., holds
286,000,000 shares of Sichuan Lutianhua Company Limited (000912.SZ), and accounting for 18.24%
of the total issued shares.
4. As of 31 December 2018, Laojiao Group, a wholly-owned subsidiary under SASAC of Luzhou,
holds 475,940,143 shares of Huaxi Securities Co., Ltd. (002926.SZ), accounting for 18.13% of the
total issued shares.
Change of the actual controller during the reporting period
Applicable √N/A
The actual controller of the Company has not changed during the reporting period.
Ownership and control relations between the actual controller and the Company
State-owned Assets Supervision and Administration
Commission of Luzhou
100% 100%
Luzhou Laojiao Group Co., Ltd. Luzhou Xinglu Touzi Jituan Co., Ltd.
26.02% 24.99%
Luzhou Laojiao Co., Ltd.
0.08%
The actual controller control the company through a trust or other ways of assets
management
Applicable √ N/A
3.4 Other corporate shareholders with a shareholding proportion over
10%
√Applicable N/A
58
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Legal
Name of actual Date of Registered capital
representative/Com Main business scope
controller establishment (CNY)
pany principal
Investment and asset management;
Project management services;
Luzhou Xinglu Touzi
Yuan Douquan 2003-01-28 4,934,049,244 Self-fiance real estate business
Jituan Co., Ltd.
activities; Investment advisory
services, financial advisory services
3.5 Limits on reduction of the Company’s shares held by its controlling
shareholder, actual controller, restructuring party and other commitment
entities.
Applicable √ N/A
59
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section VII Preference Shares
Applicable √ N/A
No preferred stock in the Company during the reporting period.
60
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section VIII Profiles of Directors, Supervisory, Senior Management and Employees
1. Changes in shares held by directors, supervisors, and senior management
Shares held by Shares Shares Other Shares held by
Incumbent/ Period of the beginning of increased during decreased during increase/ the end of the
Name Title Gender Age
Former service the reporting the reporting the reporting decrease reporting period
period (share) period (share) period (share) (share) (share)
Chairman of the board, Secretary
Liu Miao Incumbent Male 49 2015.6.30-2021.6.27 192,187 0 0 0 192,187
of the party committee
Director, general manager, Deputy
Lin Feng Incumbent Male 45 2015.6.30-2021.6.27 0 0 0 0 0
secretary of the party committee
Director, Deputy general manager,
Wang Hongbo Deputy secretary of the party Incumbent Male 55 2015.3.06-2021.6.27 0 0 0 0 0
committee, Secretary of the board
Director, Deputy secretary of the
party committee, Secretary of
Jiang Yuhui committee for discipline Incumbent Female 56 2009.5.20-2021.6.27 254,000 0 0 0 254,000
Inspection, chairman of the labor
union
Shen Caihong Director, Deputy general manager Incumbent Male 53 2002.6.30-2021.6.27 184,500 0 0 0 184,500
Du Kunlun Non-executive director Incumbent Male 50 2015.6.30-2021.6.27 0 0 0 0 0
Xu Guoxiang Non-executive director Incumbent Male 59 2015.6.30-2021.6.27 0 0 0 0 0
Tan Lili Non-executive director Incumbent Female 64 2015.6.30-2021.6.27 0 0 0 0 0
Liu Junhai Non-executive director Incumbent Male 49 2018.6.27-2021.6.27 0 0 0 0 0
Qian Xu External director Incumbent Male 55 2015.6.30-2021.6.27 0 0 0 0 0
61
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Shares held by Shares Shares Other Shares held by
Incumbent/ Period of the beginning of increased during decreased during increase/ the end of the
Name Title Gender Age
Former service the reporting the reporting the reporting decrease reporting period
period (share) period (share) period (share) (share) (share)
Ying Hanjie External director Incumbent Male 49 2016.9.13-2021.6.27 0 0 0 0 0
Zhang Ling Non-executive director Former Male 63 2012.6.30-2018.6.27 0 0 0 0 0
Chairman of supervisory
Wu Qin Incumbent Male 57 2015.6.30-2021.6.27 0 0 0 0 0
committee
Lian Jing Supervisor Incumbent Male 49 2012.6.27-2021.6.27 0 0 0 0 0
Yang Benhong Supervisor Incumbent Female 52 2009.5.20-2021.6.27 10,000 0 0 0 10,000
Cao Cong Supervisor Incumbent Male 34 2015.6.30-2021.6.27 0 0 0 0 0
Li Guangjie Supervisor Incumbent Male 49 2018.6.27-2021.6.27 0 0 0 0 0
Yang Jiaping Supervisor Former Male 35 2011.7.19-2018.6.27 0 0 0 0 0
Xie Hong CFO Incumbent Female 49 2015.3.06-2021.6.27 0 0 0 0 0
He Cheng Deputy general manager Incumbent Male 52 2015.6.30-2021.6.27 0 0 0 0 0
Zhang Suyi Deputy general manager Incumbent Male 47 2015.6.30-2021.6.27 0 0 0 0 0
Total 640,687 0 0 0 640,687
2. Changes in directors, supervisors, and senior management
√ Applicable □ N/A
Name Title Type Date Reason
Zhang Ling Non-executive director Stepped down and leave 2018.06.27 General Election
Yang Jiaping Supervisor Stepped down and leave 2018.06.27 General Election
62
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
3. Employment information
Professional background, work experience and major duties of current directors,
supervisors and senior management.
Mr. Liu Miao, Male, born in 1969, MBA of Wright State University in the USA, Craft Master
of Chinese liquor, senior marketing specialist. He used to serve as planning minister,
general manager of Sales Company, general manager assistant, and deputy general
manager of the Company. At present, he is chairman of the board and secretary of the
party committee in the Company.
Mr. Lin Feng, Male, born in 1973, Master degree, senior marketing specialist. He was
deputy general manager and general manager of Sales Company, director of marketing,
director of human resources, chief dispatcher, deputy general manager of the Company.
At present, he is director, deputy secretary of the party committee, general manager of the
Company and general manager of Sales Company.
Mr. Wang Hongbo, Male, born in 1964, Master degree. He was director and secretary of
party committee of Luzhou Commerce Bureau, director of Luzhou Liquor Industry
Development Bureau, director of Luzhou branch of China council for the promotion of
international trade, deputy secretary general and office director of Luzhou Municipal Party
Committee. At present, he is director, deputy general manager, deputy secretary of the
party committee, secretary of the board of the Company and chairman of the board of
Luzhou Laojiao International Development（Hong Kong）Co.,Ltd.
Ms. Jiang Yuhui, Female, born in 1962, Master degree, senior political engineer. She used
to serve as head of personnel education management section of the Company, deputy
director and director of party committee office, deputy secretary of commission for
discipline inspection, chairman of board of supervisors. At present, she is director, deputy
secretary of the party committee, secretary of committee for discipline inspection,
chairman of the labor union of the Company.
Mr. Shen Caihong, Male, born in 1966, Master degree, professor-level senior engineer,
one of the first batch of representative inheritors of national intangible cultural heritage,
one of the first batch of "Sichuan craftsmen". He was manager of the Company’s
qu-making branch, manager of base liquor company, general manager assistant and
director of production department. At present, he is director, deputy general manager,
chief engineer, director of national solid brewing engineering technology research center
and chairman of the board of Luzhou Pinchuang Technology Co.,Ltd..
Mr. Du Kunlun, Male, born in 1969, Doctor of Economic, senior accountant, CPA, CPV. He
was the investigator of CSRC Sichuan Supervision Bureau, member of the 12th and 13th
mainboard committee of CSRC, deputy director of the Sichuan Province Institute of
Finance and Trade Economics of Social Sciences Academy, non-executive director of
63
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Sichuan Chengfei Integration Technology Co.,Ltd., Aecc Aero Science And Technology
Co., Ltd and Tianfu (Sichuan) United Equity Exchange Center Co., Ltd. At present, he is
researcher, Master supervisor of Finance and Trade Economics Institute of Social
Sciences Academy in Sichuan Province, non-executive director of Tongwei Co., Ltd,
Sichuan Tianqi Lithium Industries Co.,Ltd. and Chengdu Jule Food Co., Ltd. He has
served as a non-executive director of the Company since June 2015.
Mr. Xu Guoxiang, Male, born in 1960, Doctor of Economic, National Second-level
Professor, Doctoral supervisor. He used to be the director of statistics department of
Shanghai University of Finance and Economics. At present, he is the director of Shanghai
University of Finance and Economics Applied Statistics Research Center, professor of
Statistics and Management College of Shanghai University of Finance and Economics
and deputy director of the teaching steering committee for statistics majors in institutions
of higher learning of Ministry of Education, expert of the discipline planning evaluation
group of national social science fund, executive director of China Statistical Society,
member of Shanghai Stock Exchange Index Expert Committee, member of Index Expert
Committee of China Securities Index Co. Ltd, director of the Branch Center of Shanghai
University of Finance and Economics, supervisor of Shanghai Xintonglian Packaging
Co.,Ltd. and Dazhong Transportation（Group）Co.,Ltd., non-executive director of Orient
Securities Co., Ltd.. He has served as a non-executive director of the Company since
June 2015.
Ms. Tan Lili, Female, born in 1954, Bachelor degree, professor-level senior accountant,
professor-level senior engineer, senior auditor. She was director of audit department and
financial department, leader of enterprise management consulting and guidance group of
Wuhan Iron and Steel Co., Ltd.; deputy general manager, deputy chairman of the board of
supervisors of Sany Heavy Industry Co., Ltd., non-executive director of Zhejiang Tiantie
Industry Co.,Ltd.. At present, she is deputy director of Business School of Enterprise
Financial Management Association of China and non-executive director of Guangzhou
Metro Design Institute. She has served as a non-executive director of the Company since
June 2015.
Mr. Liu Junhai, Male, born in 1969, PhD, Doctoral supervisor. He was director assistant,
office director and researcher of Law School of Chinese Academy of Social Sciences. At
present, he is professor of Renmin University of China, director of the institute of
commercial law, and non-executive director of Tus-Sound Environmental Resources Co.,
Ltd., China Resources Double-Crane Pharmaceutical Co., Ltd., Landocean Energy
Services Co., Ltd., and China Investment Securities Co., Ltd. He has served as a
non-executive director of the Company since June 2018.
Mr. Qin Xu, Male, born in 1963, EMBA. He was deputy general manager of Hong Kong
Jingtai industrial Group, director and general manager of Beijing Enterprises Real-Estate
Group Co.,Ltd.. At present, he is chairman of the board of Beijing Enterprises Real-Estate
Group Co.,Ltd., chairman of the board of Beijing Properties （Holdings） Limited (Listed
64
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
on the Hong Kong Stock Exchange), non-executive director of CAQ Holdings Limited
(Listed on the Australian Stock Exchange), executive director of MillenMin Ventures Inc.
(Listed on the Toronto Stock Exchange). He has served as a non-executive director of the
Company since June 2015.
Mr. Yinghanjie, Male, born in 1969, Doctor of Biochemistry, and professor. He was deputy
director of Pharmacy and Life Sciences School of Nanjing University of Technology. At
present, he is deputy director of National Biochemical Engineering Technology Research
Center of Nanjing Tech University, chairman of the board of Nanjing Biotogether Co., Ltd.
and director of Nanjing High Tech University Biological Technology Research Institute Co.,
Ltd. He has served as a non-executive director of the Company since September 2016.
Mr. Wu Qin, Male, born in 1962, Bachelor degree. He was deputy director of Luzhou
Economic Commission, deputy director of Luzhou Economic and Information Technology
Commission, deputy director of Luzhou Development and Reform Commission and
director of Luzhou Railway Construction Office. At present, he is the chairman of the
Company’s supervisory committee.
Mr. Lian Jing, Male, born in 1969, Bachelor degree. He was director of Economic
Information Publicity Department of Luzhou Economic and Trade Commission; director of
Fixed Assets Investment Department of Luzhou Development Planning Committee;
director of Fixed Assets Investment Department of Luzhou Development and Reform
Committee; chairman of the board and general manager of Luzhou State-owned
Gongfang Operation Management Co., Ltd.; chairman of the board and general manager
of Luzhou State-Owned Assets Management Co.,Ltd.; director, deputy general manager,
general manager of Luzhou Hongyang State-Owned Assets Management Co.,Ltd; deputy
secretary of the party committee, director, general manager of Luzhou Industrial
Investment Group Co.,Ltd. At present, he is chairman of the supervisory committee of
Luzhou State-Owned Capital operation and management Co. Ltd; executive director and
general manager of Luzhou Guoxin Asset Management Co. Ltd; external director of
Luzhou Xinglu Touzi Jituan Co., Ltd., Luzhou Liquor Industrial Park Development and
Investment Co. Ltd., Luzhou Public Transportation Group Co. Ltd., Luzhou Aviation
Development Investment Co. Ltd., Luzhou Culture Tourism Development Investment
Group Co. Ltd. and Sichuan Rongtong Security Investment Group Co. Ltd. He has served
as a supervisor of the Company since June 2012.
Ms. Yang Benhong, Female, born in 1966, Bachelor degree, senior political engineer. She
was head of publicity section, director of education department and deputy director,
director of human resources department of the Company. At present, she is supervisor
and deputy chairman of labour union in the Company.
Mr. Cao Cong, Male, born in 1984, Bachelor degree. He was deputy manager of
accounting department of Luzhou Winery Industry Jizhong Development District Co., Ltd.,
financial executive of Luzhou Red Sorghum Modern Agricultural Development Co., Ltd.,
65
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
and deputy director of audit department of the Company. At present, he is supervisor and
director of audit department of the Company.
Mr. Li Guangjie, Male, born in 1969, Master degree, economist. He was manager of
Planning department of the Company, deputy director of Sales Company, manager of
Import and Export company, general manager assistant of Sales Company. At present, he
is supervisor and deputy general manager of Sales Company.
Ms. Xie Hong, Female, born in 1969, Master degree, senior economist. She was section
chief of Treasury Section of the Finance Bureau, section chief of Non-tax Revenue
Collection Management Section, director of Luzhou Municipal Finance Treasury Payment
Center, chief accountant of Luzhou Finance Bureau. At present, she is CFO of the
Company.
Mr. He Cheng, Male, born in 1966, Master of Management Economics of Nanyang
Technological University, senior engineer. He was director of business administration
department, director of human resources department, general manager of Brewing
Company, chief despatcher and director of quality department of the Company. At present,
he is deputy general manager and chief quality officer.
Mr. Zhang Suyi, Male, born in 1971, PhD, professor-level senior engineer, representative
inheritor of Sichuan Intangible Cultural Heritage. He was director of Gouchu Center,
deputy chief engineer, deputy general manager of Brewing Company and director of
Liquor Body Design Center. At present, he is deputy general manager and director of
safety and environmental protection of the Company.
Position in shareholder-holding companies
√ Applicable N/A
Any remunerations
Name of Position in
Beginning Ending date received from
Name shareholder-holdi shareholder-holding
date of term of term shareholder-holding
ng companies companies
companies
Lian Jing Laojiao Group Chairman of the supervisory No
committee
Lian Jing Xinglu Group Outsider director No
Position in other companies
√ Applicable N/A
Any
Beginni Ending
Position in other remunerations
Name Name of other companies ng date date of
companies received from
of term term
other companies
Du Tongwei Co., Ltd, Sichuan Tianqi
Non-executive director
Kunlun Lithium Industries Co.,Ltd. and
66
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Any
Beginni Ending
Position in other remunerations
Name Name of other companies ng date date of
companies received from
of term term
other companies
Chengdu Jule Food Co., Ltd.
Sichuan Province Institute of Finance
Du
and Trade Economics of Social Researcher
Kunlun
Sciences Academy
Shanghai University of Finance and
Xu
Economics Applied Statistics Director
Guoxiang
Research Center
Shanghai Xintonglian Packaging
Xu
Co.,Ltd. and Dazhong Transportation Supervisor
Guoxiang
（Group）Co.,Ltd.
Xu
Orient Securities Co.,Ltd. Non-executive director
Guoxiang
Tan lili Guangzhou Metro Design Institute Non-executive director
Liu Institute of Commercial Law of
Director
Junhai Renmin University of China
Tus-Sound Environmental Resources
Co., Ltd., China Resources
Liu Double-Crane Pharmaceutical Co.,
Non-executive director
Junhai Ltd., Landocean Energy Services Co.,
Ltd., China Investment Securities Co.,
Ltd
Beijing Enterprises Real-Estate Group
Qian Xu Chairman of the board
Co.,Ltd.
Qian Xu Beijing Properties（Holdings）Limited Chairman of the board
Qian Xu CAQ Holdings Limited. Non-executive director
Qian Xu MillenMin Ventures Inc. Executive Director
National Biochemical Engineering
Ying
Technology Research Center of Director
Hanjie
Nanjing University of Technology
Ying
Nanjing Biotogether Co., Ltd. Chairman of the board
Hanjie
Nanjing High Tech University
Ying
Biological Technology Research Director
Hanjie
Institute Co., Ltd.
Luzhou State-Owned Capital Chairman of the
Lian Jing
Operation and Management Co. Ltd supervisory committee
Luzhou Guoxin Asset Management Executive director,
Lian Jing
Co. Ltd. general manager
Luzhou Liquor Industrial Park
Lian Jing External director
Development and Investment Co. Ltd.,
67
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Any
Beginni Ending
Position in other remunerations
Name Name of other companies ng date date of
companies received from
of term term
other companies
Luzhou Public Transportation Group
Co. Ltd., Luzhou Aviation
Development Investment Co. Ltd.,
Luzhou Culture Tourism Development
Investment Group Co. Ltd., Sichuan
Rongtong Security Investment Group
Co. Ltd
Punishments imposed in the recent three years by the securities regulators on the
incumbent directors, supervisors and senior management as well as those who left in the
reporting period
Applicable √ N/A
4. Remuneration of directors, supervisors and senior
management
The following describes the decision-making procedures, grounds on which decisions are
made and actual remuneration payment of directors, supervisors and senior
management.
Decision-making procedures for The remuneration of non-executive directors,
directors, supervisors and senior external directors and external supervisors
management shall be determined by the general meeting of
shareholders, and the remuneration of
directors, supervisors and senior
management who hold positions within the
Company shall be determined by relevant
rules of SASAC of Luzhou and relevant rules
of the Company
Grounds on which decisions are made Calculate according to the assessment index
of directors, supervisors and senior and weight established at the beginning of the
management year.
Actual remuneration payment of Details refer to “Remuneration of directors,
directors, supervisors and senior supervisors and senior management during
management the reporting period”.
Remuneration of directors, supervisors and senior management during the reporting
period
68
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Unit CNY 100,000
Total before-tax Remuneration from
Incumbent
Name Position Gender Age remuneration from related parties of the
/ Former
the Company Company
Liu Miao Chairman of the
board, secretary of the Male 49 Incumbent 60 No
party committee
Lin Feng Director, General
manager, Deputy
Male 45 Incumbent 60 No
secretary of the party
committee
Wang Director, Deputy
Hongbo general manager,
Deputy secretary of Male 55 Incumbent 48 No
the party committee,
Secretary of the board
Jiang Yuhui Director, Deputy
secretary of the party
committee, Secretary
of committee for Female 56 Incumbent 48 No
discipline inspection,
Chairman of the labor
union
Shen Director, Deputy
Male 53 Incumbent 48 No
Caihong general manager
Du Kunlun Non-executive director Male 50 Incumbent 9.52 No
Xu Non-executive director
Male 59 Incumbent 9.52 No
Guoxiang
Tan Lili Non-executive director Female 64 Incumbent 9.52 No
Liu Junhai Non-executive director Male 49 Incumbent 6.35 No
Qian Xu External director Male 55 Incumbent 9.52 No
Ying Hanjie External director Male 49 Incumbent 9.52 No
Wu Qin Chairman of
Male 57 Incumbent 48 No
supervisory committee
Lian Jing Supervisor Male 49 Incumbent 0 No
Yang Supervisor
Female 52 Incumbent 38.2 No
Benhong
Cao Cong Supervisor Male 34 Incumbent 35.73 No
Li Guangjie Supervisor Male 49 Incumbent 83.63 No
Xie Hong CFO Female 49 Incumbent 48 No
He Cheng Deputy general
Male 52 Incumbent 48 No
manager
Zhang Suyi Deputy general
Male 47 Incumbent 48 No
manager
69
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Total before-tax Remuneration from
Incumbent
Name Position Gender Age remuneration from related parties of the
/ Former
the Company Company
Zhang Ling Non-executive director Male 63 Former 4.76 No
Yang Supervisor Male
35 Former 25.45 No
Jiaping
Total 697.72
Share incentives for directors, supervisors and senior executives in the reporting period
Applicable √ N/A
5. Staff in the Company
5.1 Number, functions and educational backgrounds of the staff
Number of in-service staff of the parent company 1,042
Number of in-service staff of main subsidiaries 1,838
Total number of in-service staff 2,880
Total number of staff with remuneration in the period 2,880
Number of retirees to whom the Company or its main subsidiaries need
840
to pay retirement pension
Functions
Function by category Number of staff
Production staff 1,017
Sales staff 738
R&D staff 584
Financial staff 108
Administrative staff 433
Total 2,880
Educational backgrounds
Educational background by category Number of staff
Senior high school and below 616
Junior college 944
Bachelor 1,109
Master 204
Doctor 7
Total 2,880
5.2 Staff remuneration policy
In 2018, the Company established the distribution policy of "sharing benefits, paying for
losses, classification and setting, and long-term policy effects", strengthened the digital
assessment, linked individual performance with organizational performance, and
highlighted the distribution according to performance. The Company further optimized the
salary structure, implemented the post rating wage system and strengthened the
performance management of all employees in 2018. According to the following principles:
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Link individual performance with organizational performance: The increase of wages is
linked to the increase of the Company's operating performance; Under the same caliber,
the proportion of increase in salaries shall not exceed the proportion of increase in
performance.
Performance orientation, bonus and forfeit: Performance assessment is conducted
according to the actual contributions of employees, and the salary distribution is inclined
to the employees with excellent performance.
Salary and its changes based on position, ability and performance: The salary of
employee shall be determined by position and the depth of their expertise. The salary
shall be adjusted accordingly when the position, ability and performance change.
The principle of equal wage negotiation: Abide by the principles that both sides of labor
and capital agrees in collective negotiation, so as to realize the unity of benefit and
fairness.
5.3 Staff training plans
In 2018, based on the qualification standards and competency model, the Company
adheres to the business orientation and performance orientation, and conducts
hierarchical training for employees of different posts and ranks.
In terms of new employee training, first is the campus recruitment and new employee
training, which is divided into four stages: general ability training, marketing training,
business improvement training and career planning. Second is the training of new
employees form social recruitment, which takes half a year as a cycle. The training
contents mainly include enterprise culture, brewing skills and operation management.
In terms of backbone staff training, first is willing to study program, and it carries out
professional upgrading training according to the needs of different professional staff. The
course topics cover micro-course development, project management, budget
management, supply chain management and so on, which helps employees consolidate
professional knowledge and strengthen business skills. Second is the craftsman program.
For special training for production and management reserve talents, it adapts to intelligent,
mechanized and automated production reform.
In terms of middle-level cadre training, for newly promoted middle-level cadres, the
Company organizes and carries out advanced management training of "road to
excellence" to improve the ability of self-management, business management and team
management; At the same time, it supports the middle and senior cadres to expand the
pattern and refresh the vision through short-term abroad training and benchmarking
learning.
In terms of professional talents training, in combination with the strategic needs of talent
development and relevant policies of provinces and cities, the Company actively carries
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
out the work of staff title appraisal, skill appraisal, recommendation and assessment and
so on.
5.4 Labor outsourcing
Applicable √ N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section IX Corporate Governance
1. Basic situation of corporate governance
Since it was listed, in accordance with the Corporate Law, the Securities Law, The Listed
Company Governance Standards and other laws, administrative regulations and
departmental rules and normative documents, the Company has constantly perfected
corporate governance structure, standardized its operation, established the rules and
system on the basis of the Company's articles of association whose main framework is
the rules of procedure of the shareholders' general meeting, rules of procedure of the
board of directors and rules of procedure of the board of supervisors, which is formed the
management system whose main structure is the shareholders meeting, board of
directors, board of supervisors and management. In 2018, the Company won the award
for "the Ninth Tianma - The Best Board of Directors for Investor Relations of China Main
Board Listed Companies", "the 12th China's Listed Company Value Selection -- Top 10 of
China's Listed Companies on the Main Board, Top 10 Management Teams of China's
Listed Companies on the Main Board", "2017 Golden Bull Most Valuable Investment
Award, Enterprise Leader Award" and so on.
Any incompliance with the regulatory documents related to the governance of listed
companies issued by the CSRC
Yes√ No
There is no incompliance with the regulatory documents related to the governance of
listed companies issued by the CSRC
2. Independency of businesses, personnel, assets,
organizations and finance which are separated from the
controlling shareholder
The Company has an independent and complete production and operation system and
independent decision-making ability. There is no horizontal competition between the
Company and the controlling shareholders and its subsidiaries. The Company has daily
affiliated transactions with the controlling shareholders and its subsidiaries. Such daily
affiliated transactions belong to the need of rational allocation of resources and do not
affect the independence of the Company. For affiliated transactions, the Company has
strictly fulfilled the relevant decision-making procedures and information disclosure
obligations, and implemented the system of Non-executive directors' prior examination
and avoidance system of related directors (shareholders).
2.1 In the aspect of assets
Asset integrity.There are clear ownership and independency of the Company's assets
invested by controlling shareholders. The Company has an independent and complete
production, supply, sales system and auxiliary production system and supporting facilities.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
The industrial property rights, trademarks and non-patented technology and other
intangible assets are owned by the Company. There is no situation that the controlling
shareholders occupy and transfer the assets of the company.
2.2. In the aspect of business
Business apart.The Company is totally independent in the operation, production and sales
of liquor series of “Luzhou Laojiao” and “National Cellar 1573”. It has the ability to operate
independently in the market. The board of directors and the management can
independently make production and operation decisions within the corresponding
authority.
2.3 In the aspect of personnel
The Company has built independent labor management, personnel management and
salary management. The Company has established a relatively complete labor
management system and post responsibility system. Meanwhile, the Company's senior
management personnel all receive salary in the Company, but not at the controlling
shareholders.
2.4 In the aspect of organization
Organization independence.The Company has independent production management
organization and system, independent office and production management place, and
independent management organization, functional organization and branch.
2.5 In the aspect of finance
Financial independence.The Company has completed and independent financial
department. Independent accounting system and financial management are established.
The Company separately sets bank accountants, conducts external settlement and pays
taxes according to law.
3. Horizontal competition
Applicable √N/A
4. Annual meeting of shareholders and special meetings of
shareholders convened during the reporting period
4.1. Meetings of shareholders convened during the reporting period
Investor
Meeting Type participation Convened date Disclosure date Disclosure index
ratio
“Luzhou Lao Jiao Co.,Ltd.
2017 Annual 2017 Annual General Meeting
General Meeting of
General Meeting 60.66% 2018-06-27 2018-06-28 Resolution Announcement”
Shareholders
of Shareholders Announcement No:2018-20,
(http://www.cninfo.com.cn/)
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
4.2. Special meetings of shareholders convened at the request of
preference shareholders with resumed voting rights
Applicable √ N/A
5. Performance of non-executive directors during the reporting
period
5.1. Attendance of non-executive directors in board meeting and meeting
of shareholders
Attendance of non-executive director in board meeting
Attendance Attendance
Attendance Attendance by
Non-executive due in the through a Absence Absence for two Attendance
on site or telecommunication
director reporting proxy (times) consecutive times (times)
video (times) (times)
period (times) (times)
Du Kunlun 10 6 4 0 0 No 1
Xu Guoxiang 10 6 4 0 0 No 1
Tan Lili 10 6 4 0 0 No 1
Liu Junhai 5 3 2 0 0 No 1
Zhang Ling 5 2 3 0 0 No 0
Explanation of absence of non-executive directors in meetings of the board for twice
N/A
5.2. Objections from non-executive in related issues of the Company
Were there any objections on related issues of the Company from non-executive director
Yes √ No
Non-executive director has no objection on related issues of the Company during the
reporting period.
5.3. Other details about the performance of duties by non-executive
directors
Was there any advice from non-executive directors adopted by the Company?
√ Yes No
Explanation about advice of non-executive directors is adopted or not adopted by the
Company or not
The Company adopted the advice of non-executive directors in respect of safe production,
system improvement, internal control construction.
6. Performance of duties by special committees under the
broad during the reporting period
The board of directors of the Company has four special committees including the Strategic
Committee, the Remuneration and Appraisal Committee, the Nominations Committee and
the Audit Committee. Each committee has a clear division of labor, clear responsibilities
and effective operation. During the reporting period, the Strategic Committee held 5
meeting, the Audit Committee held 2 meetings, the Nominations Committee and the
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Remuneration and Appraisal Committee held 1 meeting respectively. These meetings
reviewed and made resolutions on the Company's external investment, audit, internal
control, directors' qualifications and remuneration, and provided scientific and
professional opinions for major decisions of the board of directors.
7. Performance of duties by the supervisory committee
Were there any risks to the Company identified by supervisory committee when
performing its duties during the reporting period
Yes √ No
The supervisory committee has no objection during the reporting period.
8. Evaluation and motivation mechanism for the senior
management
Remuneration and evaluation for the senior management can be found in section VIII:
Profiles of Directors, Members of Supervisory Committee, Senior Management and
Employees.
9. Internal control
9.1. Significant internal control deficiencies found in the reporting period
Yes √ No
9.2. Internal control self-assessment report
Disclosure date of the internal
2019-04-26
control self-assessment report
Disclosure index of the internal 2018 Internal Control Self-assessment Report
control self-assessment report （http://www.cninfo.com.cn/）
Ratio of the total assets of the
appraised entitles to the 90.00%
consolidated total assets
Ratio of the operating revenues of
the appraised entitles to the 90.00%
consolidated operating revenue
deficiencies identification standard
Type Financial report Non-financial report
Significant deficiencies：（1） Significant deficiencies：（1）violate
Correction of material errors in national regulations and laws；（2）
financial reports that have been The Company suffer from lake of
Qualitative standard announced (except retroactive major decision-making procedures
adjustment of previous years or unscientific procedures；if there
due to changes in policies or is a decision-making misplay, it will
other objective factors)；（2） result in significant deal failure（3）
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Material misstatement of current The substantial loss of managerial
financial report which was or technical staff；（4）Important
unrecognized but found by the business lacks system control or
auditor；（3） Corrupt transaction system failure, important economic
of senior management；4）Audit business has internal control
committee and internal audit system guidance, but with no
department are not effective to effective operation；（5）significant
the internal control supervision . deficiencies of internal control
cannot be rectified in time.
1. Significant deficiencies：
Misstatement ≥ 5% of total
profits；Misstatement ≥ 1% of
total assets；Misstatement ≥ 5%
of total operating revenue；
Misstatement ≥5% of owner's
equity
2. Material deficiencies：3% of
gross profits≤Misstatement<5%
of gross profits；0.5% of total
1. Significant deficiencies：ratio of
assets≤Misstatement<1% of
loss of net profits≥5%.
total assets；3% of total
2. Material deficiencies：3%≤ratio
Quantitative standard operating
of loss of net profits＜5%.
revenue≤Misstatement<5% of
3. General deficiencies：ratio of
total operating revenue；3% of
loss of net profits＜3%
owner's
equity≤Misstatement<5% of
owner's equity.
3. General deficiencies：
Misstatement<3% of gross
profits；Misstatement<0.5% of
total assets；Misstatement<3%
of total operating revenue；
Misstatement<3% of owner's
equity.
Number of financial-report
0
significant deficiencies
Number of non-financial-report
0
significant deficiencies
Number of important
0
financial-report related deficiencies
Number of important
Non-financial-report related 0
deficiencies
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
10. Internal control auditor report
√ Applicable N/A
Deliberation opinion section in the internal control audit report
The Company has maintained effective internal control of financial reports in accordance with the Basic
Rules for Internal Control of Enterprises and relevant regulations.
Disclosure of internal control
Disclosed
audit report
Disclosure date of the
2019-04-26
internal control audit report
Disclosure index of the
2018 Internal Control Auditor Report （http://www.cninfo.com.cn/）
internal control audit report
Type of the audit’s opinion Standard without reserved opinion
Significant deficiencies
found in the non-financial No
report
The accounting firm issued the internal control audit report of non-standard opinions
Yes √ No
Whether the internal control audit report issued by the accounting firm is consistent with
the self-assessment report issued by the board of directors.
√ Yes No
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section X Information about Corporate Bond
Whether there exists a public issue and listing of corporate bond that is not yet due or
failed to be redeemed at the date of the financial report authorized.
No
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section XI Financial Report
1. Auditor’s report
Type of audit report Standard without reserved opinion
Signing date of auditor’s report 2019-04-25
Name of Audit Sichuan Huaxin (Group) CPA Firm
No. of auditor’s report Chuan Huaxin Audit [2019] No.22
Names of auditors Feng Yuan, He Shoufu
Auditor’s Report
To the shareholders of Luzhou Laojiao Co., Ltd.:
Opinion
We have audited the financial statements of Luzhou Laojiao Co., Ltd. (hereinafter referred
to as the “Company”), which comprise the consolidated balance sheet and balance sheet
as at 31 December 2018, consolidated income statement and income statement,
consolidated cash flow statement and cash flow statement, consolidated statement of
changes in owners' equity and statement of changes in owners' equity for the year then
ended; and notes to the financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, in
accordance with Accounting Standards for Business Enterprises and present fairly the
financial position of the company as at 31 December 2018 and its operating results and
cash flow for the year then ended.
Basis for opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”) for
Certified Public Accountants. Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the Financial Statements section
of our report. We are independent of the Company in accordance with the Code of
professional ethics for Certified Public Accountants in China (“the Code”), and we have
fulfilled our other ethical responsibilities in accordance with the Code. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole and, in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Key audit matters identified in our audit are
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
summarized as follows:
1.Key audit matters-Recognition of domestic liquor sales revenue
How our audit addressed the Key Audit
Key audit matters
Matter
In 2018, the Company's total operating Our procedures in relation to recognition of
revenue is CNY 13 billion, including CNY domestic liquor sales revenue included:
12.8 billion of domestic liquor sales revenue, 1. Understood, evaluated and tested the
accounting for 98% of the total operating reasonableness and effectiveness of the internal
revenue. control design related to the Company's
revenue. Particular attention was paid to the
Considering the significant amount of the appropriateness of specific conditions for
Company's domestic liquor sales revenue, recognition of revenue.
we pay attention to it as a key audit matter. 2. Compared the key indicators such as sales
volume, revenue cost and gross profit rate of the
Company in the current period with those in the
previous period, so as to identify the rationality of
changes in key indicators and reasons for
changes.
3. The income of the top five customers totaled
CNY 8.721 billion, accounting for 66.8% of the
total business income. For the top five
customers, we carried out the following audit
procedures to verify the occurrence,
completeness and accuracy of the revenue
recognized by the management:
(1) obtained the sales contract signed by the
Company and the customer, carefully read the
key terms of the contract, and understand the
implementation of the contract;
(2) Performed the confirmation procedure.
We sent confirmation letters to verify the amount
of sales revenue in the reporting period and the
closing balance of accounts receivables or
advance from customer during the reporting
period. For local customers in Luzhou, we went
to their office to carry out confirmation procedure
and obtained the situation of purchase, sales
and storage of Luzhou Laojiao brand liquor
during the reporting period, so as to analyze and
judge whether there are abnormal fluctuations in
its inventory and its rationality; For customers
outside Luzhou, we mailed confirmation letters
and controlled the whole process of reply letter
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
by ourselves.
(3) Inquired the customer's business
information and key personnel information, and
checked whether they are related party of the
Company.
4. For other customers, randomly checked sales
contracts, customers' purchase orders, shipping
documents, transport documents, accounting
vouchers, payment receipts, customer signature
records and other materials to verify the
occurrence, completeness and accuracy of the
revenue recognized by the management.
5. Selected the confirmation voucher of large
amount of sales before and after the balance
sheet date, paid attention to the date of sales
invoice and customer receipt, and paid attention
to whether there is a large amount of return after
the period, so as to verify whether the
corresponding revenue is included in the
appropriate accounting period.
The evidence obtained from the above audit
procedures can support the Company's
management's recognition of domestic liquor
sales revenue.
2.Key audit matters-Existence of bank deposits
How our audit addressed the Key Audit
Key audit matters
Matter
As of December 31, 2018, the bank balance Our procedures in relation to existence of bank
of the Company is CNY 9.365 billion, deposits included:
accounting for 41.43% of the total assets. 1. Understood and tested the design and
Bank deposits are high-risk assets. implementation of key internal controls related to
Therefore, we pay attention to the existence the funds management cycle to confirm the
of bank deposits as a key audit matter. effectiveness of relevant internal controls.
2. Accompanied by relevant personnel of the
Company, auditors went to the bank by
themselves where the Company opens a basic
bank account to print the account opening list of
the Company and check the account opening
information individually.
3. Checked the carrying amount of all bank
accounts with the original amount of bank
statements and certificates of deposit, and
obtained all copies.
4. Based on the results of checking the amount
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
of bank statements, obtained the balance
reconciliation of all bank accounts compiled by
the Company, and check all the outstanding
items, whether there are any important overdue
overdue items that are not booked in time.
5. Implemented the confirmation procedure for
the Company's bank deposits, in which the local
deposit accounts in Luzhou were confirmed by
auditors and the Company's cashier in the bank;
The confirmation letters of deposit accounts
outside Luzhou were sent out by mailing after
auditors checked the address and the receiver
through telephone, network and other public
information, and we controlled the whole reply
letter process by ourselves.
6. Obtained and reviewed time deposits or
structured deposit agreements, identified the
types of relevant bank deposits, analyzed the
principal and interest recovery risks, and judged
the adequacy of the disclosure.
7. Inquired the management and relevant
personnel about the purpose of all bank accounts
on the Company's books and analyzed whether
there are abnormal use or bank accounts opened
for unknown reasons.
The evidence obtained from the above audit
procedures can support the Company's
management's assertion of the existence of bank
deposits.
3.Key audit matters-Sufficiency of provision for bad debts of receivable bank
deposits involving contract disputes
How our audit addressed the Key Audit
Key audit matters
Matter
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
As of December 31, 2018, the Company's Our procedures in relation to sufficiency of
receivable bank deposits involving contract provision for bad debts of receivable bank
disputes is CNY 307 million.The deposits involving contract disputes included:
management made a full analysis and 1. We communicate with the management to
judgment on the bad debt risk of the understand the basis for its accounting judgment
receivables on the balance sheet date, and estimation on this matter.
taking into account the progress of the 2. Obtained legal opinions on Luzhou Laojiao
judicial procedures related to receivable Co.,Ltd.'s provision of bad debts for abnormal
bank deposits involving contract disputes deposits in Changsha, Nanyang and another
and the key information currently available place issued by relevant law firms.
from lawyers. The key information include: 3. Telephone interview with the lawyer who
progress of relevant case investigation and issues the above legal opinions, to understand
asset preservation work conducted by the the progress of the case and the basis for
public security authorities, progress of making relevant legal opinions, and to evaluate
relevant civil proceedings and professional the appropriateness of the relevant estimates
legal advice issued by relevant professional made by the management.
lawyers. According to analysis and The evidence obtained from the above audit
judgment, the Company has maintained in procedures can support the Company's
recognizing CNY 200 million of bad debt management's estimation of the provision for
provision in the consolidated balance sheet. bad debts of receivable bank deposits involving
contract disputes.
As the bad debt provision amount of bank
deposits involving contract disputes is
significant, and it is a significant judgment to
analyze the bad debt risk of the receivables
and determine the bad debt provision
amount, we pay attention to it as a key audit
matter.
Other information
The directors of the Company are responsible for the other information. The other
information comprises the information included in the annual report, but does not include
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 conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Responsibilities of directors and those charged with governance for the financial
statements
The directors of the Company are responsible for the preparation of the financial
statements that give a true and fair view in accordance with the disclosure requirements of
Accounting Standards for Business Enterprises, and designing, implementing and
maintaining internal control that is necessary to ensure the financial statements are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will
always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the directors.
(4) Conclude on the appropriateness of the directors’ use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financial
information of the entities or business activities within the Company to express an opinion
on the financial statements. We are responsible for the direction, supervision and
performance of the group 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 and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide the governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the
current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
2. Financial statements
Prepared by: Luzhou Laojiao Co.,Ltd.
Consolidated balance sheet
As at December 31, 2018
Monetary Unit: CNY
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Current assets:
Cash and cash equivalents 9,367,386,627.68 8,449,622,154.91
Settlement reserves
Lending funds
Financial assets measured at fair
value through current profit or loss
Derivative financial assets
Notes and accounts receivables 2,398,660,205.02 2,500,822,714.85
Including：Notes receivables 2,388,326,476.15 2,492,813,857.65
Accounts receivables 10,333,728.87 8,008,857.20
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Prepayment 137,243,573.66 197,835,516.46
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
Other receivables 166,525,010.16 235,725,944.12
Including：Interests receivable 29,970,944.44 14,546,875.69
Dividends receivable
Buying back the sale of financial
assets
Inventories 3,230,415,749.95 2,811,866,523.26
Assets held for sale
Non-current assets due within one
year
Other current assets 194,237,237.02 72,856,419.60
Total current assets 15,494,468,403.49 14,268,729,273.20
Non-current assets:
Disbursement of loans and
advances
Available-for-sale financial assets 275,819,448.46 322,574,457.89
Held-to-maturity investments
Long-term receivables
Long-term equity investments 2,091,103,348.61 1,824,893,972.85
Investment property
Fixed assets 1,029,666,915.47 1,129,894,772.60
Construction in progress 3,000,489,249.86 1,567,263,995.95
Productive biological assets
Oil and gas assets
Intangible assets 231,967,372.88 231,039,145.33
Development expenses
Goodwill
Long-term deferred expenses
Deferred tax assets 436,434,961.24 411,361,142.33
Other non-current assets 44,979,896.41 4,314.05
Total non-current assets 7,110,461,192.93 5,487,031,801.00
Total assets 22,604,929,596.42 19,755,761,074.20
Current liabilities:
Short-term loans
Borrowings from the central bank
Deposits from customers and
inter-bank
Loans from other banks
Financial liabilities measured at fair
value through current profit or loss
87
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Derivative financial liabilities
Notes and accounts payable 1,292,050,954.06 740,700,050.76
Advance from customer 1,604,425,189.96 1,957,404,019.89
Financial assets sold for repurchase
Handling charges and commissions
payable
Employee benefits payable 268,092,193.50 137,700,533.18
Taxes payable 1,648,028,076.07 988,228,028.52
Other payable 602,887,024.88 543,192,435.55
Including：Interests payable
Dividends payable 4,500,000.00
Reinsurance accounts payable
Insurance contract reserves
Customer brokerage deposits
Securities underwriting brokerage
deposits
Liabilities held for sale
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 5,415,483,438.47 4,367,225,067.90
Non-current liabilities:
Long-term loans
Bonds payable
Including：Preference shares
Perpetual bonds
Long-term payables
Long-term payroll payables 7,929.00
Accrued liabilities
Deferred income 20,981,155.00 19,992,728.85
Deferred tax liabilities 44,252,383.96 55,941,136.35
Other non-current liabilities
Total non-current liabilities 65,233,538.96 75,941,794.20
Total liabilities 5,480,716,977.43 4,443,166,862.10
Shareholders' equity
Share capital 1,464,752,476.00 1,464,752,476.00
Other equity instruments
Including: preference shares
Perpetual bonds
Capital reserves 3,716,675,022.48 3,543,519,701.63
Less: treasury stock
Other comprehensive income 136,592,276.64 171,227,292.19
Special reserves
88
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Surplus reserves 1,464,752,476.00 1,464,752,476.00
General risk reserve
Undistributed profits 10,181,899,224.84 8,527,196,810.86
Total equity attributable to
owners of the parent company 16,964,671,475.96 15,171,448,756.68
Non-controlling interests 159,541,143.03 141,145,455.42
Total owners' equity 17,124,212,618.99 15,312,594,212.10
Total liabilities and owners'
equity 22,604,929,596.42 19,755,761,074.20
Legal representative：Liu Miao
Person in charge of accounting affairs：Xie Hong
Person in charge of accounting department：Yan Li
Balance sheet of parent company
As at December 31, 2018
Monetary Unit: CNY
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Current assets:
Cash and cash equivalents 6,189,473,157.83 3,631,052,399.90
Financial assets measured at fair value
through current profit or loss
Derivative financial assets
Notes and accounts receivables 67,698.43 86,250.43
Including：Notes receivables
Accounts receivables 67,698.43 86,250.43
Prepayment 7,212,512.57 1,992,501.42
Other receivables 4,657,727,046.02 5,615,683,624.57
Including：Interests receivable 29,970,944.44 11,167,975.69
Dividends receivable
Inventories 383,404.53 418,804.08
Assets held for sale
Non-current assets due within one year
Other current assets 1,761,708.33 8,492,739.48
Total current assets 10,856,625,527.71 9,257,726,319.88
Non-current assets:
Available-for-sale financial assets 275,490,526.83 322,245,536.26
Held-to-maturity investments
Long-term receivables
Long-term equity investments 5,494,914,376.71 5,219,100,200.96
Investment property
Fixed assets 701,870,689.02 792,161,331.71
Construction in progress 511,528,278.96 388,025,765.87
89
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Productive biological assets
Oil and gas assets
Intangible assets 224,039,846.61 222,713,898.06
Development expenses
Goodwill
Long-term deferred expenses
Deferred tax assets 71,119,598.96 65,501,243.66
Other non-current assets
Total non-current assets 7,278,963,317.09 7,009,747,976.52
Total assets 18,135,588,844.80 16,267,474,296.40
Current liabilities:
Short-term loans
Financial liabilities measured at fair
value through current profit or loss
Derivative financial liabilities
Notes and accounts payables 38,984,611.48 16,277,092.39
Advance from customer 12,229,153.62 8,355,217.23
Employee benefits payable 67,383,911.98 40,076,625.13
Taxes payable 115,424,262.03 82,923,469.40
Other payables 1,788,068,491.88 856,791,713.36
Including：Interests payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 2,022,090,430.99 1,004,424,117.51
Non-current liabilities:
Long-term loans
Bonds payable
Including：Preference shares
Perpetual bonds
Long-term payables
Long-term payroll payables 7,929.00
Accrued liabilities
Deferred income 12,593,640.12 13,483,984.61
Deferred tax liabilities 44,252,383.96 55,941,136.35
Other non-current liabilities
Total non-current liabilities 56,846,024.08 69,433,049.96
Total liabilities 2,078,936,455.07 1,073,857,167.47
Shareholders' equity
90
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Balance as at 31 December Balance as at 31 December
Item
2018 2017
Share capital 1,464,752,476.00 1,464,752,476.00
Other equity instruments
Including: preference shares
Perpetual bonds
Capital reserves 3,706,816,950.12 3,535,397,623.93
Less: treasury stock
Other comprehensive income 134,386,305.26 169,812,111.20
Special reserves
Surplus reserves 1,464,752,476.00 1,464,752,476.00
Undistributed profits 9,285,944,182.35 8,558,902,441.80
Total owners' equity 16,056,652,389.73 15,193,617,128.93
Total liabilities and owners' equity 18,135,588,844.80 16,267,474,296.40
Consolidated income statement
Monetary Unit: CNY
Item Year 2018 Year 2017
1. Total operating revenue 13,055,465,761.55 10,394,867,493.46
Including: Operating revenue 13,055,465,761.55 10,394,867,493.46
Interest income
Earned premium
Fee and commission income
2. Total operating costs 8,500,077,705.30 7,127,810,215.67
Including: Cost of sales 2,934,001,858.91 2,917,815,056.52
Interest expense
Handling charges and commission expenses
Refunded premiums
Net payments for insurance claims
Net provision for insurance contracts
Bond insurance expense
Reinsurance Expenses
Taxes and surcharges 1,605,835,052.97 1,335,106,291.77
Selling and distribution expenses 3,392,721,432.33 2,411,884,522.31
General and administrative expenses 722,448,972.80 518,463,705.99
Research and Development expenses 62,172,210.70 50,990,507.33
Financial expenses -215,066,482.79 -106,898,022.70
Including：Interest expenses 64,698,037.12 34,356,638.97
Interest income 280,805,447.66 145,682,879.58
Impairment losses -2,035,339.62 448,154.45
Plus: Other income 24,092,326.81 27,144,859.57
Investment income ("-" for losses) 97,993,563.50 138,316,397.04
Including: income from investment in associates 88,881,022.50 132,404,279.33
91
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Item Year 2018 Year 2017
and joint ventures
Gains from the changes in fair values(“-“ for
losses)
Foreign exchange gains ("-" for losses)
Gains from disposal of assets("-" for losses) -492,389.13 -4,256,543.78
3. Operating profits ("-" for losses) 4,676,981,557.43 3,428,261,990.62
Plus: non-operating income 31,232,477.21 25,836,921.37
Less: non-operating expenses 49,528,449.09 20,380,876.59
4. Total profits before tax ("-" for total losses) 4,658,685,585.55 3,433,718,035.40
Less: income tax expenses 1,148,219,697.12 831,693,750.31
5. Net profit ("-" for net loss) 3,510,465,888.43 2,602,024,285.09
5.1 Net profit from continuing operation ("-" for losses) 3,510,465,888.43 2,602,024,285.09
5.2 Net profit from discontinued operation ("-" for losses)
Attributable to owners of the parent company 3,485,643,008.98 2,557,944,598.97
Attributable to non-controlling interests 24,822,879.45 44,079,686.12
6.Net of tax from other comprehensive income -33,987,321.62 -5,121,775.76
Net of tax from other comprehensive income to the owner
-34,635,015.55 -5,557,598.19
of the parent company
6.1 Other comprehensive income cannot reclassified into
the profit and loss:
1) Remeasure the variation of net indebtedness or net
asset of defined benefit plans
2) Share in other comprehensive income that cannot be
classified into profit and loss under equity method
6.2 Other comprehensive income that will be reclassified
-34,635,015.55 -5,557,598.19
into the profit and loss
1) Share in other comprehensive income that will be
-359,548.90 -6,023,130.81
classified into profit and loss under equity method
2) Changes in fair value of available-for-sale financial
-35,066,257.04 -67,139.23
assets
3) Held-to-maturity investment reclassified into
available-for sale financial assets
4) Effective part of cash-flow hedge profit and loss
5) Balance arising from the translation of foreign currency
790,790.39 532,671.85
financial statements
6) Others
Net of tax from other comprehensive income to
647,693.93 435,822.43
non-controlling interests
7. Total comprehensive income 3,476,478,566.81 2,596,902,509.33
Total comprehensive income attributable to owners of the
3,451,007,993.43 2,552,387,000.78
parent company
Total comprehensive income attributable to
25,470,573.38 44,515,508.55
non-controlling interests
8. Earnings per share
(1)Basic earnings per share 2.380 1.798
(2)Diluted earnings per share 2.380 1.798
Legal representative：Liu Miao
Person in charge of accounting affairs：Xie Hong
92
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Person in charge of accounting department：Yan Li
Income statement of parent company
Monetary Unit: CNY
Item Year 2018 Year 2017
1. Operating revenue 3,361,304,739.27 2,855,282,389.57
Less: Cost of sales 2,268,904,672.24 2,090,027,989.80
Taxes and surcharges 37,365,858.48 24,781,271.41
Selling and distribution expenses
General and administrative expenses 581,921,594.90 433,118,239.53
Research and Development expenses 21,001,230.12 10,075,920.70
Financial expenses -129,471,683.37 -80,000,670.62
Including：Interest expenses 7,971,444.41
Interest income 138,532,722.84 83,033,115.75
Impairment losses -2,965,798.28 686,324.28
Plus: Other income 17,701,808.96 15,125,736.71
Investment income ("-" for losses) 2,113,902,599.28 1,970,639,408.69
Including: income from investment in associates
88,881,022.50 132,404,279.33
and joint ventures
Gains from the changes in fair values(“-“ for
losses)
Gains from disposal of assets("-" for losses) -492,389.13 -1,775,397.64
2. Operating profits ("-" for losses) 2,715,660,884.29 2,360,583,062.23
Plus: non-operating income 21,778,771.14 11,315,507.68
Less: non-operating expenses 39,292,792.61 14,640,415.00
3. Total profits before tax ("-" for total losses) 2,698,146,862.82 2,357,258,154.91
Less: income tax expenses 140,164,527.27 104,757,613.28
4. Net profit ("-" for net loss) 2,557,982,335.55 2,252,500,541.63
4.1 Net profit from continuing operation ("-" for losses) 2,557,982,335.55 2,252,500,541.63
4.2 Net profit from discontinued operation ("-" for losses)
5.Net of tax from other comprehensive income -35,425,805.94 -6,090,270.04
5.1 Other comprehensive income cannot reclassified into
the profit and loss:
1) Remeasure the variation of net indebtedness or net
asset of defined benefit plans
2) Share in other comprehensive income that cannot be
classified into profit and loss under equity method
5.2 Other comprehensive income that will be reclassified
-35,425,805.94 -6,090,270.04
into the profit and loss
1) Share in other comprehensive income that will be
classified into profit and loss under equity method -359,548.90 -6,023,130.81
2) Changes in fair value of available-for-sale financial
-35,066,257.04 -67,139.23
assets
3) Held-to-maturity investment reclassified into
available-for sale financial assets
4) Effective part of cash-flow hedge profit and loss
5) Balance arising from the translation of foreign currency
financial statements
6) Others
93
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Item Year 2018 Year 2017
6. Total comprehensive income 2,522,556,529.61 2,246,410,271.59
7. Earnings per share
(1) Basic earnings per share
(2) Diluted earnings per share
Consolidated statement of cash flows
Monetary Unit: CNY
Item Year 2018 Year 2017
1. Cash flows from operating activities
Cash received from sale of goods and rendering of
14,828,436,081.11 12,421,322,558.16
services
Net increase in customer bank deposits and placement
from banks and other financial institutions
Net increase in loans from central bank
Net increase in loans from other financial institutions
Premiums received from original insurance contracts
Net cash received from reinsurance business
Net increase in deposits and investments from
policyholders
Net increase for disposal of financial assets measured at
their fair values and of which the changes are recorded
into the current profits and losses
Cash received from interest, handling charges and
commissions
Net increase in placements from other financial
institutions
Net capital increase in repurchase business
Refunds of taxes and surcharges 5,786,338.67
Cash received from other operating activities 482,593,561.94 254,519,252.06
Subtotal of cash inflows from operating activities 15,316,815,981.72 12,675,841,810.22
Cash paid for goods purchased and services received 3,826,697,226.55 3,779,045,426.70
Net increase in loans and advances to customers
Net increase in deposits in central bank and other banks
and financial institutions
Cash paid for original insurance contract claims
Cash paid for interests, handling charges and
commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 569,194,842.30 403,853,839.86
Cash paid for taxes and surcharges 3,545,440,004.11 2,544,604,491.76
Cash paid for other operating activities 3,077,567,890.52 2,244,603,990.01
Subtotal of cash outflows from operating activities 11,018,899,963.48 8,972,107,748.33
94
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Item Year 2018 Year 2017
Net cash flows from operating activities 4,297,916,018.24 3,703,734,061.89
2. Cash flows from investing activities
Cash received from disposal of investments
Cash received from returns on investments 19,480,124.47 19,553,674.91
Net cash received from disposal of fixed assets, intangible
222,840.26 409,427.97
assets and other long-term assets
Net cash received from disposal of subsidiaries and other
business units
Cash received from other investing activities
Subtotal of cash inflows from investing activities 19,702,964.73 19,963,102.88
Cash paid to acquire and construct fixed assets,
1,468,482,777.22 1,415,996,563.84
intangible assets and other long-term assets
Cash paid for investments 16,636,159.43
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other business
10,730,800.00
units
Cash paid for other investing activities
Subtotal of cash outflows from investing activities 1,485,118,936.65 1,426,727,363.84
Net cash flows from investing activities -1,465,415,971.92 -1,406,764,260.96
3. Cash flows from financing activities
Cash received from investors 4,482,764.00 2,957,910,377.36
Including: cash received by subsidiaries from investments
by minority shareholders
Cash received from borrowings
Cash received from bonds issue
Cash received from other financing activities
Subtotal of cash inflows from financing activities 4,482,764.00 2,957,910,377.36
Cash paid for debt repayments
Cash paid for distribution of dividends and profits or
1,911,545,067.51 1,387,430,813.08
payment of interest
Including: dividends and profits paid to minority
216,855.11
shareholders by subsidiaries
Cash paid for other financing activities 9,604,800.00 244,125,003.53
Subtotal of cash outflows from financing activities 1,921,149,867.51 1,631,555,816.61
Net cash flows from financing activities -1,916,667,103.51 1,326,354,560.75
4. Effect of fluctuation in exchange rate on cash and
731,529.96 -150,238.51
cash equivalents
5. Net increase in cash and cash equivalents 916,564,472.77 3,623,174,123.17
Plus: balance of cash and cash equivalents at the
8,449,422,154.91 4,826,248,031.74
beginning of the period
6. Balance of cash and cash equivalents at the end of
9,365,986,627.68 8,449,422,154.91
the period
95
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Cash flow statements of parent company
Monetary Unit: CNY
Item Year 2018 Year 2017
1. Cash flows from operating activities
Cash received from sale of goods and rendering of
services 3,872,690,184.06 3,297,762,941.75
Refunds of taxes and surcharges
Cash received from other operating activities 285,339,299.49 147,608,021.28
Subtotal of cash inflows from operating activities 4,158,029,483.55 3,445,370,963.03
Cash paid for goods purchased and services received 2,706,797,292.39 2,520,043,439.60
Cash paid to and on behalf of employees 253,037,938.15 174,203,813.30
Cash paid for taxes and surcharges 304,535,780.73 74,139,478.90
Cash paid for other operating activities 179,745,316.75 188,997,162.43
Subtotal of cash outflows from operating activities 3,444,116,328.02 2,957,383,894.23
Net cash flows from operating activities 713,913,155.53 487,987,068.80
2. Cash flows from investing activities
Cash received from disposal of investments
Cash received from returns on investments 2,035,389,160.25 1,858,764,413.56
Net cash received from disposal of fixed assets, intangible
92,898.13 245,811.04
assets and other long-term assets
Net cash received from disposal of subsidiaries and other
business units
Cash received from other investing activities 3,173,258.16
Subtotal of cash inflows from investing activities 2,035,482,058.38 1,862,183,482.76
Cash paid to acquire and construct fixed assets,
150,107,386.59 446,683,321.51
intangible assets and other long-term assets
Cash paid for investments 26,240,959.43 2,980,558,607.72
Net cash paid to acquire subsidiaries and other business
units
Cash paid for other investing activities
Subtotal of cash outflows from investing activities 176,348,346.02 3,427,241,929.23
Net cash flows from investing activities 1,859,133,712.36 -1,565,058,446.47
3. Cash flows from financing activities
Cash received from investors 2,955,410,377.36
Cash received from loans
Cash received from bonds issue
Cash received from other financing activities 1,830,167,429.42 560,244,910.34
Subtotal of cash inflows from financing activities 1,830,167,429.42 3,515,655,287.70
Cash paid for debt repayments
Cash paid for distribution of dividends and profits or
1,844,793,539.38 1,346,162,376.96
payment of interest
Cash paid for other financing activities
Subtotal of cash outflows from financing activities 1,844,793,539.38 1,346,162,376.96
Net cash flows from financing activities -14,626,109.96 2,169,492,910.74
96
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Item Year 2018 Year 2017
4. Effect of fluctuation in exchange rate on cash and
-69,685.00
cash equivalents
5. Net increase in cash and cash equivalents 2,558,420,757.93 1,092,351,848.07
Plus: balance of cash and cash equivalents at the
3,631,052,399.90 2,538,700,551.83
beginning of the period
6. Balance of cash and cash equivalents at the end of
6,189,473,157.83 3,631,052,399.90
the period
97
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Consolidated statement of changes in shareholders' equity
For the year ended 31 December 2018
Monetary Unit: CNY
Year 2018
Equity attributable to owners of the parent company
Other equity instruments Total
Item Less： Other General Non-controlling
Preferr Special Undistributed shareholders'
Share capital Perpetual Capital reserve Treasur Comprehensiv Surplus reserve risk interests
ed Other reserve profit equity
bond y stock e Income reserve
stock
1. Balance as at
31 December of 1,464,752,476.00 3,543,519,701.63 171,227,292.19 1,464,752,476.00 8,527,196,810.86 141,145,455.42 15,312,594,212.10
last year
Plus: adjustments
for changes in
accounting policies
Adjustments for
correction of
accounting errors
in prior year
Business
combinations
under common
control
Others
2. Balance as at 1
January of the 1,464,752,476.00 3,543,519,701.63 171,227,292.19 1,464,752,476.00 8,527,196,810.86 141,145,455.42 15,312,594,212.10
current year
3.Increases/decre
173,155,320.85 -34,635,015.55 1,654,702,413.98 18,395,687.61 1,811,618,406.89
ases in the
98
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2018
Equity attributable to owners of the parent company
Other equity instruments Total
Item Less： Other General Non-controlling
Preferr Special Undistributed shareholders'
Share capital Perpetual Capital reserve Treasur Comprehensiv Surplus reserve risk interests
ed Other reserve profit equity
bond y stock e Income reserve
stock
current year (“-”
for decreases)
(1) Total
comprehensive -34,635,015.55 3,485,643,008.98 25,470,573.38 3,476,478,566.81
income
(2) Capital
contributed or 4,237,764.00 4,237,764.00
reduced by owners
Capital
contributions by 4,237,764.00 4,237,764.00
owners
Capital
contributions by
other equity
instruments
holders
Amounts of
share-based
payments
recognized in
owners' equity
Others
(3) Profit
-1,830,940,595.00 28,144.89 -1,830,912,450.11
distribution
99
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2018
Equity attributable to owners of the parent company
Other equity instruments Total
Item Less： Other General Non-controlling
Preferr Special Undistributed shareholders'
Share capital Perpetual Capital reserve Treasur Comprehensiv Surplus reserve risk interests
ed Other reserve profit equity
bond y stock e Income reserve
stock
Withdrawal of
surplus reserves
Withdrawal of
general risk
reserve
Profit distributed to
owners (or -1,830,940,595.00 28,144.89 -1,830,912,450.11
shareholders)
Others
(4) Internal
carry-forward of
owners' equity
Conversion of
capital reserves
into paid-in capital
Conversion of
surplus reserves
into paid-in capital
Surplus reserves
offsetting losses
Carry-forward of
retained earnings
from changes in
100
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2018
Equity attributable to owners of the parent company
Other equity instruments Total
Item Less： Other General Non-controlling
Preferr Special Undistributed shareholders'
Share capital Perpetual Capital reserve Treasur Comprehensiv Surplus reserve risk interests
ed Other reserve profit equity
bond y stock e Income reserve
stock
defined benefit
plans
Others
(5) Special
reserves
Withdrawal for the
period
Use for the period
(6) Others 173,155,320.85 -11,340,794.66 161,814,526.19
4. Balance as at
31 December of 1,464,752,476.00 3,716,675,022.48 136,592,276.64 1,464,752,476.00 10,181,899,224.84 159,541,143.03 17,124,212,618.99
the current year
101
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
For the year ended 31 December 2017
Monetary Unit: CNY
Year 2017
Equity attributable to owners of the parent company
Other equity instruments Less： Total
Item Other General Non-controlling
Prefer Treas Special Undistributed shareholders'
Share capital Perpetual Capital reserve Comprehensiv Surplus reserve risk interests
red Other ury reserve profit equity
bond e Income reserve
stock stock
1. Balance as at
31 December of 1,402,252,476.00 650,609,324.27 176,784,890.38 1,402,252,476.00 7,377,914,588.85 94,129,946.87 11,103,943,702.37
last year
Plus: adjustments
for changes in
accounting policies
Adjustments for
correction of
accounting errors
in prior year
Business
combinations
under common
control
Others
2. Balance as at
January 1 of the 1,402,252,476.00 650,609,324.27 176,784,890.38 1,402,252,476.00 7,377,914,588.85 94,129,946.87 11,103,943,702.37
current year
3.Increases/decre
62,500,000.00 2,892,910,377.36 -5,557,598.19 62,500,000.00 1,149,282,222.01 47,015,508.55 4,208,650,509.73
ases in the
102
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2017
Equity attributable to owners of the parent company
Other equity instruments Less： Total
Item Other General Non-controlling
Prefer Treas Special Undistributed shareholders'
Share capital Perpetual Capital reserve Comprehensiv Surplus reserve risk interests
red Other ury reserve profit equity
bond e Income reserve
stock stock
current year (“-”
for decreases)
(1) Total
comprehensive -5,557,598.19 2,557,944,598.97 44,515,508.55 2,596,902,509.33
income
(2) Capital
contributed or 62,500,000.00 2,892,910,377.36 2,500,000.00 2,957,910,377.36
reduced by owners
Capital
contributions by 62,500,000.00 2,892,910,377.36 2,500,000.00 2,957,910,377.36
owners
Capital
contributions by
other equity
instruments
holders
Amounts of
share-based
payments
recognized in
owners' equity
Others
(3) Profit
62,500,000.00 -1,408,662,376.96 -1,346,162,376.96
distribution
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2017
Equity attributable to owners of the parent company
Other equity instruments Less： Total
Item Other General Non-controlling
Prefer Treas Special Undistributed shareholders'
Share capital Perpetual Capital reserve Comprehensiv Surplus reserve risk interests
red Other ury reserve profit equity
bond e Income reserve
stock stock
Withdrawal of
62,500,000.00 -62,500,000.00
surplus reserves
Withdrawal of
general risk
reserve
Profit distributed to
owners (or -1,346,162,376.96 -1,346,162,376.96
shareholders)
Others
(4) Internal
carry-forward of
owners' equity
Conversion of
capital reserves
into paid-in capital
Conversion of
surplus reserves
into paid-in capital
Surplus reserves
offsetting losses
Carry-forward of
retained earnings
from changes in
104
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2017
Equity attributable to owners of the parent company
Other equity instruments Less： Total
Item Other General Non-controlling
Prefer Treas Special Undistributed shareholders'
Share capital Perpetual Capital reserve Comprehensiv Surplus reserve risk interests
red Other ury reserve profit equity
bond e Income reserve
stock stock
defined benefit
plans
Others
(5) Special
reserves
Withdrawal for the
period
Use for the period
(6) Others
4. Balance as at
31 December of 1,464,752,476.00 3,543,519,701.63 171,227,292.19 1,464,752,476.00 8,527,196,810.86 141,145,455.42 15,312,594,212.10
the current year
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Statement of changes in shareholders' equity of parent company
For the year ended 31 December 2018
Monetary Unit: CNY
Year 2018
Other equity instruments Less： Other
Item Special Undistributed Total shareholders'
Share capital Perpetual Capital reserve Treasury Comprehensiv Surplus reserve
Preferred stock Other reserve profit equity
bond stock e Income
1. Balance as at 31
1,464,752,476.00 3,535,397,623.93 169,812,111.20 1,464,752,476.00 8,558,902,441.80 15,193,617,128.93
December of last year
Plus: adjustments for
changes in accounting
policies
Adjustments for correction
of accounting errors in
prior year
Others
2. Balance as at January
1,464,752,476.00 3,535,397,623.93 169,812,111.20 1,464,752,476.00 8,558,902,441.80 15,193,617,128.93
1 of the current year
3.Increases/decreases in
the current year (“-” for 171,419,326.19 -35,425,805.94 727,041,740.55 863,035,260.80
decreases)
(1) Other comprehensive
-35,425,805.94 2,557,982,335.55 2,522,556,529.61
income
(2)Capital contributed or
reduced by owners
Capital contributions by
owners
Capital contributions by
other equity instruments
holders
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2018
Other equity instruments Less： Other
Item Special Undistributed Total shareholders'
Share capital Perpetual Capital reserve Treasury Comprehensiv Surplus reserve
Preferred stock Other reserve profit equity
bond stock e Income
Amounts of share-based
payments recognized in
owners' equity
Others
(3)Profit distribution -1,830,940,595.00 -1,830,940,595.00
Withdrawal of surplus
reserves
Profit distributed to owners
-1,830,940,595.00 -1,830,940,595.00
(or shareholders)
Others
(4) Internal carry-forward of
owners' equity
Conversion of capital
reserves into paid-in
capital
Conversion of surplus
reserves into paid-in
capital
Surplus reserves offsetting
losses
Carry-forward of retained
earnings from changes in
defined benefit plans
Others
(5) Special reserves
107
2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2018
Other equity instruments Less： Other
Item Special Undistributed Total shareholders'
Share capital Perpetual Capital reserve Treasury Comprehensiv Surplus reserve
Preferred stock Other reserve profit equity
bond stock e Income
Withdrawal for the period
Use for the period
(6) Others 171,419,326.19 171,419,326.19
4. Balance as at 31
December of the current 1,464,752,476.00 3,706,816,950.12 134,386,305.26 1,464,752,476.00 9,285,944,182.35 16,056,652,389.73
year
For the year ended 31 December 2017
Monetary Unit: CNY
Year 2017
Other equity instruments Less： Other
Item Special Undistributed Total shareholders'
Share capital Perpetual Capital reserve Treasury Comprehensiv Surplus reserve
Preferred stock Other reserve profit equity
bond stock e Income
1. Balance as at 31
1,402,252,476.00 653,218,046.57 175,902,381.24 1,402,252,476.00 7,715,064,277.13 11,348,689,656.94
December of last year
Plus: adjustments for
changes in accounting
policies
Adjustments for correction
of accounting errors in
prior year
Others
2. Balance as at January
1,402,252,476.00 653,218,046.57 175,902,381.24 1,402,252,476.00 7,715,064,277.13 11,348,689,656.94
1 of the current year
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2017
Other equity instruments Less： Other
Item Special Undistributed Total shareholders'
Share capital Perpetual Capital reserve Treasury Comprehensiv Surplus reserve
Preferred stock Other reserve profit equity
bond stock e Income
3.Increases/decreases in
the current year (“-” for 62,500,000.00 2,882,179,577.36 -6,090,270.04 62,500,000.00 843,838,164.67 3,844,927,471.99
decreases)
(1) Other comprehensive
-6,090,270.04 2,252,500,541.63 2,246,410,271.59
income
(2)Capital contributed or
62,500,000.00 2,882,179,577.36 2,944,679,577.36
reduced by owners
Capital contributions by
62,500,000.00 2,882,179,577.36 2,944,679,577.36
owners
Capital contributions by
other equity instruments
holders
Amounts of share-based
payments recognized in
owners' equity
Others
(3)Profit distribution 62,500,000.00 -1,408,662,376.96 -1,346,162,376.96
Withdrawal of surplus
62,500,000.00 -62,500,000.00
reserves
Profit distributed to owners
-1,346,162,376.96 -1,346,162,376.96
(or shareholders)
Others
(4) Internal carry-forward of
owners' equity
Conversion of capital
reserves into paid-in
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Year 2017
Other equity instruments Less： Other
Item Special Undistributed Total shareholders'
Share capital Perpetual Capital reserve Treasury Comprehensiv Surplus reserve
Preferred stock Other reserve profit equity
bond stock e Income
capital
Conversion of surplus
reserves into paid-in
capital
Surplus reserves offsetting
losses
Carry-forward of retained
earnings from changes in
defined benefit plans
Others
(5) Special reserves
Withdrawal for the period
Use for the period
(6) Others
4. Balance as at 31
December of the current 1,464,752,476.00 3,535,397,623.93 169,812,111.20 1,464,752,476.00 8,558,902,441.80 15,193,617,128.93
year
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
3. Company Profile
3.1 Company Overview
Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Company" or "the Company"),
formerly known as Luzhou Laojiao Brewery, was established in March 1950. On 20
September 1993, Luzhou Laojiao brewery established a joint-stock limited company with
fund-raising exclusively from its operational assets. On 25 October 1993, the public
offering of shares was approved by Sichuan Provincial People's Government and CSRC
with two documents of ChuanFuHan (1993) No.673 and FaShenZi (1993) No.108. After
the offering, the total share capital was 86,880,000 shares, which were listed and traded in
Shenzhen stock exchange on 9 May 1994.
As the end of 31 December 2004, the Company's total share capital reached 841,399,673
shares after multiple rights issues, among which the controlling shareholder, State Assets
Management Bureau of Luzhou (later renamed as State-owned Assets Supervision and
Administration Commission of Luzhou, hereinafter referred to as "SASAC of Luzhou")
held 585,280,800 shares of the Company, with a shareholding ratio of 69.56%.
On 27 October 2005, the Company implemented the non-tradable share reform. After the
implementation, the total share capital remained unchanged, and the shareholding ratio of
SASAC of Luzhou decreased from 69.56% to 60.43%.
In November 2006, the Company implemented private placement, and the total share
capital increased from 841,399,673 shares to 871,399,673 shares. The shareholding ratio
of SASAC of Luzhou decreased from 60.43% to 58.35%.
As the end of 27 February 2007, SASAC of Luzhou sold 42,069,983 shares of the
Company, and after the sale, it still held 466,375,156 shares of the Company, with its
shareholding ratio reduced to 53.52%.
On 19 May 2008, the Company increased 522,839,803 shares of capital stock resulting
from capital reserve and undistributed profits transferred to increase capital stock. After
the implementation, the total share capital reached 1,394,239,476 shares, among which,
SASAC of Luzhou held 746,200,250 shares of the Company, and the shareholding ratio
was still 53.52%.
On 3 September 2009, the 300,000,000 shares and the 280,000,000 shares held by
SASAC of Luzhou were separately transferred to Luzhou Laojiao Group Co., Ltd.
(hereinafter referred to as the "Laojiao Group") and Luzhou Xinglu Touzi Jituan Co., Ltd.
(hereinafter referred to as the "Xinglu Group"). After the transfer, Laojiao Group, Xinglu
Group, and SASAC of Luzhou respectively held 300,000,000 shares, 280,000,000 shares
and 166,200,250 shares. So far, Laojiao Group became the first majority shareholder and
SASAC of Luzhou was the actual controller.
From 6 June 2012 to 20 November 2013, the first and second phases of the Company's
equity incentive plan were exercised. After the exercise, the total share capital of the
Company was changed to 1,402,252,476 shares.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
On 10 April 2014 and 18 July 2016, SASAC of Luzhou transferred 81,088,300 shares and
84,000,000 shares to Laojiao Group and Xinglu Group respectively. In addition, Laojiao
Group has increased its equity stake through the secondary market of 13,137,100 shares.
So far, Laojiao Group, Xinglu Group and SASAC of Luzhou held 394,225,489 shares,
365,971,142 shares and 1,111,930 shares respectively, with the shareholding ratios of
28.11%, 26.10% and 0.08% respectively.
On 23 August 2017, the Company issued CNY 62,500,000 ordinary shares (A shares)
privately, raising a total capital of CNY 3,000,000,000. After the additional issuance, the
total capital stock of the Company was changed to 1,464,752,476 shares. In addition,
from 2017 to 2018, Laojiao Group decreased 13,137,100 shares that were increased
through the secondary market from April 2014 to December 2015. After share reduction,
Laojiao Group, Xinglu Group and SASAC of Luzhou held 381,088,389 shares,
365,971,142 shares and 1,111,930 shares respectively, with the shareholding ratios of
26.02%, 24.99% and 0.08% respectively. Laojiao Group still was the first majority
shareholder and SASAC of Luzhou still was the actual controller.
3.2 Registered address of the Company, company type, and headquarter
address
Registered address and headquarter address of the Company are located in Sichuan
Luzhou Laojiao Square and company type is other incorporated company (Listed).
3.3 Business nature of the Company and main business activity
Industry of the Company is food and beverage manufacturing industry.
The main activity are research and development, production and sales of “National Cellar
1573”,”Luzhou Laojiao” and other liquor series.
The main products are: “National Cellar 1573 Series”,”Century-old Luzhou Laojiao
Jiaoling Series” ,”Luzhou Laojiao Tequ”,”Touqu”,”Erqu” and other liquor series.
3.4 The name of the controlling shareholder and the ultimate substantive
controller
The controlling shareholder is Luzhou Laojiao Group Co., Ltd.; the ultimate substantive
control is SASAC of Luzhou.
3.5 Approval and submission of the financial report and its date
The financial report is approved and submitted by the board of directors of the Company
on 25 April 2019.
3.6 Consolidated financial statement scope and their changes
(1) The 24 subsidiaries included in the consolidated financial statements for the current
period are listed as follows:
Name of subsidiary Abbreviation Type of subsidiary Shareholding Voting rights (%)
proportion(%)
Luzhou Laojiao Brewing Co., Ltd. Brewing company A wholly-owned subsidiary 100.00 100.00
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Name of subsidiary Abbreviation Type of subsidiary Shareholding Voting rights (%)
proportion(%)
A wholly-owned subsidiary 100.00 100.00
Luzhou Boda Brewing Co., Ltd. Boda brewing
of Brewing company
Luzhou Red Sorghum Modern A controlling subsidiary of 60.00 60.00
Red sorghum company
Agricultural Development Co., Ltd. Brewing company
Sales Company of Luzhou Laojiao Sales company A wholly-owned subsidiary 100.00 100.00
Co., Ltd.
Luzhou Laojiao Nostalgic Liquor Nostalgic company A wholly-owned subsidiary 100.00 100.00
Marketing Co., Ltd. of Sales company
Luzhou Laojiao Custom Liquor Co., Custom liquor company A controlling subsidiary of 15.00 15.00
Ltd. Note1 Sales company
Luzhou Laojiao Selected Supply Selected company A wholly-owned subsidiary 100.00 100.00
Chain Management Co., Ltd. of Sales company
Luzhou Dingli Liquor Industry Co., Dingli company A wholly-owned subsidiary 100.00 100.00
Ltd. of Sales company
Luzhou Dingyi Liquor Industry Sales Dingyi company A wholly-owned subsidiary 100.00 100.00
Co., Ltd. of Sales company
Luzhou Dinghao Liquor Industry Dinghao company A wholly-owned subsidiary 100.00 100.00
Sales Co., Ltd. of Sales company
Luzhou Laojiao Import and Export Import and export A wholly-owned subsidiary 100.00 100.00
trade Co., Ltd. company of Sales company
Luzhou Laojiao Boda Liquor Boda marketing A controlling subsidiary of 75.00 75.00
Industry Marketing Co., Ltd. Sales company
Luzhou Laojiao Bosheng Hengxiang Bosheng Hengxiang A wholly-owned subsidiary 75.00 75.00
Liquor Sales Co., Ltd. of Boda marketing
Luzhou Laojiao Guibin Service Guibin company A controlling subsidiary of 95.00 95.00
Co.,Ltd. Note2 Boda marketing
Luzhou Laojiao fruit wine industry Fruit wine industry A controlling subsidiary of 41.00 41.00
Co., Ltd. Note3 Sales company
Mingjiang Co., Ltd. Note4 Mingjiang company A controlling subsidiary of 54.00 54.00
Sales company
Luzhou Pinchuang Technology Co., Pinchuang company A controlling subsidiary 95.00 95.00
Ltd.
Luzhou Laojiao Tourism Culture Tourism culture A wholly-owned subsidiary 100.00 100.00
Co., Ltd.
Luzhou Laojiao International Hong Kong company A controlling subsidiary 55.00 55.00
Development（Hong Kong）Co.,
Ltd.
Luzhou Laojiao Electronic Electronic commerce A controlling subsidiary 90.00 90.00
Commerce Co., Ltd. Note5
Luzhou Laojiao Baitiao Liquor Baitiao liquor industry A controlling subsidiary of 35.00 35.00
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Name of subsidiary Abbreviation Type of subsidiary Shareholding Voting rights (%)
proportion(%)
Industry Co., Ltd. Note6 Electronic commerce
Luzhou Baonuo Biotechnology Co., Baonuo biotechnology A wholly-owned subsidiary 100.00 100.00
Ltd.
Luzhou Laojiao Health Liquor Health Liquor Industry A wholly-owned subsidiary 100.00 100.00
Industry Co.,Ltd.
Luzhou Laojiao Health Sales Co., Health sales A wholly-owned subsidiary 100.00 100.00
Ltd. of Health Liquor Industry
Note 1: Although the Company holds less than 51% of the equity of Custom liquor company, among the
five members of the board of directors, the Company has sent three people, and the chairman of the
board (legal representative) is the director sent by the Company. The Company has actual control over
Custom liquor company, so it is included in the scope of consolidation.
Note 2: Guibin company is a controlling subsidiary of Boda Marketing. The Company has decided to
cancel Guibin company due to the increasingly prominent limitations of the special circulation channel
model of single product. Guibin company has obtained the notice of approval of cancellation registration
on 12 March 2018.
Note 3: 1.On 12 September 2017, the 21st meeting of the eighth board of directors reviewed and
approved the “Proposal about establishment of Luzhou Laojiao fruit wine industry Co., Ltd. invested by
subsidiary”. The joint investment establishment of Luzhou Laojiao fruit wine industry Co., Ltd. was about
to be implemented by Sales Company, a wholly owned subsidiary of the Company, and Sichuan Meihe
wine Co., Ltd. and Luzhou Juhe wine development Co., Ltd.. In January 2018, the fruit wine industry was
registered and established with a registered capital of CNY 50 million. Sales Company, a wholly-owned
subsidiary of the Company, subscribed CNY 20.5 million of investment and held 41% of the shares.
Although the shareholding ratio of the Company is less than 51%, among the five members of the board
of directors, the Company has sent three members, and the chairman of the board (legal representative)
is the director sent by the Company. The Company has the actual control over the company, so it is
included in the scope of consolidation.
Note 4: 2.On 12 September 2017, the 21st meeting of the eighth board of directors of the Company
reviewed and approved the "Proposal on the establishment of Mingjiang Co., Ltd. By subsidiary
investment", and Sales Company, a wholly-owned subsidiary of the Company, planned to establish
Mingjiang company in the United States with Luzhou Jiutai Liquor Sales Co., Ltd.. In January 2018,
Mingjiang company was registered and established with a registered capital of USD 6 million. Sales
Company, a wholly-owned subsidiary of the Company, subscribed USD 3.24 million and held 54% of the
shares. In addition, among the five members of the board of directors, the Company has sent three
people to have actual control over the company, so it is included in the scope of consolidation.
st
Note 5: On 29 May 2018, the 28 meeting of the eighth board of directors of the Company reviewed and
approved the “Proposal on partial equity acquisition of Luzhou Laojiao Electronic Commerce Co., Ltd.”.
The Company decided to use self-financed fund to purchase the subscription right of minority
shareholders of Electronic commerce based on evaluated price. By December 31, 2018, the part of the
purchase has been completed.
Note 6: Although the Company holds less than 51% of the equity in Baitiao liquor industry, among the
five members of the board of directors, the Company has sent three people and the Company has actual
control over Baitiao liquor industry, so it is included in the scope of consolidation.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Details of the subsidiaries incorporated into the consolidated financial statements show on
“7. Interests in subsidiaries”
(2) Subsidiaries that are newly incorporated into the scope of consolidation in this period
Name Reason
Luzhou Laojiao Fruit Wine Industry Co., Ltd. Establishment
Mingjiang Co., Ltd. Establishment
(3) Liquidation and cancellation for subsidiaries in this period
Name Reason
Luzhou Laojiao Guibin Service Co.,Ltd. Liquidation and cancellation
Details of changes in the scope of consolidation show on “6. Changes in consolidated
scope”.
4. Basis of preparation of financial statements
4.1. Basis of preparation of financial statements
The Company has prepared its financial statements on a going concern basis, and the
preparation is based on actual transactions and events in compliance with Accounting
Standards for Business Enterprises and relevant guidance and explanation (the following
called the ASBE) issued by Ministry of Finance, and Rules on Company Information
Disclosure and Preparation of Publicly Issued Securities No.15- General Rules on
Financial Reporting Rules (2014 Revision) issued by CSRC.
4.2. Going concern
The Company’s business activities have adequate financial support. Based on the current
information obtained by the Company, comprehensively considering factors such as
macro-policy risk, market operation risk, current or long-term profitability, debt repayment
ability of the Company, as well as its resource of financial support, the Company believes
that it is reasonable to prepare the financial statements on a going concern basis and
there are no events or situations resulting in significant doubts over going concern for at
least 12 months.
5. Significant accounting policies and accounting estimates
Whether the Company needs to comply with the requirement of special industry
No
The notes of detailed accounting policies and accounting estimates:
No
5.1 The declaration about compliance with ASBE
The financial statements of the Company have been prepared in accordance with ASBE,
and present truly and completely, the financial position as of 31st December 2018, and the
Company’s and results of operations and cash flows for the year then ended. In addition,
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
in all material respects, the financial statements of the Company comply with disclosure
requirements of the financial statements and their notes in accordance with Rules on
Company Information Disclosure and Preparation of Publicly Issued Securities No.15-
General Rules on Financial Reporting Rules revised by CSRC in 2014.
5.2 Accounting period
The Company adopts the calendar year as its accounting year, i.e. from 1st January to
31st December.
5.3 Business Cycle
The Company’s business cycle is 12 months.
5.4 Functional currency
The Company has adopted China Yuan (CNY) as functional currency.
5.5 The accounting treatment of business combinations involving
enterprises under common control and business combinations not
involving enterprises under common control
(1) Business combination under common control
Assets and liabilities obtained by the Company from the combine through business
combination under common control shall be measured at the book value as stated in the
consolidated financial statements of ultimate controlling party at the combination date.
The share of the book value of the merged party’s owner’s equity in the consolidated
financial statements is taken as the initial investment cost of long-term equity investments
in individual financial statements. The capital reserve (stock premium or capital premium)
is adjusted according to the difference between the book value of net asset acquired
through combination and the book value of consideration paid for the combination (or total
par value of shares issued). If the capital reserve (stock premium or capital premium) is
insufficient to offset, the retained earnings shall be adjusted.
(2) Business combination not under common control
Assets paid, liabilities incurred or assumed and the equity securities issued as
consideration for combination shall be measured based on fair value on the acquisition
date, the difference between fair value and its book value shall be included in current profit
and loss. The Company shall recognize the difference of the combination costs in excess
of the fair value of the net identifiable asset acquired from the acquiree through
combination as goodwill. After the review, if the combination costs are still in short of the
fair value of the net identifiable asset acquired from the acquiree through combination,
include the difference in the current profit and loss.
Fees, commissions, and other transaction expenses paid on issuance of equity securities
as combination consideration in the business combination shall be included in the initial
measurement amount of equity securities.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
5.6 Preparation of consolidated financial statements
(1) Consolidated Financial Statement Scope
The scope of the Company’s consolidated financial statements is based on control, and all
subsidiaries controlled are included in the consolidation scope of the consolidated
financial statements.
(2) Consolidation procedures
The consolidated financial statements are based on the financial statements of the
Company and its subsidiaries, and are prepared by the parent company with other
relevant information. When preparing consolidated financial statement, the Company
considers the Group as a accounting entity, adopts unified accounting policies, and
applies the requirements of ASBE related to recognition, measurement and presentation
to reflect the Group’s financial position, operating results and cash flows.
All the subsidiaries within the consolidation scope of consolidated financial statements
shall adopt the same accounting policies and accounting periods as those of the
Company. If the accounting policies or accounting periods of a subsidiary are different
from those of the Company, the financial statements of the subsidiary, upon preparation of
consolidated financial statements, shall be made necessary adjustment based on its own
accounting policies and accounting periods of the Company.
For subsidiaries acquired from the business combination not under common control, the
financial statements shall be adjusted on the basis of the fair value of identifiable net
assets on the date of purchase. For the subsidiary acquired from the business
combination under common control, its assets and liabilities (including the goodwill formed
by the acquisition of the subsidiary by the ultimate controlling party) shall be adjusted on
the basis of the book value in the consolidated statements of the ultimate controlling party.
The portion of a subsidiary’s equity, the current net profit and loss of subsidiaries, and the
current comprehensive income attributable to non-controlling interests shall be separately
presented as non-controlling interests in consolidated balance sheet within owners' equity,
below the net profit line item and below the total comprehensive income line item in the
consolidated income statement respectively. When the amount of current loss attributable
to non-controlling shareholders of a subsidiary exceeds the balance of the non-controlling
shareholders’ portion in the opening balance of owner's equity of the subsidiary, the
excess shall be allocated against the non-controlling interests.
Acquisition of subsidiaries or business
During the reporting period, if the Company acquires subsidiaries from the business
combination under common control, the opening balance in the consolidated balance
sheet shall be adjusted. The income, expenses and profits of the newly acquired
subsidiaries from the beginning to the end of the reporting period shall be included in the
consolidated income statement. The cash flows of the newly acquired subsidiaries from
the beginning to the end of the reporting period shall be included in the consolidated
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
statement of cash flows. At the same time, the relevant items of the comparative
information shall be adjusted as the combined entity existed since the control point of the
ultimate controlling party.
If the Company can control the investee from the business combination under common
control due to additional investment or other reasons, the parties involved in the combine
shall be deemed to adjust in the current state when the ultimate controlling party starts to
control them. For the equity investment before obtaining control of the investee, the
recognized relevant profit or loss and other comprehensive income and other changes in
net assets between the later of acquisition date of previous equity and the date on which
both the investor and the investee are under common control and the combination date
shall respectively write-down the beginning retained earnings or current profits and losses
during the period of comparative information.
During the reporting period, if the Company acquires subsidiaries from the business
combination not under common control, the opening balance in the consolidated balance
sheet shall not be adjusted. The income, expenses and profits of the newly acquired
subsidiaries from the acquisition date to the end of the reporting period shall be included
in the consolidated income statement. The cash flows of the newly acquired subsidiaries
from the acquisition date to the end of the reporting period shall be included in the
consolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee not under
common control due to additional investment or other reasons, the Company shall
re-measure the previously held equity interests to its fair value on the acquisition date,
and the difference shall be recognized as investment income.
When the previously held equity investment is accounted for under equity method, any
other comprehensive income previously recognized and other equity changes
(excluding other comprehensive, net profit and loss and profit distribution ) in relation to
the acquiree’s equity changes shall be transferred to profit and loss for the current period
when acquisition took place, except for other comprehensive income resulting from
changes in net liabilities or net assets due to re-measurement of defined benefit plan by
investee.
Disposal of subsidiaries and business
General treatments
During the reporting period, if the Company disposes subsidiaries, the income, expenses
and profits of the newly disposed subsidiaries from the beginning to the disposal date
shall be included in the consolidated income statement. The cash flows from the
beginning to the disposal date shall be included in the consolidated statement of cash
flows.
In case of loss of control over the investee due to partial disposal of the equity investment
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
or other reasons, the Company shall re-measure the remaining equity investment at its
fair value at the date of loss of control. The amount of the consideration obtained from the
disposal of the equity and the fair value of the remaining equity, minus the net asset
shares calculated continuously from the acquisition date based on the previous
shareholding proportion and the goodwill, the difference shall be included in the
investment income of the period when the control is lost.
Other comprehensive income related to the former subsidiary’s equity investment of or
other changes in owners' equity excluding net profit and loss, other comprehensive
income and profit distribution shall be transferred to investment income for the current
period when control is lost. Other comprehensive income resulting from changes in net
liabilities or net assets due to re-measurement of defined benefit plan by investee is
excluded.
Disposal of subsidiaries by step
If the Company loses control of a subsidiary is through multiple transactions by steps, the
terms, conditions and economic impact of the disposal transaction shall be considered.
When one or more of the following conditions may indicate that multiple transactions
should be treated as a package of transactions for accounting treatment:
a.These arrangements were entered into at the same time or in contemplation of
each other;
b.These arrangements work together to achieve an overall commercial effect;
c.The occurrence of one arrangement depends on the occurrence of at least one
other arrangement;
d.One arrangement alone is not economically justified, but it is economically justified
when considered together with other arrangements
If the transactions of the disposal of the equity investment of the subsidiary until the loss of
control belong to a package transaction, the Company shall account for as a transaction;
However, the difference between each disposal consideration received and the
corresponding proportion of the subsidiary’s net assets before the loss of control shall be
recognized as other comprehensive income in the consolidated financial statements and
transferred into the profit and loss of the current period when the control is lost.
If the transactions from the disposal of the equity investment of the subsidiary to the loss
of control are not considered as a package transactions, the accounting treatment shall be
conducted according to the relevant policies on the partial disposal of the equity
investment of the subsidiary where control is retained before the loss of control. When the
control is lost, the disposal shall be accounted for according to the general treatment.
Purchase of non-controlling interests
The difference between the increase in the cost of long-term equity investment result from
acquisition of non-controlling shareholders and the share of net assets of the subsidiary
calculated continuously from the acquisition date or combination date based on newly
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shareholding proportion shall be adjusted to equity (share) premium of capital reserves in
the consolidated balance sheet. If the capital reserve is insufficient, any excess shall be
adjusted against retained earnings.
Partial disposals of equity investment in subsidiaries without loss of control
When the Company disposes of a portion of a long-term equity investment in a subsidiary
without loss of control, the difference between disposal consideration and net assets of
the subsidiary calculated continuously since the acquisition date or the combination date
related to the disposal of long-term equity investment shall be adjusted to equity (share)
premium of capital reserves in the consolidated balance sheet. If the capital reserve is
insufficient, any excess shall be adjusted against retained earnings.
5.7 Classification of joint venture arrangements and the accounting
treatment method of common operation
(1) Classification of joint venture arrangements
A joint arrangement is classified as either a joint operation or a joint venture according to
the structure, legal form, agreed terms and other facts and conditions of a joint
arrangement.A joint arrangement that is structured through a separate vehicle is usually
classified as a joint venture. However, when a joint arrangement provides clear evidence
that it meets any of the following requirements and complies with applicable laws and
regulations as a joint operation:
a. The legal form of the joint arrangement indicates that the parties that have joint
control have rights to the assets, and obligations for the liabilities, relating to the
arrangement.
b. The terms of the joint arrangement specify that the parties that have joint control
have the rights to the assets, and the obligations for the liabilities, relating to the
arrangement.
c. Other facts and circumstances indicate that the parties that have joint control have
rights to the assets, and the obligations for the liabilities, relating to the arrangement.
The parties that have joint control have rights to substantially all of the output of the
arrangement, and the arrangement depends on the parties that have joint control on a
continuous basis for settling the liabilities of the arrangement.
A joint arrangement that is not structured through a separate vehicle shall be classified as
a joint operation. A separate vehicle refers to a separately identifiable financial structure,
including separate legal entities or entities without a legal personality but recognized by
statute.
(2) Accounting by parties of a joint operator
A joint operator shall recognize the following items in relation to its interest in a joint
operation, and account for them in accordance with relevant accounting standards:
a. Its solely-held assets, and its share of any assets held jointly;
b. Its solely-assumed liabilities, and its share of any liabilities incurred jointly;
c. Its revenue from the sale of its share of the output arising from the joint operation;
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d. Its share of the revenue from sale of the output by the joint operation; and
e. Its solely-incurred expenses and its share of any expenses incurred jointly.
The Company shall only recognize the portion of the profit and loss attributable to other
participants in the joint venture, resulting from investment or sale of assets to the joint
venture by the Company (excluding those assets constituting the business), prior to the
sale of such assets to a third party. The Company shall fully recognize impairment loss
when there are any impairment loss of invested or sold assets occurring in accordance
with the ASBE No.8-Asset Impairment. The Company shall only recognize the part of the
profit and loss attributable to other participants in the joint venture before selling the
assets and other assets purchased from the joint venture (excluding those assets
constituting the business) to a third party. When the impairment loss of the purchased
assets is in accordance with the ASBE No.8-Asset Impairment, the Company shall
recognize such losses according to its share. When the Company does not have common
control over the joint venture, if the Company enjoys the assets related to the joint venture
and assumes the liabilities related to the joint venture, the accounting treatment shall be
conducted according to the above principles. Otherwise, the accounting treatment shall be
conducted in accordance with the relevant accounting standards.
5.8 Cash and cash equivalents
When preparing the cash flow statement, the Company recognizes cash on hand and
deposits that can be readily withdrawn on demand as cash. Cash equivalents are the
Company’s short-term (due within 3 months from purchase date), highly liquid
investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value. Restricted bank deposits are not recognized as
cash and cash equivalents in the cash flow statement.
5.9 Foreign currency transactions and translation of foreign currency
statements
(1) Foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the
amount in the foreign currency shall be translated into the amount in CNY currency at the
spot exchange rate of the transaction date. For the monetary items of foreign currencies,
the translation is done according to spot rate of the balance sheet date. The exchange
difference generated from the difference of spot rate of the current balance sheet date and
the time of initial recognition of a foreign currency or the previous balance sheet date is
charged to the profit or loss of the current period except that the exchange difference
generated from foreign currency borrowings relating to assets of which the acquisition or
production satisfies the capitalization conditions is capitalized. Non-monetary items
measured at fair value that is reflected in foreign currency at the end of the period, the
Company shall firstly translate the foreign currency into the amount in functional currency
at the spot exchange rate on the date when the fair value is determined, and then
compare it with the original functional currency amount. Difference between the translated
functional currency amount and the original functional currency amount is treated as profit
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or loss from changes in fair value (including changes in exchange rate) and is recognized
in current profit and loss. If there is a non-monetary item of available-for-sale financial
assets, the differences are recorded into other comprehensive income.
(2) Translation of foreign currency statements
Assets and liabilities in the balance sheets shall be translated at the spot exchange rates
on balance sheet date. Shareholders’ equity items, except for the item of "undistributed
profits", are translated at the spot exchange rates on the dates when the transactions
occur. Revenue and expense items in the income statement are translated at the spot
exchange rates on the dates when the transactions occur or at the exchange rate
determined in a systematical and reasonable method and similar to the spot exchange
rate on the day when the transactions occur. Differences arising from the above
translations of foreign currency financial statements are separately listed under other
comprehensive income in the consolidated balance sheet. If the overseas business is
partly disposed of, the foreign currency financial statements exchange difference shall be
calculated in proportion to the percentage of disposal and transferred to gain or loss on
disposal for the current period. Foreign currency cash flow and cash flow of foreign
subsidiaries shall be translated at approximate exchange rate of spot rate on the date of
cash flow.
5.10 Financial instruments
(1) Classification of financial assets and financial liabilities
At the time of initial recognition, financial assets shall be classified into the following four
categories:
Financial assets measured at fair value through current profit or loss;
Held-to-maturity investments;
Loans and receivables; and
Available-for-sale financial assets.
At the time of initial recognition, financial liabilities shall be classified into the following two
categories:
Financial liabilities measured at fair value through current profit and loss (including
financial liabilities held for trading and financial liabilities directly designated to be
measured at fair value through current profit and loss); and
Other financial liabilities.
(2) Recognition basis and measurement method of financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a
financial asset or financial liability.
At the time of initial recognition of financial assets shall be measured at fair value while
their subsequent measurement of the four categories are different.
For financial assets or financial liabilities measured at fair value through current profit
and loss, they are initially measured at the amount of fair value upon acquisition, and
relevant transaction expenses are included in the current profit and loss when
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incurred. Cash dividends or bond interest gained during the holding period shall be
recognized as investment income. On the balance sheet date, they shall be
measured at fair values and the changes in their fair values shall be included in
current profit or loss. When disposing of a financial asset held for trading, the
Company recognizes the difference between the payment actually received and the
book value of the financial asset held for trading on the disposal date, and transfers
the accumulative amount previously included in profit or loss on changes in fair value
to the investment income.
For available-for-sale financial assets, they are initially recognized at the sum of fair
value upon acquisition and relevant transaction expenses. Cash dividends or bond
interest gained during the holding period shall be recognized as investment income.
On the balance sheet date, the available-for-sale financial assets are measured at
fair values and the changes in their fair values are included in other comprehensive
income. Upon disposal, the difference between the payment actually received and
the book value of an available-for-sale financial asset shall be included in investment
income; and meanwhile, the amount arising from the accumulated changes in fair
value, which have been previously included in other comprehensive income, shall be
transferred out and included in the investment profit or loss. However, if there is a
equity instrument investment that cannot be reliably measured at fair value in an
active market without quotation and a derivative financial assets linked with the equity
instrument investment and settled with it, they shall be measured at their costs.
For receivables arising from external sales of goods or rendering of service according,
their initial recognition amounts shall be the contract price or agreement price. Upon
recovery or disposal, the difference between the price received and the book value of
loans and receivables are included in the current profit and loss.
For held-to-maturity investments, they are initially measured at the total amount of
their fair values upon acquisition and related transaction expenses. Interest income is
calculated and recognized during the holding period according to the amortized cost
and effective interest rates, and included in the investment income. Upon disposal,
the difference between the actual proceeds and the book value of the held-to-maturity
investment is recognized as investment income.
Financial liabilities measured at fair value through current profit and loss are measured at
fair when they are acquired. Relevant transaction costs are directly included in the current
profit and loss. It shall be subsequently measured at the fair value during the holding
period. For other financial liabilities, the sum of the fair value and relevant transaction
costs shall be taken as the initial amount of recognition at the time of acquisition. It shall
be subsequently measured at amortized cost with effective interest rate method during the
holding period.
(3) The determination of the fair value of financial assets and financial liabilities
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For financial assets or financial liabilities in an active market, the fair value shall be
determined by quotation in the active market; Where there is no active market, the fair
value shall be determined by adopting valuation technology; The fair value of the initially
acquired or derived financial assets or the assumed financial liabilities shall be determined
based on the market transaction price.
(4) Test and extraction method of impairment provision of financial assets
On the balance sheet date, the Company shall check the book values of its financial
assets (excluding the financial assets measured at fair value through current profit and
loss), and recognize impairment losses on the financial assets with objective evidence of
impairment, and provide reserves for the impairment.
The impairment test can be conducted separately for the individually significant financial
assets and individually insignificant financial assets, or the impairment test can be
included in the financial asset portfolio with similar credit risk characteristics.
For loans and receivables and held-to-maturity investments, the impairment loss is
recognized at the difference between its book value and its present value of estimated
future cash flows. If there is objective evidence to show that its value has been reversed,
the previously recognized impairment loss can be reversed into the current profit and loss.
When the impairment of the available-for-sale financial asset occurs, even if the financial
asset is not derecognized, the accumulated loss caused by the decrease of fair value
previously directly included in the owner's equity shall be transferred out and included in
the current profit and loss. For the available-for-sale debt instrument, the previous
impairment provision can be reversed into the current profit and loss when the fair value
rises subsequently. For available-for-sale equity instrument investment, the impairment
provision shall not be reversed through the profit and loss.
(5) Recognition and measurement of transfer of financial assets
If nearly all of the risks and rewards of ownership of the financial assets have been
transferred to the transferee, the Company derecognizes the financial assets; If nearly all
of the risks and rewards of ownership of the financial assets are retained, the Company
shall not derecognize the financial assets. When the Company neither transfers nor
retains nearly all of the risks and rewards of ownership of the financial assets, if the
Company gives up control of the financial asset, the Company derecognizes the financial
assets; if not, the relevant financial assets shall be recognized according to the degree of
continuing involvement in the transferred financial assets, and the relevant liabilities shall
be recognized accordingly.
If the transfer of financial asset satisfies the criteria of derecognition, the difference
between the amounts of the following two items shall be included in the current profit and
loss: The book value of the transferred financial asset; The sum of the consideration
received from the transfer and the accumulated amount of the changes in fair value
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originally and directly included in other comprehensive income (the situation where the
financial asset transferred is an available-for-sale financial asset is involved in).
If the partial transfer of financial asset satisfies the criteria of derecognition, the entire
book value of the transferred financial asset shall be divided between the derecognized
and recognized parts according to their respective fair values and the difference between
the amounts of the following two items shall be included in the current profit and loss: The
book value of derecognized part; The sum of the consideration for the derecognized part
and the portion of derecognition corresponding to the accumulated amount of the changes
in fair value originally and directly included in other comprehensive income (the situation
where the financial asset transferred is an available-for-sale financial asset is involved in).
5.11 Notes and accounts receivables
(1) Recognition criteria and provision method of bad debts of individually significant
receivables
Individually significant receivables refer to accounts receivable,
its closing balances are over CNY 5 million, other receivable,
Recognition criteria of individually
its closing balances are over CNY 3 million, and Individually
significant receivables
overdue notes receivable, repayments and long-term
receivables, its closing balances are over CNY 5 million.
The Company obtains the debtor's solvency information to
analyze the possible bad debt loss; the Company separately
conducts impairment tests on the individually significant
receivables that relevant debtor's solvency information cannot
Provision method of individually be obtained (or cost is too high). These receivables shall be
significant receivables divided into several portfolios according to similar credit risk
characteristics, and then the impairment loss is recognized
according to the closing balances of the portfolio on the
balance sheet date in accordance with a certain proportion,
and the bad debt provision is recognized.
(2) Receivables whose bad debt provisions are made by portfolio
Portfolio name Provision method of bad debt
Receivables that are not individually significant but
whose risk is significant according to the portfolio of Aging analysis method
credit risk characteristics
Other non-significant receivables Aging analysis method
Among portfolios, adopting aging analysis method：
√ Applicable N/A
Proportion of provision for Proportion of provision for
Aging
accounts receivable other receivables
Within 1 Year (Inclusive) 5.00% 5.00%
1-2 years 10.00% 10.00%
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Proportion of provision for Proportion of provision for
Aging
accounts receivable other receivables
2-3 Years 20.00% 20.00%
3-4 Years 40.00% 40.00%
4-5 Years 80.00% 80.00%
Over 5 Years 100.00% 100.00%
Among portfolios, adopting percentage of balance method:
Applicable √ N/A
Among portfolios, adopting other method:
Applicable √ N/A
(3) Accounts receivable that are individually insignificant but separately accrued
bad debt provisions
The bad debt provision made by portfolio is
Reason for making provision for bad debt
obviously lower than the possible loss of
separately
this receivable.
Impairment loss is recognized by the
Provision method of bad debt difference between the present value of its
future cash flow and its book value.
5.12 Inventory
Whether the Company needs to comply with the disclosure requirement of special
industry.
No
(1) Classification of inventory
Inventories are classified as: raw materials, goods in progress, semi-finished goods, stock
commodities, dispatched inventories, revolving materials (including packing materials and
low-cost consumables).
(2) Measurement method of dispatched inventories
The standard cost is used for daily accounting of raw materials, and the difference of
material cost should be carried forward on a monthly basis to adjust the standard cost into
the actual cost;The goods in progress and semi-finished goods shall be accounted
according to the actual cost, and the weighted average method shall be used when they
are received and delivered. The actual cost of the inventory at the end of the month above
shall be taken as the standard cost, and the delivery shall be priced according to the
standard cost. At the end of the month, the standard cost of the inventory at the end of the
month shall be adjusted into the actual cost through the cost-sharing difference.
(3) Basis to determine net realizable values of inventories and method of provision for
stock obsolescence
At the end of the period, inventory is measured according to the lower of cost and net
realizable value. The difference between inventory cost and net realizable value is higher
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than the provision for stock obsolescence , which is recorded into current profit and loss.
For inventories that are related to product ranges produced and sold in the same district or
used for the same or similar ultimate purpose and are difficult to be measured separately
from other inventories, the Company provides for stock obsolescence as a whole. For
inventories that have large quantities but low value, the Company provides for stock
obsolescence on a category basis.
The materials held for production shall be measured at cost if the net realizable value of
the finished products is higher than the cost. If a decline in the value of materials shows
that the net realizable value of the finished products is lower than the cost, the materials
shall be measured at the net realizable value.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization method of packing materials and low-cost consumables
It is amortized in full at once.
5.13 Assets held for sale
(1) Classification of non-current assets held for sale or disposal groups
The Company shall classify the non-current assets or disposal group meeting the
following conditions into the held-for-sale category: The assets (or disposal group) must
be available for immediate sale in its present condition subject only to terms that are usual
and customary for sales of such assets (or disposal groups); Its sale must be highly
probable.; The Company has already made a decision to dispose the component and has
a commitment from the purchaser, the transfer will be completed within one year.
The non-current assets or disposal group acquired by the Company for resale shall be
divided into the held-for-sale category on the acquisition date if it meets the condition that
"the sale is expected to be completed within one year" and if it is likely to meet other
conditions for the held-for-sale category within a short period (usually three months).
Due to one of the following reasons that the Company is unable to control, leading to the
transactions uncompleted with non-related party within one year, and the Company still
commits to sale non-current assets or disposal groups, it can continue to account for
non-current assets or disposal groups as held-for-sale: the buyer or any other party
accidentally set sale extension condition. The Company has to take action in time
according to these conditions and the extension problem is expected to be solved within
one year; In rare cases, the Company has taken the necessary steps and re-satisfy the
hold for sale category condition within the first year for the new circumstances which
caused it unable to complete the sale of the non-current assets or disposal group within
one year.
(2) Measurement of non-current assets or disposal groups held for sale
a. Initial measurement and subsequent measurement
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When the Company measure a non-current asset or disposal group held for sale
initially or re-measure at balance sheet date subsequently, the impairment loss
should be recognized if the book value is higher than fair value less costs to sell at the
amount of the difference of these two in profit and loss, the provision for assets held
for sale need to be recognized at the same time.
For the non-current assets or disposal groups divided into held-for-sale category on
the acquisition date, they shall be measured as the lower of the initial measurement
amount and the net amount after deducting the selling expenses from the fair value
under the assumption that it is not divided into held-for-sale categories at the initial
measurement.Except for the non-current assets or the disposal groups obtained in
the enterprise merger, the difference caused by the non-current assets or the
disposal groups taking the net amount after the fair value minus the selling expenses
as the initial measurement amount shall be recorded into the current profit and loss.
For the impairment of disposal group, it should write off goodwill if existing, and then
write down the related assets proportionally. Depreciation or amortization should
cease for the non-current asset held for sale. Interest and other charges on liabilities
in the disposal groups held for sale continue to be recognized.
b. Accounting treatment of reversal of impairment loss
If the net amount of the non-current assets held for sale on the subsequent balance
sheet date increases after the fair value minus the selling expenses, the amount
previously written down shall be reversed, and the amount of the impairment loss
recognized after being classified as the held-for-sale shall be reversed, and the
reversed amount shall be included in the current profit and loss. The impairment loss
recognized before the classification of the held-for-sale shall not be reversed.
If the net amount of the disposal groups held for sale on the subsequent balance
sheet date increases after the fair value deducting the selling expenses, the amount
previously written down shall be reversed, and the amount of the impairment loss
recognized as non-current assets after being classified as the held-for-sale shall be
reversed, and the reversed amount shall be included in the current profit and loss.
The book value of the goodwill that has been written down and the impairment losses
recognized before the classification of the held-for-sale shall not be reversed.
The subsequent reversed amount of the impairment loss recognized by the disposal
groups held for sale shall be increased in proportion to the book value of non-current
assets except goodwill in the disposal groups.
c. The accounting treatment that does not continue to be classified as held-for-sale
and the termination of recognition
Non-current assets or disposal groups that are no longer divided into held-for-sale
category or non-current assets are removed from disposal groups held for sale
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because of no longer meeting the condition of classification of held-for-sale, they are
measured at lower of the following two: book value before being classified as the
held-for-sale considering depreciation, amortization or impairment that should have
been recognized under the assumption that it is not divided into held-for-sale
categories; and recoverable amount.
When terminating the recognition of the non-current assets held for sale or the
disposal groups, the unrecognized gains or losses shall be recorded into the current
profit and loss.
5.14 Long-term equity investment
(1) Judgment criteria of common control and significant influence
Common control on an agreement with other participants refers to the Company share
control with other participants on an arrangement according to relevant conventions,
which exists only when decisions about the relevant activities require the unanimous
consent of the parties sharing control. This arrangement belongs to joint venture. Where
the joint venture arrangement is made by a separate entity and the Company is judged to
have rights to the net assets of such a separate entity according to the relevant
conventions. Such a separate entity shall be regarded as a joint venture and accounted by
the equity method. If the Company is judged to be not entitled to the net assets of the
separate entity according to relevant conventions, the separate entity shall be regarded as
a joint venture and the Company shall recognize the items related to the shares of the
joint venture and perform accounting treatment in accordance with relevant accounting
standards.
The term ‘significant influence’ refers to the power to participate in decision-making on the
financial and operating policies of the investee, but with no control or joint control over the
formulation of these policies. The Company judges that it has a significant impact on the
invested entity through one or more of the following situations and taking all the facts and
circumstances into consideration:
Dispatch representatives to the board of directors or similar authorities of the
investee.
To participate in the financial and business policy making process of the investee.
Significant transactions with the investee.
Dispatch management personnel to the investee.
To provide key technical data to the investee.
(2) Determination of the initial investment cost
a. Long-term equity investment resulting from combination
Business combination under common control：
For the long-term equity investments obtained by cash paid, non-monetary assets
paid or assumed liabilities and the equity securities issued by the acquirer, on the
merger date, the initial investment cost of long-term equity investment shall be taken
as the share of the owner's equity of the investee in the book value of the final control
party's consolidated financial statements. If the investee under business combination
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under common control can be controlled due to additional investment or other
reasons, the initial investment cost of long-term equity investment shall be
determined on the merger date according to the share of the net assets of the
investee in the book value of the final control party's consolidated financial
statements. The difference between the initial investment cost of the long-term equity
investment on the merger date and sum of the book value of the long-term equity
investment before the merger and the new consideration of acquiring shares on the
merger date shall be recorded to adjust the equity premium. If the equity premium is
insufficient to be written down, the retained earnings shall be written down.
Business combination not under common control：The Company takes the initial
investment cost of long-term equity investment as the merger cost determined on the
purchase date. If the investee can be controlled under business combination not
under common control due to additional investment or other reasons, the previous
book value of the equity investment held plus the sum of the newly added investment
cost shall be taken as the initial investment cost calculated according to the cost
method.
b. Long-term equity investment obtained by other means
For the long-term equity investments obtained by cash paid, the Company recognizes
their fair value as the initial investment costs.
For the long-term equity investments acquired by the issue of equity securities, the
initial investment cost shall be the fair value of the equity securities issued.
For long-term equity investments obtained by non-monetary assets exchange, under
the condition that an exchange of non-monetary assets is of commerce nature and
the fair value of assets exchanged can be reliably measured, non-monetary assets
traded in is initially stated at the fair value of the assets traded out, unless there is
conclusive evidence indicating that the fair value of the assets traded in is more
reliable; if the above conditions are not satisfied, initial investment costs of long-term
equity investments traded in shall be recognized at the book value of the assets
traded out and the relevant taxes and surcharges payable.
For long-term equity investments obtained by debt restructuring, the Company
recognizes the fair value of shares of debt-for-equity swap as the initial investment
costs.
(3) Subsequent measurement and recognition of profit and loss
a. Long-term equity investments measured under the cost method
Long-term equity investments that can control the investee are measured under the
cost method. For long-term equity investments accounted at the cost method, except
cash dividends or profits declared but not yet distributed which are included in the
actual payments or the consideration actually paid for the investment, the cash
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dividends or profits declared by the investee shall be recognized as the investment
income irrespective of net profits realized by the investee before investment or after
investment.
b. Long-term equity investments measured under the equity method
For the long-term equity investment which has joint control or significant influence
over the investee, the equity method is adopted for accounting. For long-term equity
investments measured at the equity method, if the initial investment costs are higher
than the investor’s attributable share of the fair value of the investee’s identifiable net
assets, no adjustment will be made to the initial costs of the long-term equity
investments; if the initial investment costs are lower than the investor’s attributable
share of the fair value of the investee’s identifiable net assets, the difference shall be
recognized in current profit and loss.
The Company shall, according to the shares of net profits and other comprehensive
income realized by the investee that shall be enjoyed or borne by the Company,
recognize the profit and loss on the investments and adjust the book value of the
long-term equity investments. When recognizing the net profits and losses and other
comprehensive income of the investee that the Company shall enjoy or bear, the
Company shall make a recognition and calculation based on the net book profits and
losses of the investee after appropriate adjustments. However, where the Company is
unable to obtain the relevant information due to failure to reasonably determine the
fair value of the investee’s identifiable assets, minor difference between the
investee’s identifiable assets and the book value thereof or other reasons, the profits
or losses on the investments shall be directly calculated and recognized based on the
net book profits and losses of the investee. The Company shall calculate the part
distributed from cash dividends or profits declared by the investee and
correspondingly reduce the book value of the long-term equity investments.
When recognizing the income from investments in associates and joint ventures, the
Company shall write off the part of incomes from internal unrealized transactions
between the Company and associates and joint ventures which are attributable to the
Company and recognize the profit and loss on investments on such basis. Where the
losses on internal transactions between the Company and the investee are
impairment of related assets, full amounts of such losses shall be recognized. Profit
and loss from internal unrealized transactions between the Company’s subsidiaries
included into the combination scope and associates and joint ventures shall be
written off according to the above principles and the profit and loss on investments
thereafter shall be recognized on such basis.
When the share of net loss of the investee attributable to the Company is recognized,
it is treated in the following sequence: Firstly, write off the book value of the long-term
equity investments; where the book value of the long-term equity investments is
insufficient to cover the loss, investment losses are recognized to the extent that book
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value of long-term equity which form net investment in the investee in other
substances and the book value of long-term receivables shall be written off; after all
the above treatments, if the Company still assumes additional obligation according to
investment contracts or agreements, the obligation expected to be assumed should
be recognized as provision and included into the investment loss in the current period.
If the investee is profitable in subsequent accounting periods, the Company shall treat
the loss in reverse order against that described above after deducting unrecognized
share of loss: i.e. write down the book value of the recognized provision, then restore
the book value of long-term interests which substantially form net investments in the
investee, then restore the book value of long-term investments, and recognize
investment income at the same time.
5.15 Investment property
Measurement model of investment property
Cost model
Method of depreciation or amortization
Investment property is the property that is held to earn rent or capital appreciation or both
and can be measured and sold separately. The Company’s investment property includes
land use right already rent, land use right held for appreciation and then sold, and
buildings already rent.
(1) Initial Recognition
When the Company can obtain the rental income or value-added income related to the
investment property and the cost of the investment property that can be measured reliably,
the Company will initially measure it according to the actual expenditure of purchase or
construction:
The cost of the purchased investment property includes the purchase price and related
taxes directly attributable to the asset;
The cost of self-built investment property consists of the necessary expenses incurred
before the asset reaches the intended use condition;
The cost of the investment property obtained by other means shall be recognized in
accordance with relevant accounting standards.
(2) Subsequent measurement
In general, the Company adopts the cost model to measure the follow-up expenditure of
investment property. The depreciation or amortization of investment property shall be
carried out in accordance with the accounting policies for the Company's fixed assets or
intangible assets.
If there is solid evidence suggests that the investment property acquired can be measured
at fair value continuously and reliably, the Company can use fair value model for
subsequent measurement. For the investment property measured at fair value model, the
Company does not provide depreciation or amortization and adjusts its book value based
on the fair value of investment property at the balance sheet date. The difference between
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the fair value and book value is recorded into current profit or loss.
(3) When the Company changes the use of investment property, the relevant investment
property will be transferred to other assets.
5.16 Fixed assets
(1) Recognition of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities,
providing services, renting or business management with useful life exceeding one
accounting year. Fixed assets are recognized when the following criteria are satisfied
simultaneously: It is probable that the economic benefits relating to the fixed assets will
flow into the Company; The cost of the fixed assets can be measured reliably.
(2) Depreciation of fixed assets
Estimated useful Estimated residual Annual depreciation
Category Depreciation method
life (Years) value rate (%) rate(%)
Buildings and
Straight-line method 10－35 5 9.50－2.71
Constructions
Special equipment Straight-line method 5－30 5 19.00－3.17
Universal
Straight-line method 4－15 5 23.75－6.33
equipment
Transportation
Straight-line method 6 5 15.83
equipment
Other equipment Straight-line method 4－16 5 23.75－5.94
(3) Recognition standard, valuation method and depreciation method for fixed assets
acquired under financing lease
If the purchase price of a fixed asset exceeds the normal credit conditions and the
payment is delayed, which has a financing nature, the cost of the fixed asset shall be
determined on the basis of the present value of the purchase price. The difference
between the actual price paid and the present value of the purchase price, unless it should
be capitalized, shall be recorded into the current profit and loss in the credit period. For
fixed assets acquired under financing lease, at the inception of the lease, the Company
shall recognizes it at the lower of the fair value of the leased assets or the present value of
the minimum lease payments.Adapt the same depreciation method as the one used on
other fixed assets owned by the Company. If there is reasonable assurance that the
Company will obtain the ownership of the leased assets when the lease term expires, the
leased assets should be depreciated over its useful life; if there is no reasonable
assurance that the Company will obtain the ownership of the leased assets when the
lease term expires, the leased assets should be depreciated over the shorter of the lease
term or the useful life of the leased assets.
5.17 Construction in progress
Whether the Company needs to comply with the disclosure requirement of special
industry.
No
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(1) Construction in progress refers to various construction and installation works carried
out for the construction or repair of fixed assets, including the actual expenditure incurred
in new construction, reconstruction and expansion, and the net value of fixed assets
transferred from the reconstruction and expansion projects.
(2) Construction in progress is accounted on an individual project basis with actual cost
valuation method. The borrowing costs incurred before the projects reach the intended
use condition shall be included in the project cost. The fixed assets shall be carried
forward in the month when the project is qualified for acceptance and delivery for use. For
those that have reached the intended use condition but have not yet completed the final
account, from the date of reaching the intended use condition, according to the project
budget, construction cost or the actual cost of the project, the cost transferred to the fixed
assets shall be determined according to the estimated value, and the depreciation shall be
recognized; After the completion of the final account, the original provisional value shall be
adjusted according to the actual cost, but the amount of depreciation accrued shall not be
adjusted.
(3) The loan interest and related expenses incurred during the construction period shall be
capitalized into the cost of the construction in Progress.
(4) On the balance sheet date, the construction in progress is recognized at the lower of
book value and recoverable amount.
5.18 Borrowing costs
(1) Scope of borrowing costs and its capitalization conditions
The Company’s borrowing costs capitalized during period of capitalization are relevant
loan expenses directly attributable to the assets eligible for capitalization, including
interest thereon, amortization of discounts or premiums, ancillary expenses and exchange
differences incurred from foreign currency loan, etc.
Borrowing costs are capitalized when the following three conditions are met
simultaneously: (1) the asset expenditure has occurred, (2) the borrowing costs have
occurred, (3) the purchase and construction activities necessary to make the assets reach
the intended use condition have started.
(2) Recognition of capitalized amounts
The capitalized amount of borrowing expenses is calculated as follows:
As for special loan borrowed for acquiring and constructing or producing assets eligible for
capitalization, borrowing costs of special loan actually incurred in the current period less
the interest income of the loans unused and deposited in bank or return on temporary
investment should be recognized as the capitalization amount of borrowing costs. As for
general loans used for acquiring and constructing or producing assets eligible for
capitalization, the interest of general loans to be capitalized should be calculated by
multiplying the weighted average of asset disbursements of the part of accumulated asset
disbursements in excess of special loans by the capitalization rate of used general loans.
During the period of capitalization, the capitalized amount of interest of each accounting
period shall not exceed the current actual interest of the relevant loans. Where there are
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discounts or premiums on loans, the amounts of interest for each accounting period
should be adjusted taking account of amortizable discount or premium amounts for the
period by effective interest method. Auxiliary expenses incurred from special loans before
the acquired or constructed assets eligible for capitalization reach the working condition
for their intended use or sale should be capitalized when they incur and charged to the
costs of assets eligible for capitalization; those incurred after the acquired or constructed
assets eligible for capitalization reach the working condition for their intended use or sale
should be recognized as costs according to the amounts incurred when they incur and
charged to the current profit or loss.
(3) Recognition of capitalization rate
For a special loan for the purchase and construction of fixed assets, the capitalization rate
is the interest rate of the loan;
For more than one special loan for the acquisition and construction of fixed assets, the
capitalization rate is a weighted average interest rate of these loans.
(4) Capitalization suspension of borrowing costs
If the acquisition and construction or production activities of assets eligible for
capitalization are interrupted abnormally and this condition lasts for more than three
months, the capitalization of borrowing costs should be suspended. The borrowing costs
incurred during interruption are charged to profit or loss for the current period, and the
capitalization of borrowing costs continues when the acquisition and construction or
production activities of the asset resume.
(5) Capitalization cessation of borrowing costs
Capitalization of borrowing costs should cease when the acquired and constructed or
produced assets eligible for capitalization have reached the working condition for their
intended use or sale. Borrowing costs incurred after the assets eligible for capitalization
have reached the working condition for their intended use or sale should be recognized as
the current profit and loss when they incur. If parts of the acquired and constructed or
produced assets are completed separately but the assets cannot be used or sold
externally until overall completion, the capitalization of borrowing costs should cease at
the time of overall completion of the said assets.
5.19 Intangible assets
(1) Measurement method, useful life, impairment test
Measurement method
a. Costs of intangible assets purchased include purchase price, related tax and
expenses and other expenditure that can be distributed to the asset directly to reach
its expected use.
b. Intangible assets invested by investors shall be valued at the value agreed upon in
the investment contract or agreement;
c. Expenses on the research phase of internally researched and developed intangible
assets shall be included in the current profit and loss when they incur; The
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expenditures incurred in the development stage of the internal research and
development projects shall be recognized as intangible assets when the following
conditions are met; otherwise, they shall be recorded into the current profit and loss
when they incur.
i.It is technically feasible to finish intangible assets for use or sale;
ii. It is intended to finish and use or sell the intangible assets;
iii. The usefulness of methods for intangible assets to generate economic
benefits shall be proved, including being able to prove that there is a potential
market for the products manufactured by applying the intangible assets or there
is a potential market for the intangible assets themselves or the intangible assets
will be used internally;
iv. It is able to finish the development of the intangible assets, and able to use or
sell the intangible assets, with the support of sufficient technologies, financial
resources and other resources.
v. The expenditure attributable to the intangible asset during its development
phase can be measured reliably.
d. If payment of the purchase price of intangible assets can be deferred and exceeds
normal credit conditions, the purchase has the nature of finance in fact and cost of the
intangible asset shall be determined on the basis of present value of the purchase
price.The difference between the amount actually paid and the present value of the
purchase price should be recorded into current profit or loss other than those should
be capitalized during the credit period.
Useful life and amortization method
For intangible assets with limited useful life, amortization shall be carried out according to
the straight-line method within the period that brings economic benefits to the enterprise.
At the end of each period, the useful life and amortization method of intangible assets with
limited service life shall be reviewed. If there are differences with the original estimates,
corresponding adjustments shall be made.
Intangible assets whose useful life is uncertain shall be regarded as intangible assets if it
is impossible to foresee the term in which intangible assets bring economic benefits to the
enterprise. Intangible assets with uncertain useful life shall not be amortized during the
holding period, and the life of intangible assets shall be reviewed at the end of each period.
If it is still uncertain after the review at the end of the period, the impairment test shall
continue during each accounting period. At the end of each period, the useful life of
intangible assets with uncertain service life shall be reviewed.
Impairment test
On the balance sheet date, intangible assets are valued at the lower of book value and
recoverable amount.
(2) Internal research and development expenditure accounting policy
The expenditures incurred in the development stage of the internal research and
development projects shall be recognized as intangible assets when the following
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conditions are met; otherwise, they shall be recorded into the current profit and loss when
they occur.
a.It is technically feasible to finish intangible assets for use or sale;
b.It is intended to finish and use or sell the intangible assets;
c.The usefulness of methods for intangible assets to generate economic benefits
shall be proved, including being able to prove that there is a potential market for the
products manufactured by applying the intangible assets or there is a potential market
for the intangible assets themselves or the intangible assets will be used internally;
d.It is able to finish the development of the intangible assets, and able to use or sell
the intangible assets, with the support of sufficient technologies, financial resources
and other resources.
e.The expenditure attributable to the intangible asset during its development phase
can be measured reliably.
Development expenditures that have been recorded into profit and loss in previous periods
are not recognized as assets in subsequent periods. The capitalized expenditure in the
development stage is listed as development expenditure in the balance sheet, and it will be
recorded into intangible assets from the date when the project reaches its intended
purpose.
5.20 Non-current assets impairment
On the balance sheet date, the Company makes a judgment on whether there are signs of
possible impairment of long-term assets. If there are impairment indicators of non-current
assets, the Company estimates the recoverable amount based on individual asset. If
recoverable amount of individual asset is difficult to be estimated, the Company should
recognize the recoverable amount of the asset group which the individual asset belongs to.
The recoverable amount is the higher of fair values less costs of disposal and the present
values of the future cash flows expected to be derived from the asset.
If the measurement result of recoverable amount shows that recoverable amount of the
non-current assets is less than its book value, the book value shall be written down to the
recoverable amount, and the amount written down shall be recognized as the impairment
loss of assets, recorded into the current profit and loss, and the corresponding impairment
provision of assets shall be made at the same time. Once impairment loss stated above is
recognized, reversal is not allowed in the subsequent accounting periods.
After the recognition of the impairment loss, the depreciation or amortization expense of
the impairment asset shall be adjusted accordingly in the future period so as to
systematically apportion the adjusted book value of the asset (deducting the expected net
salvage value) within the remaining service life of the asset.
The Company should perform impairment test for goodwill and intangible assets with
indefinite life at least at each year end, no matter whether there is impairment indicator.
Goodwill shall be combined with its related asset group or asset group portfolio so as to
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perform an impairment test. When the Company performs an impairment test on relevant
asset group or asset group portfolio including goodwill, if there are signs of impairment,
the Company shall firstly perform an impairment test on asset group or asset group
portfolio excluding goodwill and calculate the recoverable amount, and compare with the
related book value, recognize the corresponding impairment loss. Then, the Company
performs an impairment test on relevant asset group or asset group portfolio including
goodwill, and compares the book value of the relevant asset groups or asset group
portfolio (including proportional book value of goodwill) with its recoverable amount. If the
recoverable amount of relevant asset group or asset group portfolio is less than its book
value, the Company shall recognize impairment loss of goodwill.
5.21 Long-term deferred expenses
Long-term deferred expenses shall be initially measured according to the actual costs
incurred. It is amortized using the straight-line method over the beneficial period. If it
cannot benefit the following accounting period, the amortized value of the item that has
not been amortized will be transferred to the current profit and loss.
5.22 Employee benefits
(1) Accounting treatment method of short-term benefits
Short-term benefits are the benefits that the Company expects to pay in full within 12
months after the reporting period in which the employee provided relevant services,
excluding the compensation for employment termination.
Accrued short term benefits will be recognized as liability during the accounting period in
which the employee is providing the relevant service to the Company. The liability will be
included in the current profit and loss or the relevant assets cost .
(2) Accounting treatment method of post-employment benefits
Defined contribution plan
The defined contribution plan of the Company includes payments of basic pension and
unemployment insurance calculated according to the local payment base and proportion.
The amount shall be included into the profit and loss or the relevant assets cost for the
accounting period in which the employee provides the service to the Company.
Defined benefit plan
According to the formula determined by the expected accumulative projected unit credit
method, the Company will record the benefit obligation generated by the defined benefit
plan belonging to the period during in which the employee provides the service into the
current profit and loss or the relevant assets cost.
The deficit or surplus resulting from the present value minus the fair value of the assets of
a defined benefit plan is recognized as a net liability or net asset of a defined benefit plan.
If there is surplus in the defined benefit plan, the net assets of the defined benefit plan shall
be measured at the lower of the surplus and the upper limit of assets of the defined benefit
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plan.
All defined benefit plan obligations, including those expected to be paid within the twelve
months following the end of the annual reporting period in which the employee provides the
service, are discounted based on the market yield and high quality corporate bonds in an
active market that match the duration and currency of defined benefit plan obligations on
the balance sheet date.
The service costs generated by the defined benefit plan and the net interest on net
liabilities or net assets of the defined benefit plan are included in the current profit and loss
or relevant assets cost; Changes in net liabilities or net assets generated by the
re-measurement of the defined benefit plan are included in other comprehensive income
and are not reversed to profit and loss in subsequent accounting periods.
At the time of settlement of the defined benefit plan, the settlement gains or losses shall be
recognized according to the difference between the present value of the obligations of the
defined benefit plan and the settlement price determined on the settlement date.
(3) Accounting treatment method of termination benefits
Employee benefits liabilities shall be recognized and included into profit or loss for the
current period on the earlier date of the two following circumstances:
a. When the Company is not able to withdraw the benefits from termination of
employment or resignation persuasion unilaterally;
b. When the Company recognizes costs and fees relevant to reforming the termination
benefits payment.
As for the termination benefits that cannot be fully paid within 12 months after the end of
the annual report period, the Company shall choose an appropriate discount rate and
record it into current profit and loss based on it.
(4) Accounting treatment method of other long-term employee benefits
Other long-term employee benefits are all employee benefits other than short-term
benefits, post-employment benefits and termination benefits. Other long-term employee
benefits provided by the Company to the employee that meet the conditions of the defined
contribution plan shall be treated in accordance with the same principles of the defined
contribution plan; If the conditions for defined benefits are met, net liabilities or net assets
of other long-term employee benefits shall be recognized and measured in accordance
with the relevant principles of the defined benefits plan.
5.23 Estimated liabilities
(1) Recognition criteria of estimated liabilities
If the contingent obligations meet the following conditions simultaneously, the Company
shall recognize it as an estimated liability :
This obligation is the Company's current obligation; The performance of this obligation is
highly likely to result in an outflow of economic benefits from the Company; The amount of
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the obligation can be measured reliably.
(2) Measurement method of estimated liabilities
The Company's estimated liabilities are initially measured in terms of the best estimate of
the expenditure of fulfilling the relevant current obligations.
For determining the best estimate, the Company takes various factors into account such
as the risk, uncertainty and time value of money related to contingencies. If the time value
of money has a significant impact, the best estimate is determined by discounting the
relevant future cash outflows.
The best estimate is processed as follows:
Where there is a continuous range (or range) of required expenditures and the probability
of the occurrence of various results within the range is same, the best estimate is
determined according to the mean of the middle value of the range, namely the mean
value of the upper and lower limits.
Where there is no continuous range (or range) of required expenditures, or where there is
a continuous range but the possibility of various outcomes within the range is different, if
the contingencies involve a single item, the best estimate is determined according to the
most likely amount; If the contingencies involve more than one item, the best estimate is
calculated and determined according to various possible results and relevant probabilities.
Where all or part of the expenses required for the liquidation of the estimated liabilities of
the Company are expected to be compensated by a third party, the amount of
compensation shall be recognized as an asset when it is basically confirmed that it can be
received, and the confirmed amount of compensation shall not exceed the book value of
the estimated liabilities.
5.24 Share-based payment
(1) The type of share-based payment
Share-based payment is classified as equity-settled share-based payment and cash-
settled share-based payment.
(2) The method of determining the fair value of equity instruments
For equity-settled share-based payment related with employees, the equity instrument is
measured at fair value. The cash-settled share-based payment shall be measured
according to the fair value of the liabilities calculated and determined on the basis of
shares or other equity instruments undertaken by the Company.
For the fair value of the stock option granted, the fair value is determined by using the
stock option pricing model, and the following factors are taken into account: the current
price of the underlying shares, the exercise price of the option, the risk-free interest rate
within the period of the option, the option life, and the expected volatility of the stock price.
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(3) Recognition of the best estimate basis of instrument that can be exercised
For the equity-settled share-based payment settled immediately after the grant, the fair
value of the equity instrument shall be included in the relevant costs or expenses on the
grant date, and the capital reserve shall be increased accordingly. Grant date means the
date on which the share-payment agreement is approved.
For the equity-settled share-based payment, in which the services during waiting period
are completed and the performance conditions are met, in return for services of
employees, on each balance sheet date during waiting period, the current obtained
service shall be included in the relevant costs or expenses and the capital reserves in
accordance with the fair value of the equity instruments on the grant date, based on best
estimate of the number of vested equity instruments, and the subsequent changes in fair
value shall not be recognized. On each balance sheet date during waiting period, the
Company makes the best estimate based on the latest available employee number
change and other subsequent information, and modifies the number of equity instruments
for the estimated vesting. On the vesting date, the final expected number of vesting
instruments is the same as the actual number of vesting instruments.
(4) Relevant accounting treatment of implement, modification and termination of
share-based payment plan
For equity-settled share-based payment, no adjustments will be made to the recognized
costs and total owners' equity after the vesting date. On the vesting date, the Company
shall recognize the share capital and the equity premium according to the exercise
situation, and carry forward the capital reserve recognized in the waiting period.
No matter how it modifies the terms and conditions of the granted equity instruments or it
cancels the granted equity instruments or its settlement, the equity instruments granted by
the Company shall be recognized at fair value on the grant date and it measures obtained
the corresponding services, unless it cannot be vested because it cannot meet the vesting
conditions of equity instruments (except market conditions).
5.25 Revenue
Whether the Company is required to comply with special industry disclosure requirements
No
(1) Recognition of revenue from sales of goods
Revenue is recognized when the following conditions can be met: it has transferred
significant risks and rewards of ownership of the goods to the purchaser; the Company
retains neither continuing managerial involvement usually related to the ownership nor
effective control over the sold goods; the relevant economic benefits are highly likely to
flow into the Company; relevant revenues and the costs can be measured reliably.
(2) Recognition principals of revenue from transfer of asset use right.
The specific conditions of the Company’s recognition of revenue: for domestic sales, it
shall specify the sales items and rights and obligations of both parties according to the
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signed sales contract or agreement. The Company shall take the receipt of the payment or
the receipt voucher as the basis and recognize the revenue after the customer signs for
the receipt of the goods. For export commodities, the revenue shall be recognized when
the Company receives the customs declaration form of export goods (export tax rebate
copy) and issues export invoices after certifying an agent export certificate in tax bureau.
(3) Revenues of rendering of services
If the service is commenced and completed within the same fiscal year, the Company
recognizes revenue from rendering of service when the service is completed. If the
commencement and completion of services are in separate fiscal years, the Company
recognizes revenue from rendering of service using the percentage-of-completion method
on the balance sheet date when the outcome of service transactions can be estimated
reliably. When the outcome of service transactions cannot be estimated reliably, the
Company recognizes and measures revenue according to the principle of prudence.
(4) Revenue from transfer of asset use right
Revenue is recognized when the following conditions can be met: the relevant economic
benefits can flow into the Company; relevant revenues can be measured reliably.
5.26 Government grants
Government grants are monetary assets and non-monetary assets acquired free of
charge by the Company from the government like fiscal subsidies.
(1) Judgment basis and accounting treatment method of government grants related to
assets
Government grants related to assets are government grants that are acquired by the
Company and used for forming long-term assets through purchasing and constructing or
other ways. If the government documents do not clearly specify the target of the subsidy,
the Company shall separately explain judgment basis of classifying the government
grants into the government grants related to assets or income.
Accounting method: it shall be recognized as deferred income allocated evenly over the
useful lives (the period of depreciation and amortization) of the relevant assets from the
month of commence of depreciation or amortization when the relevant assets reaching
the intended use condition, and included in the current profit or loss. However,
government grants measured at the nominal amount shall be directly included in current
profit and loss.
(2) Judgment basis and accounting treatment method of government grants related to
income
Government grants related to income are government grants other than government
grants related to assets.
Accounting method:
a. If it is used to compensate the Company’s relevant expenses or losses in future
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periods, it should be recognized as deferred income and included into the current
profit and loss or written off of the related costs when the relevant expenses, losses
are recognized.
b. If it is used to compensate the Company’s relevant expenses or losses incurred, it
is directly included into the current profit and loss on acquisition or written off of the
related costs.
c. Recognition time-point of government grants
Government grants are recognized when the Company can meet the attached
conditions for the government grants and the Company can receive the grants.
d. Measurement of government grants
If a government grant is a monetary asset, it shall be measured in the light of the
received or receivable amount. If a government grant is a non-monetary asset, it shall
be measured at its fair value; and if its fair value cannot be obtained in a reliable way,
it shall be measured at a nominal amount.
5.27 Deferred tax assets or deferred tax liabilities
The Company adopts the balance sheet liability method to account for income tax.
The Company recognizes deferred tax assets when the following conditions are met
simultaneously
i. temporary differences are highly likely to be reversed in the foreseeable future;
ii. taxable income that may be used to offset the deductible temporary difference is
likely to be obtained in the future and is limited to the amount of taxable income that is
likely to be obtained.
On each balance sheet date, the current income tax liabilities (or assets) incurred in the
current period or prior periods shall be measured by the Company in light of the expected
payable (refundable) amount of income taxes according to the tax law; The deferred
income tax assets and deferred income tax liabilities shall be measured at the tax rate
applicable to the period during which the assets are expected to be recovered or the
liabilities are expected to be settled.
The Company shall review the carrying amount of deferred income tax assets on each
balance sheet date. The current income tax and deferred income tax shall be recorded
into the current profit and loss as income tax expense or income, except for the income
tax generated from the enterprise merger, transactions or events directly recognized in the
owner's equity.
5.28 Lease
(1) Accounting treatment of operating lease
a. The Company records rents of leased assets into current expense using straight
line method in each period of the lease term including rent-free period. Initial direct
expenses incurred are recorded into current expense. Contingent rents are recorded
into current profit or loss when occur. When the lessor bears the leasehold expenses
which shall be borne by the Company, the expenses shall be deducted from total
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rents and the residual rent is recognized into current profit or loss in each period of
the lease term.
b. The rents arsing from leasing assets shall be recorded into rent revenue using
straight line method in each period of the lease term including rent-free period. Initial
direct expenses incurred are recorded into current expense. If the amount is large, it
shall be capitalized and recorded into current income in installment in the period of
lease term according to the same recognition base of rent revenue. When the lessee
bears the leasehold expenses which shall be borne by the Company, the expenses
shall be deducted from total rents and the residual rent is amortized in each period of
the lease term.
（2）Accounting treatment of finance lease
a. As the lessee, it recognizes the lower of fair value of lease asset and minimum
lease payment at the beginning day of the lease as the initial value of the asset
leased in and the minimum lease payment as long-term payable, the difference as
unrealized finance expense. Unrealized finance expense is amortized in the period
during the lease term and recognized as current finance expenses using actual
effective rate method.
b. As the lessor, it recognizes the difference between the total of minimum lease
amount received and residual amount not guaranteed and present value of that as
unrealized finance income. It recognizes unrealized finance income as rent revenue
in the period of lease term when the Company receives rent. The initial direct
expense related to the lease transaction shall be recorded in the initial recognition of
finance lease receivable and be deducted from recognized income in the period of
lease term.
5.29 Changes in significant accounting policies and accounting
estimates
(1) Changes in significant accounting policies
Applicable √ N/A
(2) Changes in significant accounting estimates
Applicable √ N/A
6. Taxes
6.1. Major tax types and rates
Tax type Tax base Tax rate
Value-added tax Taxable sales income 17%、16%、11%、10%、6%
Urban maintenance and
Taxable turnover tax 7%
construction tax
Corporate income tax Taxable income 25%、15%、16.5%、0%
Consumption tax（based on price） Liquor tax price or ex-factory price 20%
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Tax type Tax base Tax rate
Consumption tax（based on
Quantity of wine CNY 1.00/kg
quantity）
Education surcharge Taxable turnover tax 3%
Local education surcharge Taxable turnover tax 2%
Original value of the
Property tax 1.2%、12%
property×70%;house rent
Land use tax Land area CNY 5-18.00/m2
Others According to national regulation
Tax payment subject using different corporate income tax rates, the corporate income tax
rates are as follows:
Company name Corporate income tax rate
Luzhou Pinchuang Technology Co., Ltd. 15%
Luzhou Laojiao International Development（Hong Kong）Co., Ltd. 16.5%
Mingjiang Co., Ltd. 21%-40%
Exempted from corporate income
Luzhou Red Sorghum Modern Agricultural Development Co., Ltd.
tax
6.2. Tax preferences
(1) According to Announcement of the State Administration of Taxation on Corporate
Income Tax Questions Concerning the Further Implementation of the Western
Development Strategy (State Administration of Taxation Announcement No.12 of 2012),
from 1 January 2011 to 31 December 2020, companies are located in the western region
whose primary business is listed in the Catalogue of Encouraged Industries in the
Western Region, and the annual primary business income accounting for over 70% of the
total enterprise income. These companies can be subject to the corporate income tax at a
reduced rate of 15%. The Company's holding subsidiary, Luzhou Pinchuang Technology
Co., Ltd., whose primary business income meet the requirements of scope and amount of
the Catalogue of Encouraged Industries in the Western Region, is paid at the rate of 15%
for corporate income tax.
(2) The Company's holding subsidiary, Luzhou Laojiao International Development（Hong
Kong）Co., Ltd., is paid at the rate of 16.5% for corporate income tax according to Hong
Kong tax rate standard.
(3) Corporate income tax in the USA is a kind of income tax levied on the global income of
American resident companies and the income of non-USA resident companies derived
from the USA, which is divided into federal, state and local levels. In addition, the regular
federal corporate income tax adopts a progressive tax rate system. The holding subsidiary
of the Company, Mingjiang Co., Ltd., pays corporate income tax at the rate of 21% to 40%,
according to the tax rate standard in the USA.
(4) According to Article 27 of the Corporate Income Tax Law of the People's Republic of
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China and Article 86, Item 3 of the Implementation Regulations of the Corporate Income
Tax Law, companies are exempted from enterprise income tax when they engage in
agricultural, forestry, animal husbandry and fishery industries. The holding subsidiary of
the Company, Luzhou Red Sorghum Modern Agricultural Development Co., Ltd., is
engaged in the cultivation and sale of organic sorghum and enjoys the reduction of
corporate income tax preferences.
(6) According to the Article 15, Item 1 of the Provisional Regulations on Value-Added Tax,
agricultural producers sell self-produced agricultural products exempt from value-added
tax. The holding subsidiary of the Company, Luzhou Red Sorghum Modern Agricultural
Development Co., Ltd., is engaged in the cultivation and sale of organic sorghum and
enjoys the value-added tax exemption.
7. Notes to the main items of the consolidated financial
statements (All currency unit is CNY, except other statements)
7.1. Cash and cash equivalents
Item Closing Balance Opening Balance
Cash 4,420.76 10,907.81
Bank deposit 9,364,716,075.36 8,449,228,764.98
Other cash and cash equivalents 2,666,131.56 382,482.12
Total 9,367,386,627.68 8,449,622,154.91
Including: total deposit outbound 57,439,384.10 27,106,540.20
Other statements:
1. The total amount of funds deposited outbound is CNY 57,439,384.10, including: Luzhou
Laojiao International Development (Hong Kong) Co., Ltd., the holding subsidiary of the
Company, with a total amount of CNY 56,937,446.51 in cash and bank deposits, and CNY
501,937.59 in bank deposits of Mingjiang Co., Ltd., the holding subsidiary of the
Company.
2. The closing balance of other cash and cash equivalents is the travel service deposit of
CNY 1,400,000.00 deposited by the Company's wholly-owned subsidiary, Luzhou Laojiao
Tourism Culture Co., Ltd., in the designated bank according to the regulations of the
tourism bureau, and balance of CNY 1,266,131.56 deposited by the Company's holding
subsidiary, Luzhou Laojiao Electronic Commerce Co., Ltd. on the third-party e-commerce
platform.
7.2. Notes and accounts receivable
Item Closing Balance Opening Balance
Notes receivable 2,388,326,476.15 2,492,813,857.65
Accounts receivable 10,333,728.87 8,008,857.20
Total 2,398,660,205.02 2,500,822,714.85
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7.2.1. Notes receivable
7.2.1.1. Classification of notes receivable
Item Closing Balance Opening Balance
Bank acceptance bill 2,388,326,476.15 2,492,813,857.65
Total 2,388,326,476.15 2,492,813,857.65
7.2.1.2. Notes receivable that have been endorsed to other parties by the Company
but have not expired at the end of year
Item Derecognition at period end Not derecognition at period end
1
Bank acceptance bill 2,850,597,353.26
Total 2,850,597,353.26
Note: 1. The acceptor of the bank acceptance bill is a commercial bank. The probability of
not being paid due is very low, and the possibility of being recourse is very low, so the
confirmation has been terminated. However, if the bill expires without payment, the
Company will still bear joint liability to the holder in accordance with the provisions of the
Negotiable Instruments Law.
7.2.1.3. Notes transferred to the accounts receivable due to the non-performance of
the agreements by the issuers
There are no notes transferred to accounts receivable due to the non-performance of the
agreements by the issuers.
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7.2.2. Accounts receivable
7.2.2.1. Analysis by categories
Closing Balance Opening Balance
Type Book balance Provision for bad debt Book balance Provision for bad debt
Book Value Book Value
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Accounts receivable tested for
impairment on the portfolio with 10,922,591.46 100.00% 588,862.59 5.39% 10,333,728.87 8,431,442.86 100.00% 422,585.66 5.01% 8,008,857.20
characteristics of credit risk
Total 10,922,591.46 100.00% 588,862.59 5.39% 10,333,728.87 8,431,442.86 100.00% 422,585.66 5.01% 8,008,857.20
Accounts receivable with significant single amount and tested for impairment individually:
Applicable √ N/A
An analysis of provision under the aging analysis method:
√ Applicable N/A
Closing Balance
Aging
Accounts receivable Provision for bad debt Proportion
Classification of within 1 year
Risk free 1,526.40
Within 1 year 10,064,878.25 503,243.91 5.00%
Sub-total 10,066,404.65 503,243.91 5.00%
1-2 years 856,186.81 85,618.68 10.00%
Total 10,922,591.46 588,862.59 5.39%
Statements for determining the portfolio:
Accounts receivables using balance percentage method to provide bad debt:
Applicable √ N/A
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7.2.2.2. Provision and recovery for bad and doubtful debt in the current period
The provision allowance of current period is CNY 166,276.93. The recovery of current
period is CNY 0.00.
7.2.2.3. Accounts receivable actually written off during the reporting period
Statements for accounts receivable written off:
There is no accounts receivable actually written off during the reporting period.
7.2.2.4. Top five entities with the largest balances of accounts receivable
Relationship with Proportion in
Company name Closing Balance Provision Amount
the Company the total (%)
Zhejiang Tmall Technology Co., Client 4,642,740.20 232,137.01 42.51
Ltd.
Shanghai Shengdayuan 2,757,743.93 137,887.20 25.25
Information Technology Co., Client
Ltd.
Horgos Kunhui Co., Ltd. Client 766,403.15 76,549.29 7.02
Beijing Jiuxian Network 454,022.86 22,701.14 4.16
Client
Technology Co., Ltd.
Luzhou Happiness Setting 441,140.91 22,057.05 4.04
Client
Sailing E-commerce Co., Ltd.
Total 9,062,051.05 491,331.69 82.97
7.2.2.5. Derecognition of accounts receivable due to transfer of financial assets
There is no derecognition of accounts receivable due to transfer of financial assets during
the reporting period.
7.2.2.6. Amount of assets and liabilities resulting from transfer of accounts
receivable and continuing involvement
There are no assets and liabilities resulting from transfer of accounts receivable and
continuing involvement during the reporting period.
7.3. Prepayment
7.3.1. Aging analysis
Aging Closing Balance Opening Balance
Amount Proportion Amount Proportion
Within 1 year 130,442,246.83 95.04% 192,495,796.28 97.31%
1-2 years 6,801,326.83 4.96% 245,864.97 0.12%
Over 3 years 5,093,855.21 2.57%
1
Total 137,243,573.66 -- 197,835,516.46 --
Note: The closing balance decreased CNY 60,591,942.80 compared with the opening
balance,with a decrease by 30.63%, which was mainly due to the prepaid part of
advertising fee in the previous period that has been settled in the current period.
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Statements for significant prepayment whose aging longer than 1 year and unsettled in
time:
There is no significant prepayment whose aging is longer than 1 year.
7.3.2. Top five entities with the largest balances of prepayment
Relationship with the Proportion in the
Company name Closing balance
Company total
Shanghai Merlot Advertising Co., Ltd. Supplier 55,999,806.00 40.80
New Shottes Brook Private Company Supplier 18,086,370.77 13.18
Australian Tennis Co., Ltd. Supplier 8,631,875.00 6.29
Sass Diva Bion Co., Ltd. Supplier 4,396,975.53 3.20
Luzhou Super Value Trading Co., Ltd. Supplier 4,204,100.00 3.06
Total 91,319,127.30 66.54
7.4. Other receivables
Item Closing Balance Opening Balance
Interest receivable 29,970,944.44 14,546,875.69
Other receivables 136,554,065.72 221,179,068.43
Total 166,525,010.16 235,725,944.12
7.4.1. Interest receivable
7.4.1.1. Classification of interest receivable
Item Closing Balance Opening Balance
Fixed deposits 29,970,944.44 14,546,875.69
Total 29,970,944.44 14,546,875.691
Note: 1.The closing balance increased CNY 15,424,068.75 compared with opening
balance, with an increase by 106.03%, mainly due to the increase of interest income on
fixed deposit resulting from stock funds in the current period.
7.4.1.2. Significant interest receivable overdue
There is no significant interest receivable overdue at end of the period.
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7.4.2. Other receivables
7.4.2.1. Other receivables disclosed by categories
Closing Balance Opening Balance
Type Book balance Provision for bad debt Book balance Provision for bad debt
Book Value Book Value
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Other receivables
with significant
single amount and
307,456,275.25 89.50% 200,000,000.00 65.05% 107,456,275.25 400,000,000.00 92.86% 200,000,000.00 50.00% 200,000,000.00
tested for
impairment
individually
Other receivables
tested for
impairment on the
36,069,225.42 10.50% 6,971,434.95 19.33% 29,097,790.47 30,765,253.79 7.14% 9,586,185.36 31.16% 21,179,068.43
portfolio with
characteristics of
credit risk
Total 343,525,500.67 100.00% 206,971,434.95 60.25% 136,554,065.72 430,765,253.79 100.00% 209,586,185.36 48.65% 221,179,068.43
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Other receivables with significant single amount and tested for impairment individually:
√ Applicable N/A
Closing balance
Company Name Other Provision for bad Proportion of
Reason
receivables debt provision
The annual report of the Company in
2014 disclosed that the three savings
deposits in the Agricultural Bank of China
Changsha Yingxin branch, Industrial and
Commercial Bank of China Ltd. Nanyang
Zhongzhou branch and another bank, a
total of CNY 500,000,000.00. Due to the
contract disputes, it loses the nature of
cash and cash equivalents, and it is
transferred to “other receivables”. As the
end of 31 December 2018, the Company
has recovered CNY 182,163,803.24 of
another deposit among CNY
200,000,000.00 mentioned in the Notice
Agricultural Bank of
of Important Matters No. 2015-1 and CNY
China Changsha Yingxin
10,379,921.51 of the deposit of
Branch, Industrial and
65.05% Agricultural Bank of China Changsha
Commercial Bank of 307,456,275.25 200,000,000.00
Yingxin branch. So far, the unrecovered
China Ltd. Nanyang
amount of deposits involving contract
Zhongzhou Branch and
disputes was CNY 307,456,275.25. On 6
another bank.
January 2019, the lawyers of Beijing
Weiheng (Chengdu) Law Firm issued the
Legal Opinion of Luzhou Laojiao Co., Ltd.
on the provision for bad debt on abnormal
deposits in Changsha, Nanyang and
another place, which indicated that "since
25 March 2016, to the date issuing legal
opinion on the proportion of provision for
bad debt, there was no event that can
affect the change of provision for bad
debt, so the judgment on the provision for
bad debt of CNY 200 million was still
maintained”. For details please see Note
12.2.
Total 307,456,275.25 200,000,000.00 -- --
An analysis of provision under the aging analysis method:
√ Applicable N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Closing Balance
Aging
Other receivables Provision for bad debt Proportion of provision
Within 1 year 27,994,235.26 1,399,711.76 5.00%
1-2 years 636,506.00 63,650.60 10.00%
2-3 years 2,245,417.94 449,083.59 20.00%
3-4 years 184,722.70 73,889.08 40.00%
4-5 years 116,218.00 92,974.40 80.00%
Over 5 years 4,892,125.52 4,892,125.52 100.00%
Total 36,069,225.42 6,971,434.95 19.33%
Statements for determining the portfolio:
Other receivables using balance percentage method to provide bad debt:
Applicable √ N/A
Other receivables using other method to provide bad debt:
Applicable √ N/A
7.4.2.2. Provision and recovery for bad and doubtful other receivables in the current
period.
The provision allowance of current period is CNY -2,201,616.55. The recovery of current
period is CNY 0.00.
7.4.2.3. Other receivables actually written off during the reporting period
Item Written off amount
Other receivables actually written off 413,133.86
Statements for written off:
There are no significant other receivables actually written off.
7.4.2.4. Analysis of other receivables by category
Category Closing Balance Opening Balance
Intercourse funds 26,300,395.29 23,529,848.53
Petty cash 2,963,363.02 3,734,517.61
Saving deposits involving contract disputes 307,456,275.25 400,000,000.00
Other 6,805,467.11 3,500,887.65
Total 343,525,500.67 430,765,253.79
7.4.2.5. Top five entities with the largest balances of the other receivables
Provisioning
Proportion in total
Company Name Category Closing Balance Aging amount at period
receivables
end
Agricultural Bank of China
Changsha Yingxin branch,
Saving deposits
Industrial and Commercial
involving contract 307,456,275.25 4-5 years 89.50% 200,000,000.00
Bank of China Ltd. Nanyang
disputes
Zhongzhou branch and
another bank.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Provisioning
Proportion in total
Company Name Category Closing Balance Aging amount at period
receivables
end
Zhejiang Tmall Technology Online platform
Co., Ltd. fee, security 5,743,646.09 Within 1 year 1.67% 287,182.30
deposit, etc.
Housing and Urban-Rural
Within 1
Development Bureau of
Security deposit 2,401,617.09 year,1-2 0.70% 131,336.00
Longmatan District, Luzhou
years
City
Luzhou Electric Power 2-3
Bureau of Longmatan Security deposit 1,520,000.00 years,Over 5 0.44% 912,000.00
District, Luzhou City years
China Real Estate
Development Corporation Loan 1,500,000.00 Over 5 years 0.44% 1,500,000.00
Luzhou Branch
Total -- 318,621,538.43 -- 92.75% 202,830,518.30
7.4.2.6. Other receivables involving government subsidy
There are no other receivables involving government subsidy during the reporting period.
7.4.2.7. Other receivables derecognized arising from financial assets transfer
There are no other receivables derecognized arising from financial assets transfer during
the reporting period.
7.4.2.8. Amount of assets and liabilities resulting from transfer of other receivables
and continuing involvement
There are no assets and liabilities resulting from transfer of other receivables and
continuing involvement during the reporting period.
7.5 Inventories
Does the Company need to comply with the disclosure requirements of real estate
industry
No
7.5.1. Categories of Inventories
Closing Balance Opening Balance
Category Provision for Provision for
Book Balance stock Book Value Book Balance stock Book Value
obsolescence obsolescence
Raw materials 68,423,897.18 68,423,897.18 67,290,652.11 67,290,652.11
Goods in
138,889,316.08 138,889,316.08 133,177,796.66 133,177,796.66
progress
Finished goods 1,181,824,032.21 1,181,824,032.2 871,353,398.56 871,353,398.56
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Closing Balance Opening Balance
Category Provision for Provision for
Book Balance stock Book Value Book Balance stock Book Value
obsolescence obsolescence
1
Revolving
8,812,993.84 8,812,993.84 3,246,579.80 3,246,579.80
materials
Self-made
1,741,647,734.6
semi-finished 1,741,647,734.69 1,629,157,619.19 1,629,157,619.19
9
goods
goods in transit 90,817,775.95 90,817,775.95 107,640,476.94 107,640,476.94
3,230,415,749.9
Total 3,230,415,749.95 2,811,866,523.26 2,811,866,523.26
5
Whether the Company needs to comply with the disclosure requirements of “Shenzhen
Stock Exchange Disclosure Guide No. 4 - Listed Companies Engaged in Seed or Planting
Business”
No.
Whether the Company needs to comply with the disclosure requirements of “Shenzhen
Stock Exchange Disclosure Guide No.11 - Listed Companies Engaged in Jewelry Related
Business”
No.
7.5.2. Provision for stock obsolescence
The net realizable value is not lower than book cost in the closing balance of inventory, so
there is no provision for decline in value of inventories.
7.5.3. Statements for borrowing cost capitalized and included in the closing balance
of inventory
There is no borrowing cost capitalized and included in the closing balance of inventory.
7.5.4. Closing conditions of assets completed but not settled through construction
contracts
There are no closing conditions of assets completed but not settled through construction
contracts.
7.6. Other current assets
Item Closing Balance Opening Balance
Value-added tax 121,918,815.13 23,714,061.05
Corporate income tax 70,659,379.26 48,960,190.22
Other taxes 1,659,042.63 182,168.33
Total 194,237,237.02 72,856,419.60
Other statements:
1. The value-added tax expected to be deducted in the next fiscal year and corporate
income tax and other taxes are disclosed in other current assets.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
2. The closing balance increased CNY 121,380,817.42 compared with the opening
balance, an increase by 166.60%, mainly due to the increase in input value-added tax.
7.7. Available-for-sale financial assets
7.7.1. Details of available-for-sale financial assets
Closing Balance Opening Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
impairment impairment
Available-for-sale 281,572,374.83 5,752,926.37 275,819,448.46 328,327,384.26 5,752,926.37 322,574,457.89
equity instruments
Measured by fair 190,758,692.59 190,758,692.59 237,513,702.02 237,513,702.02
value
Measured by cost 90,813,682.24 5,752,926.37 85,060,755.87 90,813,682.24 5,752,926.37 85,060,755.87
Total 281,572,374.83 5,752,926.37 275,819,448.46 328,327,384.26 5,752,926.37 322,574,457.89
7.7.2. Available-for-sale financial assets measured at fair value at period end
Categories of available-for-sale Available-for-sale Available-for-sale
Total
financial assets equity instruments debt instruments
Cost of equity instruments / Amortized
13,749,156.76 13,749,156.76
cost of debt instruments
Fair value 190,758,692.59 190,758,692.59
Cumulative fair value changes through
177,009,535.83 177,009,535.831
other comprehensive income
Note: 1.Available-for-sale financial assets measured at fair value at the end of the period were stock
investment in Guotai Junan Securities Co.,Ltd. and Sichuan Nitrocell Co.,Ltd..
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7.7.3. Available-for-sale financial assets measured by cost at period end
Book Balance Provision for impairment Proportion of
Current period
Investee Increase in Decrease in Opening Increase in Decrease in Closing equity held in
Opening Balance Closing Balance cash dividends
current period current period Balance current period current period Balance investee
Guotai Junan Investment
22,611,834.24 22,611,834.24 1.64%
Management Co., Ltd.
Commercial Bank of Luzhou
51,120,000.00 51,120,000.00 1.66% 4,339,200.00
City
Shenzhen Xingangfeng
2,354,000.00 2,354,000.00 2,354,000.00 2,354,000.00 33.00%
Development Co., Ltd.
Sichuan Deyang Jintai Hotel 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 3.05%
Hainan Huitong International
1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 0.89%
Trust Company
Sichuan China Liquor Golden
Triangle Brand Operation 1,000,000.00 1,000,000.00 2.86%
Development Co., Ltd.
Guojiu Big Data Co., Ltd. 10,000,000.00 10,000,000.00 11.33%
Luzhou Zunzhi Auto Service
25,000.00 25,000.00 5.00%
Co., Ltd.
Sichuan Zhonghe Tongchuang
200,000.00 200,000.00 200,000.00 200,000.00 2.00%
Maca Investment Co., Ltd.
Luzhou Enterprise Union
502,848.00 502,848.00 198,926.37 198,926.37 11.31%
Trading Co., Ltd.
Total 90,813,682.24 90,813,682.24 5,752,926.37 5,752,926.37 -- 4,339,200.00
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7.7.4. Changes in provision for impairment of available-for-sale assets during the reporting period
Categories of available-for-sale financial assets Available-for-sale equity instruments Available-for-sale debt instruments Total
Opening balance of the provision for impairment 5,752,926.37 5,752,926.37
Closing balance of the provision for impairment 5,752,926.37 5,752,926.37
7.7.5. Statements for fair value of available-for-sale equity instrument at the period end decreases significantly or decreases continuously
but no provision for impairment
There is no significant decline in the fair value of available-for-sale equity instrument at the period end or a continuously decline but no provision for
impairment.
7.8. Long-term equity investments
Changes in Current Period Closing
Gain or loss Adjustments of other Balance of
Investee Opening Balance Other changes in Cash divided or Provision for Closing Balance
Increase Decrease recognized under comprehensive Other provision for
equity profit declared impairment
equity method income impairment
Huaxi Securities Co.,
1,827,461,071.65 89,710,642.15 -359,548.89 171,419,326.19 10,367,583.47 2,077,863,907.63 2,567,098.80
Ltd.
Sichuan
Development Wine 16,636,159.43 -829,619.65 15,806,539.78
Investment Co., Ltd.
Subtotal 1,827,461,071.65 16,636,159.43 88,881,022.50 -359,548.89 171,419,326.19 10,367,583.47 2,093,670,447.41 2,567,098.80
Total 1,827,461,071.65 16,636,159.43 88,881,022.50 -359,548.89 171,419,326.19 10,367,583.47 2,093,670,447.41 2,567,098.80
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Other statements:
1. On 5 February 2018, Huaxi Securities, a joint venture of the Company, was listed on
the Shenzhen Stock Exchange. The shareholding ratio of the Company holding Huaxi
Securities was diluted from 12.99% before the listing to 10.39%; The voting right of
Huaxi Securities was less than 20% but it still has significant influence because the
Company has sent directors to the board of Huaxi Securities and has the
corresponding substantive decision-making power.
2. On 9 February 2018, the 25th meeting of the eighth Board of Directors deliberated and
approved the Proposal on the Acquisition of Equity Related Transactions and Foreign
Investment of Sichuan Development Wine Investment Co., Ltd., deciding to use
owned funds to acquire all 30% equity of Sichuan Development Wine Investment Co.,
Ltd. held by the controlling shareholder Laojiao Group on the estimated price of CNY
10,594,650.00; On 16 October 2018, the 3rd meeting of the ninth board of directors
deliberated and approved the Proposal on the Acquisition of 12% equity of Sichuan
Development Wine Investment, deciding to purchase the 12% equity of the company
listed on the Southwest United Property Exchange by the Sichuan Development
(Holdings) Co., Ltd. at the listing price of CNY 6 million; Thus, the Company holds
42% equity of Sichuan Development Wine Investment Co., Ltd. and has a significant
impact on it with the equity method as an associated enterprise.
7.9. Fixed assets
Item Closing Balance Opening Balance
Fixed assets 1,028,995,516.07 1,129,894,772.60
Disposal of fixed assets 671,399.40
Total 1,029,666,915.47 1,129,894,772.60
7.9.1. Details of fixed assets
Buildings and Specialized General Transportation Other
Item Total
constructions equipment equipment equipment equipment
Original cost
1.Opening
1,173,356,149.69 506,915,296.03 253,176,265.88 39,279,474.84 540,625,993.99 2,513,353,180.43
balance
2.Increase in
9,421,817.90 6,111,604.01 14,168,672.94 85,862.07 38,592,337.50 68,380,294.42
current period
(1)External
303,184.93 3,327,943.13 12,420,866.69 85,862.07 5,703,638.82 21,841,495.64
purchase
(2)Transfer
from
10,679,539.59 388,781.84 4,379,200.58 32,912,204.32 48,359,726.33
construction
in progress
(3)Increase
from business
combination
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Buildings and Specialized General Transportation Other
Item Total
constructions equipment equipment equipment equipment
(4)Original
cost
adjustment for
-1,999,112.27 178,184.72 -1,820,927.551
completion
settlement
Note 1
(5)Internal
2
adjustment of 438,205.65 2,394,879.04 -2,631,394.33 -201,690.36
assets Note 2
3.Decrease in
10,724,390.34 948,586.05 5,263,962.83 2,430,646.98 19,747,583.10 39,115,169.30
current period
(1)Disposal or
10,724,390.34 948,586.05 5,263,962.83 2,430,646.98 19,747,583.10 39,115,169.30
retirement
4.Closing
1,172,053,577.25 512,078,313.99 262,080,975.99 36,934,689.93 559,470,748.39 2,542,618,305.55
Balance
Accumulated
depreciation
1.Opening
557,857,042.47 432,719,199.10 146,887,561.29 30,820,383.50 214,551,281.40 1,382,835,467.76
Balance
2.Increase in
51,066,964.39 33,783,676.07 30,285,255.55 2,078,066.89 37,777,746.33 154,991,709.23
current period
(1)Provision 51,057,890.64 33,732,804.40 30,307,915.91 2,078,066.89 37,815,031.39 154,991,709.23
(2)Internal
adjustment of 9,073.75 50,871.67 -22,660.36 -37,285.06
assets
3.Decrease in
4,487,790.07 697,024.04 4,947,424.69 2,314,506.37 12,380,582.41 24,827,327.58
current period
(1)Disposal or
4,487,790.07 697,024.04 4,947,424.69 2,314,506.37 12,380,582.41 24,827,327.58
retirement
4.Closing
604,436,216.79 465,805,851.13 172,225,392.15 30,583,944.02 239,948,445.32 1,512,999,849.41
Balance
Provision for
impairment
1.Opening
622,940.07 622,940.07
Balance
2.Increase in
current period
(1)Provision
3.Decrease in
current period
(1)Disposal or
retirement
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Buildings and Specialized General Transportation Other
Item Total
constructions equipment equipment equipment equipment
4.Closing
622,940.07 622,940.07
Balance
Book Value
1.Closing
566,994,420.39 46,272,462.86 89,855,583.84 6,350,745.91 319,522,303.07 1,028,995,516.07
Book Value
2.Opening
614,876,167.15 74,196,096.93 106,288,704.59 8,459,091.34 326,074,712.59 1,129,894,772.60
Book Value
Note:
1. The original cost of the assets adjusted for completion settlement in the current period refers to the
difference between the amount of construction in progress of pre-transfer in the previous period and the
amount after the completion of the current period.
2. Internal adjustment of assets in the current period refer that the Company hired an intermediary
agency to re-clean and adjust for the fixed assets category of the previous year in order to manage fixed
assets better.
7.9.2. Fixed assets without certification of right
Item Book value Reason for not having the certification of right
The property ownership certificate has not been processed yet for
Buildings 1,988,539.70 the historical reasons, and it plans to be processed after gradually
improving procedures.
The property ownership certificate has not been processed yet for
Workshop 28,047,411.95 the historical reasons, and it plans to be processed after gradually
improving procedures.
7.9.3. Disposal of fixed assets
Item Closing Balance Opening Balance
Retirement of assets 671,399.40
Total 671,399.40
7.10. Construction in progress
Item Closing Balance Opening Balance
Construction in progress 3,000,489,249.86 1,567,263,995.95
Total 3,000,489,249.86 1,567,263,995.95
7.10.1. Details of the construction in progress
Closing Balance Opening Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
impairment impairment
Technical
renovation project 2,362,483,702.39 2,362,483,702.39 1,159,259,852.35 1,159,259,852.35
of brewing
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Closing Balance Opening Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
impairment impairment
National cellar
square upgrade 396,458,270.43 396,458,270.43 382,650,395.70 382,650,395.70
project
Marketing
network
command center
office area 41,727,132.77 41,727,132.77 569,503.85 569,503.85
reconstruction
and expansion
project
New model
application project
of intelligent
41,628,781.02 41,628,781.02 100,403.31 100,403.31
production
workshop of solid
state liquor
Technical
upgrading project 7,019,543.87 7,019,543.87
of sewage station
Luohan brewing
production
automation 18,143,603.80 18,143,603.80 11,869,453.35 11,869,453.35
equipment
renovation project
Cellar
construction 66,252,965.92 66,252,965.92 2,640,114.50 2,640,114.50
project
Packaging
production line 3,325,592.75 3,325,592.75
purchase project
Other projects 66,775,249.66 66,775,249.66 6,848,680.14 6,848,680.14
Total 3,000,489,249.86 3,000,489,249.86 1,567,263,995.95 1,567,263,995.951
Note: 1.The closing balance increased CNY 1,433,225,253.91 compared with the opening balance, with
an increase by 91.45%, because the technical renovation project of brewing is in the process as planned,
and the investment input increases year by year.
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7.10.2. Significant changes in construction in progress
Proportion of Accumulat Including:
Capitalization
Increase in Transfer into Other accumulative Progress ive Capitalized
Item Budget Opening Balance Closing Balance rate for the Source of funds
current period fixed assets decreases project input (%) capitalized interest for
period (%)
in budget interest the period
Technical Capital raised by
renovation project 7,414,280,000.00 1,159,259,852.35 1,203,223,850.04 2,362,483,702.39 31.86% 40.00 share issuing and
of brewing self-financing
National cellar
square upgrade 420,000,000.00 382,650,395.70 13,807,874.73 396,458,270.43 94.39% 95.00 Other
project
Marketing network
command center
office area
271,500,200.00 569,503.85 41,157,628.92 41,727,132.77 15.37% 30.00 Other
reconstruction
and expansion
project
New model
application project
of intelligent
245,100,000.00 100,403.31 41,528,377.71 41,628,781.02 16.98% 20.00 Other
production
workshop of solid
state liquor
Technical
upgrading project 77,050,000.00 7,019,543.87 7,019,543.87 9.11% 40.00 Other
of sewage station
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Proportion of Accumulat Including:
Capitalization
Increase in Transfer into Other accumulative Progress ive Capitalized
Item Budget Opening Balance Closing Balance rate for the Source of funds
current period fixed assets decreases project input (%) capitalized interest for
period (%)
in budget interest the period
Luohan brewing
production
automation 62,840,000.00 11,869,453.35 22,179,142.87 15,904,992.42 18,143,603.80 28.87% 60.00 Other
equipment
renovation project
Cellar
Capital raised by
construction 65,000,000.00 2,640,114.50 63,612,851.42 66,252,965.92 101.93% 98.00
share issuing
project
Total 8,555,770,200.00 1,557,089,723.06 1,392,529,269.56 15,904,992.42 2,933,714,000.20 -- -- --
7.10.3. Provision for impairment of construction in progress
The net realizable value is not lower than book cost in the closing balance of construction in progress, so there is no provision for impairment of
construction in progress.
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7.11. Intangible assets
7.11.1. Details of intangible assets
No-patent right Computer
Item Land use right Patent right Trademark right Total
technology software
Original cost
1. Opening Balance 303,836,329.47 567,975.00 1,864,746.08 22,589,518.24 328,858,568.79
2. Increase in
9,988,002.65 9,988,002.65
current period
（1）Acquired 9,988,002.65 9,988,002.65
（2）Internal
developed
（3）Business
combination
3. Decrease in
current period
（1）Disposal
4. Closing Balance 303,836,329.47 567,975.00 1,864,746.08 32,577,520.89 338,846,571.44
Accumulated
amortization
1. Opening Balance 81,643,952.97 406,998.96 1,413,835.45 14,354,636.08 97,819,423.46
2. Increase in
6,262,530.17 16,797.50 96,187.68 2,684,259.75 9,059,775.10
current period
（1）Provision 6,262,530.17 16,797.50 96,187.68 2,684,259.75 9,059,775.10
3. Decrease in
current period
（1）Disposal
4. Closing Balance 87,906,483.14 423,796.46 1,510,023.13 17,038,895.83 106,879,198.56
Provision for
impairment
1. Opening Balance
2. Increase in
current period
（1）Provision
3. Decrease in
current period
（1）Disposal or
retirement
4. Closing Balance
Book Value
1. Closing Book 215,929,846.33 144,178.54 354,722.95 15,538,625.06 231,967,372.88
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No-patent right Computer
Item Land use right Patent right Trademark right Total
technology software
Value
2. Opening Book
222,192,376.50 160,976.04 450,910.63 8,234,882.16 231,039,145.33
Value
7.11.2. Details of land use right without the certification of right
Item Book value Reason for not having the certification of right
The ownership certificate has not been processed yet for the
Land use right 191,732.63 historical reasons, and it plans to be processed after gradually
improving procedures.
7.12. Deferred tax assets/ deferred tax liabilities
7.12.1 Deferred tax assets before offset
Closing Balance Opening Balance
Item Deductible temporary Deferred tax Deductible temporary Deferred tax
differences assets differences assets
Provision for asset impairment 216,298,166.31 54,074,386.45 218,751,736.26 54,687,934.08
Unrealized profits from internal
1,309,793,977.06 327,531,965.78 1,293,350,763.20 323,337,690.81
transactions
Deductible losses 872,951.87 218,237.97 3,846,566.85 961,641.71
Impact from salary 201,262,655.64 50,030,751.13 115,528,226.92 28,381,218.67
Impact from deferred earnings 18,840,778.20 4,555,670.74 16,996,051.66 3,908,893.86
Impact from fixed assets depreciation 145,146.51 23,949.17 507,655.76 83,763.20
Total 1,747,213,675.59 436,434,961.24 1,648,981,000.65 411,361,142.33
7.12.2 Deferred tax liabilities before offset
Closing Balance Opening Balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
differences differences
Fair value changes of
177,009,535.83 44,252,383.96 223,764,545.26 55,941,136.35
available-for-sale assets
Total 177,009,535.83 44,252,383.96 223,764,545.26 55,941,136.35
7.12.3. Deferred tax assets or liabilities presented as net value after offset
Closing offset amount Closing balance of Opening offset amount Opening balance of
of deferred tax assets deferred tax assets or of deferred tax assets deferred tax assets or
Item
and deferred tax deferred tax liabilities and deferred tax deferred tax liabilities
liabilities after offset liabilities after offset
Deferred tax assets 436,434,961.24 411,361,142.33
Deferred tax liabilities 44,252,383.96 55,941,136.35
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7.12.4. Details of unrecognized deferred tax assets
Item Closing Balance Opening Balance
Deductible losses 17,608,147.09 28,544,342.43
Impact from provision for impairment of available-for-sale assets 200,000.00 200,000.00
Impact from employee benefits payable 1,618,142.01 1,532,571.82
Impact from deferred earnings 24,000.00
Impact from provision for impairment of assets 5,096.46
Total 19,431,385.56 30,300,914.25
7.12.5. Deductible losses from unrecognized deferred tax assets will due on the
following years
Year Closing Amount Opening Amount Notes
2018 4,426,712.93
2019 1,164,310.73
2020 2,954,015.20 4,649,215.96
2021 8,109,464.53 7,521,410.02
2022 6,544,667.36 10,782,692.79
Total 17,608,147.09 28,544,342.43 --
7.13. Other non-current assets
Item Closing Balance Opening Balance
Value-added tax to be deducted 4,314.05 4,314.05
Prepaid equipment expense 16,919,004.20
Prepaid land expense 26,763,369.74
Others 1,293,208.42
Total 44,979,896.41 4,314.05
Other statements:
1. The closing balance of Value-added tax to be deducted is CNY 4,314.05, which is input tax of Luzhou
Boda Brewing Co., Ltd., a subsidiary of the Company. As it has no business temporarily, it is estimated
that it cannot be deducted within the next year, so it is listed in other non-current assets.
2. The closing balance increased CNY 44,975,582.36 compared with the opening balance, with an
increase by 1,042,537.35%, mainly due to the impact of the new prepayment on construction and
payment on land of CNY 43,682,373.94 in the current period in the Brewery Company, a Company's
subsidiary.
7.14. Notes and accounts payable
Category Closing Balance Opening Balance
Accounts payables 1,292,050,954.06 740,700,050.76
Total 1,292,050,954.06 740,700,050.76
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7.14.1. Presentation of accounts payable
Item Closing Balance Opening Balance
Within 1 year 1,283,226,149.23 734,067,517.60
1-2 years 6,964,123.24 4,227,780.92
2-3 years 544,190.59 661,571.89
Over 3 years 1,316,491.00 1,743,180.35
Total 1,292,050,954.06 740,700,050.761
Note:1.The closing balance increased CNY 551,350,903.30 compared with the opening balance, with an
increase by 74.44%. Firstly, the purchase of raw materials and packaging materials has increased in the
current period. Secondly, the investment in the technical renovation project of brewing has increased
year by year, and the amount of construction equipment payable has increased.
7.14.2. Significant accounts payable aging more than 1 year
Other statements:
There is no significant accounts payable aging more than 1 year.
7.15. Advance from customers
7.15.1. Presentation of advances from customers
Item Closing Balance Opening Balance
Within 1 year 1,548,909,002.82 1,930,720,655.19
1-2 years 31,636,485.70 6,254,648.13
2-3 years 4,230,033.33 3,606,983.63
Over 3 years 19,649,668.11 16,821,732.94
Total 1,604,425,189.96 1,957,404,019.89
7.15.2. Significant advance from customers aging more than 1 year
Item Closing Balance Reason for not settled
Advance from customers of payment for
55,516,187.14 Payment is in settlement period
liquor
Total 55,516,187.14 --
7.16. Employee benefits payable
7.16.1. Employee benefits payable shown as follows
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
Short-term benefits 111,149,325.18 620,624,437.52 495,679,602.71 236,094,159.99
Post-employment benefits-
26,404,135.85 90,661,781.13 85,076,855.00 31,989,061.98
defined contribution plans
Termination benefits 147,072.15 138,100.62 8,971.53
Total 137,700,533.18 711,286,218.65 580,894,558.33 268,092,193.501
Note: 1.The closing balance increased CNY 130,391,660.32 compared with the opening balance, with an
increase by 94.69%, mainly due to the expansion of the Company's scale, the increase in staff, and the
increase in performance pay and bonuses.
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7.16.2. Short-term employee benefits payable shown as follows
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
Wages, bonuses,
85,744,972.24 481,405,751.45 366,428,985.48 200,721,738.21
allowances and grants
Employees’ welfare 44,477,316.98 44,477,316.98
Social insurance premiums 8,183,495.19 27,401,368.10 21,473,000.59 14,111,862.70
Including: Medical
6,717,961.40 22,809,279.76 18,553,665.13 10,973,576.03
insurance premium
Work-related injury
1,020,367.09 2,003,927.55 1,607,354.17 1,416,940.47
insurance
Maternity insurance
445,166.70 2,588,160.79 1,311,981.29 1,721,346.20
premium
Housing funds 51,051.47 51,154,695.25 51,089,737.93 116,008.79
Labor union expenditures
and employee education 17,169,806.28 16,185,305.74 12,210,561.73 21,144,550.29
funds
Total 111,149,325.18 620,624,437.52 495,679,602.71 236,094,159.99
7.16.3. Defined contribution plan shown as follows
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
Basic endowment
7,514,736.36 61,784,911.42 51,536,043.46 17,763,604.32
insurance premium
Unemployment insurance
5,998,331.55 1,913,736.07 752,193.66 7,159,873.96
premium
Enterprise annuity 12,891,067.94 26,963,133.64 32,788,617.88 7,065,583.70
Total 26,404,135.85 90,661,781.13 85,076,855.00 31,989,061.98
7.17. Taxes payable
Item Closing Balance Opening Balance
Value-added tax 416,220,575.79 210,917,636.38
Consumption tax 544,950,527.72 400,011,992.63
Enterprise income tax 580,497,468.84 289,699,536.39
Individual income tax 9,702,128.37 5,534,176.09
Urban maintenance and construction tax 55,496,044.38 43,402,175.65
Education surcharge 22,601,336.84 18,646,679.12
Local education surcharge 13,211,282.71 12,570,849.21
Property tax 389,027.85 1,206,827.35
Stamp duty 4,300,446.09 5,965,709.00
Land use tax 616,031.18
Others 43,206.30 272,446.70
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Item Closing Balance Opening Balance
Total 1,648,028,076.07 988,228,028.52
Other statements: The closing balance increased CNY 659,800,047.55 compared with the opening
balance, with an increase by 66.77%, mainly due to the increase of enterprise income tax, value-added
tax and consumption tax with the growth of sales income in the current period.
7.18. Other payables
Item Closing Balance Opening Balance
Dividends payable 4,500,000.00
Other payables 602,887,024.88 538,692,435.55
Total 602,887,024.88 543,192,435.55
7.18.1. Dividends payable
Item Closing Balance Opening Balance
Dividends due to ordinary shareholders 4,500,000.00
Total 4,500,000.00
Other statements include significant dividends payable overdue for over 1 year and outstanding reasons.
The opening balance of the dividends payable to ordinary shares is the dividends payable of
non-controlling shareholders of Pinchuang company, the Company's subsidiary. It was paid in this
reporting period.
7.18.2. Other payables
7.18.2.1. Categories by nature
Item Closing Balance Opening Balance
Security deposit 543,339,684.25 497,716,438.39
Intercourse funds 28,265,598.58 34,340,599.33
Others 31,281,742.05 6,635,397.83
Total 602,887,024.88 538,692,435.55
7.18.2.2. Important other payables aging more than 1 year
There is no important other payables aging more than 1 year.
7.19. Long-term employee benefits payable
7.19.1. Long-term employee benefits payable table
Item Closing Balance Opening Balance
Other long-term benefits 7,929.00
Total 7,929.001
Note: The closing balance of other long-term welfare refers to the employee's internal retirement benefits
that do not need to be fully paid in the last 12 months. It was the net liability calculated on the expenses
paid to inner-retired staff by the Company until the retirement date at a discount rate of 4.22% which was
interest rate of the five-year government bond of the previous year. As the end of the period, the
Company no longer has relevant situation.
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7.20. Deferred income
Opening Increase in Decrease in current
Item Closing Balance Reason
Balance current period period
Reception of financial
Government grants 19,992,728.85 9,985,200.00 8,996,773.85 20,981,155.00
allocation
Total 19,992,728.85 9,985,200.00 8,996,773.85 20,981,155.00 --
Details:
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Increase in Non-operating income Other income in Cost reduction in Other Closing Related to assets/
Liability Item Opening Balance
current period in current period current period current period changes Balance income
Demonstration project of biomass gas production
technology and equipment industrialization of 1,250,000.00 516,666.67 733,333.33 Related to assets
brewing solid waste
Key technology research and industrialization
280,000.00 280,000.00 Related to assets
project of artificial pit mud cultivation
Demonstration project of biomass gas technology
and equipment industrialization from solid waste of 400,000.00 400,000.00 Related to assets
brewing
Agricultural, industrial and social integration
regional circular economy technology model and 520,000.00 520,000.00 Relevant to asset
demonstration project
The second batch of provincial strategic emerging
566,666.67 200,000.00 366,666.67 Related to assets
industry project
Modern warehousing logistics information
operation and maintenance system construction 583,333.33 583,333.33 Related to assets
project
The national service industry development
642,857.14 214,285.73 428,571.41 Related to assets
guidance fund central base construction project
The central finance promotes the service industry
800,000.00 800,000.00 Related to assets
development project
Luzhou agricultural science and technology park
1,000,000.00 -400,000.00 600,000.00 Related to assets
construction project
Solid state brewing engineering capacity
1,125,000.00 375,000.00 750,000.00 Related to assets
improvement project
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Increase in Non-operating income Other income in Cost reduction in Other Closing Related to assets/
Liability Item Opening Balance
current period in current period current period current period changes Balance income
Demonstration project of science and technology
service of solid brewing industry for food safety 1,241,117.98 15,344.82 1,225,773.16 Related to assets
and efficient production
Liquor circulation electronic traceability system
1,500,000.00 1,500,000.00 Related to assets
phase I construction project
Luzhou Lao jiao Co.,Ltd. Logistics business
1,750,000.00 600,000.00 1,150,000.00 Related to assets
spin-off project
Demonstration and application project of intelligent
2,780,000.00 -400,000.00 2,380,000.00 Related to assets
production line for liquor brewing and qu-making
Standardization demonstration base project 2,972,677.19 1,082,300.39 1,890,376.80 Related to assets
Luzhou-flavor liquor brewing intelligent workshop
4,000,000.00 4,000,000.00 Related to assets
new mode application project
New mode application project of digital workshop
3,465,000.00 3,465,000.00 Relevant to asset
for solid state liquor production
Luzhou Laojiao automatic wine production line
500,000.00 500,000.00 Related to assets
technical renovation project
Cooling water circulation and waste heat recovery
500,000.00 500,000.00 Related to assets
of steamed bran in brewing workshop
Demonstration project of thermochemical energy
and drying of brewing waste and coupling 586,000.00 586,000.00 Related to assets
technology of brewing process
Demonstration project of thermochemical soil
improvement materials and green planting of 620,000.00 620,000.00 Related to income
brewery waste
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Increase in Non-operating income Other income in Cost reduction in Other Closing Related to assets/
Liability Item Opening Balance
current period in current period current period current period changes Balance income
Other projects - related to income 387,333.34 387,333.34 Related to income
Other projects - related to assets 2,193,743.20 314,200.00 722,509.57 1,785,433.63 Related to assets
Other statement:
The other change decreased CNY 800,000.00 in the current period was to transfer the project subsidy to the cooperative unit according to the project task book and the progress
of project implementation.
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7.21. Share capital
Increases/decreases in the current period (+, -)
Conversion of
Item Opening Balance Issuance of Bonds Closing Balance
reserves funds Others Subtotal
new shares share
into shares
Total number of
1,464,752,476.00 1,464,752,476.00
shares
7.22. Capital reserves
Increase in current Decrease in
Item Opening Balance Closing Balance
period current period
Share premium(Capital
3,536,865,466.83 1,735,994.66 3,536,865,466.83
premium)
Other capital reserves 6,654,234.80 171,419,326.19 179,809,555.65
Total 3,543,519,701.63 173,155,320.85 3,716,675,022.48
Statements of capital reserves include increase or decrease changes of various categories and reasons
of changes in the current period
1. The increase in share premium in the current period was the difference between the acquisition price
and the proportion of the identifiable net assets that the E-commerce company continues to calculate
from the purchase date when the company acquired a minority shareholding in the subsidiary company,
E-commerce company.
2. Huaxi Securities was listed on the Shenzhen Stock Exchange on 5 February 2018. The shareholding
ratio of the Company holding Huaxi Securities was diluted from 12.99% before the listing to 10.39%. The
increase in other capital reserves is the share of the book value of net assets of Huaxi Securities the
Company enjoyed on the basis of shareholding ratio.
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7.23. Other comprehensive income
Current period
Less: Previously
Amount in
recognized in other Amount attribute to Amount attribute to
Item Opening Balance current period Closing Balance
comprehensive Less: income tax parent company non-controlling
before income
income transferred to after tax shareholders after tax
tax
profit and loss
Other comprehensive income
that will be reclassified into profit 171,227,292.19 -45,676,074.01 -11,688,752.39 -34,635,015.55 647,693.93 136,592,276.64
and loss
Including: Other comprehensive
income that will be reclassified
1,988,702.29 -359,548.90 -359,548.90 1,629,153.39
into profit and loss under equity
method
Changes in fair value of available
167,823,408.91 -46,755,009.43 -11,688,752.39 -35,066,257.04 132,757,151.87
for sale financial assets
Difference from conversion of
financial statements in foreign 1,415,180.99 1,438,484.32 790,790.39 647,693.93 2,205,971.38
currency
Total 171,227,292.19 -45,676,074.01 -11,688,752.39 -34,635,015.55 647,693.93 136,592,276.64
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7.24. Surplus reserves
Increase in Decrease in
Item Opening Balance Closing Balance
current period current period
Statutory surplus
1,464,752,476.00 1,464,752,476.00
reserves
Total 1,464,752,476.00 1,464,752,476.00
Statements for surplus reserves include increase or decrease changes and change reasons this period:
The statutory surplus reserve is drawn at 10% of the parent company's net profit, and is limited to the
parent company's share capital.
7.25. Undistributed profits
Item Current Period Previous Period
Undistributed profit before adjustment at the
8,527,196,810.86 7,397,874,451.50
end of the last year
Total adjustment for undistributed profit at the
-19,959,862.65
beginning of year
Undistributed profit after adjustment at the
8,527,196,810.86 7,377,914,588.85
beginning of year
Plus: net profit attributable to owners of the
3,485,643,008.98 2,557,944,598.97
parent company for the current period
Less: withdrawal of statutory surplus reserves 62,500,000.00
ordinary share dividends payable 1,830,940,595.00 1,346,162,376.96
Undistributed profits at the end of the period 10,181,899,224.84 8,527,196,810.86
7.26. Operating revenue and cost of sales
Current Period Previous Period
Item
Revenue Cost of sales Revenue Cost of sales
Primary business 12,859,523,825.56 2,878,994,470.11 10,114,600,585.81 2,859,769,882.87
Other business 195,941,935.99 55,007,388.80 280,266,907.65 58,045,173.65
Total 13,055,465,761.55 2,934,001,858.91 10,394,867,493.46 2,917,815,056.52
7.27. Business taxes and surcharges
Item Current Period Previous Period
Consumption tax 1,254,699,216.54 1,049,362,375.31
Urban maintenance and construction tax 186,133,761.82 146,723,195.28
Educational surcharge 79,725,865.40 62,064,859.14
Property tax 11,252,344.25 3,991,367.53
Land use tax 9,618,415.36 14,200,672.84
Stamp duty 11,077,748.47 12,730,883.34
Local education surcharge 53,171,925.46 46,032,938.33
Others 155,775.67
Total 1,605,835,052.97 1,335,106,291.77
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7.28. Selling and distribution expenses
Item Current Period Previous Period
Advertising promotion and marketing expense 2,641,767,107.45 1,879,646,808.80
Transportation and storage costs 215,414,715.67 220,015,711.84
Others 535,539,609.21 312,222,001.67
Total 3,392,721,432.33 2,411,884,522.31
Other statements:
The amount of this period increased CNY 980,836,910.02 compared with previous period, with an
increase by 40.67%, mainly due to advertising and marketing promotion strengthened in the current
period in order to enhance the brand influence and promote sales.
7.29. General and administrative expenses
Item Current Period Previous Period
Employee compensation 354,105,514.18 180,770,697.71
Depreciation and amortization 136,785,444.52 142,139,945.00
Management fee and service expense 55,198,156.70 27,225,557.31
Others 176,359,857.40 168,327,505.97
Total 722,448,972.80 518,463,705.99
Other statements:
The amount of this period increased CNY 203,985,266.81 compared with previous period, with an
increase by 39.34%, mainly due to the expansion of the Company's scale, the increase in staff, and the
increase in performance pay and bonuses.
7.30. Research and development expenses
Item Current Period Previous Period
Comprehensive research and development expenses 62,172,210.70 50,990,507.33
Total 62,172,210.70 50,990,507.33
7.31. Financial expenses
Item Current Period Previous Period
Interest expenses 64,698,037.12 34,356,638.97
Less: Interest income 280,805,447.66 145,682,879.58
Losses from currency exchange -731,529.96 961,580.83
Amortization of unacknowledged financial charges 1,964.45
Handling charges 1,772,457.71 3,464,672.63
Total -215,066,482.79 -106,898,022.70
Other statements:
1. Interest expenses mainly results from bank acceptance bill discounting.
2. The amount of this period decreased CNY 108,168,460.09 compared with previous period, with a
decrease by 101.19%, mainly due to the increase of interest income on deposit resulting from stock
funds in the current period.
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7.32. Impairment losses
Item Current Period Previous Period
Bad debt loss -2,035,339.62 448,154.45
Total -2,035,339.62 448,154.45
Other statements:
The amount of this period decreased CNY 2,483,494.07 compared with previous period, with a decrease
by 554.16%, mainly due to the decrease of accounts receivable and recovery for bad and doubtful debt in
the current period.
7.33. Other income
Item Current Period Previous Period
Government grants 22,342,598.30 27,087,985.92
Individual income tax commission refund 1,749,728.51 56,873.65
7.34. Investment income
Item Current Period Previous Period
Investment income from long-term equity
88,881,022.50 132,404,279.33
investments under the equity method
Investment income gained during the period of
9,112,541.00 5,912,117.71
holding the available-for-sale financial assets
Total 97,993,563.50 138,316,397.04
Other statements:
There is no major restriction on the repatriation of the Company's investment income.
7.35. Gains from disposal of assets
Item Current Period Previous Period
Gains from disposal of non-current assets -492,389.13 -4,256,543.78
Including: gains from disposal of fixed assets -492,389.13 -4,256,543.78
7.36. Non-operating income
The amount included in the
Item Current Period Previous Period extraordinary gains and
losses of the current period
Compensation for default 26,772,376.92 15,990,595.57 26,772,376.92
Others 4,460,100.29 9,846,325.80 4,460,100.29
Total 31,232,477.21 25,836,921.37 31,232,477.21
7.37. Non-operating costs
The amount included in the
Item Current Period Previous Period extraordinary gains and
losses of the current period
Donation expenses 32,585,518.55 14,559,500.00 32,585,518.55
Losses from retirement of fixed assets 13,393,602.05 13,393,602.05
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The amount included in the
Item Current Period Previous Period extraordinary gains and
losses of the current period
Others 3,549,328.49 5,821,376.59 3,549,328.49
Total 49,528,449.09 20,380,876.59 49,528,449.09
Other statements:
The amount of this period increased CNY 29,147,572.50 compared with previous period, with an
increase by 143.01%, mainly due to the donation expenses increased CNY 18,026,018.55 and the
losses from retirement of fixed assets increased CNY 13,393,602.05.
7.38. Income tax expense
7.38.1. Statement of income tax expense
Item Current Period Previous Period
Current period income tax 1,173,293,516.03 886,383,123.71
Deferred income tax -25,073,818.91 -54,689,373.40
1
Total 1,148,219,697.12 831,693,750.312
Note:1. The amount of this period increased CNY 316,525,946.81 compared with previous period, with
an increase by 143.01%, mainly due to the increase of profit.
2. Details of income tax rate in Note 6.Taxes
7.38.2. Adjustment for accounting profit and income tax expense
Item Current Period Amount
Total profit 4,658,685,585.55
Income tax expenses determined by statutory/applicable tax rate 1,164,671,396.39
Impact from subsidiaries’ different tax rates -14,426,965.85
Impact from adjust for impact from income tax expense in
-7,297,996.38
previous period
Impact from non-taxable income -19,628,359.76
Impact from non-deductible costs, expenses and losses 15,638,804.09
Impact from deductible temporary difference or losses due to
4,857,846.39
unrecognized deferred tax asset in current period
Impact from recovery for deductible temporary losses due to
4,404,972.24
recognized deferred tax asset at early stage
Income tax expense 1,148,219,697.12
7.39. Other comprehensive income
Details in Note 7.23 Other comprehensive income
7.40. Notes to the statement of cash flow
7.40.1. Cash received from other operation activities
Item Current Period Previous Period
Government grants 23,331,024.45 17,166,817.40
Other receivables 91,393,724.75
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Item Current Period Previous Period
Interest income from bank deposit 263,400,471.52 141,431,303.89
Others 104,468,341.22 95,921,130.77
Total 482,593,561.94 254,519,252.06
Statement for cash received from other operation activities
The amount in current period increased CNY 228,074,309.88 compared with previous period,with an
increase by 89.61%. Firstly, the Company recovered CNY 91,393,724.75 of saving deposits involving
contract disputes. Secondly, the interest income on deposit increased CNY 121,969,167.63.
7.40.2. Cash paid for other operating activities
Item Current Period Previous Period
Cash paid for expenses 3,076,367,890.52 2,244,603,990.01
Payment of tourism bureau deposit 1,200,000.00
Total 3,077,567,890.52 2,244,603,990.01
Statement for cash paid for other operation activities
The amount in current period increased CNY 832,963,900.51 compared with previous
period, with an increase by 37.11%, mainly due to the increase in advertising and
marketing promotion.
7.40.3. Cash paid for other investing activities
Item Current Period Previous Period
Net outflow of Internal adjustment 244,125,003.53
Cash paid for buying subsidiary - E-commerce company 9,604,800.00
Total 9,604,800.00 244,125,003.53
7.41. Supplementary information to statement of cash flow
7.41.1. Supplementary information to statement of cash flow
Item Current Period Previous Period
1. Reconciliation of net profit to cash flow from operating
-- --
activities
Net profit 3,510,465,888.43 2,602,024,285.09
Plus: provision for asset impairment -2,035,339.62 448,154.45
Depreciation of fixed asset, oil and gas assets and productive
154,991,709.23 161,101,237.90
biological assets
Amortization of intangible assets 9,059,775.10 8,301,452.51
Amortization of long-term deferred expenses 492,389.13 4,256,543.78
Losses from retirement of fixed assets (Gains use “-”) 13,393,602.05
Financial expenses (Gains use “-”) 63,966,507.16 35,320,184.25
Losses on investments (Gains use “-”) -97,993,563.50 -138,316,397.04
Decrease in deferred income tax assets (Increase uses “-”) -25,073,818.91 -54,666,993.69
Increase in deferred income tax liabilities (Decrease uses “-”) -22,379.71
Decrease in inventories (Increase use “-”) -418,549,226.69 -298,091,290.60
Decrease in operating receivables (Increase use “-”) 233,990,726.21 -452,241,323.24
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Item Current Period Previous Period
Increase in operating payables (Decrease use “-”) 855,207,369.65 1,835,620,588.19
Net cash flows from operating activities 4,297,916,018.24 3,703,734,061.89
2. Significant investing and financing activities not involving
-- --
cash
3.Net change in cash and cash equivalents -- --
Closing balance of cash 9,365,986,627.68 8,449,422,154.91
Less: opening balance of cash 8,449,422,154.91 4,826,248,031.74
Net change in cash and cash equivalents 916,564,472.77 3,623,174,123.17
7.41.2. Net cash paid during current period for subsidiaries’ acquisitions
There is no net cash paid during current period for subsidiaries’ acquisitions.
7.41.3. Net cash received during current period from disposing subsidiaries
There is no net cash received during current period from disposing subsidiaries.
7.41.4. Composition of cash and cash equivalent
Item Opening Balance Closing Balance
1. Cash 9,365,986,627.68 8,449,422,154.91
Including: Cash on hand 4,420.76 10,907.81
Unrestricted bank deposit 9,364,716,075.36 8,449,228,764.97
Other unrestricted cash and cash equivalents 1,266,131.56 182,482.13
2. Closing balance of cash and cash equivalents 9,365,986,627.68 8,449,422,154.91
Other statements:
The difference between the closing balance of cash and cash equivalents and cash at bank and on hand
is CNY 1,400,000,00, which is a travel service deposit with limited use rights in other cash and cash
equivalents.
7.42. Assets with restricted ownership or use rights
Item Closing Book Balance Reason for Restriction
According to the regulations of tourism
Other cash and cash equivalents 1,400,000.00 bureau, travel service deposit is deposited
in a designated bank.
Total 1,400,000.00 --
7.43. Foreign currency transactions
7.43.1. Foreign currency transactions
Closing Balance in
Item Exchange Rate Closing Balance in CNY
Foreign Currency
Cash at Bank and on Hand -- -- 115,442,541.42
Including: USD 16,383,718.02 6.8632 112,444,733.50
EUR
HKD 3,366,299.20 0.8762 2,949,551.36
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Closing Balance in
Item Exchange Rate Closing Balance in CNY
Foreign Currency
AUD 10,001.36 4.8250 48,256.56
Accounts Receivable -- -- 1,003,841.49
Including: USD 146,264.35 6.8632 1,003,841.49
EUR
HKD
Long-term Loans -- --
Including: USD
EUR
HKD
Advance from Customers 935,519.13
Including: HKD 738,200.77 0.8762 646,811.51
USD 22,038.16 6.8632 151,252.30
AUD 28,488.15 4.8250 137,455.32
Other Receivables 3,733,469.76
Including: HKD 1,236,852.82 0.8762 1,083,730.44
USD 304,493.25 6.8632 2,089,798.07
AUD 116,050.00 4.8250 559,941.25
Accounts Payable 1,255,351.19
Including: HKD 493,103.36 0.8762 432,057.16
USD 119,957.75 6.8632 823,294.03
Other Payables 15,766,894.83
Including: HKD 4,975,591.67 0.8762 4,359,613.42
USD 1,662,093.69 6.8632 11,407,281.41
7.43.2. Description of the foreign business entity, including the important foreign
business entity, shall disclose its main foreign business place, bookkeeping
standard currency and selection basis, and shall also disclose the reason for the
change of the bookkeeping standard currency
√ Applicable N/A
Bookkeeping
Company Operation site Choosing Reason
currency
Luzhou Laojiao International
Development（Hong Kong）Co., Hong Kong, China HKD Currency in the registration place
Ltd.
Mingjiang Co., Ltd. New York, USA USD Currency in the registration place
7.44. Government grants
7.44.1. Details of government grants
Amount included in profit or
Item Amount Presentation
loss of the current period
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Amount included in profit or
Item Amount Presentation
loss of the current period
Related to assets 20,361,155.00 Deferred income 7,809,440.51
Related to income 620,000.00 Deferred income 387,333.34
Related to income 14,145,824.45 Other income 14,145,824.45
8. Changes in consolidated scope
8.1. Business combination not under common control
8.1.1. Business combination not under common control during current period
There is no business combination not under common control during current period.
8.2. Business combination under common control
8.2.1. Business combination under common control during current period
There is no business combination under common control during current period.
8.3. Reverse purchase
The basic information of the transaction, the basis of the transaction constitutes the
reverse purchase, whether the assets and liabilities retained by the listed company
constitute the business and its basis, the determination of the merger cost, and the
adjustment of the equity amount and its calculation according to the equity transaction:
There is no reverse purchase during current period.
8.4. Disposing subsidiaries
Whether there is a situation of losing control after disposing the investment in the
subsidiary only once
Yes √ No
Whether there is a situation of disposing the investment in the subsidiary through several
transactions step by step and losing control during the period
Yes √ No
8.5. Consolidated scope changes due to other reasons
Explain other reasons for changing consolidated scope (such as establishing a new
subsidiary, liquidating a subsidiary) and its related situation.
As mentioned in the Note 3.6, the newly merged enterprises include: In this year, Sales
Company of Luzhou Laojiao Co., Ltd., a wholly-owned subsidiary of the Company,
invested and established Luzhou Laojiao fruit wine industry Co., Ltd. and Mingjiang
Co.Ltd., which holds 41% and 54% shares respectively. The reduced merged enterprise is
the canceled the subsidiary, Luzhou Laojiao Guibin Service Co., Ltd.
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9. Interests in other entities
9.1. Interests in subsidiaries
9.1.1. Group Composition:
Name of Major business Place of Shareholding Proportion
Nature of business Acquisition method
Subsidiaries location registration Direct Indirect
Luzhou Laojiao Liquor manufacture
Luzhou Luzhou 100.00% Investment
Brewing Co., Ltd. and sales
Luzhou Boda
Luzhou Luzhou Liquor sales 100.00% Investment
Brewing Co., Ltd.
Luzhou Red
Sorghum Modern
Agricultural product Business combination
Agricultural Luzhou Luzhou 60.00%
planting and sales under common control
Development Co.,
Ltd.
Sales Company of
Luzhou Laojiao Luzhou Luzhou Liquor sales 100.00% Investment
Co., Ltd.
Luzhou Laojiao
Nostalgic Liquor Luzhou Luzhou Liquor sales 100.00% Investment
Marketing Co., Ltd.
Luzhou Laojiao
Custom Liquor Co., Luzhou Luzhou Liquor sales 15.00% Investment
Ltd.
Luzhou Laojiao
Selected Supply Supply chain
Luzhou Luzhou 100.00% Investment
Chain Management management; sales
Co., Ltd.
Luzhou Dingli
Liquor Industry Co., Luzhou Luzhou Liquor sales 100.00% Investment
Ltd.
Luzhou Dingyi
Liquor Industry Luzhou Luzhou Liquor sales 100.00% Investment
Sales Co., Ltd.
Luzhou Dinghao
Liquor Industry Luzhou Luzhou Liquor sales 100.00% Investment
Sales Co., Ltd.
Luzhou Laojiao
Import and export
Import and Export Luzhou Luzhou 100.00% Investment
trade
trade Co., Ltd.
Luzhou Laojiao
Boda Liquor
Luzhou Luzhou Liquor sales 75.00% Investment
Industry Marketing
Co., Ltd.
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Name of Major business Place of Shareholding Proportion
Nature of business Acquisition method
Subsidiaries location registration Direct Indirect
Luzhou Laojiao
Bosheng
Luzhou Luzhou Liquor sales 75.00% Investment
Hengxiang Liquor
Sales Co., Ltd.
Luzhou Laojiao
Business services,
Guibin Service Luzhou Luzhou 95.00% Investment
wine sales
Co.,Ltd.
Luzhou Laojiao
Fruit Wine Industry Luzhou Luzhou Fruit wine sales 41.00% Investment
Co., Ltd.
Mingjiang Co., Ltd. USA USA Liquor sales 54.00% Investment
Luzhou Pinchuang Technology
Technology Co., Luzhou Luzhou development and 95.00% Investment
Ltd. service
Luzhou Laojiao
Tourism Culture Luzhou Luzhou Liquor sales, tourism 100.00% Investment
Co., Ltd.
Luzhou Laojiao
International
Hong Kong Hong Kong Wine sales 55.00% Investment
Development（Hon
g Kong）Co., Ltd.
Luzhou Laojiao
Electronic
Luzhou Luzhou Liquor sales 90.00% Investment
Commerce Co.,
Ltd.
Luzhou Laojiao
Concoction of wine
Baitiao Liquor Luzhou Luzhou 35.00% Investment
sales
Industry Co., Ltd.
Luzhou Baonuo
Fermented product
Biotechnology Co., Luzhou Luzhou 100.00% Investment
manufacture
Ltd.
Luzhou Laojiao Health care wine
Business combination
Health Liquor Luzhou Luzhou manufacture and 100.00%
under common control
Industry Co.,Ltd. sales
Luzhou Laojiao
Health care wine Business combination
Health Sales Co., Luzhou Luzhou 100.00%
sales under common control
Ltd.
Statement for that the proportion of share-holding is different from the proportion of voting rights:
As the Note 3.6, the Company holds less than 51% shares of Luzhou Laojiao Custom Liquor Co., Ltd.,
Luzhou Laojiao fruit wine industry Co., Ltd., and Luzhou Laojiao Baitiao Liquor Industry Co., Ltd. but in
these companies’ board, among the five members, the Company have sent three person, which is in the
majority. The Company has substantial control over these companies, so they are included in the
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
consolidation scope.
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9.1.2. Important non-wholly-owned subsidiaries
Gains and losses attributable to
Proportion of share holdings of Dividends paid to non-controlling Closing balance of non-controlling
Name of subsidiary non-Controlling shareholders during
non-Controlling shareholders shareholders during current period shareholders interest
current period
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. 25.00% -59,978.67 83,287,621.26
Luzhou Laojiao Custom Liquor Co., Ltd 85.00% 12,588,867.22 34,183,184.06
9.1.3. Major financial information of important non-wholly-owned subsidiaries
Closing Balance Opening Balance
Name of Non-curr Non-curr
Non-current Non-current
subsidiary Current assets Total assets Current Liabilities ent Total liabilities Current assets Total assets Current liabilities ent Total liabilities
assets assets
liabilities liabilities
Luzhou
Laojiao
Boda
Liquor 1,166,879,541.23 8,708.99 1,166,888,250.22 833,737,765.21 833,737,765.21 1,133,316,438.78 2,249,387.40 1,135,565,826.18 801,894,834.55 801,894,834.55
Industry
Marketing
Co., Ltd.
Luzhou
Laojiao
Custom 84,545,682.39 866,940.67 85,412,623.06 45,197,112.41 45,197,112.41 63,655,919.80 412,775.56 64,068,695.36 38,663,616.73 38,663,616.73
Liquor
Co., Ltd
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Current Period Previous Period
Total Total
Name of subsidiary Operating cash Operating cash
Operating revenue Net profit comprehensive Operating revenue Net profit comprehensive
flow flow
income income
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. 2,493,854,876.92 -303,651.51 -303,651.51 16,457,683.16 2,405,756,993.61 83,648,582.41 83,648,582.41 -304,677,182.86
Luzhou Laojiao Custom Liquor Co., Ltd 163,005,460.59 14,810,432.02 14,810,432.02 15,388,726.32 121,336,926.80 17,896,450.80 17,896,450.80 13,293,051.34
9.1.4. Significant limitations for using group assets and paying off group liabilities
There are no significant limitations for using group assets and paying off group liabilities.
9.1.5. Financial support and other support provided to the structure subjects that are incorporated into the scope of consolidated financial
statements
There are no structure subjects that are incorporated into the scope of consolidated financial statements.
9.2. Transactions that change owners’ equity share of the subsidiary and still control the subsidiary
9.2.1. Statements for the changes of owners’ equity share of the subsidiary
As stated in Note 3.6 note 5, until 31 December 31 2018, the registered capital of E-commerce company was CNY 60 million, and the Company’s subscribed capital contribution
was CNY 54 million, whose shareholding ratio was 90.00%.
9.2.2. Impact of the transactions on non-controlling interests and equity attributable to the parent company
June 2018 September 2018 Total
--Cash 8,866,000.00 738,800.00 9,604,800.00
Total purchase cost/ disposal consideration 8,866,000.00 738,800.00 9,604,800.00
Less: share of net assets of the subsidiary calculated at the proportion acquired /disposed 10,308,361.72 1,032,432.94 11,340,794.66
Difference -1,442,361.72 -293,632.94 -1,735,994.66
Including: adjust capital reserves 1,442,361.72 293,632.94 1,735,994.66
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9.3. Interests in joint ventures and associates
9.3.1. Important joint ventures and associates
Name of joint Major business Place of Business Shareholding Proportion
Accounting Method
venture/associates location registration nature Direct Indirect
Important joint
ventures: none
Important
associates:
Huaxi Securities Chengdu, Chengdu,
Securities 10.39% Equity method
Co., Ltd. Sichuan province Sichuan province
Statement for that the proportion of shareholdings in joint ventures or associates is different from the
proportion of voting rights:
The basis of holding less than 20% of the voting rights in other entities but having significant influence or
holding 20% or more than 20% of the voting rights in other entities but having insignificant influence:
On 5 February 2018, Huaxi Securities was listed on the Shenzhen Stock Exchange. The shareholding
ratio of the Company holding Huaxi Securities was diluted from 12.99% before the listing to 10.39%. The
Company has sent directors to the board of Huaxi Securities and has the corresponding substantive
decision-making power, so the Company still has significant influence on Huaxi Securities.
9.3.2. Major financial information of important associates
Closing Balance/Amount in Opening Balance/Amount in
Current Period Previous Period
Huaxi Securities Co., Ltd. Huaxi Securities Co., Ltd.
Current assets 39,285,470,127.19 42,341,287,994.61
Non-current assets 7,495,424,200.01 8,175,472,282.46
Total assets 46,780,894,327.20 50,516,760,277.07
Current liabilities 22,645,172,995.67 32,512,916,865.11
Non-current liabilities 5,735,587,548.65 5,183,876,316.48
Total liabilities 28,380,760,544.32 37,696,793,181.59
Non-controlling shareholder interest 44,260,373.43 62,636,144.96
shareholder interest attributable to
18,355,873,409.45 12,757,330,950.52
parent company
Share of net assets calculated based
1,907,830,072.92 1,657,427,236.96
on shareholding proportion
Book value of equity investments in
2,075,296,808.82 1,824,893,972.85
associate companies
Fair value of equity investments in
associate companies that have public 2,283,596,675.28
quote
Operating revenue 2,545,233,363.80 2,671,626,421.94
Net profit 845,132,348.07 1,019,988,335.17
Other comprehensive income -9,197,741.57 -46,360,450.51
Total comprehensive income 835,934,606.50 973,627,884.66
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Closing Balance/Amount in Opening Balance/Amount in
Current Period Previous Period
Huaxi Securities Co., Ltd. Huaxi Securities Co., Ltd.
Dividends from associate companies
10,367,583.46 13,641,557.20
this year
9.3.3. Financial information summarized of unimportant joint ventures and
associate companies
Closing Balance/Amount in Opening Balance/Amount in
Current Period Previous Period
Joint ventures: -- --
Total following items calculated on the
-- --
basis of shareholding proportion
Associate companies: -- --
Total book value of investments 15,806,539.78
Total following items calculated on the
-- --
basis of shareholding proportion
--Net profit -829,619.65
-- Total comprehensive income -829,619.65
Other statements:
As stated in Note 7.8. note 2, the Company acquired 42% equity of Sichuan Development
Wine Investment Co., Ltd. in 2018, and has a significant impact on it, using the equity
method as an associated enterprise.
10. Risks related to financial instruments
Business activities of a company usually face various financial risks, mainly credit risk,
liquidity risk and market risk. The Company's overall risk management plan addresses the
unpredictability of financial markets and seeks to reduce potential adverse effects on the
Company's financial performance.
10.1. Credit risk
Credit risk refers to the risk that one party to a financial instrument cannot perform its
obligations, causing financial losses to the other party. The Company only trades with
recognized, reputable, and large third parties. In accordance with the Company's policy,
the terms of sale with customers are based on transactions of payment before delivery,
with only a small amount of credit transactions, and credit review for all customers who
require credit to trade. In addition, the Company continuously monitors and controls the
balance of the receivables to ensure that the Company does not face significant bad debt
risks.
10.2. Liquidity risk
Liquidity risk refers to the risk unable to obtain sufficient funds in time to meet business
development needs or to repay debts due and other payment obligations. The Company
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has sufficient working capital, and in recent years there has been no external borrowing to
supplement the working capital of daily operating activities. The liquidity risk is extremely
small.
The total budget investment of the Company's Technical renovation project of brewing is
CNY 7,414,280,000.00, and the first phase of the project’s budget is CNY
3,340,810,000.00. The Company will use raised funds of CNY 2,952,735,000.00, which
was approved by the CSRC in July 2017 for the first phase. The balance will be
supplemented by self-financed funds about CNY 388,075,000.00. This project will not
have a significant impact on the liquidity of funds.
10.3. Market risk
Market risk refers to the risk that the fair value or future cash flow of financial instruments
will fluctuate due to changes in market prices, including foreign exchange risk, interest
rate risk and other price risks.
10.3.1. Foreign exchange risk
The Company's main business is located in the mainland of China, and main business is
settled in CNY. Only two subsidiaries, Hong Kong company and Mingjiang company, settle
in HKD in Hong Kong and USD in the United States respectively. The proportion and
impact of their income and profit scale are negligible, and the foreign exchange risk is
minimal.
10.3.2. Rate risk
The Company's operating capital is sufficient and in recent years there has been no
external borrowing, so interest rate risk is minimal.
10.3.3. Other price risks
Other price risk refers to the risk of fluctuation caused by market price changes other than
foreign exchange risk and interest rate risk, whether these changes are caused by factors
related to a single financial instrument or its issuer or all similar financial instruments
traded in the market. Other price risks faced by the Company mainly come from
available-for-sale financial assets measured at fair value.
11. Fair Value Disclosure
11.1. Closing fair value of assets and liabilities measured at fair value
Closing fair value
Item
Level 1 Level 2 Level 3 Total
1. Continuous
measurement at fair -- -- -- --
value
(2)Equity instrument
190,758,692.59 190,758,692.59
investment
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Closing fair value
Item
Level 1 Level 2 Level 3 Total
2. Discontinuous
measurement at fair -- -- -- --
value
11.2. Determination basis of the market value of items measured
continuously and discontinuously within Level 1 of the fair value
hierarchy
Open market prices
12. Related parties and related party transactions
12.1. The Parent company of the Company
Shareholding Voting rights
Registration
Parent company Business nature Registered capital proportion by the proportion by the
place
parent company parent company
Luzhou Laojiao Group Brewing and Food
Luzhou,Sichuan 2,798,818,800.00 26.02% 51.01%
Co., Ltd. Industry
Statements for situation of parent company:
The nature of parent company: Limited liability company (wholly state-owned);
Registration place: Ai Rentang Square, China Liquor Golden Triangle Wine Industry Park, Luzhou,
Sichuan Province;
Business Scope: Investment and asset management; investment in liquor, food, finance, trade, logistics,
education, medical and health, cultural tourism, Internet industry; holding company services; social
economic consulting, business management consulting; enterprise management services; supply chain
management services; import and export business and trade agency; food production, sales (including
online); planting and sales of crops (including online). (The Company cannot start business activities until
projects subject to approval according to law are approved by relevant departments.)
The final control party of the Company is SASAC of Luzhou.
12.2. Subsidiaries of the Company
For details please see Note 9.1. Interests in subsidiaries
12.3. Joint ventures and associates of the Company
For details please see Note 9.3. Interests in joint ventures and associates
Other joint ventures or associates that have related party transactions with the Company
in the current period or in the previous period and result in balance are as follows:
There are no other joint ventures or associates that have related party transactions with
the Company in the current period or in the previous period and result in balance.
12.4. Other related party of the Company
Name of Other Related Party Relationship with the Company
Luzhou Laojiao Construction and Installation Wholly-owned subsidiary of the parent company
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Name of Other Related Party Relationship with the Company
Engineering Co. Ltd.
New Shottes Brook Private Company Wholly-owned subsidiary of the parent company
Luzhou Lianzhong Logistics Co. Ltd. Wholly-owned subsidiary of the parent company
Luzhou Laojiao Industrial Investment Management
Wholly-owned subsidiary of the parent company
Co. , Ltd.
Luzhou Laojiao Real Estate Development Co., Ltd. Wholly-owned subsidiary of the parent company
Associate company and holding subsidiaries of the
Huaxi Securities Co.,Ltd.
parent company
Holding subsidiary of the second largest
Luzhou Xinglu Water (Group) Co., Ltd.
shareholder
Holding subsidiary of the second largest
Luzhou Huarun Xinglu Gas Co., Ltd.
shareholder
Laojiao Group and its other subsidiaries Wholly-owned subsidiary of the parent company
Luzhou Xinglu Touzi Jituan Co., Ltd. and its other Holding subsidiary of the second largest
subsidiaries shareholder of the Company
Other statement:
On 31 December 2015, Laojiao Group and Xinglu Group, the second biggest shareholder, signed a
concerted action agreement that when the parties in deal with the Company’s business development and
make decisions by shareholders meeting and board of directors according to the company law and other
relevant laws and regulations and the articles of association, the parties should adopt the consistent
actions. The agreement is valid as of 13 December 2015 and ends on 1 June 2021. During the effective
period of this agreement, before any party submits proposals involving the major issues of the
Company's business development to the shareholders meeting or exercise the voting rights at the
shareholders meeting and the board of directors, the internal coordination for relevant proposals and
voting events shall be conducted by persons acting in concert. If there are different opinions, it will be
subject to Laojiao Group’s opinion. In view of this, the Company will disclose the transactions with Xinglu
Group and its controlling enterprises as other related parties of the Company.
12.5 Related transactions
12.5.1. Related transactions of purchase and sales of goods / rendering and receipt
of services
Table of purchase of goods / receipt of services
Whether over
Name of Related Amount in Approved Amount in
Transaction approved
Party current period trading amount previous period
trading amount
Receipt of
services:
Luzhou Lianzhong Storage and
17,604,367.59 Yes
Logistics Co. Ltd. transport service
Luzhou Xinglu
Property
Touzi Jituan Co.,
management 1,911,100.00 Yes 1,900,772.00
Ltd. and its other
fee ,etc.
subsidiaries
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Whether over
Name of Related Amount in Approved Amount in
Transaction approved
Party current period trading amount previous period
trading amount
Laojiao Group and Training,
its other accommodation 655,704.88 Yes 731,713.22
subsidiaries services, etc.
Sponsor and
Huaxi Securities underwriting fees
32,320,000.00
Co.,Ltd. of private share
placement
Luzhou Laojiao
Construction
Construction and
funds and
Installation 193,924.12
maintenance
Engineering Co.
costs
Ltd.
Purchase of
goods
New Shottes
Brook private Red wine 66,793,476.33 No 26,971,264.99
company
Luzhou Laojiao
Industrial
Investment Land, etc. 26,292,000.00 No
Management Co. ,
Ltd.
Luzhou Xinglu
Water (Group) Water 4,441,998.74 Yes 631,853.92
Co., Ltd.
Luzhou Huarun
Xinglu Gas Co., Gas, etc. 3,782,843.32 Yes 3,370,428.64
Ltd.
Laojiao Group and
Water, power,
its other 512,783.17 Yes
etc.
subsidiaries
Acquisition of
30% equity of
Sichuan
Laojiao Group Development 10,594,650.00 No
Wine Investment
Co., Ltd. held by
Laojiao Group
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Table of sales of goods and rendering of service
Name of Related Party Transaction Amount in current period Amount in previous period
sales of goods:
Laojiao Group and its
Wine, etc. 318,580.42 4,154,856.17
subsidiaries
Xinglu Group and its
Wine 586,044.00 1,883,992.00
subsidiaries
Rendering of service:
Rendering of
Laojiao Group 1,190,880.00
service
12.5.2. Related party leasing
The Company as lessee:
Leasing fee recognized Leasing fee recognized
Name of lessor Type of leased asset
during current period during previous period
Luzhou Laojiao Real Estate
House lease 1,851,227.44
Development Co. Ltd.
12.5.3. Key management compensation
Item Amount in current period Amount in previous period
Key management 6,977,200.00 9,799,682.10
12.6. Receivables and payables of related parties
12.6.1. Receivables
Closing Balance Opening Balance
Item Related party Provision for bad Provision for bad
Book value Book value
debt debt
New Shottes Brook private
Prepayment 18,086,370.77 30,974,021.43
company
Luzhou Xinglu Water
Prepayment 4,377.45
(Group) Co., Ltd.
Sichuan Kangrun
Prepayment 10,000.00
Investment Group Co., Ltd.
Luzhou Yongsheng Asset
Accounts
Operation and Management 1,526.40
receivable
Co., Ltd.
12.6.2. Payables
Item Related party Closing Balance Opening Balance
Luzhou Laojiao Construction
Other payables and Installation Engineering 34,175.78 628,505.15
Co. Ltd.
Other payables Luzhou Liquor Industry 154,352.70 154,352.70
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Item Related party Closing Balance Opening Balance
Concentration Development
Zone Brewing Co. Ltd.
Luzhou Laojiao Zhitong
Advance from customers 900,866.00 39,998.00
Trading Co., Ltd.
Luzhou Laojiao Group Co.,
Advance from customers 1,680.00 1,680.00
Ltd.
Sichuan Hongxin Financing
Advance from customers 7,745.00
Guarantee Co. Ltd.
Luzhou laojiao business
Advance from customers 840.00
school
Luzhou Huarun Xinglu Gas
Accounts payable 382,967.14
Co., Ltd.
Luzhou Laojiao Real Estate
Accounts payable 20,255.07
Development Co., Ltd.
Luzhou Lianzhong Logistics
Accounts payable 946,701.22
Co. Ltd.
Luzhou laojiao business
Accounts payable 4,100.00
school
13. Share-based payment
13.1. Overall Share-based payment
Applicable √ N/A
13.2. Equity-settled share-based payment
Applicable √ N/A
13.3. Cash-settled share-based payment
Applicable √ N/A
14. Commitments and Contingencies
14.1. Contingencies
14.1.1. Significant contingencies at the balance sheet date
On 15 October 2014 and 10 January 2015, the Company disclosed three saving deposits
involving contract disputes in Agricultural Bank of China Changsha Yingxin Branch,
Industrial and Commercial Bank of China Ltd. Nanyang Zhongzhou Branch and another
bank, with a total amount of CNY 50 million. The public security organization has
investigated, and the investigation of related cases and the preservation of assets are
under way. The Company has initiated a civil procedure to recover the loss from the
responsible unit, among them:
The criminal case with saving deposits involving contract disputes in Agricultural Bank of
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China Changsha Yingxin branch with amount of CNY 15 million was decided by
Changsha Intermediate People's Court in the first instance, and then maintained by
Hunan Higher People's Court in the second instance. The amount involved in the case
was ultimately determined to be CNY 149,425,000.00. The Company recovered CNY
10,379,900.00 of returned deposits from Agricultural Bank of China Changsha Yingxin
Branch.
The Company has filed a lawsuit with Sichuan Higher People's Court about the saving
deposits involving contract disputes in Industrial and Commercial Bank of China Ltd.
Nanyang Zhongzhou branch with amount of 15 million. Sichuan Higher People's Court
ruled that the case should be transferred to the Henan Higher People's Court. Henan
Higher People's Court considered that due to the involvement of criminal cases, its trial
should be based on the results of criminal case. The case has not yet been settled and
proceedings are suspended.
The Company referred to another deposit of CNY 20 million in the Notice of Significant
Events No. 2015-1 on 17 April 2015, recovering a total of CNY 182,163,800.00 as the end
of 31 December 2018.
Except for the above matters, the Company has no other significant contingencies that
need to be disclosed as the end of 31 December 2018.
15. Post balance sheet event
15.1. Profit distribution
Unit: CNY
Profit or dividend planned to be distributed 2,270,366,337.80
15.2. Sales return
There are no important sales returning after balance sheet date.
15.3. Statement for other post balance sheet events
(1) Investment planned in establishing Luzhou Laojiao Wine E-commerce Co
The 6th meeting of the ninth board of directors was held on 28 January 2019 by means of
communication voting. The meeting reviewed and approved the Proposal on the
Subsidiary's Investment in Establishing Luzhou Laojiao Wine E-Commerce Co., Ltd., and
the Company agreed that its subsidiary, Luzhou Laojiao E-Commerce Co., Ltd. invested in
establishing a wholly-owned subsidiary, Luzhou Laojiao Wine E-Commerce Co., Ltd.,
whose registered capital is CNY 5 million and is mainly engaged in e-commerce sales of
imported wine, grape juice and other products.
(2) Investment planned in establishing Luzhou Laojiao Baidiao E-commerce Co. by
investment
The 6th meeting of the 9th Board of Directors was held on 28 January, 2019 by means of
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
communication voting.The meeting reviewed and approved the Proposal on the
Subsidiary's Investment in Establishing Luzhou Laojiao Baidiao E-Commerce Co., Ltd.,
and the Company agreed that its subsidiary, Luzhou Laojiao E-Commerce Co., Ltd.
invested in establishing a wholly-owned subsidiary, Luzhou Laojiao Baidiao E-Commerce
Co., Ltd., whose registered capital is CNY 3 million and is mainly engaged in e-commerce
sales of pre-mixed liquor, oak barrel liquor and other products.
(3) Investment in establishing Chengdu Tianfu Panda Baidiao Liquor Co., Ltd. by
investment
The 4th meeting of the ninth Board of Directors was held on 26 October, 2018 by live and
video conference. The meeting reviewed and approved the Proposal on the Subsidiary's
Investment in Establishing Chengdu Tianfu Panda Baidiao Liquor Co., Ltd. The Company
agreed that the subsidiary, Luzhou Laojiao Baidiao Liquor Co., Ltd. and Chengdu Tianfu
Panda Culture Communication Co., Ltd. jointly invested and established Chengdu Tianfu
Panda Liquor Co., Ltd., whose registered capital is CNY 5 million. Luzhou Laojiao Baidiao
Liquor Co., Ltd. invested CNY 3 million by cash, accounting for 60% of the total share
capital, and was controlling shareholder; Chengdu Tianfu Panda Culture Communication
Co., Ltd. invested CNY 2 million, accounting for 40% of the total share capital. The
company was established on 26 February 2019.
(4) Luzhou Boda Brewing Co., Ltd., a subsidiary of the Company, has been canceled
On May 29 2018, the 28 meeting of the eighth board of directors reviewed and approved
the "About the cancellation of Luzhou Boda Brewing Co., Ltd.”. Due to business
adjustment in recent years, Luzhou Boda Brewing Co., Ltd. has not conducted the actual
production and operation activities, therefore, the Company decided to cancel it. It does
not have a significant impact on the Company's financial position and operating results.
Luzhou Boda Brewing Co., Ltd. has obtained the notice of approval of cancellation on 25
March 2019.
Except for the above matters, the Company has no other post balance sheet events that
need to be disclosed up to 25 April 2019.
16. Other Important Information
16.1. Annuity plan
The Company carried out the enterprise annuity payment work normally in 2018. In 2018,
according to the relevant provisions of the Enterprise Annuity Methods (Order No. 36 of
the Ministry of Human Resources and Social Security), the Company revised the Luzhou
Laojiao Co., Ltd. Enterprise Annuity Plan on 1 December 2018. After discussion and
decision of the Workers' Congress on 28 December 2018, it was filed a record through the
Ministry of Human Resources and Social Security of Luzhou on 25 February 2019.
After the revision of the new enterprise annuity method, the enterprise annuity funds are
paid by both the Company and employees. The Company's contribution shall not exceed
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
8% of the Company's total salary in the previous year as stipulated by the state, and the
individual contribution shall be withheld by the Company according to 1% of total salary of
the employee in the previous year.
16.2. Segment information
16.2.1. If the Company has no reporting segment or cannot disclose total assets
and total liabilities of reporting segments, the reason should be disclosed.
Except for the business on wine sales, the Company does not operate other businesses
that have a significant impact on operation results. In addition, the Company operates
mainly in one area, revenue mainly from China and main assets also located in China, so
the Company does not need to disclose segment data.
16.3. Other significant events that can affect investors’ decision
(1) Saving deposits involving contract disputes
As stated in Note 14.1, three saving deposits involved contract disputes in Agricultural
Bank of China Changsha Yingxin Branch, Industrial and Commercial Bank of China Ltd.
Nanyang Zhongzhou Branch and another bank, with a total amount of CNY 50 million. At
present, the investigation of related cases and the preservation of assets have been under
way. The Company has initiated a civil procedure to recover the loss from the responsible
unit.
Based on the amount of assets preserved by the public security organization at present
and professional legal opinions issued by Beijing Weiheng (Chengdu) Law Firm on 6
January 2019, the Company has made provision for bad debts on savings deposits
involving contract disputes of CNY 200 million. In the future, the amount of bad debts may
be adjusted along with the process and recovery of cases.
(2) Progress of technical renovation project of brewing invested by subsidiary
Based on the Company's development strategy, the "13th Five-Year Plan" and deep
analysis of the liquor industry and the actual situation of the Company itself, the Company
invested in the implementation of technical renovation project of brewing with Brewing
Company, the wholly-owned subsidiary, as the main body. The total investment of the
project is CNY 7,414,280,000, and the required funds are solved by the Company with
owned funds and other financing methods. At present, the project has invested a total of
CNY 2,362,483,700.00, and the completion ratio has been 40%.
(3) State-owned shareholders signed a concerted action agreement
On 31 December 2015, the state-owned shareholders and Xinglu Group signed a
concerted action agreement that when the parties in deal with the Company’s business
development and make decisions by shareholders meeting and board of directors
according to the Company law and other relevant laws and regulations and the articles of
association, the parties should adopt the consistent actions. The agreement is valid as of
31 December 2015 and ends on 1 June 2021. The signed agreement helps state-owned
shareholders further improve and clear ownership relations, standardize corporate
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governance. After the signing, the Company's shareholding structure has not changed.
The controlling shareholder is still Laojiao group, and the ultimate controlling is still
SASAC of Luzhou.
(4) To acquire part of the equity of Luzhou Pinchuang Technology Co., Ltd.
The 5th meeting of the ninth Board of Directors reviewed and approved the Proposal on
Purchase of part Equity Related Transactions of Luzhou Pinchuang Technology Co., Ltd.
on 28 December 2018. The Company has decided to purchase all 5% of Luzhou
Pinchuang Technology Co., Ltd. owned by Luzhou Sanxiang Technology Services
Department with its own capital at the estimated price of CNY 10,149,100.00. As the end
of the period, the equity acquisition has not been completed.
(5) Plan to establish Luzhou Baitiao Tongdao Uncle Constellation Wine Sales Co.,
Ltd.
On December 28, 2018, the Company’s fifth board meeting of ninth board of directors
reviewed and approved the "About plan to establish Luzhou Baidiao Tongdao Uncle
Constellation wine sales Co., Ltd.” It agreed that Luzhou Laojiao Baitiao Liquor Industry
Co., Ltd., a subsidiary of the Company and Shenzhen Tongdao Uncle Culture
Communication Co., Ltd. jointly invest and establish Luzhou Baitiao Tongdao Uncle
Constellation Wine Sales Co., Ltd. The registered capital of the company is CNY 5 million,
among which Luzhou Laojiao Baitiao Liquor Industry Co., Ltd. contributes CNY 3.5 million
in cash, accounting for 70% of the total capital stock, and it is the controlling shareholder.
Shenzhen Tongdao Uncle Culture Communication Co., Ltd. contributed CNY 1.5 million,
accounting for 30% of the total capital stock.
Except for the above matters, the Company has no other significant events that can affect
investors’ decision that need to be disclosed up to 31 December, 2018.
17. Notes to the Main Items of the Financial Statements of
Parent Company (All currency unit is CNY, except other
statements)
17.1. Notes and accounts receivable
Item Closing Balance Opening Balance
Accounts receivable 67,698.43 86,250.43
Total 67,698.43 86,250.43
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.1.1. Accounts receivable
17.1.1.1. Analysis by categories
Closing Balance Opening Balance
Type Book balance Provision for bad debt Book balance Provision for bad debt
Book value Book value
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Accounts receivables tested for impairment
on the portfolio with characteristics of credit 68,103.61 100.00% 405.18 0.59% 67,698.43 91,856.79 100.00% 5,606.36 6.10% 86,250.43
risk
Total 68,103.61 100.00% 405.18 0.59% 67,698.43 91,856.79 100.00% 5,606.36 6.10% 86,250.43
Accounts receivable with significant single amount and tested for impairment individually:
Applicable √ N/A
An analysis of provision under the aging analysis method:
√ Applicable N/A
Closing Balance
Aging
Accounts receivable Provision for bad debt Proportion
Classification of within 1 year
Risk free 60,000.00
Within 1 year 8,103.61 405.18 5.00%
Subtotal 68,103.61 405.18 0.59%
Total 68,103.61 405.18 0.59%
Statements for determining the portfolio:
Accounts receivables using balance percentage method to provide bad debt:
Applicable √ N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.1.1.2. Provision and recovery for bad and doubtful debt in the current period
The provision allowance of current period is CNY -5,201.18. The recovery of current
period is CNY 0.00.
17.1.1.3. Accounts receivable actually written off during the reporting period
Statements for accounts receivable written off:
There is no accounts receivable actually written off during the reporting period.
17.1.1.4. Top five entities with the largest balances of accounts receivable
The sum of top five entities with the largest balances of accounts receivable is CNY
68,103.61, accounting for 100% of the closing balance of accounts receivable, and the
corresponding provision for bad debt is CNY 405.18.
17.1.1.5. Derecognition of accounts receivables due to transfer of financial assets
There is no derecognition of accounts receivables due to transfer of financial assets
during the reporting period.
17.1.1.6. Amount of assets and liabilities resulting from transfer of accounts
receivables and continuing involvement
There are no assets and liabilities resulting from transfer of accounts receivables and
continuing involvement during the reporting period.
17.2. Other receivables
Item Closing Balance Opening Balance
Interest receivable 29,970,944.44 11,167,975.69
Other receivables 4,627,756,101.58 5,604,515,648.88
Total 4,657,727,046.02 5,615,683,624.57
17.2.1. Interest receivable
17.2.1.1. Classification of interest receivable
Item Closing Balance Opening Balance
Fixed deposits 29,970,944.44 11,167,975.69
Total 29,970,944.44 11,167,975.691
Note: 1. The closing balance increased CNY 18,802,968.75 compared with opening balance, with an
increase by 106.03%, mainly due to the increase of interest income on fixed deposit resulting from stock
funds in the current period.
17.2.1.2. Significant interest receivable overdue
There is no significant interest receivable overdue at period end.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.2.2. Other receivables
17.2.2.1. Other receivables disclosed by categories
Closing Balance Opening Balance
Type Book Balance Provision for bad debt Book Balance Provision for bad debt
Book Value Book Value
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Other receivables with significant single
amount and tested for impairment 307,456,275.25 6.36% 200,000,000.00 65.05% 107,456,275.25 400,000,000.00 6.88% 200,000,000.00 50.00% 200,000,000.00
individually
Other receivables tested for impairment on
4,525,091,586.91 93.64% 4,791,760.58 0.11% 4,520,299,826.33 5,412,681,140.42 93.12% 8,165,491.54 0.15% 5,404,515,648.88
the portfolio with characteristics of credit risk
Total 4,832,547,862.16 100.00% 204,791,760.58 4.24% 4,627,756,101.58 5,812,681,140.42 100.00% 208,165,491.54 50.15% 5,604,515,648.88
Other receivables with significant single amount and tested for impairment individually:
√ Applicable N/A
Closing Balance
Company Name Provision balance Proportion of
Book Balance Reason
for bad debt Provision
Agricultural Bank of China Changsha Yingxin branch, Industrial and Commercial
307,456,275.25 200,000,000.00 65.05% For details please see Note14.1
Bank of China Ltd. Nanyang Zhongzhou branch and another bank.
Total 307,456,275.25 200,000,000.00 -- --
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
An analysis of provision under the aging analysis method:
√ Applicable N/A
Closing Balance
Aging
Other receivables Provision for bad debt Proportion of Provision
Classification of within 1 year
Risk free 4,510,110,733.71
Within 1 year 10,028,014.85 501,400.74 5.00%
Sub-total 4,520,138,748.56 501,400.74 5.00%
1-2 years 415,215.72 41,521.57 10.00%
2-3 years 193,383.93 38,676.79 20.00%
3-4 years 184,722.70 73,889.08 40.00%
4-5 years 116,218.00 92,974.40 80.00%
Over 5 years 4,043,298.00 4,043,298.00 100.00%
Total 4,525,091,586.91 4,791,760.58
Statements for determining the portfolio:
Other receivables using balance percentage method to provide bad debt:
Applicable √ N/A
Other receivables using other method to provide bad debt:
Applicable √ N/A
17.2.2.2. Provision and recovery for bad and doubtful other receivables in the
current period.
The provision allowance of current period is CNY -2,960,597.10. The recovery of current
period is CNY 0.00.
17.2.2.3. Other receivables actually written off during the reporting period
Item Written off amount
Other receivables actually written off 413,133.86
Statements for written off:
There are no significant other receivables actually written off.
17.2.2.4. Analysis of other receivables by category
Category Closing Balance Opening Balance
Internal transactions with related parties
4,510,110,733.71 5,391,751,764.73
within the scope of merger
Intercourse funds 14,282,195.47 19,885,208.11
Petty cash 698,657.73 1,044,167.58
Saving deposits involving contract disputes 307,456,275.25 400,000,000.00
Total 4,832,547,862.16 5,812,681,140.42
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.2.2.5. Top five entities with the largest balances of the other receivables
Proportion in total Provision at
Company Name Category Closing Balance Aging
receivables period end
Luzhou Laojiao Brewing Internal
2,640,034,560.59 Within 1 year 54.63%
Co., Ltd. transactions
Sales Company of Internal
1,583,875,514.35 Within 1 year 32.78%
Luzhou Laojiao Co., Ltd. transactions
Agricultural Bank of
China Changsha
Yingxin branch,
Saving deposits
Industrial and
involving contract 307,456,275.25 4-5 years 6.36% 200,000,000.00
Commercial Bank of
disputes
China Ltd. Nanyang
Zhongzhou branch and
another bank.
Luzhou Laojiao
Internal
Electronic Commerce 98,579,653.89 Within 1 year 2.04%
transactions
Co., Ltd.
Luzhou Laojiao Import
Internal
and Export trade Co., 75,548,088.86 Within 1 year 1.56%
transactions
Ltd.
Total -- 4,705,494,092.94 -- 97.37% 200,000,000.00
17.2.2.6. Other receivables involving government grants
There are no other receivables involving government subsidy during the reporting period.
17.2.2.7. Other receivables derecognized arising from financial assets transfer
There are no other receivables derecognized arising from financial assets transfer during
the reporting period.
17.2.2.8. Amount of assets and liabilities resulting from transfer of other
receivables and continuing involvement
There are no assets and liabilities resulting from transfer of other receivables and
continuing involvement during the reporting period.
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17.3. Long-term equity investments
Closing Balance Opening Balance
Item
Book Balance Provision for impairment Book Value Book Balance Provision for impairment Book Value
Investment in subsidiary 3,403,811,028.11 3,403,811,028.11 3,394,206,228.11 3,394,206,228.11
Investment in associate and joint venture 2,093,670,447.40 2,567,098.80 2,091,103,348.60 1,827,461,071.65 2,567,098.80 1,824,893,972.85
Total 5,497,481,475.51 2,567,098.80 5,494,914,376.71 5,221,667,299.76 2,567,098.80 5,219,100,200.96
17.3.1. Investment in subsidiary
Increase in Decrease in current Provision for impairment Closing balance of
Investee Opening Balance Closing Balance
current period period in current period provision for impairment
Luzhou Pinchuang Technology Co., Ltd. 47,500,000.00 47,500,000.00
Sales Company of Luzhou Laojiao Co., Ltd. 103,162,447.09 103,162,447.09
Luzhou Laojiao Brewing Co., Ltd. 3,172,109,991.25 3,172,109,991.25
Luzhou Laojiao International Development（Hong Kong）Co., Ltd. 5,433,789.77 5,433,789.77
Luzhou Laojiao Electronic Commerce Co., Ltd. 42,000,000.00 9,604,800.00 51,604,800.00
Luzhou Baonuo Biotechnology Co., Ltd. 20,000,000.00 20,000,000.00
Luzhou Laojiao Tourism Culture Co., Ltd. 4,000,000.00 4,000,000.00
Luzhou Laojiao Health Liquor Industry Co.,Ltd.
Total 3,394,206,228.11 9,604,800.00 3,403,811,028.11
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.3.2. Investment in associate and joint venture
Changes in Current Period
Adjustments of Closing Balance
Gain or loss Cash divided
Investee Opening Balance other Changes in Provision for Closing Balance of provision for
Increase Decrease recognized under or profit Other
comprehensive other equity impairment impairment
equity method declared
income
1. Joint Venture
None
2. Associate
Huaxi Securities Co., Ltd. 1,827,461,071.65 89,710,642.15 -359,548.90 171,419,326.19 10,367,583.47 2,077,863,907.62 2,567,098.80
Sichuan Development Wine
16,636,159.43 -829,619.65 15,806,539.78
Investment Co., Ltd.
Subtotal 1,827,461,071.65 16,636,159.43 88,881,022.50 -359,548.90 171,419,326.19 10,367,583.47 2,093,670,447.40 2,567,098.80
Total 1,827,461,071.65 16,636,159.43 88,881,022.50 -359,548.90 171,419,326.19 10,367,583.47 2,093,670,447.40 2,567,098.80
17.3.3. Other statements
For details about changes in current period please see Note 7.8 Long-term equity investments.
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
17.4. Operating revenue and cost of sales
Current Period Previous Period
Item
Revenue Cost of sales Revenue Cost of sales
Primary business 3,325,711,704.83 2,268,801,347.29 2,806,613,863.86 2,086,961,571.07
Other business 35,593,034.44 103,324.95 48,668,525.71 3,066,418.73
Total 3,361,304,739.27 2,268,904,672.24 2,855,282,389.57 2,090,027,989.80
17.5. Investment income
Item Current Period Previous Period
Investment income from long-term
equity investments under cost 2,015,909,035.78 1,832,323,011.65
method
Investment income from long-term
equity investments under equity 88,881,022.50 132,404,279.33
method
Investment income gained during
the period of holding 9,112,541.00 5,912,117.71
available-for-sale investments
Total 2,113,902,599.28 1,970,639,408.69
18. Supplementary information
18.1. Detailed statement of extraordinary gain and loss in the current
period (+ for gain, - for loss)
√ Applicable N/A
Item Amount Remark
For details please see
Gains or losses on disposal non-current assets -13,885,991.18
Note 7.35, 7.37
Government grants included into current profits and
losses (other than government grants closely related For details please see
22,342,598.30
to enterprise business and granted by quota or Note 7.33
quantity according to national unified standard)
Other non-operating income and costs other than For details please see
-4,902,369.83
above items Note 7.33, 7.37
Less: impact from income tax 316,133.32
impact from non-controlling shareholders equity 768,397.45
Total 2,469,706.52 --
Statement for extraordinary gain and loss items that the Company defines according to the definition in
“Explanatory Announcement of Information Disclosure of Company that Issues Securities publicly NO.1-
Extraordinary Gain and Loss” and definition of recurrent gain and loss items that are listed as
extraordinary gain and loss in the “Explanatory Announcement of Information Disclosure of Company
that Issues Securities publicly NO.1- Extraordinary Gain and Loss”:
Applicable √ N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
18.2. Return on equity and earnings per share
EPS(CNY/Share)
Profit during reporting period Weighted average ROE
Basic EPS Diluted EPS
Net profits attributable to
ordinary shareholders of the 21.81% 2.380 2.380
Company
Net profits attributable to
ordinary shareholders of the
21.80% 2.378 2.378
Company after deduction of
extraordinary gain and loss
18.3. Accounting data differences under domestic and foreign
accounting standards
18.3.1. Differences of net profit and net assets between international accounting
standards and Chinese accounting standards disclosed in the financial reporting at
the same time
Applicable √ N/A
18.3.2. Differences of net profit and net assets between outbound accounting
standards and Chinese accounting standards disclosed in the financial reporting at
the same time
Applicable √ N/A
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2018 Annual Report of Luzhou Laojiao Co.,Ltd.
Section XII Documents Available for Preference
1. Financial statements signed and stamped by the legal representative, person in charge
of accounting affairs and person charge of accounting department ;
2. The original of the auditor’s report with the seal of the accounting firm, and signed and
stamped by CPAs;
3. The originals of all company documents and announcements that are disclosed on the
public website designated by CSRC during the reporting period.
211
