2019 Annual Report of Luzhou Laojiao Co., Ltd.
Luzhou Laojiao Co., Ltd.
2019 Annual Report
April 2020
1
2019 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
and Ms. 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.
Position of directors who
Name of directors who did not Reason for not attending
did not attend the meeting Name of deputies
attend the meeting in person the meeting in person
in person
Lin Feng Director Work Liu Miao
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 15.9 (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.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
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2019 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 ...............................................................13
Section V Significant Events......................................................................................................34
Section VI Changes in Shares and Information about Shareholders .............................51
Section VII Preference Shares ...................................................................................................59
Section VIII Information about Convertible Corporate Bond ............................................60
Section IX Profiles of Directors, Supervisors, Senior Management and Employees .61
Section X Corporate Governance .............................................................................................74
Section XI Information about Corporate Bond......................................................................81
Section XII Financial Report.......................................................................................................87
Section XIII Documents Available for Preference.............................................................. 240
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Definitions
Referen
Term Definition
ce
Company, the Company, Luzhou
Refer to Luzhou Laojiao Co., Ltd.
Laojiao
Laojiao Group Refer to Luzhou Laojiao Group Co., Ltd.
Xinglu Group Refer to Luzhou XingLu Investment Group Co., Ltd.
State-owned Assets Supervision and Administration
SASAC of Luzhou Refer to
Commission of Luzhou
Huaxi Securities Refer to Huaxi Securities Co., Ltd.
CICC Refer to China International Capital Corporation Limited
Luzhou Bank Refer to Luzhou Bank Co., Ltd.
Sales Company Refer to Sales Company of Luzhou Laojiao Co., Ltd.
Brewing Company Refer to Luzhou Laojiao Brewing Co., Ltd.
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2019 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
the shares of the Shenzhen Stock Exchange
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, Nanguang Road,
Business address
Luzhou City, Sichuan Province, China
Postal code 646000
Company website www.lzlj.com
E-mail lzlj@lzlj.com
2. Contact us
Representative for securities
Secretary of the board
affairs
Name Wang Hongbo Wang Chuan
Luzhou Laojiao Marketing Network Command Center, Nanguang
Address
Road, Luzhou City, Sichuan Province, China
Tel. (0830)2398826 (0830)2398826
Fax (0830)2398864 (0830)2398864
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
E-mail dsb@lzlj.com dsb@lzlj.com
3. Information disclosure and place where the annual report is kept
Newspaper designated by the Company China Securities Journal, Securities Times, Securities Dail
for information disclosure y
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 the
Board office
Company is kept
4. Company registration and alteration
Organization code 91510500204706718H
Changes in main business activities
since the Company was listed (if None
any)
Before September 2009, the controlling shareholder was the
Changes of controlling shareholders SASAC of Luzhou. After the equity transfer in September 2009, the
of the Company (if any) controlling shareholder was 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 City,
accounting firm Sichuan Province.
Name of accountants for writing
Tang Fangmo, Feng Yuan
signature
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting
period
□ Applicable √ N/A
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Financial adviser engaged by the Company to continuously perform its supervisory function during the
reporting period.
Applicable √ N/A
6. Key accounting data and financial indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data.
Yes √ No
2019 2018 YoY Change 2017
Operating revenues (CNY) 15,816,934,272.86 13,055,465,761.55 21.15% 10,394,867,493.46
Net profits attributable to
shareholders of the Company 4,641,988,857.03 3,485,643,008.98 33.17% 2,557,944,598.97
(CNY)
Net profits attributable to
shareholders of the Company
4,600,916,766.09 3,483,173,302.46 32.09% 2,539,601,364.06
before non-recurring gains and
losses (CNY)
Net cash flows from operating
4,841,619,203.86 4,297,916,018.24 12.65% 3,703,734,061.89
activities (CNY)
Basic earnings per share
3.17 2.38 33.19% 1.798
(CNY/share)
Diluted earnings per share
3.17 2.38 33.19% 1.798
(CNY/share)
Weighted average ROE 25.50% 21.81% 3.69% 20.30%
At the end of 2019 At the end of 2018 YoY Change At the end of 2017
Total assets (CNY) 28,919,969,078.32 22,604,929,596.42 27.94% 19,755,761,074.20
Net assets attributable to
shareholders of the Company 19,406,845,725.61 16,964,671,475.96 14.40% 15,171,448,756.68
(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.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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
Unit: CNY
Q1 Q2 Q3 Q4
Operating revenues 4,169,227,565.29 3,843,807,454.43 3,463,860,724.49 4,340,038,528.65
Net profits attributable to
1,514,560,516.51 1,235,220,524.91 1,045,505,627.15 846,702,188.46
shareholders of the Company
Net profits attributable to
shareholders of the Company
1,509,954,666.54 1,217,827,861.02 1,064,362,543.26 808,771,695.27
before non-recurring gains and
losses
Net cash flows from operating
561,024,531.75 1,145,726,058.59 1,638,528,733.43 1,496,339,880.09
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 2019 2018 2017 Note
Profit or loss from disposal of
See "Section XII Note
non-current assets (including the
23,211,482.49 -13,885,991.18 -4,256,543.78 5.38, 5.39, 5.40" for
write-off portion of the impairment
details.
provision)
Government grants accounted for, in the
profit or loss for the current period
(except for the government grants
See "Section XII Note
closely related to the business of the 43,969,302.07 22,342,598.30 27,087,985.92
5.34" for details.
Company and given at a fixed amount or
quantity in accordance with the national
uniform standards)
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Net profit and loss of subsidiaries arising
from business combination under the
-269,195.68
common control from the beginning of
the period to the date of merger
Other non-operating income and
See "Section XII Note
expenditure except above-mentioned -11,510,048.21 -4,902,369.83 5,512,918.43
5.39, 5.40" for details.
items
Less: Corporate income tax 13,076,295.35 316,133.32 5,357,931.72
Minority interests (after tax) 1,522,350.06 768,397.45 4,373,998.26
Total 41,072,090.94 2,469,706.52 18,343,234.91 --
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 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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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section III Business Profile
1. Business scope in the reporting period
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.
Currently, China’s liquor market shares are concentrated in brands with superior reputation, high quality,
convoluted cultural background, and close relationship with origins. Brands and products are made to
appeal more to younger consumers, and are made more stylish, healthier and more international. In
particular, market competition will become fiercer as China adopts an opening -up policy for the liquor
industry. During the reporting period, closely adhering to the development theme of “firmness,
management, scale”, the Company enhanced its foundation, built up growth momentum and made
remarkable efforts to accomplish key tasks. As a result, the Company continued to g row in a healthy way,
with its operating results hitting a record high.
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
The closing balance increased by CNY 489,198,482.44 compared to
opening balance, indicating an increase of 47.51 percent. It was
Fixed assets mainly due to the increase in construction in progress that met the
expected conditions for use and was transferred to fixed assets in the
current period.
The closing balance increased by CNY 100,266,659.59 compared to
opening balance, indicating an increase of 43.22 percent. It was
Intangible assets
mainly due to the acquisition of land use rights of CNY 84,360,783.58
in the current period.
The closing balance increased by CNY 4,256,903,837.70 compared
to opening balance, indicating an increase of 141.87 percent. It was
Construction in progress
mainly due to the increased input to the technical renovation project of
brewing.
2.2. Main assets overseas
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Applicable √ N/A
3. Analysis of core competitiveness
A. Geographical advantage
Luzhou City, where the Company is located, sits in the transitional area between the southern rim of the
Sichuan Basin and the Yunnan-Guizhou Plateau, which features a warmer and more humid sub -tropical
climate compared to other areas at the same latitude, with a temperature always above 0℃ throughout
the year. The unique climate and soil are agreeable to grow grains for liquor brewing. The glutinous red
sorghum and soft wheat grown in this area are the primary raw materials for the liquor of the Company.
The cellars in which the Company brews its liquor are made of the local loessal clay characteristic of
strong viscosity, a variety of minerals and excellent moisture retention. In addition, the abundant and
quality water in the region, creates a unique geographical advantage for the production of the
Company’s liquor.
B. Advantage of cellars and brewing technique
Aged cellars are the most essential condition for a strong aromatic liquor maker to produce good quality
liquor. The Cellars of National Treasure 1573, founded in 1573, was granted by the State Council as the
first Cultural Relic of National Importance in the industry under the Protection of the State in December
1996. 1,619 cellars of Luzhou Laojiao which have been continuously used for over 100 years, together
with its 16 ancient brewing workshops and three natural cellar holes, were all selected as the fourth
batch of Cultural Relics of National Importance under the Protection of the State in 2013 . They are
unique resources that cannot be replicated. In both 2006 and 2012, Luzhou Laojiao Daqu Cellars were
twice selected into the preliminary list of China for World Heritage. In November 2018, Luzhou Laojiao
Cellars and Brewing Workshops were selected into China’s Industrial Heritage List. The time -honored
Traditional Brewing Technique of Luzhou Laojiao is a 23-generation inheritance and a classic brewing
technique for strong aromatic liquor. This technique was selected as the first batch of National Intangible
Cultural Heritage in May 2006. The Cellars of National Treasure 1573 and the Traditional Brewing
Technique of Luzhou Laojiao together provide the most essential basis and assurance for the quality of
the product series of National Cellar 1573 and Luzhou Laojiao.
C. Brand advantage
Brand is a key business resource for liquor producers. The Company’s reputation is greatly built on its
superiority in brand. National Cellar 1573, which is of a connoisseurship level, is a world-famous
high-end brand. Luzhou Laojiao Tequ, a classic brand for strong aromatic liquor, was selected in 1952
by the first national tasting competition judges as one of the four most famous liquor brands in China. It is
the only strong aromatic liquor brand that won the title of “National Famous Liquor” for five consecutive
times, as well as the pioneer with regard to the “Tequ” variety of liquor. In recent years, the Company
has successfully put in place a brand system of “dual brands, three product se ries, and five major single
products” with great clarity and focus. The programs carried out to promote the brand of National Cellar
1573 and revive the brand of Luzhou Laojiao have produced remarkable results, with significant
improvement in brand influence. The Company’s liquor is increasingly known by consumers as a
national brand of strong aromatic liquor and of authentic flavor.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
D. Quality and R&D advantage
The Company is committed to producing high-quality liquor, advocating a healthy lifestyle and “making
the quality visible”. The first “Organic Sorghum Planting Base” was established and the six-factor
management system (including organic, quality, safety, environment, measurement and energy) was
built and improved. The eight research platforms are established, including National Engineering
Research Center of Solid-State Brewing, National Liquor Test Center, National Postdoctoral Workstation,
etc, which all support the innovation and upgrading of products with their strong technical force. In recent
years, the Company has put in a lot of efforts in researching Tequ production, brewing informatization &
automation. Relying on the technological innovation platforms such as the National Industrial Design
Center, and continuously deepening the cooperation with universities and scientific research institutes
including the Chinese Academy of Sciences and the Jiangnan University, the Company has undertaken
dozens of national- or provincial-level projects and has been granted hundreds of invention or utility
model patents. And remarkable results have been achieved with respect to improvement of the quality of
base liquor, as well as production efficiency improvement.
E. Talent advantage
The Company has built up the richness in its talent pool throughout the years. It has 1 inheritor of
national intangible cultural heritage, 2 masters of Chinese brewing, 2 masters of Chinese liquor, 3
masters of Chinese liquor technique, 2 Chinese liquor connoisseurs, 4 senior professor engineers, 6
experts who receive special allowances from the State Council, 3 national technicians, 3 academic and
technologic leaders of Sichuan province, 1 excellent expert with special contribution of Sichuan province,
1craftsman of Sichuan province, 1 technological elite of Sichuan province, as well as hundreds of highly
skilled personnel including national liquor judges, senior brewing technicians and brewing technicians.
The comprehensive and professional personnel system assures the sound development of the
Company.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section IV Performance Discussion and Analysis
1. Overview
2019 marked the end of the three-year sprint to the fulfillment of the Company’s development strategy.
Centering on the strategic planning and business objectives, the Company’s management and
employees implemented the development theme of “firmness, management, scale” to promote a solid
and rapid development. For 2019, operating revenue amounted to CNY 15.817 billion, up 21.15% year
on year; and the net profit attributable to the shareholders of the listed company reached CNY 4.642
billion, up 33.17% year on year. As such, the development objectives for the year have been achieved!
Over the past year, the Company's main work and performance included:
A. Significant ramp-up of quality production capacity and enhanced quality foundation for
further growth
In 2019, Luzhou Laojiao Huangyi Brewery Eco-Park (focusing on the brewing technical innovation
program) was put into production. The liquor produced in the new cellars in the eco-park is of excellent
quality due to the application of technological achievements in relation to cellar mud cultivation, cellar
sealing technology, etc. The liquor production system led by the Huangyi Brewery Eco -Park will promote
fast growth in sales and help achieve a leading market share with better quality and taste. Active efforts
were made to build a national traceability system of liquor safety, carry out a pilot program of quality
improvement targeted at the entire industrial chain, as well as strengthen quality management programs
such as “comprehensive quality improvement” and “research on technology standards for packaging
materials”. Additionally, the Company has issued several white papers on product quality and safety. It
has also won a variety of accolades in this respect, including the “Nationwide Advanced Enterprise in
Quality”, the “Nationwide Iconic Enterprise in Quality”, the “Workshop of National Masters”, and the
“Sichuan Craftsman”.
B. Steady progress in brand value return, with historic and fundamental revival for core product
series
For the product series of National Cellar 1573, the Company firmly implemented a retail quota
mechanism and a price circuit breaker mechanism. Continual optimization in channel inventories,
increased rationale in market prices, and the fundamental shift from lower expense driven growth to
brand driven growth were all accomplished. The package of the Tequ series was upgraded, and the
production of Jiaoling Liquor ramped up. Both the sales volume and prices of 60 Tequ rose, and the
Luzhou Laojiao brand revival campaign produced fruitful results. The marketing models of the Touqu
and Erqu series took shape smoothly, and brand coverage was expanding. As such, th e Company is
taking solid steps on the path of brand revival and value return.
C. Significant improvement in the management system, with more scientific corporate
governance
The Company fully fulfilled the requirements of the “management year” by carrying out solid
improvement and innovative optimization in internal control, project management, financial management,
asset management, production safety, environmental protection , among others. The reporting period
saw a significant improvement in the Company’s business planning and budgetary management
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
capabilities. The business and marketing plans were successfully devised, indicating that the Company
was well positioned to carry out the plans in 2020. Meanwhile, substantial progress was made in
environmental protection. Key projects such as environment-related risk screening and rectification,
waste water treatment plant upgrading, diversion of rain and waste water in all production bases, and
renovation of the cooling water circulation system were smoothly completed, with all the production
emissions complying with the applicable standards.
D. Further progress in team building, with a considerable improvement in the sense of h onor, the
sense of belonging and the sense of achievement among employees
The Company further expanded its talent pool through campus and social recruitment during the
reporting period. The “Hang” plan, a talent cultivation system, was put in place, the P3-level talent review
was concluded, and the “dual channel” career promotion mechanism was implemented in a deeper
manner. In addition to the “352” appraisal and motivation model that was promoted in the front line of
sales, training programs including the “Operator Plan”, the “Commander Plan” and “Speed up” were
carried out in a deep manner to fully enhance the practical ability of marketing personnel. Meanwhile, the
Company kept improving employee benefits. It adopts a mechanism of “seven insurance payments,
housing funds and annuities” for employees, as well as a well-established occupational health
management system, reaching yet another new height of the Company as an “employees’ paradise” and
“talent paradise”.
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
2019 2018
As a percentage of As a percentage of YoY Change
Amount Amount
operating revenues operating revenues
Total 15,816,934,272.86 100% 13,055,465,761.55 100% 21.15%
By business segment
Liquor 15,615,719,102.43 98.73% 12,859,523,825.56 98.50% 21.43%
Other 201,215,170.43 1.27% 195,941,935.99 1.50% 2.69%
By product
High-grade liquor 8,595,855,288.20 54.35% 6,377,822,866.84 48.85% 34.78%
Mid-grade liquor 3,748,895,591.48 23.70% 3,674,967,125.89 28.15% 2.01%
Low-grade liquor 3,270,968,222.75 20.68% 2,806,733,832.83 21.50% 16.54%
Other 201,215,170.43 1.27% 195,941,935.99 1.50% 2.69%
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
By geographical segment
Domestic 15,674,636,458.22 99.10% 12,950,439,919.30 99.20% 21.04%
Overseas 142,297,814.64 0.90% 105,025,842.25 0.80% 35.49%
2.2.2. Business segment, products or geographical segments contributing over 10%
of the operating revenues or profits
√ Applicable N/A
Unit：CNY
YoY change of YoY change of
Operating Gross profit YoY change of
Cost of sales operating gross profit
Revenue margin cost of sales
revenue margin
By business segment
Liquor 15,615,719,102.43 2,974,484,362.13 80.95% 21.43% 3.32% 3.34%
By product
High-grade
8,595,855,288.20 617,861,758.74 92.81% 34.78% 18.84% 0.96%
liquor
Mid-grade
3,748,895,591.48 667,389,589.67 82.20% 2.01% -10.48% 2.49%
liquor
Low-grade
3,270,968,222.75 1,689,233,013.72 48.36% 16.54% 4.69% 5.85%
liquor
By geographical segment
Domestic 15,674,636,458.22 3,046,516,937.67 80.56% 21.04% 5.29% 2.90%
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
2.2.3. Whether revenue from sales of goods is higher than revenue of rendering
services
√ Yes No
By business
Item Unit 2019 2018 YoY Change
segment
Sales volume ton 142,684.91 146,426.14 -2.56%
Liquor Output volume ton 137,865.2 156,750.5 -12.05%
Stock ton 45,350.24 50,169.95 -9.61%
Reason for any over 30% YoY movements in the data above
Applicable √ N/A
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
2.2.4. Execution of significant sales contracts in the reporting period
Applicable √ N/A
2.2.5. Breakdown of cost of sales
By business segment
Unit：CNY
2019 2018
By business As a
Item As a percentage YoY Change
segment Amount Amount percentage of
of cost of sales
cost of sales
Raw
Liquor 2,618,480,096.93 85.42% 2,493,466,778.30 84.99% 5.01%
materials
Liquor Labor costs 170,437,243.49 5.56% 176,446,424.13 6.01% -3.41%
Manufacturin
Liquor 276,500,707.96 9.02% 263,794,683.61 8.99% 4.82%
g overhead
2.2.6. Change in the scope of the consolidated financial statements for the reporting
period
√ Yes No
Luzhou Boda Brewing Co., Ltd. was deconsolidated for it was de -registered.
The following entities were newly consolidated for they were newly incorporated subsidiaries with the
Company’s investment: Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd., Chengdu Tianfu
Panda Whitail Liquor Industry Co., Ltd., Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co.,
Ltd., Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Ltd., Luzhou Laojiao Selected
Electronic Commerce Co., Ltd., and Luzhou Laojiao Commercial Development (North America) Co., Ltd.
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） 10,447,279,425.97
Total sales from top five customers as a
66.05%
percentage of the total sales
Total sales from related parties among top
five customers as a percentage of the total 0.00%
sales
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Information on top five customers
As a percentage of the total sales
No. Customer Sales amount (CNY)
for the year
1 Customer A 7,229,818,651.23 45.71%
2 Customer B 1,601,232,211.38 10.12%
3 Customer C 941,829,400.97 5.95%
4 Customer D 454,487,975.98 2.87%
5 Customer E 219,911,186.41 1.39%
Total -- 10,447,279,425.97 66.05%
Other information on major customers
Applicable √ N/A
Major suppliers of the Company
Total sales from top five suppliers（CNY） 1,230,215,105.39
Total sales from top five suppliers as a
38.97%
percentage of the total sales
Total sales from related parties among top
five suppliers as a percentage of the total 0.00%
purchase
Information on top five suppliers
As a percentage of the total
No. Supplier Purchases(CNY)
purchase for the year
1 Supplier A 354,223,472.83 11.22%
2 Supplier B 279,764,450.95 8.86%
3 Supplier C 231,425,892.63 7.33%
4 Supplier D 188,694,909.68 5.98%
5 Supplier E 176,106,379.30 5.58%
Total -- 1,230,215,105.39 38.97%
Other information on major suppliers
Applicable √ N/A
2.3. Expenses
Unit：CNY
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
2019 2018 YoY Change Reason for any significant change
Selling and distribution
4,186,102,153.59 3,392,721,432.33 23.38%
expenses
General and
administrative 828,945,024.92 722,448,972.80 14.74%
expenses
Finance expenses -205,084,493.69 -215,066,482.79
R&D expenses 71,643,099.77 62,172,210.70 15.23%
2.4. R&D expenses
√ Applicable N/A
In 2019, the Company’s research interests included research on breeding and standardized cultivation
of sorghum varieties for brewing, research on brewing microorganism fermentation mechanism and
application, development of new brewed tonic liquor products, research and application of liquor food
safety and quality improvement technology, research on production techniques of different styles of base
liquor, and research on comprehensive utilization of brewing by-products. The Company passed the
inspection of science and technology authorities for 10 provincial and municipal science and technology
projects, including Research and Application of Microorganism Enhanced Co-culture Technology Based
on Flavor Fingerprint and Integration and Industrial Demonstration of Key Technologies in Intelligent and
Automatic Production of Luzhou-Flavor Liquor, and won three awards for scientific and technological
research results, including one Second Prize of China Alcoholic Drinks Association for Scientific and
Technological Progress and two Outstanding Paper Awards of China Alcoholic Drinks Association. The
promotion and application of related technological achievements in the Company has helped to enrich
its product categories, ensure product quality, enhance liquor yield a nd high-quality liquor yield, save
energy, reduce the discharge of brewing waste and minimize labor, laying a technical foundation for the
Company’s positive and scientific development.
Information about R&D input
2019 2018 YoY Change
Number of R&D
454 452 0.44%
personnel
R&D personnel as a
percentage in total 14.06% 15.69% -1.63%
employees
R&D input (CNY) 86,837,791.61 85,334,100.70 1.76%
R&D input as a
percentage in operating 0.55% 0.65% -0.10%
revenues
18
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Capitalized R&D input
0.00 0.00
(CNY)
Capitalized R&D input as
a percentage in total 0.00% 0.00%
R&D input
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 2019 2018 YoY Change
Subtotal of cash inflows
19,116,354,312.63 15,316,815,981.72 24.81%
from operating activities
Subtotal of cash outflows
14,274,735,108.77 11,018,899,963.48 29.55%
from operating activities
Net cash flows from
4,841,619,203.86 4,297,916,018.24 12.65%
operating activities
Subtotal of cash inflows
62,529,093.56 19,702,964.73 217.36%
from investing activities
Subtotal of cash outflows
4,613,226,214.50 1,485,118,936.65 210.63%
from investing activities
Net cash flows from
-4,550,697,120.94 -1,465,415,971.92
investing activities
Subtotal of cash inflows
2,493,834,692.00 4,482,764.00 55,531.63%
from financing activities
Subtotal of cash outflows
2,400,399,307.80 1,921,149,867.51 24.95%
from financing activities
Net cash flows from
93,435,384.20 -1,916,667,103.51
financing activities
Net increase in cash and
386,279,899.10 916,564,472.77 -57.86%
cash equivalents
Explanation of why the data above varied significantly
√ Applicable N/A
Net cash flows from investing activities decreased by CNY 3,085,281,149.02 year-on-year, mainly due
19
2019 Annual Report of Luzhou Laojiao Co., Ltd.
to the increase in cash paid for investments in the technical renovation project of brewing during the
reporting period.
Net cash flows from financing activities increased by CNY 2,010,102,487.71 year-on-year, mainly due to
the issue of corporate bond by the Company.
Explanation of main reasons leading to the material difference between net ca sh 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
Adjustments to the financial statements at the beginning of the first execution year of any new standards
governing financial instruments, revenue or leases since 2019
√ Applicable □ N/A
Unit：CNY
At the end of 2019 At the end of 2018
As a As a
Change in
percentage percentage Explanation about any material change
Amount Amount percentage
of total of total
assets assets
Cash and cash
9,753,666,526.78 33.73% 9,367,386,627.68 41.34% -7.61%
equivalents
Accounts
18,293,914.23 0.06% 10,333,728.87 0.05% 0.01%
receivable
Inventories 3,641,235,092.33 12.59% 3,230,415,749.95 14.26% -1.67%
Long-term equity
2,230,721,725.72 7.71% 2,092,554,736.09 9.24% -1.53%
investments
Fixed assets 1,518,865,397.91 5.25% 1,029,666,915.47 4.54% 0.71%
Mainly due to the increase of input in the
Construction in
7,257,393,087.56 25.09% 3,000,489,249.86 13.24% 11.85% technical renovation project of brewing
progress
industry.
20
2019 Annual Report of Luzhou Laojiao Co., Ltd.
4.2 Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit：CNY
Changes in
Changes in fair
Opening cumulative fair Provision for Amount of Amount of Other
Item value through Closing balance
balance value recorded impairment purchase sale changes
profit or loss
into equity
Financial asset
4. Investments
in other equity 327,036,804.62 25,358,451.16 247,832,416.78 352,395,255.78
instruments
Total 327,036,804.62 25,358,451.16 247,832,416.78 352,395,255.78
Financial
0.00 0.00 0.00 0.00
liability
Information about other changes
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
Other cash and cash 1,400,000.00 According to regulations of Tourism Bureau, the travel
equivalents service deposit was 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 year
YoY change
period (CNY) (CNY)
5,033,329,478.98 1,527,400,090.76 229.54%
21
2019 Annual Report of Luzhou Laojiao Co., Ltd.
5.2. Significant equity investment made in the reporting period
Applicable √ N/A
5.3. Significant ongoing non-equity investment in the reporting period
√ Applicable □ N/A
Unit: CNY
Accumula Reasons
Accumula
ted actual for not
Whether it Amount of ted actual
Industry input meeting
is a fixed input in income by Date of Disclosur
Investme of the amount Capital Project Projected the
asset the the end of disclosure e index (if
Item nt form investme by the source progress income schedule
investme reporting the (if any) any)
nt project end of the and
nt period reporting
reporting projected
period
period income
Announce
ment of
About
subsidiary
technical
Technical
renovatio
renovatio Fund-raisi
4,000,207 6,362,690 28 April n project
n project Self-built Yes Liquor ng+self-fi 85.00% 0.00 0.00 N/A
,095.68 ,798.07 2016 of
of nance
brewing
brewing
No：
2016-12
（http://w
ww.cninfo
.com.cn/）
4,000,207 6,362,690
Total -- -- -- -- -- 0.00 0.00 -- -- --
,095.68 ,798.07
5.4. Financial assets investment
5.4.1. Securities investment
√ Applicable □ N/A
Unit: CNY
Category Abbreviat Initial Accounti Beginnin Changes Changes Amount Profit Closing
Stock Amount Accounti Capital
of ion of investme ng g book in fair in the of and loss book
22
2019 Annual Report of Luzhou Laojiao Co., Ltd.
securitie code securities nt cost measure balance value cumulati purchase of sale during balance ng item source
s ment recogniz ve fair the
model ed in value reporting
profit or recorded period
loss into
equity
Investme
Domesti Fair nts in
c and 12,719,1 value 180,423, 37,333,0 205,037, 3,238,67 217,756, other Owned
601211 GTJA
foreign 56.76 measure 594.04 80.48 517.76 4.18 674.52 equity fund
stock ment instrume
nts
Investme
Domesti Fair nts in
c and 1,030,00 value 10,335,0 1,422,83 10,727,9 85,995.5 11,757,9 other Owned
002246 SNC
foreign 0.00 measure 98.55 5.05 33.60 3 33.60 equity fund
stock ment instrume
nts
Investme
Domesti Fair nts in
c and 51,120,0 value 102,337, -13,260, 37,956,3 5,424,00 89,076,3 other Owned
01983 LZBANK
foreign 00.00 measure 356.16 992.96 63.20 0.00 63.20 equity fund
stock ment instrume
nts
64,869,1 293,096, 25,494,9 253,721, 8,748,66 318,590,
Total -- 0.00 0.00 -- --
56.76 048.75 22.57 814.56 9.71 971.32
5.4.2. Derivative investment
□Applicable √ N/A
No such cases in the reporting period
5.5. Use of fund-raising
√ Applicable N/A
5.5.1. General use of fund-raising
√ Applicable □ N/A
Unit：CNY 10,000
23
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Accumula
Total Total ted
Total
Total amount of amount of re-purpos Purpose Amount
amount of Total
Total amount of re-purpos accumula ed and of
used amount of
amount of accumula ed ted fund-raisi direction fund-raisi
Year Method fund-raisi unused
fund-raisi ted used fund-raisi re-purpos ng as a of unused ng idle for
ng in the fund-raisi
ng fund-raisi ng in the ed percentag fund-raisi more than
reporting ng
ng reporting fund-raisi e in total ng two years
period
period ng fund-raisi
ng
Deposited
in special
account
of
fund-raisi
Non-publi 120,199.7 258,227.2
2017 295,273.5 0 0 0.00% 50,015.16 ng and 0
c offering 9 6
purchase
of
structured
deposit
products
Deposited
Public in special
offering of account
2019 249,000 200,381.5 200,381.5 0 0 0.00% 50,001.54 0
corporate of
bond fund-raisi
ng
320,581.2 458,608.7
Total -- 544,273.5 0 0 0.00% 100,016.7 -- 0
9 6
Notes for general use of fund-raising
The total amount of unused fund-raising includes funds interests.
5.5.2. Fund-raising for committed projects
√ Applicable □ N/A
Unit：CNY 10,000
Whether TotalAdjusted Investm Accumul Investm Date of Realized Whether Whether
Committed
the amount Investm ent ated ent the benefits the the
investment projects
project of ent total amount input by progress projects during expecte feasibilit
and direction of
has fund-rais amount in the the end by the reach the d y of the
over-raised funds
been ing for (1) reporting of the end of the reporting benefits project
24
2019 Annual Report of Luzhou Laojiao Co., Ltd.
changed committ period reporting reporting working period have has
(includin ed period period condition been changed
g partial investme (2) (3)＝ for their achieved significa
change) nt (2)/(1) intended ntly
use
Committed investment projects
Technical Renovation 31
295,273. 295,273. 120,199. 258,227.
Project of Brewing No 87.45% Decemb 0 N/A No
5 5 79 26
Phrase I er 2020
Technical Renovation 31
200,381. 200,381.
Project of Brewing No Decemb 0 N/A No
5 5
Phrase II er 2020
Project of Intelligent
Upgrading and
30 June
Building of the No 0 0 0 N/A No
2022
Information
Management System
Project of Acquiring
398,400. 398,400.
Sealing Equipment 50.30% 31
00 00
for the Cellar of No 0 0 Decemb 0 N/A No
Huangyi Brewing er 2020
Base
Project of Acquiring
Accessory
31
Equipment for
No 0 0 Decemb 0 N/A No
Leaven Making for
er 2020
Huangyi Brewing
Base
Subtotal of
693,673. 693,673. 320,581. 458,608.
committed -- -- -- -- --
5 5 29 76
investment projects
Direction of over-raised funds
None
693,673. 693,673. 320,581. 458,608.
Total -- -- -- 0 -- --
51 5 29 76
Situation and reason
for not reaching plan
progress or expected None
benefits (by specific
items)
Significant changes None
25
2019 Annual Report of Luzhou Laojiao Co., Ltd.
of project feasibility
Amount, propose and N/A
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
Applicable
Fundraising through non-public offering: On 30 November 2017, the Company held the 24 th
meeting of the eighth board of directors and the 13 th meeting of the eighth supervisory committee.
At the meetings, the Proposal on Using Raised Funds to Replace Up-front Costs was considered
and approved, which agreed to the Company’s replacement of the up -front self-raised fund of
CNY 581,774,996.30 using the fund-raising. Non-executive directors of the Company issued
independent opinions of consent. Sichuan Huaxin (Group) CPA Firm (Limited Liability
Partnership) verified the matter on up-front investment in the fundraising project with self-raised
Situation of
fund and produced the Special Report (CHXZ (2017) No. 534) on 14 November 2017.
prior-period
investment and
replacement of the Fundraising through public offering of corporate bond: On 14 Ma y 2019, th e Company held the 1 st
projects special meeting of shareholders in 2019, which considered and approved the Proposal on
Requesting the Company’s General Meeting to Fully Authorize Chairman of the Board or Other
Personnel Authorized b y the Board to Go Through Procedu res for the Public Offering of
Corporate Bond. According to the Proposal, in the event of inconsistency between the payment of
the raised funds and the progress of the project implementation, the Company may pay up -front
costs using other funds (including self-owned funds, bank project loans, etc.) according to the
actual situation, and replace fund investment other than capital fund when the raised funds are in
place. As of 31 December 2019, the Company had replaced an up -front self-raised fund of CNY
425,897,677.24 using the fund-raising.
Idle fund-raising used N/A
for temporary
supplementary
liquidity
Amount and reason N/A
for surplus of
fund-raising
Of the idle fund-raising through non-public offering, CNY 500 million is under the procedures for
Propose and
structured deposits with Chengdu Xiti North Road Sub-branch of China Merchants Bank Co., Ltd.
direction of unused
for the purpose of cash management; the remaining part is deposi ted in the bank accounts with
26
2019 Annual Report of Luzhou Laojiao Co., Ltd.
fund-raising Chengdu Branch of China Minsheng Banking Co., Ltd. and Chengdu Xiti North Road Sub -branch
of China Merchants Bank Co., Ltd. specifically for fundraising.
Idle fund-raising through public offering of corporate bond are deposited in the bank accounts with
CGB Chengdu Branch, BOC Luzhou Branch and Fucheng Avenue Sub -branch of Chengdu
Branch of China Merchants Bank specifically for fundraising.
Problems and other
situation when
None
fund-raising is used
and disclosed
Note: 1. The total amount of investment committed through fundraising is CNY 6,936,735,000, including
a fund of CNY 2,952,735,000 actually raised through non-public offering and a fund of CNY
3,984,000,000 actually raised through public offering of corporate bond respectively in August 2019 and
March 2020. The total amount of investment committed and total amount of investment after adjustment
have not been stated separately for Technical Renovation Project of Brewing Phase II, Project of
Intelligent Upgrading and Building of the Information Management System, Project of Acquiring Sealing
Equipment for the Cellar of Huangyi Brewing Base and Project of Acquiring Accessory Equipment for
Leaven Making for Huangyi Brewing Base. This is because that there are uncertaintie s in the approval
and issue time for public offering of corporate bond in the review of issue plans. To ensure smooth
progress of the projects and guarantee the interests of the Company’s shareholders, the investment
sequence and specific amounts of corresponding fund-raising should be determined by Chairman as
authorized by the general meeting or some other person as authorized by the board of directors in the
scope of the four projects according to the actual needs, provided that the capital fund for each project is
no less than 20% of the total investment.
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
27
2019 Annual Report of Luzhou Laojiao Co., Ltd.
7. Analysis of major subsidiaries
√ Applicable N/A
Main subsidiaries and joint companies with an over 10% influence on the Company’s net profit
Unit：CNY
Company Company Business Registered Operating Operating
Total assets Net assets Net profit
name type scope capital Revenue profit
Luzhou
Sales
Laojiao
Company of
series 100,000,00 5,104,555,5 1,650,609,3 15,093,167, 5,356,088,8 4,027,236,0
Luzhou Subsidiary
unified 0.00 31.72 66.02 596.91 01.02 19.99
Laojiao Co.,
package
Ltd.
liquor sales
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √N/A
Notes for major holding companies and joint stock companies
The operating profit and net profit of Sales Company increased 44.65% and 45.35% year on year,
mainly due to increased sale revenue during the reporting period.
8. Structured entities controlled by the Company
Applicable √ N/A
9. Outlook for the future development of the Company
9.1 Industry pattern and trends
According to the data of National Bureau of Statistics, the number of liquor companies above the scale
designated by the Bureau was 1,176 during January-December 2019, down by 269 from the previous
year; total production of brewed liquor of those 1,176 companies was 7.8595 million kl, down by 0.76%
year-on-year; total sales revenue reached CNY 561.782 billion, up by 8.24% year -on-year; total profit of
CNY 140.409 billion was realized, up by 14.54% year-on-year.
Under the joint influence of the macro-economic environment, population aging, consumption upgrading
and other related factors, the liquor industry has declined year by year since 2016, with faster withdrawal
of low-end capacity. China’s liquor market shares are concentrated in brands with superior reputation,
high quality, convoluted cultural background, and close relationship with origins. Brands and products
28
2019 Annual Report of Luzhou Laojiao Co., Ltd.
are made to appeal more to younger consumers, and are made more stylish, healthier and more
international. The rising prices of mid- and high-end liquors have reduced the impact of declined
production on total sales. Sales growth of liquor companies comes more from the competition in existing
markets and market competition of the liquor industry will be more intense in the future.
9.2 Company’s development strategy
9.2.1. Development opportunities in the future
(1) In the future, the international political and economic environments will usher in deeper reforms and
adjustments. China’s economy and enterprises will experience the leap from quantitative to qualitative
changes in the global economic and trade systems. As a result, China will achieve its milestone target of
building a moderately prosperous society in all aspects as planned. Luzhou Laojiao will face a diversity
of historical opportunities for high-quality development, including the expansion of opening-up on all
fronts, rising of city clusters, faster rural revitalization and upgrading of middle -class consumption.
(2) Over recent years of efforts, development and accumulation of experience and power, the Company
has gained solid strength in capacity, a positive development structure, prominent advantages in scale
and a robust momentum for growth, building a sound foundation for its faster development and
revitalization. As a series of prospective key projects are being put into production, the Company will
usher in opportunities for expansion of advantages, market shares and growth drivers.
9.2.2. Possible challenges and risks in the future
(1) As the rising international trade protectionism in recent years causes impact to export, the
macro-economic environment remains intense. In particular after 2020, with great fluctuations in the
international financial market and bulk commodity market, the world economy faces big chances of
recession, injecting more uncertainties to domestic macro economy, which will in turn affect liquor
consumption.
(2) The COVID-19 outbreak since the end of 2019 has brought huge impact to global economy and
changed consumption patterns and behaviors during the epidemic period. It has greatly impacted on the
consumption environment and product sales of the liquor industry. Since the fight against COVID -19
kicked off, the Company has attached great importance to the epidemic prevention and control,
prioritized staff safety and health, and focused on the anti-epidemic efforts. It has quickly set up a
COVID-19 prevention and control leading group and built a comprehensive prevention and control
system that comprises an “all-level” prevention and control organ, an “all-day” prevention and control
report mechanism, an “all-round” prevention and control range, and an “all-coverage” prevention and
control identification. It has taken a number of measures, including communication and education on the
epidemic prevention and control, survey of personnel & follow-ups, testing and monitoring of staff health
conditions, preparations for work and production recovery and guaranteed inventory of supplies.
Through the responsive and scientific approaches, the Company aims to carry forward the business
operations while all departments are dutifully performing the epidemic prevention & control, on the basis
of no infected and no suspected cases. As of now, the epidemic impact continues, restricting further
development on domestic liquor consumption. The recovery of the liquor industry is not known yet. The
Company will continue to keep track of the pandemic, assess and proactively deal with the impact on its
29
2019 Annual Report of Luzhou Laojiao Co., Ltd.
operation conditions and operating results.
9.2.3. The Company's "13th five-year" development strategy
As of the Company's "13th five-year" period, the overall plan is "12345" strategy, namely: the goal of
clearly return to China's liquor industry "top three"; adhering to the two principles of "profession and
strength" and "harmonious coexistence"; 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 2019
In 2019, the Company achieved the operating revenue of CNY 15.817 billion, up by 21.15%
year-on-year. The net profit attributable to shareholders of the listed company reached CNY 4.642 billion,
up by 33.17% year-on-year. The Company has successfully completed its business target of a
year-on-year growth in operating revenue by 15%-25% as set by the board of directors at the beginning
of 2019.
9.4 Business plan in 2020
th
2020 marks the year for the Company to achieve the “13 Five-year” plan. The Company will closely
center on the development theme of “Firm Determination, Strong Confidence, Strict Management,
Targeted Audit, Talent Development and All-out Efforts”, seize development opportunities and strive to
maintain the momentum of positive development. Due to the gre at uncertainties brought by the
COVID-19, the board deems that it will be difficult for the Company to quantify accurate business targets.
Despite that, the Company will keep close track of the pandemic, make proactive steps to deal with the
changes, maintain the positive momentum and industrial reputation, and take efforts to narrow the gap
between industry leaders.
The main measures are as follows:
A. Enhancing efforts in brand promotion, increasing brand visibility and accelerating brand
revitalization
The Company will implement the double brand strategy and the major single product strategy at an
in-depth level, strengthen brand management, regulate the use of bar codes and continue to shape the
brand system of “double brands, three categories and five single products”. It will inten sify, deepen and
refine cooperation with mainstream media, carry out targeted promotion that directly reaches consumers,
drive brand resources to focus on the first tier of market and on consumers, and continue to promote the
positive growth of “National Cellar 1573”. On the basis of strategic return, the old-time Tequ will firmly
dress up to achieve the return of consumers, brand image and the status of renowned liquor. For
Jiaoling Baijiu, the Company will focus on key markets and continuously reinforce its brand support
strength. For Touqu, the Company will continue to increase profit margins and enhance the power of
channel recommendation. The Company will extend coverage of the “See-through Bottle” strategy on all
fronts and continue to raise the brand image. It will persist in developing and expanding overseas
consumption circles and “let the world taste China” by high-quality products and services.
30
2019 Annual Report of Luzhou Laojiao Co., Ltd.
B. Strengthening efforts in quality, building a solid quality foundation and maintaining a leading
position for quality
With a goal of full-scale production of Luzhou Laojiao Huangyi Brewing Eco-park in 2021, the Company
will speed up the project construction progress and ensure a leading construction speed in the industry.
It will persist in the parallel application of “process” and “innovation” by continuing to use traditional
brewing techniques in old cellars, together with boldly automatic equipment and the latest technologies
in new cellars. It will advance the project of technical improvements in the intelligent packaging center,
accelerate the construction of intelligent package production lines & automatic dimensional warehouses,
expedite the construction of information systems for warehouse management & purchase management,
and improve the overall synergistic effect & execution of supply chains. It will speed up the research and
reserve of innovative, cutting-edge and game-changing quality monitoring technologies to secure its
industrial leading position for its quality technology. It will continue to explore the quality regulation &
tracing system under the automatic and intelligent production model, improve the quality standar ds of
pre-mixed liquor, fruit wine, cocktails & other innovative products, and make consistent high quality of
Luzhou Laojiao.
C. Intensifying efforts in management, delivering innovation in management and promoting the
exercise of management
The Company will accelerate innovation in the structural design, authorization management, business
process and communication mechanisms of brewing, production and product guarantee systems, and
establish a management system matching mechanization and intelligence. It will vigorously perform
identification of potential safety and environmental risks and tangibly fulfill its responsibilities in safety
and environmental protection.
Centering around the theme of “strict management”, the Company will strictly carry out in spection of
policy and process execution, continue to strengthen business risk control, take tough measures to
prevent financial, legal, internal control and public opinion risks. It will implement the “key audit” theme,
conduct post audit, verification and calculation of fund and human resources after utilization and ensure
year-on-year improvement in human resource efficiency. It will continuously beef up fee audit of sales
and management systems, further integrate the “eye in the sky” project and market regulation forces,
and perform “site audit” and “process audit” for front lines of sales.
D. Making unswerving efforts to drive talent development, improving the talent system and
unleashing talent efficacy
Based on consolidating and enhancing the quality and quantity of existing talents, the Company will
continue to rapidly increase the number of pioneering, capital operation and top design talents and build
a human resource system covering various types of talents. It will continue the recruitment of fre sh
graduates and experienced professionals, and reasonably introduce talents to different brands of
Luzhou Laojiao. It will further implement the “double channel” mechanism, build a talent development
system under the targeted training program, and extend specialized training to more trainees. It will
strictly implement the principle of “no promotion for five types of employees” for the promotion of sales
personnel, create a three-tier talent pool for the sales system, and conduct alternate training for reg ional
managers to fully improve the abilities, competitiveness and execution of marketing personnel. It will
31
2019 Annual Report of Luzhou Laojiao Co., Ltd.
further implement the “352” incentive model, continuously reinforce appraisal on per capita production,
and develop iron fighters for the sales of Luzhou Laojiao who are able to stand market test, address
industrial pressure and fight tough fights.
E. Initiating efforts in innovation and sticking to innovation-driven growth with continuous
innovation and achievements
The Company will speed up the formulation of the “14th Five-year” research plan, give full play to the
roles of such platforms as National Solid-state Fermentation Center, and continue to improve the
conversion rate of scientific research results. It will create new product sequencing methods, make plans
for tonic liquor, pre-mixed liquor and fruit wine and achieve growth amid stable sales. It will develop new
bespoke liquor services and enhance the level of such services to meet individualized demands of
customers. It will design new experience-based marketing approaches to enhance consumers’ sense
and participation and obtainment in “Fine Liquor DIY” and raise its visibility and reputation among
consumers. It will continue to build its e-commerce network and create and operate internet products. It
will exercise strict management of its franchise store system, resolutely control expenses, logistics and
prices, and promote healthy development of franchise stores. It will conscientiously run brand image
stores, make itself a model for price and image and enhance its visibility, accessibility and reputation
among more consumers.
F. Promoting efforts in culture shaping, building a cultural high ground and driving cultural
empowerment
The Company will continue to cultivate the historical and cultural resources of L uzhou Laojiao,
commence the construction of Luzhou Laojiao National Cellar Culture Park on all fronts, focus on
building a “Pilgrim’s Destination of Chinese Liquor” with international influence and visibility, and further
promote the integrated development of liquor with tourism, culture and other industries. It will plan
museum construction on a scientific basis, continue to strengthen the management of existing museums,
and boldly adopt modern technologies, such as 5G, VR and holographic projection to giv e an account of
the historical and cultural stories of Luzhou Laojiao to consumers nationwide. It will continue to develop
its cultural IPs, including “International Festival of Poetry & Liquor” and “Storage Ceremony”, deepens
cooperation with China National Opera & Dance Drama Center and masters of culture and art, and
further enhance the fashion and influence of the brand culture of Luzhou Laojiao.
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
17 March 2019 Field survey Institution Industry Trends and Company
32
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Performance
(http://www.cninfo.com.cn/)
Company Performance
22 March 2019 Field survey Institution
(http://www.cninfo.com.cn/)
Company Performance
14 May 2019 Field survey Institution
(http://www.cninfo.com.cn/)
Industry Trends and Company
30 May 2019 Field survey Institution Performance
(http://www.cninfo.com.cn/)
Industry Trends and Company
27 June 2019 Field survey Institution Performance
(http://www.cninfo.com.cn/)
Industry Trends, Company
11 September 2019 Field survey Institution Performance and Plan
(http://www.cninfo.com.cn/)
Company Performance
6 November 2019 Field survey Institution
(http://www.cninfo.com.cn/)
Number of reception 7
Number of reception of institutions 352
Number of reception of individuals 2
Number of reception of others 5
Whether to disclose or divulge material
NO
information that has not been made public
33
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section V Significant Events
1. 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 2018 was deliberated and approved by 2018 annual
shareholders' meeting. Based on its total of 1,464,752,476 shares, the Company distributed a cash
dividend of CNY 15.50 (tax inclusive) per 10 shares to all shareholders. The distribution plan was
implemented on 22 August 2019.
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 dividends
Yes
are clear:
Whether the relevant decision-making process and
Yes
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 has not been
compliant and transparent and whether the cash
adjusted or changed in the reporting period
dividend policy is adjusted or changed:
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 2019: Based on its total shares, the Company is to distribute a
cash dividend of CNY 15.90 (tax inclusive) per 10 shares to all shareholders.
Preliminary plan for profit distribution for 2018: Based on its total shares, th e Company distributed a cash
dividend of CNY 15.50 (tax inclusive) per 10 shares to all shareholders.
34
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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.
Cash dividend distribution over the recent three years (including the reporting period)
Unit: CNY
Ratio to net profit
Net profit attributable attributable to Ratio of cash
Total cash
to common common Ratio of cash dividends
Cash dividends Cash dividends dividends
Year shareholders in the shareholders in dividends in (including
(tax included) in other forms (including other
consolidated the consolidated other forms other forms)
forms)
statement in the year statement in the
year
2019 2,328,956,436.84 4,641,988,857.03 50.17% 0.00 0.00% 2,328,956,436.84 50.17%
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%
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
2. 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) (ta x
15.9
included)
Total shares as the basis for the preliminary
1,464,752,476
plan for profit distribution (share)
Total cash dividends (CNY) (tax included) 2,328,956,436.84
Cash dividends in other forms (e.g. repurchase
0.00
share)
Total cash dividends (CNY) (including other
2,328,956,436.84
forms)
Distributable profit (CNY) 12,599,746,579.91
Percentage of cash dividends in the total 100%
35
2019 Annual Report of Luzhou Laojiao Co., Ltd.
distributed 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 %.
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 15.90 (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 on
Undertaking Type of Details of Undertaking
Undertaking reasons Term the
giver undertakings 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 Luzhou
Laojiao by
non-public
offering
purchased,
Luzhou Liquor I/The unit
Restricted
Undertakings given in time of IPO or Industry undertakes that 14 September
shares 36 months In progress
refinancing Investment Co., the shares will 2017
Ltd. be not
transferred
within 36
months from
new shares
offering,
including but
36
2019 Annual Report of Luzhou Laojiao Co., Ltd.
not limited to
public transfer
and negotiating
transfer. If laws
and regulations
have other rules
on restricted
period, it follows
the rules.
Equity incentive commitment
Other undertakings to non-controlling
shareholders
Whether the undertaking is fulfilled on
Yes
time
Specific reasons for failing to fulfill any
None
undertakings 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
37
2019 Annual Report of Luzhou Laojiao Co., Ltd.
6. Reason for changes in accounting policies, accounting estimates and
accounting methods compared to the financial report for the prior year
√ Applicable □ N/A
th
1. The Company held the 7 meeting of the ninth board of directors on 25 April 2019, reviewed and
approved the Proposal on Execution of Newly Revised Accounting Standards for Business Enterprises
in 2019 and decided to implement four new standards governing financial instruments revised by the
Ministry of Finance in 2017 since 1 January 2019 as required by the Ministry of Finance including
Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial
Instruments, Accounting Standards for Business Enterprises No.23-Transfer of Financial Assets,
Accounting Standards for Business Enterprises No.24-Hedge Accounting and Accounting Standards for
Business Enterprises No.37-Presentation of Financial Instruments. The influence of implementing the
new standards governing financial instruments on financial statements was shown in the Note 3 -44.
Changes in significant accounting policies and accounting estimates.
2. The Company held the 9th meeting of the ninth board of directors on 27 August 2019, reviewed and
approved the Proposal on Changes in Accounting Policies and decided to implement new regulations as
required by Notice on Revising and Issuing 2019 Formats of Financial Statements for General
Enterprises (CK[2019]No.6) issued by the Ministry of Finance since the Interim Report of 2019.
Information about adjustment of financial statements was shown in the Note 3 -44. Changes in significant
accounting policies and accounting estimates.
7. Reason for retrospective restatement of major accounting errors
during the reporting period
Applicable √ N/A
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
Guangxi Luzhou Laojiao Imported Liquor Industry Establishment
Co., Ltd.
Luzhou Laojiao Whitail Innovative Electronic Establishment
Commerce Co., Ltd.
Luzhou Laojiao Selected Electronic Commerce Co., Establishment
38
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Ltd.
Chengdu Tianfu Panda Whitail Liquor Industry Co., Establishment
Ltd.
Luzhou Whitail Tongdao Uncle Constellation Wine Establishment
Sales Co., Ltd.
Luzhou Laojiao Commercial Development (North Establishment
America) Co., Ltd.
Liquidation and cancellation for subsidiaries in this period
Name Reason for change
Luzhou Boda Brewing Co., Ltd. Liquidation and cancellation
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
90
firm (CNY’0,000)
Consecutive years of the audit service provided by
21
the domestic CPAs firm
Names of the certified public accountants from the
Tang Fangmo, Feng Yuan
domestic CPAs firm
Consecutive years of the audit service provided by
Tang Fangmo 1 year, Feng Yuan 2 years
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 450 thousand.
10. Possibility of listing suspension and termination after disclosure of
this annual report
Applicable √ N/A
39
2019 Annual Report of Luzhou Laojiao Co., Ltd.
11. Bankruptcy and reorganization
Applicable √ N/A
No such cases in the reporting period.
12. Material litigation and arbitration
√ Applicable N/A
Amount Execution of
Whether it forms Progress in Trial results and
Profile of litigation involved in judgment of Date of Disclosure
an estimate litigation impacts of litigation
(arbitration) the case (CNY’ litigation disclosure index
liability (arbitration) (arbitration)
0,000) (arbitration)
For the losse s that
the Company
The Company filed a
cannot recover
lawsuit with ABC
through criminal
Changsha Yingxin
execution
Branch over a deposit
procedures, 40%
dispute, and the case The second See Section V
shall be borne by
has been completed in trial has 15 October “Other
14,942.5 No ABC Changsha Not executed
the first instance of been 2014 significant
Yingxin Branch,
Hunan Province concluded events”
20% shall be borne
Higher People's Court
by ABC Changsha
and the final trial of the
Hongxin Branch
Supreme People's
and the rest shall
Court
be borne by the
Company itself.
The Company filed a
lawsuit with ICBC
See Section V
Nanyang Zhongzhou
“Other
Branch over a deposit Resume to The case is still The case is still 10 January
15,000 No significant
dispute, and the case be handled pending. pending. 2015
events”
has been transferred
to Henan Province
Higher People’s Court.
13. Punishments and rectifications
Applicable √ N/A
No such cases in the reporting period.
40
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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 2019 daily affiliated transactions shall be implemented in accordance with the “ Proposal
on the estimated 2019 annual daily affiliated transactions” reviewed and approved at the 7th meeting of
the ninth board of directors. For details, please refer to Section XII “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.
41
2019 Annual Report of Luzhou Laojiao Co., Ltd.
16.5. Other significant related party transactions
√ Applicable □ N/A
1. On 15 October 2019, the Company held the 11th meeting of the ninth board of directors, on which the
“Proposal on the affiliated transaction regarding assets purchase ” was reviewed and approved and the
Company decided to purchase the land use right, construction in progress and equipment assets from
the subsidiary of Laojiao Group with its owned fund of CNY 287,550,400.
th
2. On 13 December 2019, the Company held the 15 meeting of the ninth board of directors, on which
the “Proposal on the affiliated transaction regarding assets purchase for the technical renovation project
of intelligent packaging center” was reviewed and approved and the Company decided to purchase land
use right from the subsidiary of Laojiao Group with its owned fund of CNY 100,776,700.
Index to the current announcements about the said affiliated transactions disclosed:
Title of announcement Disclosure date Disclosure website
Announcement on the Affiliated
Transaction regarding Assets 16 October 2019 (http://www.cninfo.com.cn/)
Purchase
Announcement on the Affiliated
Transaction regarding Assets
Purchase for the Technical 14 December 2019 (http://www.cninfo.com.cn/）
Renovation Project of Intelligent
Packaging Center
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.
42
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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.
17.3. Entrusted cash asset management
17.3.1. Entrust assets management
Applicable √ N/A
No such cases in the reporting period.
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 2019 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
A. Basic Strategy
Under the leadership of the central, provincial and municipal party committees and governments, the
Company implements poverty alleviation plans of party committees of all levels, closely centers on
targeted poverty alleviation, focuses on supporting two villages and one district, (Xiangtian Village, Gulin
County, Luzhou; Guntang Village, Hongyuan County, Ngawa Prefecture; and Longmatan District,
Luzhou), and provides strong human, material and financial resources, contributing to local poverty
alleviation and rural revitalization.
43
2019 Annual Report of Luzhou Laojiao Co., Ltd.
B. Overall Objective
The Company puts full effect into the requirements of party committees and governments at all levels for
poverty alleviation, as well as consolidates and enhances the achievements on all fronts based on
successful poverty alleviation of two target villages. Anchored by the “r ural revitalization strategy” ,and
aimed at building “new villages of civilization” & “new villages of four goodness”, the Company will take
tough measures and address tough challenges to counter weaknesses of villages and towns, further
improve the regulation of ecological environment, enhance the competence of villages, strengthen their
competitiveness to shake off poverty and become prosperous, and facilitate the high -quality and leaping
development of the two villages and one district.
C. Key tasks
The Company persists in the support principle of placing equal importance on “blood transfusion,
production and activation” and follows the concepts of providing support based on actual needs and
sustainable development. Led by party building, anchored by in dustrial poverty alleviation, and based on
educational poverty alleviation, the Company explores approaches of comprehensive development that
solve both superficial and underlying problems, tangibly promotes poverty alleviation and regulation of
environment, and ultimately aims to substantially enhance the level of economy, life quality, ecological
environment, social governance and cultural education in the two villages and one district.
D. Guarantee measures
The Company fulfills its support responsibilities of “five ones”, which means the work mechanism of “one
responsible unit, one person in charge, one support project team, one chief secretary and one resident
work team”; consolidates “five pivots”, which refers to “setting the ledger for p overty alleviation, defining
the concept of poverty alleviation, drawing the blueprint for poverty alleviation, improving the team for
poverty alleviation and building a stricter accountability system”, so as to ensure orderly implementation
of poverty alleviation.
18.2.1 Outline of annual targeted poverty alleviation
A. The Company made joint efforts to help consolidate the achievements of poverty alleviation in
Hongyuan County and Guntang Village. Based on the conditions of Hongyuan County, the Company
followed the principle of “alleviating veritable poverty and veritably alleviating poverty”, conducted
detailed study of alleviation projects, implemented alleviation measures and highlighted alleviation
effects. It conducted star-rate appraisal and boosted the morale of impoverished people; reinforced
talent training and rolled out talent projects; intensified cultural poverty alleviation and enriched spiritual
life; developed animal husbandry industry and expanded collective economy; carried out donation
activities of “indirect donation through buying and creating wealth through selling”; took actions of
consolation and charity.
B. The Company made tangible efforts to help consolidate the achievements of poverty alleviation in
Xiangtian Village of Gulin County. It upheld the principle of placing equal importance on “blood
transfusion, production and activation”. Led by party building, anchored by industrial poverty alleviation
and based on educational poverty alleviation, the Company fulfilled its responsibilities of poverty
alleviation for Xiangtian Village on all fronts, and continued to consolidate and enhance the
achievements of poverty alleviation in Xiangtian Village. It continued to consolidate the “fish farming on
rice fields” project to drive industrial sustainable development; made donations to the “top three projects”
of the village to build “inhabitable new homes”; and made donations to Xiangyang Primary School to
improve the teaching and learning environment.
C. The Company made active efforts to support the environmental protection in Longmatan District. It
donated CNY 40 million for the environmental improvement project along the Yangtze River in
Longmatan District to improve the living environment there and facilitate rural revitalization along the
River.
44
2019 Annual Report of Luzhou Laojiao Co., Ltd.
18.2.3 Poverty alleviation achievement
Indicator Unit Amount/Implementation situation
A. Overall situation —— ——
Including：1. Fund CNY 10,000 4,434.29
3. Number of establishing card
Person 443
for archives of poor people out of poverty
B. Input by project —— ——
1. Industrial development —— ——
Including：1.1 Type of poverty alleviation Poverty alleviation through agriculture and forestry,
——
projects for industrial development poverty alleviation through electronic commerce, others
1.2 Number of poverty alleviation
Item 5
projects for industrial development
1.3 Amount invested in poverty
alleviation projects for industrial CNY 10,000 50
development
1.4 Number of establishing card
Person 358
for archives of poor people out of poverty
2. Transfer and employment —— ——
Including: 2.1 Amount invested in vocational
CNY 10,000 183
training
2.2 Number of persons engaging
Person 929
in vocational training
2.3 Number of establishing card
for archives of poor people out of Person 25
unemployment
3. Removal and relocation —— ——
4. Educational poverty alleviation —— ——
Including：4.1 Input of aiding poor students CNY 10,000 13.5
4.2 Number of aiding poor
Person 27
students
4.3 Amount invested in improving
CNY 10,000 13
the educational resources in poor areas
5. Health poverty alleviation —— ——
6. Ecological protection —— ——
Including: 6.1 Type of projects —— Conduct ecological protection and construction
45
2019 Annual Report of Luzhou Laojiao Co., Ltd.
6.2 Input amount CNY 10,000 4,000
7. Basic guarantee —— ——
8. Social poverty alleviation —— ——
9. Other project —— ——
Including：9.1. Item Item 10
9.2 .Input amount CNY 10,000 174.79
9.3. Number of establishing card
Person 85
for archives of poor people out of poverty
C. Awards（content and level） —— ——
“China Red Cross Contribution Medal” granted by Red
National level
Cross Society of China
Outstanding Chief Secretary of Sichuan Province for
Provincial level Yang Guangrong, Chief Secretary sent to Xiangtian
Village by the Company
Demonstration Village for Cultural Poverty Alleviation of
Provincial level Sichuan Province for Xiangtian Village under support of
the Company
Provincial “Six Nos” Safe Village for Xiangtian Village
Provincial level
under support of the Company
“Ad vanced Enterprise for 100 Enterprises -100 Villages”
Municipal level
of Luzhou for the Company
Demonstration Base for Farmers’ Night School of
Municipal level Luzhou for Xiangtian Village under support of the
Company
18.2.4 Follow-up poverty alleviation plan
The Company will continue to carry out poverty alleviation in Xiangtian Village of Gulin County,
Hongyuan County and Guntang Village, focus on strengthening support to the ideology, concept,
confidence, knowledge, technology and mentality of the people in those places, and improve the level of
economy, life quality, ecological environment, social governance and education in the two villages. In
terms of poverty alleviation to Xiangtian Village of Gulin County, the Company will address problems in
infrastructure and public services, make efforts in stabilizing production, guaranteeing supply, increasing
farmers’ income and revitalizing villages, make donations to build the base for Chinese herbs, continue
vigorous efforts to develop courtyard economy and expand the project of fish farming on rice fields. In
terms of poverty alleviation to Hongyuan County and Guntang Village, the Company will continue to
increase forces, fund and policy support, consolidate the achievements of poverty alleviation by
centering around industrial poverty alleviation, development of product sales channels and cultural and
educational poverty alleviation, further improve infrastructure, enhance villagers’ competence, optimize
46
2019 Annual Report of Luzhou Laojiao Co., Ltd.
the rural and community environment, assist to build livestock lanes, remote graze sites, bridges,
pasture lane rings, etc., and continue to address problems in Hongyuan County and Guntang Village.
18.3 Information about environment protection
Whether the listed company and its subsidiaries belong to heavy pollut ing industries prescribed by the
environmental protection department
Yes
Name of
main Distributio
Number of Emission Pollution Approved
Company pollutant Discharge n of Total Excessive
discharge concentrati discharge total
name and type discharge emission discharge
outlet on standard emission
particular outlet
pollutant
Luzhou Continuou
Luohan 41.073mg/
Laojiao COD s 1 50mg/L 8.091t 25t/a No
Base L
Co.,Ltd. discharge
Luzhou Continuou
Ammonia Luohan
Laojiao s 1 1.38mg/L 5mg/L 0.313t 2.5t/a No
nitrogen Base
Co.,Ltd. discharge
Luzhou Total Continuou
Luohan
Laojiao phosphoru s 1 0.198 mg/L 0.5 mg/L 0.003t 0.25t/a No
Base
Co.,Ltd. s discharge
Luzhou Continuou
Total Luohan 10.079
Laojiao s 1 15 mg/L 0.179t 7.5t/a No
nitrogen Base mg/L
Co.,Ltd. discharge
Luzhou Continuou
Sulfur Luohan
Laojiao s 2 0.37mg/m 50mg/m 0.44t 4.7t/a No
dioxide Base
Co.,Ltd. discharge
Luzhou Continuou
Luohan 26.18mg/m
Laojiao Oxynitride s 2 200mg/m 20.585t 22.1t/a No
Base
Co.,Ltd. discharge
Luzhou Continuou
Luohan 8.093mg/m
Laojiao PM s 2 20 mg/m 0.41t 2.8t/a No
Base
Co.,Ltd. discharge
Information about construction and operation of anti-pollution installations
Waste water: The Company has a waste water treatment station in Luohan Base, which is equipped
with an automatic online monitoring instrument for COD, ammonia nitrogen, total phosphorus, total
nitrogen PH and flow. The real-time monitoring data is connected with the superior environmental
protection department (Luzhou Environmental Information Center) for operation. The waste water
47
2019 Annual Report of Luzhou Laojiao Co., Ltd.
treatment facilities are in normal operation, and the waste water discharge indexes are up to the
standard. All production areas of the Company (Luohan Base, National Cellar Base, Xiaoshi Base,
Zaojiaoxiang Work Team, Anning Park), 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 waste water treatment station of Luohan Base for discharge up to the
standard, which reduced and controlled the hazards of wastewater pollutants to the Yangtze River.
Waste gas: The Company's old brewery in the urban area adopts natural gas boiler which belongs to
clean fuel. The boiler of Luohan Base is natural gas boiler after the technical transformation from coal to
gas for boilers with low-nitrogen combustion. The online automatic monitoring instrument for waste gas
is installed and the waste gas treatment facilities are in normal operation, and the waste gas discharge
are up to the standard, which reduced and controlled the hazards of waste gas pollutants to the
atmosphere.
Environmental impact assessment for construction project and other environmental protection
administrative permission
All construction projects are in accordance with the requirements of the state environmental protection
laws and regulations. The Company carries out environmental impact assessment an d obtains the
environmental protection administrative permission. The brewing engineering technical upgrading
project, Luzhou Laojiao intelligent packaging center technological upgrading project, sewage station
technical upgrading project and boiler upgrading project 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 for environmental emergencies.
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 monitor ing system will be connected
with the superior environmental protection department for operation. Relevant self-monitoring
information will be disclosed on the "pollution source monitoring information management and sharing
platform of Sichuan province" as required to receive social supervision.
Other information about environmental protection that should be disclosed:
N/A
Other information about environment protection
N/A
48
2019 Annual Report of Luzhou Laojiao Co., Ltd.
19. Other significant events
√ Applicable N/A
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 fi led 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.
During the reporting period, the Supreme People’s Court made a final judgment on the dispute arising
out of the deposit contract between the Company and ABC Changsha Yingxin Branch. In respe ct of the
losses that couldn’t be recovered through criminal procedures, ABC Changsha Yingxin Branch should
bear 40% of the compensation liability, ABC Changsha Hongxing Branch 20%, and the remaining losses
should be borne by the Company. As of 31 March 2020, the Company had recovered an amount of CNY
214,859,700 for three of the disputes. The case between the Company and ICBC Nanyang Zhongzhou
Branch is still under trial. Adjustment may be made to the amount of bad debt provisions as the case
proceeds.
See details in the Company’s announcements:
Date of announcement No. Catalogue Official website
15 October 2014 2014-35 Announcement of significant http://www.cninfo.com.cn/
litigation
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
49
2019 Annual Report of Luzhou Laojiao Co., Ltd.
22 July 2015 2015-45 Announcement of significant
litigation progress part VII
6 June 2018 2018-17 Announcement of significant
litigation progress part VIII
7 Ma y 2019 2019-11 Announcement of significant
litigation progress part IX
17 May 2019 2019-13 Announcement of significant
litigation progress part X
24 March 2020 2020-7 Announcement of significant
litigation progress part XI
B. The Company held the 7 th meeting of the ninth board of directors on 25 April 2019 and the 1 st special
meeting of shareholders in 2019 on 14 May 2019, reviewed and approved the Proposal on the
Company’s Eligibility for Public Offering of Corporate Bond for Qualified Investors and Proposal on Plan
of Public Offering of Corporate Bond and agreed the Company’s application of public offering of
corporate bond for qualified investors. On 26 July 2019, the Company received the Reply on Approval of
Luzhou Laojiao Co., Ltd. Public Offering of Corporate Bond for Qualified Investors (ZJXK(2019)No. 1312)
issued by China Securities Regulatory Commission. On 28 August 2019, the 2019 public offering of
corporate bond for qualified investors (Phase I) finished with the issue price of CNY 100 per piece. The
final issue scale is CNY 2.5 billion and the final coupon rate is 3.58%. The said bonds were traded in
Shenzhen Stock Exchange on 4 September 2019. On 17 March 2020, the 2020 public offering of
corporate bond for qualified investors (Phase I) finished with the issue price of CNY 100 per piece. The
final issue scale is CNY 1.5 billion and the final coupon rate is 3.50%. The said bonds were traded in
Shenzhen Stock Exchange on 25 March 2020.
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 7,414,280,000. See details in the
announcement About subsidiary technical renovation project of brewing , No ： 2016-12
(http://www.cninfo.com.cn/). As of the end of the reporting period, 85% of this project has been
completed.
50
2019 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
Capitalizati
Issuance of Bonus on of
Number Proportion Other Subtotal Number Proportion
new shares shares capital
reserves
I. Restricted shares 4,647,181 0.32% 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
480,515 0.03% 480,515 0.03%
domestic investors
Shares held by domestic
480,515 0.03% 480,515 0.03%
individuals
1,460,105, 1,460,105,
II. Non-restricted shares 99.68% 99.68%
295 295
1,460,105, 1,460,105,
1.CNY common shares 99.68% 99.68%
295 295
1,464,752, 1,464,752,
III. Total shares 100.00% 100.00%
476 476
Reasons for the change in shares
Applicable √ N/A
Approval of share changes
Applicable √ N/A
Transfer of share ownership
Applicable √ N/A
Implementation progress of shares repurchases
□ Applicable √ N/A
Implementation progress of share buyback reduction through centralized bidding
51
2019 Annual Report of Luzhou Laojiao Co., Ltd.
□ 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
2. Issuance and listing of securities
2.1 Securities（excluding preference shares） issued in the reporting period
√ Applicable □ N/A
Name of stock Issuance price Approved
Expiry date of the
and its derivative Issuance date (or interest Numbers Listing date numbers for
trading
securities rate) trading
Stock
Convertible corporate bonds, separate bargaining convertible corporate bonds and corporate bonds
2019 Public
Offering of
Corporate Bond
of Luzhou 28 August 4 September
3.58% 25,000,000 25,000,000
Laojiao Co., Ltd. 2019 2019
for Qualified
Investors (Phase
I)
Other derivative securities
Information about securities (excluding preference shares) issued in the reporting period
On 28 August 2019, the Company completed the issuance of 2019 Public Offering of Corporate Bond of
Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) at CNY 100 per piece. The final actual
issuance scale was CNY 2.5 billion and the final coupon rate was 3.58%. The said bonds were traded on
Shenzhen Stock Exchange on 4 September 2019.
52
2019 Annual Report of Luzhou Laojiao Co., Ltd.
2.2 Changes in total shares of the Company and the shareholder structure, as well as
the asset and liability structure
√ Applicable □ N/A
In accordance with the document of ZJXK(2019)No. 1312 issued by China Securities Regulatory
Commission, the Company is allowed to publicly offer corporate bonds with face value not exceeding
CNY 4 billion for qualified investors. During the reporting period, the Company accomplished the
issuance of corporate bonds of CNY 2.5 billion bringing about the increase in total assets and total
liabilities of the Company. For more details about changes in structure of the Company’s assets and
liabilities, please refer to “Section IV Performance Discussion and Analysis” and “Section XI Information
about Corporate Bond”.
2.3 Existing staff-held shares
Applicable √ N/A
3. Shareholders and actual controller
3.1 Total number of shareholders and their shareholdings
Unit：Share
Total number of Total number of
Total number of
common preference
Total number of preference
shareholders at shareholders with
common shareholders with
the prior resumed voting
shareholders at 93,643 99,589 resumed voting 0 0
month-end before rights by the end of
the end of the rights by the end of
the disclosure date the reporting
reporting period the reporting period
of the annual period (if any)(see
(if any)(see Note 8)
report Note 8)
Shareholdings of shareholders with a shareholding percentage over 5% or the top 10 shareholders
Total shares Increase/d Pledged or frozen shares
Sharehol Number Number of
held by the ecrease
Nature of ding of holding holding
Name of shareholder end of the during the
shareholder percenta restricted non-restricte Status of shares Number of shares
reporting reporting
ge shares d shares
period period
Luzhou Laojiao State-owned
26.02% 381,088,389 0 0 381,088,389
Group Co., Ltd. corporation
Luzhou XingLu
State-owned
Investment Group 24.99% 365,971,142 0 0 365,971,142 Pledged 165,980,000
corporation
Co., Ltd.
Hong Kong Outbound 2.75% 40,310,275 -7,630,905 0 40,310,275
53
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Securities Clearing corporation
Company Limited
China Securities
State-owned
Finance Corporation 2.31% 33,842,059 0 0 33,842,059
corporation
limited
Bank of China
Co.,Ltd. – Middle
and small capital
Other 1.46% 21,379,566 921,183 0 21,379,566
stock s hybrid
securities investment
fund by E fund
Central Huijin Asset
Management State-owned 1.43% 20,937,500 0 0 20,937,500
Co.,Ltd.
Agricultural Bank of
China Co.,Ltd. -
Consumption
industry stock - Other 1.42% 20,829,830 -3,874,761 0 20,829,830
based securities
investment fund by E
fund
Bank of China
Co.,Ltd. – Liquor
index classification
Other 1.24% 18,105,061 -2,027,296 0 18,105,061
securities investment
fund by China
Merchants Fund
Industrial and
Commercial Bank of
China Co.,
Ltd.-Newly growth Other 1.09% 15,912,158 — 0 15,912,158
hybrid securities
investment fund by
Invesco Great Wall
China Life Insurance
Co.,Ltd. - Traditional
- general insurance Other 0.80% 11,781,095 -4,072,007 0 11,781,095
products
-005L-CT001 SHEN
Strategic investors or general corporations
become the top-ten shareholders due to N/A
placing of new shares（if any）（see note 3）
54
2019 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 2015. For details, please refer to the announcement of the Company on 5 January 2016 -
Related parties or acting-in-concert Announcement on the agreement of persons acting in concert signed by shareholders. The
announcement number is 2016-1 (http://www.cninfo. com.cn/)
2. In addition, whether there is an association between the remaining shareholde rs 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
CNY common
Luzhou Laojiao Group Co., Ltd. 381,088,389 381,088,389
shares
CNY common
Luzhou XingLu Investment Group Co., Ltd. 365,971,142 365,971,142
shares
Hong Kong Securities Clearing Company CNY common
40,310,275 40,310,275
Limited shares
China Securities Finance Corporation CNY common
33,842,059 33,842,059
limited shares
Bank of China Co.,Ltd. – Middle and small
CNY common
capital stock s hybrid securities investment 21,379,566 21,379,566
shares
fund by E fund
CNY common
Central Huijin Asset Management Co.,Ltd. 20,937,500 20,937,500
shares
Agricultural Bank of China Co.,Ltd. -
CNY common
Consumption industry stock - based 20,829,830 20,829,830
shares
securities investment fund by E fund
Bank of China Co.,Ltd. – Liquor index
CNY common
classification securities investment fund by 18,105,061 18,105,061
shares
China Merchants Fund
Industrial and Commercial Bank of China
CNY common
Co., Ltd.-Newly growth hybrid securities 15,912,158 15,912,158
shares
investment fund by Invesco Great Wall
China Life Insurance Co.,Ltd. - Traditional
CNY common
- general insurance products -005L-CT001 11,781,095 11,781,095
shares
SHEN
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
55
2019 Annual Report of Luzhou Laojiao Co., Ltd.
shareholders
Explanation on the top 10 common
During the reporting period, Xinglu Group took its 57,000,000 shares of our company as collateral to
shareholders participating in the securities
participate in financing business through Citic Securities Company Limited
margin trading（if any）(see 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.
3.2 Controlling shareholder
Nature of controlling shareholder：Local state-owned
Type of controlling shareholder：Corporation
Legal
Name of controlling shareholder representative/Compa Date of establishment Credibility code Main business scope
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
consulting, enterprise
Luzhou Laojiao Group Co.,Ltd. Zhang Liang 21 December 2000 91510500723203346U
management 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).
Shareholdings of the controlling 1. As of 30 June 2019, Laojiao Group holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd.
shareholder in other controlled or (02281.HK), accounting for 8.19% of the total issued shares.
non-controlled listed companies 2. As of 30 September 2019, Laojiao Group holds 212,954,666 shares of Hongli Zhihui Group Co., Ltd.
at home or abroad during the (300219.SZ) through its wholly-owned subsidiary, Sichuan Jinduo investment Co., Ltd., accounting for 29.94%
reporting period of the total issued shares.
56
2019 Annual Report of Luzhou Laojiao Co., Ltd.
3. As of 31 December 2019, Laojiao Group holds 475,940,143 shares of Huaxi Securities Co., Ltd.
(002926.SZ), accounting for 18.13% of the total issued shares.
4. As of 30 June 2019, Laojiao Group holds 325,440,000 shares of Luzhou Bank (01983.HK), accounting for
14.37% 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 controller representative/Com Date of establishment Credibility code Main business scope
pany principal
State-owned assets supervision
SASAC of Luzhou Yu Zhiqiang 1 March 2005 11510400771686813T
and administration department
1. As of 30 June 2019, XingLu Group, a wholly-owned subsidiary of SASAC of Luzhou, holds 511,654,127
shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 59.51% of the total issued
shares. Luzhou Infrastructure Construction Investment Co., Ltd., a holding subsidiary of XingLu Group,
holds 62,709,563 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), and accounting for 7.29% of
the total issued shares. Laojiao Group, a wholly-owned subsidiary under SASAC of Luzhou, holds
70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 8.19% of the total
issued shares.
2. As of 30 September 2019, Laojiao Group holds 212,954,666 shares of Hongli Zhihui Group Co., Ltd.
(300219.SZ) through its wholly-owned subsidiary, Sichuan Jinduo investment Co., Ltd., accounting for
Share holdings of the controlling
29.94% of the total shares issued.
shareholder in other controlled or
3. As of 31 December 2019, Luzhou Industrial Investment Group Co., Ltd., a holding Company under the
non-controlled listed companies at
jurisdiction of SASAC of Luzhou, holds 115,064,610 shares of Sichu an Lutianhua Company Limited
home or abroad during the
(000912.SZ), accounting for 7.34% of the total shares issued. Lutianhua Group Company Limited, a
reporting period.
wholly-owned subsidiary of Luzhou Industrial Investment Group Co., Ltd., holds 289,858,993 shares of
Sichuan Lutianhua Company Limited (000912.SZ), and accounting for 18.49% of the total issued shares.
4. As of 31 December 2019, 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.
5. As of 30 June 2019, Laojiao Group, a wholly-owned subsidiary under SASAC of Luzhou, holds
325,440,000 shares of Luzhou Bank (01983.HK), accounting for 14.37% of the total issued shares. XingLu
Group, a wholly-owned subsidiary under SASAC of Luzhou, holds 40,549,462 shares of Luzhou Bank
(01983.HK), accounting for 1.79% of the total issued shares.
57
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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
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
Legal
Date of Registered capital
Name of actual controller representative/Comp Main business scope
establishment (CNY)
any principal
Investment and asset
management; Project
management services;
Luzhou XingLu Investment Self-finance real estate
Yuan Douquan 28 January 2003 4,934,049,244
Group Co., Ltd. business 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
58
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section VII Preference Shares
Applicable √ N/A
No preferred stock in the Company during the reporting period.
59
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section VIII Information about Convertible Corporate Bond
Applicable √ N/A
No convertible corporate bond in the Company during the reporting period.
60
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section IX Profiles of Directors, Supervisors, Senior
Management and Employees
1. Changes in shares held by directors, supervisors, and senior
management
Shares
Shares Shares Shares
held by the
increased decreased Other held by the
beginning
Incumbent during the during the increase/ end of the
Name Title Gender Age Period of service of the
/ Former reporting reporting decrease reporting
reporting
period period (share) period
period
(share) (share) (share)
(share)
Chairman
of the
board,
Liu Miao Secretary Incumbent Male 50 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 46 2015.6.30-2021.6.27 0 0 0 0 0
secretary
of the
party
committee
Director,
Deputy
general
manager,
Wang member of
Incumbent Male 56 2015.3.06-2021.6.27 0 0 0 0 0
Hongbo the party
committee,
Secretary
of the
board
Director,
Jiang Deputy
Incumbent Female 57 2009.5.20-2021.6.27 254,000 0 0 0 254,000
Yuhui general
manager,
61
2019 Annual Report of Luzhou Laojiao Co., Ltd.
member of
the party
committee,
chairman
of the
labor union
Director,
Shen Deputy
Incumbent Male 54 2002.6.30-2021.6.27 184,500 0 46,125 0 138,375
Caihong general
manager
Non-execu
Du Kunlun tive Incumbent Male 51 2015.6.30-2021.6.27 0 0 0 0 0
director
Non-execu
Xu
tive Incumbent Male 60 2015.6.30-2021.6.27 0 0 0 0 0
Guoxiang
director
Non-execu
Tan Lili tive Incumbent Female 65 2015.6.30-2021.6.27 0 0 0 0 0
director
Non-execu
Liu Junhai tive Incumbent Male 50 2018.6.27-2021.6.27 0 0 0 0 0
director
External
Qian Xu Incumbent Male 56 2015.6.30-2021.6.27 0 0 0 0 0
director
Ying External
Incumbent Male 50 2016.9.13-2021.6.27 0 0 0 0 0
Hanjie director
Lian Jing Supervisor Incumbent Male 50 2012.6.27-2021.6.27 0 0 0 0 0
Yang
Supervisor Incumbent Female 53 2009.5.20-2021.6.27 10,000 0 0 0 10,000
Benhong
Cao Cong Supervisor Incumbent Male 35 2015.6.30-2021.6.27 0 0 0 0 0
Li
Supervisor Incumbent Male 50 2018.6.27-2021.6.27 0 0 0 0 0
Guangjie
Deputy
Wu Qin general Incumbent Male 58 2020.1.10-2021.6.27 0 0 0 0 0
manager
Xie Hong CFO Incumbent Female 50 2015.3.06-2021.6.27 0 0 0 0 0
Deputy
He Cheng general Incumbent Male 53 2015.6.30-2021.6.27 0 0 0 0 0
manager
Zhang Deputy Incumbent Male 48 2015.12.29-2021.6.27 0 0 0 0 0
62
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Suyi general
manager
Chairman
of
Wu Qin supervisor Former Male 58 2015.6.30-2019.12.30 0 0 0 0 0
y
committee
Total -- -- -- -- -- 640,687 0 46,125 0 594,562
2. Changes in directors, supervisors, and senior management
√ Applicable □ N/A
Name Title Type Date Reason
Chairman of
Wu Qin supervisory Leave 2019.12.30 Leave voluntarily
committee
Deputy general
Wu Qin Appoint 2020.1.10 Appointed
manager
Deputy general
Jiang Yuhui Appoint 2020.1.10 Appointed
manager
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, office
63
2019 Annual Report of Luzhou Laojiao Co., Ltd.
director of Luzhou Municipal Party Committee and deputy secretary of the party committee of the
Company. At present, he is director, deputy general manager, secretary of the board, and member of the
party committee 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 the supervisory
committee, deputy secretary of the party committee, secretary of committee for discipline inspe ction of
the Company. At present, she is director, deputy general manager, chairman of the labor union and
member of the party committee 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 leaven-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, researcher, 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 Trad e Economics
of Social Sciences Academy, non-executive director of 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. SCIMEE Tech.&Sci.Co.,Ltd. and Chengdu Jule Food Co., Ltd
(company planning to be listed). 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 departme nt 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.
64
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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., and China Investment Securities Co., Ltd. He has served as a non -executive director of the
Company since June 2018.
Mr. Qian Xu, Male, born in 1963, EMBA. He was general manager and chairman of the board of Beijing
Enterprises Real-Estate Group Co.,Ltd.. At present, he is chairman of the board and general manager of
Beijing Enterprises Urban Development (Group) Co.,Ltd., chairman of the board of Beijing Properties
（Holdings） Limited (Listed on the Hong Kong Stock Exchange), non-executive director of CAQ
Holdings Limited (Listed on the Australian Stock Exchange). He has served as a non -executive director
of the Company since June 2015.
Mr. Ying Hanjie, Male, born in 1969, Doctor of Biochemistry, and professor. He was deput y 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. 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 Investment Group Co., Ltd., Luzhou Liquor
Industrial Park Development and Investment Co. Ltd., Luzhou Pub lic Transportation Group Co. Ltd.,
Luzhou Culture Tourism Development Investment Group Co. Ltd. and Sichuan Rongtong Security
65
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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., 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.
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, director of Luzhou Railway Construction
Office and the chairman of the Company’s supervisory committee. At present, he is the deputy general
manager of the 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 dispatcher 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
Name of shareholder-holding Position in Beginning Ending date of An y
Name
companies shareholder- date of term term remunerations
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
holding received from
companies shareholder-holdi
ng companies
Lian Jing Laojiao Group Chairman of No
the
supervisory
committee
Lian Jing Xinglu Group Outsider No
director
Position in other companies
√ Applicable N/A
An y
Position in remunerations
Beginning Ending date of
Name Name of other companies other received from
date of term term
companies other
companies
Tongwei Co., Ltd, Sichuan Tianqi
Lithium Industries Co.,Ltd. SCIMEE Non-executi
Du Kunlun
Tech.&Sci.Co.,Ltd., Chengdu Jule Food ve director
Co., Ltd (company planning to be listed)
Sichuan Province Institute of Finance
Deputy
Du Kunlun and Trade Economics of Social
director
Sciences Academy
Shanghai University of Finance and
Xu Guo xiang Economics Applied Statistics Research Director
Center
Shanghai Xintonglian Packaging
Xu Guo xiang Co.,Ltd. and Dazhong Transportation Supervisor
（Group）Co.,Ltd.
Non-executi
Xu Guo xiang Orient Securities Co.,Ltd.
ve director
Business School of Enterprise Financial Deputy
Tan Lili
Management Association of China director
Non-executi
Tan Lili Guangzhou Metro Design Institute
ve director
Institute of Commercial Law of Renmin
Liu Junhai Director
University of China
Tus-Sound Environmental Resources Non-executi
Liu Junhai
Co., Ltd., China Resources ve director
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Double-Crane Pharmaceutical Co., Ltd.,
China Investment Securities Co., Ltd
Chairman of
Beijing Enterprises Urban Development the board,
Qian Xu
(Group) Co.,Ltd. general
manager
Chairman of
Qian Xu Beijing Properties （Holdings） Limited
the board
Non-executi
Qian Xu CAQ Holdings Limited.
ve director
National Biochemical Engineering
Deputy
Ying Hanjie Technology Research Center of Nanjing
director
University of Technology
Chairman of
Ying Hanjie Nanjing Biotogether Co., Ltd.
the board
Nanjing High Tech University Biological
Ying Hanjie Director
Technology Research Institute Co., Ltd.
Chairman of
Luzhou State-Owned Capital Operation the
Lian Jing
and Management Co. Ltd supervisory
committee
Executive
Luzhou Guoxin Asset Management Co. director,
Lian Jing
Ltd. general
manager
Luzhou Liquor Industrial Park
Development and Investment Co. Ltd.,
Luzhou Public Transportation Group Co.
External
Lian Jing Ltd., Lu zhou Culture Tourism
director
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
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
actual remuneration payment of directors, supervisors and senior management.
Decision-making procedures for directors, The remuneration of non-executive directors, external directors
supervisors and senior management and external supervisors 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 of Calculate according to the assessment index and weight
directors, supervisors and senior established at the beginning of the year.
management
Actual remuneration payment of directors, Details refer to “Remuneration of directors, supervisors and
supervisors and senior management senior management during the reporting period”.
Remuneration of directors, supervisors and senior management during the reporting period
Unit CNY 10,000
Total before-tax Remuneration
Incumbent/ remuneration from related
Name Position Gender Age
Former from the parties of the
Company Company
Chairman of the
board,
Liu Miao Male 50 Incumbent 70 No
Secretary of the
party committee
Director,
general
manager,
Lin Feng Male 46 Incumbent 70 No
Deputy
secretary of the
party committee
Director, Deputy
general
manager,
member of the
Wang Hongbo Male 56 Incumbent 56 No
party
committee,
Secretary of the
board
Director, Deputy
general
Jiang Yuhui Female 57 Incumbent 56 No
manager,
member of the
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
party
committee,
chairman of the
labor union
Director, Deputy
Shen Caihong general Male 54 Incumbent 56 No
manager
Non-executive
Du Kunlun Male 51 Incumbent 9.52 No
director
Non-executive
Xu Guo xiang Male 60 Incumbent 9.52 No
director
Non-executive
Tan Lili Female 65 Incumbent 9.52 No
director
Non-executive
Liu Junhai Male 50 Incumbent 9.52 No
director
Qian Xu External director Male 56 Incumbent 9.52 No
Ying Hanjie External director Male 50 Incumbent 9.52 No
Lian Jing Supervisor Male 50 Incumbent 0 No
Yang Benhong Supervisor Female 53 Incumbent 46.63 No
Cao Cong Supervisor Male 35 Incumbent 41.32 No
Li Guangjie Supervisor Male 50 Incumbent 69.71 No
Deputy general
Wu Qin Male 58 Incumbent 56 No
manager
Xie Hong CFO Female 50 Incumbent 56 No
Deputy general
He Cheng Male 53 Incumbent 56 No
manager
Deputy general
Zhang Suyi Male 48 Incumbent 56 No
manager
Total -- -- -- -- 746.78 --
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 1,125
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Number of in-service staff of main subsidiaries 2,103
Total number of in-service staff 3,228
Total number of staff with remuneration in the period 3,228
Number of retirees to whom the Company or its main
861
subsidiaries need to pay retirement pension
Functions
Function by category Number of staff
Production staff 1,128
Sales staff 824
R&D staff 593
Financial staff 106
Administrative staff 577
Total 3,228
Educational backgrounds
Educational background by category Number of staff
Senior high school and below 610
Junior college 1,069
Bachelor 1,278
Master 264
Doctor 7
Total 3,228
5.2 Staff remuneration policy
In 2019, the Company established the distribution policy of "sharing benefits, paying for losses,
classification and setting, and long-term policy effects", continuously strengthened the digital
assessment, linked individual performance with organizational performance, and highlighted the
distribution according to performance. The Company implemented the post rating wage system and
strengthened the performance management of all employees. According to the following principles:
Link individual performance with organizational performance: The increase of wages is linked to the
increase of the Company's operating performance and profit growth; Under the same caliber, the
proportion of increase in salaries shall not exceed the proportion of increase in performance and profit
growth.
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.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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.
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 2019, based on the staff career development system and job qualification standards, the Company
implemented a targeted training system comprising different levels to meet demands for staff ability
improvement for different positions and different career development stages.
Sail Program: The “Sail Program” training was conducted for new employees hired through campus and
social recruitment and for other grassroots employees. The purpose was to enhance new emp loyees’
understanding and recognition of the Company’s core values, familiarize them with the Company’s
production and operation statuses and their work procedures, and allow them to accumulate
professional knowledge and skills and improve their ability to work independently.
Dive Program: The “Dive Program” training was conducted for general employees on specialized lines.
The purpose was to strengthen their specialty knowledge and ability to solve specialty problems,
enhance their basic management skills, improve their competency and raise their performance. Due to
the huge coverage of trainees across different business segments, the training was conducted in the
form of sub-programs, such as “Happy Learning Sub-program” and “Craftsman Sub-program” to provide
specialty knowledge and skills of different systems.
Voyage Program: The “Voyage Program” training was conducted for key personnel with a systematic
design of three-year development plans and a focus on three themes, including “self -management”,
“work management” and “interpersonal management”. The purpose was to enrich employees’
knowledge on corporate business management, improve their knowledge structure, and enhance their
strategic understanding and abilities of work and team management.
Steering Program: The “Steering Program” training was conducted for middle management personnel
and department experts in the form of online and offline combined, “coming in” and “going out” combined
and ability enhancement and work style building combined. Through the learning of advanced
management concepts and practices, the training aimed to drive employees to broaden their mind,
expand their vision, strengthen their leadership skills and enhance their level of corporate management.
In addition, 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 out the work of
staff title appraisal, skill appraisal, recommendation and assessment and so on.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
5.4 Labor outsourcing
Applicable √ N/A
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section X 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. During the reporting period, the Company won a number of honors and awards, including
“Top 100 Value” for main board listed companies by Securities Times, “2019 Golden Bull Prize for Top
100 Chinese Listed Company” and “2019 Golden Bull Prize for Gold Board Secretary” by China
Securities Journal, and “Excellent Board Secretary Award for Listed Companies of Sichuan” by The List
Company Association of Sichuan.
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. The industrial property rights,
trademarks and non-patented technology and other intangible assets are owned by the Company. There
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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 la w.
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 Convened date Disclosure date Disclosure index
participation ratio
“Luzhou Lao Jiao
The First Special Co., Ltd. The First
Meeting of Special meeting of Special Meeting
59.32% 14 May 2019 15 May 2019
Shareholders in shareholders Resolution
2019 Announcement”
No:2019-12,
75
2019 Annual Report of Luzhou Laojiao Co., Ltd.
(http://www.cninfo.
com.cn/)
“Luzhou Lao Jiao
Co.,Ltd. 2018
Annual General
2018 Annual Meeting Resolution
General Meeting of
General Meeting of 55.84% 27 June 2019 28 June 2019 Announcement”
Shareholders
Shareholders Announcement
No:2019-17,
(http://www.cninfo.
com.cn/)
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 Absence for
Attendance Attendance
Non-executive due in the by Absence two Attendance
on site through a
director reporting telecommuni (times) consecutive (times)
(times) proxy (times)
period (times) cation (times) times
Du Kunlun 10 1 9 0 0 No 1
Xu Guo xiang 10 1 9 0 0 No 0
Tan Lili 10 1 9 0 0 No 1
Liu Junhai 10 0 10 0 0 No 0
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.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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, and 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 committees held 7 meetings, providing important support to the decisions of the
board. The Audit Committee provided proactive guidance for internal audit, dutifully reviewed the
Company’s financial report and issued audit opinions in the audit procedures, and raised suggestions on
further appointment of the accountant firm; the Strategic Committee conduc ted careful research on the
macro-economic environment and industrial development trends, provided professional opinions on
investment in external parties and other issues and effectively guaranteed the strategic orientation of the
Company; the Nomination Committee continued to update and improve the Company’s database of
high-level professionals, providing assurance for the Company’s healthy and sustained development;
the Remuneration and Appraisal Committee made active steps to urge the Company to establi sh and
optimize a remuneration and appraisal mechanism that conforms with the management policies of
modern enterprises and conducted review on the payment and disclosure of the remuneration of the
Company’s directors and senior management.
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.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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 control
29 April 2020
self-assessment report
Disclosure index of the internal control
2019 Internal Control Self-assessment Report （http://www.cninfo.com.cn/）
self-assessment report
Ratio of the total assets of the
appraised entitles to the consolidated 90.00%
total assets
Ratio of the operating revenues of the
appraised entitles to the consolidated 90.00%
operating revenue
Deficiencies identification standard
Type Financial report Non-financial report
Significant deficiencies ：（1）violate
Significant deficiencies ：（1）Correction of national regulations and laws ；2）The
material errors in financial reports that Company suffer from lake of major
have been announced (except decision-making procedures or
retroactive adjustment of previous years unscientific procedures ；if there is a
due to changes in policies or other decision-making misplay, it will result
objective factors)；（2）Material in significant deal failure（3）The
Qualitative standard misstatement of current financial report substantial loss of managerial or
which was unrecognized but found by technical staff； 4）Important business
the auditor；（3） Corrupt transaction of lacks system control or system
senior management； 4）Audit committee failure, important economic business
and internal audit department are not has internal control system guidance,
effective to the internal control but with no effective operation；（5）
supervision . significant deficiencies of internal
control cannot be rectified in time.
1. Significant deficiencies ：Misstatement
≥ 5% of total profits ；Misstatement ≥ 1% 1. Significant deficiencies ：ratio of
of total assets ；Misstatement ≥ 5% of loss of net profits≥5%.
total operating revenue；Misstatement 2. Material deficiencies ：3%≤ratio of
Quantitative standard
≥5% of owner's equity loss of net profits ＜5%.
2. Material deficiencies ：3% of gross 3. General deficiencies ：ratio of loss
profits≤Misstatement<5% of gross of net profits＜3%
profits；0.5% of total
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
assets≤Misstatement<1% of total
assets；3% of total operating
revenue≤Misstatement<5% of total
operating revenue；3% of 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 significant
0
deficiencies
Number of non-financial-report
0
significant deficiencies
Number of important financial-report
0
related deficiencies
Number of important
Non-financial-report related 0
deficiencies
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 internal
29 April 2020
control audit report
Disclosure index of the internal
2019 Internal Control Auditor Report （http://www.cninfo.com.cn/）
control audit report
Type of the audit’s opinion Standard without reserved opinion
Significant deficiencies found in
No
the non-financial report
The accounting firm issued the internal control audit report of non -standard opinions
Yes √ No
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section XI 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.
Yes
1. Basic information about the corporate bond
Bond balance Way of
Name Abbr. Code Issue date Due date Interest rate
(CNY 10,000) redemption
In terms of the
bonds of this
phase,
interests will
be paid by
2019 Public year and the
Offering of principal will
Corporate be repaid in
Bond of lump sum at
Luzhou 19 Lao Jiao 27 August 28 August maturity. The
112959.SZ 250,000 3.58%
Laojiao Co., 01 2019 2024 interests will
Ltd. for be paid once
Qualified every year
Investors and the
(Phase I) interests for
the last
installment
will be paid
together with
the principal.
2020 Public In terms of the
Offering of bonds of this
Corporate phase,
Bond of interests will
Luzhou 20 Lao Jiao 17 March 17 March be paid by
149062.SZ 150,000 3.50%
Laojiao Co., 01 2020 2025 year and the
Ltd. for principal will
Qualified be repaid in
Investors lump sum at
(Phase I) maturity. The
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
interests will
be paid once
every year
and the
interests for
the last
installment
will be paid
together with
the principal.
Listed or transferred trading
Shenzhen Stock Exchange
place of corporate bond
The bonds are applicable to eligible investors who have qualified securities accounts with
Shenzhen Branch of China Securities Depository and Clearing Co., Ltd., are permitted to
engage in the subscription and transfer of corporate bonds in accordance with the
Appropriate arrangement of Management Measures for the Issue and Transaction Management of Corporate Bonds ,
the investors Management Measures for the Suitability of Securities and Futures Investors,
Management Measures of Shenzhen Stock Exchange for the Suitab ility of Securities
Market Investors, and relevant laws and regulations, and have the corresponding risk
identification and bearing capacity (excluding those prohibited by laws and regulations)
Interest payment during the
“19 Lao Jiao 01” and “20 Lao Jiao 02” have not reached the interests payment period;
reporting period
Execution of the relevant
regulations during the
reporting period such as the
affiliated option clause of the The term of “19 Lao Jiao 01” is five years with the issuer’s option for adjustment to the
issuers or investors, special stated interest rate and the investor’s option for sell back at the end of the 3 rd year
clauses such as the
exchangeable regulations of
corporate bond (if applicable)
2. List of the bond trustee and the rating organization
Bond trustee:
27th and 28 th Ma Sichong,
China Floor, China Huang
International World Office Jiening, Pan
Office Contact Contact （010）
Name Capital 2, No. 1 Xiaofei, Xie
address person number 65051166
Corporation Jianguomenw Ci, Qi Qin,
Limited. ai Avenue, Feng Jin, Yan
Chaoyang Jie, Wang
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
District, Yiqiu, Jiang
Beijing Lijia
Rating organization executed the tracking rating of the corporate bonds of the reporting period:
Building 6, Galaxy SOHO, No.2 Nanzhugan
China Chengxin International Credit Rating Office
Name hutong,Chaoyangmennei Avenue,
Co., Ltd. address
Dongcheng District, Beijing
Alternation reasons, execution process
and influences on the investors’
interests etc. if there was alternation of
the bond trustees and the credit rating N/A
agencies engaged by the Company
during the reporting period (if
applicable)
3. Information about usage of fund-raising of the corporate bond
The Company raised a fund of CNY 2.5 billion through the issue of corporate
bonds on 26 August 2019. After deduction of the issue fees, the balance
amount was set to use in the technical renovation project of brewing (Phase II),
Information about usage of fund-raising Project of Intelligent Upgrading and Building of the Information Management
and the execution process of corporate System, Project of Acquiring Sealing Equipment for the C ellar of Huangyi
bond Brewing Base and Project of Acquiring Accessory Equipment for Leaven
Making for Huangyi Brewing Base. As of 31 December 2019, CNY
2,003,815,000 of the fund-raising through the issue of corporate bonds had
been used.
Closing balance (CNY 10,000) 50,001.54
In accordance with related laws and regulations, the Company has designated
an account specifically for fundraising to receive, deposit and transfer funds
raised through the issue of corporate bonds and pay interests and principals.
Operating situation of the fund-raising
Details of this bank account are as follows: account name: Luzhou Laojiao Co.,
special account
Ltd.; bank: CGB Chengdu Branch; account number: 9550880046723000135.
The Company has signed a third-party regulation agreement with the bank and
the trustee.
Whether the usage of the fund-raising
met with the usage, using plan and
The usage of the fund-raising met with the usage committed on the prospectus
other agreements committed on the
prospectus
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
4. Rating situation of corporate bond information
On 15 August 2019, China Chengxin Securities Rating Co., Ltd. issued a credit rating report for “19 Lao
Jiao 01”. The Company’s main body has a credit rating of AAA and a stable rating outlook; the bond’s
credit rating is AAA.
On 2 March 2020, China Chengxin International Credit Rating Co., Ltd. issued a credit rating report for
“20 Lao Jiao 01”. The Company’s main body has a credit rating of AAA and a stable rating outlook; the
bond’s credit rating is AAA.
5. Credit-adding mechanism, repayment plan and other repayment
guarantee measures of the corporate bond
Not applicable
6. Information about convening of the bondholders meeting during the
reporting period
The Company did not convene bondholders meeting during the reporting period.
7. Information about duty execution of bond trustee during the reporting
period
During the validity of the corporate bond, the trustee performed continuous tracking of the Company’s
credit information and management and utilization of the fund-raising strictly in accordance with the
Bonds Trusteeship Agreement, urged the Company to fulfill its obligations agreed in the prospectus of
the corporate bond, proactively exercised its duties as a bonds trustee and safeguarded the legitimate
rights and interests of the bondholders.
CICC produced an interim report on the trusteeship affairs for the Company’s involvement of significant
litigation and disclosed it synchronously on cninfo (www.cninfo.com.cn).
8. The major accounting data and the financial indicators of the recent 2
years of the company as of the end of the reporting period
Unit：CNY 10,000
Item 2019 2018 YoY change
EBITDA 641,080.79 488,743.51 31.17%
Current ratio 240.36% 286.11% -45.75%
Asset-liability ratio 32.38% 24.25% 8.13%
Quick ratio 184.48% 223.93% -39.45%
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Total debt ratio of
257.37% 0.00%
EBITDA
Times interest earned 41.31 73.01 -43.42%
Times interest earned of
42.42 75.54 -43.84%
EBITDA
Main reason of the above accounting data and the financial indicators with the YoY change exceeded
30%
√ Applicable □ N/A
1. EBITDA increased 31.17% year-on-year, mainly due to increase in sales revenue and net profit for the
reporting period.
2. Current ratio decreased 45.75% year-on-year, mainly due to increase in advances from customer and
accounts payable of current liabilities for the reporting period.
3. Quick ratio decreased 39.45% year-on-year, mainly due to increase in advances from customer and
accounts payable of current liabilities for the reporting period.
4. Times interest earned decreased 43.42% year-on-year, mainly due to increase in interest expense for
the reporting period.
5. Times interest earned of EBITDA decreased 43.84% year -on-year, mainly due to increase in interest
expense for the reporting period.
9. Information about interest payment of other bonds and debt financing
instruments during the reporting period
Not applicable
10. Information about acquired bank credit lines, usage and repayment
of the bank loans during the reporting period
Not applicable
11. Information about the execution of the agreements or the
commitments related to the corporate bond fund-raising specification
during the reporting period
During the reporting period, the Company used the raised funds strictly according to the agreemen t s
related to the corporate bond fund-raising specification.
12. Significant events occurring during the reporting period
No significant events during the reporting period.
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13. Whether there was guarantor of the corporate bond
□ Yes √ No
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section XII Financial Report
1. Auditor’s report
Type of audit report Standard without reserved opinion
Signing date of auditor’s report 27 April 2020
Name of Audit Sichuan Huaxin (Group) CPA Firm
No. of auditor’s report Chuan Huaxin Audit [2020] No.0032
Names of auditors Feng Yuan, Tang Fangmo
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
2019, consolidated income statement and income statement, consolidated cash flow statement and
cash flow statement, consolidated statement of changes in owners' e quity 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 2019 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 pr ovide 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
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
thereon, and we do not provide a separate opinion on these matters. Key audit matters identified in our
audit are summarized as follows:
1. Key audit matters-Recognition of domestic liquor sales revenue
Key audit matters How our audit addressed the Key Audit Matter
In 2019, the Company's total operating revenue is Our procedures in relation to recognition of domestic
CNY 15.817 billion, including CNY 15.473 billion of liquor sales revenue included:
domestic liquor sales revenue, accounting for 97.83% 1. Understood, evaluat ed and tested the reasonableness
of the total operating revenue. and effectiveness of the internal control design related to
the Company's revenue. Particular attention was paid to
Considering the significant amount of the Company's the appropriat eness of specific conditions for recognition
domestic liquor sales revenue, we pay attention to it of revenue.
as a key audit matter. 2. Compared t he 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 indic ators and
reasons for changes.
3. The income of the top five customers totaled CNY
10.447 billion, accounting for 66.05% 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) P erformed t he 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 t o 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 cont rolled the whole process of reply letter by
ourselves.
(3) Inquired the customer's business information and key
personnel information, and checked whether they are
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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, complet eness 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 pai d attention to whether there is a large
amount of return aft er 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
Key audit matters How our audit addressed the Key Audit Matter
As of 31 December 2019, the bank balance of the Our procedures in relation to existence of bank deposits
Company is CNY 9.744 billion, accounting for 33.69% included:
of the total assets. Bank deposits are high-risk assets. 1. Understood and tested the design and implement ation
Therefore, we pay attention to the existence of bank of key internal controls related to the funds management
deposits as a key audit matter. cycle to confirm the 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 c heck the
account opening information individually.
3. Checked the carrying amount of all bank accounts with
the original amount of bank statements and certificat es of
deposit, and obtained all copies.
4. Based on the results of checking the amount of bank
statements, obtained the balanc e reconciliation of all
bank accounts compiled by the Company, and check all
the outstanding items, whether there a re any important
overdue items that are not booked in time.
5. Implement ed the confirmation procedure for the
Company 's bank deposits, in which the local deposit
accounts in Luzhou were confirmed by auditors and t he
Company 's cashier in the bank; The confirmation letters
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
of deposit accounts outside Luzhou were sent out by
mailing after auditors checked the address and the
receiver through telephone, net work and other public
information, and we controlled the whole reply letter
process by ours elves.
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-Recognition of the book value of technical renovation project of brewing
industry
Key audit matters How our audit addressed the Key Audit Matter
As of 31 December 2019, an amount of CNY 6.363 Our procedures in relation to the recognition of the book
billion was spent on the technical renovation project value of the technic al renovation project of brewing
of brewing, one of the construction in progress; the included:
closing balance was CNY 6.072 billion, accounting for 1. Understood and tested the design and imple ment ation
21.00% of the total assets; an amount of CNY 4 billion of key internal controls related to the assets management
was spent in 2019. Some sub-projects had reached cycle to confirm the effectiveness of relevant internal
the expected usable state and been transferred into controls.
fixed assets. The total increase in fixed assets from 2. We selected samples for new important amounts
the transfer was CNY 290 million, all of which was occurred in the current period with regard to the technical
from trans fer in 2019. Because the amount spent on renovation project of brewing, reviewed the ledger of the
the technical renovation project of brewing is project contracts, and examined supporting documents
significant, the amount of transfer from construction in related to it, including tender and bidding documents,
progress to fixed assets involves the estimation and project establishment or budget documents, project
judgment of the management, and the withdrawal of contracts and invoices, final statement of the project,
depreciation costs has direct impact on the current procurement contracts and invoices, and payment
profit, we have paid attention to the recognitio n of the approvals.
book value of the technical renovation project of
3. We selected samples for new important amounts
brewing as a key audit matter.
transferred into fixed assets in the current period with
regard to the technical renovation project of brewing,
examined reports on final statement for complet ed
sub-projects and inspection reports or information on
pre-transfers into fixed assets, and confirmed the
accuracy of the time point of trans fers from projects in
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
progress to fixed assets through survey at project
construction sites and interviews with project
management pers onnel. Based on our understanding
and comparison, we assessed the reasonableness of the
management’s estimation on the service life and net
salvage value of the part transferred into fixed assets.
4. We checked the status of the technical renovation
project of brewing through site survey, observed,
understood and inquired about the project progress and
construction statuses, and compared the project progress
report and the actual progress.
The evidence obtained from the above audit procedures
can support the Company 's management's assertion of
the recognition of t he book value of the t echnical
renovation project of brewing.
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.
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 co ntrol 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.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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 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 obta ined 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, 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, amon g other matters, the planned
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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 31 December 2019
Monetary Unit: CN Y
Item Balance as at 31 December 2019 Balance as at 31 December 2018
Current assets:
Cash and cash equivalents 9,753,666,526.78 9,367,386,627.68
Settlement reserves
Lending funds
Held-for-trading financial assets
Financial assets measured at fair
value through current profit or loss
Derivative financial assets
Notes receivables 2,388,326,476.15
Accounts receivables 18,293,914.23 10,333,728.87
Accounts receivables financing 2,393,797,259.80
Prepayment 151,818,448.48 137,243,573.66
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
Other receivables 159,753,421.64 166,525,010.16
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Including：Interests receivable 45,636,744.44 29,970,944.44
Dividends receivable
Buying back the sale of financial
assets
Inventories 3,641,235,092.33 3,230,415,749.95
Contractual assets
Assets held for sale
Non-current assets due within one
year
Other current assets 195,174,048.57 194,237,237.02
Total current assets 16,313,738,711.83 15,494,468,403.49
Non-current assets:
Disbursement of loans and
advances
Investments in debt obligations
Available-for-sale financial assets 275,819,448.46
Investments in other debt
obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 2,230,721,725.72 2,091,103,348.61
Investments in other equity
352,395,255.78
instruments
Other non-current financial assets
Investment property
Fixed assets 1,518,865,397.91 1,029,666,915.47
Construction in progress 7,257,393,087.56 3,000,489,249.86
Productive biological assets
Oil and gas assets
Use right assets
Intangible assets 332,234,032.47 231,967,372.88
Development expenses
Goodwill
Long-term deferred expenses 928,805.23
Deferred tax assets 676,152,614.07 436,434,961.24
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Other non-current assets 237,539,447.75 44,979,896.41
Total non-current assets 12,606,230,366.49 7,110,461,192.93
Total assets 28,919,969,078.32 22,604,929,596.42
Current liabilities:
Short-term loans
Borrowings from the central bank
Loans from other banks
Held-for-trading financial liabilities
Financial liabilities measured at fair
value through current profit or loss
Derivative financial liabilities
Notes payable
Accounts payable 1,868,623,958.02 1,292,050,954.06
Ad vance from customer 2,244,442,643.64 1,604,425,189.96
Contractual liabilities
Financial assets sold for repurchase
Deposits from customers and
inter-bank
Customer brokerage deposits
Securities underwriting brokerage
deposits
Employee benefits payable 342,025,687.49 268,092,193.50
Taxes payable 1,633,044,231.67 1,648,028,076.07
Other payable 698,942,399.37 602,887,024.88
Including：Interests payable 30,650,684.93
Dividends payable
Handling charges and commissions
payable
Reinsurance accounts payable
Liabilities held for sale
Non-current liabilities due within one
year
Other current liabilities
Total current lia bilities 6,787,078,920.19 5,415,483,438.47
Non-current liabilities:
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Insurance contract reserves
Long-term loans
Bonds payable 2,490,883,676.39
Including：Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payables
Accrued liabilities
Deferred income 23,845,000.00 20,981,155.00
Deferred tax liabilities 63,430,453.64 44,252,383.96
Other non-current liabilities
Total non-current lia bilities 2,578,159,130.03 65,233,538.96
Total liabilities 9,365,238,050.22 5,480,716,977.43
Shareholders' equity
Share capital 1,464,752,476.00 1,464,752,476.00
Other equity instruments
Including: preference shares
Perpetual bonds
Capital reserves 3,722,777,063.13 3,716,675,022.48
Less: treasury stock
Other comprehensive income 194,817,130.57 136,592,276.64
Special reserves
Surplus reserves 1,464,752,476.00 1,464,752,476.00
General risk reserve
Undistributed profits 12,559,746,579.91 10,181,899,224.84
Total equity attributable to owners of
19,406,845,725.61 16,964,671,475.96
the parent company
Non-controlling interests 147,885,302.49 159,541,143.03
Total owners' equity 19,554,731,028.10 17,124,212,618.99
Total liabilities and owners' equity 28,919,969,078.32 22,604,929,596.42
Legal repres entative：Liu Miao
Person in charge of accounting affairs：Xie Hong
Person in charge of accounting department：Yan Li
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Balance sheet of parent company
As at 31 December 2019
Monetary Unit: CN Y
Item Balance as at 31 December 2019 Balance as at 31 December 2018
Current assets:
Cash and cash equivalents 8,872,692,385.79 6,189,473,157.83
Held-for-trading financial assets
Financial assets measured at fair
value through current profit or loss
Derivative financial assets
Notes receivables
Accounts receivables 21,562.85 67,698.43
Accounts receivables financing
Prepayment 11,682,593.27 7,212,512.57
Other receivables 5,850,481,480.50 4,657,727,046.02
Including：Interests receivable 40,570,144.44 29,970,944.44
Dividends receivable
Inventories 1,049,384.24 383,404.53
Contractual assets
Assets held for sale
Non-current assets due within one
year
Other current assets 5,562,360.72 1,761,708.33
Total current assets 14,741,489,767.37 10,856,625,527.71
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets 275,490,526.83
Investments in other debt
obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 5,636,681,853.83 5,494,914,376.71
Investments in other equity
352,066,334.15
instruments
Other non-current financial assets
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Investment property
Fixed assets 601,481,983.81 701,870,689.02
Construction in progress 967,953,263.55 511,528,278.96
Productive biological assets
Oil and gas assets
Use right assets
Intangible assets 297,830,285.02 224,039,846.61
Development expenses
Goodwill
Long-term deferred expenses 777,834.15
Deferred tax assets 75,249,717.72 71,119,598.96
Other non-current assets
Total non-current assets 7,932,041,272.23 7,278,963,317.09
Total assets 22,673,531,039.60 18,135,588,844.80
Current liabilities:
Short-term loans
Held-for-trading financial liabilities
Financial liabilities measured at fair
value through current profit or loss
Derivative financial liabilities
Notes payable
Accounts payable 87,652,671.29 38,984,611.48
Ad vance from customer 9,712,630.35 12,229,153.62
Contractual liabilities
Employee benefits payable 116,124,722.19 67,383,911.98
Taxes payable 82,399,599.18 115,424,262.03
Other payables 1,099,598,588.83 1,788,068,491.88
Including：Interests payable 30,650,684.93
Dividends payable
Liabilities held for sale
Non-current liabilities due within one
year
Other current liabilities
Total current lia bilities 1,395,488,211.84 2,022,090,430.99
Non-current liabilities:
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Long-term loans
Bonds payable 2,490,883,676.39
Including：Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payables
Accrued liabilities
Deferred income 2,380,000.00 12,593,640.12
Deferred tax liabilities 63,430,453.64 44,252,383.96
Other non-current liabilities
Total non-current lia bilities 2,556,694,130.03 56,846,024.08
Total liabilities 3,952,182,341.87 2,078,936,455.07
Shareholders' equity
Share capital 1,464,752,476.00 1,464,752,476.00
Other equity instruments
Including: preference shares
Perpetual bonds
Capital reserves 3,706,816,950.12 3,706,816,950.12
Less: treasury stock
Other comprehensive income 192,332,738.05 134,386,305.26
Special reserves
Surplus reserves 1,464,752,476.00 1,464,752,476.00
Undistributed profits 11,892,694,057.56 9,285,944,182.35
Total owners' equity 18,721,348,697.73 16,056,652,389.73
Total liabilities and owners' equity 22,673,531,039.60 18,135,588,844.80
Consolidated income statement
Monetary Unit: CN Y
Item Year 2019 Year 2018
1. Total operating revenue 15,816,934,272.86 13,055,465,761.55
Including: Operating revenue 15,816,934,272.86 13,055,465,761.55
Interest income
Earned premium
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Fee and commission income
2. Total operating costs 9,922,882,478.20 8,502,113,044.92
Including: Cost of sales 3,065,418,048.38 2,934,001,858.91
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 1,975,858,645.23 1,605,835,052.97
Selling and distribution expenses 4,186,102,153.59 3,392,721,432.33
General and administrative expenses 828,945,024.92 722,448,972.80
Research and Development expenses 71,643,099.77 62,172,210.70
Financial expenses -205,084,493.69 -215,066,482.79
Including：Interest expenses 139,603,113.82 64,698,037.12
Interest income 344,656,931.22 280,805,447.66
Plus: Other income 43,969,302.07 24,092,326.81
Investment income ("-" for losses) 154,711,995.41 97,993,563.50
Including: income from investment in associates and joint
145,963,325.70 88,881,022.50
ventures
Income from the derecognition of financial
assets measured at amortized cost (“-” for losses)
Foreign exchange gains ("-" for losses)
Net gain on exposure hedges (“-” for losses)
Gains from the changes in fair values(“-“ for losses)
Credit impairment losses (“-” for losses) -618,334.74
Impairment losses(“-“ for losses) 2,035,339.62
Gains from disposal of assets("-" for losses) 27,180,182.25 -492,389.13
3. Operating profits ("-" for losses) 6,119,294,939.65 4,676,981,557.43
Plus: non-operating income 44,307,757.49 31,232,477.21
Less: non-operating expenses 59,786,505.46 49,528,449.09
4. Total profits before tax ("-" for total losses) 6,103,816,191.68 4,658,685,585.55
Less: income tax expenses 1,461,580,689.27 1,148,219,697.12
5. Net profit ("-" for net loss) 4,642,235,502.41 3,510,465,888.43
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
5.1 By operating continuity
5.1.1 Net profit from continuing operation ("-" for losses) 4,642,235,502.41 3,510,465,888.43
5.1.2 Net profit from discontinued operation ("-" for losses)
5.2 By ownership
1) Attributable to owners of the parent company 4,641,988,857.03 3,485,643,008.98
2) Attributable to non-controlling interests 246,645.38 24,822,879.45
6. Net of tax from other comprehensive income 25,099,247.90 -33,987,321.62
Net of tax from other comprehensive income to the owner of the
24,585,285.17 -34,635,015.55
parent company
6.1 Other comprehensive income cannot reclassified into the
19,018,838.37
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
3) Changes in fair value of investments in other equity
19,018,838.37
instruments
4) Changes in fair value of the company’s credit risks
5) Other
6.2 Other comprehensive income that will be reclassified into the
5,566,446.80 -34,635,015.55
profit and loss
1) Share in other comprehensive income that will be classified
4,938,830.88 -359,548.90
into profit and loss under equity method
2) Changes in fair value of investments in other debt obligations
3) Changes in fair value of available-for-sale financial assets -35,066,257.04
4) Other comprehensive income arising from the reclassification
of financial assets
5) Held-to-maturity investment reclassified into available-for sale
financial assets
6) Allowance for credit impairments in investments in other debt
obligations
7) Reserve for cash-flow hedge
8) Balance arising from the translation of foreign currency
627,615.92 790,790.39
financial statements
9) Others
Net of tax from other comprehensive income to non-controlling
513,962.73 647,693.93
interests
101
2019 Annual Report of Luzhou Laojiao Co., Ltd.
7. Total comprehensive income 4,667,334,750.31 3,476,478,566.81
Total comprehensive income attributable to owners of the parent
4,666,574,142.20 3,451,007,993.43
company
Total comprehensive income attributable to non-controlling
760,608.11 25,470,573.38
interests
8. Earnings per share
(1) Basic earnings per share 3.17 2.38
(2) Diluted earnings per share 3.17 2.38
Legal repres entative：Liu Miao
Person in charge of accounting affairs：Xie Hong
Person in charge of accounting department：Yan Li
Income statement of parent company
Monetary Unit: CN Y
Item Year 2019 Year 2018
1. Operating revenue 4,886,810,422.27 3,361,304,739.27
Less: Cost of sales 3,494,194,921.16 2,268,904,672.24
Taxes and surcharges 35,721,430.12 37,365,858.48
Selling and distribution expenses
General and administrative expenses 667,996,227.68 581,921,594.90
Research and Development expenses 29,631,770.27 21,001,230.12
Financial expenses -234,014,687.01 -129,471,683.37
Including：Interest expenses 40,008,978.03 7,971,444.41
Interest income 275,281,390.78 138,532,722.84
Plus: Other income 21,882,835.13 17,701,808.96
Investment income ("-" for losses) 4,196,863,510.68 2,113,902,599.28
Including: income from investment in associates and joint
145,963,325.70 88,881,022.50
ventures
Income from the derecognition of financial
assets at amortized cost (“-” for losses)
Net gain on exposure hedges (“-” for losses)
Gains from the changes in fair values(“-“ for losses)
Credit impairment losses (“-” for losses) -58,058.02
Asset impairment losses (“-” for losses) 2,965,798.28
102
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Gains from disposal of assets("-" for losses) 27,050,240.74 -492,389.13
2. Operating profits ("-" for losses) 5,139,019,288.58 2,715,660,884.29
Plus: non-operating income 24,397,783.88 21,778,771.14
Less: non-operating expenses 56,307,795.01 39,292,792.61
3. Total profits before tax ("-" for total losses) 5,107,109,277.45 2,698,146,862.82
Less: income tax expenses 235,868,705.50 140,164,527.27
4. Net profit ("-" for net loss) 4,871,240,571.95 2,557,982,335.55
4.1 Net profit from continuing operation ("-" for losses) 4,871,240,571.95 2,557,982,335.55
4.2 Net profit from discontinued operation ("-" for losses)
5. Net of tax from other comprehensive income 23,957,669.25 -35,425,805.94
5.1 Other comprehensive income cannot reclassified into the
19,018,838.37
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
3) Changes in fair value of investments in other equity
19,018,838.37
instruments
4) Changes in fair value of the company’s credit risks
5) Other
5.2 Other comprehensive income that will be reclassified into the
4,938,830.88 -35,425,805.94
profit and loss
1) Share in other comprehensive income that will be classified
4,938,830.88 -359,548.90
into profit and loss under equity method
2) Changes in fair value of investments in other debt obligations
3) Changes in fair value of available-for-sale financial assets -35,066,257.04
4) Other comprehensive income arising from the reclassification
of financial assets
5) Held-to-maturity investment reclassified into available-for sale
financial assets
6) Allowance for credit impairments in investments in other debt
obligations
7) Reserve for cash-flow hedge
8) Balance arising from the translation of foreign currency
financial statements
9) Others
103
2019 Annual Report of Luzhou Laojiao Co., Ltd.
6. Total comprehensive income 4,895,198,241.20 2,522,556,529.61
7. Earnings per share
(1) Basic earnings per share
(2) Diluted earnings per share
Consolidated statement of cash flows
Monetary Unit: CN Y
Item Year 2019 Year 2018
1. Cash flows from operating activities
Cash received from sale of goods and rendering of services 18,483,174,163.09 14,828,436,081.11
Net increase in customer bank deposits and placement from
banks and other financial institutions
Net increase in loans from central bank
Net increase in loans from other financial institutions
Premiums received from original insurance contracts
Net cash received from reinsurance business
Net increase in deposits and investments from policyholders
Cash received from interest, handling charges and commissions
Net increase in placements from other financial institutions
Net capital increase in repurchase business
Net cash received from customer brokerage deposits
Refunds of taxes and surcharges 5,043,369.84 5,786,338.67
Cash received from other operating activities 628,136,779.70 482,593,561.94
Subtotal of cash inflows from operating activities 19,116,354,312.63 15,316,815,981.72
Cash paid for goods purchased and services received 5,306,328,780.97 3,826,697,226.55
Net increase in loans and advances to customers
Net increase in deposits in central bank and other banks and
financial institutions
Cash paid for original insurance contract claims
Net increase in lending funds
Cash paid for interests, handling charges and commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 765,303,405.29 569,194,842.30
104
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Cash paid for taxes and surcharges 4,932,650,062.18 3,545,440,004.11
Cash paid for other operating activities 3,270,452,860.33 3,077,567,890.52
Subtotal of cash outflows from operating activities 14,274,735,108.77 11,018,899,963.48
Net cash flows from operating activities 4,841,619,203.86 4,297,916,018.24
2. Cash flows from investing activities
Cash received from disposal of investments
Cash received from returns on investments 29,483,836.65 19,480,124.47
Net cash received from disposal of fixed assets, intangible assets
33,045,256.91 222,840.26
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 62,529,093.56 19,702,964.73
Cash paid to acquire and construct fixed assets, intangible assets
4,605,226,214.50 1,468,482,777.22
and other long-term assets
Cash paid for investments 8,000,000.00 16,636,159.43
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities
Subtotal of cash outflows from investing activities 4,613,226,214.50 1,485,118,936.65
Net cash flows from investing activities -4,550,697,120.94 -1,465,415,971.92
3. Cash flows from financing activities
Cash received from investors 3,834,692.00 4,482,764.00
Including: cash received by subsidiaries from investments by
3,834,692.00
minority shareholders
Cash received from borrowings
Cash received from bonds issue 2,490,000,000.00
Cash received from other financing activities
Subtotal of cash inflows from financing activities 2,493,834,692.00 4,482,764.00
Cash paid for debt repayments
Cash paid for distribution of dividends and profits or payment of
2,390,250,207.80 1,911,545,067.51
interest
Including: dividends and profits paid to minority shareholders by
subsidiaries
Cash paid for other financing activities 10,149,100.00 9,604,800.00
Subtotal of cash outflows from financing activities 2,400,399,307.80 1,921,149,867.51
105
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Net cash flows from financing activities 93,435,384.20 -1,916,667,103.51
4. Effect of fluctuation in exchange rate on cash and cash
1,922,431.98 731,529.96
equivalents
5. Net increase in cash and cash equivalents 386,279,899.10 916,564,472.77
Plus: balance of cash and cash equivalents at the beginning of
9,365,986,627.68 8,449,422,154.91
the period
6. Balance of cash and cash equivalents at the end of the
9,752,266,526.78 9,365,986,627.68
period
Cash flow statements of parent company
Monetary Unit: CN Y
Item Year 2019 Year 2018
1. Cash flows from operating activities
Cash received from sale of goods and rendering of services 5,524,665,200.15 3,872,690,184.06
Refunds of taxes and surcharges
Cash received from other operating activities 336,073,969.61 285,339,299.49
Subtotal of cash inflows from operating activities 5,860,739,169.76 4,158,029,483.55
Cash paid for goods purchased and services received 4,128,632,128.61 2,706,797,292.39
Cash paid to and on behalf of employees 277,720,935.68 253,037,938.15
Cash paid for taxes and surcharges 458,233,955.78 304,535,780.73
Cash paid for other operating activities 209,925,720.97 179,745,316.75
Subtotal of cash outflows from operating activities 5,074,512,741.04 3,444,116,328.02
Net cash flows from operating activities 786,226,428.72 713,913,155.53
2. Cash flows from investing activities
Cash received from disposal of investments
Cash received from returns on investments 4,071,635,351.92 2,035,389,160.25
Net cash received from disposal of fixed assets, intangible assets
32,304,306.23 92,898.13
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 4,103,939,658.15 2,035,482,058.38
Cash paid to acquire and construct fixed assets, intangible assets
497,241,658.62 150,107,386.59
and other long-term assets
106
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Cash paid for investments 10,149,100.00 26,240,959.43
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities
Subtotal of cash outflows from investing activities 507,390,758.62 176,348,346.02
Net cash flows from investing activities 3,596,548,899.53 1,859,133,712.36
3. Cash flows from financing activities
Cash received from investors
Cash received from loans
Cash received from bonds issue 2,490,000,000.00
Cash received from other financing activities 1,830,167,429.42
Subtotal of cash inflows from financing activities 2,490,000,000.00 1,830,167,429.42
Cash paid for debt repayments
Cash paid for distribution of dividends and profits or payment of
2,278,840,954.51 1,844,793,539.38
interest
Cash paid for other financing activities 1,910,715,145.78
Subtotal of cash outflows from financing activities 4,189,556,100.29 1,844,793,539.38
Net cash flows from financing activities -1,699,556,100.29 -14,626,109.96
4. Effect of fluctuation in exchange rate on cash and cash
equivalents
5. Net increase in cash and cash equivalents 2,683,219,227.96 2,558,420,757.93
Plus: balance of cash and cash equivalents at the beginning of
6,189,473,157.83 3,631,052,399.90
the period
6. Balance of cash and cash equivalents at the end of the
8,872,692,385.79 6,189,473,157.83
period
Consolidated statement of changes in shareholders' equity
For the year ended 31 December 2019
Monetary Unit: CN Y
Year 2019
Equity attributable to ow ners of the parent company
Non-co
Other equity Other Total
Less： Surplu Genera ntrollin
Item instruments shareh
Share Capital Compr Special Undistr
Treasu s l risk Subtot g
capita Prefe Perp reserv ehensi reserv ibuted Other olders'
ry reserv reserv al interes
l e ve e profit equity
rred etual Other ts
stock e e
stock bond Income
1. Balance as at 1,464, 3,716,6 136,59 1,464,7 10,181, 16,964, 159,54 17,124,
107
2019 Annual Report of Luzhou Laojiao Co., Ltd.
31 December of 752,4 75,022. 2,276.6 52,476. 899,22 671,47 1,143.0 212,61
last year 76.00 48 4 00 4.84 5.96 3 8.99
Plus: adjustments
for changes in 33,639, 6,224,8 39,864, 39,864,
accounting 568.76 35.84 404.60 404.60
policies
Adjustments for
correction of
accounting errors
in prior year
Business
combinations
under common
control
Others
2. Balance as at 1,464, 3,716,6 170,23 1,464,7 10,188, 17,004, 159,54 17,164,
1 January of the 752,4 75,022. 1,845.4 52,476. 124,06 535,88 1,143.0 077,02
current year 76.00 48 0 00 0.68 0.56 3 3.59
3.Increases/decr
2,371,6 2,402,3 2,390,6
eases in the 6,102,0 24,585, -11,655
22,519. 09,845. 54,004.
current year (“-” 40.65 285.17 ,840.54
23 05 51
for decreases)
(1) Total 4,641,9 4,666,5 4,667,3
24,585, 760,60
comprehensive 88,857. 74,142. 34,750.
285.17 8.11
income 03 20 31
(2) Capital
contributed or 1,334,6 1,334,6
reduced by 92.00 92.00
owners
Capital
1,334,6 1,334,6
contributions by
92.00 92.00
owners
Capital
contributions by
other equity
instruments
holders
Amounts of
share-based
payments
recognized in
108
2019 Annual Report of Luzhou Laojiao Co., Ltd.
owners' equity
Others
-2,270, -2,270, -2,270,
(3) Profit
366,33 366,33 366,33
distribution
7.80 7.80 7.80
Withdrawal of
surplus reserves
Withdrawal of
general risk
reserve
Profit distributed -2,270, -2,270, -2,270,
to owners (or 366,33 366,33 366,33
shareholders) 7.80 7.80 7.80
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 losse s
Carry-forward of
retained earnings
from changes in
defined benefit
plans
Carry-forward of
retained earnings
from other
comprehensive
income
Others
(5) Special
reserves
109
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Withdrawal for
the period
Use for the period
6,102,0 6,102,0 -13,751 -7,649,
(6) Others
40.65 40.65 ,140.65 100.00
4. Balance as at 1,464, 3,722,7 194,81 1,464,7 12,559, 19,406, 147,88 19,554,
31 December of 752,4 77,063. 7,130.5 52,476. 746,57 845,72 5,302.4 731,02
the current year 76.00 13 7 00 9.91 5.61 9 8.10
For the year ended 31 December 2018
Monetary Unit: CN Y
Year 2018
Equity attributable to ow ners of the parent company
Other equity Other Non-co
Total
instruments Less： Compr Specia Surplu Genera ntrollin
Item shareho
Share Capital Undistr
Treasu ehensi l s l risk Subtot g
capita Prefe Perp reserv ibuted Other lders'
ry ve reserv reserv reserv al interest
l e profit equity
rred etual Other s
stock Incom e e e
stock bond
e
1. Balance as at 1,464, 3,543,5 171,22 1,464,7 8,527,1 15,171, 15,312,5
141,145,
31 December of 752,4 19,701. 7,292.1 52,476. 96,810. 448,75 94,212.1
455.42
last year 76.00 63 9 00 86 6.68 0
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 1,464, 3,543,5 171,22 1,464,7 8,527,1 15,171, 15,312,5
141,145,
January 1 of the 752,4 19,701. 7,292.1 52,476. 96,810. 448,75 94,212.1
455.42
current year 76.00 63 9 00 86 6.68 0
3.Increases/dec 173,15 -34,635 1,654,7 1,793,2 18,395,6 1,811,61
110
2019 Annual Report of Luzhou Laojiao Co., Ltd.
reases in the 5,320.8 ,015.55 02,413. 22,719. 87.61 8,406.89
current year (“-” 5 98 28
for decreases)
(1) Total 3,485,6 3,451,0
-34,635 25,470,5 3,476,47
comprehensive 43,008. 07,993.
,015.55 73.38 8,566.81
income 98 43
(2) Capital
contributed or 4,237,76 4,237,76
reduced by 4.00 4.00
owners
Capital
4,237,76 4,237,76
contributions by
4.00 4.00
owners
Capital
contributions by
other equity
instruments
holders
Amounts of
share-based
payments
recognized in
owners' equity
Others
-1,830, -1,830, -1,830,9
(3) Profit 28,144.8
940,59 940,59 12,450.1
distribution 9
5.00 5.00 1
Withdrawal of
surplus reserves
Withdrawal of
general risk
reserve
Profit distributed -1,830, -1,830, -1,830,9
28,144.8
to owners (or 940,59 940,59 12,450.1
9
shareholders) 5.00 5.00 1
Others
(4) Internal
carry-forward of
owners' equity
Conversion of
111
2019 Annual Report of Luzhou Laojiao Co., Ltd.
capital reserves
into paid-in
capital
Conversion of
surplus reserves
into paid-in
capital
Surplus reserves
offsetting losse s
Carry-forward of
retained earnings
from changes in
defined benefit
plans
Carry-forward of
retained earnings
from other
comprehensive
income
Others
(5) Special
reserves
Withdrawal for
the period
Use for the
period
173,15 173,15
-11,340, 161,814,
(6) Others 5,320.8 5,320.8
794.66 526.19
5 5
4. Balance as at 1,464, 3,716,6 136,59 1,464,7 10,181, 16,964, 17,124,2
159,541,
31 December of 752,4 75,022. 2,276.6 52,476. 899,22 671,47 12,618.9
143.03
the current year 76.00 48 4 00 4.84 5.96 9
Statement of changes in shareholders' equity of parent company
For the year ended 31 December 2019
Monetary Unit: CNY
Year 2019
Item
Share Other equity Capital Less： Other Special Surplus Undistr Other Total
112
2019 Annual Report of Luzhou Laojiao Co., Ltd.
capital instruments reserv e Treasury Compreh reserv e reserv e ibuted shareholde
stock ensive profit rs' equity
Preferr Perpet
Income
ed ual Other
stock bond
1. Balance as at 1,464,7 9,285,9
3,706,816 134,386,3 1,464,752 16,056,652,
31 December of 52,476. 44,182.
,950.12 05.26 ,476.00 389.73
last year 00 35
Plus: adjustments
for changes in 33,988,76 5,875,6 39,864,404.
accounting 3.54 41.06 60
policies
Adjustments for
correction of
accounting errors
in prior year
Others
2. Balance as at 1,464,7 9,291,8
3,706,816 168,375,0 1,464,752 16,096,516,
January 1 of the 52,476. 19,823.
,950.12 68.80 ,476.00 794.33
current year 00 41
3.Increases/decr
2,600,8
eases in the 23,957,66 2,624,831,9
74,234.
current year (“-” 9.25 03.40
15
for decreases)
(1) Other 4,871,2
23,957,66 4,895,198,2
comprehensive 40,571.
9.25 41.20
income 95
(2)Capital
contributed or
reduced by
owners
Capital
contributions by
owners
Capital
contributions by
other equity
instruments
holders
Amounts of
share-based
payments
113
2019 Annual Report of Luzhou Laojiao Co., Ltd.
recognized in
owners' equity
Others
-2,270,3
(3)Profit -2,270,366,
66,337.
distribution 337.80
80
Withdrawal of
surplus reserves
Profit distributed to -2,270,3
-2,270,366,
owners (or 66,337.
337.80
shareholders) 80
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 losse s
Carry-forward of
retained earnings
from changes in
defined benefit
plans
Carry-forward of
retained earnings
from other
comprehensive
income
Others
(5) Special
reserves
Withdrawal for the
period
Use for the period
114
2019 Annual Report of Luzhou Laojiao Co., Ltd.
(6) Others
4. Balance as at 1,464,7 11,892,
3,706,816 192,332,7 1,464,752 18,721,348,
31 December of 52,476. 694,057
,950.12 38.05 ,476.00 697.73
the current year 00 .56
For the year ended 31 December 2018
Monetary Unit: CNY
Year 2018
Other equity
Other
instruments Less： Total
Item Share Capital Compre Special Surplus Undistrib
Preferr Perpet Treasury Other shareholder
capital reserv e hensive reserv e reserv e uted profit
ed ual Other stock s' equity
Income
stock bond
1. Balance as at 1,464,7
3,535,39 169,812, 1,464,75 8,558,902, 15,193,617,
31 December of 52,476.
7,623.93 111.20 2,476.00 441.80 128.93
last year 00
Plus:
adjustments for
changes in
accounting
policies
Adjustments for
correction of
accounting errors
in prior year
Others
2. Balance as at 1,464,7
3,535,39 169,812, 1,464,75 8,558,902, 15,193,617,
January 1 of the 52,476.
7,623.93 111.20 2,476.00 441.80 128.93
current year 00
3.Increases/dec
reases in the 171,419, -35,425, 727,041,7 863,035,260
current year (“-” 326.19 805.94 40.55 .80
for decreases)
(1) Other
-35,425, 2,557,982, 2,522,556,5
comprehensive
805.94 335.55 29.61
income
(2)Capital
contributed or
reduced by
owners
115
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Capital
contributions by
owners
Capital
contributions by
other equity
instruments
holders
Amounts of
share-based
payments
recognized in
owners' equity
Others
(3)Profit -1,830,940 -1,830,940,5
distribution ,595.00 95.00
Withdrawal of
surplus reserves
Profit distributed
-1,830,940 -1,830,940,5
to owners (or
,595.00 95.00
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 losse s
Carry-forward of
retained earnings
from changes in
defined benefit
plans
116
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Carry-forward of
retained earnings
from other
comprehensive
income
Others
(5) Special
reserves
Withdrawal for
the period
Use for the
period
171,419, 171,419,326
(6) Others
326.19 .19
4. Balance as at 1,464,7
3,706,81 134,386, 1,464,75 9,285,944, 16,056,652,
31 December of 52,476.
6,950.12 305.26 2,476.00 182.35 389.73
the current year 00
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 th e shareholding ratio of SASAC of
Luzhou decreased from 69.56% to 60.43%.
117
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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 L uzhou 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 Investment Group Co., Ltd. (hereinafter referred to as the "Xinglu Group").
After the transfer, Laojiao Group, Xinglu Group, and SASAC of Luzhou respectively held 300,000,000
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.
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, r aising
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 th e 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).
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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 27 April
2020.
3.6 Consolidated financial statement scope and their changes
(1) The 29 subsidiaries included in the consolidated financial statements for the current period are listed
as follows:
Name of subsidiary Abbreviation Shareholding proportion(%) Voting rights (%)
Direct Indirect
Luzhou Laojiao Brewing Co., Ltd. Brewing company 100.00 100.00
Luzhou Boda Brewing Co., Ltd. Note 1 Boda brewing 100.00 100.00
Luzhou Red Sorghum Modern Agricultural Development Co., 60.00 60.00
Red sorghum company
Ltd.
Sales Company of Luzhou Laojiao Co., Ltd. Sales company 100.00 100.00
Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. Nostalgic company 100.00 100.00
Luzhou Laojiao Custom Liquor Co., Ltd. Note 2 Custom liquor company 15.00 60.00
Luzhou Laojiao Selected Supply Chain Management Co., Selected company 100.00 100.00
Ltd.
Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. Guangxi Imported Liquor 100.00 100.00
Industry
Luzhou Dingli Liquor Industry Co., Ltd. Dingli company 100.00 100.00
Luzhou Dingyi Liquor Industry Sales Co., Ltd. Dingyi company 100.00 100.00
Luzhou Dinghao Liquor Industry Sales Co., Ltd. Dinghao company 100.00 100.00
Luzhou Laojiao Import and Export trade Co., Ltd. Import and export 100.00 100.00
company
Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. Boda marketing 75.00 75.00
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Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. Bosheng Hengxiang 100.00 100.00
Luzhou Laojiao fruit wine industry Co., Ltd. Note 3 Fruit wine industry 41.00 60.00
Mingjiang Co., Ltd. Mingjiang company 54.00 54.00
Luzhou Pinchuang Technology Co., Ltd. Note 4 Pinchuang company 100.00 100.00
Luzhou Laojiao Tourism Culture Co., Ltd. Tourism culture 100.00 100.00
Luzhou Laojiao International Development（Hong Kong）Co., Hong Kong company 55.00 55.00
Ltd.
Luzhou Laojiao Commercial Development (North America) Commercial 100.00 100.00
Co., Ltd. Development
Luzhou Laojiao Electronic Commerce Co., Ltd. Electronic Commerce 90.00 90.00
Luzhou Laojiao Whitail Innovative Electronic Commerce Co., Whitail Electronic 100.00 100.00
Ltd. Commerce
Luzhou Laojiao Selected Electronic Commerce Co., Ltd. Selected Electronic 100.00 100.00
Commerce
Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note 5 Whitail liquor industry 35.00 60.00
Chengdu Tianfu Panda Whitail Liquor Industry Co., Ltd. Note Panda Whitail 60.00 60.00
5
Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co., Whitail Tongdao Uncle 70.00 70.00
Ltd. Note 5
Luzhou Baonuo Biotechnology Co., Ltd. Baonuo biotechnology 100.00 100.00
Luzhou Laojiao Health Liquor Industry Co.,Ltd. Health Liquor Industry 100.00 100.00
Luzhou Laojiao Health Sales Co., Ltd. Health sales 100.00 100.00
Note 1: Due to changes in market of liquor industry, for further integration of internal resources, the Company has decided
to cancel Boda brewing. Boda brewing has obtained the notice of approval of cancellation registration on 25 March 2019.
Note 2 : Although the Company holds less than 51% of the equity of Custom liquor company, amo ng 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 3: Although the Company holds less than 51% of the equity of Fruit wine industry, 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 Fruit wine industry, so it is included in the scope of
consolidation.
Note 4: On 28 December 2018, the 5 th meeting of the ninth board of directors reviewed and approved the “Proposal on
related party transaction regarding partial equity acquisition of Luzhou Pinchuang Technology Co., Ltd. By 30 June 2019,
the part of the purchase has been completed and Pinchuang company became the Company’s wholly-owned subsidiary.
Note 5: Although the Company holds less than 51% of the equity of Whitail liquor industry and its subsidiaries, among the
five members of the board of directors, the Company has sent three people. The Company has actual control over Whitail
liquor industry and its subsidiaries, so it is included in the scope of consolidation.
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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
Guangxi Luzhou Laojiao Imported Wine & Spirits Establishment
Industry Co., Ltd.
Luzhou Laojiao Whitail Innovative Electronic Establishment
Commerce Co., Ltd.
Luzhou Laojiao Selected Electronic Commerce Co., Establishment
Ltd.
Chengdu Tianfu Panda Whitail Liquor Industry Co., Establishment
Ltd.
Luzhou Whitail Tongdao Uncle Constellation Wine Establishment
Sales Co., Ltd.
Luzhou Laojiao Commercial Development (North Establishment
America) Co., Ltd.
(3) Liquidation and cancellation for subsidiaries in this period
Name Reason
Luzhou Boda Brewing 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 resu lting in significant doubts
over going concern for at least 12 months.
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5. Significant accounting policies and accounting estimates
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 31 December 2019, and the Company’s and results of
operations and cash flows for the year then ended. In addition, 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 securitie s 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
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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.
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 an 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 s hall be adjusted. The income,
expenses and profits of the newly acquired subsidiaries from the beginning to the end of the reporting
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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
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 u ltimate 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 sha ll 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 subsidiar ies, 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 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
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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 whe n 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 pro fit 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 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
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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 ne t 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;
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
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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 ha nd 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 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 si milar 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
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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 ca sh 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
A financial instrument is a contract that gives rise to a financial asset of one entity and a f inancial liability
or equity instrument of another entity. When the Company becomes a party to a financial instrument
contract, the related financial asset or financial liability should be recognized.
(1) Classification, recognition and measurement of financial assets
Based on the business model of financial asset management and the contract cash flow characteristics
of financial assets, the Company classifies financial assets into: financial assets measured at amortized
cost; financial assets measured at fair value with their changes included into other comprehensive
income; and financial assets measured at fair value with their changes included into current
profits/losses.
At the initial recognition, financial assets are measured at fair value. For financial assets measured at fair
value with their changes included into current profits/losses, the expenses involved in the transaction are
directly recorded into current profits/losses; for other financial liabilities, the expenses involved in the
transaction are recorded into the initially recognized amount.
1) Financial assets measured at amortized cost
The business model in which the Company manages financial assets measured at amortized cost aims
to receive contract cash flow. Furthermore, the characteristics of the contract cash flow of such financial
assets are consistent with basic borrowing and lending arrangements, which means that cash flow
generated on a specific date serves only as payment for principal and interests based on the amount of
unpaid principal. The Company adopts the effective interest method for such financial interests,
performs subsequent measurement of them at amortized cost, and includes the gains or losses from
derecognition, changes or impairment of them into current profits/losses.
2) Financial assets measured at fair value with their changes included into other comprehensive i ncome
The business model in which the Company manages such financial assets both aims to receive contract
cash flow and for the purpose of sale. Furthermore, the characteristics of the contract cash flow of such
financial assets are consistent with basic borrowing and lending arrangements. The Company measure
such financial assets at fair value and include their changes into other comprehensive income, but
record impairment losses or gains, exchange gains or losses and interest income calculated in the
effective interest method into current profits/losses.
At the initial recognition, the Company may specify non-trading equity instrument investment as a
financial asset measured at fair value with its changes included into other comprehensive income and
should recognize the dividend income according to regulations; the specification is irrevocable once
made. When the financial asset is derecognized, the cumulative gains or losses previously included into
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other comprehensive income should be transferred into retained earnings.
3) Financial assets measured at fair value with their changes included into current profits/losses
For financial assets other than the above financial assets measured at amortized cost and financial
assets measured at fair value with their changes included into other comprehensive income, the
Company classifies them as financial assets measured at fair value with their changes included into
current profits/losses. In addition, at the initial recognition, the Company specifies partial finan cial assets
as financial assets measured at fair value with their changes included into current profits/losses, in order
to eliminate or substantially reduce accounting mismatch. For such financial assets, the Company
performs subsequent measurement using fair value and records changes in the fair value into current
profits/losses.
(2) Classification, recognition and measurement of financial liabilities
At their initial recognition, financial liabilities are divided into financial liabilities measured at f air value
with their changes included into current profits/losses and other financial liabilities. For financial liabilities
measured at fair value with their changes included into current profits/losses, the expenses involved in
the transaction are directly recorded into the current profits/losses. For other financial liabilities, the
expenses involved in the transaction are recorded into the initially recognized value.
1) Financial liabilities measured at fair value with their changes included into current profits/losses
Financial liabilities measured at fair value with their changes included into current profits/losses include
trading financial liabilities (including derivatives classified as financial liabilities) and the financial
liabilities specified to be measured at fair value with their changes included into current profits/losses at
the initial recognition.
Trading financial liabilities (including derivatives classified as financial liabilities) are subsequently
measured at fair value, with changes in fair value recorded into current profits/losses, except for those
related to hedge accounting.
For those specified as financial liabilities measured at fair value with their changes included into current
profits/losses, changes in the fair value of such liabilities caused by changes in the Company’s own
credit risk should be included into other comprehensive income. In derecognition of such liabilities,
cumulative changes in their value caused by the Company’s own credit risk that have been recorded in to
other comprehensive income should be transferred into retained earnings. Other changes in their fair
value should be recorded into current profits/losses. If treatment of the impact of the Company’s own
credit risk changes of such financial liabilities in the above manner causes or expands accounting
mismatch in profits/losses, the Company will include all gains or losses of such financial liabilities
(including the amount of the impact of the Company’s own credit risk changes) into current
profits/losses.
2) Other financial liabilities
Financial liabilities other than those formed from the transfer of financial assets not meeting
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derecognition conditions or continuous involvement into transferred financial assets and those outside
financial guarantee contracts are classified as financial liabilities measured at amortized cost. Such
financial liabilities should be subsequently measured at amortized cost and the gains or losses from
derecognition or amortization should be included into current profits/losses.
(3) Recognition basis and measurement method of transfer of financial assets
If a financial asset meets any of the following conditions, it shall be derecognized: 1)The contractual right
for collecting the cash flow of the financial asset has been termin ated; 2)The financial asset has been
transferred and almost all the risks and remunerations in respect of the ownership of the financial asset
has been transferred to the transferee; 3)The financial asset has been transferred, and although the
enterprise neither transfers nor retains almost all the risks and remunerations in respect of the ownership
of the financial asset, it has abandoned its control over the asset.
If the enterprise neither transfers nor retains almost all the risks and remunerations in respect of the
ownership of the financial asset and does not abandon its control over the asset, the involved financial
asset shall be recognized according to the level of continuous involvement of the transferred financial
asset and the relevant liabilities shall be recognized accordingly. The level of continuous involvement of
the transferred financial asset refers to the level of risk faced by the enterprise due to changes in the
value of the financial asset.
If the overall transfer of the financial asset meets the recognition conditions, the difference between the
carrying value of the transferred financial asset as well as the consideration received from the transfer
and the cumulative amount of fair value changes originally-recorded into other comprehensive incomes
shall be recorded into the current profits/losses.
If partial transfer of the financial asset meets the recognition conditions, the carrying value of the
transferred financial asset shall be apportioned at the relative fair value between the derecognition and
underecognition part. The difference between the summation of the consideration received from the
transfer and the cumulative amount of fair value changes originally-recorded into other comprehensive
incomes that should be apportioned to the derecognition part and the apportioned aforementioned
carrying value shall be recorded into the current profits/losses.
For a financial asset sold with the right of recourse or with the transfer of the financial asset endorsement,
the Company shall decide whether almost all the risks and remunerations in respect of the ownership of
the financial asset should be transferred. If they are transferred, the financial asset shall be
derecognized; if they are retained, the financial asset shall not be derec ognized; if they are neither
transferred nor retained, the Company will continue to decide whether the enterprise should retain
control over the asset and perform the accounting treatment according to the principles stated in
previous paragraphs.
(4) Derecognition of financial liabilities
When the current obligation of a financial liability (or a part of it) is relieved, the Company will
derecognize the financial liability (or the part of it). When the Company (borrower) signs an agreement
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with a lender to replace an original financial liability in the form of bearing a new financial liability and the
contract terms for the new financial liability differ from those for the original in substance, the original
financial liability should be derecognized and the new one should be recognized. When the Company
makes substantial changes to the contract terms of an original financial liability (or a part of it), the
original financial liability should be derecognized and a new financial liability should be recog nized
according to the amended contract terms.
When a financial liability (or a part of it) is derecognized, the Company will include the difference
between its carrying value and the consideration paid (including non -cash assets or liabilities borne that
are transferred out) into current profits/losses.
(5) Offsetting of financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial liabilities and
may execute the legal right currently and simultaneously, the Company plans to settle or simultaneously
encash the financial assets in net amounts and pay off the financial liabilities, the financial assets and
the financial liabilities which are presented in the net amount after the mutual offset in the balance sheet.
Other than that, they shall be presented separately in the balance sheet without the mutual offset.
(6) Method of determining the fair value of financial assets and financial liabilities
Fair value refers to the price that a market participant can receive for selling an asset or transferring a
liability in an orderly transaction on the measurement date. For an existing financial instrument in an
active market, the Company adopts the quotations in the active market to determine its fair value.
Quotations in the active market refer to prices that can be easily obtained from exchanges, brokers,
industrial associations and pricing service institutions and represent the actual prices in the market
transactions happening in a fair trade. For a non-existing financial instrument in an active market, the
Company adopts the valuation technique to determine its fair value. The valuation technique includes
references to familiar situations and the prices used by the parties voluntarily parti cipating in the recent
market transactions, as well as references to the present fair value of other financial instruments of the
same nature, discounted cash flow method and options pricing model. In the valuation, the Company
uses a valuation technique that is applicable in the current situation with sufficient data available and
other information support, chooses input values that are consistent with the asset or liability
characteristics considered by market players in related asset or liability transactions, and make
maximum effort to use related observable input values on a preferential basis. When it is unable or
unfeasible to obtain related observable input values, unobservable will be used.
(7) Equity instruments
Equity instruments refer to the contracts that can prove the Company’s residual equity of assets after the
deduction of all liabilities. The Company’s issuance (including refinancing), repurchase, sale or
cancellation of equity instruments serve as the change treatment of equity. Transacti on expenses
related to the equity transactions are deducted from the equity. The Company does not recognize
changes in the fair value of equity instruments.
Dividends from the Company’s equity instruments distributed during the validity (including the “i nterests”
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from instruments classified as equity instruments) are treated as profit distribution.
(8) Impairment of financial instruments
Based on the expected credit loss, the Company treats financial assets measured at amortized cost and
debt instrument investment measured at fair value with its changes included into other comprehensive
income by impairment and recognizes the provision for loss.
Credit loss means the difference between all contract cash flow discounted at the original effective
interest rate to be received according to contracts and all contract cash flow expected to be received,
namely, the present value of all cash shortage. For a financial asset with credit impairment purchased by
or originated from the Company, it should be discounted by the effective interest rate after credit
adjustment to the financial asset.
For accounts receivable that do not contain significant financing components, the Company adopts
simplified measurement to measure loss provisions according to the amount equivalent to the expected
credit loss for the entire duration.
For a financial asset other than those using the above simplified measurement, the C ompany assesses
on each balance sheet date whether its credit risk has substantially increased since the initial recognition.
If it has not and is in the first stage, the Company will measure the loss provision at the amount
equivalent to the expected credit loss for the next 12 months and calculate the interest income according
to the book balance and the effective interest rate; if it has substantially increased since the initial
recognition without credit impairment and is in the second stage, the Compan y will measure the loss
provision at the amount equivalent to the expected credit loss for the entire duration and calculate the
interest income according to the book balance and the effective interest rate; if credit impairment has
occurred since the initial recognition and is in the third stage, the Company will measure the loss
provision by the amount equivalent to the expected credit loss for the entire duration and calculate the
interest income according to the amortization cost and the effective inter est rate. For financial
instruments with low credit risks on balance sheet dates, the Company assumes that their credit risks
have not substantially increased since the initial recognition.
The Company assesses expected credit losses of financial instrume nts based on individual and group
assessment. The Company considers the credit risk characteristics of different customers and assesses
the expected credit losses of accounts receivable and other receivables based on account age portfolio.
When assessing expected credit losses, the Company considers reasonable and well-founded
information on past matters, present conditions and forecast of future economic conditions.
When it no longer reasonably expects to recover all or part of the contract cash flow of financial assets,
the Company will directly write down the book balance of such financial assets.
5.11 Notes receivable
The method of determining the expected credit loss of notes receivables and accounting treatment
method:
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Divide notes receivables into various portfolios according to common risk characteristics based on the
credit risk characteristics of acceptors and determine the accounting estimate policies of expected credit
loss:
Portfolio name Provision method
Bank acceptance bill The management evaluates that this type has low credit risk and its fixed bad
portfolio debt provision ratio is 0%.
Trade acceptance The provision for impairment is made according to the expected loss rate with
portfolio the same portfolio classification of accounts receivables
5.12 Accounts receivables
The method of determining the expected credit loss of accounts receivables and accounting treatment
method:
As for accounts receivables, regardless of whether there is a significant financing component, the
Company always measures the provision for loss based on the amount equivalent to the expected credit
loss over the entire life, and the resulting increase or reversal of provision for loss shall be included in the
current profit or loss as gains or losses on impairment. The accrual method is as follows:
(1) When there is objective evidence showing that an account receivable has incurred credit impairment,
the Company shall make bad debt provision for the account receivable and recognize the expected
credit loss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluated
at a reasonable cost, the Company shall divide the accounts receivables portfolio according to credit risk
characteristics and measure the expected credit loss based on portfolios.
Portfolio name Provision method
Risk portfolio Expected credit loss
Other portfolio No bad debt provision
Other portfolio refers to the normal intercourse funds among the Company and businesses under the
same control, the recovery of which are controllable with no risks. Thus, no bad debt provision was
made.
The Company combines the accounts receivables classified as risk portfolio in accordance with similar
credit risk characteristics (aging), and calculates the expected credit loss through the exposure at default
and expected credit loss rate over the entire life based on the current situation and prediction of future
economic situation consulting historical credit loss experience. The comparative table of the credit loss
rate is as follows:
Aging Expected loss provision rate %
Within 1 year 5
1-2 years 10
2-3 years 20
3-4 years 40
4-5 years 80
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Over 5 years 100
5.13 Accounts receivables financing
The accounts receivables financing of the Company refer to the notes receivables measured at fair value
through other comprehensive income on the balance sheet date. For more details, see Note 3 -10
Financial instruments.
5.14 Other receivables
The method of determining the expected credit loss of other receivables and accounting treatment
method:
As for other receivables, regardless of whether there is a significant financing component, the Company
always measures the provision for loss based on the amount equivalent to the expected credit loss over
the entire life, and the resulting increase or reversal of provision for loss shall be included in the current
profit or loss as gains or losses on impairment. The accrual method is as follows:
(1) When there is objective evidence showing that the other receivable has incurred credit impairment,
the Company shall make bad debt provision for the other receivable and recognize the expected credit
loss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluated
at a reasonable cost, the Company shall divide the other receivables portfolio according to credit risk
characteristics and measure the expected credit loss based on portfolios.
Portfolio name Provision method
Risk portfolio Expected credit loss
Other portfolio No bad debt provision
Other portfolio refers to the normal intercourse funds among the Company and businesses under the
same control, the recovery of which are controllable with no risks. Thus, no bad debt provision was
made.
The Company combines the other receivables classified as risk portfolio in accordance with similar credit
risk characteristics (aging), and calculates the expected credit loss through the exposure at default and
expected credit loss rate over the entire life based on the current situation and prediction of future
economic situation consulting historical credit loss experience. The comparative table of the credit loss
rate is as follows:
Aging Expected loss provision rate %
Within 1 year 5
1-2 years 10
2-3 years 20
3-4 years 40
4-5 years 80
Over 5 years 100
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5.15 Inventory
(1) Classification of inventory
Inventories are classified as: raw materials, goods in progress, semi-finished goods, stock commodities,
dispatched inventories, revolving materials (including packing materials and low-cost consumables).
(2) Measurement method of dispatched inventories
The standard cost is used for daily accounting of raw materials, and the difference of material cost
should be carried forward on a monthly basis to adjust the standard cost into the actual co st; 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 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.
5.16 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.
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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 c ontrol, 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.
Measurement of non-current assets or disposal groups held for sale
a. Initial measurement and subsequent measurement
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 th e 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 min us 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.
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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 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.
5.17 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.
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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 t he
book value of the final control party's consolidated financial statements. If the investee under business
combination 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 t he 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.
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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 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 pr ofits 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 par t 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
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recognized to the extent that book 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 invest ment 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.
5.18 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 .
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.
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 p rovide depreciation or
amortization and adjusts its book value based on the fair value of investment property at the balance
sheet date. The difference between the fair value and book value is recorded into current profit or loss.
(3) When the Company changes the use of investment property, the relevant investment property will be
transferred to other assets.
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5.19. 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
Depreciation Estimated useful Estimated residual Annual depreciation
Category
method life (Year) value rate (%) rate (%)
Buildings and Straight-line
Constructions 10－45 5 9.50－2.11
method
Straight-line
Special equipment 5－35 5 19.00－2.71
method
Universal Straight-line
equipment 4－25 5 23.75－3.80
method
Transportation Straight-line
equipment 6 5 15.83
method
Straight-line
Other equipment 4－16 5 23.75－5.94
method
Except for fixed assets still in use after full depreciation, the Company depreciates all fixed assets and
calculates the depreciation in the straight-line depreciation method.
Based on the nature and use of fixed assets, the Company determines their service life and estimated
net salvage value and reviews their service life, estimated net salvage value and depreciation method at
the end of the year. Changes in the service life, estimated net salvage value a nd depreciation method of
the same type of assets are treated as changes in accounting estimation.
The Company’s newly-built brewing production lines, packaging production lines and warehousing
assets, and the houses and buildings, special and general equipment formed thereof are obviously
different from the existing same types of assets and have obviously longer estimated service life than the
same types of fixed assets. The maximum years of depreciation for different types of the newly -built
fixed assets are as follows: 45 years for houses and buildings; 35 years for special equipment and 25
years for general equipment.
During the year, some of the Company’s projects in progress reached the expected usable state and
were transferred into fixed assets.
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(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.
Fixed assets acquired under financing lease is adapted 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. 20. Construction in progress
(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 c ost 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. 21. Borrowing costs
(1) Scope of borrowing costs and its capitalization conditions
The Company’s borrowing costs capitalized during period of capitalization are relevant loa n 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
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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 starte d.
(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 c onstructing 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 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 construct ed 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 t hree 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 par ts of the
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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. 22. 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 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
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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 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 t he 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. 23. 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 indiv idual 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 th e
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 appo rtion the adjusted
book value of the asset (deducting the expected net salvage value) within the remaining service life of
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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 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. 24. 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. 25. 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
a. 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 empl oyee
provides the service to the Company.
b. 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
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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 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. 26. Estimated liabilities
(1) Recognition criteria of estimated liabilities
If the contingent obligations meet the following conditions simultaneo usly, 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
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result in an outflow of economic benefits from the Company; The amount of the obliga tion 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 accordi ng 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. 27. 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.
(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
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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 cos ts 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 cap ital 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. 28. Revenue
Whether the Company has implemented the new revenue standards
Yes √ 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 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.
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(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 rend ering 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. 29. 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 live s (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 go vernment grants related to
assets;
Accounting method:
a. If it is used to compensate the Company’s relevant expenses or losses in future 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 cost s.
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
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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. 30. 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 condition s 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. 31. 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 rents and the residual rent is recognized into current profit or loss in each period of the lease
term.
b. The rents arising 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.
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b. As the lessor, it recognizes the difference between the total of minimum lease amount received and
residual amount not guaranteed and the present value of that as unrealized finance income. It
recognizes unrealized finance income as rent revenue in the perio d 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. 32 Income tax expense
The Company’s income tax is calculated in the balance sheet liability method.
The Company recognized deferred tax assets when both of the following conditions are met:
(1) Temporary differences are very likely to reverse in foreseeable future;
(2) It is very likely in the future that the taxable income amount can be obtained and used to offset the
deductible temporary differences, which is capped at the taxable income amount that is very likely to
obtain.
On the balance sheet date, the current income tax liabilities (or assets) formed in the current period and
previous periods are measured at the expected income tax amount payable (or returnable) calculated
according to tax laws. For deferred tax assets and deferred tax liabilities, in a ccordance with tax law,
they shall be measured at the applicable tax rate during the period of expected recovery of such assets
or satisfaction of such liabilities.
On the balance sheet date, the Company reviews the carrying values of deferred tax assets a nd
deferred tax liabilities. The Company’s current income tax and deferred tax will be treated as income tax
expenses or income, except for income tax from business combinations or transactions or matters
recognized directly in owners’ equity.
5. 33 Changes in significant accounting policies and accounting estimates
5.33.1. Changes in significant accounting policies
√Applicable N/A
Content and reason of changes Approval procedures Note
The Company started to
implement Accounting Standards
for Business Enterprises
No.22-Recognition and
Measurement of Financial
Instruments, Accounting
Approved on the 7 th Meeting of
Standards for Business
the 9th Board of Directors
Enterprises No.23-Transfer of
Financial Assets, Accounting
Standards for Business
Enterprises No.24-Hedge
Accounting and Accounting
Standards for Business
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Enterprises No.37-Presentation
of Financial Instruments
(hereinafter referred to as ”new
standards governing financial
instruments”) revised and issued
in March 2017 by the Ministry of
Finance from 1 January 2019.
Note 1
Notes of Revising and Printing
the Format of 2019 General
Enterprises Financial Statement
(CK [2019] No. 6) was issued by
the Ministry of Finance on 30 April
2019, and the Notes of Revising
and Printing the Format of 2018
Approved on the 9 th Meeting of
General Enterprises Financial th
the 9 Board of Directors
Statement (CK [2018] No. 15)
issued by the Ministry of Finance
on 15 June 2018 was abolished
at the same time; according to the
Notes, the Company has revised
the format of financial statements.
Note 2
Note 1: The new standards governing financial instruments stipulated that on the implementation date of
new standards, the enterprises shall classify and measure the financial instruments in line with the
stipulations. As the data involved in comparative financial statements in the prior period are inconsistent
with the requirements of the new standard, the Company does no need to adjust the information during
the comparable period; the difference between the original book value of financial instruments and new
book value on the implementation date shall be included into the retained earnings, other
comprehensive income and other item of financial statements on 1 January 2019.
Note 2: The Company has revised and consolidated the format of financial statements, which the item
“notes receivable and accounts receivable” was divided into “note receivable” and “accounts receivable”,
and the item “notes payable and accounts payable” was divided into “notes payable” and “accounts
payable” as well; the Company has adjusted the comparative data during the comparable period
according to the document (CK [2019] No. 6); the change merely influenced the presentation of financial
statements, without impact on total assets, net assets and net profit.
There was no other change in significant accounting policies in the Reporting Period other than the
above changes.
5.33.2. Changes in significant accounting estimates
Applicable √ N/A
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
5.33.3. Adjustments to the financial statements at the beginning of the execution year of any new
standard governing financial instruments, revenue or leases from 2019
√Applicable N/A
Consolidated balance sheet
Monetary Unit: CN Y
Item 31 December 2018 1 January 2019 Adjusted
Current assets:
Cash and cash equivalents 9,367,386,627.68 9,367,386,627.68
Settlement reserves
Lending funds
Trading financial assets
Financial assets measured
at fair value through
current profit or loss
Derivative financial assets
Notes receivables 2,388,326,476.15 -2,388,326,476.15
Accounts receivables 10,333,728.87 10,333,728.87
Accounts receivables
2,388,326,476.15 2,388,326,476.15
financing
Prepayment 137,243,573.66 137,243,573.66
Premiums receivable
Reinsurance accounts
receivable
Reinsurance contract
reserve
Other receivables 166,525,010.16 166,525,010.16
Including：Interests
29,970,944.44 29,970,944.44
receivable
Dividends
receivable
Buying back the sale of
financial assets
Inventories 3,230,415,749.95 3,230,415,749.95
Contractual assets
Assets held for sale
Non-current assets due
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
within one year
Other current assets 194,237,237.02 194,237,237.02
Total current assets 15,494,468,403.49 15,494,468,403.49
Non-current assets:
Disbursement of loans and
advances
Investment in debt
obligations
Available-for-sale financial
275,819,448.46 -275,819,448.46
assets
Investment in other debt
obligations
Held-to-maturity
investments
Long-term receivables
Long-term equity
2,091,103,348.61 2,092,554,736.09 1,451,387.48
investments
Other equity instrument
327,036,804.62 327,036,804.62
investment
Other non-current financial
assets
Investment property
Fixed assets 1,029,666,915.47 1,029,666,915.47
Construction in progress 3,000,489,249.86 3,000,489,249.86
Productive biological
assets
Oil and gas assets
Right-to-use assets
Intangible assets 231,967,372.88 231,967,372.88
Development expenses
Goodwill
Long-term deferred
expenses
Deferred tax assets 436,434,961.24 436,434,961.24
Other non-current assets 44,979,896.41 44,979,896.41
Total non-current assets 7,110,461,192.93 7,163,129,936.57 52,668,743.64
Total assets 22,604,929,596.42 22,657,598,340.06 52,668,743.64
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Current liabilities:
Short-term loans
Borrowings from the
central bank
Loans from other banks
Trading financial liabilities
Financial liabilities
measured at fair value
through current profit or
loss
Derivative financial
liabilities
Notes payable
Accounts payable 1,292,050,954.06 1,292,050,954.06
Ad vance from customer 1,604,425,189.96 1,604,425,189.96
Contractual liabilities
Financial assets sold for
repurchase
Customers deposits and
deposits from banks and
other financial institutions
Customer brokerage
deposits
Securities underwriting
brokerage deposits
Employee benefits
268,092,193.50 268,092,193.50
payable
Taxes payable 1,648,028,076.07 1,648,028,076.07
Other payable 602,887,024.88 602,887,024.88
Including：Interests
payable
Dividends
payable
Handling charges and
commissions payable
Reinsurance accounts
payable
Liabilities held for sale
156
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Non-current liabilities due
within one year
Other current liabilities
Total current liabilities 5,415,483,438.47 5,415,483,438.47
Non-current liabilities:
Insurance contract
reserves
Long-term loans
Bonds payable
Including: Preference
shares
Perpetual
bonds
Lease liabilities
Long-term payables
Long-term payroll
payables
Accrued liabilities
Deferred income 20,981,155.00 20,981,155.00
Deferred tax liabilities 44,252,383.96 57,056,723.00 12,804,339.04
Other non-current liabilities
Total non-current liabilities 65,233,538.96 78,037,878.00 12,804,339.04
Total liabilities 5,480,716,977.43 5,493,521,316.47 12,804,339.04
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 3,716,675,022.48
Less: Treasury stock
Other comprehensive
136,592,276.64 170,231,845.40 33,639,568.76
income
Special reserves
Surplus reserves 1,464,752,476.00 1,464,752,476.00
General risk reserve
Undistributed profits 10,181,899,224.84 10,188,124,060.68 6,224,835.84
157
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Total equity attributable to
owners of the parent 16,964,671,475.96 17,004,535,880.56 39,864,404.60
company
Non-controlling interests 159,541,143.03 159,541,143.03
Total owners' equity 17,124,212,618.99 17,164,077,023.59 39,864,404.60
Total liabilities and owners'
22,604,929,596.42 22,657,598,340.06 52,668,743.64
equity
Statement for adjustment
The Ministry of Finance revised the Accounting Standards for Business Enterprises No.22-Recognition
and Measurement of Financial Instruments, Accounting Standards for Business Enterprises
No.23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No.24-Hedge
Accounting and Accounting Standards for Business Enterprises No.37-Presentation of Financial
Instruments on 31 March 2017, and required the domestic listed companies to implement from 1
January 2019.
On 25 April 2019, the 7 th Meeting of the 9 th Board of Directors reviewed and approved the Proposal on
Implementation of Newly-revised Accounting Standards in 2019, which decided to implement the above
new standards governing financial instruments from 1 January 2019. As for cumulative effects arising
from the first execution of new standards, the Company adjusted the retained earnings and the amount
of other relevant items in financial statements at the beginning of 2019, while the comparative financial
statements of 2018 were not rearranged.
Balance sheet of parent company
Monetary Unit: CN Y
Item 31 December 2018 1 January 2019 Adjusted
Current assets:
Cash and cash equivalents 6,189,473,157.83 6,189,473,157.83
Trading financial assets
Financial assets measured
at fair value through
current profit or loss
Derivative financial assets
Notes receivables
Accounts receivables 67,698.43 67,698.43
Accounts receivables
financing
Prepayment 7,212,512.57 7,212,512.57
Other receivables 4,657,727,046.02 4,657,727,046.02
Including: Interests
29,970,944.44 29,970,944.44
receivable
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Dividends
receivable
Inventories 383,404.53 383,404.53
Contractual assets
Assets held for sale
Non-current assets due
within one year
Other current assets 1,761,708.33 1,761,708.33
Total current assets 10,856,625,527.71 10,856,625,527.71
Non-current assets:
Investment in debt
obligations
Available-for-sale financial
275,490,526.83 -275,490,526.83
assets
Investment in other debt
obligations
Held-to-maturity
investments
Long-term receivables
Long-term equity
5,494,914,376.71 5,496,365,764.19 1,451,387.48
investments
Other equity instrument
326,707,882.99 326,707,882.99
investment
Other non-current financial
assets
Investment property
Fixed assets 701,870,689.02 701,870,689.02
Construction in progress 511,528,278.96 511,528,278.96
Productive biological
assets
Oil and gas assets
Right-to-use assets
Intangible assets 224,039,846.61 224,039,846.61
Development expenses
Goodwill
Long-term deferred
expenses
159
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Deferred tax assets 71,119,598.96 71,119,598.96
Other non-current assets
Total non-current assets 7,278,963,317.09 7,331,632,060.73 52,668,743.64
Total assets 18,135,588,844.80 18,188,257,588.44 52,668,743.64
Current liabilities:
Short-term loans
Trading financial liabilities
Financial liabilities
measured at fair value
through current profit or
loss
Derivative financial
liabilities
Notes payables
Accounts payable 38,984,611.48 38,984,611.48
Ad vance from customer 12,229,153.62 12,229,153.62
Contractual liabilities
Employee benefits
67,383,911.98 67,383,911.98
payable
Taxes payable 115,424,262.03 115,424,262.03
Other payables 1,788,068,491.88 1,788,068,491.88
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 2,022,090,430.99
Non-current liabilities:
Long-term loans
Bonds payable
Including: Preference
shares
Perpetual
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
bonds
Lease liabilities
Long-term payables
Long-term payroll
payables
Accrued liabilities
Deferred income 12,593,640.12 12,593,640.12
Deferred tax liabilities 44,252,383.96 57,056,723.00 12,804,339.04
Other non-current liabilities
Total non-current liabilities 56,846,024.08 69,650,363.12 12,804,339.04
Total liabilities 2,078,936,455.07 2,091,740,794.11 12,804,339.04
Shareholders' equity
Share capital 1,464,752,476.00 1,464,752,476.00
Other equity instruments
Including: Preference
shares
Perpetual bonds
Capital reserves 3,706,816,950.12 3,706,816,950.12
Less: Treasury stock
Other comprehensive
134,386,305.26 168,375,068.80 33,988,763.54
income
Special reserves
Surplus reserves 1,464,752,476.00 1,464,752,476.00
Undistributed profits 9,285,944,182.35 9,291,819,823.41 5,875,641.06
Total owners' equity 16,056,652,389.73 16,096,516,794.33 39,864,404.60
Total liabilities and owners'
18,135,588,844.80 18,188,257,588.44 52,668,743.64
equity
Statement for adjustment
The Ministry of Finance revised the Accounting Standards for Business Enterprises No.22-Recognition
and Measurement of Financial Instruments, Accounting Standards for Business Enterprises
No.23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No.24-Hedge
Accounting and Accounting Standards for Business Enterprises No.37-Presentation of Financial
Instruments on 31 March 2017, and required the domestic listed companies to implement from 1
January 2019.
On 25 April 2019, the 7 th Meeting of the 9 th Board of Directors reviewed and approved the Proposal on
Implementation of Newly-revised Accounting Standards in 2019, which decided to implement the above
new standards governing financial instruments from 1 January 2019. As for cumulative effects arising
161
2019 Annual Report of Luzhou Laojiao Co., Ltd.
from the first execution of new standards, the Company adjusted the retained earnings and the amount
of other relevant items in financial statements at the beginning of 2019, while the comparative financial
statements of 2018 were not rearranged.
5.33.4. Retrospective restatement of previous comparative data due to the execution of any new
standard governing financial instruments or lease from 2019
√ Applicable N/A
According to relevant stipulations in new standard governing financial instruments, for cumulative effects
arising from the first execution of new standard, the Company adjusted the amount of relevant items in
financial statements at the beginning of 2019, and didn’t adjust the comparative financial statements of
2018.
The impact on relevant items in consolidated balance sheet at the period-begin by implementing new
standard governing financial instruments is as follows:
Item Balance on 31 December 2018 Adjusted Balance on 1 January 2019
Notes receivable 2,388,326,476.15 -2,388,326,476.15
Accounts receivable 2,388,326,476.15 2,388,326,476.15
financing
Long-term equity 2,091,103,348.61 1,451,387.48 2,092,554,736.09
investments
Available-for-sale financial 275,819,448.46 -275,819,448.46
assets
Other equity instrument 327,036,804.62 327,036,804.62
investment
Deferred tax liabilities 44,252,383.96 12,804,339.04 57,056,723.00
Other comprehensive 136,592,276.64 33,639,568.76 170,231,845.40
income
Undistributed profit 10,181,899,224.84 6,224,835.84 10,188,124,060.68
The impact on relevant items in balance sheet of parent company at the period-begin by implementing
new standards governing financial instruments is as follows:
Item Balance on 31 December 2018 Adjusted Balance on 1 January 2019
Long-term equity 5,494,914,376.71 1,451,387.48 5,496,365,764.19
investments
Available-for-sale financial 275,490,526.83 -275,490,526.83
assets
Other equity instrument 326,707,882.99 326,707,882.99
investment
Deferred tax liabilities 44,252,383.96 12,804,339.04 57,056,723.00
Other comprehensive 134,386,305.26 33,988,763.54 168,375,068.80
income
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Undistributed profit 9,285,944,182.35 5,875,641.06 9,291,819,823.41
6. Taxes
6.1. Major tax types and rates
Tax type Tax base Tax rate
Value-added tax Taxable sales income 16%, 13%, 11%, 10%, 9%, 6%
Urban maintenance and construction
Taxable turnover tax 7%
tax
Corporate income tax Taxable income 25%, 15%, 16.5%, 9%, 0%
Consumption tax (based on price) Liquor tax price or ex-factory price 20%
Consumption tax (based on quantity) Quantity of wine CNY 1.00/kg
Education surcharge Taxable turnover tax 3%
Local education surcharge Taxable turnover tax 2%
Original value of the property*70%;
Property ta x 1.2%, 12%
house rent
Land use tax Land area CNY 5-18.00/m 2
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)
16.5%
Co., Ltd.
Mingjiang Co., Ltd. 21%-40%
Luzhou Laojiao Commercial Development (North America)
21%-40%
Co., Ltd.
Luzhou Red Sorghum Modern Agricultural Development
Exempted from corporate income tax
Co., Ltd.
Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. 9%
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
163
2019 Annual Report of Luzhou Laojiao Co., Ltd.
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., L td.,
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) According to Article 27 of the Corporate Income Tax Law of the People's Republic of China and
Article 86, Item 1 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.
(3) 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.
(4) According to the Article 3, Item 7 of the Notice on Revise of Interim Measures of Accelerating the
Development in Headquarters Economy of China-Malaysia Qinzhou Industrial Park , till 31 December
2020, the enterprises in the Qinzhou Industrial Park that enjoy 15% of tax rate of Western Development
with the half reduction in the tax period of preferential policies shall enjoy the local share of corporate
income tax exemption (namely 40% of corporate income tax was exempted, and the proportion adjusted
by the state shall be executed according to new proportion); Guangxi Luzhou Laojiao Imported Liquor
Industry Co., Ltd., the wholly-owned subsidiary of the Company, pays corporate income tax at the rate of
9% according to the tax preference policies.
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
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Cash 28,776.67 4,420.76
Bank deposit 9,744,243,225.66 9,364,716,075.36
Other cash and cash equivalents 9,394,524.45 2,666,131.56
Total 9,753,666,526.78 9,367,386,627.68
Including: Total deposit outbound 61,031,136.88 57,439,384.10
Total amount with restriction to
1,400,000.00 1,400,000.00
use due to mortgage, pledge or freeze
164
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Other statements:
Note 1: The total amount of funds deposited outbound is CNY 61,031,136.88, including: Luzhou Laojiao
International Development (Hong Kong) Co., Ltd., the holding subsidiary of the Company, with a total
amount of CNY 58,205,456.37, and CNY 2,825,680.51 of Mingjiang Co., Ltd., the holding subsidiary of
the Company.
Note 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
7,994,524.45 deposited by the Company's holding subsidiary, Luzhou Laojiao Electronic Commerce Co.,
Ltd. on the third-party e-commerce platform.
7.2. Accounts receivable
7.2.1. Classification of accounts receivable
Monetary Unit: CN Y
Closing Balance Opening Balance
Provision for bad Provision for bad
Book balance Book balance
Type debt Book debt Book
Proporti Proporti value Proportio Proportio value
Amount Amount Amount Amount
on on n n
Including:
Accounts
receivable tested 19,266,7 100.00 972,883. 18,293,9 10,922,5 588,862. 10,333,72
5.05% 100.00% 5.39%
for impairment by 97.97 % 74 14.23 91.46 59 8.87
the portfolio
Including:
Accounts
receivable tested
for impairment on 19,266,7 100.00 972,883. 18,293,9 10,922,5 588,862. 10,333,72
5.05% 100.00% 5.39%
the portfolio with 97.97 % 74 14.23 91.46 59 8.87
characteristics of
credit risk
19,266,7 100.00 972,883. 18,293,9 10,922,5 588,862. 10,333,72
Total 1 5.05% 100.00% 5.39%
97.97 % 74 14.23 91.46 59 8.87
Note: 1. The closing book balance at the period-end increased CNY 8,344,206.51 compared with the
period-begin, with an increase by 76.39%, primarily driven by the influence of the credit policy to
overseas business in the Hong Kong company.
Accounts receivable tested for impairment on the portfolio: characteristics of credit risk
Monetary Unit: CN Y
165
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Closing Balance
Name
Book balance Provision for bad debt Proportion
Risk portfolio 19,266,797.97 972,883.74 5.05%
Total 19,266,797.97 972,883.74 --
Statements for determining the portfolio:
The Company will combine the accounts receivable divided into credit risk portfolio according to similar
characteristics of credit risk (aging), and calculate expected credit loss with the reference of historical
credit loss experience and combination of present condition and prediction of future financial situation,
as well as through default risk exposure and expected credit loss rate in the duration.
Statements for determining the portfolio:
Please refer to the relevant information of disclosure of provision for bad debt of other accounts
receivable if adopting the general mode of expected credit loss to withdraw provision for bad debt of
accounts receivable
Applicable √ N/A
Disclosure by aging
Monetary Unit: CN Y
Aging Book balance
Within 1 year (including 1 year) 19,195,772.10
1-2 years 11,100.41
2-3 years 59,925.46
Total 19,266,797.97
7.2.2. Provision and recovery for bad and doubtful debt in the current period
Allowance of provision for bad debt:
Monetary Unit: CN Y
Current Period
Opening
Type Reversal or Closing Balance
Balance Allowance Write-off Other
recovery
Provision
allowance by 588,862.59 384,021.15 972,883.74
risk portfolio
Total 588,862.59 384,021.15 972,883.74
There is no significant provision in accounts receivable reversed or recovered in the reporting period.
7.2.3. Top five entities with the largest balances of accounts receivable
Monetary Unit: CN Y
166
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Proportion to total closing Closing balance of provision
Company name Closing Balance
balance of accounts receivable for bad debt
China Duty Free Group
9,518,039.01 49.40% 475,901.95
Co., Ltd.
Zhejiang Tmall
6,175,675.26 32.05% 308,783.76
Technology Co., Ltd.
China Duty Free
1,155,684.03 6.00% 57,784.20
International Co., Ltd.
Beijing Jiuxian Network
812,753.36 4.22% 40,637.67
Technology Co., Ltd.
Hangzhou Youzan
253,617.22 1.32% 12,680.86
Technology Co., Ltd.
Total 17,915,768.88 92.99%
7.3. Accounts receivable financing
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Bank acceptance bill 2,393,797,259.80 2,388,326,476.15
Total 2,393,797,259.80 1 2,388,326,476.15
Note: 1. The business mode to manage notes receivable aims to collect contract cash flow as well as to
sell the financial assets, and thus the notes receivable is presented as accounts receivable financing;
due to the short term of notes receivable less than 1 year, and the sales time, sales price and sale
proportion cannot be estimated reliably, the face value is regarded as the fair value o f accounts
receivable financing by the Company.
Changes in accounts receivable financing in the reporting period and fair value:
Applicable √ N/A
Please refer to the relevant information of disclosure of impairment provision of other accounts
receivable if adopting the general mode of expected credit loss to withdraw impairment provision of
accounts receivable financing.
Applicable √ N/A
Other statements:
(1) There is no account receivable financing pledged.
(2) There is CNY 4,270,000,000 as follows of accounts receivable financing 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
Bank acceptance bill 4,270,000,000.00
167
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Subtotal 4,270,000,000.00
Note: 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.
(3) There are no accounts receivable financing transferred to accounts receivable due to the
non-performance of the agreements by the issuers.
(4) There are no accounts receivable financing actually written off during the reporting period.
7.4. Prepayment
7.4.1. Aging analysis
Monetary Unit: CN Y
Closing Balance Opening Balance
Aging
Amount Proportion Amount Proportion
Within 1 year 150,806,477.44 99.33% 130,442,246.83 95.04%
1-2 years 861,490.00 0.57% 6,801,326.83 4.96%
2-3 years 150,481.04 0.10%
Total 151,818,448.48 -- 137,243,573.66 --
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.
7.4.2. Top five entities with the largest balances of prepayment
Company Name Closing Balance Proportion to the total closing
balance of prepayment
New Shottes Brook Private Company 32,149,113.33 21.18%
Shanghai Merlot Ad vertising Co., Ltd. 27,769,124.00 18.29%
Australian Tennis Co., Ltd. 9,208,237.50 6.07%
Shanghai Endeavor Culture Development Co., 8,005,949.99 5.27%
Ltd.
Luzhou Western Gas Co., Ltd. 8,000,000.00 5.27%
Subtotal 85,132,424.82 56.08%
7.5 Other receivables
Monetary Unit: CN Y
168
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Item Closing Balance Opening Balance
Interest receivable 45,636,744.44 29,970,944.44
Other receivables 114,116,677.20 136,554,065.72
Total 159,753,421.64 166,525,010.16
7.5.1. Interest receivable
7.5.1.1. Classification of interest receivable
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Fixed deposits 45,636,744.44 1 29,970,944.44
Total 45,636,744.44 29,970,944.44
Note: 1. The closing balance increased CNY 15,665,800.00 compared with opening balance, with an
increase by 52.27%, mainly due to the increase of interest income on fixed deposit resulting from stock
funds in the reporting period.
7.5.2. Other receivables
7.5.2.1. Other receivables disclosed by nature
Monetary Unit: CN Y
Nature Closing book balance Opening book balance
Intercourse funds 27,025,658.11 26,300,395.29
Petty cash 2,184,482.07 2,963,363.02
Saving deposits involving contract
287,400,297.52 307,456,275.25
disputes
Other 1,902,662.52 6,805,467.11
Total 318,513,100.22 343,525,500.67
7.5.2.2. Allowance of provision for bad debt
Monetary Unit: CN Y
First stage Second stage Third stage
Expected credit Expected loss in the Expected loss in the
Provision for bad debt Total
loss of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January
6,971,434.95 200,000,000.00 206,971,434.95
2019
169
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Balance of 1 January
2019 in the current —— —— —— ——
period
Allowance of the
234,313.59 234,313.59
current period
Verification of the
2,809,325.52 2,809,325.52
current period
Balance of 31
4,396,423.02 200,000,000.00 204,396,423.02
December 2019
Changes of book balance with significant amount changed of loss provision in the current period
Applicable √ N/A
Disclosure by aging
Monetary Unit: CN Y
Aging Book balance
Within 1 year (including 1 year) 24,393,757.76
1-2 years 2,325,254.36
2-3 years 414,000.00
Over 3 years 291,380,088.10
3-4 years 1,807,606.93
4-5 years 166,583.65
Over 5 years 289,405,897.52
Total 318,513,100.22
7.5.2.3. Provision and recovery for bad and doubtful other receivables in the current period
Allowance of provision for bad debt:
Monetary Unit: CN Y
Current Period
Opening
Type Reversal or Closing Balance
Balance Allowance Write-off Other
recovery
Other
receivables
tested for 200,000,000
200,000,000.00
impairment .00
individually
Note1
Other 6,971,434.9 234,313.59 2,809,325.5 4,396,423.02
170
2019 Annual Report of Luzhou Laojiao Co., Ltd.
receivables 5 2
tested for
impairment by
the portfolio
206,971,434 2,809,325.5
Total 234,313.59 204,396,423.02
.95 2
Note 1: In the 2014 Annual Report, the Company disclosed the information about three deposits
amounting to CNY 500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of China and
Nanyang Zhongzhou Sub-branch of Industrial and Commercial Bank of China. The deposits have lost
the nature of monetary fund due to their involvement in contract disputes and have thus been transferred
into “other receivables”. As of 31 December 2019, of the deposits involved in contract disputes, the
amount that was not recovered was CNY 287,400,297.52. Related attorneys of W&H Law Firm Chengdu
produced the Legal Opinions on the Allowance of Provision for Bad Debt of Luzhou Laojiao Co., Ltd. for
Abnormal Deposits in Three Places Including Changsha and Nanyang on 17 March 2020. According to
the opinions, “Whereas during the period from 25 March 2016 till this production of legal opinions on the
allowance proportion of provision for bad debt, there is no matter that occurred and affected or changed
the provision for bad debt, and thus the judgment on the allowance of provision for bad debt at CNY 200
million shall remain”. Refer to Note 12.2. for details.
Of which provision for bad debt with significant amount reversed or recovered:
There is no provision for bad debt with significant amount in other receivables reversed or recovered.
7.5.2.4. Other receivables actually written off during the reporting period
Monetary Unit: CN Y
Item Written off amount
Other receivables actually written off 2,809,325.52
Of which significant other receivables written off:
Monetary Unit: CN Y
Whether generated
Write-off
Company Name Nature Amount Reason from related
procedures
transaction
Managed
according to
China Real Estate
lawyer’s
Development
Intercourse funds 1,500,000.00 Irrecoverable investigation report No
Corporation
and approved by
Luzhou Branch
manager’s office of
the Company
Managed
Luzhou Tuojiang according to
Intercourse funds 1,233,098.00 Irrecoverable No
Market lawyer’s
investigation report
171
2019 Annual Report of Luzhou Laojiao Co., Ltd.
and approved by
manager’s office of
the Company
Total -- 2,733,098.00 -- -- --
7.5.2.5. Top five entities with the largest balances of the other receivables
Monetary Unit: CN Y
Provisioning
Proportion in total
Company Name Nature Closing Balance Aging amount at period
receivables
end
Agricultural Bank
of China Changsha
Yingxin
Sub-branch,
Saving deposits
Industrial and
involving contract 287,400,297.52 Over 5 years 90.23% 200,000,000.00
Commercial Bank
disputes
of China Nanyang
Zhongzhou
Sub-branch and
another bank
Housing and
Urban-Rural
Development
Security deposit 3,052,930.23 Within 1 year 0.96% 152,646.51
Bureau of
Longmatan
District, Luzhou
Treasury payment
center of
Security deposit 1,828,350.00 Within 1 year 0.57% 91,417.50
Jiangyang District,
Luzhou
Luzhou Electric
Power Bureau of
Security deposit 1,520,000.00 3-4 years 0.48% 608,000.00
Longmatan
District, Luzhou
Administration
Bureau of
Construction Security deposit 1,043,000.00 Over 5 years 0.33% 1,043,000.00
Engineering of
Luzhou
Total -- 294,844,577.75 -- 92.57% 201,895,064.01
172
2019 Annual Report of Luzhou Laojiao Co., Ltd.
7.6 Inventories
Whether the Company has implemented the new revenue standards
Yes √ No
7.6.1. Categories of Inventories
Monetary Unit: CN Y
Closing Balance Opening Balance
Provision for Provision for
Category
Book Balance stock Book Value Book Balance stock Book Value
obsolescence obsolescence
Raw materials 59,935,022.20 59,935,022.20 68,423,897.18 68,423,897.18
Goods in
201,122,739.38 201,122,739.38 138,889,316.08 138,889,316.08
progress
1,136,393,394.7 1,136,393,394.7 1,181,824,032.2 1,181,824,032.2
Finished goods
3 3 1 1
Revolving
18,778,952.72 18,778,952.72 8,812,993.84 8,812,993.84
materials
Goods in transit 110,174,419.64 110,174,419.64 90,817,775.95 90,817,775.95
Self-made
2,114,830,563.6 2,114,830,563.6 1,741,647,734.6 1,741,647,734.6
semi-finished
6 6 9 9
goods
3,641,235,092.3 3,641,235,092.3 3,230,415,749.9 3,230,415,749.9
Total
3 3 5 5
7.6.2. 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.
7.6.3. 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.
7.6.4. Closing conditions of assets completed but not settled through construction contracts
Other statements:
There are no closing conditions of assets completed but not settled through construction contracts.
173
2019 Annual Report of Luzhou Laojiao Co., Ltd.
7.7. Other current assets
Whether the Company has implemented the new revenue standards
Yes √ No
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Value-added tax 112,912,411.46 121,918,815.13
Corporate income tax 78,049,453.69 70,659,379.26
Other taxes 4,212,183.42 1,659,042.63
Total 195,174,048.57 194,237,237.02
Other statements:
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.
7.8. Long-term equity investments
Monetary Unit: CN Y
Changes in current period Closing
Gain or Adjustm Balance
Opening Closing
loss ents of Cash Provision of
Balance Other Balance
Investee Decreas recogniz other divided for provision
(book Increase changes Other (book
e ed under compreh or profit impairme for
value) in equity value)
equity ensive declared nt impairme
method income nt
1. Joint Ventures
2. Associate
Huaxi
Securitie 2,076,74 148,787, 4,938,83 20,735,1 2,209,73 2,567,09
s Co., 8,196.31 121.31 0.87 66.94 8,981.55 8.80
Ltd.
Sichuan
Develop
ment
15,806,5 -2,823,7 12,982,7
Wine
39.78 95.61 44.17
Investme
nt Co.,
Ltd.
Sichuan
8,000,00 8,000,00
Tongnian
0.00 0.00
g Liquor
174
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Industry
Technolo
gy
Researc
h
Institute
Co., Ltd.
Note
2,092,55 8,000,00 145,963, 4,938,83 20,735,1 2,230,72 2,567,09
Subtotal
4,736.09 0.00 325.70 0.87 66.94 1,725.72 8.80
2,092,55 8,000,00 145,963, 4,938,83 20,735,1 2,230,72 2,567,09
Total
4,736.09 0.00 325.70 0.87 66.94 1,725.72 8.80
Other statements
On 10 September 2019, the Proposal on the Subsidiary Participating in the Investment to Establish
Sichuan Tongniang Liquor Industry Technology Research Institute Co., Ltd. was reviewed and approved
th th
at the 10 Meeting of the 9 Board of Directors of the Company. It was agreed that seven corporate
entities, including the Company’s subsidiary Luzhou Pinchuang Technology Co., Ltd. and Sichuan
Jingwei Education Management Group Co., Ltd. would jointly invest to establish Sichuan Tongniang
Liquor Industry Technology Research Institute Co., Ltd.. The registered capital of the company would be
CNY 50 million, with Pinchuang contributing CNY 20 million in the monetary form, accounting for 40% of
the equity. According to the resolution at the annual general meeting, all shareholders gave the consent
that the board of directors of the company would comprise five members, including two from Pinchuang,
one from Sichuan Jingwei Education Management Group Co., Ltd., one from Luzhou Liquor Industrial
Park Development and Investment Co., Ltd. and one from Sichuan Huayu Ruide Technology Co., Ltd..
The voting proportion of Pinchuang would be 40%, constituting significant influence, and thus the
accounting would be done in the equity method.
7.9. Other equity instrument investment
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Financial assets assigned measured
by fair value and the changes be
included in the current gains and
losses:
Including:
Guotai Junan Investment Management
22,611,834.24 22,611,834.24
Co., Ltd.
Guojiu Big Data Co., Ltd. 10,000,000.00 10,000,000.00
Sichuan Nitrocell Co., Ltd. 11,757,933.60 10,335,098.55
Luzhou Bank Co., Ltd. 89,076,363.20 102,337,356.16
175
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Guotai Junan Securities Co., Ltd. 217,756,674.52 180,423,594.04
Sichuan China Liquor Golden Triangle
Brand Operation Development Co.,
1,192,450.22 1,328,921.63
Ltd. and other equity instrument
investments
Total 352,395,255.78 327,036,804.62
Categories of non-trading equity instrument investment in the current period:
Monetary Unit: CN Y
Reason for
assigning to
Amount of other Reason of other
measure at fair
comprehensive comprehensive
Recognized value and
Accumulative Accumulative income income
Item dividends changes
gains losses transferred to transferred to
income recorded into
retained retained
other
earnings earnings
comprehensive
income
According to the
Shenzhen mode of
Xingangfeng managing
2,354,000.00
Development assets by
Co., Ltd. management
layer
According to the
mode of
Sichuan
managing
Deyang Jintai 2,000,000.00
assets by
Hotel
management
layer
According to the
mode of
Hainan Huitong
managing
International 1,000,000.00
assets by
Trust Company
management
layer
According to the
Guotai Junan
mode of
Investment
managing
Management
assets by
Co., Ltd.
management
176
2019 Annual Report of Luzhou Laojiao Co., Ltd.
layer
According to the
mode of
Guojiu Big Data managing
Co., Ltd. assets by
management
layer
Sichuan China According to the
Liquor Golden mode of
Triangle Brand managing
136,471.41
Operation assets by
Development management
Co., Ltd. layer
According to the
mode of
Sichuan
managing
Nitrocell Co., 85,995.53 10,727,933.60
assets by
Ltd.
management
layer
According to the
mode of
Luzhou Bank managing
5,424,000.00 37,956,363.20
Co., Ltd. assets by
management
layer
According to the
mode of
Guotai Junan
managing
Securities Co., 3,238,674.18 205,037,517.76
assets by
Ltd.
management
layer
Sichuan According to the
Zhonghe mode of
Tongchuang managing
200,000.00
Maca assets by
Investment Co., management
Ltd. layer
According to the
Luzhou
mode of
Enterprise
198,926.37 managing
Union Trading
assets by
Co., Ltd.
management
177
2019 Annual Report of Luzhou Laojiao Co., Ltd.
layer
According to the
mode of
Luzhou Zunchi
managing
Auto Service
assets by
Co., Ltd.
management
layer
7.10. Fixed assets
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Fixed assets 1,516,871,720.00 1,028,995,516.07
Disposal of fixed assets 1,993,677.91 671,399.40
Total 1,518,865,397.91 1,029,666,915.47
7.10.1. Details of fixed assets
Monetary Unit: CN Y
Buildings and Specialized General Transportation Other
Item Total
constructions equipment equipment equipment equipment
I. Original cost:
1.Opening 1,172,053,577.2 2,542,618,305.5
512,078,313.99 262,080,975.99 36,934,689.93 559,470,748.39
balance 5 5
2.Increase in
150,625,771.28 207,122,983.03 117,051,574.77 5,447,941.48 173,004,258.08 653,252,528.64
current period
(1) External
47,301,562.45 9,833,330.49 4,398,053.09 4,414,693.22 65,947,639.25
purchase
(2) Transfer
from
150,625,771.28 159,821,420.58 107,218,244.28 1,049,888.39 168,589,564.86 587,304,889.39
construction in
progress
(3) Increase
from business
combination
3.Decrease in
53,997,503.14 1,477,675.73 11,867,065.83 4,539,608.27 10,052,844.94 81,934,697.91
current period
(1) Disposal or 53,997,503.14 1,477,675.73 11,867,065.83 4,539,608.27 10,052,844.94 81,934,697.91
178
2019 Annual Report of Luzhou Laojiao Co., Ltd.
retirement
4.Closing 1,268,681,845.3 3,113,936,136.2
717,723,621.29 367,265,484.93 37,843,023.14 722,422,161.53
Balance 9 8
II. Accumulated
depreciation
1.Opening 1,512,999,849.4
604,436,216.79 465,805,851.13 172,225,392.15 30,583,944.02 239,948,445.32
Balance 1
2.Increase in
39,631,814.79 36,010,822.34 37,051,486.86 1,541,304.20 41,851,514.60 156,086,942.79
current period
(1) Provision 39,631,814.79 36,010,822.34 37,051,486.86 1,541,304.20 41,851,514.60 156,086,942.79
3.Decrease in
48,132,409.93 1,189,274.49 10,861,516.91 3,796,437.02 8,665,677.64 72,645,315.99
current period
(1) Disposal or
48,132,409.93 1,189,274.49 10,861,516.91 3,796,437.02 8,665,677.64 72,645,315.99
retirement
4.Closing 1,596,441,476.2
595,935,621.65 500,627,398.98 198,415,362.10 28,328,811.20 273,134,282.28
Balance 1
III. 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
4.Closing
622,940.07 622,940.07
Balance
IV. Book Value
1.Closing Book 1,516,871,720.0
672,123,283.67 217,096,222.31 168,850,122.83 9,514,211.94 449,287,879.25
Value 0
179
2019 Annual Report of Luzhou Laojiao Co., Ltd.
2.Opening Book 1,028,995,516.0
566,994,420.39 46,272,462.86 89,855,583.84 6,350,745.91 319,522,303.07
Value 7
7.10.2. Fixed assets without certification of right
Monetary Unit: CN Y
Reason for not having the certification
Item Book value
of right
The property ownership certificate has
not been processed yet for the
Buildings 28,149,660.22 historical reasons, and it plans to be
processed after gradually improving
procedures.
7.10.3. Disposal of fixed assets
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Disposal and retirement of assets 1,993,677.91 671,399.40
Total 1,993,677.91 671,399.40
7.11. Construction in progress
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Construction in progress 7,257,393,087.56 3,000,489,249.86
Total 7,257,393,087.56 3,000,489,249.86
7.11.1. Details of the construction in progress
Monetary Unit: CN Y
Closing Balance Opening Balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Technical
renovation 6,072,403,009.7 6,072,403,009.7 2,362,483,702.3 2,362,483,702.3
project of 1 1 9 9
brewing
Technical
8,079,135.92 8,079,135.92 2,639,877.96 2,639,877.96
renovation of
180
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Luzhou Laojiao
Intelligent
packaging
center
Construction
project of
Luzhou Laojiao
Liquor Culture 401,316,175.65 401,316,175.65 396,458,270.43 396,458,270.43
Museum and
supporting
facility
Improvement
and technical
renovation
project of 11,346,483.95 11,346,483.95
Luzhou Laojiao
production
supporting
Marketing
network
command
center office
220,539,935.89 220,539,935.89 41,727,132.77 41,727,132.77
area
reconstruction
and expansion
project
New model
application
project of
intelligent 189,417,456.65 189,417,456.65 41,628,781.02 41,628,781.02
production
workshop of
solid state liquor
Guojiao Culture
Park Qiankun
Wine Castle 229,262,370.65 229,262,370.65 2,800,622.50 2,800,622.50
Cultural Tourism
project
Technical
upgrading
2,006.06 2,006.06 7,019,543.87 7,019,543.87
project of
sewage station
181
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Luohan brewing
production
automation
669,025.61 669,025.61 18,143,603.80 18,143,603.80
equipment
renovation
project
Transformation
of production
line of Luzhou
Laojiao
17,329,425.02 17,329,425.02 60,095.77 60,095.77
packaging
workshop
(Huangyi North
District)
Other projects 107,028,062.45 107,028,062.45 127,527,619.35 127,527,619.35
7,257,393,087.5 7,257,393,087.5 3,000,489,249.8 3,000,489,249.8
Total 1
6 6 6 6
Note: 1.The closing balance increased CNY 4,256,903,837.70 compared with the opening balance, with
an increase by 141.87%, because of the increase in investment of the technical renovation project of
brewing.
7.11.2. Significant changes in construction in progress
Monetary Unit: CN Y
Proporti Includin
Capitali
on of Accumu g:
Increas Transfer zation
Openin Other accumul lative Capitali
e in into Closing Progres rate for Source
Item Budget g decreas ative capitaliz zed
current fixed Balance s (%) the of funds
Balance es project ed interest
period assets period
input in interest for the
(%)
budget period
Technic
al
Capital
renovati 7,414,2 2,362,4 4,000,2 6,072,4
290,287 11,815,1 11,815,1 raised
on 80,000. 83,702. 07,095. 03,009. 85.82% 85.00% 3.67%
,788.36 17.50 17.50 and
project 00 39 68 71
other
of
brewing
Technic
1,577,9
al 2,639,8 5,439,2 8,079,1
13,400. 0.51% 1.00% Other
renovati 77.96 57.96 35.92
00
on of
182
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Luzhou
Laojiao
Intellige
nt
packagi
ng
center
Constru
ction
project
of
Luzhou
Laojiao 1,500,0
396,458 4,857,9 401,316
Liquor 00,000. 26.75% 26.00% Other
,270.43 05.22 ,175.65
Culture 00
Museu
m and
supporti
ng
facility
Improve
ment
and
technica
l
renovati
on
888,544 11,346, 11,346,
project 1.28% 1.00% Other
,100.00 483.95 483.95
of
Luzhou
Laojiao
producti
on
supporti
ng
Marketi
ng
network
comma 271,500 41,727, 178,812 220,539
81.23% 85.00% Other
nd ,000.00 132.77 ,803.12 ,935.89
center
office
area
183
2019 Annual Report of Luzhou Laojiao Co., Ltd.
reconstr
uction
and
expansi
on
project
New
model
applicati
on
project
of
intellige
245,100 41,628, 147,788 189,417
nt 77.28% 80.00% Other
,000.00 781.02 ,675.63 ,456.65
producti
on
worksho
p of
solid
state
liquor
Guojiao
Culture
Park
Qiankun
337,885 2,800,6 226,461 229,262
Wine 67.85% 70.00% Other
,813.44 22.50 ,748.15 ,370.65
Castle
Cultural
Tourism
project
Technic
al
upgradi
ng 77,050, 7,019,5 43,209, 50,226, 2,006.0
65.19% 99.00% Other
project 000.00 43.87 449.99 987.80 6
of
sewage
station
Luohan
brewing
59,870, 18,143, 16,216, 33,690, 669,025
producti 83.96% 99.00% Other
000.00 603.80 244.31 822.50 .61
on
automat
184
2019 Annual Report of Luzhou Laojiao Co., Ltd.
ion
equipm
ent
renovati
on
project
Transfor
mation
of
producti
on line
of
Luzhou
57,774, 60,095. 39,396, 11,781, 10,345, 17,329,
Laojiao 68.29% 70.00% Other
100.00 77 441.57 660.36 451.96 425.02
packagi
ng
worksho
p
(Huang
yi North
District)
12,429, 2,872,9 4,673,7 7,150,3
385,987 10,345, 11,815,1 11,815,1
Total 917,413 61,630. 36,105. 65,025. -- -- --
,259.02 451.96 17.50 17.50
.44 51 58 11
7.12. Intangible assets
7.12.1. Details of intangible assets
Monetary Unit: CN Y
No-patent right Computer
Item Land use right Patent right Trademark right Total
technology software
I. Original cost
1. Opening
303,836,329.47 567,975.00 32,577,520.89 1,864,746.08 338,846,571.44
Balance
2. Increase in
105,912,993.40 1,132,075.44 8,078,043.80 50,000.00 115,173,112.64
current period
(1) Acquired 84,360,783.58 1,132,075.44 8,078,043.80 50,000.00 93,620,902.82
(2) Internal
developed
(3) Business
185
2019 Annual Report of Luzhou Laojiao Co., Ltd.
combination
(4) Transferred
from
21,552,209.82 21,552,209.82
construction in
progress
3. Decrease in
6,207,684.98 24,000.00 6,231,684.98
current period
(1) Disposal 6,207,684.98 24,000.00 6,231,684.98
4. Closing
403,541,637.89 1,700,050.44 40,655,564.69 1,890,746.08 447,787,999.10
Balance
II. Accumulated
amortization
1. Opening
87,906,483.14 423,796.46 17,038,895.83 1,510,023.13 106,879,198.56
Balance
2. Increase in
7,326,345.14 16,797.50 3,799,460.14 132,560.69 11,275,163.47
current period
(1) Provision 7,326,345.14 16,797.50 3,799,460.14 132,560.69 11,275,163.47
3. Decrease in
2,586,535.41 13,859.99 2,600,395.40
current period
(1) Disposal 2,586,535.41 13,859.99 2,600,395.40
4. Closing
92,646,292.87 440,593.96 20,838,355.97 1,628,723.83 115,553,966.63
Balance
III. Provision for
impairment
1. Opening
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
186
2019 Annual Report of Luzhou Laojiao Co., Ltd.
4. Closing
Balance
IV. Book Value
1. Closing Book 332,234,032.47
310,895,345.02 1,259,456.48 19,817,208.72 262,022.25 1
Value
2. Opening
215,929,846.33 144,178.54 15,538,625.06 354,722.95 231,967,372.88
Book Value
Note: 1. The closing balance increased CNY 100,266,659.59 compared with the opening balance, with
an increase by 43.22%, primarily driven by the impact of acquisition of and with CNY 84,360,783.58 in
the current period.
There is no proportion of intangible assets formed by internal development to the balance of intangible
assets at the period-end.
7.12.2. Details of land use right without the certification of right
Monetary Unit: CN Y
Reason for not having the certification
Item Book value
of right
The ownership certificate has not been
processed yet for the historical
Land use right 35,497.96
reasons, and it plans to be processed
after gradually improving procedures.
Other statements:
The net value of Luohan production area land is CNY 131,928.99, which has completed process of the
land property rights in the first half of 2019. As of the period -end, the net value of the rest land without
the certificate of right is CNY 35,497.96.
7.13. Long-term deferred expense
Monetary Unit: CN Y
Item Opening Balance Increase Amortization Other decrease Closing Balance
Improvement
expense of rented 955,342.52 26,537.29 928,805.23
fixed assets
Total 955,342.52 26,537.29 928,805.23
Other statements
The closing balance at the period-end is mainly the expense for the laboratory improvement in Chengdu
by operating lease.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
7.14. Deferred tax assets/ deferred tax liabilities
7.14.1. Deferred tax assets before offset
Monetary Unit: CN Y
Closing Balance Opening Balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
differences differences
Provision for asset
208,551,338.49 52,073,505.61 210,745,239.94 52,686,154.86
impairment
Unrealized profits from
2,194,391,801.31 548,597,950.33 1,309,793,977.06 327,531,965.78
internal transactions
Deductible losses 4,745,206.42 1,186,301.61 872,951.87 218,237.97
Impact from salary 269,597,906.46 66,865,466.60 201,262,655.64 50,030,751.13
Impact from deferred
23,845,000.00 5,961,250.00 18,840,778.20 4,555,670.74
earnings
Impact from fixed
277,518.07 45,790.48 145,146.51 23,949.17
assets depreciation
Impact from fair value
changes of other
5,689,397.78 1,422,349.44 5,552,926.37 1,388,231.59
equity instrument
investment
Total 2,707,098,168.53 676,152,614.07 1,747,213,675.59 436,434,961.24
7.14.2. Deferred tax liabilities before offset
Monetary Unit: CN Y
Closing Balance Opening Balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
differences differences
Fair value changes of
other equity instrument 253,721,814.56 63,430,453.64 228,226,891.99 57,056,723.00
investment
Total 253,721,814.56 63,430,453.64 228,226,891.99 57,056,723.00
7.14.3. Deferred tax assets or liabilities presented as net value after offset
Monetary Unit: CN Y
Closing offset amount Closing balance of Opening offset amount Opening balance of
Item
of deferred tax assets deferred tax assets or of deferred tax assets deferred tax assets or
188
2019 Annual Report of Luzhou Laojiao Co., Ltd.
and deferred tax deferred tax liabilities and deferred tax deferred tax liabilities
liabilities after offset liabilities after offset
Deferred tax assets 676,152,614.07 436,434,961.24
Deferred tax liabilities 63,430,453.64 57,056,723.00
7.14.4. Details of unrecognized deferred tax assets
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Deductible losses 16,684,718.93 17,608,147.09
Impact from employee benefits payable 3,997,637.66 1,618,142.01
Impact from provision for impairment of
8,007.14 5,096.46
assets
Impact from fair value changes of other
200,000.00 200,000.00
equity instrument investment
Total 20,890,363.73 19,431,385.56
7.14.5. Deductible losses from unrecognized deferred tax assets will due on the following years
Monetary Unit: CN Y
Year Closing Amount Opening Amount Notes
2019
2020 1,320,354.35 2,954,015.20
2021 2,942,475.67 8,109,464.53
2022 668,388.33 6,544,667.36
2023 760,000.23
2024 10,993,500.35
Total 16,684,718.93 17,608,147.09 --
7.15. Other non-current assets
Whether the Company has implemented the new revenue standards
Yes √ No
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Value-added tax to be deducted 4,314.05
Prepaid equipment and land expense 237,539,447.75 43,682,373.94
189
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Others 1,293,208.42
Total 237,539,447.75 44,979,896.41
Other statements:
The closing balance increased CNY 192,559,551.34 compared with the opening balance, with an
increase by 428.10%, mainly due to the impact of increase in the new prepayment on construction and
payment on land in the current period in the Brewing Company, a Company's subsidiary.
7.16. Accounts payable
7.16.1. Presentation of accounts payable
Monetary Unit: CN Y
Category Closing Balance Opening Balance
Materials and service expense 656,206,916.53 959,423,097.59
Engineering equipment expense 1,212,417,041.49 332,627,856.47
Total 1,868,623,958.02 1 1,292,050,954.06
Note: 1. The closing balance increased CNY 576,573,003.96 compared with the opening balance, with
an increase by 44.62%, mainly due to the successive investment in brewing technical renovation project
of capital raised project and the increase in engineering equipment expense payable.
7.17. Advance from customers
Whether the Company has implemented the new revenue standards
Yes √ No
7.17.1. Presentation of advances from customers
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Within 1 year 2,189,574,440.25 1,548,909,002.82
1-2 years 20,802,869.90 31,636,485.70
2-3 years 14,155,802.38 4,230,033.33
Over 3 years 19,909,531.11 19,649,668.11
Total 2,244,442,643.64 1 1,604,425,189.96
Note: 1. The closing balance increased CNY 640,017,453.68 compared with the opening balance, with
an increase by 39.89%, mainly due to the increase in the sales volume and the impact of corresponding
increase in payment of liquor sales in advance.
190
2019 Annual Report of Luzhou Laojiao Co., Ltd.
7.18. Employee benefits payable
7.18.1. Employee benefits payable shown as follows
Monetary Unit: CN Y
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
1. Short-term benefits 236,094,159.99 757,581,087.94 706,450,458.57 287,224,789.36
2. Post-employment
benefits- defined 31,989,061.98 103,208,722.92 80,405,858.30 54,791,926.60
contribution plans
3. Termination benefits 8,971.53 8,971.53
Total 268,092,193.50 860,789,810.86 786,856,316.87 342,025,687.49
7.18.2. Short-term employee benefits payable shown as follows
Monetary Unit: CN Y
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
1. Wages, bonuses,
200,721,738.21 574,691,016.42 576,099,632.91 199,313,121.72
allowances and grants
2. Employees’ welfare 53,898,804.41 53,898,804.41
3. Social insurance
14,111,862.70 33,676,427.92 28,306,766.35 19,481,524.27
premiums
Including: Medical
10,973,576.03 27,957,395.32 24,608,379.75 14,322,591.60
insurance premium
Work-related injury
1,416,940.47 2,590,934.45 1,700,567.22 2,307,307.70
insurance
Maternity insurance
1,721,346.20 3,128,098.15 1,997,819.38 2,851,624.97
premium
4. Housing funds 116,008.79 42,604,558.15 35,077,052.88 7,643,514.06
5. Labor union
expenditures and
21,144,550.29 52,710,281.04 13,068,202.02 60,786,629.31
employee education
funds
Total 236,094,159.99 757,581,087.94 706,450,458.57 287,224,789.36
7.18.3. Defined contribution plan shown as follows
Monetary Unit: CN Y
191
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
1. Basic endowment
17,763,604.32 78,306,031.58 55,421,509.20 40,648,126.70
insurance premium
2. Unemployment
7,159,873.96 2,533,558.86 1,997,307.73 7,696,125.09
insurance premium
3. Enterprise annuity 7,065,583.70 22,369,132.48 22,987,041.37 6,447,674.81
Total 31,989,061.98 103,208,722.92 80,405,858.30 54,791,926.60
7.19. Taxes payable
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Value-added tax 130,301,346.24 416,220,575.79
Consumption tax 706,805,251.73 544,950,527.72
Enterprise income tax 663,458,294.52 580,497,468.84
Individual income tax 24,337,261.47 9,702,128.37
Urban maintenance and construction
56,353,741.57 55,496,044.38
tax
Education surcharge 24,151,666.39 22,601,336.84
Local education surcharge 16,101,110.87 13,211,282.71
Property ta x 1,017,585.02 389,027.85
Stamp duty 438,646.53 4,300,446.09
Land use tax 9,891,132.70 616,031.18
Others 188,194.63 43,206.30
Total 1,633,044,231.67 1,648,028,076.07
7.20. Other payables
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Dividends payable 30,650,684.93
Other payables 668,291,714.44 602,887,024.88
Total 698,942,399.37 602,887,024.88
7.20.1. Interest payable
Monetary Unit: CN Y
192
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Item Closing Balance Opening Balance
Interest of corporate bonds 30,650,684.93
Total 30,650,684.93 1
Note: 1. The Company has obtained approval from China Securities Regulatory Commission with the
document “ZJXK [2019] No. 1312” for public issue of corporate bonds capped at CNY 4 billion.
According to the Announcement on the Public Issuance of Corporate Bonds (Phase I) to Eligible
Investors by Luzhou Laojiao Co., Ltd. in 2019, the Company’s public issue of corporate bonds to eligible
investors in 2019 shall be capped at CNY 2.5 billion (inclusive of CNY 2.5 billion) with an issue price of
CNY 100 per bond through off-market inquiry and allotment of institutional investors. The period of the
issue started on 27 August 2019 and ended on 28 August 2019; the final amount actually issued was
CNY 2.5 billion and the final stated interest rate was 3.58%.
Information of significant overdue but unpaid interest:
There is no significant overdue but unpaid interest.
7.20.2. Other payables
7.20.2.1. Categories by nature
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Security deposit 637,133,029.48 543,339,684.25
Intercourse funds 5,009,860.11 28,265,598.58
Others 26,148,824.85 31,281,742.05
Total 668,291,714.44 602,887,024.88
7.21. Bonds payable
7.21.1. Bonds payable
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Corporate bonds in 2019 (Phase I) 2,490,883,676.39
Total 2,490,883,676.39
7.21.2. Increase/decrease of bonds payable (excluding other financial instrument classified as
financial liabilities such as preferred shares and perpetual bonds)
Monetary Unit: CN Y
193
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Amortiza
Withdra
Issued in tion of Repaym
wal of
Bond Par Issuing Issuing Opening the premium ent in the Closing
Duration interest
name value date amount Balance current and reporting Balance
by par
period depreciat period
value
ion
Corporat
27
e bonds 2,500,00 2,490,00 2,490,00 30,650,6 883,676. 2,490,88
August 3+2
in 2019 0,000.00 0,000.00 0,000.00 84.93 39 3,676.39
2019
(Phase I)
2,490,88
2,490,00 2,490,00 30,650,6 883,676.
Total -- -- -- 3,676.39
0,000.00 0,000.00 84.93 39 1
Note: 1. On 18 July 2019, the Company obtained approval from CSRC with the document “ZJXK [2019]
No. 1312” for public issue of corporate bonds capped at CNY 4 billion (inclusive of CNY 4 billion) to
eligible investors (hereinafter referred to as “the bonds”). The bonds would be issued in phase s without
guarantee. The Company’s public issue of corporate bonds (Phase I) to eligible investors in 2019
(hereinafter referred to as “the bonds of 2019”) started on 27 August 2019 and ended on 28 August 2019;
the final amount actually issued was CNY 2.5 billion and the final stated interest rate was 3.58%. The
short name of the bonds of 2019 was “19 Laojiao 01” and the code was “112959”. The nominal value of
each bond was CNY 100, issue quantity 25 million, and issue price CNY 100 per bond. The term of th e
bonds of 2019 is five years, with the issuer’s option for adjustment to the stated interest rate and the
investor’s option for sell back at the end of the third year.
7.22. Deferred income
Monetary Unit: CN Y
Increase in current Decrease in
Item Opening Balance Closing Balance Reason
period current period
Reception of
Government grants 20,981,155.00 17,020,000.00 14,156,155.00 23,845,000.00
financial allocation
Total 20,981,155.00 17,020,000.00 14,156,155.00 23,845,000.00 --
Details:
Monetary Unit: CN Y
Non-operati Other Cost
Increase in Related to
Liability Opening ng income income in reduction in Other Closing
current assets/
Item Balance in current current current changes Balance
period income
period period period
Demonstrat
Relevant to
ion and 2,380,000.00 20,000.00 20,000.00 2,380,000.00
asset
application
194
2019 Annual Report of Luzhou Laojiao Co., Ltd.
project of
intelligent
production
line for
liquor
brewing
and
qu-making
Standardiz
ation
1,890,376.8 Related to
demonstrati 1,890,376.80
0 assets
on base
project
The second
batch of
provincial
Relevant to
strategic 366,666.67 366,666.67
asset
emerging
industry
project
New mode
application
project of
digital Relevant to
3,465,000.00 3,465,000.00
workshop asset
for solid
state liquor
production
Solid state
brewing
engineering Related to
750,000.00 750,000.00
capacity assets
improveme
nt project
The
national
service
industry
Relevant to
developme 428,571.41 428,571.41
asset
nt guidance
fund central
base
constructio
195
2019 Annual Report of Luzhou Laojiao Co., Ltd.
n project
Luzhou Lao
jiao Co.,
Ltd.
1,150,000.0 Relevant to
Logistics 1,150,000.00
0 asset
business
spin-off
project
Constructio
n project of
spirit room
of Luzhou 7,000,000.0 Related to
7,000,000.00
Laojiao 0 assets
brewing
technical
renovation
Luzhou
Laojiao
automatic
wine
Relevant to
production 500,000.00 500,000.00
asset
line
technical
renovation
project
Luzhou
agricultural
science and
Related to
technology 600,000.00 600,000.00
assets
park
constructio
n project
Demonstrat
ion project
of science
and
technology
1,225,773.1 Relevant to
service of 1,225,773.16
6 asset
solid
brewing
industry for
food safety
and
196
2019 Annual Report of Luzhou Laojiao Co., Ltd.
efficient
production
Cooling
water
circulation
and waste
heat Related to
500,000.00 500,000.00
recovery of assets
steamed
bran in
brewing
workshop
Demonstrat
ion project
of
thermoche
mical
energy and
Relevant to
drying of 586,000.00 586,000.00
asset
brewing
waste and
coupling
technology
of brewing
process
Demonstrat
ion project
of
thermoche
mical soil
Related to
improveme 620,000.00 620,000.00
income
nt materials
and green
planting of
brewery
waste
Demonstrat
ion project
of biomass
Relevant to
gas 733,333.33 733,333.33
asset
technology
and
equipment
197
2019 Annual Report of Luzhou Laojiao Co., Ltd.
industrializa
tion from
solid waste
of brewing
Brewing
wastewater 10,000,000. Related to
10,000,000.00
treatment 00 assets
project
Luzhou-flav
or liquor
brewing
intelligent 4,000,000.0 Relevant to
4,000,000.00
workshop 0 asset
new mode
application
project
Other
projects - 1,785,433.6 Related to
1,785,433.63
related to 3 assets
assets
7.23. Share capital
Monetary Unit: CN Y
Increases/decreases in the current period (+, -)
Conversion of
Opening Closing
Issuance of reserves
Balance Bonds share Others Subtotal Balance
new shares funds into
shares
Total number 1,464,752,47 1,464,752,47
of shares 6.00 6.00
7.24. Capital reserves
Monetary Unit: CN Y
Increase in current Decrease in current
Item Opening Balance Closing Balance
period period
Share premium (capital
3,536,865,466.83 6,102,040.65 3,542,967,507.48
premium)
Other capital reserves 179,809,555.65 179,809,555.65
Total 3,716,675,022.48 6,102,040.65 3,722,777,063.13
198
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Statements of capital reserves include increase or decrease changes of various categories and reasons
of changes in the current period:
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 Pinchuang Technology continues to calculate from
the purchase date when the company acquired a minority shareholding in the subsidiary company,
Pinchuang Technology.
7.25. Other comprehensive income
Monetary Unit: CN Y
Current Period
Less:
Previousl
Less:
y Amount
Previously
Amount recognize attribute
recognized Amount
in current d in other to
Opening in other Less: attribute Closing
Item period compreh non-contr
Balance comprehens Income to parent Balance
before ensive olling
ive income tax company
income income sharehold
transferred after tax
tax transferre ers after
to profit and
d to tax
loss
retained
earnings
I. Other comprehensive income
166,805,47 25,358,4 6,339,61 19,018,8 185,824
that will not be reclassified into
4.21 51.16 2.79 38.37 ,312.58
profit and loss
Fair value changes of other 166,805,47 25,358,4 6,339,61 19,018,8 185,824
equity instrument investment 4.21 51.16 2.79 38.37 ,312.58
II. Other comprehensive
3,426,371. 6,080,40 5,566,44 513,962. 8,992,8
income that will be reclassified
19 9.53 6.80 73 17.99
into profit and loss
Including: Other
comprehensive income that will 1,220,399. 4,938,83 4,938,83 6,159,2
be reclassified into profit and 81 0.88 0.88 30.69
loss under equity method
Difference from conversion of
2,205,971. 1,141,57 627,615. 513,962. 2,833,5
financial statements in foreign
38 8.65 92 73 87.30
currency
170,231,84 31,438,8 6,339,61 24,585,2 513,962. 194,817
Total
5.40 60.69 2.79 85.17 73 ,130.57
199
2019 Annual Report of Luzhou Laojiao Co., Ltd.
7.26. Surplus reserves
Monetary Unit: CN Y
Increase in current Decrease in current
Item Opening Balance Closing Balance
period 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 shall not be drawn
when the accumulated amount of the statutory surplus reserve has reached 50% of the registered
capital.
7.27. Undistributed profits
Monetary Unit: CN Y
Item Current Period Previous Period
Undistributed profit before adjustment at the
10,181,899,224.84 8,527,196,810.86
end of the last year
Total adjustment for undistributed profit at the
6,224,835.84
beginning of year
Undistributed profit after adjustment at the
10,188,124,060.68 8,527,196,810.86
beginning of year
Plus: Net profit attributable to owners of the
4,641,988,857.03 3,485,643,008.98
parent company for the current period
Ordinary share dividends payable 2,270,366,337.80 1,830,940,595.00
Undistributed profits at the end of the period 12,559,746,579.91 10,181,899,224.84
List of adjustment of opening retained profits:
1) CNY 6,224,835.84 opening retained profits was affected by retrospective adjustment conducted
according to the Accounting Standards for Business Enterprises and relevant new regulations.
2) CNY opening retained profits was affected by changes in accounting policies.
3) CNY opening retained profits was affected by correction of significant accounting errors.
4) CNY opening retained profits was affected by changes in combination scope arising from same
control.
5) CNY opening retained profits was affected totally by other adjustments.
7.28. Operating revenue and cost of sales
Monetary Unit: CN Y
Item Current Period Previous Period
200
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Revenue Cost of sales Revenue Cost of sales
Primary business 15,615,719,102.43 2,974,484,362.13 12,859,523,825.56 2,878,994,470.11
Other business 201,215,170.43 90,933,686.25 195,941,935.99 55,007,388.80
Total 15,816,934,272.86 3,065,418,048.38 13,055,465,761.55 2,934,001,858.91
Whether the Company has implemented the new revenue standards
Yes √ No
7.29. Business taxes and surcharges
Monetary Unit: CN Y
Item Current Period Previous Period
Consumption tax 1,614,253,353.53 1,254,699,216.54
Urban maintenance and construction
194,163,333.35 186,133,761.82
tax
Educational surcharge 83,212,857.10 79,725,865.40
Property ta x 10,863,342.07 11,252,344.25
Land use tax 8,802,817.64 9,618,415.36
Stamp duty 7,717,838.58 11,077,748.47
Local education surcharge 55,475,238.14 53,171,925.46
Others 1,369,864.82 155,775.67
Total 1,975,858,645.23 1,605,835,052.97
7.30. Selling and distribution expenses
Monetary Unit: CN Y
Item Current Period Previous Period
Ad vertising promotion and marketing
3,308,474,818.22 2,641,767,107.45
expense
Transportation and storage costs 267,723,621.05 215,414,715.67
Others 609,903,714.32 535,539,609.21
Total 4,186,102,153.59 3,392,721,432.33
7.31. General and administrative expenses
Monetary Unit: CN Y
Item Current Period Previous Period
Employee compensation 416,563,694.87 354,105,514.18
201
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Depreciation and amortization 123,738,753.48 136,785,444.52
Management fee and service expense 70,060,721.26 55,198,156.70
Others 218,581,855.31 176,359,857.40
Total 828,945,024.92 722,448,972.80
7.32. Research and development expenses
Monetary Unit: CN Y
Item Current Period Previous Period
Comprehensive research and
71,643,099.77 62,172,210.70
development expenses
Total 71,643,099.77 62,172,210.70
7.33. Financial expenses
Monetary Unit: CN Y
Item Current Period Previous Period
Interest expenses 139,603,113.82 64,698,037.12
Less: Interest income 344,656,931.22 280,805,447.66
Losses from currency exchange -1,922,431.98 -731,529.96
Handling charges 1,891,755.69 1,772,457.71
Total -205,084,493.69 -215,066,482.79
7.34. Other income
Monetary Unit: CN Y
Item Current Period Previous Period
Government grants 43,319,756.65 22,342,598.30
Individual income tax commission
649,545.42 1,749,728.51
refund
7.35. Investment income
Monetary Unit: CN Y
Item Current Period Previous Period
Investment income from long-term equity
145,963,325.70 88,881,022.50
investments under the equity method
Investment income gained during the
9,112,541.00
period of holding the available-for-sale
202
2019 Annual Report of Luzhou Laojiao Co., Ltd.
financial assets
Investment income gained during the
period of holding other equity instrument 8,748,669.71
investment
Total 154,711,995.41 97,993,563.50
Other statements:
There is no major restriction on the repatriation of the Company's investment income.
7.36. Credit impairment loss
Monetary Unit: CN Y
Item Current Period Previous Period
Bad debt loss of other receivables -234,313.59
Bad debt loss of accounts receivable -384,021.15
Total -618,334.74
7.37. Assets impairment loss
Whether the Company has implemented the new revenue standards
Yes √ No
Monetary Unit: CN Y
Item Current Period Previous Period
I. Bad debt loss 2,035,339.62
Total 2,035,339.62
7.38. Gains from disposal of assets
Monetary Unit: CN Y
Item Current Period Previous Period
Gains from disposal of non-current
27,180,182.25 -492,389.13
assets
Including: Gains from disposal of fixed
14,030,349.78 -492,389.13
assets
Gains from disposal of
13,149,832.47
intangible assets
7.39. Non-operating income
Monetary Unit: CN Y
203
2019 Annual Report of Luzhou Laojiao Co., Ltd.
The amount included in the
Item Current Period Previous Period extraordinary gains and
losses of the current period
Compensation for default 29,331,754.71 26,772,376.92 29,331,754.71
Gains from damage
retirement of non-current 84,375.58 84,375.58
assets
Others 14,891,627.20 4,460,100.29 14,891,627.20
Total 44,307,757.49 31,232,477.21 44,307,757.49
7.40. Non-operating costs
Monetary Unit: CN Y
The amount included in the
Item Current Period Previous Period extraordinary gains and
losses of the current period
Donation 55,224,710.00 32,585,518.55 55,224,710.00
Losses from damage
retirement of non-current 4,053,075.34 13,393,602.05 4,053,075.34
assets
Others 508,720.12 3,549,328.49 508,720.12
Total 59,786,505.46 49,528,449.09 59,786,505.46
7.41. Income tax expense
7.41.1. Statement of income tax expense
Monetary Unit: CN Y
Item Current Period Previous Period
Current period income tax 1,701,264,224.25 1,173,293,516.03
Deferred income tax -239,683,534.98 -25,073,818.91
Total 1,461,580,689.27 1,148,219,697.12
7.41.2. Adjustment for accounting profit and income tax expense
Monetary Unit: CN Y
Item Current Period
Total profit 6,103,816,191.68
Income tax e xpenses determined by statutory/applicable 1,525,954,047.92
204
2019 Annual Report of Luzhou Laojiao Co., Ltd.
tax rate
Impact from subsidiaries’ different tax rates -4,736,962.49
Impact from adjust for impact from income tax e xpense in
13,839,831.13
previous period
Impact from non-taxable income -41,585,497.67
Impact from non-deductible costs, expenses and losses 8,026,376.03
Impact from deductable losses of unrecognized deferred
-26,726,526.34
income tax at the beginning of the reporting period
Impact from deductible temporary difference or losses due
2,891,592.65
to unrecognized deferred tax asset in current period
Impact from research and development expense deduction -16,082,171.96
Income tax e xpense 1,461,580,689.27
7.42. Other comprehensive income
Details in Note 5.25. Other comprehensive income.
7.43. Notes to the statement of cash flow
7.43.1. Cash received from other operation activities
Monetary Unit: CN Y
Item Current Period Previous Period
Government grants 46,183,601.65 23,331,024.45
Interest income from bank deposit 328,991,131.22 263,400,471.52
Others 252,962,046.83 195,862,065.97
Total 628,136,779.70 482,593,561.94
7.43.2. Cash paid for other operating activities
Monetary Unit: CN Y
Item Current Period Previous Period
Cash paid for expenses 3,270,452,860.33 3,076,367,890.52
Payment of tourism bureau deposit 1,200,000.00
Total 3,270,452,860.33 3,077,567,890.52
7.43.3. Cash paid for other investing activities
Monetary Unit: CN Y
205
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Item Current Period Previous Period
Cash paid for buying equity of
10,149,100.00 9,604,800.00
subsidiary
Total 10,149,100.00 9,604,800.00
7.44. Supplementary information to statement of cash flow
7.44.1. Supplementary information to statement of cash flow
Monetary Unit: CN Y
Item Current Period Previous Period
1. Reconciliation of net profit to cash flow
-- --
from operating activities:
Net profit 4,642,235,502.41 3,510,465,888.43
Plus: Provision for asset impairment 618,334.74 -2,035,339.62
Depreciation of fixed asset, oil and gas
156,086,942.79 154,991,709.23
assets and productive biological assets
Amortization of intangible assets 11,275,163.47 9,059,775.10
Amortization of long-term deferred
26,537.29
expense
Losses from disposal of fixed assets,
intangible assets and other long-term -27,180,182.25 492,389.13
assets (Gains use “-”)
Losses from retirement of fixed assets
3,968,699.76 13,393,602.05
(Gains use “-”)
Financial expenses (Gains use “-”) 137,680,681.84 63,966,507.16
Losses on investments (Gains use “-”) -154,711,995.41 -97,993,563.50
Decrease in deferred income tax assets
-239,717,652.83 -25,073,818.91
(Increase uses “-”)
Decrease in inventories (Increase use
-410,819,342.38 -418,549,226.69
“-”)
Decrease in operating receivables
-21,852,590.05 233,990,726.21
(Increase use “-”)
Increase in operating payables
744,009,104.48 855,207,369.65
(Decrease use “-”)
Net cash flows from operating activities 4,841,619,203.86 4,297,916,018.24
2. Significant investing and financing
-- --
activities not involving cash:
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
3.Net change in cash and cash
-- --
equivalents:
Closing balance of cash 9,752,266,526.78 9,365,986,627.68
Less: Opening balance of cash 9,365,986,627.68 8,449,422,154.91
Net change in cash and cash equivalents 386,279,899.10 916,564,472.77
7.44.2. Composition of cash and cash equivalent
Monetary Unit: CN Y
Item Opening Balance Closing Balance
1. Cash 9,752,266,526.78 9,365,986,627.68
Including: Cash on hand 28,776.67 4,420.76
Unrestricted bank deposit 9,744,243,225.66 9,364,716,075.36
Other unrestricted cash and
7,994,524.45 1,266,131.56
cash equivalents
3. Closing balance of cash and cash
9,752,266,526.78 9,365,986,627.68
equivalents
Including: Cash and cash equivalent with
restriction to use of parent company and 1,400,000.00 1,400,000.00
subsidiaries
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.
7.45. Assets with restricted ownership or use rights
Monetary Unit: CN Y
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 --
7.46. Foreign currency transactions
7.46.1. Foreign currency transactions
Monetary Unit: CN Y
Item Closing Balance in Foreign Exchange Rate Closing Balance in CNY
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Currency
Cash at Bank and on Hand -- -- 189,983,949.92
Including: USD 26,555,613.02 6.97620 185,257,267.55
EUR 25,041.10 7.81550 195,708.72
HKD 4,718,143.04 0.89578 4,226,418.17
GBP 32,368.51 9.15010 296,175.10
AUD 1,715.78 4.88430 8,380.38
Accounts Receivable -- -- 19,246,231.88
Including: USD 47,330.54 6.97620 330,187.31
EUR
HKD 21,116,841.83 0.89578 18,916,044.57
Long-term Loans -- --
Including: USD
EUR
HKD
Other Receivables 3,288,597.93
Including: USD 2,107.00 6.97620 14,698.85
HKD 3,654,802.61 0.89578 3,273,899.08
Accounts Payable 8,581,256.24
Including: USD 46,209.75 6.97620 322,368.46
HKD 9,219,772.47 0.89578 8,258,887.78
Other Payables 27,118,301.10
Including: USD 148,747.31 6.97620 1,037,690.98
HKD 29,114,972.56 0.89578 26,080,610.12
7.46.2. 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 Currency in the registration
Hong Kong, China HKD
(Hong Kong) Co., Ltd. place
Mingjiang Co., Ltd. New York, USA USD Currency in the registration
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
place
7.47. Government grants
7.47.1. Details of government grants
Monetary Unit: CN Y
Amount included in profit or
Item Amount Presentation
loss of the current period
Related to assets 37,381,155.00 Deferred income 13,536,155.00
Related to income 620,000.00 Deferred income 620,000.00
Related to income 29,163,601.65 Other income 29,163,601.65
7.47.2. Return of government grants
Applicable √ N/A
Other statements:
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
Other statements:
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
Other statements:
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.
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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 se veral 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.
(1) The decrease of consolidated company at the period-end is deregistration of the subsidiary, Luzhou
Boda Brewing Co., Ltd.
(2) The increase of consolidated company at the period-end is establishment of subsidiaries via
investment including Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd., Chengdu Tianfu Panda
Whitail Liquor Industry Co., Ltd., Luzhou Whitail Tongdao Uncle Constellation Wine Sales Co., Ltd.,
Luzhou Laojiao Whitail Innovated Electronic Commerce Co., Ltd., Luzhou Laojiao Selected Electronic
Commerce Co., Ltd. and Luzhou Laojiao Commercial Development (North America) Co., Ltd.
9. Interests in other entities
9.1. Interests in subsidiaries
9.1.1. Group composition
Name of Major business Place of Nature of Shareholding Proportion Acquisition
Subsidiaries location registration business Direct Indirect method
Luzhou Laojiao Liquor
Brewing Co., Luzhou Luzhou manufacture 100.00% Investment
Ltd. and sales
Luzhou Boda
Brewing Co., Luzhou Luzhou Liquor sales 100.00% Investment
Ltd.
Luzhou Red
Sorghum Business
Agricultural
Modern combination
Luzhou Luzhou product planting 60.00%
Agricultural under common
and sales
Development control
Co., Ltd.
Sales Company Luzhou Luzhou Liquor sales 100.00% Investment
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
of Luzhou
Laojiao Co., Ltd.
Luzhou Laojiao
Nostalgic Liquor
Luzhou Luzhou Liquor sales 100.00% Investment
Marketing Co.,
Ltd.
Luzhou Laojiao
Custom Liquor Luzhou Luzhou Liquor sales 15.00% Investment
Co., Ltd.
Luzhou Laojiao
Selected Supply
Chain Luzhou Luzhou Liquor sales 100.00% Investment
Management
Co., Ltd.
Guangxi Luzhou
Laojiao Red wine
Imported Liquor Qinzhou Qinzhou production and 100.00% Investment
Industry Co., sales
Ltd.
Luzhou Dingli
Liquor Industry Luzhou Luzhou Liquor sales 100.00% Investment
Co., 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 Wine import and
Luzhou Luzhou 100.00% Investment
Export Trade export trade
Co., Ltd.
Luzhou Laojiao
Boda Liquor
Industry Luzhou Luzhou Liquor sales 75.00% Investment
Marketing Co.,
Ltd.
Luzhou Laojiao
Bosheng
Luzhou Luzhou Liquor sales 100.00% Investment
Hengxiang
Liquor Sales
211
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Co., Ltd.
Luzhou Laojiao
Fruit Wine
Luzhou Luzhou Fruit wine sales 41.00% Investment
Industry Co.,
Ltd.
Mingjiang Co.,
America America Liquor sales 54.00% Investment
Ltd.
Luzhou
Technology
Pinchuang
Luzhou Luzhou development 100.00% Investment
Technology Co.,
and service
Ltd.
Luzhou Laojiao
Liquor sales,
Tourism Culture Luzhou Luzhou 100.00% Investment
tourism
Co., Ltd.
Luzhou Laojiao
International
Development Hong Kong Hong Kong Wine sales 55.00% Investment
(Hong Kong)
Co., Ltd.
Luzhou Laojiao
Commercial
Business
Development America America 100.00% Investment
development
(North America)
Co., Ltd.
Luzhou Laojiao
Electronic
Luzhou Luzhou Wine sales 90.00% Investment
Commerce Co.,
Ltd.
Luzhou Laojiao
Whitail
Innovated
Luzhou Luzhou Wine sales 100.00% Investment
Electronic
Commerce Co.,
Ltd.
Luzhou Laojiao
Selected
Electronic Luzhou Luzhou Wine sales 100.00% Investment
Commerce Co.,
Ltd.
Luzhou Laojiao
Luzhou Luzhou Wine sales 35.00% Investment
Whitail Liquor
212
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Industry Co.,
Ltd.
Chengdu Tianfu
Panda Whitail
Chengdu Chengdu Wine sales 60.00% Investment
Liquor Industry
Co., Ltd.
Luzhou Whitail
Tongdao Uncle
Constellation Luzhou Luzhou Wine sales 70.00% Investment
Wine Sales Co.,
Ltd.
Luzhou Baonuo Fermented
Biotechnology Luzhou Luzhou product 100.00% Investment
Co., Ltd. manufacture
Luzhou Laojiao Health care Business
Health Liquor wine combination
Luzhou Luzhou 100.00%
Industry manufacture under common
Co.,Ltd. and sales control
Luzhou Laojiao Business
Health Sales Health care combination
Luzhou Luzhou 100.00%
Co., Ltd. wine sales under common
control
Statement for that the proportion of share-holding is different from the proportion of voting rights:
As the Note 3.6, the Company holds less than 51% shares of Luzhou Laojiao Custom Liquor Co., Ltd.,
Luzhou Laojiao fruit wine industry Co., Ltd., and Luzhou Laojiao Whitail Liquor Industry Co., Ltd. but in
these companies’ board, among the five members, the Company has sent thr ee persons, which is in the
majority. The Company has substantial control over these companies, so they are included in the
consolidation scope.
9.1.2. Important non-wholly-owned subsidiaries
Monetary Unit: CN Y
Gains and losses
Proportion of share Dividends paid to
attributable to Closing balance of
holdings of non-controlling
Name of subsidiary non-Controlling non-controlling
non-Controlling shareholders during
shareholders during shareholders interest
shareholders current period
current period
Luzhou Laojiao Boda
Liquor Industry 25.00% 5,056,555.26 88,344,176.52
Marketing Co., Ltd.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
9.1.3. Major financial information of important non-wholly-owned subsidiaries
Monetary Unit: CN Y
Closing Balance Opening Balance
Name of Non-cur Non-cur
Non-cur Current Total Non-cur Total
subsidia Current Total rent Current Total Current rent
rent liabilitie liabilitie rent liabilitie
ry assets assets liabilitie assets assets liabilities liabilitie
assets s s assets s
s s
Luzhou
Laojiao
Boda
1,314,5 1,317,4 1,166,8 1,166,8
Liquor 2,881,5 964,059 964,059 8,708.9 833,737 833,737
54,833. 36,429. 79,541. 88,250.
Industry 95.65 ,722.96 ,722.96 9 ,765.21 ,765.21
37 02 23 22
Marketi
ng Co.,
Ltd.
Monetary Unit: CN Y
Current Period Previous Period
Name of Total Total
Operating Operating Operating Operating
subsidiary Net profit comprehens Net profit comprehens
revenue cash flow revenue cash flow
ive income ive income
Luzhou
Laojiao
Boda Liquor 2,787,789,6 20,226,221. 20,226,221. -335,380,17 2,493,854,8 16,457,683.
-303,651.51 -303,651.51
Industry 90.74 05 05 0.98 76.92 16
Marketing
Co., Ltd.
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 statement s.
Other statements:
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
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
th th
As stated in Note1.6 note 4, on 28 December 2018, the 5 Meeting of the 9 Board of Directors
reviewed and approved the Proposal on Acquisition of Partial Equity in Luzhou Pinchuang Technology
Co., Ltd. and Related Transaction, and as of the period-end, the acquisition was completed, among
which the Company has contributed CNY 50 million with 100% of shareholding.
9.2.2. Impact of the transactions on non-controlling interests and equity attributable to the parent
company
Monetary Unit: CN Y
Luzhou Pinchuang Technology Co., Ltd.
--Cash 10,149,100.00
Total purchase cost/ disposal consideration 10,149,100.00
Less: share of net assets of the subsidiary calculated at the
16,251,140.65
proportion acquired /disposed
Difference -6,102,040.65
Including: Adjustment of capital reserves 6,102,040.65
9.3. Interests in joint ventures and associates
9.3.1. Important joint ventures and associates
Name of joint Shareholding proportion
Major business Place of Accounting
venture/associat Business nature
location registration Direct Indirect Method
es
Important joint
ventures: none
Important
associates:
Huaxi Securities Chengdu, Chengdu,
Securities 10.39% Equity method
Co., Ltd. Sichuan Sichuan
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:
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.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
9.3.2. Major financial information of important associates
Monetary Unit: CN Y
Closing Balance/Amount in current Opening Balance/Amount in previous
period period
Huaxi Securities Co., Ltd. Huaxi Securities Co., Ltd.
Current assets 57,134,274,353.71 40,401,035,988.45
Non-current assets 10,693,128,565.71 6,394,133,262.77
Total assets 67,827,402,919.42 46,795,169,251.22
Current liabilities 39,721,993,771.95 22,367,046,060.48
Non-current liabilities 8,411,797,290.51 6,014,025,121.83
Total liabilities 48,133,791,062.46 28,381,071,182.31
Non-controlling shareholder interest 44,225,184.16 44,260,373.43
Shareholder interest attributable to
19,649,386,672.80 18,369,837,695.48
parent company
Share of net assets calculated based
2,042,272,245.65 1,909,281,460.40
on shareholding proportion
--Others 167,466,735.90 167,466,735.90
Book value of equity investments in
2,209,738,981.55 2,076,748,196.31
associate companies
Fair value of equity investments in
associate companies that have public 3,003,870,895.44 2,283,596,675.28
quote
Operating revenue 3,937,424,572.74 2,545,233,363.80
Net profit 1,431,540,167.66 845,132,348.07
Other comprehensive income 47,518,149.37 -9,197,741.57
Total comprehensive income 1,479,058,317.03 835,934,606.50
Dividends from associate companies
20,735,166.94 10,367,583.46
this year
9.3.3. Financial information summarized of unimportant joint ventures and associate companies
Monetary Unit: CN Y
Closing Balance/Amount in current Opening Balance/Amount in previous
period period
Joint ventures: -- --
Total following items calculated on the
-- --
basis of shareholding proportion
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Associate companies: -- --
Total book value of investments 20,982,744.17 15,806,539.78
Total following items calculated on the
-- --
basis of shareholding proportion
--Net profit -2,823,795.61 -829,619.65
-- Total comprehensive income -2,823,795.61 -829,619.65
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 ha s 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.
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
217
2019 Annual Report of Luzhou Laojiao Co., Ltd.
financial instrument or its issuer or all similar financial instruments traded in t he 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
Monetary Unit: CN Y
Closing fair value
Item
Level 1 Level 2 Level 3 Total
1. Continuous
measurement at fair -- -- -- --
value
1.3 Other equity
318,590,971.32 33,804,284.46 352,395,255.78
instrument investment
1.6 Accounts receivable
2,393,797,259.80 2,393,797,259.80
financing
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
The listed companies in mainland China determine the fair value of other equity instrument investment
according to the closing price on the last trading day of Shenzhen Stock Exchange or Shanghai Stock
Exchange at the period-end. The companies listed in Hong Kong determine the fair value of other equity
instrument investment according to the closing price of Hong Kong Dollar on the last trading day of Hong
Kong Stock Exchange at the period-end and the median price of RMB exchange rate disclosed on the
same day by China Foreign Exchange Trade System.
11.3. Valuation technique adopted and nature and amount determination of important parameters
for continuously and discontinuously within Level 3 of the fair value hierarchy
Accounts receivable financing: Due to the short term of notes receivable less than 1 year, and the sales
time, sales price and sale proportion cannot be estimated reliably, the Company shall measure the fair
value by regarding the face value as the reasonable estimation.
Other equity instrument investment: Due to no significant changes in business environment, business
condition and financial situation of invested companies, the Company shall measure the fair value
according to the lower one between investment cost and the share of net assets enjoyed by invested
companies on the base date as the reasonable estimation.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
12. Related parties and related party transactions
12.1. The parent company of the Company
Shareholding Voting rights
Parent company Registration place Business nature Registered capital proportion by the proportion by the
parent company parent company
Luzhou Laojiao Investment and
Luzhou, Sichuan 2,798,818,800.00 26.02% 51.01%
Group Co., Ltd. asset management
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 7.1. Interests in subsidiaries
12.3. Joint ventures and associates of the Company
For details please see Note 7.3. Interests in joint ventures and associates.
Other statements
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 Jiaxin Holding Group Co., Ltd. Note 2 The same parent company
Luzhou Liquor Industry Central Development Area Brewing
The same parent company
Co., Ltd.
Sichuan Kangrun Group Construction and Installation
The same parent company
Engineering Co., Ltd. Note 3
Luzhou Laojiao Zhitong Trading Co., Ltd. The same parent company
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Luzhou Lianzhong Logistics Co. Ltd. The same parent company
Luzhou COSCO Lianzhong Logistics Co., Ltd. The same parent company
Luzhou Laojiao Commercial College of Luzhou The same parent company
Sichuan Kangrun Group Yongsheng Asset Operation
The same parent company
Management Co., Ltd. Note 4
Sichuan Wine & Spirits Trading Center Co., Ltd. The same parent company
Sichuan Kangrun Group Real Estate Development Co., Ltd.
The same parent company
Note 5
Sichuan Kangrun Investment Group Co., Ltd. Note 6 The same parent company
New Shottes Brook Private Company The same parent company
Huaxi Securities Co., Ltd. Associate company and the same parent company
Laojiao Group and its other subsidiaries The same parent company
Luzhou Communication Investment Group Auto Service
Subsidiary of the second largest shareholder
Co., Ltd.
Luzhou Huarun XingLu Gas Co., Ltd. Subsidiary of the second largest shareholder
Luzhou XingLu Water (Group) Co., Ltd. Subsidiary of the second largest shareholder
Luzhou XingLu Property Management Co., Ltd. Subsidiary of the second largest shareholder
Luzhou XingLu Investment Group Co., Ltd. and its other
Other subsidiary of the second largest shareholder
subsidiaries
Other statements:
Note 1: On 31 December 2015, Laojiao Group and XingLu Investment 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, t he 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 dif ferent
opinions, it will be subject to Laojiao Group’s opinion. In view of this, the Company will disclose the
transactions with XingLu Investment Group and its controlling enterprises as other related parties of the
Company.
Note 2: Luzhou Laojiao Industrial Investment Management Co., Ltd. was renamed Luzhou Jiaxin
Holding Group Co., Ltd. in November 2019.
Note 3: Luzhou Laojiao Construction and Installation Engineering Co., Ltd. was renamed Sichuan
Kangrun Group Construction and Installation Engineering Co., Ltd. in October 2019.
Note 4: Luzhou Yongsheng Asset Operation Management Co., Ltd. was renamed Sichuan Kangrun
Group Yongsheng Asset Operation Management Co., Ltd. in December 2019.
Note 5: Luzhou Laojiao Real Estate Development Co., Ltd. was renamed Sichuan Kangrun Group Real
Estate Development Co., Ltd. in October 2019.
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Note 6: Luzhou Laojiao Yongsheng Property Investment Management Co., Ltd. was renamed Sichuan
Kangrun Investment Group Co., Ltd. in March 2018.
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
Monetary Unit: CN Y
Whether over
Name of Related Amount in Approved trading Amount in previous
Transaction approved trading
Party current period amount period
amount
Receipt of
services:
Luzhou XingLu
Property
Investment Group
management 3,909,858.41 1,911,100.00
Co., Ltd. and its
fee ,etc.
other subsidiaries
Training,
Laojiao Group and accommodation,
its other storage, 46,058,991.08 18,260,072.47
subsidiaries transportation
services, etc.
Purchase of
goods:
Housing
Sichuan Wine &
construction fee ,
Spirits Trading 287,389,843.00 1
land expense,
Center Co., Ltd.
etc.
Luzhou Jiaxin
Land expense,
Holding Group 26,292,000.00
etc.
Co., Ltd.
Laojiao Group and
Red wine, water,
its other 41,924,295.93 67,306,259.50
power, etc.
subsidiaries
Luzhou XingLu
Investment Group
Water, gas, etc. 7,153,652.03 8,224,842.06
Co., Ltd. and its
other subsidiaries
Luzhou Laojiao Acquisition of
10,594,650.00
Group Co., Ltd. 30% equity of
221
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Sichuan
Development
Wine Investment
Co., Ltd. held by
Laojiao Group
Note: 1. The 11 th Meeting of the 9th Board of Directors held on 15 October 2019 reviewed and approved
the Proposal on Acquisition of Assets and Related Transaction; in order to upgrade and construct
Luzhou Laojiao Liquor Culture and Tourism Industrial Park Scenic Area, the Company decided to
purchase the land use right, construction in progress and equipment assets of Sichuan Wine & Spirits
Trading Center Co., Ltd., the wholly-owned subsidiary of controlled shareholder Luzhou Laojiao Group
by self-owned fund of CNY 287.3898 million (including transaction VAT) according to asset appraisal
value. The transaction is paid in installment in line with the asset transfer price under the appraisal value
in assessment report (YXPBZ [2019] Hu No. 0659) issued by Yinxin Appraisal Co., Ltd..
Table of sales of goods and rendering of service
Monetary Unit: CN Y
Name of Related Party Transaction Amount in current period Amount in previous period
Sales of goods:
Laojiao Group and its
Wine, etc. 3,985,144.32 318,580.42
subsidiaries
XingLu Investment Group
Wine 156,000.00 586,044.00
and its subsidiaries
Rendering of service:
Luzhou Laojiao Group Co.,
Rendering of service 1,190,880.00
Ltd.
12.5.2. Related party leasing
The Company as lessee:
Monetary Unit: CN Y
Leasing fee recognized Leasing fee recognized
Name of lessor Type of leased asset
during current period during previous period
Laojiao Group and its
House lease 1,551,064.09 1,851,227.44
subsidiaries
12.5.3. Key management compensation
Monetary Unit: CN Y
Item Amount in current period Amount in previous period
Key management 7,467,800.00 6,977,200.00
222
2019 Annual Report of Luzhou Laojiao Co., Ltd.
12.6. Receivables and payables of related parties
12.6.1. Receivables
Monetary Unit: CN Y
Closing Balance Opening Balance
Item Related party Provision for bad Provision for bad
Book value Book value
debt debt
Other non-current
Luzhou Jiaxin
assets (transfer 1
Holding Group Co., 70,994,300.00
prepayment of
Ltd.
land use right)
New Shottes Brook
Prepayment 32,149,113.33 18,086,370.77
private company
Luzhou XingLu
Prepayment Water (Group) Co., 3,145.70 4,377.45
Ltd.
Sichuan Kangrun
Other receivables Investment Group 10,000.00
Co., Ltd.
Sichuan Kangrun
Prepayment Investment Group 10,000.00
Co., Ltd.
Sichuan Kangrun
Group Yongsheng
Accounts
Asset Operation 1,526.40
receivable
Management Co.,
Ltd.
Note: 1. The 15 th Meeting of the 9 th Board of Directors held on 13 December 2019 reviewed and
approved the Proposal on the Acquisition of Land for Technical Renovation Project of Intelligent
Packaging Center and Related Transaction; the Company made the decision that the wholly-owned
subsidiary, Luzhou Laojiao Brewing Co., Ltd. purchased the 5 cases of land use right with 204.82 mu of
Luzhou Jiaxin Holding Group Co., Ltd., the wholly-owned subsidiary of the controlled shareholder
Luzhou Laojiao Group, in Luzhou Liquor Industry Central Development Area by self-owned fund of CNY
100.7767 million (including transaction VAT) according to appraisal value, which was used for
construction of technical renovation of intelligent packaging center. The trans action is paid in installment
in line with the asset transfer price under the appraisal value in assessment report (BJYCPBZ [2019] No.
A212) issued by Beijing Yachao Asset Appraisal Co., Ltd..
12.6.2. Payables
Monetary Unit: CN Y
223
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Item Related party Closing Balance Opening Balance
Sichuan Kangrun Group Real
Accounts payable 372,467.29 20,255.07
Estate Development Co., Ltd.
Luzhou XingLu Water
Accounts payable 297,019.53
(Group) Co., Ltd.
Luzhou Lianzhong Logistics
Accounts payable 135,824.73 946,701.22
Co. Ltd.
Luzhou Huarun XingLu Gas
Accounts payable 382,967.14
Co., Ltd.
Luzhou Laojiao Commercial
Accounts payable 4,100.00
College
Luzhou Communication
Accounts payable Investment Group Auto 13,950.00
Service Co., Ltd.
Luzhou Jiaxin Holding Group
Accounts payable 178,170.40
Co., Ltd.
Luzhou Laojiao Zhitong
Ad vance from customers 900,866.00
Trading Co., Ltd.
Luzhou Lianzhong Logistics
Ad vance from customers 2,628.03
Co. Ltd.
Luzhou Laojiao Group Co.,
Ad vance from customers 1,680.00 1,680.00
Ltd.
Luzhou Laojiao Commercial
Ad vance from customers 840.00 840.00
College
Luzhou Lianzhong Logistics
Other payables 750,000.00
Co. Ltd.
Luzhou XingLu Property
Other payables 100,000.00
Management Co., Ltd.
Luzhou COSCO Lianzhong
Other payables 200,000.00
Logistics Co., Ltd.
Sichuan Kangrun Group
Other payables Construction and Installation 34,175.78
Engineering Co., Ltd.
Luzhou Liquor Industry
Other payables Central Development Area 154,352.70
Brewing Co., Ltd.
224
2019 Annual Report of Luzhou Laojiao Co., Ltd.
13. Commitments and contingencies
13.1. Contingencies
13.1.1. 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 Sub-branch, Industrial and
Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank, with a total amount of
CNY 500 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 China
Changsha Yingxin Sub-branch with amount of CNY 150 million was concluded, and the amount involved
in the case was ultimately determined to be CNY 149.425 million, which was executed by criminal case.
As of 30 June 2019, CNY 17.9799 million was recovered. The civil case has been decided by Hunan
Higher People's Court in the first instance, and now is under the second trial of the Supreme People’s
Court.
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 Sub-branch with
amount of 150 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 involve ment of
criminal cases, its trial should be based on the results of criminal case, and judged to suspend in 2015.
Now the case has been settled, and the case of civil action is reopened, which is under trial of Henan
Higher People's Court.
Another deposit in the Notice of Significant Events No. 2015-1 has been recovered a total of CNY
194.6198 million as of the period-end, and the residual amount is recovering actively.
The Company has recovered the abovementioned saving deposits involving contract disput es with CNY
212.5997 million, and the relevant progress will be announced subsequently.
Except for the above matters, the Company has no other significant contingencies that need to be
disclosed as the end of 31 December 2019.
13.1.2. In despite of no significant contingency to disclose, the Company shall also make
relevant statements
There is no significant contingency to disclose.
225
2019 Annual Report of Luzhou Laojiao Co., Ltd.
14. Post balance sheet event
14.1. Profit distribution
Monetary Unit: CN Y
Profits or dividends planned to distribute 2,328,956,436.84
Reviewed and approved profits or dividends declared to
2,328,956,436.84
distribute
14.2. Sales return
There are no important sales returning after balance sheet date.
14.3. Statement for other post balance sheet events
(1) The public issuance of corporate bonds (Phase I) to eligible investors in 2020
The Company has obtained the approval from the CSRC with the document the “ZJXK [2019] No. 1312”
on 18 July 2019 for public issue of corporate bonds (hereinafter referred to as “the bonds”) with total face
value of no more than CNY 4 billion (inclusive of CNY 4 billion) to eligible investors.
The bonds would be issued in phases without guarantee. The Company’s public issue of corporate
bonds (Phase I) to eligible investors in 2020 (hereinafter referred to as “the bonds of 2020”) shall be
capped at CNY 1.5 billion (inclusive of CNY 1.5 billion). The short name of the bonds of 2020 will be “20
Laojiao 01” and the code “149062”. The nominal value of each bond will be CNY 100, issue quantity
capped at 15 million (inclusive of 15 million), and issue price CNY 100 per bond. The bonds will have a
term of five years and be issued through off-market inquiry and allotment of institutional investors.
The period of the issue started on 16 March 2020 and ended on 17 March 2020; the final amount
actually issued was CNY 1.5 billion and the final interest rate was 3.50%.
(2) The acquisition of assets from related party by subsidiary
The 18th Meeting of the 9 th Board of Directors held on 18 March 2019 reviewed and approved the
Proposal on Acquisition of Assets by Subsidiary and Related Transaction ; in order to construct the
region-concentrated modern production base, the Company decided that Luzhou Laojiao Brewing Co.,
Ltd., the wholly-owned subsidiary, purchased the land and supporting structures of Luzhou Jiaxin
Holding Co., Ltd., the wholly-owned subsidiary of the controlled shareholder Luzhou Laojiao Group by
self-owned fund with CNY 227.5466 million (including transaction VAT)according to appraisal value,
which was used for base liquor storage; the transaction is paid in installment in line with the asset
transfer price under the appraisal value in assessment report (BJYCPBZ [2019] No. A213) issued by
Beijing Yachao Asset Appraisal Co., Ltd., namely the total price including tax of CNY 227.5466 million;
the related transaction doesn’t constitute the major assets restructuring, and restructuring and listing
stipulated in the Measures for the Administration of Major Assets Restructuring of Listed Companies ,
which is no need to be submitted to the general meeting for deliberation.
(3) The progress of saving deposits involving the contract disputes
The Company has obtained the Paper of Civil Judgment concerning the saving deposit case of
226
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Changsha by Supreme People’s Court. According to the paper, the Supreme People’s Court has
rejected the appeal of the Company and affirmed the original judgment, so the judgment was the final
judgment. As of the reporting date, the Company has recovered CNY 20.2399 million in sav ing deposits
case of Changsha involving contract disputes. The judgment has no significant influence to the profit in
or after the current period.
(4) The impact evaluation of COVID-19 epidemic situation
Since the COVID-19 outbreak across the country in January 2020, efforts have been made continuously
to prevent and control the epidemic in the whole country. The Company has made active response to
and strictly implemented all regulations and requirements of the party and governments at all levels for
the epidemic prevention and control. To juggle anti-epidemic work and production, the Company and its
subsidiaries have orderly resumed business in a bid to support the country’s strategic decisions in a
number of aspects, including guarantee of supplies, social responsibilities and internal management.
As part of its tangible effort to perform its social responsibilities as a listed company, the Company held
th th
the 17 Meeting of the 9 Board of Directors on 27 January 2020. The Proposal on Fighting COVID-19
through Donation of Medical Supplies and Cash Support was reviewed and approved. Based on the
Proposal, the Company decided to donate medical supplies and cash worth about CNY 20 million in the
COVID-19 prevention and treatment.
The Company anticipates that the epidemic and prevention and control measures will cause temporary
impact to its production and operation, with the severity of impact depending on the progress and
duration of the epidemic prevention and control and the implementation of prevention a nd control
policies in different places. The Company will continue to keep close watch on the developments of the
epidemic, and assess and actively respond to its impact on the Company’s financial status and operating
results. As at the date of this report, the assessment is still in progress.
Except for the above matters, the Company has no other post balance sheet events that need to be
disclosed as of 27 April 2020.
15. Other important information
15.1. 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 8% of the Company's total
salary in the previous year as stipulated by the state, and the individual contribution shall b e withheld by
the Company according to 1% of total salary of the employee in the previous year.
227
2019 Annual Report of Luzhou Laojiao Co., Ltd.
15.2. Segment information
15.2.1. 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.
15.3. Other significant events that can affect investors’ decision
(1) Saving deposits involving contract disputes
As stated in Note 12.2, three saving deposits involved contract disputes in Agricultural Bank of China
Changsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou
Sub-branch and another bank, with a total amount of CNY 500 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 17 March 2020, 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 investment
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 7,414.28 million, and the
required funds are solved by the Company with self-owned funds and other financing methods. At
present, the project has invested a total of CNY 6362.6908 million, and the completion ratio has been
85%.
(3) State-owned shareholders signed a concerted action agreement
On 31 December 2015, the state-owned shareholders and XingLu Investment 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 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.
Except for the above matters, the Company has no other significant events that can affect investors’
decision that need to be disclosed as of 31 December 2019.
228
2019 Annual Report of Luzhou Laojiao Co., Ltd.
16. Notes to the main Items of the financial statements of parent company (all
currency unit is CNY, except other statements)
16.1. Accounts receivable
16.1.1. Analysis by categories
Monetary Unit: CN Y
Closing Balance Opening Balance
Provision for bad Provision for bad
Book balance Book balance
Type debt Book debt Book
Proporti Proporti value Proportio Proportio value
Amount Amount Amount Amount
on on n n
Including:
Accounts
receivables tested 21,759.0 100.00 21,562.8 68,103.6
196.21 0.90% 100.00% 405.18 0.59% 67,698.43
for impairment by 6 % 5 1
the portfolio
Including:
Accounts
receivables tested
for impairment on 21,759.0 100.00 21,562.8 68,103.6
196.21 0.90% 100.00% 405.18 0.59% 67,698.43
the portfolio with 6 % 5 1
characteristics of
credit risk
21,759.0 100.00 21,562.8 68,103.6
Total 196.21 0.90% 100.00% 405.18 0.59% 67,698.43
6 % 5 1
Accounts receivables tested for impairment by the portfolio: characteristics of credit risk
Monetary Unit: CN Y
Closing Balance
Item
Book balance Provision for bad debt Proportion
Risk portfolio 21,759.06 196.21 0.90%
Other portfolios
Statements for determining the portfolio:
The Company will combine the accounts receivable divided into credit risk portfolio according to similar
characteristics of credit risk (aging), and calculate expected credit loss with the reference of historical
credit loss experience and combination of present condition and prediction of future financial situation,
as well as through default risk exposure and expected credit loss rate in the duration.
Statements for determining the portfolio:
229
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Please refer to the relevant information of disclosure of provision for bad debt of other accounts
receivable if adopting the general mode of expected credit loss to withdraw provision for bad debt of
accounts receivable.
Applicable √ N/A
Disclosure by aging
Monetary Unit: CN Y
Aging Book balance
Within 1 year (including 1 year) 21,759.06
Total 21,759.06
16.1.2. Provision and recovery for bad and doubtful debt in the current period
Allowance of provision for bad debt:
Monetary Unit: CN Y
Current Period
Opening
Type Reversal or Closing Balance
Balance Allowance Write-off Other
recovery
Accounts
receivables
tested for 405.18 208.97 196.21
impairment by
the portfolio
Total 405.18 208.97 196.21
There is no accounts receivable reversed or recovered with significant amount during the repo rting
period.
16.1. 3. Accounts receivable actually written off during the reporting period
Of which significant accounts receivable written off:
Statements for accounts receivable written off:
There is no accounts receivable actually written off during the reporting period.
16.1. 4. Top five entities with the largest balances of accounts receivable
Monetary Unit: CN Y
Proportion to total closing
Closing Balance of provision
Company Name Closing Balance balance of accounts
for bad debt
receivable
Luzhou Laojiao Brewing Co., 17,834.94 81.97%
230
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Ltd.
Suchuan Fifth Construction
3,924.12 18.03% 196.21
Co., Ltd.
Total 21,759.06 100.00%
16.1. 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.
16.1.6. 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.
16.2. Other receivables
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Interest receivable 40,570,144.44 29,970,944.44
Other receivables 5,809,911,336.06 4,627,756,101.58
Total 5,850,481,480.50 4,657,727,046.02
16.2.1. Interest receivable
16.2.1.1. Classification of interest receivable
Monetary Unit: CN Y
Item Closing Balance Opening Balance
Fixed deposits 40,570,144.44 29,970,944.44
Total 40,570,144.44 29,970,944.44
16.2.1.2. Significant interest receivable overdue
Other statements:
There is no significant interest receivable overdue at the period -end.
16.2.1.3. Provision for bad and doubtful debt
Applicable √ N/A
231
2019 Annual Report of Luzhou Laojiao Co., Ltd.
16.2.2. Other receivables
16.2.2.1. Other receivables disclosed by nature
Monetary Unit: CN Y
Nature Closing book balance Opening book balance
Intercourse funds of subsidiaries
5,709,914,323.15 4,510,110,733.71
receivable
Intercourse funds 14,258,750.49 14,282,195.47
Petty cash 454,894.47 698,657.73
Saving deposits involving contract
287,400,297.52 307,456,275.25
disputes
Total 6,012,028,265.63 4,832,547,862.16
16.2.2.2. Provision for bad and doubtful other receivables in the current period
Monetary Unit: CN Y
First stage Second stage Third stage
Expected credit Expected loss in the Expected loss in the
Provision for bad debt Total
loss of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January
4,791,760.58 200,000,000.00 204,791,760.58
2019
Balance of 1 January
2019 in the current —— —— —— ——
period
Allowance of the
58,266.99 58,266.99
current period
Verification of the
2,733,098.00 2,733,098.00
current period
Balance of 31
2,116,929.57 200,000,000.00 202,116,929.57
December 2019
Changes of carrying amount with significant amount changed of loss provision in the current period
Applicable √ N/A
Disclosure by aging
Monetary Unit: CN Y
Aging Book balance
232
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Within 1 year (including 1 year) 5,721,939,715.25
1-2 years 1,176,427.93
2-3 years 65,000.00
Over 3 years 288,847,122.45
3-4 years 47,606.93
4-5 years 166,218.00
Over 5 years 288,633,297.52
Total 6,012,028,265.63
16.2.2.3. Provision and recovery for bad and doubtful other receivables in the current period
Allowance of provision for bad debt:
Monetary Unit: CN Y
Current Period
Opening
Type Reversal or Closing Balance
Balance Allowance Write-off Other
recovery
Other receivables
tested for
200,000,000
impairment 200,000,000.00
.00
individually
Note 1
Other receivables
tested for 4,791,760.5 2,733,098.0
58,266.99 2,116,929.57
impairment by the 8 0
portfolio
204,791,760 2,733,098.0
Total 58,266.99 202,116,929.57
.58 0
Note 1: Refer to Note 5.5, 12.2 for details.
Of which provision for bad debt reversed or recovered with significant amount:
There is no provision for bad debt reversed or recovered of other receivables with significant amount in
the reporting period.
16.2.2.4. Other receivables actually written off during the reporting period
Monetary Unit: CN Y
Item Written off amount
Other receivables actually written off 2,733,098.00
Of which significant other receivables written off:
233
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Monetary Unit: CN Y
Whether generated
Written-off
Company Name Nature Amount Reason from related
procedures
transaction
Managed
according to
China Real Estate
lawyer’s
Development
Intercourse funds 1,500,000.00 Irrecoverable investigation report No
Corporation Luzhou
and approved by
Branch
manager’s office of
the Company
Managed
according to
lawyer’s
Luzhou Tuojiang
Intercourse funds 1,233,098.00 Irrecoverable investigation report No
Market
and approved by
manager’s office of
the Company
Total -- 2,733,098.00 -- -- --
16.2.2.5. Top five entities with the largest balances of the other receivables
Monetary Unit: CN Y
Provisioning
Proportion in total
Company Name Nature Closing Balance Aging amount at period
receivables
end
Luzhou Laojiao Internal
4,736,901,888.26 Within 1 year 78.79%
Brewing Co., Ltd. transactions
Luzhou Laojiao
Bosheng Hengxiang Internal
379,412,818.63 Within 1 year 6.31%
Liquor Sales Co., transactions
Ltd.
Agricultural Bank of
China Changsha
Yingxin Sub-branch,
Industrial and Saving deposits
Commercial Bank of involving contract 287,400,297.52 Over 5 years 4.78% 200,000,000.00
China Nanyang disputes
Zhongzhou
Sub-branch and
another bank.
234
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Luzhou Laojiao
Internal
Electronic 277,873,441.14 Within 1 year 4.62%
transactions
Commerce Co., Ltd.
Luzhou Laojiao
Internal
Import and Export 147,987,109.34 Within 1 year 2.46%
transactions
Trade Co., Ltd.
Total -- 5,829,575,554.89 -- 96.96% 200,000,000.00
16.2.2.6. Other receivables involving government grants
There are no other receivables involving government subsidy during the reporting period.
16.2.2.7. Other receivables derecognized arising from financial assets transfer
There are no other receivables derecognized arising from financial assets transfer during the reporting
period.
16.2.2.8. 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.
16.3. Long-term equity investments
Monetary Unit: CN Y
Closing Balance Opening Balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investment in
3,413,960,128.11 3,413,960,128.11 3,403,811,028.11 3,403,811,028.11
subsidiary
Investment in
associates and 2,225,288,824.52 2,567,098.80 2,222,721,725.72 2,095,121,834.88 2,567,098.80 2,092,554,736.08
joint venture
Total 5,639,248,952.63 2,567,098.80 5,636,681,853.83 5,498,932,862.99 2,567,098.80 5,496,365,764.19
16.3.1. Investment in subsidiary
Monetary Unit: CN Y
Opening Changes in current period Closing
Closing Balance
Investee Balance (book balance of
Increase Decrease Provision for Other (book value)
value) provision for
235
2019 Annual Report of Luzhou Laojiao Co., Ltd.
impairment impairment
Luzhou
Pinchuang
47,500,000.00 10,149,100.00 57,649,100.00 1
Technology
Co., Ltd.
Sales
Company of
103,162,447.0
Luzhou 103,162,447.09
9
Laojiao Co.,
Ltd.
Luzhou
Laojiao 3,172,109,991. 3,172,109,991.2
Brewing Co., 25 5
Ltd.
Luzhou
Laojiao
International
5,433,789.77 5,433,789.77
Development
(Hong Kong)
Co., Ltd.
Luzhou
Laojiao
Electronic 51,604,800.00 51,604,800.00
Commerce
Co., Ltd.
Luzhou
Baonuo
20,000,000.00 20,000,000.00
Biotechnolog
y Co., Ltd.
Luzhou
Laojiao
Tourism 4,000,000.00 4,000,000.00
Culture Co.,
Ltd.
Luzhou
Laojiao
Health Liquor 0.00 0.00 2
Industry Co.,
Ltd.
3,403,811,028. 3,413,960,128.1
Total 10,149,100.00
11 1
236
2019 Annual Report of Luzhou Laojiao Co., Ltd.
Note: 1. As stated in Note 1.6 note 4, the Company acquired the subscribed equity of Pinchuang
Technology held by non-controlling shareholders according to evaluated price by self-owned fund; as of
31 December 2019, the Company has completed the acquisition of subscribed equity, and has paid the
acquisition price of CNY 10,149,100.00.
2. The Company obtained 100% of equity in Health Liquor Industry by the business combination under
the same control. The net assets of Health Liquor Industry were negative on the M&A date, and the book
cost of long-term equity investment was limited to 0 by the Company.
16.3.2. Investment in associate and joint venture
Monetary Unit: CN Y
Changes in current period Closing
Gain or Adjustm Balance
Opening Closing
loss ents of Cash Provision of
Balance Changes Balance
Investee Decreas recogniz other divided for provision
(book Increase in other Other (book
e ed under compreh or profit impairme for
value) equity value)
equity ensive declared nt impairme
method income nt
1. Joint Venture
2. Associate
Huaxi
Securitie 2,076,74 148,787, 4,938,83 20,735,1 2,209,73 2,567,09
s Co., 8,196.30 121.31 0.88 66.94 8,981.55 8.80
Ltd.
Sichuan
Develop
ment
15,806,5 -2,823,7 12,982,7
Wine
39.78 95.61 44.17
Investme
nt Co.,
Ltd.
2,092,55 145,963, 4,938,83 20,735,1 2,222,72 2,567,09
Subtotal
4,736.08 325.70 0.88 66.94 1,725.72 8.80
2,092,55 145,963, 4,938,83 20,735,1 2,222,72 2,567,09
Total
4,736.08 325.70 0.88 66.94 1,725.72 8.80
16.4. Operating revenue and cost of sales
Monetary Unit: CN Y
Current Period Previous Period
Item
Revenue Cost of sales Revenue Cost of sales
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Primary business 4,860,840,693.18 3,494,170,203.81 3,325,711,704.83 2,268,801,347.29
Other business 25,969,729.09 24,717.35 35,593,034.44 103,324.95
Total 4,886,810,422.27 3,494,194,921.16 3,361,304,739.27 2,268,904,672.24
Whether the Company has implemented the new revenue standards
Yes √ No
16.5. Investment income
Monetary Unit: CN Y
Item Current Period Previous Period
Investment income from long-term equity
4,042,151,515.27 2,015,909,035.78
investments under cost method
Investment income from long-term equity
145,963,325.70 88,881,022.50
investments under equity method
Investment income gained during the
period of holding other equity instrument 8,748,669.71 9,112,541.00
investment
Total 4,196,863,510.68 2,113,902,599.28
17. Supplementary information
17.1. Detailed statement of extraordinary gain and loss in the current period (+ for gain, - for loss)
√ Applicable N/A
Monetary Unit: CN Y
Item Amount Remark
Gains or losses on disposal non-current For details please see Note 5.38, 5.39,
23,211,482.49
assets 5.40.
Government grants included into current
profits and losses (other than
government grants closely related to
43,969,302.07 For details please see Note 5.34.
enterprise business and granted by
quota or quantity according to national
unified standard)
Other non-operating income and costs
-11,510,048.21 For details please see Note 5.39, 5.40.
other than above items
Less: Impact from income tax 13,076,295.35
Impact from non-controlling
1,522,350.06
shareholders’ equity
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Total 41,072,090.94 --
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
17.2. 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 25.50% 3.17 3.17
Company
Net profits attributable to
ordinary shareholders of the
25.28% 3.14 3.14
Company after deduction of
extraordinary gain and loss
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2019 Annual Report of Luzhou Laojiao Co., Ltd.
Section XIII Documents Available for Preference
1. Financial statements signed and stamped by the legal representative, person in charge of accounting
affairs and person in 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.
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