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Semi-annual Report 2011
August 2011
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Important Notes
The Board of Directors, Supervisory Committee and directors, supervisors,
and senior managers of the company ensure that there is neither untrue
presentation, seriously misleading statements, nor omission of material facts
contained in the information herein and shall severally and jointly bear
responsibility for the authenticity, accuracy and completeness of the
information contained in this report.
Mr. Yu Lin, the principal of the Company, Mr. Ye Changqing, the principal
in charge of accounting, and Ms. Xia Xueyun, the principal of the
accounting organ (chief accountant), hereby declare that: We guarantee the
authenticity and completeness of the financial statements in the semi-annual
report.
The financial statements in the Company’s interim report have not yet been
audited.
The report has been prepared in Chinese and English respectively. In case of
discrepancy, the Chinese version shall prevail.
In the report, all of Company, the Company and Gujing refer to Anhui
Gujing Distillery Co., Ltd., “Gujing Group” refers to Anhui Gujing Group
Co., Ltd..
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Contents
Chapter I Basic Information of the Company 3
Chapter II Details of Changes in Share Capital and Major Shareholders 5
Chapter III Particulars about Directors, Supervisors and Senior Executives of the Company 7
Chapter IV Report of the Board of Directors 8
Chapter V Substantial Events 13
Chapter VI Financial Report 17
Chapter VII Documents for Further Reference 92
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Chapter I Basic Information of the Company
I. Basic Information
1. Statutory name of the Company:
In Chinese: 安徽古井贡酒股份有限公司
In English: ANHUI GUJING DISTILLERY COMPANY LIMITED
Abbreviation: GUJING
2. Legal representative: Yu Lin
3. Secretary of Board of Directors: Ye Changqing
Contact address: Gujing, Bozhou, Anhui
Tel: (0558) 5712231
Fax: (0558) 5317706
E-mail: ycq@gujing.com.cn
Securities affairs representative: Ma Junwei
Contact address: Gujing, Bozhou, Anhui
Tel: (0558) 5710057
Fax: (0558) 5317706
E-mail: gjzqb@gujing.com.cn
4. Registered address: Gujing, Bozhou, Anhui
Office address: Gujing, Bozhou, Anhui
Post code: 236820
Website: http://www.gujing.com
E-mail: gujing@mail.ahbbptt.com.cn
5. Selected newspapers for information disclosure are as follows: China Securities
Journal, Shanghai Securities News, and Hong Kong Ta Kung Pao
Website for publishing Annual Report of the Company: http://www.cninfo.com.cn
Place of the Annual Report filed: Office of Secretary of BOD of the Company
6. Place where the company shares are listed: Shenzhen Stock Exchange
Short form of Stock Name: Gujing Distillery Stock Code: 000596
Short form of Stock Name: Gujing Distillery B Stock Code: 200596
7. Other information:
1) Initial registration date of the Company: 30 May 1996
Registration authority: Anhui Provincial Administration for Industry and
Commerce
2) Registration No. of Corporate Business License: 340000400001632
Tax registration number: 341600151940008.
3) Name and address of the CPA firm appointed by the Company
Name: Reanda Certified Public Accountants
Address: 2008 Dongqu, Bldg. 1, Zhubang 2000, 100 Balizhuang Xili,
ChaoYang District, Beijing, PRC.
II. Main financial data and index
1. Main accounting data and financial index
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Unit: (RMB) Yuan
30 Jun. 2011 31 Dec. 2010 Increase/decrease (%)
Total assets (Yuan) 2,293,213,128.85 1,857,931,814.00 23.43
Owners’ equity attributed to shareholders of
1,255,173,026.68 1,049,475,547.82 19.60
the listed company (Yuan)
Share capital (Share) 235,000,000.00 235,000,000.00 0.00
Net assets per share attributed to
shareholders of the listed company 5.34 4.47 19.46
(Yuan/share)
Jan. – Jun. 2011 Jan. – Jun. 2010 Increase/decrease (%)
Total operating income (Yuan) 1,583,297,669.82 856,347,372.96 84.89
Operating profit (Yuan) 388,708,798.74 137,764,355.39 182.15
Total profit (Yuan) 394,339,400.11 145,416,447.76 171.18
Net profit attributed to shareholders of the
287,947,478.86 107,386,990.04 168.14
listed company (Yuan)
Net profit attributed to shareholders of the
listed company after deducting 283,724,527.83 101,647,920.76 179.12
non-recurring profits and losses (Yuan)
Basic earnings per share (Yuan/share) 1.23 0.46 167.39
Diluted earnings per share (Yuan/share) 1.23 0.46 167.39
Weighted average net asset earning ratio (%) 24.99 13.09 11.90
Weighted average net asset earning ratio
after deducting non-recurring profits and 24.62 12.39 12.23
losses (%)
Net cash flows from operating activities
195,085,921.58 162,039,277.10 20.39
(Yuan)
Net cash flows per share from operating
0.83 0.69 20.29
activities (Yuan/share)
2. Items and amounts of non-recurring profits and losses deducted
Unit: (RMB) Yuan
Non-recurring profit and loss Amount Note (if applicable)
Net non-operating incomes and expenses 5,630,601.37
Less: effect on income tax 1,407,650.34
Total 4,222,951.03
3. Difference between PRC GAAP and IFRS
There existed no difference between PRC GAAP and IFRS concerning the
accounting data of the Company.
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Chapter II Details of Changes in Share Capital and Major
Shareholders
I. No changes in share capital during the reporting period
II. Particulars about shareholders
(1) Number of shareholders and shares held by them
Unit: share
Total number of shareholders 10,872
Particulars about shares held by the top ten shareholders
Nature of Proportion of Total shares Non-tradable Shares pledged or
Name of shareholders
shareholder shares held held shares held frozen
State-owned
Anhui Gujing Group Co., Ltd. 57.75% 135,702,011 57,000,000
Corporation
GUOTAIJUNAN
Foreign
SECURITIES (HONGKONG) 2.98% 6,998,307
corporation
LIMITED
Foreign
KGI ASIA LIMITED 2.07% 4,866,839
corporation
China Merchants Securities State-owned
1.77% 4,152,042
(HK) Co., Ltd. Corporation
Foreign
UBS (LUXEMBOURG) S.A. 1.57% 3,698,317
corporation
Industrial and Commercial
State-owned
Bank of China-Galaxy Yintai 1.47% 3,454,868
Corporation
Financing Dividend Fund
Agricultural Bank of
State-owned
China-Soochow Value Growth 1.42% 3,347,892
Corporation
Double Power Stock Fund
TRIVEST CHINA FOCUS Foreign
1.33% 3,135,087
MASTER FUND corporation
Industrial and Commercial
Bank of China-Soochow Jiahe State-owned
1.31% 3,073,454
Advanced Mixed Type Corporation
Open-Ended Fund
Industrial and Commercial
State-owned
Bank of China- Tianhong 1.04% 2,455,535
Corporation
Selected Mixed Type Fund
Shares held by the top ten shareholders holding tradable share
Name of shareholders Tradable shares held Variety of shares
Anhui Gujing Group Co., Ltd. 135,702,011 Renminbi ordinary shares
GUOTAIJUNAN SECURITIES 6,998,307 Domestically listed foreign shares
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(HONGKONG) LIMITED
KGI ASIA LIMITED 4,866,839 Domestically listed foreign shares
China Merchants Securities (HK) Co., Ltd. 4,152,042 Domestically listed foreign shares
UBS (LUXEMBOURG) S.A. 3,698,317 Domestically listed foreign shares
Industrial and Commercial Bank of
China-Galaxy Yintai Financing Dividend 3,454,868 Renminbi ordinary shares
Fund
Agricultural Bank of China-Soochow Value
3,347,892 Renminbi ordinary shares
Growth Double Power Stock Fund
TRIVEST CHINA FOCUS MASTER FUND 3,135,087 Domestically listed foreign shares
Industrial and Commercial Bank of
China-Soochow Jiahe Advanced Mixed Type 3,073,454 Renminbi ordinary shares
Open-Ended Fund
Industrial and Commercial Bank of China-
2,455,535 Renminbi ordinary shares
Tianhong Selected Mixed Type Fund
Among the shareholders above, no affiliated relationship exists between the Company’s
controlling shareholder — Anhui Gujing Group Co., Ltd. — and other shareholders, nor
they are parties acting in concert as defined in the Administrative Measures on
Explanation on associated Information Disclosure of Changes in Shareholding of Listed Companies. Among
relationship among the top ten shareholders holding tradable shares, Agricultural Bank of China-Soochow Value Growth
shareholders or Double Power Stock Fund and Industrial and Commercial Bank of China-Soochow Jiahe
acting-in-concert Advanced Mixed Type Open-Ended Fund are parties acting in concert. As for other
shareholders, the Company does not know whether they are related parties or whether
they belong to parties acting in concert as defined in the Administrative Measures on
Information Disclosure of Changes in Shareholding of Listed Companies.
(2) The shareholder holding over 5% shares—Anhui Gujing Group Co., Ltd.—holds
135,702,011 shares at the end of the reporting period, which are all tradable shares.
And Anhui Gujing Group Co., Ltd. had no pledge or entrust situation other than
gaining loans by its 57,000,000 shares of the Company on 16 Mar. 2009
(3) Anhui Gujing Group Co., Ltd. is the shareholder that represents the state.
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Chapter III Particulars about Directors, Supervisors and
Senior Executives of the Company
I ．Changes in shares held by directors, supervisors and senior executives of the
Company
There is no change in shares held by directors, supervisors and senior executives of
the Company during the reporting period.
II. Changes in directors, supervisors and senior executives of the Company
during the reporting period:
(I) Shareholders’ General Meeting for Y2010 held by the Company on 15 Apr. 2011
1. Mr. Yu Lin, Mr. Liang Jinhui, Mr. Wang Feng, Mr. Ye Changqing, Mr. Zhou
Qingwu and Mr. Yang Xiaofan were elected as the Directors of the 6th Board of
Directors of the Company at the session; and Mr. Wang Ruihua, Mr. Wu Cisheng and
Mr. Liu Libin were elected as the Independent Directors of the 6th Board of Directors
of the Company.
2. Mr. Xu Peng, Mr. Niu Haiting, Mr. Hu Wenchao, Mr. Lu Duicang and Mr. Fu
Qiangxin were elected as the Supervisors of the 6th Supervisory Committee of the
Company at the session.
(II) The 1st Session of the 6th Board of Directors held by the Company on 15 Apr.
2011
1. Mr. Yu Lin was elected as the Chairman of the 6th Board of Directors of the
Company at the session; Mr. Liang Jinhui was engaged as the General Manager of the
Company; Mr. Zhou Qingwu and Mr. Ye Changqing were engaged as the Vice
General Manager of the Company; and Mr. Ye Changqing was engaged as the Chief
Accountant and Secretary to the Board.
(III) The 1st Session of the 6th Supervisory Committee held by the Company on 15 Apr.
2011
1. Mr. Xu Peng was elected as the Chief Supervisor of the 6th Supervisory Committee
of the Company at the session.
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Chapter IV Report of the Board of Directors
I. Discussion and analysis by the management
2011 is considered a crucial year for the Company’s goal to achieve leap-frog
development. In the reporting period, sticking to its production and operation plan, the
Company continued to carry out lean management and the operating strategy of
“Continuous Focus and Efficient Execution”. Under the leadership of the Board of
Directors and the common efforts of all employees, the Company adjusted its
organizational structure for marketing, optimized its product mix and rationally
allocated various resources, further improving the Company’s operation and
comprehensive competitiveness. And all operating objectives for the first half of the
year were accomplished.
In the production of distilled spirit, the Company kept to the principle—“Quality is
the most important”. With lean management, spirit richness and unique bouquet as the
goals, the Company improved its brewing technique and enhanced development of a
spirit tasting & commenting system, which laid a solid quality foundation for its rapid
and sustained development.
In marketing, the Company kept to the principle of “High Quality, Big Brand and Full
Coverage”. During the reporting period, it continued to implement the marketing
strategy of “Continuous Focus and Efficient Execution”, and rationally allocated
resources according to different environments in key markets such as Jiangsu,
Shandong, Henan, Anhui, Zhejiang and Hebei. The move further solidified and
improved the market performance and share of the “Gujinggong Year Protoplasmic
Spirit Series”. All business indicators showed a distinct growth.
II. Operating results of the Company during the reporting period
(I) Business overview
For the reporting period, the Company achieved an operating income of RMB
1,583,297,700, up by 84.89% year on year; a total profit of RMB 394,339,400, up by
171.18% year on year; a net profit reaching RMB 287,947,500, up by 168.14% year
on year; net operating cash flows of RMB 195,085,900, up by 20.39% from a year
earlier; and EPS of RMB 1.23, up by 167.39% from a year earlier. As such, the
Company accomplished all business objectives set for the first half of the year,
showing that the Company was in a good operating position with an excellent
operating quality.
(Ⅱ) Breakdown of main businesses
1. Main business scope of the Company
The Company mainly specializes in the production and sale of “Gujinggong”,
“Gujing” distilled spirits and other distilled spirits with a strong aroma, with the
alcohol content ranging from 60 degree to 30 degree, and the prices ranging from high,
medium and low levels. A complete product system has been formed with the
Gujinggong year protoplasmic spirit series as the core, and the traditional Gujinggong
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spirit series and the “gentle” Gujing spirit series as the important support.
2. Main operations classified by products and industries
Unit: (RMB) ten thousand
Main operations classified by industries
Year-on-year Year-on-year Year-on-year
Operating Gross profit rate increase/decreas increase/decreas increase/decrease
Industries or products Operating cost
income (%) e of operating e of operating of gross profit
income (%) cost (%) rate (%)
Distilled spirits 151,578.60 35,896.04 76.32 93.15 91.23 0.24
Hotel 3,224.61 1,967.01 39.00 -12.07 -10.60 -1.00
Others 1,614.92 1,159.64 28.19 41.72 35.27 3.42
Total 156,418.12 39,022.69 75.05 87.81 78.77 1.26
Main operations by products
High-class spirits 94,959.22 18,423.35 80.60 139.95 139.70 0.02
Medium-class spirits 54,985.99 16,610.06 69.79 48.29 62.99 -2.72
Low-class spirits 1,633.39 862.63 47.19 -10.43 -3.50 -3.79
Total 151,578.60 35,896.04 76.32 93.15 91.23 0.24
3. Main operations classified by regions
Unit: (RMB) ten thousand
Region Operating income Year-on-year increase/decrease (%)
North China 29,941.05 233.05
Central China 113,683.95 70.80
South China 12,793.12 65.39
Total 156,418.12 87.81
(III) Financial analysis Unit: RMB Yuan
1. Items of the balance sheet:
(1) Notes receivable at the period-end were up by 307.75% as compared with the
opening amount, which was mainly due to increase of income in the reporting period
and notes receivable were adopted more often for settlement;
(2) Accounts receivable at the period-end were up by 223.20% as compared with the
opening amount, which was mainly due to increase of the sales income;
(3) Prepayments at the period-end were up by 205.26% as compared with the opening
amount, which was mainly because the expenses incurred due to the seasonal
production halt were recognized as deferred expenses;
(4) Other receivables at the period-end were up by 25.49% as compared with the
opening amount, which was mainly because the Company paid compensations for
relocation on other’s behalf in the reporting period;
(5) Intangible assets at the period-end were up by 30.09% as compared with the
opening amount, which was mainly because the Company paid for land purchased for
projects invested with raised funds;
(6) Long-term deferred expenses at the period-end were down by 25.00% as
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compared with the opening amount, which was mainly due to amortization for the
reporting period;
(7) Accounts received in advance at the period-end were up by 155.19% as compared
with the opening amount, which was mainly due to increase of operating revenues and
advances from customers in the reporting period;
(8) Other payables at the period-end were up by 56.40% as compared with the
opening amount, which was mainly because guaranty deposits received by the
Company increased due to the sales growth and the large-scale repair expenses during
the seasonal production halt were not yet settled;
(9) Other current liabilities at the period-end were down by 50.00% as compared with
the opening amount, which was mainly due to amortization of deferred incomes for
the reporting period.
2. Items of the income statement:
(1) Operating income in the reporting period was up by 84.89% year on year, which
was mainly due to increase of the distilled spirit sales volume and the selling prices in
the reporting period;
(2) Operating cost in the reporting period was up by 67.57% year on year, which was
mainly due to the sales increase in the reporting period;
(3) Business taxes and surcharges in the reporting period were up by 84.92% year on
year, which was mainly due to the sales increase in the reporting period;
(4) Selling expenses in the reporting period were up by 68.89% year on year, which
was mainly due to a higher input for advertising and market expansion in the
reporting period;
(5) Administrative expenses in the reporting period were down by 187.75% year on
year, which was mainly due to increase of interest income from term deposits and
structural deposits, as well as services fees charged on notes in the reporting period;
(6) Income tax expenses in the reporting period were up by 179.76% year on year,
which was mainly due to increase of the total profit for the reporting period.
(IV) There were no other operating activities during the reporting period that had
significant influence on the profit.
(V) There was no investment income from any individual joint venture which
accounted for over (including) 10 % of the Company’s net profit during the reporting
period.
(VI) Existing problems and difficulties, as well as the plan for the second half of the
year
1. Existing problems and difficulties
(1) In the first half of the year, the distilled spirit industry continued to prosper, with
increasing market concentration. In terms of the competition situation, top spirit
makers maintained a rapid growth while second-tier spirit makers accelerated their
growth despite fierce competition. Big names and high-end spirits increase in the
industry. It has become increasingly obvious that “the strong will remain strong
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eternally”. Meanwhile, growth of regional strong brands is also worth expecting. In
face of direct competition with other competitors in its strategic main market, the
Company will try its best to win the sale battle in the second half of the year—a peak
season of distilled spirit sales. It is fairly crucial for the Company to fulfill its strategic
objectives.
(2) To increase the Company’s brand value is a long-term strategy. The Company’s
strategic main product—the Gujinggong year protoplasmic spirit series—maintains a
rapid growth but also encounters direct challenges from other brands. Therefore, in
the process of increasing its brand value and the market share of the Gujinggong year
protoplasmic spirit series, the Company should maintain quite a resource input for the
segment. The Company needs to concentrate resource input and improve the
input-output effect.
(3) In rapid development of business, the Company should pay attention to building a
talent team. It will try all means to improve employees’ quality and professional skills
so as to build an operational and management team featuring good political quality,
good business performance, good cooperation and a good image. In this way, the
Company seeks to lay a solid talent foundation for its leap-frog development.
2. Measures to be taken in the second half of the year
In order to fulfill all business objectives in a better way, the Company is going to
adopt the following measures:
(1) The Company will actively promote the idea of “maximum production”. In
production, it will further carry out lean management. By using the lean management
tool, the Company will increase the production efficiency and the product quality
from the outside to the inside, i.e. from improvements at the production site to
improvements of the production process, tools, methods and the management mode.
(2) In marketing, the Company will continue to carry out the strategy of “Continuous
focus and Efficient Execution” so as to promote the execution efficiency of the new
organizational structure for marketing. It will rationally plan out its market layout and
improve allocation of capital and other resources so as to ensure that all employees,
capital and materials will run in an orderly, rational and smooth way. Meanwhile, by
beefing up the market access project and carrying out phasic sales promotion
activities, the Company will manage resources to their very best performance so as to
enlarge its market share.
(3) The Company will also accelerate the building of a talent team. Using a position
value evaluating tool, the Company will formulate a remuneration and performance
evaluation system which is truly needed by the Company and keep improving its
incentive and disciplinary mechanism.
III. Particulars about investments during the reporting period
(I) Investment with raised capital
There was no investment with raised capital during the reporting period.
(II) Investment with non-raised capital
There was no significant investment with non-raised capital during the reporting
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period.
(IV) During the reporting period, there was no difference between the actual
operating results and the profit forecast and expectations disclosed in the
periodical report of the previous period.
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Chapter V Substantial Events
I. Corporate governance
In the reporting period, in strict compliance with the Company Law, the Securities
Law, the Code of Corporate Governance for Listed Companies in China and the
Guiding Opinion for Formulating the Independent Director Mechanism in Listed
Companies, as well as other applicable laws, regulations and regulatory documents,
the Company kept improving its corporate governance and operation in practice.
In the first half of the year, according to requirements of the Basic Norms of
Enterprise Internal Control, the Guideline of the Shenzhen Stock Exchange for
Internal Control of Listed Companies and other applicable regulatory documents, the
Company launched a series of internal control activities to improve the internal
control system step by step and promote normative operation and healthy
development of the Company. The Board of Directors, the Supervisory Committee,
the managers and other organs made operating decisions, exercised rights and
assumed responsibilities in strict compliance with the normative operation rules and
the internal management rules, which ensured that the Company operated normatively
under the applicable rules.
Pursuant to requirements of the CSRC and the Stock Listing Rules of the Shenzhen
Stock Exchange, under the principles of “openness, fairness and justness”, the
Company performed the duty of information disclosure in a serious and timely
manner, ensuring the factuality, accuracy and completeness of the information
disclosed by the Company. There was no false information, misleading statement or
material omission in the information disclosed by the Company. And all shareholders
of the Company were equal in obtaining information that the Company disclosed.
In the future, according to the Basic Norms of Enterprise Internal Control and the
Guideline of the Shenzhen Stock Exchange for Internal Control of Listed Companies,
the Company will continue to perfect its corporate governance and form effective
checks and balances among organs of power, decision-making, supervision and
execution, so as to make sure that the Company’s governance will be improved
continuously.
II. Plan for profit distribution and transfer of capital reserves to share capital, as
well as the execution thereof
According to resolutions of the Annual Shareholders’ General Meeting of 2010, the
Board of Directors implemented and finished the profit distribution for 2010.
III. Major litigations and arbitrations
There was no significant litigation or arbitration during the reporting period.
IV. Stock equity of other listed companies held by the Company
The Company did not hold any stock equities of other listed companies.
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V. There was no significant acquisition, sale or reorganization of assets or other
substantial events in the reporting period.
VI. Major related-party transactions
(I) There was no significant non-operating related transaction.
(II) Implementation of routine operating related-party transactions
For details of the implementation of the Company’s routine operating related-party
transactions during the reporting period, please refer to the Notes to Financial
Statements.
VII. The Company did not execute any important contract during the reporting
period.
VIII. As at the end of the reporting period, the Company had made no major
guarantee; and the controlling shareholder or other related party had occupied
the Company’s funds.
IX. Special explanation and independent opinion of the independent directors on
capital occupation by related parties or provision of external guarantees by the
Company
According to the CSRC Document ZJF [2003] No. 56—the Circular on Regulating
Capital Flows between Listed Companies and Their Related parties and Listed
Companies’ Provision of Guarantees for External Parties, as well as the Notice of the
Shenzhen Stock Exchange on Doing a Good Job in Listed Companies’ Disclosure of
their Semi-annual Reports 2011, as the independent directors of Anhui Gujing
Distillery Company Limited, we have made the following opinions on capital
occupation by the Company’s related parties and the current and accumulative
external guarantees provided by the Company, under the principles of strict
self-regulation, normative operation and being fact-based upon relevant checks and
investigations:
During the reporting period, the Company did not provide any significant guarantee,
and the controlling shareholder and other related parties did not occupy any capital of
the Company.
We believe that: The directors, supervisors and senior executives of the Company can
strictly abide by relevant laws and regulations as well as internal control rules. There
are no funds occupied by the controlling shareholder or other related parties. The
Company has not provided any guarantee in any form for other companies or
organizations. The Company has well controlled the risk of external guarantee
provision and protected the interests of minority shareholders.
Independent directors: Wang Ruihua, Wu Cisheng, Liu Libin
X. Execution of the information insider management rules
In the reporting period, the company secretary was responsible for the disclosure of
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sensitive information. Before the disclosure of any significant information in
periodical reports or interim announcements, the personnel who had access to the
insider information all filled in the Registration Form for Information Insiders in a
timely manner as required by regulatory authorities. During the reporting period, no
insider traded the Company’s shares making use of the insider information before the
disclosure of significant sensitive information that might influence the Company’s
stock price.
During the first half of the year, the Company strictly carried out the Management
Rules for Information Reporting, Submission to and Use by External Parties,
effectively controlling the reporting and submission of the Company’s business data,
financial statements and other internal information to external parties. No information
of the Company was leaked against applicable laws and regualtions during the
reporting period.
XI. Reception of surveys, interviews and visits in the reporting period
The Company did not receive any survey, interview or visit from any institution or
individual during the reporting period.
In the first half of 2011, for investor inquiries made over the phone, the Company
answered them according to relevant rules. The Company never disclosed, revealed or
leaked any significant confidential information selectively, privately or in advance to
certain parties, ensuring the fairness of information disclosure.
XII. Particulars about engagement and dismissal of the accounting firm
The 2010 Annual Shareholders’ General Meeting of the Company resolved to
continue to engage Reanda Certified Public Accountants as the Company’s audit
agency for 2011. For the reporting period, the Company paid an audit fee of RMB
0.35 million to the accounting firm.
XIII. Progress of the private offering project launched by the Company
The A-share private offering plan was reviewed and approved first at the 26th Session
of the Fifth Board of Directors on 26 Nov. 2010 and then at the First Special
Shareholders’ General Meeting for 2011. According to the plan, the net amount of the
raised capital to be used would be RMB 1.266 billion, and the offering would raise a
total sum less than RMB 1.30 billion.
According to the authorization by the First Special Shareholders’ General Meeting for
2011 to the Board of Directors, a special session of the Fifth Board of Directors was
held on 6 Apr. 2011. According to the corresponding announcement, it was resolved
to take out RMB 39,845,200 (the self-owned capital previously input) from the total
raised capital of the offering. Upon the adjustment, the total raised capital of the
offering stood at an amount less than RMB 1,260,154,800, with the net raised capital
to be invested in projects being RMB 1,226,154,800. The CSRC issued on 15 Jun.
2011 the Reply on the Private Stock Offering of Anhui Gujing Distillery Company
Limited (Zheng-Jian-Xu-Ke [2011] No. 943), approving the Company to issue less
than 20 million additional private A-shares in number, with a 6-month valid period
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starting from the date of approval.
Before the arrival of the raised capital of this offering, according to its production and
operation needs, the Company would input self-raised capital in advance for some
projects to be invested with the raised capital. And the Company would take out all
the previously input self-raised capital from the raised capital of this offering upon the
latter’s arrival.
Usage plan for the raised capital of this offering:
Unit: RMB Ten thousand
Serial Raised capital to be
Project name Total investment
No. invested
Technological Transform on the Brewage
1 13,500 12,194.42
of High-quality Base Spirits
Construction of Base Spirit Blending &
2 68,600 65,921.06
Filling Centre and Ancillary Facilities
3 Construction of Marketing Network 27,500 27,500.00
4 Brand Promotion 65,000 17,000.00
Total 174,600 122,615.48
XIV. Subsequent events
As approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943, the
Company accomplished the issuance-related work of the private offering project on
19 Jul. 2011. The Company issued a total of 16.80 million shares of RMB ordinary
shares (A-shares) to 6 specific investors at the price of RMB 75.00 per share, raising
RMB 1.26 billion in total. Reanda Certified Public Accountants verified the raised
capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi
[2011] No. 1065. GF Securities Co., Ltd. served as the sponsor for the additional issue
by the Company in the Shenzhen Stock Exchange.
16
English Translation for Reference Only
Chapter VI Financial Report
I. Financial statements
Balance Sheet
Prepared by: ANHUI GUJING DISTILLERY COMPANY LIMITED
30 Jun. 2011 Unit: RMB Yuan
Closing balance Opening balance
Items
Consolidation The Company Consolidation The Company
Current Assets:
Monetary funds 663,079,295.66 590,395,007.96 643,231,404.42 480,737,398.56
Settlement reserves
Intra-group lendings
Transactional financial
assets
Notes receivable 391,564,070.58 389,905,050.68 96,030,755.37 95,501,941.37
Accounts receivable 41,430,743.51 102,887.50 12,818,732.56 141,180.50
Accounts paid in
5,584,689.99 4,994,654.85 1,829,510.94 1,204,384.85
advance
Premiums receivable
Reinsurance premiums
receivable
Receivable reinsurance
contract reserves
Interest receivable
Dividend receivable
Other accounts
97,744,409.65 277,853,147.42 77,890,785.60 267,012,565.97
receivable
Financial assets
purchased under
agreements to resell
Inventories 481,855,981.80 436,480,735.40 452,879,486.68 415,921,177.10
Non-current assets due
within 1 year
Other current assets
Total current assets 1,681,259,191.19 1,699,731,483.81 1,284,680,675.57 1,260,518,648.35
Non-current assets:
Loans by mandate and
advances granted
Available-for-sale
financial assets
Held-to-maturity
investments
17
English Translation for Reference Only
Long-term accounts
receivable
Long-term equity
217,991,408.32 227,891,408.32
investment
Investing property 42,710,660.92 42,710,660.92 45,302,486.98 45,302,486.98
Fixed assets 334,121,980.06 127,894,759.87 340,073,469.76 124,128,116.13
Construction in
10,763,682.75 5,730,911.64 9,044,377.55 6,563,500.47
progress
Engineering materials
Disposal of fixed assets
Production biological
assets
Oil-gas assets
Intangible assets 200,918,757.37 75,409,547.35 154,446,392.29 27,308,645.11
R&D expense
Goodwill
Long-term deferred
1,328,082.17 1,328,082.17 1,770,776.25 1,770,776.25
expenses
Deferred income tax
22,110,774.39 21,216,726.81 22,613,635.60 21,187,756.69
assets
Other non-current
assets
Total of non-current assets 611,953,937.66 492,282,097.08 573,251,138.43 454,152,689.95
Total assets 2,293,213,128.85 2,192,013,580.89 1,857,931,814.00 1,714,671,338.30
Current liabilities:
Short-term borrowings
Borrowings from
Central Bank
Customer bank deposits
and due to banks and
other financial institutions
Intra-group borrowings
Transactional financial
liabilities
Notes payable
Accounts payable 113,707,078.52 87,283,797.59 125,477,892.08 114,914,319.09
Accounts received in
233,472,954.11 747,747,445.98 91,491,403.51 300,050,355.69
advance
Financial assets sold for
repurchase
Handling charges and
commissions payable
Employee’s 121,853,415.84 83,029,865.14 125,967,749.54 74,580,660.62
18
English Translation for Reference Only
compensation payable
Tax payable 368,116,984.93 228,371,916.38 334,701,132.86 226,903,366.29
Interest payable
Dividend payable
Other accounts payable 195,510,660.84 82,041,672.16 125,010,186.17 55,588,232.84
Reinsurance premiums
payable
Insurance contract
reserves
Payables for acting
trading of securities
Payables for acting
underwriting of securities
Non-current liabilities
due within 1 year
Other current liabilities 628,894.10 431,500.00 1,257,788.19 863,000.00
Total current liabilities 1,033,289,988.34 1,228,906,197.25 803,906,152.35 772,899,934.53
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Specific payables
Estimated liabilities
Deferred income tax
liabilities
Other non-current
4,750,113.83 4,351,000.00 4,550,113.83 4,151,000.00
liabilities
Total non-current
4,750,113.83 4,351,000.00 4,550,113.83 4,151,000.00
liabilities
Total liabilities 1,038,040,102.17 1,233,257,197.25 808,456,266.18 777,050,934.53
Owners’ equity (or
shareholders’ equity)
Paid-up capital (or
235,000,000.00 235,000,000.00 235,000,000.00 235,000,000.00
share capital)
Capital reserves 336,039,042.92 288,262,657.08 336,039,042.92 288,262,657.08
Less: Treasury stock
Specific reserves
Surplus reserves 97,283,190.70 92,180,930.43 97,283,190.70 92,180,930.43
Provisions for general
risks
Retained profits 586,850,793.06 343,312,796.13 381,153,314.20 322,176,816.26
Foreign exchange
difference
19
English Translation for Reference Only
Total equity attributable
1,255,173,026.68 958,756,383.64 1,049,475,547.82 937,620,403.77
to owners of the Company
Minority interests
Total owners’ equity 1,255,173,026.68 958,756,383.64 1,049,475,547.82 937,620,403.77
Total liabilities and
2,293,213,128.85 2,192,013,580.89 1,857,931,814.00 1,714,671,338.30
owners’ equity
Income Statement
Prepared by: ANHUI GUJING DISTILLERY COMPANY LIMITED
Jan.-Jun. 2011 Unit: RMB Yuan
Reporting period Same period of last year
Items
Consolidation The Company Consolidation The Company
I. Total operating revenues 1,583,297,669.82 926,197,487.04 856,347,372.96 494,783,937.72
Including: Sales income 1,583,297,669.82 926,197,487.04 856,347,372.96 494,783,937.72
Interest income
Premium income
Handling charge and
commission income
II. Total operating cost 1,194,588,871.08 783,161,660.58 719,462,302.12 438,254,757.59
Including: Cost of sales 405,155,605.30 393,587,049.61 241,788,417.54 212,032,214.67
Interest expenses
Handling charge and
commission expenses
Surrenders
Net claims paid
Net amount
withdrawn for the insurance
contract reserve
Expenditure on
policy dividends
Reinsurance
premium
Taxes and associate
239,474,072.21 226,271,977.03 129,503,665.00 121,901,746.02
charges
Selling and
337,004,379.60 199,540,427.62
distribution expenses
Administrative
222,974,971.23 168,408,927.06 151,923,089.23 106,002,812.68
expenses
Financial expenses -10,495,581.72 -5,222,173.59 -3,647,510.77 -2,036,229.28
Asset impairment
475,424.46 115,880.47 354,213.50 354,213.50
loss
Add: Gain/(loss) from
0.00 0.00
change in fair value (“-”
20
English Translation for Reference Only
means loss)
Gain/(loss) from
299,516.89 879,284.55 645,653.65
investment (“-” means loss)
Including: share of profits in
associates and joint ventures
Foreign exchange gains (“-”
means loss)
III. Business profit (“-”
388,708,798.74 143,335,343.35 137,764,355.39 57,174,833.78
means loss)
Add: non-operating
5,916,789.73 1,901,357.07 9,177,114.26 7,802,557.76
income
Less: non-operating
286,188.36 129,123.05 1,525,021.89 1,466,135.05
expense
Including: loss from
122,757.19 1,394,204.42 27,794.00
non-current asset disposal
IV. Total profit (“-” means
394,339,400.11 145,107,577.37 145,416,447.76 63,511,256.49
loss)
Less: Income tax
106,391,921.25 41,721,597.50 38,029,457.72 16,647,468.80
expense
V. Net profit (“-” means
287,947,478.86 103,385,979.87 107,386,990.04 46,863,787.69
loss)
Attributable to owners
287,947,478.86 103,385,979.87 107,386,990.04 46,863,787.69
of the Company
Minority shareholders’
income
VI. Earnings per share
(I) basic earnings per
1.23 0.44 0.46 0.20
share
(II) diluted earnings per
1.23 0.44 0.46 0.20
share
Ⅶ. Other comprehensive
incomes
Ⅷ. Total comprehensive
287,947,478.86 103,385,979.87 107,386,990.04 46,863,787.69
incomes
Attributable to owners
287,947,478.86 103,385,979.87 107,386,990.04 46,863,787.69
of the Company
Attributable to minority
shareholders
Cash Flow Statement
Prepared by: ANHUI GUJING DISTILLERY COMPANY LIMITED
Jan.-Jun. 2011 Unit: RMB Yuan
Items Reporting period Same period of last year
21
English Translation for Reference Only
Consolidation The Company Consolidation The Company
I. Cash flows from
operating activities:
Cash received from sale
of commodities and 1,297,349,192.92 920,002,968.03 944,450,759.79 669,099,779.94
rendering of service
Net increase of deposits
from customers and dues
from banks
Net increase of loans
from the central bank
Net increase of funds
borrowed from other
financial institutions
Cash received from
premium of original
insurance contracts
Net cash received from
reinsurance business
Net increase of deposits
of policy holders and
investment fund
Net increase of disposal
of tradable financial assets
Cash received from
interest, handling charges
and commissions
Net increase of
intra-group borrowings
Net increase of funds in
repurchase business
Tax refunds received 422,693.25 185,409.52
Other cash received
relating to operating 45,771,101.29 34,636,174.52 32,212,518.52 6,397,998.92
activities
Subtotal of cash inflows
1,343,542,987.46 954,639,142.55 976,848,687.83 675,497,778.86
from operating activities
Cash paid for goods
285,643,594.11 188,896,577.24 350,562,945.06 297,605,191.76
and services
Net increase of
customer lendings and
advances
Net increase of funds
deposited in the central
22
English Translation for Reference Only
bank and amount due
from banks
Cash for paying claims
of the original insurance
contracts
Cash for paying
interest, handling charges
and commissions
Cash for paying policy
dividends
Cash paid to and for
157,164,781.96 75,008,438.31 81,480,491.28 47,482,907.43
employees
Various taxes paid 531,346,111.98 386,162,796.55 299,367,760.53 195,644,012.34
Other cash payment
relating to operating 174,302,577.83 35,367,982.85 83,398,213.86 10,111,917.21
activities
Subtotal of cash outflows
1,148,457,065.88 685,435,794.95 814,809,410.73 550,844,028.74
from operating activities
Net cash flows from
195,085,921.58 269,203,347.60 162,039,277.10 124,653,750.12
operating activities
II. Cash flows from
investing activities:
Cash received from
9,900,000.00
withdrawal of investments
Cash received from
879,284.55 645,653.65
return on investments
Net cash received from
disposal of fixed assets,
64,799.30 3,275.55 14,207,842.23 14,207,842.23
intangible assets and other
long-term assets
Net cash received from
disposal of subsidiaries or
other business units
Other cash received
relating to investing
activities
Subtotal of cash
inflows from investing 64,799.30 9,903,275.55 15,087,126.78 14,853,495.88
activities
Cash paid to acquire
fixed assets, intangible
93,006,246.14 87,152,430.25 7,118,379.86 5,040,050.62
assets and other long-term
assets
Cash paid for
23
English Translation for Reference Only
investment
Net increase of pledged
loans
Net cash paid to acquire
subsidiaries and other
business units
Other cash payments
relating to investing
activities
Subtotal of cash outflows
93,006,246.14 87,152,430.25 7,118,379.86 5,040,050.62
from investing activities
Net cash flows from
-92,941,446.84 -77,249,154.70 7,968,746.92 9,813,445.26
investing activities
III. Cash Flows from
Financing Activities:
Cash received from
capital contributions
Including: Cash
received from minority
shareholder investments
by subsidiaries
Cash received from
borrowings
Cash received from
issuance of bonds
Other cash received
relating to financing
activities
Subtotal of cash inflows
from financing activities
Repayment of
5,000,000.00 5,000,000.00
borrowings
Cash paid for interest
expenses and distribution 82,296,583.50 82,296,583.50 82,608,627.58 82,608,627.58
of dividends or profit
Including: dividends
or profit paid by
subsidiaries to minority
shareholders
Other cash payments
relating to financing
activities
Sub-total of cash outflows
82,296,583.50 82,296,583.50 87,608,627.58 87,608,627.58
from financing activities
24
English Translation for Reference Only
Net cash flows from
-82,296,583.50 -82,296,583.50 -87,608,627.58 -87,608,627.58
financing activities
IV. Effect of foreign
exchange rate changes on
cash and cash equivalents
V. Net increase in cash
19,847,891.24 109,657,609.40 82,399,396.44 46,858,567.80
and cash equivalents
Add: Opening
balance of cash and cash 643,231,404.42 480,737,398.56 361,051,750.67 279,382,070.44
equivalents
VI. Closing balance of
663,079,295.66 590,395,007.96 443,451,147.11 326,240,638.24
cash and cash equivalents
25
English Translation for Reference Only
Statement of Changes in Owners’ Equity (Consolidated)
Prepared by: ANHUI GUJING DISTILLERY COMPANY LIMITED For the first half of 2011 Unit: (RMB) Yuan
Reporting period Last year
Equity attributable to owners of the Company Equity attributable to owners of the Company
Paid-up Minorit Paid-up Minorit
Total Total
Items capital Less: Specifi Genera y capital Less: Specifi Genera y
Capital Surplus Retaine owners’ Capital Surplus Retaine owners’
(or treasur c l risk Others interest (or treasur c l risk Others interest
reserve reserve d profit equity reserve reserve d profit equity
share y stock reserve reserve s share y stock reserve reserve s
capital) capital)
235,00 336,03 381,15 1,049,4 235,00 326,06 176,95 807,99
97,283, 69,977,
I. Balance at the end of the previous year 0,000.0 9,042.9 3,314.2 75,547. 0,000.0 4,758.9 5,910.5 7,950.9
190.70 281.49
0 2 0 82 0 2 2 3
Add: change of accounting policy
Correction of errors in previous periods
628,00 63,118. -67,362 623,75
Other
0.00 44 .48 5.96
235,00 336,03 381,15 1,049,4 235,00 326,69 176,88 808,62
97,283, 70,040,
II. Balance at the beginning of the year 0,000.0 9,042.9 3,314.2 75,547. 0,000.0 2,758.9 8,548.0 1,706.8
190.70 399.93
0 2 0 82 0 2 4 9
205,69 205,69 204,26 240,85
III. Increase/ decrease of amount in the 9,346,2 27,242,
7,478.8 7,478.8 4,766.1 3,840.9
year (“-” means decrease)
84.00 790.77
6 6 6 3
26
English Translation for Reference Only
287,94 287,94 313,75 313,75
(I) Net profit 7,478.8 7,478.8 7,556.9 7,556.9
6 6 3 3
(II) Other comprehensive incomes
287,94 287,94 313,75 313,75
Subtotal of (I) and (II) 7,478.8 7,478.8 7,556.9 7,556.9
6 6 3 3
(III) Capital paid in and reduced by 9,916,2 9,916,2
owners
84.00 84.00
1. Capital paid in by owners
2. Amounts of share-based payments
recognized in owners’ equity
9,916,2 9,916,2
3. Others
84.00 84.00
-109,49
-82,250 -82,250 27,242, -82,250
(IV) Profit distribution 2,790.7
,000.00 ,000.00 790.77 ,000.00
7
27,242, -27,242
1. Appropriations to surplus reserves
790.77 ,790.77
2. Appropriations to general risk
provisions
27
English Translation for Reference Only
3. Appropriations to owners (or -82,250 -82,250 -82,250 -82,250
shareholders)
,000.00 ,000.00 ,000.00 ,000.00
4. Other
(V) Internal carry-forward of owners’
equity
1. New increase of capital (or share
capital) from capital public reserves
2. New increase of capital (or share
capital) from surplus reserves
3. Surplus reserves for making up
losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the period
2. Used in the period
-570,00 -570,00
(Ⅶ) Other
0.00 0.00
235,00 336,03 586,85 1,255,1 235,00 336,03 381,15 1,049,4
97,283, 97,283,
IV. Closing balance 0,000.0 9,042.9 0,793.0 73,026. 0,000.0 9,042.9 3,314.2 75,547.
190.70 190.70
0 2 6 68 0 2 0 82
28
English Translation for Reference Only
Statement of Changes in Owners’ Equity (the Company)
Prepared by: ANHUI GUJING DISTILLERY COMPANY LIMITED For the first half of 2011 Unit: (RMB) Yuan
Reporting period Last year
Paid-up Paid-up
Less: General Total Less: General Total
Items capital Capital Specific Surplus Retained capital Capital Specific Surplus Retained
treasury risk owners’ treasury risk owners’
(or share reserve reserve reserve profit (or share reserve reserve reserve profit
stock reserve equity stock reserve equity
capital) capital)
235,000,0 288,262,6 92,180,93 322,176,8 937,620,4 235,000,0 288,184,0 64,938,13 159,241,6 747,363,8
I. Balance at the end of the previous year
00.00 57.08 0.43 16.26 03.77 00.00 10.28 9.66 99.35 49.29
Add: change of accounting policy
Correction of errors in previous periods
Other
235,000,0 288,262,6 92,180,93 322,176,8 937,620,4 235,000,0 288,184,0 64,938,13 159,241,6 747,363,8
II. Balance at the beginning of the year
00.00 57.08 0.43 16.26 03.77 00.00 10.28 9.66 99.35 49.29
III. Increase/ decrease of amount in the 21,135,97 21,135,97 27,242,79 162,935,1 190,256,5
78,646.80
year (“-” means decrease)
9.87 9.87 0.77 16.91 54.48
103,385,9 103,385,9 272,427,9 272,427,9
(I) Net profit
79.87 79.87 07.68 07.68
(II) Other comprehensive incomes
103,385,9 103,385,9 272,427,9 272,427,9
Subtotal of (I) and (II)
79.87 79.87 07.68 07.68
29
English Translation for Reference Only
(III) Capital paid in and reduced by
owners
1. Capital paid in by owners
2. Amounts of share-based payments
recognized in owners’ equity
3. Others
-82,250,0 -82,250,0 27,242,79 -109,492, -82,250,0
(IV) Profit distribution
00.00 00.00 0.77 790.77 00.00
27,242,79 -27,242,7
1. Appropriations to surplus reserves
0.77 90.77
2. Appropriations to general risk
provisions
3. Appropriations to owners (or -82,250,0 -82,250,0 -82,250,0 -82,250,0
shareholders)
00.00 00.00 00.00 00.00
4. Other
(V) Internal carry-forward of owners’
equity
1. New increase of capital (or share
capital) from capital public reserves
2. New increase of capital (or share
capital) from surplus reserves
3. Surplus reserves for making up
losses
30
English Translation for Reference Only
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the period
2. Used in the period
(Ⅶ) Other 78,646.80 78,646.80
235,000,0 288,262,6 92,180,93 343,312,7 958,756,3 235,000,0 288,262,6 92,180,93 322,176,8 937,620,4
IV. Closing balance
00.00 57.08 0.43 96.13 83.64 00.00 57.08 0.43 16.26 03.77
31
English Translation for Reference Only
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
For the six months ended 30 June 2011
（All amounts are expressed in RMB Yuan unless otherwise stated）
I. Company Profile
1. Company history
Anhui Gujing Distillery Company Limited (“the Company”) was registered in the People
Republic of China on 30 May 1996.
The Company has been issued 60,000,000 domestic listed foreign shares (“B” shares) in June
1996 and 20,000,000 ordinary shares (“A shares) on September 1996, ordinary shares are listed in
national and par value is one yuan per share. Those A share and B share are listed in Shenzhen
Stock exchange.
On May 29, 2006, a shareholder meeting was held to discuss and approval a program of equity
division of A share, the program was implement in June 2006. After implementation, all shares are
outstanding share, which include 147,000,000 shares with restrict condition on disposal, represent
62.55% of total equity, and 88,000,000 shares without restrict condition on disposal, represent
37.45% of total equity.
The Company issued on June 27, 2007, 11,750,000 outstanding shares with restrict condition on
disposal are listed in stock market on June 29, 2007. Up to that day, outstanding shares with
restrict condition on disposal are 135,250,000, representing 57.55% of total equity, the share
without restrict condition are 99,750,000, representing 42.45% of total equity.
The Company issued on July 17, 2008, 11,750,000 outstanding shares with restrict condition on
disposal are listed in stock market on July 18, 2008. Up to that day, outstanding shares with
restrict condition on disposal are 123,500,000, representing 52.55% of total equity, the share
without restrict condition are 111,500,000, representing 47.45% of total equity.
The Company issued on July 24, 2009, 123,500,000 outstanding shares with restrict condition on
disposal are listed in stock market on 29 July, 2009. Up to that day, the Company’s all shares are
all tradable.
Legal representative of the Company: Yu Lin
Registration address of the Company: Gujing Town, Bozhou City, Anhui Province
Parent company of the Company: Anhui Gujing Group Co., Ltd. (“the Gujing Group” hereinafter)
2. The industry
The Company belongs to the food manufacturing industry.
3. Scope of business
32
English Translation for Reference Only
The approved business of the Company including procurement of grain (operating with business
license), manufacture of distilled spirits, beer, red wine, wine distilling facilities, packaging
material, bottles, alcohol, feeds, grease (limited to byproducts from wine manufacture), and
research and development of high-tech, biotechnology development, agricultural and sideline
products deep processing, as well as sale of self-manufacturing products.
4. Main product
The company’s main product is grain distilled spirit.
5. Explanation on changes in main business, significant changes in equity, occurrence of
significant merger and reorganization during the reporting period
There are no changes in main business, occurrence of significant merger or reorganization for the
Company during the reporting period.
The Company’s parent company— Gujing Group— reduced to hold 8 million shares of the
Company from 9 Aug. 2010 to 17 Aug. 2010, after which the shareholding proportion of Gujing
Group changed from 61.15% to 57.75%.
II. Summary of significant accounting policies and estimates as well as correction of previous
errors
1. Bases for preparation of the financial statements
The financial statements of the Company have been prepared on the going concern basis with
reference to the actual occurrence of transactions and events and in accordance with the China
Enterprise Accounting Standards (CAS) issued by the Ministry of Finance on 15 Feb. 2006 and
the significant accounting policies and estimates as set out in part two of this FS notes.
2. Declaration of Compliance with the Enterprise Accounting Standards
The financial statements of the Company have been prepared in accordance with the Enterprise
Accounting Standards to present truly and completely the financial position, result of operation
and cash flow and the relevant information of the Company.
3. Accounting year
The Company employs a period of calendar days from 1 Jan. to 31 Dec. each year as accounting
year.
4. Presentation currency
The Company’s presentation currency is Renminbi (“RMB”).
5. Accounting treatment of the business combination that is under the same control and not
under the same control.
(1) Accounting treatment of the business combination that is under the same control
Those assets and liabilities obtained by the Company during the business combination should be
recognized in the carrying value of the equity of the merged party on the merger date. The
difference between the carrying amount of the net assets obtained and carrying amount of the
merger consideration (or total par value of issued shares ) paid shall be adjusted to capital reserve.
If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against
retained earnings.
(2) Accounting treatment of the business combination that is not under the same control
The consideration paid for the business combination exceeds the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill;
Where the cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, should be review the fair value of acquiree’s identifiable assets, liabilities
33
English Translation for Reference Only
and contingency liabilities , as well as the computation of combination cost, after reassessment,
the difference shall be recognized in profit or loss at the current period.
6. Basis of Consolidated Financial Statement
(1) Consolidation Scope
The consolidated financial statements prepared are in accordance with the No. 33 Enterprise
Accounting Standards – Consolidated Financial Statement issued in Feb. 2006. The consolidated
financial statements incorporate the financial statements of the Company and its subsidiaries
directly controlled or indirectly controlled by the Company as well as units with special purpose.
Control is achieved where the Company has the power to govern the financial and operating
policies of an invested enterprise so as to obtain benefits from its operating activities.
If there is evidence provide that the invested company is not controlled by holding company, the
invested company would not be included in the consolidation scope.
(2) Purchase and sale of equities of subsidiaries
The effective purchase day and sales day shall be recognized after transferring the related risks
and reward of ownership of equities of subsidiaries. For the subsidiaries not under the same
control from business combination, the results of operation and cash flow of subsidiaries before
disposal or after acquired the share have been included in the consolidated income statement and
consolidated cash flow statement; for the subsidiaries under the same control from business
combination, the operation results and cash flow from beginning of combination period to
consolidation date have been included in the consolidated income statement and consolidated cash
flow statement and disclosed in statement individual, the comparative amount in consolidation
statement has been adjusted accordingly.
For the long-term equity investment gained from acquiring minority equity shares of subsidiaries,
on the date of preparing consolidation statement, the difference between the value of the new
long-term equity investment and the value of subsidiary’s net assets calculated by proportion of
shareholdings from acquiring date (or combination date) shall be adjusted to owners’
equity(capital reserve), if the capital reserve is not sufficient to absorb the difference, any excess
shall be adjusted against retained earnings.
(3) Adjusting the subsidiary’ financial statement when different accounting policy and reporting
period existing between the subsidiaries and the parent company.
If the subsidiary has different accounting policy and reporting period with the parent company, the
Company has made relevant adjustment in the subsidiary’ financial statement according to the
parent company’s accounting policy while preparing its consolidated financial statement; For
those subsidiary acquired not under the same control, the Company has made relevant adjustment
in the subsidiary’ financial statement according to the fair value of identifiable assets, liabilities
and contingent liabilities of the subsidiary on the acquisition date.
(4) Consolidation method
All significant accounts and transactions between the Company and the subsidiary and those
between the subsidiaries are offset while preparing consolidated financial statement.
The minority interest in the net assets of merged subsidiary shall be individually listed under the
owners’ equity in the consolidated financial statement.
7. Standard of cash and cash equivalents
Cash equivalents are short-term (normally with a maturity date within three months from the date
of acquisition), high-liquidity investments that are readily convertible to known amounts of cash
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and low-risk of changes in value.
8. Foreign currency business and translation of foreign currency financial statement
(1) Foreign currency transactions
The Company’s foreign currency transactions are converted into presentation currency (RMB) at
spot exchange rates of transaction date (usually refer to the middle price of the foreign exchange
rate of transaction date).
On the balance sheet date, those foreign currency monetary items within the financial statement
shall be converted at the spot rates on the balance sheet date. The exchange difference caused by
the change in the exchange rate from the initial recognized date and the current balance sheet date
shall be included in current profits and losses. Those foreign currency non-monetary items
measured by historical cost shall still be converted at the spot exchange rate of transaction date,
without changing its presentation currency amount. Those foreign currency non-monetary items
measured by fair value shall be converted at the spot exchange rate on the day when the fair value
can be determined, the difference between amount after converted into presentation currency and
the original presentation currency amount shall be treated as the changes in the fair value and
recognized in the current profits and losses.
(2) Translation of foreign currency financial statement
① Those items of assets and liabilities in the balance sheet shall be converted at the spot rate on
the balance sheet date; Items of owners’ equity other than undistributed profits shall be converted
at the spot rate on the transaction date.
② Those items of income and expenses in income statement shall be converted at the spot rate on
the transaction date.
The difference caused from the above translation method shall be individually listed under the
owners’ equity in the balance sheet.
③ The items in cash flow statement shall be converted at the spot rate on the occurrence date of
the cash flow. And the affected amount due to the changes of exchange rate shall be as the
adjusted item and individually listed in the cash flow statement.
9. Financial Instruments
(1) Classification of financial assets and financial liabilities
The Company classified its financial assets into four categories in accordance with the investment
purpose and economic substance, which are financial assets measured at fair value and the change
in fair value recorded into current profits and losses, held-to-maturity investments, loans and
receivables, available-for-sale financial assets.
The financial liabilities are divided into financial liabilities measured at fair value and the change
in fair value recorded into current profits and losses and other financial liabilities according to the
economic substance.
① Financial assets or financial liabilities measured at fair value and the change in fair value
recorded into current profits and losses: including transactional financial assets or financial
liabilities and financial assets or financial liabilities designated by the Company to be measured at
fair value and the change in fair value recorded into current profits and losses.
Transactional financial assets or financial liabilities refer to the financial assets or financial
liabilities meeting one of the following conditions:
a. The main purpose of acquiring the financial assets or bearing the financial liabilities is to sell or
repurchase in the near term; or
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b. Part of a portfolio of identified financial instruments that are managed together and there is
evidence that the Company manage them under the pattern of short-term profit-gaining recently;
or
c. A derivative instrument (except for a derivative instrument that is a designated and effective
hedging instrument, a derivative instrument of financial guarantee contract, a derivative
instrument that connected with and settled by equity instrument, whose price could not be quoted
in active market and the fair value could not be measured reasonably).
Financial assets or financial liabilities designated by the Company to be measured at fair value and
the change in fair value recorded into current profits and losses refer to the financial assets or
financial liabilities meeting one of the following conditions:
a. The designation can eliminate or significantly reduce the inconsistent situation of the relevant
gains and losses on the aspects of recognition and measurement caused by adopting different
measurement basis of financial assets and financial liabilities;
b. The official documents on Company risk management or investment strategy has stated that the
financial assets portfolio, the financial liabilities portfolio, or the financial assets and financial
liabilities portfolio are managed and evaluated on the basis of fair value and reported to key
management person.
② Held-to-maturity investments: refer to non-derivative financial assets with fixed maturity date,
fixed or determinable payments that enterprise has the clear intention and ability to hold to
maturity. Mainly include fixed-rate national bonds, floating-rate corporate bonds and etc. that the
Company's management has a clear intention and ability to hold to maturity.
③ Receivables: are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Receivables of the Company mainly refer to the Company's
accounts receivable and other accounts receivable formed by sales of goods or rendering of
services.
④ Available-for-sale financial assets: are those non-derivative financial assets that are designated
as available for sale at initial recognition, and those financial assets not divided into financial
assets measured at fair value and the change in fair value recorded into current profits and losses,
held-to-maturity investments, loans and receivables.
⑤ Other financial liabilities: are those financial liabilities not divided into financial liabilities
measured at fair value and the change in fair value recorded into current profits and losses.
(2) Measurement of financial assets and financial liabilities
The Company’s financial asset or financial liability is recognized at its fair value initially. For
financial assets or financial liabilities measured at fair value and the change in fair value recorded
into current profits and losses, relevant transaction costs that are directly recorded into current
profits and losses; for other types of financial assets or financial liabilities, relevant transaction
costs are recorded into the initial recognized amount.
Subsequent measurement of financial assets and financial liabilities by the Company:
① Financial assets or financial liabilities measured at fair value and the change in fair value
recorded into current profits and losses shall be made subsequent measurement at its fair value,
the gains and losses from the change of fair value and termination of recognition shall be
recorded into current profits and losses.
② Held-to-maturity investments shall be made subsequent measurement at amortized cost using
the effective interest method, the gains and losses from termination of recognition, depreciation or
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amortization shall be recorded into current profits.
③ Receivables shall be made subsequent measurement at amortized cost using the effective
interest method, the gains and losses from termination of recognition, depreciation or amortization
shall be recorded into current profits.
④ Available-for-sale financial assets shall be made subsequent measurement at its fair value, the
gains and losses from the change of fair value shall be recorded into capital reserve. Disposal of
available-for-sale financial assets, the difference between consideration received and carrying
value of the financial assets included into investment profits or losses account; at the same time,
turn out the disposal amount corresponding to the cumulative amount of changes in fair value that
originally directly recorded into owners’ equity investment, and recorded into investment profits
or losses account. The impairment losses of such financial assets and exchange differences of
foreign monetary financial assets shall be recorded into current profits and losses. Interest received
and cash dividends declared to distribute by the invested company during the holding period of
such financial assets shall be recognized into investment income.
⑤ Other financial liabilities that connected with and settled by equity instrument, whose price
could not be quoted in active market and the fair value could not be measured reasonably shall be
made subsequent measurement by cost.
The financial guarantee contract is not belong to financial liabilities designated by the Company to
be measured at fair value and the change in fair value recorded into current profits and losses, as
well as the loan commitment is not belong to financial liabilities designated by the Company to be
measured at fair value and the change in fair value recorded into current profits and losses and for
lending at the lower-than-market rate, after initial recognition, which shall be made subsequent
measurement at the higher of：(a) Amount recognized by < Enterprise Accounting Standard 13—
Contingent events> ； (b) Balance of initial recognition amount after deducting the accumulated
amortization refer to .
Other financial liabilities shall be made subsequent measurement at amortized cost using the
effective interest method, the gains and losses from termination of recognition or amortization
shall be recorded into current profits and losses.
⑥ Fair value：it refers to the amount, at which both parties to a transaction who are familiar with
the condition exchange their assets or clear off their debts under fair conditions. In a fair
transaction, both parties to it shall be enterprises in continuous operation, and do not plan or do
not need to carry out any liquidation, significantly reduce their operational scale or carry out
transactions notwithstanding the unfavorable conditions they face. As for the financial assets or
financial liabilities for which there is an active market, the quoted prices in the active market shall
be used to determine the fair values thereof. If there is no active market, company should adopt
valuation techniques to determine the fair value.
⑦ The post-amortization cost of a financial asset or financial liability： it refers the balance of the
initially recognized amount of the financial asset or financial liability after deducting the already
paid principal, adding or deducting the accumulative amount of amortization incurred from
amortizing the balance between the initially recognized amount and the amount of the maturity
date by adopting the actual interest rate method, and deducting the impairment losses that have
actually incurred.
⑧ The actual interest rate method: it refers to the method by which the post-amortization costs
and the interest incomes of different installments or interest expenses are calculated in light of the
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actual interest rates of the financial assets or financial liabilities (including a set of financial assets
or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future
cash flow of a financial asset or financial liability within the predicted term of existence or within
a shorter applicable term into the current carrying amount of the financial asset or financial
liability. When the actual interest rate is determined, the future cash flow shall be predicted on the
basis of taking into account all the contractual provisions concerning the financial asset or
financial liability (including the right to repay the loan ahead of schedule, call options, similar
options and etc.), and the future credit losses shall not be taken into account.
(3) Transfer and termination of recognition of financial assets
① Where a financial asset satisfies any of the following requirements, the recognition of it shall
be terminated:
a. Where the contractual rights for collecting the cash flow of the said financial asset are
terminated; or
b. Where the financial asset has been transferred and nearly all of the risks and rewards related to
the ownership of the financial asset have been transferred to the transferee; or
c. Where the financial asset has been transferred but the enterprise does not transfer or retain
nearly all of the risks and rewards related to the ownership of a financial asset, and the enterprise
gives up its control over the financial asset.
② If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the
Company recorded the difference between the amounts of the following two items into the current
profits and losses:
a. The book value of the transferred financial asset;
b. The sum of consideration received from the transfer, and the accumulative amount of the
changes of the fair value originally recorded in the owner's equities.
③ If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire
book value of the transferred financial asset shall, between the portion whose recognition has been
stopped and the portion whose recognition has not been stopped, be apportioned according to their
respective relative fair value, and the difference between the amounts of the following two items
shall be included into the current profits and losses:
a. The book value of the portion whose recognition has been stopped;
b. The sum of consideration of the portion whose recognition has been stopped, and the portion of
the accumulative amount of the changes in the fair value originally recorded in the owner's
equity which is corresponding to the portion whose recognition has been stopped.
④ If the transfer of partial financial asset doesn’t satisfy the conditions to stop the recognition, the
Company shall continue to recognize the financial assets and recognized the consideration it
receives as a financial liability. For those financial assets transferred by adopting continuous
involvement method, the Company should recognize one financial asset and one financial liability,
according to the extent of the transferred financial assets under continuous involvement.
(4) Impairment test method of financial assets and withdrawal method of impairment provision
① If the Company have the following evidence to prove the impairment of financial assets, should
recognize the provision of impairment:
a. A serious financial difficulty occurs to the issuer or debtor;
b. The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the
payment of interests or the principal, etc.;
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c. The creditor makes any concession to the debtor which is in financial difficulties due to
economic or legal factors, etc.;
d. The debtor will probably become bankrupt or carry out other financial reorganizations;
e. The financial asset can no longer continue to be traded in the active market due to serious
financial difficulties of the issuer;
f. It is impossible to identify whether the cash flow of a certain asset within a certain combination
of financial assets has decreased or not. But after making an overall appraisal according to the
public data available, it is found that the predicted future cash flow of the said combination of
financial assets has indeed decreased since it was initially recognized and such decrease can be
measured.
g. Any seriously disadvantageous change has occurred to technical, market, economic or legal
environment, etc. wherein the debtor operates its business, which makes the investor of an equity
instrument unable to take back its investment;
h. Where the fair value of the equity instrument investment drops significantly or not
contemporarily;
i. Other objective evidences showing the impairment of the financial asset.
② On balance sheet date, the Company should adopt different impairment test method for
different category financial assets, and recognize provision for impairment:
a. Held-to-maturity investments ： on the balance sheet date, if there are objective evidence of
impairment for the investment, the Company has recognized the impairment loss by the balance
between the asset’s carrying amount and the present value of estimated future cash flows.
b. Available-for-sale financial assets ： on the balance sheet date, the Company analyzes the
impairment evidences of the financial assets, judging whether the fair value of the financial asset
continued to decline. Generally, if the fair value of financial assets had serious decline, after
consideration of all relevant factors, anticipating this is non-temporary, then identified the
available-for-sale financial assets has been impaired, and recognized the impairment loss. If the
fair value of the available-for-sale financial asset has a decline, when recognizing the impairment
losses, the Company shall transferred the accumulated losses from the decrease in fair value that
originally directly recorded in owners’ equity to the assets impairment losses account.
10. Accounts receivable
(1) Accounts receivable with significant amount and being individually withdrawn bad debts
provision
The judgment basis and amount of significant amount: on the balance sheet date, the Company
considered the amount of individual accounts receivable more than RMB 2 million (including 2
million) as accounts receivable with significant amounts.
Withdrawal method of bad debts provision for accounts receivable with significant amount and
being individually withdrawn bad debts provision: when making individual impairment test on
accounts receivable with significant amount, if there is objective evidence that the accounts
receivable have been impaired, the impairment loss shall be recognized based on the difference of
the book values higher than the present value of future cash flows, then withdraw the bad debts
provision.
If the accounts receivable with significant amount has not been impaired under the individual test,
which shall be withdrawn the bad debts provision by aging group as the credit risk group. Please
refer to Note II. 10. (2)
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(2) Accounts receivable withdrawn bad debts provision by group
Recognition basis
Type of group Withdrawal method
for group
Aging group Age Aging analysis
Withdrawing the bad debts provision by aging analysis in the group
Withdrawal proportion for Withdrawal proportion for
Age
accounts receivable(%) other accounts receivable (%)
Within 1 year（including 1 year）
Of which：within 6 months 1.00 1.00
6 months to 1 year 5.00 5.00
1-2 years 10.00 10.00
2-3 years 50.00 50.00
Over 3 years 100.00 100.00
(3) Accounts receivable with insignificant amount but being individually withdrawn bad debts
provision
Reason for individually withdrawing the bad debts provision: high credit risk.
Withdrawal method of bad debts provision: when making individual impairment test on accounts
receivable with insignificant amount but high credit risk, the impairment loss shall be recognized
based on the difference of the book values higher than the present value of future cash flows, then
withdraw the bad debts provision.
(4) Other accounts receivable (including notes receivable, advance to customers, interest
receivable, long-term accounts receivable and etc.) shall be withdrawn the bad debts provision
basing on the difference of the book values higher than the present value of future cash flows
(5) The accounts receivable among the companies in the consolidated scope shall not be
withdrawn the bad debts provision.
11. Inventory
(1) Category of inventory:
Inventory of the Company refers to enterprises’ hold-for-sale finished goods or merchandise,
product in process, and materials consumed in the production process or rendering of services, etc.
in the daily activities, which includes material in transit, raw materials, goods in process,
merchandise on hand, merchandise issued, entrusted processing materials and circulating materials,
etc.
(2) Valuation methods of inventories input and output:
The issue of inventories is calculated by the weighted average method; and the routine accounting
of inventory is calculated by actual cost.
(3) Recognition basis of net realizable value and withdrawal method of falling price provision for
inventories:
① Recognition of net realizable value for inventories:
Those inventories of merchandise, such as finished goods, commodities and materials used for
directly sale, the net realizable value is referred to the estimated selling price minus the estimated
selling expenses and related tax and fees in normal operating process. Those inventories of
materials needing being processed, the net realizable value is referred to the estimated selling
price of products minus the estimated finished cost and estimated selling expenses and related tax
and fees in normal operating process. The net realizable value of the inventory held to exercising
sales contract or service contract is based on the contract price. If the sales contracts are for less
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than the inventory quantities held, the net realizable value of the excess is based on general selling
prices.
② Withdrawal method of falling price provision for inventories:
On the balance sheet date, the evaluation criteria should base on the lower value between costs
and net realizable value. When net realizable value is lower than costs, falling price provision of
inventories shall be made. Under normal circumstances, the Company withdraws the falling price
provision in according to individual inventory items, but for large quantity and low-unit-price
inventories, falling price provision of inventories shall be made based on the category of
inventories; for those inventories that relating to the same product line that have similar purposes
or end uses, are produced and marketed in the same geographical area, and cannot be practicably
evaluated separately from other items in that product line, their falling price provision of
inventories shall be consolidated.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any
write-down of the inventories, have disappeared, the amount of write-down shall be recovered
and reversed from the original amount of depreciation reserve for inventories. The reversed
amount shall be included in the profits and losses of the current period.
(4) Inventory system for inventories: Perpetual inventory system.
(5) Amortization method of the low-value consumption goods and packing articles
The Company shall amortize the low-value consumption goods and packing through the one-off
amortization method.
12. Long-term equity investment
Long-term equity investment including the equity investments held by the Company, who can
able to exercise control, joint control or significant influence in the invested entity, or the
Company do not have control, joint control or significant influence on the invested entity, and
there is no active market quotation, the fair value measurement should not reliable.
(1) Initial measurement
The Company separates the following two cases of long-term equity investment in the
measurement:
① Long-term equity investment obtained through business combinations:
a. For obtaining subsidiary under common control, the consideration cost can be paid by cash
payment, non-monetary assets transfer or taking over the subsidiary’s liability. Under this
situation, the investment cost is carrying amount of owners’ equity of the subsidiary on the merger
date. The difference between the carrying amount of the net assets obtained and investment cost of
long-term equity investment shall be adjusted to capital reserve. If the capital reserve is not
sufficient to absorb the difference, any excess shall be adjusted against retained earnings. In the
case of company issues equity securities as the consideration, the investment cost is carrying
amount of owners’ equity of the subsidiary on the merger date. If the book value amount of the
issued shares is deemed as the capital, the difference between the carrying amount of the issued
shares and investment cost of long-term equity investment shall be adjusted to capital reserve. If
the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against
retained earnings. All direct expenses related to the merger, including the auditor fee,
evaluation expense, legal service expense, etc will be accrued to the current profit and
loss.
b. For obtaining subsidiary not under common control, the cost of long-term equity investment is
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fair value of assets paid, liabilities undertaken by the Company, or the fair value of equity bonds
issued. Where the cost of a business combination exceeds the acquirer’s interest in the fair value
of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill, Where the
cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, after reassessment, the difference shall be recognized in profit or loss for
the current period (non-operating income). The costs related to business combinations, including
the commission fees for audit, law services, assessment & consultancy services and other relevant
expenses occurred in the business combination by the combining party, shall be recorded into
current profits and losses upon their occurrence; the transaction expense from the issuance of
equity securities or bonds securities which are as consideration for combination by the combining
party, should be recorded as the initial amount of equity securities and bonds securities.
For business combination not under the same control realized by two or more transactions of
exchange, which was implemented relevant accounting treatment by separating the individual
financial statement and consolidated financial statement:
(I) In the individual financial statement, the investment cost was the sum of the book value of
such equity investment of acquiree before the purchasing date and the newly added investment
cost on the purchasing date; while if the equity of acquiree held before purchasing date involves
any other comprehensive income, which shall be transferred into current investment income
together with other relevant comprehensive income (i.e. the change in the fair value of
available-for-sale financial assets transferred to capital reserves, the same below) when disposing
such investment.
(II) In the consolidated financial statement, the equity of acquiree held before purchasing date
shall be re-measured at the fair value of such equity on the purchasing date, and the balance
between its fair value and book value shall be recorded into current investment income; while if
the equity of acquiree held before purchasing date involves any other comprehensive income,
which shall be transferred into current investment income together with other relevant
comprehensive income. The acquirer shall disclose its amounts of the fair value of equity of
acquiree held before purchasing date, relevant profits or losses from the re-measurement at the
fair value in the notes to financial statement.
② Except for the long-term equity investments formed by the merger of enterprises, the initial
cost of a long-term equity investment obtained by other means shall be ascertained in accordance
with the provisions as follows:
a. The initial cost of a long-term equity investment obtained by making payment in cash shall be
the purchase cost which is actually paid. The investment cost consists of the expenses directly
relevant to the obtainment of the long-term equity investment, taxes and other necessary expenses.
But if the actual payment contains cash dividend that has not been received but has been
announced, that should be accounted as receivable items separately.
b. The investment cost of a long-term equity investment obtained on the basis of issuing equity
securities shall be the fair value of the equity securities issued.
c. Long-term equity investment made by the investors, the values agreed in the investment
contracts or agreements will be deemed as the initial investment cost, except that the contracts or
agreements provide that the values are not fair.
d. Long-term equity investment is acquired by exchange of non-monetary assets, if this
transaction has commercial substance or the fair values of exchange assets can be reliably
measured, the fair values of these assets and relevant taxes will be deemed as the investment cost;
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the difference between the fair values of the assets and book values will be record into the current
profit and loss; if the non-currency asset exchange does not satisfy these two conditions mention
above, the book values of the assets and relevant taxes will be deemed as the investment cost.
e. Long-term equity investment, which is acquired by the debt restructuring, the fair values of the
obtained equities will be deemed as the investment cost; the difference between the investment
cost and book values of credit will be record into the current profit and loss.
(2) Subsequent measurement and recognition of gains or losses
The cost method is employed to calculate the long-term equity investment of subsidiaries and will
be adjusted in accordance with the equity method in the preparation of the consolidated financial
statements.
The Company uses cost method for the following conditions: a long-term equity investment where
the investing enterprise does not have joint control or significant influence over the investee, the
investment can’t be quoted in an active market and its fair value can’t be reliably measured.
The Company uses equity method for the following conditions: a long-term equity investment
where the investing enterprise has joint control or significant influence over the investee.
a. When using cost method, increase or recovery of investment need to adjust the cost of long term
equity investment. When gaining cash dividends or profit distributions declared by the investee,
the return on investment at current period shall be recognized in accordance with the cash
dividend or profit announced to distribute by the invested entity, except the announced but not
distributed cash dividend or profit included in the actual payment or consideration upon gaining
the investment.
b. When measured by adopting equity method, the investment profits or losses at current period
shall be the attributable share of the net profits or losses of the investee, and adjust the carrying
amount of the investment accordingly.
The Company shall recognize current period investment profits or losses following the attributable
share of the net profits or losses of the investee. When recognizing the attributable share of the net
profits or losses of the investee, basing on the investee’s book value of net profit, if the investee
used inconsistent accounting policies with the Company, the Company shall withdraw the
depreciation amount and amortization amount basing on the fair value of fixed assets and
intangible assets of the investee on the investment acquired date, and the Company shall adjust the
affected net profits of the investee with the recognized amount of impairment provision of fixed
assets basing on the fair value of relevant assets on the investment acquired date, and offset the
internal transaction profit and loss between the Company and the joint enterprises or the
jointly-run enterprises, and then recognize the investment profit or loss on this basis. The internal
transaction profit and loss between the Company and the joint enterprises or the jointly-run
enterprises, refer to the < Enterprise Accounting Standard 8--Impairment of assets>, belong to
asset impairment loss, and recognized in full.
The Company shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially form the
net investment made to the invested entity are reduced to zero (unless the investing enterprise has
the obligation to undertake extra losses). If the invested entity realizes any net profits later, the
investing enterprise shall, after the amount of its attributable share of profits exceeding its
attributable share of the un-recognized losses, resume the book value of the long-term equity and
long-term investment according to attributable un-recognized losses.
Those long term equity investment on joint venture and associate company held before first
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executive date, if their is relevant investment debit difference, according to residual time to
amortize in straight line method, and the amortization amount shall be recognized in current
profits and losses account.
(3) Recognition basis of joint control and significant influences on investee
① The existence of jointly control on investee is usually evidenced in one or more of the
following ways: A. any joint venture cannot control the jointly controlled company’s operation
alone; B. the strategy decision of the jointly controlled company, should be agreed by each venture
parties; C. the venture parties may appoint one of them to manage the daily activities of the joint
venture, but executing the management right in the scope of financial and operation strategies
unanimously agreed by the venturers. When the investee is under legal reconstruction or bankrupt,
or the ability of transferring funds to investors strictly restricted in long time, the venturers cannot
exercise joint control to the investee generally. However, if the existence of joint control can be
proved, the venturers still adopt equity method of long term equity investment principle to
account.
② The existence of significant influence by an investor is usually evidenced in one or more of the
following ways: A. representation on the board of directors or equivalent governing body of the
investee; B. participation in policy-making processes, including participation in decisions about
dividends or other distributions; C. material transactions between the investor and the investee; D.
dispatch of managerial personnel; or E. provision of essential technical information.
(4) Method of impairment test of long term equity investment and provision for impairment
On the balance sheet date, the Company shall assess the long term equity investment one by one,
according to the investee’s operation strategy, legal environment, market demand, industry and
profitability etc, to decide whether there are impairment indicators. When the recoverable amount
of long term equity investment is lower than its book value, the differences should be recognized
as provision for impairment. Once the impairment loss was recognized, it shall never be reversed
in the future accounting periods.
13. Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and leased
buildings.
(1) The depreciation and amortization method for investment property by adopting cost model
The Company’s all investment properties are subsequently measured by adopting cost model. The
Company withdrew depreciation or amortization on the use right of building and land according to
its expected useful life and net residual rate. The expected useful life, net residual rate and annual
depreciation rate of Company’s investment property as follow:
Expected residual rate Annual depreciation
Categories Expected useful life
(%) (amortization) rate (%)
Houses and buildings 3-5 8-35 years 2.7-12.1
Land use rights 0 50 years 2
(2) Withdrawal basis of impairment provision for investment property by adopting cost model
On the balance sheet date, the evaluation criteria should base on the lower one between book
value and recoverable amount. If the recoverable amount is lower than the book value, the
difference of which shall be the impairment provision. If the value of the impaired investment
property recovered, the withdrawn impairment loss in prior period cannot be reversed.
14. Fixed assets
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(1) Recognition of fixed assets:
Fixed assets refer to high-unit-value tangible assets held for production of goods or rendering of
services, rental, or operation purpose as well as useful lives more than one accounting year. Fixed
assets shall be recognized by actual costs incurred, if they meet the following conditions:
① The economic benefits related to fixed asset probably flows to the enterprise;
② The cost of fixed asset may be reliably measured.
The subsequent expenses related with the fixed asset, if they meet the above recognition condition
to fixed asset, which would be recorded in the cost of fixed asset, otherwise, they would be
recorded into current profits and losses upon occurrence.
(2) The depreciation method of fixed assets
Straight-line method is in used to calculate the depreciation of fixed assets.
The estimated useful lives, expected residual value and annual depreciation rate of different kinds
of fixed assets are listed as follows:
Categories Estimated useful life Estimated residual Estimated annual
value rate (%) depreciation rate (%)
Houses and buildings 8-35 years 3-5 2.7-12.1
Machineries and 8-10 years 3-5 9.7-12.1
equipments
Transportation equipments 8 years 3 12.1
Office equipments and 8 years 3 12.1
others
(3) Method of impairment test and provision for impairment loss of fixed assets:
On the balance sheet date, the Company assess all types of fixed assets whether there is any
indication that an asset may be impaired, where the recoverable amount is lower than its carrying
value, the carrying value of the asset shall be recorded down to the recoverable amount, and the
reduced amount shall be recognized as the loss of asset impairment and be recorded as the profit
or loss for the current period. Simultaneously, a provision for the asset impairment shall be made
accordingly. Once any loss of asset impairment is recognized, it shall not be switched back in the
future accounting periods.
There may be an impairment of fixed assets when one of the following signs occurs:
① The current market price of assets falls, and its decrease is obviously higher than the expected
drop over time or due to the normal use;
② The economic, technological or legal environment in which the enterprise operates, or the
market where the assets is situated will have any significant change in the current period or in the
near future, which will cause adverse impact on the enterprise;
③ The market interest rate or any other market investment return rate has risen in the current
period, and thus the discount rate of the enterprise for calculating the expected future cash flow of
the assets will be affected, which will result in great decline of the recoverable amount of the
assets;
④ Any evidence shows that the assets have become obsolete or have been damaged substantially;
⑤ The assets have been or will be left unused, or terminated for use, or disposed ahead of
schedule;
⑥ Any evidence in the internal report of the enterprise shows that the economic performance of
the assets have been or will be lower than the expected performance, for example, the net cash
flow created by assets or the operating profit (or loss) realized is lower than the excepted amount,
etc.; and
⑦ Other evidence indicates that the impairment of assets has probably occurred.
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(4) Recognition basis and pricing method of fixed assets by finance lease
The Company recognized a lease that has transferred in substance all the risks and rewards related
to the ownership of an asset as finance lease. The cost of fixed asset acquired by finance lease
shall be recognized by the lower one between the fair value of the asset on the inception date of
such finance lease and the current value of the lowest rental. The fixed assets by finance lease
shall adopt the same depreciation policy for self-owned fixed assets to withdraw the depreciation
of leased assets. If it is reasonable to be certain that the lessee will obtain the ownership of the
leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful
life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset
at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of
the lease term or its useful life.
15. Recognition and measurement of construction in progress
(1) Category of construction in progress
The construction in progress shall be classified by the approved project.
(2) The standard and time point of the construction in progress transferred to fixed assets
Construction in progress is transferred to fixed assets by actual cost of construction when the
project is substantially ready for its intended use. The project is in condition of ready for used but
not handled the final account would be transferred to fixed assets in its estimate value firstly, and
adjust the temporary estimated value after handling the final account, but would not adjust
depreciated value that have been depreciated.
(3) Method of impairment test and provision for impairment loss of construction in progress:
On the balance sheet date, the Company shall assess the overall construction in progress, if there is
evidence providing that the value of project was impaired, the carrying value of the asset shall be
recorded down to the recoverable amount, and the reduced amount shall be recognized as the loss
of asset impairment and be recorded as the profit or loss for the current period. Simultaneously, a
provision for the asset impairment shall be made accordingly. Once any loss of asset impairment is
recognized, it shall not be switched back in the future accounting periods. The construction in
progress shall be made impairment test if one or more of the following situation existed:
① The project has been suspended for a long time, and it is expected to resume within the next 3
years;
② The project has fallen behind no matter in function or technology, which has brought
significant uncertainty to the economic benefits of the enterprise;
③ Other evidence indicates that the impairment of the project has probably occurred.
16. Borrowing costs
(1) Recognition of capitalization of borrowing costs and capitalization period:
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition
and construction or production of assets eligible for capitalization, which shall not be capitalized
and recorded into the costs of relevant assets unless they simultaneously meet the following
requirements:
① The capital expenditures have been incurred.
② The borrowing costs have been incurred.
③ The acquisition and construction or production activities which are necessary to prepare the
asset for its intended use or sale have already started.
Other borrowing costs, discount or premium and difference of foreign exchange, should be
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recognized in the current profit and loss account.
Where the acquisition and construction or production of a qualified asset is interrupted abnormally
and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs
shall be suspended.
When the qualified asset under acquisition and construction or production is ready for the intended
use or sale, the capitalization of the borrowing costs shall be ceased. Borrowing costs should be
recognized as an expense in the subsequent period.
(2) Measurement of capitalized borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets
eligible for capitalization, the to-be-capitalized amount of interests shall be determined in light of
the actual cost incurred of the specially borrowed loan at the present period minus the income of
interests earned on the unused borrowing loans as a deposit in the bank or as a temporary
investment.
Where a general borrowing is used for the acquisition and construction or production of assets
eligible for capitalization, the enterprise shall calculate and determine the to-be-capitalized amount
of interests on the general borrowing by multiplying the weighted average asset disbursement of
the part of the accumulative asset disbursements minus the general borrowing by the capitalization
rate of the general borrowing used.
17. Intangible assets
(1) Measurement of intangible asset
Intangible asset are recognize initially at cost.
(2) Useful life and amortization of intangible asset
Intangible asset is judged by the comprehensive factors, such as its contractual right, condition in
same industry, history experience, and demonstration of expert, etc., if the result shows that it can
bring future economic benefit inflow to company, which can be recognized as finite useful life
assets. Otherwise, the asset would be recognized as infinite useful life assets.
① To estimate the useful life of finite useful life asset need consider the following factors: a. The
life cycle of the product produced by the assets, and the information of similar asset; b. The
current situation of craftwork and technology, and the estimate of future development trend; c. The
market demand of the product produced by the asset; d. The estimated action would be taken by
competitor or potential competitor; e. The expense expected to maintain the assets to bring future
economic benefits and the ability of the Company to pay for it; f. The relevant law restriction on
control period of the asset or other similar restriction such as franchise, lease period; g. Relation
with other assets’ useful life that held by the Company.
② The intangible asset with finite useful years should be amortization on a systematic and rational
basic according its economic benefit achievement plan. A straight line method would be used if
the plan could not define.
(3) Method of impairment test and provision for impairment of infinite useful life asset
The Company shall check the useful life of intangible assets with uncertain useful life during each
accounting period, if the result shows that the useful life is still uncertain, which shall be
implemented the impairment test on the balance sheet date. The intangible asset's recoverable
amount is lower than its carrying value, the carrying value of the asset shall be recorded down to
the recoverable amount, and the reduced amount shall be recognized as the loss of asset
impairment and be recorded as the profit or loss for the current period. Simultaneously, a
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provision for the asset impairment shall be made accordingly. Once any loss of asset impairment is
recognized, it shall not be switched back in the future accounting periods.
Impairment test for intangible assets shall be implemented if one or more the following conditions
met:
A. The intangible asset has been replaced by other new technology, which caused significant
adverse effect on its profitability.
B. The market value has declined in current period, and may not rise in the future residual period;
C. Other indication to prove that the carrying value higher than the recoverable value.
(4) The criterion to divide the research stage and the development stage of internal research and
development project:
The expenditures on research stage for internal research and development project shall be
recorded in current profits and losses upon their occurrence. The expenditures on research stage
for internal research and development project shall not be recognized as an intangible asset unless
it meets the following conditions simultaneously: ①It is feasible technically to finish intangible
assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ 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 itself or the
intangible assets will be used internally; ④ 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; and ⑤ The development expenditures of the intangible
assets can be reliably measured.
18. Long-term deferred expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year
(one year excluded) that have occurred but attributable to the current and future periods.
Long-term deferred expense shall be recoded into book in the light of the actual expenditure, and
amortized averagely within benefit period.
19. Estimated liabilities
(1) Recognition basis of estimated liabilities
The obligation such as external guaranty, pending litigation or arbitration, product quality
assurance, layoff plan, loss contract, restructuring and disposal of fixed assets, pertinent to a
contingencies shall be recognized as an estimated liabilities when the following conditions are
satisfied simultaneously:
① That obligation is a current obligation of the Company;
② It is likely to cause any economic benefit to flow out of the Company as a result of
performance of the obligation; and
③ The amount of the obligation can be measured in a reliable way.
Loss contracts and reorganization obligations of the Company shall be recognized as accrued
liabilities when the above conditions are satisfied simultaneously.
(2) Measurement of estimated liabilities
The estimated liabilities shall be initially measured in accordance with the best estimate of the
necessary expenses for the performance of the current obligation. To determine the best estimate,
the Company shall take into full consideration of the risks, uncertainty, time value of money, and
other factors pertinent to the Contingencies. If the time value of money is of great significance, the
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best estimate shall be determined after discounting the relevant future outflow of cash. On balance
sheet date, check the carry amount of accrued liabilities, and make adjustment to carry amount to
reflect the optimum evaluation. The increase amount in carry amount of accrued liabilities cause
by time process would be determined as interest fee.
(3) Recognition method of optimum evaluation amount
If the necessary payments have scopes, the optimum evaluation shall be determined based on the
average amount between the upper and lower limit amount of scope ; if the necessary payments do
not have such scopes, then the optimum evaluation shall be determined in the following method:
①If the contingent event is involved in an individual project, the optimum evaluation amount will
be determined base on the most possible amount;
②If the contingent event is involved more than one project, the optimum evaluation amount shall
be determined base on possible amount and occurrence probability. In case of all or part of
payments about the confirmed liquidation liabilities are expected to be compensated by the third
parties or other parties, and the compensation amounts are surely received, then such amounts
shall be separately recognized as assets. The confirmed compensation amounts shall not exceed
book values of confirmed liabilities.
20. Shares-based payment and equity instrument
(1) Category of share-based payment
The types of shares-based payment of the Company are: cash-settle and equity-settle.
①Cash-settled share-based payment
The measurement of cash-settle is according with the fair value of liability undertake by the
Company, which is calculated base on the Company’s share or other equity instrument.
The value of cash-settle share-based payment that could exercise immediately after award would
be reckoned to relate cost or expense, and increase liability corresponds to it.
At each balance sheet date, a best estimated of situation of exercise cash-settled right that with
waiting-period should be undertaken, and reckon cost or expense and increase liability which is on
the base of service award by the Company, according to the fair value of company’s liability.
② Equity-settled share-based payment
The measurement is base on the fair value of the equity instrument granted to employees.
The value of equity-settled payment that could be exercised immediately after award would be
reckoned in relates cost and expense and increase capital reserves corresponds to it..
On each balance sheet date, a best estimated of amount of exercise equity-settled that with
waiting-period should be undertaken, and reckon in cost or expense and capital reserves which is
on the base of service award by the Company, according to the fair value of company’s liability.
(2) Recognition method of the fair value of equity instruments
① For those shares granted to employees shall measure the fair value of equity instruments
granted at the measurement date, based on market prices if available, simultaneously, taking into
account the terms and conditions ( exclude the vesting conditions of external market) upon
which those equity instruments were granted.
② For those share options granted to employees, the market prices are not available in most
circumstance. If there are no clauses and requirements of others similar trading options, the
Company shall estimate the fair value of the share option granted using a valuation technique.
(3) Recognition basis of the best estimate of vesting equity instrument:
On each balance sheet date of waiting-period, the Company shall recognize an amount for the
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equity instrument during the vesting period based on the best available estimate of the number of
equity instruments expected to vest and shall revise that estimate, if necessary, if subsequent
information indicates that the number of equity instruments expected to vest differs from previous
estimates.
(4) Accounting treatment of share-based payment plan:
① As to a cash-settled share-based payment instruments, if the right may be exercised
immediately after the grant, the fair value of the liability undertaken by the Company shall, on the
date of the grant, be included in the relevant costs or expenses, and the liabilities shall be
increased accordingly. Re-measure the fair value of liabilities on every balance sheet date and
settlement date before settlement, and record the change of fair value into profits and losses.
② As to a cash-settled share-based payment, if the right may not be exercised until the vesting
period comes to an end or until the specified performance conditions are met, on each balance
sheet date within the vesting period, the services obtained in the current period shall, based on the
best estimate of the information about the exercisable right, be included in the relevant costs or
expenses and the corresponding liabilities at the fair value of the liability undertaken by the
Company.
③ As to an equity-settled share-based payment in return for services of employees, if the right
may be exercised immediately after the grant, the fair value of the equity instruments shall, on the
date of the grant, be included in the relevant cost or expense and the capital reserves shall be
increased accordingly.
④ As to a equity-settled share-based payment in return for employee services, if the right cannot
be exercised until the vesting period comes to an end or until the prescribed performance
conditions are met, then on each balance sheet date within the vesting period, the services
obtained in the current period shall, based on the best estimate of the number of vested equity
instruments, be included in the relevant costs or expenses and the capital reserves at the fair value
of the equities instruments on the date of the grant.
21. Revenue
Recognition principles and measurement method of revenue:
(1) Revenue from selling goods
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously:
① The significant risks and rewards of ownership of the goods have been transferred to the buyer
by the Company;
② The Company retains neither continuous management right that usually keeps relation with the
ownership nor effective control over the sold goods;
③ The relevant amount of revenue can be measured in a reliable way;
④ The relevant economic benefits may flow into the enterprise; and
⑤ The relevant costs incurred or to be incurred can be measured in a reliable way.
(2) Rendering of services
①If the Company can, on the date of the balance sheet, reliably estimate the outcome of a
transaction concerning the labor services it provides, it shall recognize the revenue from providing
services employing the percentage-of-completion method. The term "percentage-of-completion
method" refers to a method to recognize the revenues and expenses in the light of the stage of
completion under a transaction concerning the providing of labor services
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The outcome of a transaction concerning the providing of labor services can be measured in a
reliable way, means that the following conditions shall be met simultaneously:
a. The amount of revenue can be measured in a reliable way;
b. The relevant economic benefits are likely to flow into the enterprise;
c. The schedule of completion under the transaction can be confirmed in a reliable way; and
d. The costs incurred or to be incurred in the transaction can be measured in a reliable way.
② If the Company can not, on the date of the balance sheet, measure the result of a transaction
concerning the providing of labor services in a reliable way, it shall be conducted in accordance
with the following circumstances, respectively:
a. If the cost of labor services incurred is expected to be compensated, the revenue from the
providing of labor services shall be recognized in accordance with the amount of the cost of labor
services incurred, and the cost of labor services shall be carried forward at the same amount; or
b. If the cost of labor services incurred is not expected to compensate, the cost incurred should be
included in the current profits and losses, and no revenue from the providing of labor services may
be recognized.
(3) Transfer of asset use right
The revenue from abalienating of right to use assets consists of interest revenue and royalty
revenue, which may not be recognized unless the following conditions are met simultaneously:
①The relevant economic benefits are likely to flow into the enterprise; and
② The amount of revenues can be measured in a reliable way.
The amount of interest revenue should be measured and confirmed in accordance with the length
of time for which the enterprise's cash is used by others and the actual interest rate; or
The amount of royalty revenue should be measured and confirmed in accordance with the period
and method of charging as stipulated in the relevant contract or agreement.
22. Government grants
(1) Recognition of government grants:
①The Company can meet the conditions for the government subsidies; and
②The Company can obtain the government subsidies.
(2) Category and accounting treatment of government grants:
① A government grant related to an asset shall be recognized as deferred income, when the assets
is substantially ready for its intended use, evenly amortized to profit and loss over the useful lives
of the related asset. Unamortized amount would be one-off recognized in profit and loss account
when the asset is sold, transferred, discarded or damaged before its useful life.
② The government subsidies pertinent to incomes shall be treated respectively in accordance with
the circumstances as follows: (a) Those subsidies used for compensating the related future
expenses or losses of the enterprise shall be recognized as deferred income and shall included in
the current profits and losses during the period when the relevant expenses are recognized; or (b)
Those subsidies used for compensating the related expenses or losses incurred to the enterprise
shall be directly included in the current profits and losses.
(3) Measurement of government grants:
If a government subsidy is a monetary asset, it shall be measured in the light of the received or
receivable amount. If a government subsidy is a non-monetary asset, it shall be measured at its fair
value. If its fair value cannot be obtained in a reliable way, it shall be measured at its nominal
amount
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(4) If it is necessary to refund any government subsidy which has been recognized, it shall be
treated respectively in accordance with the circumstances as follows:
① If there is the deferred income concerned, the book balance of the deferred income shall be
offset against, but the excessive part shall be included in the current profits and losses; and
② If there is no deferred income concerned to the government subsidy, it shall be directly
included in the current profits and losses.
23. Deferred income tax assets and deferred income tax liabilities
The Company uses balance sheet liability method in calculation of income taxes.
According the difference between carry amount of asset and liability and its tax base, apply tax
rate to determine deferred income tax asset or liability according the predict period of recover
asset or discharge liability.
(1) Recognition of deferred income tax assets
① The Company recognize the deferred income tax liability arising from a deductible temporary
difference to the extent of the amount of the taxable income which it is most likely to obtain and
which can be deducted from the deductible temporary difference. However, it shall not recognize
the deferred income tax assets arising from the initial recognition of assets or liabilities in a
transaction which is simultaneously featured by the following:
a. This transaction is not business combination; and
b. At the time of transaction, the accounting profits will not be affected, nor will the taxable
amount (or the deductible losses) be affected.
② For the deductible temporary difference relating to the investments of the subsidiary companies,
associated enterprises and joint enterprises, the enterprise shall recognize the corresponding
deferred income tax assets for those that meet the following requirements:
a. The temporary differences are likely to be reversed in the expected future; and
b. It is likely to acquire any amount of taxable income that may be used for deducting the
deductible temporary differences.
③ For any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax asset shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.
(2) Recognition of deferred income tax liability
Except for the deferred income tax liabilities arising from the following transactions, an enterprise
shall recognize the deferred income tax liabilities arising from all taxable temporary differences:
① The initial recognition of business reputation;
② The initial recognition of assets or liabilities arising from the following transactions which are
simultaneously featured by the following:
a. The transaction is not business combination;
b. At the time of transaction, the accounting profits will not be affected, nor will the taxable
amount (or the deductible losses) be affected.
③ The taxable temporary differences relating to the investments of subsidiary companies,
associated enterprises and joint enterprises shall recognized as corresponding deferred income tax
liabilities, however, excluding those that simultaneously satisfy the following conditions:
a. The investing enterprise can control the time of the reverse of temporary differences; and
b. The temporary differences are unlikely to reverse in the excepted future.
(3) The carrying amount of deferred income tax assets shall be reviewed at each balance sheet date.
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If it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred
income tax asset, the carrying amount of the deferred income tax assets shall be written down.
Any such write-down should be subsequently reversed where it becomes probable that sufficient
taxable income will be available.
24. Operating leases and finance leases
(1) Operating leases
① When the Company as the Lessee under operating lease, the rents from operating leases shall
be recorded by the lessee in the profits and losses of the current period by using the straight-line
method over each period of the lease term or in accordance with the using amount of leased assets.
Initial direct expense undertaken by the Company, recognized to the management expenses,
contingent rental incurred recognized as current expenses. If the lease contract including a
rent-free period, the Company shall amortize the overall rent expenses on a straight-line basis over
the whole lease period, during the rent-free period recognize lease expenses and liability
correspond to it. If the lessee’s expenses paid by the lessor, the Company shall be reduce this
expenses from the total rent expenses, and amortize the balance.
② When the Company as the lessor under operating lease, lease income from operating leases
shall be recognized in income on a straight-line basis over the lease term. The initial costs,
recognized to the current profit and loss account. However, if the amount is large, the lease
income shall be capitalized, and recognized in current profits and losses over the lease term on
installment on the same basis as the lease income. The contingent lease income shall be recorded
into current income upon the occurrence if it is stipulated in the agreement. If the lease contract
including a rent-free period, the Company shall recognize the total lease income for the whole
lease period (not deducting the rent-free period), and distribute by adopting straight line method or
other methods, and the lessor’ s lease income is also recognized during the rent-free period. If the
Company paid some lessee’s expenses, the Company shall amortize the income balance (total
lease income deduct the expenses) during lease period.
(2) Finance lease
① On the lease beginning date, a lessee shall record the lower one of the fair value of the leased
asset and the present value of the minimum lease payments on the lease beginning date as the
entering value in an account, recognize the amount of the minimum lease payments as the entering
value in an account of long-term account payable, and treat the balance between the recorded
amount of the leased asset and the long-term account payable as unrecognized financing charges.
The unrecognized financing charges should be recorded into current financing charges measured
by adopting effective interest method during the lease period, and recorded into current financial
expense. The direct initial expense shall be recorded into value of rented assets..
The depreciation policy for depreciable leased assets shall be consistent with that for depreciable
assets that are owned, the depreciation period according to the lease period. If there is reasonable
certainty that the lessee will obtain ownership by the end of the lease term, the assets shall be
depreciated over its useful life. If there is no reasonable certainty that the lessee will obtain
ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the
lease term and its useful life
② When the Company as the lessor under finance lease, on the beginning date of the lease term, a
lessor shall recognize the sum of the minimum lease receipts on the lease beginning date and the
initial direct costs as the entering value in an account of the financing lease values receivable, and
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recorded into the long-term accounts receivable in the balance sheet, and record the unguaranteed
residual value at the same time. The balance between the sums of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value, and the sum of their present values shall be
recognized as unrealized financing income. The unrealized financing income should be recorded
into lease income measured by adopting effective interest method during the lease period, and
recorded into income from other business.
25. Assets held for sale
(1) Recognition criterion of assets held for sale
An entity shall classify a non-current asset as held for sale if when all the following conditions are
satisfied:
① The Company has made a decision on disposing such non-current assets;
② The Company has entered into a irreversible transfer agreement with buyer;
③ The transfer of asset will be completed within one year.
(2) Accounting treatment
For those assets held for sale, the Company shall adjust the assets’ estimated net residual value, let
the amount can reflect the fair value after deducting costs to sell, but not in excess of the original
carrying amount of the fixed assets, the balance of estimated net residual value after adjustment
and the original carrying amount, shall be recognized as assets impairment loss to be recorded into
current profit and loss account.
An asset or an disposal group was classified as held for sale before, but if it couldn’t meet the
recognition conditions for held-for-sale fixed asset later, the Company shall cease to classify it as
held for sale, and measure it by the lower amount of the followings:
① Its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted
for any depreciation, amortization or impairment before the asset (or disposal group) being
classified as held for sale; or
② Its recoverable amount on the date of the subsequent decision not to sell.
26. Change in major accounting policies and accounting estimates
(1) Changes in accounting policies
There are no changes in accounting policies during current reporting period.
(2) Changes in accounting estimates
There are no changes in accounting estimates during current reporting period.
27. Corrections of prior accounting errors
The Company has no matter related to correction of prior-period errors.
III. Taxation
1. The main type of tax and tax rate for the Company are list below:
Type of tax Tax base Tax rate %
VAT Sale of product and raw material 17、13
Business Tax Business turnover 3、5
Sales amount and quantity of taxable 20% based on price or RMB 0.5 per
Consumption tax
product kg. (500ml)
VAT payable, business tax,
Urban maintenance construction tax consumer tax, Tax that shall not be 5、7
exempt from tax allowance and
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deduction
VAT payable, business tax,
consumer tax, Tax that shall not be
Education Surcharge 3
exempt from tax allowance and
deduction
VAT payable, business tax,
Local education consumer tax, Tax that shall not be
2
surcharge exempt from tax allowance and
deduction
Corporation Tax Taxable profit 25 (Note)
Note: Anhui Gujing Hotel (Group) Co., Ltd., subsidy of the Company is a small operation
corporate with minor profits that its corporation tax rate is 20%.
IV. Enterprise consolidation and consolidation statement
1. Information of subsidiaries in consolidation scope:
(1) Subsidies acquired through establishment or investment, etc.
Registered
Company Registration Nature of
Subsidiary name capital Business scope
type location business
(0’000)
Bozhou Gujing Sales Co., Ltd Wholesales of distilled spirit,
(hereinafter refer to as Gujing Limited Bozhou, Business 8,486.00 construction materials, feeds
Sales) company Anhui trading and assistant materials
Hefei Gujing Trade Co., Ltd Department stores, wine,
Business
(hereinafter refer to as “Hefei Limited Hefei, Anhui 1,000.00 hardware, and wholesale of
trading
Trade”) company construction materials
Bozhou Gujing Transportation Co.,
Ltd (hereinafter refer to as “Gujing Limited Bozhou,Anhui Transportation 695.00 Provision of transportation
Transportation”) company services to the Company
Bozhou Gujing Glass Co., Ltd
Manufacture and sale of glass
(hereinafter refer to as “Gujing Limited Bozhou,Anhui Manufacture 6,646.00
products
Glass”) company
Bozhou Gujing Waste Reclamation Collect and sale of recycled
Co., Ltd (hereinafter refer to as Limited Bozhou,Anhui Recycled 100.00 glass bottle、glass、
“Gujing Waste”) company wastebasket
Design, publish, design and
Anhui Jinyunlai Culture & Media proxy of ads in China;
Ads
Co.,Ltd. (hereinafter refer to as Hefei, Anhui 200.00 ceremony service for
marketing
“Jinyunlai”) Limited conferences as well as sales
company of gifts in arts and crafts
Subsidies acquired through establishment or investment, etc. (Continued)
Share holding Voting
Subsidiary Actual investing amount at Balance of other projects that actually formed
proportion proportion
name period-end (RMB 10’000) net investment to subsidies
(%) (%)
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Share holding Voting
Subsidiary Actual investing amount at Balance of other projects that actually formed
proportion proportion
name period-end (RMB 10’000) net investment to subsidies
(%) (%)
Gujing Trade 8,486.00 0.00 100.00 100.00
Hefei Trade 1,000.00 0.00 100.00 100.00
Gujing
695.00 0.00 100.00 100.00
Transportation
Guing Glass 6,646.00 0.00 100.00 100.00
Gujing Waste 100.00 0.00 100.00 100.00
Jinyunlai 200.00 0.00 100.00 100.00
Subsidies acquired through establishment or investment, etc. (Continued)
Balance between shareholders’ equity in the
Whether or not Amount of minority
Company that deducting current loss
Subsidiary combined into equity that be used to
Minority equity shouldered by minority shareholders in
name financial offset minority gains and
subsidies over shares enjoyed by shareholders
statements loss
in equity of subsidies at the period-begin
Gujing Trade Yes 0.00 0.00 0.00
Hefei Trade Yes 0.00 0.00 0.00
Gujing
Yes 0.00 0.00 0.00
Transportation
Guing Glass Yes 0.00 0.00 0.00
Gujing Waste Yes 0.00 0.00 0.00
Jinyunlai Yes 0.00 0.00 0.00
(2) Subsidies acquired through corporate combination under the same control
Registered Nature of Registeredcapital
Subsidiary name Type Operation scope
place business (RMB 10’000)
Hotel management（Except for
catering management、Except for
Shanghai Gujing Jinhao Hotel
hotel operation）; Self-owned
Management Co., Ltd. Limited Hotel
Shanghai 5,400.00 housing rental; establish branch.
(hereinafter refer to as company management
（If there is need administrative
“Shanghai Jinhao”)
licensing, operating based on the
license.）
Accommodation and parking
Bozhou Gujing Hotel Co.,
Limited Bozhou, Hotel services；lunch processing, sales
Ltd.(hereinafter refer to as 62.80
company Anhui management of alcohol and tobacco and sales
“Gujing Hotel”)
of daily commodity
Subsidies acquired through corporate combination under the same control (Continued)
Whether or not Amount of minority Balance between shareholders’ equity
combined into equity that be used in the Company that deducting current
Subsidiary name Minority equity
financial to offset minority loss shouldered by minority
statements gains and loss shareholders in subsidies over shares
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English Translation for Reference Only
enjoyed by shareholders in equity of
subsidies at the period-begin
Shanghai Jinhao Yes 0.00 0.00 0.00
Gujing Hotel Yes 0.00 0.00 0.00
2. Explanation for changes in consolidation scope
(1) Decrease in consolidation scope
① Shanghai Gujing Trade Co., Ltd. was cancelled in Jun. 2011 that it is not written into
consolidation scope since 30 Jun. 2011.
V. Main notes in the Consolidation Statement
1. Monetary fund
Balance as at 30 June 2011 Balance as at 31 December 2010
Items Original
Original currency Exchange rate RMB Exchange rate RMB
currency
Cash on hand
RMB 261,732.05 1.0000 261,732.05 180,852.46 1.0000 180,852.46
Subtotal 261,732.05 261,732.05 180,852.46
Deposit in bank
RMB 662,817,563.61 1.0000 662,817,563.61 642,986,669.59 1.0000 642,986,669.59
USD 0.00 9,645.97 6.6227 63,882.37
Subtotal 662,817,563.61 643,050,551.96
Total 663,079,295.66 643,231,404.42
2. Notes receivable
(1) Categories of notes receivable
Item Balance as at 30 June 2011 Balance as at 31 December 2010
Bank acceptance bill 391,564,070.58 96,030,755.37
Total 391,564,070.58 96,030,755.37
(2) Bills that has endorsed to others but not matured yet as at the end of reporting period
amounting to RMB 99,073,156.89. Details of top five are as following:
Issuing company Date of draft Mature date Balance
Erdos Tongyida Coal Trade Co., Ltd. 2011-01-12 2011-07-12 1,000,000.00
Shanxi Qinshou Materials Co., Ltd. 2011-03-18 2011-09-18 1,000,000.00
Shaoxing City Mode Smelting Ltd. 2011-01-24 2011-07-24 700,000.00
Shandong Haiheng Chemistry Co., Ltd. 2011-01-18 2011-07-18 500,000.00
Shouguang Jinguang Electrics Technology
2011-01-12 2011-07-12 500,000.00
Co., Ltd.
Total 3,700,000.00
3. Accounts receivable
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(1) Details of accounts receivable listed by categories
Balance as at 30 June 2011
Book value Bad debts provisions
Items
Percentage Percentage
Amount Amount
% %
Individual significant amount that make independent
0.00 0.00 0.00 0.00
provision for bad debt
Making provision for bad debt by group analysis
Age group analysis 42,651,351.14 100.00 1,220,607.63 2.86
Individual insignificant amounts but make independent
0.00 0.00 0.00 0.00
provision for bad debt
Total 42,651,351.14 100.00 1,220,607.63 2.86
Continued:
Balance as at 31 December 2010
Book value Bad debts provisions
Items
Percentage Percentage
Amount Amount
% %
Individual significant amount that make independent
0.00 0.00 0.00 0.00
provision for bad debt
Making provision for bad debt by group analysis
Age group analysis 13,479,796.20 100.00 661,063.64 4.90
Individual insignificant amounts but make independent
0.00 0.00 0.00 0.00
provision for bad debt
Total 13,479,796.20 100.00 661,063.64 4.90
(2) Within the group analysis, accounts receivable that conduct age group analysis:
Balance as at 30 June 2011
Book balance Provision for bad debt
Age
Proportion Proportion
Amount Amount
(%) (%)
Within 1 year
Including: within 6 months 38,217,682.20 89.60 382,176.83 1.00
6 months to 1 year 2,982,731.98 7.00 149,136.60 5.00
Subtotal of within 1 year 41,200,414.18 96.60 531,313.43 1.29
1 year to 2 years 646,394.04 1.52 64,639.40 10.00
2 years to 3 years 359,776.24 0.84 179,888.12 50.00
Over 3 years 444,766.68 1.04 444,766.68 100.00
Total 42,651,351.14 100.00 1,220,607.63 2.86
Continued:
Balance as at 31 December 2010
Age
Book balance Provision for bad debt
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Proportion Proportion
Amount Amount
(%) (%)
Within 1 year
Including: within 6 months 12,099,472.51 89.76 120,994.73 1.00
6 months to 1 year 333,186.94 2.47 16,659.35 5.00
Subtotal of within 1 year 12,432,659.45 92.23 137,654.08 1.11
1 year to 2 years 415,836.04 3.08 41,583.60 10.00
2 years to 3 years 298,949.50 2.22 149,474.75 50.00
More than 3 years 332,351.21 2.47 332,351.21 100.00
Total 13,479,796.20 100.00 661,063.64 4.90
(3) In the reporting period, there is neither accounts receivable that already withdrawn provision
for bad debt before the reporting period at full amount transfer back or recover, nor significant
accounts receivable that already withdrawn provision for bad debt.
(4) In the reporting period, there is no accounts receivable due from shareholders who hold 5% or
over 5% voting rights.
(5) The balance of top five accounts receivable
Relationship
Proportion of total
Company name with the Balance Age
accounts receivable %
Company
Zhengzhou Erqi District Non-related
Within 6
Zhiyuan Wine Industry party 4,088,165.60 9.59
months
Company
Chaohu City-east Trade Co., Non-related Within 6
2,261,577.27 5.30
Ltd. party months
Hanshan County Huatian Trade Non-related Within 6
2,062,425.38 4.84
Co., Ltd. party months
Ngs Supermarket Group Co., Non-related Within 6
1,553,107.73 3.64
Ltd. party months
Beijing Yizhaotong Material Non-related Within 6
1,526,811.00 3.58
Co., Ltd. party months
Total 11,492,086.98 26.95
4. Advance to suppliers
(1) Age analysis
Balance as at 30 June 2011 Balance as at 31 December 2010
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 5,584,689.99 100.00 1,793,790.94 98.05
1-2 years 0.00 0.00 35,720.00 1.95
2-3 years 0.00 0.00 0.00 0.00
Over 3 years 0.00 0.00 0.00 0.00
Total 5,584,689.99 100.00 1,829,510.94 100.00
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(2) Details about the top five entities on advance to suppliers at the end of the reporting period:
Relationship
Company name with the Balance Age Reason for unsettlement
Company
Non-related Within half a
SDIC Xinji Co., Ltd. 1,560,000.00 Unfulfilled of settlement
party year
Beijing Jinqiao Jiaren TV Advertising Non-related Within half a
999,999.98 Unfulfilled of contract
Media Co., Ltd. party year
Hainan White Horse Advertising Non-related Within half a
540,000.00 Unfulfilled of contract
Media Investment Co, Ltd. party year
Non-related Within half a
171,000.00 Unfulfilled of settlement
Tbea Hengyang Transformer Co., Ltd. party year
Non-related Within half a
99,999.99 Unfulfilled of contract
Anhui Branch of Xinhua News Agency party year
Total 3,370,999.97
(3) In the reporting period, there is no advance to suppliers due from shareholders who holds 5%
or over 5% voting rights.
5. Other accounts receivable
(1) Details of other accounts receivable listed by categories
Balance as at 30 June 2011
Book value Bad debts provisions
Items
Proportion Proportion
Amount Amount
(%) (%)
Individual significant amount that make independent
provision for bad debt 55,216,448.81 35.79 55,216,448.81 100.00
Making provision for bad debt by group analysis
Age group analysis 99,069,108.09 64.21 1,324,698.44 1.34
Individual insignificant amounts but make independent
0.00 0.00 0.00 0.00
provision for bad debt
Total 154,285,556.90 100.00 56,541,147.25 36.65
Continued:
Balance as at 31 December 2010
Book value Bad debts provisions
Items
Proporti Proporti
Amount Amount
on(%) on(%)
Individual significant amount that make independent
55,216,448.81 41.05 55,216,448.81 100.00
provision for bad debt
Making provision for bad debt by group analysis
Age group analysis 79,299,603.57 58.95 1,408,817.97 1.78
Individual insignificant amounts but make independent
0.00 0.00 0.00 0.00
provision for bad debt
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Balance as at 31 December 2010
Book value Bad debts provisions
Items
Proporti Proporti
Amount Amount
on(%) on(%)
Total 134,516,052.38 100.00 56,625,266.78 42.10
(2) Within the group, other accounts receivable that conducts age group analysis:
Balance as at 30 June 2011
Book value Bad debts provisions
Age
Proportion Proportion
Amount Amount
(%) (%)
Within 1 year
Including: within 6 months 96,335,504.14 97.24 963,355.04 1
6 months to 1 year 715,424.00 0.72 35,771.20 5
Subtotal of within 1 year 97,050,928.14 97.96 999,126.24 3
1 year to 2 years 1,711,294.44 1.73 171,129.44 10
2 years to 3 years 304,885.51 0.31 152,442.76 50
More than 3 years 2,000.00 0.00 2,000.00 100
Total 99,069,108.09 100.00 1,324,698.44 1.34
Continued:
Balance as at 31 December 2010
Book value Bad debts provisions
Age
Proporti Proporti
Amount Amount
on(%) on(%)
Within 1 year
Including: within 6 months 76,893,145.27 96.97 768,931.45 1.00
6 months to 1 year 1,525,447.18 1.92 76,272.36 5.00
Subtotal of within 1 year 78,418,592.45 98.89 845,203.81 1.08
1 year to 2 years 324,885.51 0.41 32,488.55 10.00
2 years to 3 years 50,000.00 0.06 25,000.00 50.00
More than 3 years 506,125.61 0.64 506,125.61 100.00
Total 79,299,603.57 100.00 1,408,817.97 1.78
(3) In the reporting period, there is no other accounts receivable to suppliers due from
shareholders who holds 5% or over 5% voting rights.
(4) Details about the top five entities on other accounts receivable at the end of the reporting
period:
Relationship
Proportion to total other
Company name with the Balance Age
accounts receivable (%)
Company
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Finance Bureau of
Non-related Within 6
Qiaocheng District, Bozhou 64,342,050.00
party months
City 41.70
Non-related
29,502,438.53 Over 3 years
Hengxin Securities party 19.12
Non-related
12,879,010.28 Over 3 years
Minfa Securities party 8.35
Non-related
12,835,000.00 Over 3 years
Jianqiao Securities party 8.32
Non-related Within 6
4,900,000.00
CCTV party months 3.17
Total 124,458,498.81 80.66
6. Inventory
(1) Details of inventory:
Balance as at 30 June 2011 Balance as at 31 December 2010
Items Provision for Provision for
Book balance Carrying value Book balance Carrying value
impairment impairment
Raw material and
59,111,551.38 5,609,659.23 53,501,892.15 65,545,977.24 5,609,659.23 59,936,318.01
packaging material
Self-made
semi-manufacture
370,147,275.87 0.00 370,147,275.87 317,467,522.18 0.00 317,467,522.18
d goods and
product in process
Finished goods 59,402,693.47 1,195,879.69 58,206,813.78 78,961,306.99 3,485,660.50 75,475,646.49
Total 488,661,520.72 6,805,538.92 481,855,981.80 461,974,806.41 9,095,319.73 452,879,486.68
(2) Provision for falling price of inventories
Decrease in current period
Balance as at 31 Provision in current Balance as at 30 June
Items Reversal in current Write off in current
December 2010 period 2011
period period
Raw material and
5,609,659.23 0.00 0.00 0.00 5,609,659.23
packaging material
Finished goods 3,485,660.50 0.00 0.00 2,289,780.81 1,195,879.69
Total 9,095,319.73 0.00 0.00 2,289,780.81 6,805,538.92
7. Investment property
(1) Investment property adopt the cost model
Balance as at 31 Increment Decrement Balance as at 30
Items
December 2010 June 2011
Ⅰ. Total costs 79,352,732.76 0.00 0.00 79,352,732.76
1. Houses and buildings 76,708,140.76 0.00 0.00 76,708,140.76
2. Land use right 2,644,592.00 0.00 0.00 2,644,592.00
Ⅱ. Total accumulated depreciation and 34,050,245.78 2,591,826.06 0.00 36,642,071.84
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accumulated amortization:
1. Houses and buildings 33,865,943.45 2,560,818.78 0.00 36,426,762.23
2. Land use right 184,302.33 31,007.28 0.00 215,309.61
Ⅲ. Total net value : 45,302,486.98 0.00 0.00 42,710,660.92
1. Houses and buildings 42,842,197.31 0.00 0.00 40,281,378.53
2. Land use right 2,460,289.67 0.00 0.00 2,429,282.39
Ⅳ. Total accumulated impairment loss : 0.00 0.00 0.00 0.00
1. Houses and buildings 0.00 0.00 0.00 0.00
2. Land use right 0.00 0.00 0.00 0.00
Ⅴ. Total carrying value 45,302,486.98 0.00 0.00 42,710,660.92
1. Houses and buildings 42,842,197.31 0.00 0.00 40,281,378.53
2. Land use right 2,460,289.67 0.00 0.00 2,429,282.39
(2) In the reporting period, depreciation and amortization in investment property amounting to
RMB 2,591,826.06, accumulated amount of depreciation and amortization is RMB 36,642,071.84.
(3) Details about investment properties that uncompleted property right at period-end
Book original Accumulated Impairment
Items Book value
value depreciation provision
Building for wine filling and packing
22,618,411.84 11,050,980.34 0.00 11,567,431.50
workshop (third floor)
Office building for filling and
6,458,600.00 2,903,141.00 0.00 3,555,459.00
packing workshop (second floor)
Filling and packing workshop 8,268,007.88 2,525,518.78 0.00 5,742,489.10
Packing complex building project
6,110,867.18 3,195,983.81 0.00 2,914,883.37
(including packing workshop No. 7)
New established workshop in fodder
10,183,833.35 50,919.17 0.00 10,132,914.18
plant
Total 53,639,720.25 19,726,543.10 0.00 33,913,177.15
8. Fixed assets
(1) Particulars about fixed assets
Items Balance as at 31 Increment Decrement Balance as at 30
December 2010 June 2011
Ⅰ. Total book values: 797,965,905.14 18,312,292.85 915,934.75 815,362,263.24
Houses and buildings 503,961,199.28 2,341,107.51 0.00 506,302,306.79
Machineries and
193,190,395.60 13,394,072.63 504,308.18 206,080,160.05
equipments
Vehicles 32,046,687.27 1,811,860.36 9,300.00 33,849,247.63
Office equipment and others 68,767,622.99 765,252.35 402,326.57 69,130,548.77
Ⅱ . Total accumulated
450,940,444.96 23,813,559.19 465,711.39 474,288,292.76
depreciation
Houses and buildings 257,758,414.08 10,496,734.17 0.00 268,255,148.25
Machineries and
133,952,164.80 7,880,073.45 189,585.24 141,642,653.01
equipments
Vehicles 14,851,585.08 3,074,645.24 8,723.40 17,917,506.92
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Office equipment and others 44,378,281.00 2,362,106.33 267,402.75 46,472,984.58
Ⅲ. Total net value 347,025,460.18 0.00 0.00 341,073,970.48
Houses and buildings 246,202,785.20 0.00 0.00 238,047,158.54
Machineries and 0.00 0.00
59,238,230.80 64,437,507.04
equipments
Vehicles 17,195,102.19 0.00 0.00 15,931,740.71
Office equipment and others 24,389,341.99 0.00 0.00 22,657,564.19
Ⅳ. Total accumulated 0.00 0.00
6,951,990.42 6,951,990.42
impairment loss
Houses and buildings 4,264,099.10 0.00 0.00 4,264,099.10
Machineries and 0.00 0.00
2,020,210.96 2,020,210.96
equipments
Vehicles 0.00 0.00 0.00 0.00
Office equipment and others 667,680.36 0.00 0.00 667,680.36
Ⅴ. Total carrying value 340,073,469.76 0.00 0.00 334,121,980.06
Houses and buildings 241,938,686.10 0.00 0.00 233,783,059.44
Machineries and 0.00 0.00
57,218,019.84 62,417,296.08
equipments
Vehicles 17,195,102.19 0.00 0.00 15,931,740.71
Office equipment and others 23,721,661.63 0.00 0.00 21,989,883.83
Note: In the reporting period, RMB 23,813,559.19 is withdrawn in accumulated depreciation of
fixed assets and accumulated depreciation amount is of RMB 474,288,292.76.
(2) During current period, the amount of fixed assets that are transferred from completion of
construction in progress is RMB 1, 916,332.29.
(3) Particulars about idle fixed assets at the end of the reporting period:
Accumulated Provision for
Items Book original value Book value
depreciation impairment
Houses and buildings 17,270,151.02 12,724,361.30 4,264,099.10 281,690.62
Machineries and
11,428,316.96 9,408,106.00 2,020,210.96 0.00
equipments
Office equipment and
1,772,209.55 1,104,529.19 667,680.36 0.00
others
Total 30,470,677.53 23,236,996.49 6,951,990.42 281,690.62
(4) Particulars about fixed assets leasing out by operating lease at the end of the reporting period:
Items Accumulated Provision for
Book original value Book value
depreciation impairment
Machineries and
10,377,267.94 6,892,885.30 0.00 3,484,382.64
equipments
Vehicles 228,450.99 150,047.26 0.00 78,403.73
Electric equipment and
6,125,604.27 3,865,146.59 0.00 2,260,457.68
others
Total 16,731,323.20 10,908,079.15 0.00 5,823,244.05
(5) Particulars about fixed assets which have not completed the process of property right
certificate at period-end
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Accumulated Provision for
Items Book original value Book value
depreciation impairment
Boiler workshop 4,917,406.90 3,242,188.31 0.00 1,675,218.59
Steam turbine workshop 2,064,038.30 1,353,663.24 0.00 710,375.06
Workshop of 35KV
3,495,600.00 2,237,329.65 1,167,530.40 90,739.95
power transformation
Newly established
13,045,000.85 326,125.02 0.00 12,718,875.83
warehouse
Total 23,522,046.05 7,159,306.22 1,167,530.40 15,195,209.43
Explanation: Property right certificate of houses and buildings owed by the Company is under
process.
(6) The Company has no pledged and warranted fixed assets during current period.
9. Construction in progress
(1) Details of construction in progress
Balance as at 30 June 2011 Balance as at 31 December 2010
Provision
Items Provision for Carrying
Book balance Carrying value Book balance for
impairment value
impairment
Anaerobism 0.00 0.00
14,847.40 14,847.40 14,847.40 14,847.40
methane project
Zhangji wine pot 0.00 0.00
5,090,782.20 5,090,782.20 5,085,598.20 5,085,598.20
project
Zhengde Plaza 0.00 0.00 0.00 1,439,123.25 0.00 1,439,123.25
e-HR system 325,282.04 0.00 325,282.04 23,931.62 0.00 23,931.62
Toast flower
painting on glass 242,447.89 0.00 242,447.89 144,635.01 0.00 144,635.01
bottle line project
Reform and
alternation project 5,090,323.22 0.00 5,090,323.22 2,336,242.07 0.00 2,336,242.07
of No. 4 furnace
Total 10,763,682.75 0.00 10,763,682.75 9,044,377.55 0.00 9,044,377.55
(3) Changes in construction in progress
Increment
Budget Opening Fixed assets Other Closing
Items in current
amount balance transfer in decrement balance
period
Anaerobism methane
3,000,000.00 14,847.40 0.00 0.00 0.00 14,847.40
project
Zhangji wine pot
5,859,011.96 5,085,598.20 5,184.00 0.00 0.00 5,090,782.20
project
Zhengdei Plaza 1,939,123.25 1,439,123.25 0.00 1,439,123.25 0.00 0.00
e-HR system 528,000.00 23,931.62 301,350.42 0.00 0.00 325,282.04
Toast flower painting 2,306,275.77 144,635.01 575,021.92 477,209.04 0.00 242,447.89
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Increment
Budget Opening Fixed assets Other Closing
Items in current
amount balance transfer in decrement balance
period
on glass bottle line
project
Reform and alternation
project of No. 4 6,740,268.07 2,336,242.07 2,754,081.15 0.00 0.00 5,090,323.22
furnace
Total 9,044,377.55 3,635,637.49 1,916,332.29 0.00 10,763,682.75
10. Intangible assets
(1) Particulars about intangible assets
Items Balance as at 31 Increment Decrement Balance as at 30
December 2010 June 2011
Ⅰ. Total book values: 212,369,601.20 48,752,604.00 0.00 261,122,205.20
Land use rights 172,441,156.80 48,752,604.00 0.00 221,193,760.80
Trade mark privileges 38,150,000.00 0.00 0.00 38,150,000.00
Software 1,778,444.40 0.00 0.00 1,778,444.40
Ⅱ. Total accumulated
57,923,208.91 2,280,238.92 0.00 60,203,447.83
amortization:
Land use rights 19,539,640.07 2,072,398.92 0.00 21,612,038.99
Trade mark privileges 37,850,000.00 30,000.00 0.00 37,880,000.00
Software 533,568.84 177,840.00 0.00 711,408.84
Ⅲ. Total net value : 154,446,392.29 0.00 0.00 200,918,757.37
Land use rights 152,901,516.73 0.00 0.00 199,581,721.81
Trade mark privileges 300,000.00 0.00 0.00 270,000.00
Software 1,244,875.56 0.00 0.00 1,067,035.56
Ⅳ. Total accumulated
0.00 0.00 0.00 0.00
impairment loss:
Land use rights 0.00 0.00 0.00 0.00
Trade mark privileges 0.00 0.00 0.00 0.00
Software 0.00 0.00 0.00 0.00
Ⅴ. Total carrying value: 154,446,392.29 0.00 0.00 200,918,757.37
Land use rights 152,901,516.73 0.00 0.00 199,581,721.81
Trade mark privileges 300,000.00 0.00 0.00 270,000.00
Software 1,244,875.56 0.00 0.00 1,067,035.56
(2) Current period the intangible assets impairment is RMB 2,280,238.92.
11. Long-term deferred expense
Opening Increment in Amortization in Other
Items Closing balance
balance current period current period decrement
66
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Decoration of
Breweries Industrial 1,486,844.67 0.00 300,728.22 0.00 1,186,116.45
Park
Overhaul of extract
filtering wine pot 283,931.58 0.00 141,965.86 0.00 141,965.72
project
Total 1,770,776.25 0.00 442,694.08 0.00 1,328,082.17
12. Deferred tax assets
(1) Recognized deferred tax assets
Items Balance as at 30 June 2011 Balance as at 31 December 2010
Bad debts provisions 14,411,511.74 14,205,749.62
Provision for falling price of inventory 1,686,700.25 2,215,092.01
Provision of impairment for fixed asset 1,737,997.61 1,737,997.61
Unrecognized profits from inter-group
0.00 73,008.05
transactions
Deferred income 1,344,751.98 1,451,975.50
Accrued expense 2,929,812.81 2,929,812.81
Deductible losses 0.00 0.00
Total 22,110,774.39 22,613,635.60
(2) Details of deductable difference of assets caused by temporary differences:
Amount of temporary differences
Items
Balance as at 30 June 2011 Balance as at 31 December 2010
Bad debts provisions 57,646,047.27 56,823,499.97
Provision for falling price of inventory 6,746,800.99 8,860,368.01
Provision of impairment for fixed asset 6,951,990.42 6,951,990.42
Unrecognized profits from inter-group
0.00 292,032.21
transactions
Deferred income 5,379,007.93 5,807,902.02
Accrued expense 11,719,251.22 11,719,251.22
Total 88,443,097.83 90,455,043.85
13. Provision for assets impairment
Balance as at 31 Decrement Balance as at
Items Increment
December 2010 Recovery Written off 30 June 2011
Bad debts provisions 57,286,330.42 475,424.46 0.00 0.00 57,761,754.88
Provision for
falling price of 9,095,319.73 0.00 0.00 2,289,780.81 6,805,538.92
inventory
Provision of 6,951,990.42 0.00 0.00 0.00 6,951,990.42
67
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Balance as at 31 Decrement Balance as at
Items Increment
December 2010 Recovery Written off 30 June 2011
impairment for fixed
asset
Total 73,333,640.57 475,424.46 0.00 2,289,780.81 71,519,284.22
14. Accounts payable
(1) Aging analysis
Aging Balance as at 30 June 2011 Balance as at 31 December 2010
Within 1 year 112,196,928.64 120,513,831.94
Over 1 year 1,510,149.88 4,964,060.14
Total 113,707,078.52 125,477,892.08
(2) There is no Accounts payable balance due to shareholders who hold 5% or over 5% voting
rights as at 30 June 2011.
(3) Details of accounts payable balance due to related parties please refer to Ⅵ.5.
(4) The details of accounts payable, which is significant in amount and the account’s age more
than one year:
Outstanding Repayment after the
Name of company Balance Age
reasons balance sheet date
Hefei Hengchang Automatic Equipment 0.00
272,400.00 2-3 years
Co., Ltd. final payment
Xiangtan De Feng Machine Equipment 0.00
140,000.00 1-2 years
Manufacturing Co., Ltd final payment
Guangzhou Yuanda Chemical Business 0.00
73,500.00 Over 3 years
Industry Trade termination
Qingdao Delong Packaging Equipment 0.00
40,500.00 2-3 years
Equipment Co.,Ltd. final payment
Anqiu Dingzheng Machinery Equipment 0.00
40,300.00 1-2 years
Manufacturing Co., Ltd. final payment
Total 566,700.00 0.00
15. Advance from customers
(1) Aging analysis
Aging Balance as at 30 June 2011 Balance as at 31 December 2010
With in 1 year 229,819,573.27 84,900,159.05
Over 1 year 3,653,380.84 6,591,244.46
Total 233,472,954.11 91,491,403.51
(2) There is no advance from customers balance due to shareholders who hold 5% or over 5%
voting rights during the reporting period.
(3) Particulars about significant advance from customers with age over 1 year at the end of
reporting period:
Items Amount Age Reason for no transfer in
68
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Items Amount Age Reason for no transfer in
Yantai Mouping Huarong Gujing Chain 53,460.00 2-3 years Final payment
Beijing Tongguang Economy and
34,857.42 Final payment
Technology Co., Ltd. 2-3 years
Tengzhou De’an Hongyuan Trade Co.,
30,000.00 Final payment
Ltd. 2-3 years
Quanzhou Liu Bingfang 28,326.56 2-3 years Final payment
Panjin Xinghlong Mansion Co., Ltd. 11,858.00 2-3 years Final payment
Total 158,501.98
16. Payroll payable
(1) Particulars about payroll payable
Balance as at 31 Balance as at 30
Items Increased Decrement
December 2010 June 2011
Ⅰ. Salary, bonus and allowance 91,382,499.10 107,281,862.04 135,045,165.92 63,619,195.22
Ⅱ. Employee welfare 0.00 1,011,768.46 1,011,768.46 0.00
Ⅲ. Social insurance: 11,149,377.43 22,939,150.66 14,685,249.40 19,403,278.69
Including: 1. Medical insurance 1,439,319.86 4,687,204.05 253,084.40 5,873,439.51
2. Basic retirement insurance 9,674,599.61 17,581,745.43 14,273,973.40 12,982,371.64
3. Unemployment insurance 22,797.03 535,605.32 153,754.23 404,648.12
4. Injury insurance 7,793.02 74,383.53 4,437.37 77,739.18
5. Pregnancy insurance 4,867.91 60,212.33 0.00 65,080.24
Ⅳ. Housing accumulation fund 14,701,572.60 28,265,476.08 15,735,658.58 27,231,390.10
Ⅴ. Dismissing welfare 0.00 0.00 0.00 0.00
Ⅵ. Labor union fee and
8,734,300.41 5,310,892.04 2,445,640.62 11,599,551.83
employee education fee
Ⅶ.Non-monetary welfare 0.00 0.00 0.00 0.00
Ⅷ. Compensation of
0.00 0.00 0.00 0.00
termination of labor contract
Ⅸ. Others: 0.00 0.00 0.00 0.00
Including: cash-settled share
0.00 0.00 0.00 0.00
payment
Total 125,967,749.54 164,809,149.28 168,923,482.98 121,853,415.84
(2) There is no arrearage due from payroll payables.
17. Tax payable
Types of tax Balance as at 30 June 2011 Balance as at 31 December 2010
VAT 90,701,469.19 75,399,278.88
Consumption tax 143,164,620.41 140,420,188.41
Business Tax 662,712.51 615,100.66
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Types of tax Balance as at 30 June 2011 Balance as at 31 December 2010
Urban construction tax 12,954,865.54 8,995,466.49
Corporation Tax 107,530,502.66 99,978,490.67
Individual income tax 125,075.62 902,332.16
Stamp duty tax 0.00 636,169.62
Education Surcharge 12,953,099.72 7,002,243.42
Others 24,639.28 751,862.55
Total 368,116,984.93 334,701,132.86
18. Other accounts payable
(1) Aging analysis
Aging Balance as at 30 June 2011 Balance as at 31 December 2010
Within 1 year 137,844,117.70 80,236,518.17
More than 1 year 57,666,543.14 44,773,668.00
Total 195,510,660.84 125,010,186.17
(2) Particulars about other accounts payable balance due to shareholders who own 5% or more
than 5% voting right as at 30 June 2011 is as followed:
Balance as at 30 Balance as at 31
Content of accoutn
Shareholder name June 2011 December 2010
Gujing Group Leasing expense 0.00 191,666.67
Total 0.00 191,666.67
(3) Please refer to Note Ⅵ. 5. for details about accounts payable on related parties.
(4) The details of significant other accounts payable with age more than one year:
Company name Balance Age Outstanding reasons
Anhui Anzhen investment Co., Ltd 5,000,000.00 Over 3 years Unable to contact creditor
Guangxi Construction Engineering Decoration expenses for
2,265,300.00 Over 2-3 years
Group No. 1 Installation Co., Ltd boiler and security deposit
Final payment and security
Shanghai Sage Software Co., Ltd. 524,204.00 Over 2-3 years
deposit
Jiangsu Xincheng Print Development
330,000.00 Over 3 years Security deposit
Co., Ltd
Wenzhou Zhongyuan Non-staple Foods
300,000.00 1-2 years Security deposit
Co., Ltd
Total 8,419,504.00
(5) Particulars about significant other accounts payable aging over 1 year at period-end
Items Balance Content
Anqiu Dingzheng Mechanic Equipment Co., Ltd 873,760.00 Pledged money
Henan Heli Architecture Construction Co., Ltd. 393,294.57 Pledged money
Miao Xiufu 392,000.00 Pledged money
70
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Shandong Liaocheng Fuhe Packing Co., Ltd 300,000.00 Pledged money
Anhui Hualian Department Store Co., Ltd 300,000.00 Pledged money
Total 2,259,054.57
19. Other current liabilities
Increment in Decrement in
Items Opening balance Closing balance
current period current period
Energy-saving and reform project of
coal-fired industry boiler and glass 547,788.19 0.00 273,894.09 273,894.10
furnace
Bozhou city logistics center project 60,000.00 0.00 30,000.00 30,000.00
Special account for prevention and cure
of waste water directed by municipal 650,000.00 0.00 325,000.00 325,000.00
finance
Total 1,257,788.19 0.00 628,894.09 628,894.10
Note: This item reveals deferred income amortized in the reporting period.
20. Other non-current liabilities
(1) Category
Item Balance as at 30 June 2011 Balance as at 31 December 2010
Government grant related to assets 4,750,113.83 4,550,113.83
Total 4,750,113.83 4,550,113.83
(2) Explanation for other non-current liabilities: government grant related to assets and closing
amount
Amortization Decrement
Increment in Closing
Items Opening balance in current in current
current period balance
period period
Energy-saving and reform project
of coal-fired industry boiler and 1,470,113.83 0.00 0.00 0.00 1,470,113.83
glass furnace
Bozhou city logistics center
480,000.00 0.00 0.00 0.00 480,000.00
project
Special account for prevention
and cure of waste water directed 2,600,000.00 0.00 0.00 0.00 2,600,000.00
by municipal finance
Government grants for wine pot
0.00 200,000.00 0.00 0.00 200,000.00
packaging No. 3 workshop
Total 4,550,113.83 200,000.00 0.00 0.00 4,750,113.83
21. Share capital
Unit: share
Items Balance as at 31 Increase/decrease (+、－) Balance as at
December 2010 30 June 2011
71
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Issuance Capitalization
Bonus
of new of capital Others Subtotal
shares
shares reserve
Ⅰ. Shares subject to
trading moratorium
1. Shares held by the
0.00 0.00 0.00 0.00 0.00 0.00 0.00
state
2. Shares held by
0.00 0.00 0.00 0.00 0.00 0.00 0.00
state-owned corporations
3. Other domestic shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Including: shares held
0.00 0.00 0.00 0.00 0.00 0.00 0.00
by domestic corporations
Shares held
by domestic natural 0.00 0.00 0.00 0.00 0.00 0.00 0.00
person
4. Foreign shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Including: shares held
0.00 0.00 0.00 0.00 0.00 0.00 0.00
by foreign corporation
Shares held by
0.00 0.00 0.00 0.00 0.00 0.00 0.00
foreign natural person
Total of shares subject to
0.00 0.00 0.00 0.00 0.00 0.00 0.00
trading moratorium
Ⅱ. Shares not subject to
trading moratorium
1. RMB ordinary shares 175,000,000.00 0.00 0.00 0.00 0.00 0.00 175,000,000.00
2. Domestically listed
60,000,000.00 0.00 0.00 0.00 0.00 0.00 60,000,000.00
foreign shares
3. Overseas listed foreign
0.00 0.00 0.00 0.00 0.00 0.00 0.00
shares
4. Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total shares not subject
235,000,000.00 0.00 0.00 0.00 0.00 0.00 235,000,000.00
to trading moratorium
Total shares 235,000,000.00 0.00 0.00 0.00 0.00 0.00 235,000,000.00
22. Capital reserve
Balance as at 31 Increment in Decrement in Balance as at 30
Categories
December 2010 current period current period June 2011
Share premium 303,653,005.78 0.00 0.00 303,653,005.78
Other capital reserves 32,386,037.14 0.00 0.00 32,386,037.14
Total 336,039,042.92 0.00 0.00 336,039,042.92
23. Surplus reserve
Categories Balance as at 31 Increment in Decrement in Balance as at 30
72
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December 2010 current period current period June 2011
Statutory surplus
97,283,190.70 0.00 0.00 97,283,190.70
reserve
Total 97,283,190.70 0.00 0.00 97,283,190.70
24. Undistributed profit
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Balance at the end of the year of 2010
381,153,314.20 176,955,910.52
(Before adjustment)
Total adjustment for the balance at the
0.00 -67,362.48
beginning of the year of 2011
Balance at the beginning of the year of 2011
381,153,314.20 176,888,548.04
(After adjustment)
Add: Current distributable net profits for
287,947,478.86 313,757,556.93
owners of parent company
Less: Appropriation of statutory surplus
0.00 27,242,790.77
reserves
Appropriation of discretionary surplus
0.00 0.00
reserve
Appropriation of normal risk provision 0.00 0.00
Ordinary shares dividend payables 82,250,000.00 82,250,000.00
Ordinary shares dividend capitalized to
0.00 0.00
share capital
Undistributed profits as at 30 June 2011 586,850,793.06 381,153,314.20
25. Operating Revenues and Operating Costs
(1) Operating Revenues
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Main operating incomes 1,564,181,223.58 832,852,759.94
Other operating incomes 19,116,446.24 23,494,613.02
Total operating income 1,583,297,669.82 856,347,372.96
Main operating Costs 390,226,869.38 218,281,810.84
Other operating Costs 14,928,735.92 23,506,606.70
Total operating costs 405,155,605.30 241,788,417.54
(2) Main business (listed according to categories of products)
Jan.-Jun. 2011 Jan.-Jun. 2010
Name of products
Operating income Operating Cost Operating income Operating Cost
Wine 1,515,785,982.31 358,960,409.73 784,786,790.62 187,707,053.93
Hotel 32,246,050.22 19,670,090.63 36,670,434.57 22,002,260.74
Other 16,149,191.05 11,596,369.02 11,395,534.75 8,572,496.17
Total 1,564,181,223.58 390,226,869.38 832,852,759.94 218,281,810.84
73
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(3) Main business (listed according to different districts)
Jan.-Jun. 2011 Jan.-Jun. 2010
Name of districts
Operating income Operating Cost Operating income Operating Cost
North China 299,410,492.72 71,858,518.25 89,900,827.78 21,502,680.38
Central China 1,136,839,486.73 287,664,852.54 665,601,300.56 178,278,233.97
South China 127,931,244.13 30,703,498.59 77,350,631.60 18,500,896.49
Total 1,564,181,223.58 390,226,869.38 832,852,759.94 218,281,810.84
(4) Particulars about operating revenue from the top five clients:
Proportion of total operating
Items Operating revenues
revenues (%)
The first 54,865,044.44 3.47
The second 36,276,553.93 2.29
The third 34,246,588.89 2.16
The fourth 32,692,442.74 2.06
The fifth 29,292,485.64 1.85
Total 187,373,115.64 11.83
26. Business tax and surtax
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Consumption tax 195,602,195.05 105,651,934.12
Business tax 2,110,970.16 2,048,480.08
Urban construction tax and Education
41,640,569.72 21,784,915.58
surcharge
Flood protection fee 120,337.28 18,335.22
Total 239,474,072.21 129,503,665.00
Please refer to Note Ⅲ taxation for the details of tax rate and scale.
27. Sales expenses
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Employee remuneration 31,469,649.29 21,789,501.31
Travel expense 22,912,955.63 12,398,059.41
Advertising expense 136,027,371.88 106,212,888.25
Transportation expense 11,952,957.68 6,902,466.34
Charges for publicity and promotion 61,283,622.15 19,160,565.92
Charges for sample wine and holiday
16,641,250.56 24,618,837.50
wine
74
English Translation for Reference Only
Service fee 47,771,270.63 0.00
Other sales expense 8,945,301.78 8,458,108.89
Total 337,004,379.60 199,540,427.62
28. Administration expenses
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Employee remuneration 59,784,800.07 32,652,665.32
Administrative expense 21,850,174.70 10,622,183.62
Charges for consultation and audit 1,017,618.80 1,452,590.00
Taxation expense 3,260,053.29 2,662,690.63
Repair charge 10,373,877.13 42,708,309.41
Depreciation cost 7,502,161.98 7,966,650.07
Amortization of intangible asset 2,311,246.20 1,291,135.94
Pollution charge 2,180,723.00 20,100.00
Charges for business entertainment 2,063,776.61 2,805,625.40
Cost of material wastage 8,771,692.38 9,058,158.56
Travel expense 9,803,816.29 9,932,931.13
Hotel administration expense 3,326,786.70 3,084,677.13
Charges for water and electricity 1,585,038.80 4,227,045.41
Landscaping fee 55,283.30 1,085,462.54
Scientific research testing fee 1,131,609.69 2,195,637.50
Storage charge 1,794,554.24 1,597,417.07
Premium 822,998.41 455,116.59
Amortization of long-term deferred
0.00
expense 442,694.08
Trade mark registration fee 232,930.00 279,525.00
Lease expense 960,623.32 242,177.22
Sample wine 75,565,828.69 5,586,231.00
Others 8,136,683.55 11,996,759.69
Total 222,974,971.23 151,923,089.23
29. Financial expenses
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Interest expense 0.00 79,200.00
Less: Interest Income 6,928,661.61 3,752,813.00
Less: Charges for handling bills 3,586,692.84 0.00
Bank commission 19,772.73 26,102.23
Total -10,495,581.72 -3,647,510.77
75
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30. Asset impairment loss
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Bad debt loss 475,424.46 354,213.50
Impairment loss on inventories 0.00 0.00
Total 475,424.46 354,213.50
31. Investment income
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Investment income arising from disposal of
0.00 0.00
long-term equity investment
Investment income arising from disposal of
0.00 879,284.55
tradable financial assets
Total 0.00 879,284.55
32. Non-operating income
（1）Details of non-operating income:
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Gains from disposal of non-current assets 986,738.50 6,750,770.10
Including: Gains from disposal of fixed
704,354.36 1,549,386.30
assets
Gains from penalties 2,979,764.58 1,806,148.06
Sale of waste 1,169,204.80 0.00
Others 781,081.85 620,196.10
Total 5,916,789.73 9,177,114.26
33. Non-operating expenses
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Loss on disposal of non-current
122,757.19 1,394,204.42
assets
Include: Loss on disposal of fixed
122,757.19 1,394,204.42
assets
Others 163,431.17 130,817.47
Total 286,188.36 1,525,021.89
34. Income tax expenses
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Income tax for current period 105,889,060.04 21,381,988.92
76
English Translation for Reference Only
Deferred Income tax expense 502,861.21 16,647,468.80
Total 106,391,921.25 38,029,457.72
35. Calculation for Basic EPS and Diluted EPS
Jan.-Jun. 2011 Jan.-Jun. 2010
Profit of this period
Basic EPS Diluted EPS Basic EPS Diluted EPS
Net profits attributable to
1.23 1.23 0.46 0.46
ordinary shareholders
Net profits attributable to
ordinary shareholders that
1.21 1.21 0.43 0.43
have deducted extraordinary
profits or losses.
Basic Earnings Per Share =P0÷S
S=S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0-Sk
Including：P0 : is the net profits attributable to ordinary shareholders or net profits attributable to
ordinary shareholders that have deducted extraordinary profits or losses; S: is weighted average
number of ordinary shares outstanding during the period; S0 : is the total number of ordinary
shares outstanding at the beginning of the period; S1: is incremental ordinary shares issued as a
result of the conversion of surplus to ordinary shares or distribution of shares dividend; Si: is
incremental ordinary shares issued as a result of the conversion of a debt instrument to ordinary
shares or issued new shares; Sj: Decrement shares that are the number of ordinary shares bought
back,etc; Sk: is the number of shrink stocks during the reporting period; M0: is the number of
month during the reporting period; Mi: is the accumulative months that is from the next month of
incremental shares to the month of end of reporting period; Mj is the accumulative months that is
from the next month of decrement shares to the month of end of reporting period.
Diluted Earnings Per Share =P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+ weighted average number of
increased ordinary shares from Options and warrants、Share options、Convertible debenture, etc)
Including：P1: is the net profits attributable to ordinary shareholders or net profits attributable to
ordinary shareholders that have deducted extraordinary profits or losses, and need to consider the
effects of all dilutive potential ordinary shares, as well as adjusted according to and relevant policies.
36. Notes to cash flow statement
（1）Cash received related to other operating activities
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Security deposit 33,938,682.52 24,208,415.40
Others 11,832,418.77 8,004,103.12
Total 45,771,101.29 32,212,518.52
（2）Cash paid related to other operating activities
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Cash paid in sales expenses and 161,764,392.97 65,349,941.37
77
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administration expenses
Security deposit 4,611,399.20 12,388,384.71
Others 7,926,785.66 5,659,887.78
Total 174,302,577.83 83,398,213.86
37. Supplemental information for cash flow statement
（1）Supplemental information for cash flow statement
Supplemental information Jan.-Jun. 2011 Jan.-Jun. 2010
1 Adjusting net profit to cash flow from operating
activities
Net profits 287,947,478.86 107,386,990.04
Add：Provision for assets impairment loss 0.00 0.00
Depreciation of fixed assets, oil and gas assets and
26,374,377.97 23,412,021.70
productive biological assets
Amortization of intangible assets 2,311,246.20 1,329,278.10
Amortization of Long-term deferred expenses 442,694.08 0.00
Loss on disposal of fixed assets, intangible assets and other
74,861.78 1,366.00
long-term assets (The gain is listed beginning with “-“)
Losses on scraped fixed assets (The gain is listed beginning
0.00 1,394,204.42
with “-“)
Losses from fluctuation in fair values (The gain is listed
0.00 0.00
beginning with “-“)
Financial costs (The gain is listed beginning with “-“) 0.00 79,200.00
Losses on investment (The gain is listed beginning with
0.00 -879,284.55
“-“)
Decrease of deferred income tax assets (The increase is
502,861.21 17,167,549.92
listed beginning with “-“)
Increase of deferred income tax liabilities (The decrease is 0.00
0.00
listed beginning with “-“)
Decrease of inventories (The increase is listed beginning
-28,976,495.12 -20,705,209.33
with “-“)
Decrease of operating receivables (The increase is listed
-323,603,833.48 -67,291,963.64
beginning with “-“)
Increase of operating payables (The decrease is listed
230,012,730.08 100,145,124.44
beginning with “-“)
Others 0.00 0.00
Net cash flow arising from operating activities 195,085,921.58 162,039,277.10
2 Significant investment and financing activities that not
relate to cash flows:
Debts convert to capital 0.00 0.00
Convertible corporate bond due within 1 year 0.00 0.00
78
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Supplemental information Jan.-Jun. 2011 Jan.-Jun. 2010
Finance leased fixed assets 0.00 0.00
3 Net increase (decrease) of cash and cash equivalents
Closing balance of cash 663,079,295.66 443,451,147.11
Less: Beginning balance of cash 643,231,404.42 361,051,750.67
Add : Closing balance of cash equivalents 0.00 0.00
Less: Beginning balance of cash equivalents 0.00 0.00
Net increase of cash and cash equivalents 19,847,891.24 82,399,396.44
2 Cash and cash equivalent
Items Jan.-Jun. 2011 Jan.-Jun. 2010
1 Cash 663,079,295.66 443,451,147.11
Including: Cash on hand 261,732.05 319,492.38
unrestricted bank deposit 662,817,563.61 443,131,654.73
2. Cash equivalents 0.00 0.00
Including: Bond investment due within three month 0.00 0.00
3. Closing balance of cash and cash equivalents 663,079,295.66 443,451,147.11
Ⅵ. Related party relationships and transactions
a) Details of the Company’s parent company
Authoriz
Parent Relationship Type of Place of
ed Registered
company’s with the enterpris registrati Nature of business
represent capital
name Company e on
ative
Beverage,
State-ow
Construction
Controlling ned Anhui
Gujing Group Yu Lin materials, and plastic 353,380,000.00
shareholder enterpris Bozhou
productions
es
manufacture
Con.：
Parent
Shareholding Voting rights The Company’s final Code of
company’s
proportion% proportion% controller organization
name
Gujing Anhui Province, Bozhou
57.75 57.75 151947437
Group City government
b) Details of the Company’s subsidiaries
For details of the Company’s subsidiaries, please refer to Note Ⅳ. 1.
c) Details of other related parties of the Company
Names of other related parties Relationships with the company Code of organization
79
English Translation for Reference Only
Names of other related parties Relationships with the company Code of organization
Affiliated enterprise of controlling
Anhui Ruifuxiang Food Co., Ltd 77908892-2
shareholder and actual controller
Anhui Ruijing Trade Travel (Group) Affiliated enterprise of controlling
14912443-1
Co., Ltd shareholder and actual controller
Anhui Bozhou Gujing Employee Affiliated enterprise of controlling
77737615-4
Hospital shareholder and actual controller
Affiliated enterprise of controlling
Bozhou Gujing Hotel Co., Ltd 15194003-2
shareholder and actual controller
Anhui Gujing Real Estates Group Co., Affiliated enterprise of controlling
151940024
Ltd. shareholder and actual controller
Anhui Ruijing Famous Wine Marketing Affiliated enterprise of controlling
66791637-5
Co., Ltd shareholder and actual controller
d) Related transactions
(1) Goods purchased and service received
Jan.-Jun. 2011 Jan.-Jun. 2010
Pricing way and The
Content of
decision The proportion proportion of
Related party related-party
procedures of Amount of similar Amount similar
transaction
related-transaction transactions（%） transactions
（%）
Anhui
Purchase of
Ruifuxiang Food Market price 32,034,447.04 100.00 19,740,787.87 100.00
alcohol
Co., Ltd
Total 32,034,447.04 19,740,787.87
(2) Sales of goods and rendering of service
Jan.-Jun. 2011 Jan.-Jun. 2010
Pricing way and The
Content of The proportion
decision proportion of
Related party related-party of similar
procedures of Amount similar Amount
transaction transactions
related-transaction transactions
（%）
（%）
Sales of
water,
electricity,
Gujing Group Market price 5,814.89 0.02 84,350.84 0.35
gas, and
small-sized
materials
Anhui Ruijing
Sale of
Famous Wine Market price 0.00 0.00 44,716,844.44 5.96
white spirit
Marketing Co., Ltd
Anhui Bozhou Sales of
Market price 0.00 0.00 2,833.60 0.01
Gujing Employee water,
80
English Translation for Reference Only
Jan.-Jun. 2011 Jan.-Jun. 2010
Pricing way and The
Content of The proportion
decision proportion of
Related party related-party of similar
procedures of Amount similar Amount
transaction transactions
related-transaction transactions
（%）
（%）
Hospital electricity,
gas, and
small-sized
materials
Anhui Gujing Real
Sale of
Estates Group Co., Market price 226,923.06 0.70 42,051.28 0.01
white spirit
Ltd.
232,737.95 44,846,080.16
Total
(3) Related leasing
Leasing fee
Start date of End date of Pricing basis of
Lessor Lessee Leased assets recognized in
leasing leasing leasing fee
reporting period
Houses and
Gujing Group The Company 2010-6-1 2020-5-31 Market price 900,000.00
buildings
Houses and
Gujing Group Gujing Inn 2010-6-1 2020-5-31 Market price 250,000,00
buildings
Total 1,150,000.00
e) Receivables from and payables to related parties
(1) Receivables from related parties
Closing balance Opening balance
Item Related-party Book Bad debt Bad debt
Book balance
balance provision provision
Other
receivables
Gujing Group 5,727.25 0.00 0.00 0.00
(2) Payables to related parties
Item Related parties Closing balance Opening balance
Accounts payable
Anhui Ruifuxiang Food Co., Ltd 0.00 5,986,267.22
Other payables
Anhui Ruijing Trade Travel (Group)
0.00 181,984.17
Co., Ltd
Gujing Group 0.00 191,666.67
81
English Translation for Reference Only
VII. Contingency
Up to 30 June 2011, there is no contingency event that needs to be disclosed.
VIII. Commitment
Up to 30 June 2011, there is no commitment event that needs to be disclosed.
IX. Events after the Balance Sheet Date
As approved by Zheng-Jian-Xu-Ke [2011] No. 943 Document of CSRC, the Company
accomplished non-public offering of shares on 19 Jul. 2011. The Company issued 16.8 million
RMB ordinary shares (A-share) to 6 certain investors at the price of RMB 75.00/share, reaching a
total raised fund of RMB 1,260 million. Reanda Certified Public Accountants Co., Ltd. audited on
the collection of the raised fund and issued the Capital Verification Report (Reanda-Yan-Zi [2011]
No. 1065). GF Securities Co., Ltd. sponsored the new issued shares of the Company at Shenzhen
Stock Exchange.
As at the reporting date, there’s no other significant event after the balance sheet date except the
abovementioned event.
X. Notes to main items in financial statements of the parent company
1. Accounts receivable
(1) Accounts receivable listed by categories
Closing amount
Book balance Bad debt provision
Item
Proportion Proportion
Amount Amount
(%) (%)
Accounts receivable with significant amount and being individually
0.00 0.00 0.00 0.00
withdrawn bad debt provision
Accounts receivable withdrawn bad debt provision by group
Aging groups 587,771.00 100.00 484,883.50 82.50
Accounts receivable with insignificant amount but being individually
0.00 0.00 0.00 0.00
withdrawn bad debt provision
Total 587,771.00 100.00 484,883.50 82.50
Con:
Opening amount
Book balance Bad debt provision
Item
Proportion Proportion
Amount Amount
(%) (%)
82
English Translation for Reference Only
Opening amount
Book balance Bad debt provision
Item
Proportion Proportion
Amount Amount
(%) (%)
Accounts receivable with significant amount and being individually
0.00 0.00 0.00 0.00
withdrawn bad debt provision
Accounts receivable withdrawn bad debt provision by group
Aging groups 587,771.00 100.00 446,590.50 75.98
Accounts receivable with insignificant amount but being
0.00 0.00 0.00 0.00
individually withdrawn bad debt provision
Total 587,771.00 100.00 446,590.50 75.98
(2) Accounts receivable withdrawn bad debt provision by aging analysis method in groups
Closing amount
Book balance Bad debt provision
Age
Proportion Proportion
Amount Amount
(%) (%)
Within 1 year
Including: within 6 months 0.00 0.00 0.00 1.00
6 months to 1 year 0.00 0.00 0.00 5.00
Subtotal: within 1 year 0.00 0.00 0.00 0.00
1-2 years 0.00 0.00 0.00 10.00
2-3 years 205,775.00 35.01 102,887.50 50.00
Over 3 years 381,996.00 64.99 381,996.00 100.00
Total 587,771.00 100.00 484,883.50 82.50
Con:
Opening amount
Book balance Bad debt provision
Age
Proportion Proportion
Amount Amount
(%) (%)
Within 1 year
Including: within 6 months 0.00 0.00 0.00 1.00
6 months to 1 year 0.00 0.00 0.00 5.00
Subtotal: within 1 year 0.00 0.00 0.00 0.00
1-2 years 5,775.00 0.98 577.50 10.00
83
English Translation for Reference Only
Opening amount
Book balance Bad debt provision
Age
Proportion Proportion
Amount Amount
(%) (%)
2-3 years 271,966.00 46.27 135,983.00 50.00
Over 3 years 310,030.00 52.75 310,030.00 100.00
Total 587,771.00 100.00 446,590.50 75.98
(3) In the reporting period, there was no accounts receivable, which had been fully allotted for bad
debt provision or allotted for bad debt provision in a large proportion before this period, were
written back or recovered.
(4) There were no accounts receivables from shareholder entities holding more than 5% (including
5%) voting shares of the Company in the reporting period.
(5) Top 5 entities on accounts receivable at the period-end
Relation with the Proportion in total
Entity Amount Age
Company accounts receivable (%)
Chang Xianfeng in
Non-related party 492,545.00 Over 2 years 83.80
Huaiyuan
Anhui Sanbao Feed
Non-related party 95,226.00 Over 3 years 16.20
Co., Ltd.
Total 587,771.00 100.00
2. Other receivables
(1) Other receivables listed by categories
Closing amount
Book balance Bad debt provision
Item
Proporti Proporti
Amount Amount
on (%) on (%)
Other receivables with significant amount and being individually
withdrawn bad debt provision 55,216,448.81 16.55 55,216,448.81 100
Other receivables withdrawn bad debt provision by group
Aging groups 278,405,363.65 83.45 552,216.23 0.20
Other receivables with insignificant amount but being
individually withdrawn bad debt provision 0.00 0.00 0.00 0.00
Total 333,621,812.46 100.00 55,768,665.04 16.72
Con:
Opening amount
Book balance Bad debt provision
Item
Proporti Proporti
Amount Amount
on (%) on (%)
84
English Translation for Reference Only
Opening amount
Book balance Bad debt provision
Item
Proporti Proporti
Amount Amount
on (%) on (%)
Other receivables with significant amount and being individually
55,216,448.81 17.11 55,216,448.81 100.00
withdrawn bad debt provision
Other receivables withdrawn bad debt provision by group
Aging groups 267,487,194.73 82.89 474,628.76 0.18
Other receivables with insignificant amount but being
0.00 0.00 0.00 0.00
individually withdrawn bad debt provision
Total 322,703,643.54 100.00 55,691,077.57 17.26
(2) Other receivables withdrawn bad debt provision by aging analysis method in groups
Closing amount
Book balance Bad debt provision
Age
Proporti Proporti
Amount Amount
on (%) on (%)
Within 1 year
Including: within 6 months 91,294,209.69 32.79 521,658.53 注 1.00
6 months to 1 year 611,153.96 0.22 30,557.70 5.00
Subtotal: within 1 year 91,905,363.65 33.01 552,216.23 0.50
1-2 years 186,500,000.00 66.99 0.00 注 0.00
2-3 years 0.00 0.00 0.00 50.00
Over 3 years 0.00 0.00 0.00 100.00
Total 278,405,363.65 100.00 552,216.23 0.20
Con:
Opening amount
Book balance Bad debt provision
Age
Proporti Proporti
Amount Amount
on (%) on (%)
Within 1 year
Including: within 6 months 136,060,681.56 50.87 437,438.10 1.00
6 months to 1 year 131,145,213.17 49.03 7,260.66 5.00
Subtotal: within 1 year 267,205,894.73 99.90 444,698.76 0.17
1-2 years 279,300.00 0.10 27,930.00 10.00
2-3 years 0.00 0.00 0.00 0.00
Over 3 years 2,000.00 0.00 2,000.00 100.00
85
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Opening amount
Book balance Bad debt provision
Age
Proporti Proporti
Amount Amount
on (%) on (%)
Total 267,487,194.73 100.00 474,628.76 0.18
Note: The parent company didn’t withdraw bad debt provision for accounts receivable of
subsidiaries in consolidation scope.
(3) There were no other receivables from shareholder entities holding more than 5% (including
5%) voting shares of the Company in the reporting period.
(4) Top 5 entities on other receivables at the period-end
Proportion in
Relation with total other
Item Amount Nature Age
the Company receivables
(%)
Business-running Within 2
Shanghai Jinhao Related party 186,500,000.00 55.90
funds years
Non-related Treasury bond
Hengxin Securities 29,502,438.53 Over 3 years 8.84
party deposit
Charges for
Within 6
Gujing Glass Related party 17,790,033.27 water, electricity, 5.33
months
and gas
Non-related Treasury bond
12,879,010.28 Over 3 years 3.86
Minfa Securities party deposit
Capital-Bridge Non-related Treasury bond
12,835,000.00 Over 3 years 3.85
Securities party deposit
Total 259,506,482.08 77.78
3. Long-term equity investment
（1）Details of long-term equity investment
Explanation for the
difference between
Proportion of
Accounting Initial investment Proportion of shareholding
Name of investee company shareholding
Method cost voting rights% proportion and
%
voting rights
proportion
Cost
Gujing Sales 84,864,497.89 100.00 100.00
method
Cost
Gujing Motor Transportation 6,875,743.00 100.00 100.00
method
Cost
Gujing Glass 65,795,666.00 100.00 100.00
method
Cost
Hefei Trading 9,900,000.00 100.00 100.00
method
86
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Explanation for the
difference between
Proportion of
Accounting Initial investment Proportion of shareholding
Name of investee company shareholding
Method cost voting rights% proportion and
%
voting rights
proportion
Cost
Gujing Inn 648,646.80 100.00 100.00
method
Cost
Shanghai Jinhao 49,906,854.63 100.00 100.00
method
Total 217,991,408.32
Con:
Provision
for
Provision
Name of investee Changes in impairment
Opening balance Closing balance for Cash dividend
company current year loss for
impairment
reporting
period
Gujing Sales 84,864,497.89 0.00 84,864,497.89 0.00 0.00 0.00
Gujing Motor
6,875,743.00 0.00 6,875,743.00 0.00 0.00 0.00
Transportation
Gujing Glass 65,795,666.00 0.00 65,795,666.00 0.00 0.00 0.00
Shanghai Trading 9,900,000.00 -9,900,000.00 0.00 0.00 0.00 0.00
Hefei Trading 9,900,000.00 0.00 9,900,000.00 0.00 0.00 0.00
Shanghai Jinhao 49,906,854.63 0.00 49,906,854.63 0.00 0.00 0.00
Gujing Inn 648,646.80 0.00 648,646.80 0.00 0.00 0.00
Total 227,891,408.32 -9,900,000.00 217,991,408.32 0.00 0.00 0.00
4. Operating income and cost
(1) Operating income
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Main operating income 909,857,567.78 471,613,698.56
Other operating income 16,339,919.26 23,170,239.16
Total operating income 926,197,487.04 494,783,937.72
Main operating Cost 377,328,510.59 188,744,723.93
Other operating Cost 16,258,539.02 23,287,490.74
Total operating cost 393,587,049.61 212,032,214.67
（2）Main business（listed according to categories of products）
Jan.-Jun. 2011 Jan.-Jun. 2010
Product
Operating income Operating cost Operating income Operating cost
87
English Translation for Reference Only
White spirit 909,857,567.78 377,328,510.59 471,613,698.56 188,744,723.93
Total 909,857,567.78 377,328,510.59 471,613,698.56 188,744,723.93
（3）Details of operating income from top five clients:
Proportion in total operating
Client Operating income
income of the Company (%)
No.1 905,072,211.18 97.72
No.2 3,617,961.28 0.39
No.3 228,153.85 0.02
No.4 63,076.92 0.01
No.5 61,538.46 0.01
Total 909,042,941.69 98.15
5. Investment income
(1) Details of investment income
Items Jan.-Jun. 2011 Jan.-Jun. 2010
Long-term equity investment income measured by cost
0.00 0.00
method
Investment income arising form disposal of long-term
299,516.89 0.00
equity investment
Investment income arising from disposal of tradable
0.00 645,653.65
financial assets
Total 299,516.89 645,653.65
6. Supplemental information for cash flow statement
Supplemental information Jan.-Jun. 2011 Jan.-Jun. 2010
1 Adjusting net profit to cash flow from operating
activities
Net profits 103,385,979.87 46,863,787.69
Add：Provision for assets impairment loss 0.00 0.00
Depreciation of fixed assets 、 oil and gas assets and
11,280,687.88 10,356,089.21
productivity biological assets
Amortization of intangible assets 651,701.76 650,543.58
Amortization of Long-term deferred expenses 442,694.08 0
Loss on disposal of fixed assets、intangible assets and other 0.00
0.00
long-term assets (The gain is listed beginning with “-“)
Losses on scraped fixed assets (The gain is listed beginning 0.00
27,794.00
with “-“)
Losses from fluctuation in fair values (The gain is listed 0.00
0
beginning with “-“)
Financial costs (The gain is listed beginning with “-“) 0.00 79,200.00
Losses on investment (The gain is listed beginning with -299,516.89 -645,653.65
88
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Supplemental information Jan.-Jun. 2011 Jan.-Jun. 2010
“-“)
Decrease of deferred income tax assets (The increase is
-28,970.12 16,647,468.80
listed beginning with “-“)
Increase of deferred income tax liabilities (The decrease is
0.00 0
listed beginning with “-“)
Decrease of inventories (The increase is listed beginning
-20,559,558.30 -21,967,792.28
with “-“)
Decrease of operating receivables (The increase is listed
-282,107,433.40 -70,304,525.75
beginning with “-“)
Increase of operating payables (The decrease is listed
456,437,762.72 142,946,838.52
beginning with “-“)
Others 0.00 0
Net cash flow arising from operating activities 269,203,347.60 124,653,750.12
2 Significant investment and financing activities that not
relate to cash flows:
Debts convert to capital 0.00 0.00
Convertible corporate bond due within 1 year 0.00 0.00
Finance leased fixed assets 0.00 0.00
3 Net increase (decrease) of cash and cash equivalents
Ending balance of cash 590,395,007.96 326,240,638.24
Less: Beginning balance of cash 480,737,398.56 279,382,070.44
Add : Ending balance of cash equivalents 0.00 0.00
Less: Beginning balance of cash equivalents 0.00 0.00
Net increase in cash and cash equivalents 109,657,609.40 46,858,567.80
XI. Supplemental information
1. List of current extraordinary profits or losses of this period
Item Amount Explanation
Gains and Losses on disposal of non-current assets 0.00
Refunding and exemption of taxes in excess of authority or
0.00
without official approval documents
Government subsidies recorded into current income account,
except for those government subsidies closely related to the
0.00
Company’s business, and sustainably received by quota or
ration according to the state’s unified standard
Capital adoption fee collected from non-financial organizations
0.00
and accounted into current gain/loss
Gain/loss from differences between the investment cost from
subsidiaries, associated enterprise, as well as joint ventures and 0.00
the fair value of recognizable net asset of the invested entities
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Item Amount Explanation
Gain/loss from non-monetary assets 0.00
Gain/loss from commissioned investment or assets 0.00
Asset impairment provisions provided for force-majeure, for
0.00
example, natural disasters
Gain/loss from debt reorganization 0.00
Enterprise reorganizing expenses, such as employee placement
0.00
fee and integration fee
Gain/loss from trade departing from fair value 0.00
Current net gain/loss of subsidiaries under same control from
0.00
beginning of term till date of consolidation
Gain/loss generated by contingent liabilities without connection
0.00
with main businesses
Gain/loss from change of fair value of transactional asset and
liabilities, and investment gains from disposal of transactional
financial assets and liabilities and sellable financial assets, other 0.00
than valid period value instruments related to the Company’s
common businesses
Restoring of receivable account impairment provision tested
0.00
individually
Gain/loss from commissioned loans 0.00
Gain/loss from change of fair value of investment property
0.00
measured at fair value in follow-up measurement
Influence of one-time adjustment made on current gain/loss
account according to the laws and regulations regarding tax and 0.00
accounting
Consigning fee received for consigned operation 0.00
Other non-business income and expenditures other than the
5,630,601.37
above
Other gain/loss items satisfying the definition of nonrecurring
0.00
gain/loss account
Subtotal 5,630,601.37
Less: the amount from income tax effect 1,407,650.34
the impact from minority interests 0.00
Total (after tax) 4,222,951.03
2. Yield Rate of Net Assets and Earnings Per Share
Weighted Earnings Per Share(Yuan per share)
Average Yield
Profit of reporting period Reporting periods
Rate of Net Basic EPS Basic EPS
Assets%
Net profits attributable to Jan.-Jun. 2011 24.99 1.23 1.23
ordinary shareholders Jan.-Jun. 2010 13.09 0.46 0.46
90
English Translation for Reference Only
Net profits attributable to Jan.-Jun. 2011 24.62 1.21 1.21
ordinary shareholders Jan.-Jun. 2010 12.39 0.43 0.43
3. Abnormalities in main items in financial statements of the Company and reasons thereof
(1) Notes receivable at the period-end were up by 307.75% as compared with the opening amount,
which was mainly due to increase of income in the reporting period and notes receivable were
adopted more often for settlement;
(2) Accounts receivable at the period-end were up by 223.20% as compared with the opening
amount, which was mainly due to increase of the sales income;
(3) Prepayments at the period-end were up by 205.26% as compared with the opening amount,
which was mainly because the expenses incurred due to the seasonal production halt were
recognized as deferred expenses;
(4) Other receivables at the period-end were up by 25.49% as compared with the opening amount,
which was mainly because the Company paid compensations for relocation on other’s behalf in
the reporting period;
(5) Intangible assets at the period-end were up by 30.09% as compared with the opening amount,
which was mainly because the Company paid for land purchased for projects invested with raised
funds;
(6) Long-term deferred expenses at the period-end were down by 25.00% as compared with the
opening amount, which was mainly due to amortization for the reporting period;
(7) Accounts received in advance at the period-end were up by 155.19% as compared with the
opening amount, which was mainly due to increase of operating revenues and advances from
customers in the reporting period;
(8) Other payables at the period-end were up by 56.40% as compared with the opening amount,
which was mainly because guaranty deposits received by the Company increased due to the sales
growth and the large-scale repair expenses during the seasonal production halt were not yet
settled;
(9) Other current liabilities at the period-end were down by 50.00% as compared with the opening
amount, which was mainly due to amortization of deferred incomes for the reporting period.
(10) Operating income in the reporting period was up by 84.89% year on year, which was mainly
due to increase of the distilled spirit sales volume and the selling prices in the reporting period;
(11) Operating cost in the reporting period was up by 67.57% year on year, which was mainly due
to the sales increase in the reporting period;
(12) Business taxes and surcharges in the reporting period were up by 84.92% year on year, which
was mainly due to the sales increase in the reporting period;
(13) Selling expenses in the reporting period were up by 68.89% year on year, which was mainly
due to a higher input for advertising and market expansion in the reporting period;
(14) Administrative expenses in the reporting period were down by 187.75% year on year, which
was mainly due to increase of interest income from term deposits and structural deposits, as well
as services fees charged on notes in the reporting period;
(15) Income tax expenses in the reporting period were up by 179.76% year on year, which was
mainly due to increase of the total profit for the reporting period.
4. Approval of financial statements
This financial statement are approved and authorized for issuance by the Board of Directors on 18
Aug. 2011.
91
English Translation for Reference Only
Chapter VII Documents Available for Reference
I. Accounting Statements carried with signatures and seals of Legal Representative
Head of the Accounting Work, as well as Principal of the Accounting Organ
(Accounting principal).
II. The original copy of all company files and manuscript of public notices ever
disclosed in China Securities Journal and Hong Kong Ta Kung Pao in the reporting
period.
III. Other related documents.
Board of Directors
Anhui Gujing Distillery Company Limited
18 Aug. 2011
92
