Gujing Distillery Original Chinese Spirits Annual Report 2016
ANHUI GUJING DISTILLERY COMPANY LIMITED
THE 2016 ANNUAL REPORT
April 2017
Gujing Distillery Original Chinese Spirits Annual Report 2016
Important Statements
The board of directors (the “Board”), the supervisory board (the “Supervisory Board”), as
well as the directors, supervisors and senior executive officers of Anhui Gujing Distillery
Company Limited (the “Company”) hereby guarantee the factuality, accuracy and
completeness of the contents of this Report, and shall be jointly and severally liable for any
false representation, misleading statements or material omissions in this Report.
Liang Jinhui, head of the Company, Ye Changqing, accounting head for this Report, and Zhu
Jiafeng, head of the accounting department (head of accounting), hereby guarantee that the
Financial Report carried in this Report is factual, accurate and complete.
All directors attended the board meeting for the review of this Report.
Any plans for the future and other forward-looking statements mentioned in this Report shall
NOT be considered as virtual promises of the Company to investors. Therefore, investors are
kindly reminded to pay attention to possible investment risks.
The Board has considered and approved the following proposal for profit distribution: Based
on the total shares of the Company on December 31, 2016, a cash dividend of RMB6.00 (tax
inclusive) per 10 shares will be distributed to all shareholders of the Company. No bonus
shares will be granted, nor will any capital reserve be converted into share capital.
This Annual Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese
version shall prevail.
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Anhui Gujing Distillery Company Limited
Table of Contents for Annual Report 2016
Section I Important Statements, Contents and Definitions ............................................................ 3
Section II Corporate Profile and Key Financial Results ................................................................ 5
Section III Business Profile ............................................................................................................... 9
Section IV Performance Discussion and Analysis ......................................................................... 10
Section V Significant Events ........................................................................................................... 30
Section VI Share Changes and Shareholders’ Profile ................................................................... 38
Section VII Preference Shares......................................................................................................... 44
Section VIII Directors, Supervisors, Senior Executive Officers and Staff .................................. 45
Section IX Corporate Governance ................................................................................................. 53
Section X Financial Report ............................................................................................................. 60
Section XI Documents Available for Reference ........................................................................... 171
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Definitions
Term Definition
Company, the Company, Gu Jing Anhui Gujing Distillery Company Limited
Group, the Group Anhui Gujing Distillery Company Limited (consolidated)
Gujing Group Anhui Gujing Group Co., Ltd.
Huanghelou Wuhan Tianlong Jindi Technology Development Co., Ltd
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Section II Corporate Profile and Key Financial Results
I Corporate information
Stock name Gujing Distillery, Gujing Distillery B
Stock code 000596, 200596
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 安徽古井贡酒股份有限公司
Abbr. 古井
Company name in English (if any) ANHUI GUJING DISTILLERY COMPANY LIMITED
Abbr. (if any) GU JING
Legal representative Liang Jinhui
Registered address Gujing Town, Bozhou City, Anhui Province, P.R.China
Zip code 236820
Office address Gujing Town, Bozhou City, Anhui Province, P.R.China
Zip code 236820
Company website http://www.gujing.com
Email gjzqb@gujing.com.cn
II Contact information
Board Secretary Securities Representative
Name Ye Changqing Ma Junwei
Gujing Town, Bozhou City, Anhui Gujing Town, Bozhou City, Anhui
Address
Province, P.R.China Province, P.R.China
Tel. （0558）5712231 （0558）5710057
Fax （0558）5710099 （0558）5710099
E-mail gjzqb@gujing.com.cn gjzqb@gujing.com.cn
III Information disclosure and place where this Report is kept
Newspapers designated by the Company for
China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK)
information disclosure
Website designated by the China Securities http://www.cninfo.com.cn
Regulatory Commission (CSRC) for the publication
of this Report
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Place where this Report is kept The Board Secretary’s Office
IV Company registration and alteration
Credibility code 913400001519400083
Changes in main business activities of the
No changes
Company after going public (if any)
Changes of controlling shareholder (if any) No changes
V Other information
The CPAs firm hired by the Company
Name Ruihua Certified Public Accountants LLP
5-11 F, West Tower, China Overseas Property Plaza, Building No. 7, Courtyard No. 8, Xi
Office address
Binhe Road, Yong Ding Men, Dong Cheng District, Beijing, China
Accountants writing signatures Pan Xinhua, Zhang Xianfa
Sponsor engaged by the Company to continuously perform its supervisory function during this Reporting Period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to continuously perform its supervisory function during this Reporting Period
□ Applicable √ Not applicable
VI Key financial results
Indicate by tick mark whether the Company retroactively restated any of its accounting data due to changes of accounting policies or
correction of accounting errors.
□ Yes √ No
2016 2015 +/-% 2014
Operating revenues (RMB) 6,017,143,660.56 5,253,411,479.40 14.54% 4,650,855,881.72
Net profit attributable to
shareholders of the Company 829,630,063.38 715,578,369.68 15.94% 597,041,887.34
(RMB)
Net profit attributable to
shareholders of the Company
792,534,098.54 682,760,794.86 16.08% 568,353,541.08
before exceptional profit and loss
(RMB)
Net cash flows from operating
1,183,231,808.06 790,109,535.01 49.76% 387,494,289.89
activities (RMB)
Basic earnings per share
1.65 1.42 16.20% 1.19
(RMB/share)
Diluted earnings per share 1.65 1.42 16.20% 1.19
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Gujing Distillery Original Chinese Spirits Annual Report 2016
(RMB/share)
Weighted average return on equity
15.88% 15.91% -0.03% 15.05%
(%)
December 31, 2016 December 31, 2015 +/-% December 31, 2014
Total assets (RMB) 8,736,205,153.86 7,183,147,641.13 21.62% 6,413,518,166.03
Net assets attributable to
shareholders of the Company 5,595,121,383.96 4,833,721,630.08 15.75% 4,181,050,977.96
(RMB)
VII Differences in accounting data under domestic and foreign accounting standards
1. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and international accounting standards
□ Applicable √ Not applicable
No such differences for this Reporting Period.
2. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and foreign accounting standards
□ Applicable √ Not applicable
No such differences for this Reporting Period.
VIII Key financial results by quarter
Unit: RMB
1Q 2Q 3Q 4Q
Operating revenues 1,843,478,461.71 1,201,556,245.02 1,460,526,002.88 1,511,582,950.95
Net profit attributable to
344,007,925.98 87,047,536.64 151,384,181.93 247,190,418.83
shareholders of the Company
Net profit attributable to
shareholders of the Company 339,439,775.36 83,796,577.13 128,287,249.62 241,010,496.43
before exceptional profit and loss
Net cash flows from operating
475,909,121.05 -149,796,508.06 876,734,575.48 -19,615,380.41
activities
Indicate by tick mark whether there are any material differences between the financial indicators above or their summations and those
which have been disclosed in quarterly or semi-annual reports
□ Yes √ No
IX Exceptional profit/loss
√ Applicable □ Not applicable
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Unit: RMB
Item 2016 2015 2014 Note
Profit/loss on disposal of non-current assets
(including offset asset impairment -6,319,619.72 -990,695.19 -2,134,348.70
provisions)
Government subsidies charged to the
profit/loss for this Reporting Period (except
for the government grants closely related to
25,336,275.56 19,931,320.03 6,045,394.97
the business of the Company and given at a
fixed quota or amount in accordance with
the State’s uniform standards)
Profit/loss on fair value changes of
transactional financial assets and liabilities
& investment income from disposal of
transactional financial assets and liabilities 16,263,956.97 7,842,274.38 17,233,109.00
as well as financial assets available for sale,
except for effective hedges related to routine
operations of the Company
Impairment provision reversal for accounts
receivable on which the impairment test is 0.00 0.00 382,500.00
carried out separately
Non-operating income and expense other
14,343,655.95 16,973,709.12 16,729,758.11
than the above
Less: Corporate income tax effects 12,229,198.63 10,939,033.52 9,568,067.12
Minority interests effects (after tax) 299,105.29 0.00 0.00
Total 37,095,964.84 32,817,574.82 28,688,346.26 --
Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit and Loss,
or reclassified any exceptional profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in this Reporting Period.
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Section III Business Profile
I Main business scope for this Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
The Company specializes in the production and marketing of distilled spirits.
No changes have occurred to the main business of the Company in this Reporting Period. And the main products of the Company are
the original Chinese spirits series, the traditional Gujing spirits series and the light Gujing spirits series.
As one of China’s traditional top eight liquor brands, the Company is committed to superior quality. Its spirits comes from quality
grain and water adopting a unique technique and is well stored. With its spirits produced in Bozhou, known as “a city good for
health”, the Company promotes a healthy drinking concept. It also introduces China’s distilled spirits culture to the world through
tours to New York and Milan.
II Significant changes in main assets
1. Significant changes in main assets
Not applicable
2. Main assets overseas
□ Applicable √ Not applicable
III Core competitiveness analysis
No significant changes occurred to the core competitiveness of the Company in this Reporting Period.
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Section IV Performance Discussion and Analysis
I Overview
2016 marked the first year of China’s 13th Five-Year Plan for Economic and Social Development, as well as a year to carry through
the supply-side structural reform. Consumers have attached more importance to quality. And along with the deep change and rebound
in the distilled spirits industry, the fundamentals of famous distillers in China have kept improving. Under such circumstances,
upholding the values of “Be Honest, Offer Quality Spirits, Be Stronger and Be Helpful to the Society” and following the “Distilled
Spirits 5.0” strategy, the Company strengthened branding and quality improvement, as well as improved its operation by adopting a
series of effective measures. As a result, the operating goals that the Board had set for the year were achieved.
For 2016, the Company achieved, on a consolidated basis, operating revenues of RMB6.017 billion, up 14.54% compared with a year
earlier; total profit of RMB1.15 billion, up 19.09% from last year; net profit of RMB0.830 billion, representing a year-on-year
growth of 15.94%; earnings per share of RMB1.65, 16.20% higher than last year; and net operating cash flows of RMB1.183 billion,
representing a 49.76% increase on a year-on-year basis.
(I) Focusing on Strategy 5.0, and constantly enhancing the core competitiveness of the major business of liquor
1. “Double brands” open up the new pattern. Faced with a complex economic environment in the reporting period, the Company has
actively sought the extensional development, continued to deploy throughout the entire country and give play to the effect of synergy
and integration.
2. Efforts in deep cultivation of market construction. In 2016, the Company continued to make efforts in “sinking organization,
channels and personnel”, implement contact point management, split sales terminal units and stimulate dynamism; strengthened
target budgeting, process KPI and performance appraisal, and constantly cultivated market construction.
3. Continuous optimization of the product system. The Original Chinese Spirits is granted with the title of “1985-2015 Chinese
Liquor Historical Landmark Product” by China National Food Industry Association. 37℃ Bo Ju liquor, the healthy new product, has
been successfully launched, opening up a new pattern of thinking for developing the healthy liquors under Gujing Distillery; the
Original Chinese Spirits G20, Gujing Distillery 1989 has been launched innovatively, continuously enriching product lines.
4. Constant enhancement of the brand value reputation. The brand construction has been vigorously promoted with a series of
activities and promotion events organized. Gujing Distillery has entered the Middle and East Europe by grasping the strategic
opportunity of “One Belt One Road”. The value of the brand Gujing Distillery has reached RMB49.259 billion during the reporting
period.
(II) Innovating management tools and methods, activating management dynamism and improving scientific and technological
innovation
1. Exploration of internal marketization and informationization of in-depth application. In the reporting period, the Company has
implemented the appraisal mechanism for internal marketization, which activated the internal dynamism and motivation; the projects
such as Customer Relationship Management (CRM) and Unified Call Center have made phased progress.
2. Scientific and technological innovation has been intensified with a number of breakthroughs made. Two projects have been
selected into the list of key R&D projects under the 13th Five-Year Plan, one item of technological achievements have passed the
provincial accreditation of scientific and technological achievements, four items of technological achievements have been converted
and applied into production, and two items have passed the review based on the local standard at the provincial level. The
academician workstation and the state-level post-doctoral research workstation have successfully passed the performance appraisal,
Anhui Solid State Fermentation Engineering Technology Research Center has passed the quality acceptance, the state-level corporate
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Gujing Distillery Original Chinese Spirits Annual Report 2016
technological center has been rated excellent in the annual appraisal, and the Company has won Anhui Quality Award.
(III) Optimizing the contents of appraisal, and improving the skill of the management staff
1. The company has optimized the contents of performance appraisal, intensified the strength of rewards and punishments, revised
and improved the appraisal system, simplified the relevant indicators, highlighted the key points and publicized the results.
2. The company has applied the echelon construction of talents, carrying out the targeted nurture and development of core marketing
staff, core technical staff and core management staff, which has achieved good results.
(IV) Continuing to promote the corporate brand image by centering around “Two learn one to do learning education” and Gujing’s
core values
In the reporting period, the Company has strengthened its educational guidance by vigorously conducting the educational activities
themed with “three-strict and three-honest” and “four-consciousness”, and deepening the implementation of the series learning and
discussion activities on “Two learn one to do learning education” and “aim at keeping up by acting”. The Company has combined its
corporate values of “behaving decently, brewing good wines, cultivating moral character of employees and benefiting the society”
with Party built companies, promoting the integration of Party governance and building a learning, innovative and appreciative
company.
(V) Pressure and weaknesses in the Company during the reporting period
1. Pressure of the regional competitions and increasing costs of the traditional manufacturing industry.
2. Insufficient motivation for staff growth and inflexible corporate mechanism.
3. Unthorough capillary management and existence of “laziness, tiredness, stubbornness and squeamishness” to different extents.
II Analysis of main business
1. Overview
See “I Overview” in “Management Discussion and Analysis”.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB
2016 2015
As a percentage of As a percentage of
+/-%
Amount operating revenues Amount operating revenues
(%) (%)
Operating revenues 6,017,143,660.56 100.00% 5,253,411,479.40 100.00% 14.54%
Manufacturing 6,017,143,660.56 100.00% 5,253,411,479.40 100.00% 14.54%
Distilled spirits 5,876,233,721.58 97.66% 5,118,622,287.57 97.44% 14.80%
Hotel services 83,773,044.79 1.39% 83,118,805.82 1.58% 0.79%
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Other 57,136,894.19 0.95% 51,670,386.01 0.98% 10.58%
North China 345,881,952.52 5.75% 297,439,265.75 5.66% 16.29%
Central China 5,285,863,801.21 87.84% 4,435,362,515.78 84.43% 19.18%
South China 383,674,353.55 6.38% 518,051,081.70 9.86% -25.94%
Overseas 1,723,553.28 0.03% 2,558,616.17 0.05% -32.64%
(2) Business segments, products or geographical segments contributing over 10% of the operating revenues
or profit
√ Applicable □ Not applicable
Unit: RMB
Operating Gross profit
Operating Gross profit Operating cost:
Operating cost revenue: YoY margin: YoY
revenue margin YoY +/-%
+/-% +/-%
By business segment
Manufacturing 6,017,143,660.56 1,523,585,779.51 74.68% 14.54% 0.93% 3.41%
Distilled spirits 5,876,233,721.58 1,451,465,873.25 75.30% 14.80% -0.37% 3.76%
Hotel services 83,773,044.79 35,526,066.93 57.59% 0.79% 4.02% -1.32%
Other 57,136,894.19 36,593,839.33 35.95% 10.58% 96.75% -28.06%
North China 345,881,952.52 127,359,850.64 63.18% 16.29% 9.24% 2.38%
Central China 5,285,863,801.21 1,264,533,247.94 76.08% 19.18% 3.37% 3.66%
South China 383,674,353.55 131,266,223.31 65.79% -25.94% -22.26% -1.62%
Overseas 1,723,553.28 426,457.62 75.26% -32.64% -48.17% 7.42%
Main business data of the prior year restated according to the changed statistical caliber for the Reporting Period
□ Applicable √ Not applicable
(3) Whether revenue from physical sales is higher than service revenue
√ Yes □ No
Business segment Item Unit 2016 2015 +/-%
Sales volume Ton 81,634.15 71,829.51 13.65%
Distilled spirits
Output volume Ton 83,766.51 77,105.07 8.64%
brewage
Inventory Ton 12,594.11 8,262.69 52.42%
Reason for any over 30% YoY movements in the data above
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Gujing Distillery Original Chinese Spirits Annual Report 2016
√ Applicable □ Not applicable
Mainly due to the inventory preparation for the Spring Festival and increased consolidated scope, the closing inventory stood at
12,594.11 tons, representing a year-on-year surge of 52.42%.
(4) Execution progress of major signed sales contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of operating costs
By business segment
Unit: RMB
2016 2015
As a percentage As a percentage
Business segment Item +/-%
Amount of operating costs Amount of operating costs
(%) (%)
Food
Direct materials 1,079,095,302.80 70.83% 1,084,012,660.40 73.29% -0.45%
manufacturing
Food
Direct labor cost 164,611,344.55 10.80% 164,561,013.89 11.13% 0.03%
manufacturing
Food Manufacturing
127,651,145.25 8.38% 127,413,435.90 8.61% 0.19%
manufacturing expenses
Food
Fuels 80,108,080.65 5.26% 80,798,764.23 5.46% -0.85%
manufacturing
By product
Unit: RMB
2016 2015
Business segment As a percentage of As a percentage of +/-%
Amount Amount
operating costs (%) operating costs (%)
Distilled spirits 1,451,465,873.25 95.27% 1,456,785,874.42 96.51% -0.37%
Hotel services 35,526,066.93 2.33% 34,151,473.72 2.26% 4.02%
Other 36,593,839.33 2.40% 18,598,751.14 1.23% 96.75%
(6) Changes in the scope of the consolidated financial statements for the Reporting Period
√ Yes □ No
The Company obtained 51% equities of Wuhan Tianlong Yellow Crane Tower Co., Ltd for the enterprise merger not under the same
control during the Reporting Period, and newly established the subsidiaries Anhui Gujing Yunshang Electronic Commerce Co., Ltd
and Anhui Zhenrui Contruction Project Co., Ltd.; The Company newly established sub-subsuaiaries Bozhou Gujing Distillery
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Marketing Co., Ltd, Wuhan Ya shibo Technology Co., Ltd, and Wuhan Junya Sales Co., Ltd; The Company liquidated its subsidiary
Bozhou Gujing Packaging Co., Ltd in the current year.
(7) Major changes in the business, products or services in the Reporting Period
□ Applicable √ Not applicable
(8) Main customers and suppliers
Main customers
Total sales to top five customers (RMB) 944,817,094.34
Total sales to top five customers as a percentage of the total
sales for the Reporting Period (%) 15.71%
The related-party sales from sales to top five customers as a
0.00%
percentage of the total sales for the Reporting Period (%)
Information about top five customers
As a percentage of the total sales for the
No. Customer Sales amount (RMB)
Reporting Period (%)
1 Distributor A 552,657,163.86 9.18%
2 Distributor B 179,050,471.48 2.98%
3 Distributor C 93,213,613.77 1.55%
4 Distributor D 63,598,453.69 1.06%
5 Distributor E 56,297,391.54 0.94%
Total -- 944,817,094.34 15.71%
Other information about the main customers
□ Applicable √ Not applicable
Main suppliers
Total purchases from top five suppliers (RMB) 437,477,126.73
Total purchases from top five suppliers as a percentage of the
31.38%
total purchases for the Reporting Period (%)
The related-party purchase of purchases from top five suppliers
as a percentage of the total purchases for the Reporting Period 0.00%
(%)
Information about top five suppliers
As a percentage of the total purchases for
No. Supplier Purchase amount (RMB)
the Reporting Period (%)
1 Supplier A 186,441,168.02 13.38%
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Gujing Distillery Original Chinese Spirits Annual Report 2016
2 Supplier B 77,941,297.39 5.59%
3 Supplier C 59,698,625.66 4.28%
4 Supplier D 57,609,299.20 4.13%
5 Supplier E 55,786,736.46 4.00%
Total -- 437,477,126.73 31.38%
Other information about the main suppliers
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2016 2015 +/-% Reason for any significant change
Selling expenses 1,980,127,377.89 1,557,800,618.96 27.11%
Administrative expenses 556,513,607.99 543,822,606.51 2.33%
The interest of financing products
Financial costs -30,253,967.33 -20,334,406.40 -48.78%
increased.
4. R&D input
√ Applicable □ Not applicable
We carried out R&D projects in the current year to study and develop new products, improve the quality of our products, study the
intelligent brewage technique and new brewage technique.
Our achievements in R&D: 2 items were selected to the National 13th Five Year Key Research Plan, and 1 technological achievement
passed the provincial technological achievement ratification, 4 technological achievements were transformed to apply to production,
and 2 provincial local standards were reviewed. Academician workstation and national post-doctoral scientific research station
passed performance evaluation, Anhui Solid State Fermentation Engineering Technology Research Center was approved, and the
annual assessment of Provincial Corporate Technology Center was excellent.
Information about R&D input
2016 2015 +/-%
Number of R&D personnel 586 506 15.81%
R&D personnel as a percentage
10.14% 8.65% 1.49%
in the total employees
R&D input (RMB) 189,540,000.00 162,495,000.00 16.64%
R&D input as a percentage in
3.15% 3.09% 0.06%
operating revenues
Capitalized R&D input (RMB) 0.00 0.00 0.00%
Capitalized R&D input as a
percentage in the total R&D 0.00% 0.00% 0.00%
input
Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues
□ Applicable √ Not applicable
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
Item 2016 2015 +/-%
Subtotal of operating cash
7,393,896,952.67 6,505,710,652.03 13.65%
inflow
Subtotal of operating cash
6,210,665,144.61 5,715,601,117.02 8.66%
outflow
Net operating cash flow 1,183,231,808.06 790,109,535.01 49.76%
Subtotal of investment cash
3,411,470,839.90 2,279,338,189.57 49.67%
inflow
Subtotal of investment cash
4,952,490,817.51 2,610,714,434.30 89.70%
outflow
Net investment cash flow -1,541,019,977.61 -331,376,244.73 -365.04%
Subtotal of financing cash
1,000,000.00 0.00 100.00%
inflow
Subtotal of financing cash
155,736,537.45 100,720,000.00 54.62%
outflow
Net financing cash flow -154,736,537.45 -100,720,000.00 -53.63%
Net increase in cash and cash
-512,524,707.00 358,013,290.28 -243.16%
equivalents
Explanation of why the data above varied significantly
√ Applicable □ Not applicable
1. Mainly due to an increase of sales revenue, the net operating cash flow for the Reporting Period was RMB 1,183,231,808.06,
representing a surge of 49.76% from the year earlier;
2. Mainly due to the payment for subsidiary equity, the net investment cash flow for the Reporting Period was RMB
-1,541,019,977.61, dropping 365.04% from last year;
3. Mainly because Yellow Crane Tower repaid the borrowing money to original big shareholders, the net financing cash flow for the
Reporting Period was RMB-154,736,537.45, dropping 53.63% on a year-on-year basis;
4. Mainly due to due to the payment for subsidiary equity, the net increase in cash and cash equivalents for the Reporting Period was
RMB -512,524,707.00, dropping 243.16% from last year.
Reason for any big difference between the net operating cash flow and the net profit for the Reporting Period
□ Applicable √ Not applicable
III Analysis of non-core business
□ Applicable √ Not applicable
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Gujing Distillery Original Chinese Spirits Annual Report 2016
IV Analysis of assets and liabilities
1. Significant changes in the asset composition
Unit: RMB
December 31, 2016 December 31, 2015
As a As a Change in
percentage of percentage of percentage Reason for any significant change
Amount Amount
total assets total assets (%)
(%) (%)
Monetary funds 532,909,026.07 6.10% 1,087,319,158.77 15.14% -9.04%
Accounts
12,287,262.88 0.14% 4,948,074.84 0.07% 0.07%
receivable
Inventories 1,786,433,036.50 20.45% 1,396,712,050.87 19.44% 1.01%
Investment
8,402,944.74 0.10% 9,715,451.89 0.14% -0.04%
property
Fixed assets 1,865,691,585.06 21.36% 1,691,028,804.32 23.54% -2.18%
Construction in
71,771,324.26 0.82% 62,562,971.78 0.87% -0.05%
progress
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit/loss on
Cumulative fair Impairment
fair value Purchased in Sold in the
Opening value changes provided in the Closing
Item changes in the the Reporting Reporting
balance charged to Reporting balance
Reporting Period Period
equity Period
Period
Financial assets
1. Financial
assets measured
at fair value with
fair value
changes included
in the profit and 322,223.28 -5,598.43 0.00 21,229,606.20 37,105,003.63 429,190.68
loss for the
Reporting Period
(excluding
derivative
financial assets)
2. 213,881,190.47 0.00 -24,449,878.06 216,262,513.42 1,664,273.56 404,029,552.27
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Available-for-sale
financial assets
Subtotal of
214,203,413.75 -5,598.43 -24,449,878.06 237,492,119.62 38,769,277.19 404,458,742.95
financial assets
Total of the
214,203,413.75 -5,598.43 -24,449,878.06 237,492,119.62 38,769,277.19 404,458,742.95
above
Financial
0.00 0.00 0.00 0.00 0.00 0.00
liabilities
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
3. The limitation of assets right at the end of Reporting Period
At the end of Reporting Period, the Company had freezed bank deposits RMB5,060,000.00; The pledge of bank’s acceptance bill was
RMB33,483,200.00. There were no cases of use limitation due to pledge and mortgage or deposits overseas with limited repatriation.
Remarks: for details, please see XII Contingency in Note.
~ 18 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
V Investments made
1. Total investments made
√Applicable □ Not applicable
Investment in the report period (RMB) Investment over the same period last year (yuan) Change range
1,032,262,513.42 280,756,681.88 267.67%
2. Significant equity investments made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
progress Investment
up to the gains and Whether
Disclosure
Major Investment Investment Shareholding Funds Investment Products date of the Estimated losses of involved Disclosure index (if
Name Partners date (if
business method amount ratio resources period type assets profits the with the any)
any)
liabilities Reporting lawsuits
statement period
Wuhan At the end For details, see the
Tianlong of May Announcement
Yellow Production 2016, the About
Crane and sales Own 51% Acquisition of
Acquisition 816,000,000.00 51.00% No 04/29/2016
Tower of distilled funds equity of Assetts of the
Wine spirits Wuhan Company released
Industry Tianlong on April 29, 2016
Co., Ltd Yellow on
~ 19 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Crane www.cninfo.com.cn
Tower
Wine
Industry
Co., Ltd
had been
transferred
to the
Company.
Total -- -- 816,000,000.00 -- -- -- -- -- -- -- -- --
3. Significant non-equity investments ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial investments
(1) Securities investments
√ Applicable □ Not applicable
Unit: RMB
Gain/loss
on fair Cumulative
Code of Initial Gain/loss Sourc
Variety of Name of Accounting value fair value Purchased in Sold in the
Opening book in the Closing book
securitie investment measuremen changes changes the Reporting Reporting Accounting title e of
securities securities value Reporting value
t model in the charged to Period Period
s cost Period funds
Reportin equity
g Period
Domestic/oversea Fair value 139,416.7 Available-for-sal Own
601988 ZGYH 44,385,674.20 42,045,251.00 0.00 -5,720,879.69 15,500,203.87 647,351.18 51,177,224.00
s stock method 5 e financial asset funds
~ 20 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Domestic/oversea Fair value 1,016,922.3 142,175.3 Available-for-sal Own
000001 PAYH 70,317,243.98 26,614,442.80 0.00 -3,187,740.07 50,762,309.55 73,172,089.90
s stock method 8 9 e financial asset funds
Domestic/oversea Fair value 145,221,496.6 -15,030,072.6 130,191,424.0 Available-for-sal Own
600373 ZWCM 91,133,996.80 0.00 0.00 0.00 0.00
s stock method 7 7 0 e financial asset funds
GF
150,000,000.0 Fair value 150,000,000.0 149,488,814.3 Available-for-sal Own
fund Securitie 0.00 -511,185.63 0.00 0.00
0 method 0 7 e financial asset funds
s Nast
355,836,914.9 213,881,190.4 -24,449,878.0 216,262,513.4 1,664,273.5 281,592.1 404,029,552.2
Total -- 0.00
8 7 6 2 6 4 7
Disclosure date of the announcement
about the board’s consent for the
securities investment
Disclosure date of the announcement
about the general meeting’s consent
for the securities investment (if any)
(2) Investment in financial derivatives
□ Applicable √ Not applicable
5. Use of funds raised
√ Applicable □ Not applicable
(1) Overview of the use of raised funds
√ Applicable □ Not applicable
~ 21 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Unit: RMB'0,000
Proportion of
Total amount of Total amount of
Total amount of the total amount Usage and Amount of the
Total amount of the raise funds the Total amount of
the used raise of the whereabouts of raise funds
Total amount of the which changed accumulative the raise funds
Raised years Raised methods funds of the accumulative the raise funds which left
the raise funds accumulative the usage during raise funds had not been
Reporting raise funds had not been unused over 2
used raise funds the Reporting which changed used
Period which changed used years
Period the usage
the usage
Deposited in the
special account
2011 Private offering 122,749.95 1,735.38 108,748.12 0.00 0.00 0.00% 5,271.55 0.00
for raised
proceeds
Total -- 122,749.95 1,735.38 108,748.12 0.00 0.00 0.00% 5,271.55 -- 0.00
Overview of the use of raised funds
The usage of the raise funds of the Company executed steadily as planed without any change.
(2) Projects invested with raised funds as promised
√ Applicable □ Not applicable
Unit: RMB’0,000
Date when the
Project Investment Material
Projects invested with raised project Profit
changed or Raised capital Input in the Accumulative progress up to Reach the change in the
capital as promised and Investment after reaches the generated in
not (including input as Reporting input up to the the period-end expected project
investments with over-raised adjustment (1) expected the Reporting
partially promised Period period-end (2) (%) (3)＝ profit or not feasibility or
capital usable Period
changed) (2)/(1) not
condition
~ 22 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Commitment investment projects
Couldn’t be
Technological Transform on the
Brewage of High-quality Base No 13,500 12,194.42 0.00 12,247.9 100.44% 04/30/2014 individually Yes No
Wine
measured
Couldn’t be
Construction of Base Wine
Blending & Filling Centre and No 68,600 65,921.06 1,499.03 61,142.45 92.75% 04/30/2014 individually Yes No
Ancillary Facilities
measured
Couldn’t be
Construction of Marketing
No 27,500 27,500 236.35 18,332.71 66.66% 04/30/2014 individually Yes No
Network
measured
Couldn’t be
Construction of Brand Promotion No 17,000 17,000 0.00 17,025.06 100.15% 12/31/2012 individually Yes No
measured
Subtotal of promised investment
-- 126,600 122,615.48 1,735.38 108,748.12 -- -- -- --
projects
Investments of over-raised capital
N/A
Total -- 126,600 122,615.48 1,735.38 108,748.12 -- -- -- --
Reason for failing to reach
scheduled progress or projected
Naught
income (explain one project by
one project)
Explanation on significant
Naught
changes in feasibility of projects
~ 23 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Amount, usage and usage progress
Not applicable
of over-raised capital
Change of the implementation
location of any raised funds Not applicable
investment project
Adjustment of the implementation
method of any raised funds Not applicable
investment project
Applicable
In accordance with the explanation of the Particulars on the Private Issuance of A-share of Anhui Gujing Distillery Co., Ltd. and the Listing Announcement,
“Before the raised proceeds being in place, the Company can use the self-raised proceeds to input preliminarily in accordance with the actual progress of
Advanced input and exchange of
raised proceeds investment projects; after the raised proceeds being in place, the Company can use the raised proceeds to replace the self-raised proceeds
any raised funds investment
preliminarily input”. And the Proposal on Using the Raised Proceeds to Replace the Self-raised Proceeds Preliminarily Input to the Raised Proceeds
project
Investment Projects was reviewed and approved at the 7th Session of the 6th Board of Directors, which agreed to use the raised proceeds to replace the
self-raised proceeds of RMB27,058,143.42 preliminarily input to the raised proceeds investment projects. The above funds replacement was completed on 6
January 2012.
Idle raised capital for temporarily
Not applicable
supplementing working capital
Applicable
1. The Company strictly carried out the purchase system and the project bidding way, which better controlled the project construction and purchase cost and
Outstanding raised funds in
under the premise of guaranteeing the project quality with the principles of practicing strict economy, the Company further strengthened the project expenses
project implementation and
control, supervisor and management in the process of the execution which reduced the total cost of the investment project of the raised funds. 2. The surplus
reasons
reason of the marketing network construction project was due to the rather big changes of the liquor market environment and the third party logistics system
gradually becoming more and more mature and at the same time, the Company would no more execute the center project of Hefei Logistics for reducing the
~ 24 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
fixed operating cost of the Company, which caused the capital surplus of the project.
Usage and whereabouts of unused
Deposited in the special account for raised proceeds.
raise capital
Problems found in the usage and
disclosure affairs of raised capital N/A
and other situations
(3) Change of projects invested with raised funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
~ 25 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
VI Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of major equity interests
□ Applicable √ Not applicable
VII Main controlled and joint stock companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profits
Unit: RMB
Relationshi Main
Company business Registered Operating Operating
p with the Total assets Net assets Net profits
name scope capital revenues profits
Company
Wholesales
of distilled
Bozhou spirit,
Gujing constructio 1,754,196,495.4 157,916,415.0 5,523,858,938.1 572,541,811.9 412,646,277.7
Subsidiary 84,864,497.89
Sales Co., n materials, 2 3 1 3 9
Ltd feeds and
assistant
materials
Anhui Manufactur
Longrui e and sale 187,058,787.6
Subsidiary 86,660,268.98 215,341,849.55 204,117,202.03 33,847,514.73 29,858,971.65
Glass Co., of glass 4
Ltd products
Wuhan
Tianlong
Production
Yellow
and sales of 400,000,000.0 1,027,152,789.2 705,325,583.2
Crane Subsidiary 354,950,364.64 55,623,357.07 42,220,477.84
distilled 0 1 7
Tower Wine
spirit
Industry
Co., Ltd
Shanghai Hotel
Gujing manageme 110,626,934.0
Subsidiary 54,000,000.00 216,313,145.21 77,317,480.22 11,913,961.39 9,084,254.78
Jinhao nt and 7
Hotel house lease
~ 26 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Manageme
nt Co., Ltd.
Subsidiaries obtained or disposed in the Reporting Period
√ Applicable □ Not applicable
How subsidiary was obtained or
Subsidiary name Impact on overall operation and results
disposed in the Reporting Period
Anhui Gujing Yunshang Electric Optimizing the internal business structure and
Invest and set up
Commerce Co., Ltd enhancing the endogenous power
Anhui Zhenrui Construction Project Co., Optimizing the internal business structure and
Invest and set up
Ltd enhancing the endogenous power
Strengthening the development of the Company’s
main business distilled spirit, speeding the
Wuhan Tianlong Yellow Crane Tower Enterprise merger not under the
national layout of products market, and
Wine Industry Co., Ltd same control
improving the Company’s brand influence and
business scale.
Bozhou Gujing Packaging Co., Ltd. Cancellation of the liquidation
Remarks: see the “VIII Equities in the subsidiaries in Notes of Financial Statement”
VIII Structured bodies controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the future development of the Company
(I) Industrial development prospect of the Company
1. Bottoming rebound of industrial adjustment with recovery growth, and industrial development entering a new normal
Over the five years since the continuous adjustment of the liquor sector, many major liquor companies have adjusted their product
structure and sunk their channels, shifting the focus from famous liquor to “people’s” liquor to adapt to the market changes where the
competitions have continued to increase for the medium- and low-end market. The industrial concentration has been increasing with
obvious differentiation.
In recent years, China’s leading famous liquor companies have basically completed their adjustment in their teams, strategies and
products. By virtue of their powerful brand influence and sustained recovery of product quality, the top famous liquor companies
have experienced marked growth and defined their deployment; regional small and medium sized liquor companies are faced with
the shuffle, with the regional famous liquors at the sandwich layer and the industrial development in a new normal.
2. Obvious upgrade of liquor consumption - coming of quality-oriented consumption and pursuit of healthy intake of liquors
In recent years, with the continued increase in people’s incomes, the social public consumption has been constantly upgrading,
resulting in consumers’ pursuit in the quality-oriented consumption style. When it comes to liquor specifically, people have started to
purse a healthy intake style such as less intake and intake of quality and branded liquors. In China Food and Drinks Fair 2017,
“healthy liquor” once again became the highly concerned focus topic. Many famous liquor producers launched their new healthy
liquors to hit the potential market, and the Company’s 37℃ Bo JU was exhibited again for sale.
3. The liquor sector will enter a new era with the integration of channels, and the focus of the strength point will lie in the terminals
~ 27 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Under the in-depth adjustment of the liquor sector, liquor companies are gradually making revolutions and transformations,
consumption is fragmentized and diversified, and new channels are emerging continuously. Modes such as crowd funding,
customization and E-commerce that focus on consumers (terminal C) will only serve as a supplement instead of becoming the market
mainstream within a short period. Thus, the traditional channels in the liquor sector will not die out. The strength point of future
channels will focus on terminals (terminal B), the online and offline integration of which (terminal B) will be built through the
Internet, and thus, the future liquor sector will enter a new era with the integration of channels.
(II) Development strategy of the company
1. Stick to developing in optimization, speed up the process of adjustment, upgrade, renovation and transformation, adjust structure
of products, improve their quality, enhance human resource development and management, improve the pressure transmission
mechanism, intensify assessment execution, improve quality of personnel, optimize the talent structure and build a corporate team for
harmonious and win-win development.
2. Stick to implementing all-round innovation strategy, improve self-reliant innovation capability, combine technical, managerial,
institutional and concept innovations, speed up corporate informatization construction, achieve optimized configuration of resources
and information sharing and give to full play of coordination effect.
3. Stick to implementing brand promotion, enhance brand building, improve brand image all-roundly and endeavor to become the
best liquor enterprise in China.
4. Become an enterprise with social responsibility, venture to shoulder the responsibility for stockholders, customers, partners, the
society and the environment, and build a harmonious enterprise actively.
(III) Operating revenue plan of the company in 2017
Efforts will be made in achieving growth of operating revenue of the company in 2017 on the basis of maintaining the figure in 2016.
(IV) Operating risk of the company
1. Macro-economy has entered a new normal, liquor sector has reached the adjustment bottom, famous liquor companies have shown
marked signs for growth, and market competitions have further intensified.
2. Structure of products is being upgraded and adjusted, consumption is being developed in a diversified way, consumption has
returned to be rational, mass consumption has become a main trend, and competition of medium and low grade liquors has been
keener.
3. Unfavorable impact of fake and inferior products and right-infringing products.
(V) Operating measures
1. Marketing
Continue to expand and cultivate the market, further promote refined operation management of market, and build a solid base market
and major core market. Stick to common revitalization of multiple markets, actively promote the deployment throughout the entire
country, and give play to the synergy effect. Continue to enhance the brand and implement the promotion of the internationalization
of the Gujing Distillery culture.
2. Product management
Continue to strengthen the development of science and technology, focus on the development of new products and converted
application of the achievements, further promote “green brewing”, accelerate the automation and intelligence process, vigorously
explore new automated production line renovation projects, fully reproduce and promote projects with positive results, and make new
breakthroughs in automation renovation.
3. Cost control
Implement the cycle management of asset operation by centering around the Company’s business process; intensity the control of
selling expenses and improve the effectiveness of investing selling expenses; optimize the product design and development process
by controlling the process and from the root for product R&D and design; continue to explore internal marketization modes, refine
~ 28 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
internal appraisal mechanisms, and highlight the key points through deep cultivation, thus effectively advancing cost control
management.
4. Human resource
Improve staff promotion and remuneration system, thoroughly open up “two gateways” and “management gateway”, further define
position ranking and dynamic appraisal, confirm remuneration and performance based on the level of position, and manage
professional technical staff in a hierarchical manner based on their inventions and technical level under the “technology gateway”;
establish appraisal indicators. Build up the mechanism of “creation and innovation”, namely, platform for creation and platform for
innovation, fully develop young people, and optimize human resource allocation, thus providing a bigger space and platform for
employees to grow and improve.
5. Corporate cultural construction
Continue the in-depth promotion and implementation of Gujing’s core values, drive the mental construction through corporate
cultural construction, and fully improve the political competence of Party members and management staff. Play the model and
leading role of Party members, and stick to “aim at keeping up by acting”, strengthen “four-consciousness”, thus creating a good
environment with Party members and management staff taking the lead and staff members acting consciously.
In 2017, while continuing to center around terminal users, the Company will firmly boost Strategy 5.0, implement “five-star
operation” and “capillary” management in a comprehensive way, and fully motivate staff activity and creativity in an effort to
successfully achieving all the operating targets.
X Visits paid to the Company for purposes of research, communication, interview, etc.
1. In the Reporting Period
□ Applicable √ Not applicable
~ 29 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section V Significant Events
I Profit distribution and converting capital reserves into share capital for common
shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in the
Reporting Period
√ Applicable □ Not applicable
The 2015 Annual Meeting of Shareholders held on May 26, 2016 considered and approved the Company’s Interest Distribution
Scheme in 2015 that based on the total shares 503,600,000 of the Company on December 31, 2015, cash dividend was distributed at
RMB 1,00 per 10 shares(including tax), and the total distributed cash dividend was RMB50,360,000,00(including tax).
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of
association or the requirements of the resolutions of the Yes
shareholders’ meeting:
Whether the dividend standard and the proportion were definite
Yes
and clear:
Whether the relevant decision-making process and the system
Yes
were complete:
Whether the independent director acted dutifully and exerted the
Yes
proper function:
Whether the medium and small shareholders had the chances to
fully express their suggestions and appeals, of which their legal Yes
interest had gained fully protection:
Whether the conditions and the process met the regulations and
The cash dividend policy of the Company was not adjusted or
was transparent of the adjustment or altered of the cash dividend
altered
policy:
The Company’s plans (preplans) for distributing common stock dividend and turning capital reserve into share capital for the recent
three years (including the reporting year)
1. 2014 profits distribution plan of the Company: distributed the cash of RMB2.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
2.2015 profits distribution plan of the Company: distributed the cash of RMB1.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
3. 2016 profits distribution proposal of the Company: distributed the cash of RMB6.00 (tax included) for every 10 shares without
converting capital reserve into share capital
Unit: RMB
Cash dividends Net profits Proportion in net Ratio of cash
Cash dividends in
Year dividends in other
(tax included) attributable to profits attributable other forms
forms
~ 30 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
common to common
shareholders of the shareholders of the
Company in the Company in the
consolidated consolidated
statements for the statements for the
year year (%)
2016 302,160,000.00 829,630,063.38 36.42% 0.00 0.00%
2015 50,360,000.00 715,578,369.68 7.04% 0.00 0.00%
2014 100,720,000.00 597,041,887.34 16.87% 0.00 0.00%
The Company made profits in the Reporting Period and the profits distributable to common shareholders of the Company was
positive, but it did not put forward a preliminary plan for cash dividend distribution to its common shareholders
□ Applicable √ Not applicable
II Preliminary plan for profit distribution and converting capital reserves into share capital
for the Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax included) 6.00
Additional shares converted from capital reserves
0
for every 10 shares (share)
Total shares as the basis for the preliminary plan for 503,600,000
profit distribution (share)
Total cash dividends (RMB) (tax included) 302,160,000.00
Distributable profits (RMB) 3,307,203,353.63
Percentage of cash dividends in the total distributed 100.00%
profits
Cash dividend policy
The minimum proportion of cash dividend from profit distribution this time should be 20% when the Company distributed the profits
under the condition that the Company was in mature stage with large capital cost.
Details about the preliminary plan for profit distribution and converting capital reserves into share capital
The Company planned to based on the total shares at the year-end of 503,600,000 shares to distribute the dividends with a cash of
RMB6.00 (tax included) for each 10 shares with the total amount of RMB302,160,000.00and the retained unallocated profits of
RMB3,005,043,353.63 would all transfer to the next year.
~ 31 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
III Fulfillment of commitments
1. Commitments of the Company, its shareholders, actual controller, acquirer, directors, supervisors,
senior management staff or other related parties fulfilled in the Reporting Period or ongoing at the
period-end
□Applicable √ Not applicable
No such cases in the Reporting Period.
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations given by the Board of Directors, the Supervisory Committee and the
independent directors (if any) regarding the “auditor’s non-standard report” issued by the
CPAs firm for the Reporting Period
□ Applicable √ Not applicable
VI YoY changes in accounting policies, estimations and methods
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VII Retroactive restatement due to correction of material accounting errors in the Reporting
Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY changes in the scope of the consolidated financial statements
√ Applicable □ Not applicable
The Company obtained 51% equities of Wuhan Tianlong Yellow Crane Tower Co., Ltd for the enterprise merger not under the
same control during the Reporting Period, and newly established the subsidiaries Anhui Gujing Yunshang Electronic Commerce Co.,
Ltd and Anhui Zhenrui Contruction Project Co., Ltd.; The Company newly established sub-subsuaiaries Bozhou Gujing Distillery
Marketing Co., Ltd, Wuhan Ya shibo Technology Co., Ltd, and Wuhan Junya Sales Co., Ltd; The Company liquidated its subsidiary
~ 32 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Bozhou Gujing Packaging Co., Ltd in the current year.
IX Engagement and disengagement of CPAs firm
CPAs firm at present
Name of the domestic CPAs firm Ruihua CPAs (LLP)
The Company’s payment for the domestic CPAs firm
140
(RMB’0,000)
Consecutive years of the audit service provided by
4
the domestic CPAs firm
Names of the certified public accountants from the
Pan Xinhua, Zhang Xianfa
domestic CPAs firm
Reengage the CPAs firm at current period or not?
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
In 2016, the Company engaged the Ruihua CPAs (LLP) as the internal control audit CPAs of the Company.
X Possibility of listing suspension or termination after disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Significant litigations and arbitrations
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII Punishments and rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Not applicable
~ 33 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
XV Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Significant related-party transactions
1. Related-party transactions relevant to routine operation
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-party transactions regarding purchase or sales of assets or equity interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related-party transitions regarding joint investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and liabilities with related parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other significant related-party transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period
XVII Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
~ 34 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Entrusted cash management
(1) Entrusted asset management
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrusted loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other significant contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Social Responsibilities
1. Implementation of social responsibilities in precision poverty alleviation
(1) Summary of annual precision poverty alleviation
In accordance with the requirements of the State, Anhui Provincial Party Committee and Government, and Bozhou Municipal Party
Committee and Government on precision poverty alleviation, the Company has established targeted support towards 17 poor families
in Bali village, Wuma town, Qiaocheng District, Bozhou. The Company has established a complete and formal long-term mechanism
for poverty alleviation targeted at those families. A supporting policy of one file for one family, one card for one family, and one
policy for one family has been implemented based on the principle of “organizations are responsible for villages and cadres are
responsible for families”, and files have been created based on family members, major labor force, farmland and income structure of
poor families in each poor village. The Company has made some achievements in poverty alleviation through its efforts over the past
~ 35 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
year.
(2) Subsequent plan for precision poverty alleviation
First, the Company will continue to engage in poverty alleviation and strengthen its efforts in targeted support towards poor families;
second, the Company will continue to implement the supporting policy of the Provincial Party Committee and Government and the
Municipal Party Committee and Government, soundly advancing the poverty alleviation work in line with the requirements of
relevant poor counties to carry out the social responsibility.
2. Implementation of other social responsibilities
The Company disclosed its Corporate Social Responsibility Report 2016 on 28 April 2017 (see http://www.cninfo.com.cn for more
details)
Whether the Company or any of its subsidiaries belongs to a heavily polluting business identified by the environmental protection
authorities of China
Name of
Name of Quantity
major Distribution Pollutant discharge
company or Way of of Discharge Total Permitted Excess
pollutant of discharge standard
subsidiary discharge discharge concentration discharge discharge discharge
and typical outlet implemented
company outlet
pollutant
Anbui
Main GB27631-2011 Table
Gujing
COD Direct 1 discharge 67.88mg/L 2 Direct Discharge 154.66 155.05 0
Distillery
outlet (COD≤100mg/L)
Co., Ltd.
Anbui
Main GB27631-2011 Table
Gujing
NH3-N Direct 1 discharge 6.74mg/L 2 Direct Discharge 15.36 15.53 0
Distillery
outlet (NH3-N≤10mg/L)
Co., Ltd.
Construction and operation of pollution prevention and management
Existing sewage treatment facilities operate well, meeting the discharge standard.
Whether the Social Responsibility Report has been released
√ Yes □ No
Corporate Social Responsibility Report
Whether including Standard of report disclosure
Whether including Whether including
Nature of information about
information about information about
enterprise corporate Domestic standard Foreign standard
environment society
governance
ISO 26000:2010
Guidance on Social
Responsibility and
State-owned Guidance from
Yes Yes Yes GRI
enterprise Shenzhen Stock
Exchange on Social
Responsibility of Listed
Companies under
~ 36 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Shenzhen Stock
Exchange
Particulars of specific items
1. Whether the Company has passed the environmental
Yes
management system (ISO14001)
2. Annual expenditure on environmental protection (RMB
826.29
‘0,000)
3. Performance in reducing the discharge of three wastes
A total of 2,278,460tons of water was treated in 2016.
including “waster gas, waste water and waste residues”
4. Expenditure in the enhancement of employees’ individual
knowledge and skills to improve their ability in professional 193.97
development (RMB ‘0,000)
XIX Other significant events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant events of subsidiaries
□ Applicable √ Not applicable
~ 37 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section VI Share Changes and Information about Shareholders
I. Share changes
1. Share changes
Unit: share
Before Increase/decrease (+/-) After
Increase
New Bonus from
Number Percentage Other Subtotal Number Percentage
issues shares capital
reserves
I. Restricted shares 900 0.00% 300 300 1,200 0.00%
3 Shares held by other
900 0.00% 300 300 1,200 0.00%
domestic investors
Among which: Shares held
900 0.00% 300 300 1,200 0.00%
by domestic corporations
II. Non-restricted shares 503,599,100 100.00% -300 -300 503,598,800 100.00%
1 RMB common shares 383,599,100 76.17% -300 -300 383,598,800 76.17%
2 Domestically listed foreign
120,000,000 23.83% 0 0 120,000,000 23.83%
shares
III. Total shares 503,600,000 100.00% 0 0 503,600,000 100.00%
Reasons for the share changes
√Applicable □ Not applicable
During this Reporting Period, the shareholdings of outgoing senior management personnel in the Company were unlocked half a year
after they left the Company.
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and
other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√ Applicable □Not applicable
~ 38 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Unit: share
Amount of
Amount of
restricted shares
Name of Opening restricted shares Closing restricted Reason for Date of easing
to be eased
shareholder Restricted shares increased during shares restriction restriction
during Reporting
Reporting Period
Period
Leaving of senior Six months after
Zhai Liangdong 900 300 1,200
executive leaving
Total 900 300 1,200 -- --
II Issuance and listing of securities
1. Securities (excluding preference shares) issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability
structures
□ Applicable √ Not applicable
3. Existing staff-held shares
□ Applicable √ Not applicable
III Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total
number of
preference
shareholders
Total number of
with
common Total number of
resumed
Total number of common shareholders at preference shareholders
voting rights
shareholders at the 21,272 the prior 16,875 with resumed voting 0 0
at the prior
period-end month-end before rights at the period-end
month-end
the disclosure of (if any) (see Note 8)
before the
this Report
disclosure of
this Report
(if any) (see
Note 8)
~ 39 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Shareholdings of shareholders with a shareholding percentage over 5% or the top 10 shareholders
Number Pledged or frozen shares
Shareholding Total shares Increase/decrease of Number of
Nature of
Name of shareholder percentage held at the during the restricted non-restricted Status of Status of
shareholder
(%) period-end Reporting Period shares shares held shares shares
held
ANHUI GUJING GROUP State-owned
53.89% 271,404,022 271,404,022 Pledged 114,000,000
COMPANY LIMITED corporation
Foreign
GAOLING FUND,L.P. 2.47% 12,446,408 12,446,408
corporation
Foreign
UBS (LUXEMBOURG) S.A. 2.41% 12,150,199 12,150,199
corporation
Foreign
NORGES BANK 2.28% 11,458,346 11,458,346
corporation
CENTRAL HUIJIN ASSET State-owned
1.30% 6,543,600 6,543,600
MANAGEMENT CO., LTD. corporation
CHINA INT'L CAPITAL CORP
Foreign
HONG KONG SECURITIES 1.20% 6,067,462 6,067,462
corporation
LTD
NATIONAL SOCIAL
State-owned
SECURITY FUND 0.99% 4,970,485 4,970,485
corporation
PORTFOLIO 113
GREENWOODS CHINA Foreign
0.98% 4,939,963 4,939,963
ALPHA MASTER FUND corporation
CHINA LIFE INSURANCE
CO., State-owned
0.90% 4,536,754 4,536,754
LTD.-DIVIDEND-INDIVIDUAL corporation
BONUS -005L-FH002SHEN
MORGAN STANLEY & CO. Foreign
0.76% 3,833,134 3,833,134
INTERNATIONAL PLC corporation
Strategic investors or the general legal person
due to the placement of new shares become N/A
the top 10 shareholders（if any）（see Note 3）
Among the above shareholders, the Company's controlling shareholder, Anhui Gujing Group Co.,
Ltd., has no relationship with other shareholders and does not belong to the acting-in-concert
Explanation on associated relationship among
stipulated in the Administrative Measures on Information Disclosure of Changes in Shareholding
the above-mentioned shareholders or
of Listed Companies. In addition, the relationship between other shareholders is unknown, and it is
explanation on acting-in-concert
unknown whether it belongs to the acting-in-concert stipulated in the Administrative Measures on
Information Disclosure of Changes in Shareholding of Listed Companies.
Particulars about shares held by top 10 shareholders not subject to trading moratorium
~ 40 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Type of share
Number of shares held not subject to trading moratorium at the end
Name of shareholder Type of
of the period Amount
share
RMB
ANHUI GUJING GROUP COMPANY
271,404,022 common 271,404,022
LIMITED
shares
Domestically
GAOLING FUND,L.P. 12,446,408 listed foreign 12,446,408
shares
Domestically
UBS (LUXEMBOURG) S.A. 12,150,199 listed foreign 12,150,199
shares
Domestically
NORGES BANK 11,458,346 listed foreign 11,458,346
shares
RMB
CENTRAL HUIJIN ASSETS
6,543,600 common 6,543,600
MANAGEMENT CO., LTD.
shares
Domestically
CHINA INT'L CAPITAL CORP HONG
6,067,462 listed foreign 6,067,462
KONG SECURITIES LTD
shares
RMB
NATIONAL SOCIAL SECURITY FUND
4,970,485 common 4,970,485
PORTFOLIO 113
shares
Domestically
GREENWOODS CHINA ALPHA MASTER
4,939,963 listed foreign 4,939,963
FUND
shares
CHINA LIFE INSURANCE CO., RMB
LTD.-DIVIDEND-INDIVIDUAL BONUS 4,536,754 common 4,536,754
-005L-FH002SHEN shares
Domestically
MORGAN STANLEY & CO.
3,833,134 listed foreign 3,833,134
INTERNATIONAL PLC
shares
Explanation on associated relationship among shareholder—Anhui Gujing Group Company Limited—and other shareholders, nor they are
the top ten shareholders of tradable share not parties acting in concert as defined in the Administrative Measures on Information Disclosure of
subject to trading moratorium, as well as Changes in Shareholding of Listed Companies. As for other shareholders, the Company does not
among the top ten shareholders of tradable know whether they are related parties or whether they belong to parties acting in concert as defined
share not subject to trading moratorium and in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
top ten shareholders, or explanation on Companies.
~ 41 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
acting-in-concert
Explanation on the top 10 shareholders
participating in the margin trading business (if N/A
any) (see note 4)
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry
out an agreed buy-back in the Reporting Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company had not
carried out any agreed buy-back in the Reporting Period.
2. Information about the controlling shareholder
Nature of the controlling shareholder: Local state-owned holding
Type of the controlling shareholder: Corporation
Name of controlling Legal representative
Date of establishment Credibility code Main business scope
shareholder / company principal
Making beverage,
ANHUI GUJING GROUP
Liang Jinhui 01/16/1995 91341600151947437P construction materials and
COMPANY LIMITED
plastic products
Shares held by the controlling
shareholder in other listed
The controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly
companies by holding or
holds100,000,000 shares of Huaan Securities Co., Ltd. owning the proportion of shares3.55%
shareholding during the
reporting period
Change of the controlling shareholder during the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder of the Company in the Reporting Period.
3. Information about the actual controller
Nature of the actual controller: Local management organization for state-owned assets
Type of the actual controller: Corporation
Legal
representative / Date of
Name of actual controller Organization code Business scope
company establishment
principal
The People’s Government of
Not applicable Not applicable Not applicable
Bozhou
Shares held by the controlling
Not applicable
shareholder in other listed
~ 42 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
companies by holding or
shareholding during the
Reporting Period
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller of the Company in the Reporting Period.
Ownership and control relations between the actual controller and the Company
The People’s Government of Bozhou
Anhui Gujing Group Company Limited
Anhui Gujing Distillery Company Limited
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. Other corporate shareholders with a shareholding percentage above 10%
□ Applicable √ Not applicable
5. Limits on the Company’s shares held by its controlling shareholder, actual controller, reorganizer and
other commitment subjects
□ Applicable √ Not applicable
~ 43 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
~ 44 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section VIII Directors, Supervisors, Senior Executive Officers and Staff
I Changes in shareholdings of directors, supervisors and senior management
Increase Decreas
Opening in the e in the Other Closing
Incumbent/form Gende Ag Starting Ending
Name Office title date of date of shareholdi Reportin Reportin increase/decrea shareholdi
er r e tenure tenure
ng (share) g Period g Period se (share) ng (share)
(share) (share)
Chairman
Liang 06/20/201 06/19/201
of the Current Male 52
Jinhui 4 7
Board
08/24/201 06/19/201
Li Peihui Director Current Male 44
6 7
Zhou Director, 06/20/201 06/19/201
Current Male 43
Qingwu GM 4 7
Director, 06/20/201 06/19/201
Yan Lijun Current Male 46
GM 4 7
Director,
Deputy
GM,
Ye Secretary
06/20/201 06/19/201
Changqin of the Current Male 43
4 7
g Board,
Chief
Accountan
t
Director,
08/24/201 06/19/201
Xu Peng Deputy Current Male 47
6 7
GM
Wang Independe 06/20/201 06/19/201
Current Male 55
Ruihua nt director 4 7
Wang Independe 06/20/201 06/19/201
Current Male 52
Gao nt director 4 7
Song Independe 11/17/201 06/19/201
Current Male 55
Shuyu nt director 4 7
Chairman
Wang of the 08/24/201 06/19/201
Current Male 52
Feng Supervisor 6 7
y
~ 45 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Committee
Yang 08/24/201 06/19/201
Supervisor Current Male 49
Xiaofan 6 7
Fu 08/24/201 06/19/201
Supervisor Current Male 47
Qiangxin 6 7
Employee 08/24/201 06/19/201
Zhang Bo Current Male 52
supervisor 6 7
Wang Employee 08/24/201 06/19/201
Current Male 48
Zibin supervisor 6 7
Zhang Deputy 08/06/201 06/19/201
Current Male 48
Lihong GM 6 7
Zhu 08/06/201 06/19/201
GM
Xianghon Current Male 43 6 7
assistant
g
Gao GM 08/06/201 06/19/201
Current Male 47
Jiakun assistant 6 7
Zhai
GM 06/20/201 08/06/201
Liangdon Former Male 46 1,200 1,200
assistant 4 6
g
Total -- -- -- -- -- -- 1,200 1,200
II Particulars about changes of Directors, Supervisors and Senior Executives
√Applicable □Not applicable
Name Office title Type Date Reason
08/24/2016 For details, please refer to the announcement of the
Wang Feng Director Leave office resolution of the 9th meeting of the 7th Board of
Directors disclosed on August 6, 2016.
08/24/2016 For details, please refer to the announcement of the
Yang Xiaofan Director Leave office resolution of the 9th meeting of the 7th Board of
Directors disclosed on August 6, 2016.
Chairman of the 08/24/2016 For details, please refer to the announcement of the
Xu Peng Supervisory Leave office resolution of the 9th meeting of the 7th Board of
Committee Directors disclosed on August 6, 2016.
08/24/2016 For details, please refer to the announcement of the
Niu Haiting Supervisor Leave office resolution of the 9th meeting of the 7th Board of
Directors disclosed on August 6, 2016.
08/24/2016 For details, please refer to the announcement of the
Hu Wenchao Supervisor Leave office
resolution of the 9th meeting of the 7th Board of
~ 46 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Directors disclosed on August 6, 2016.
For details, please refer to the announcement of the
Lu Duicang Supervisor Leave office 08/24/2016 resolution of the 9th meeting of the 7th Board of
Directors disclosed on August 6, 2016.
For details, please refer to the announcement of the
Zhai Liangdong GM assistant Leave office 08/06/2016 resolution of the 9th meeting of the 7th Board of
Directors disclosed on August 6, 2016.
III Resumes of important personnel
The professional background, main working experience and current responsibilities in the company of current directors, supervisors
and senior management staff
(I) Mr. Liang Jinhui, 52 year-old, is Political Engineer who has educational experience of graduate student, incumbent Director and
president of the Company and Gujing Group, secretary of the party committee. He ever took the post of MD of Sales Company, GM,
Deputy GM, GM, Supervisor of Third Supervisory Committee and Director of the Fourth, Fifth and Sixth Board of Directors.
(II) Mr. Li Peihui, 44 year-old, holder of master degree. He is a senior accountant, CPA and member of national leading (backup)
accounting talents. At present, he acts as the Company’s director, executive vice president and CFO of Gujing Group. He had ever
served as deputy GM of Financial Department, GM, deputy chief accountant, chief accountant, Secretary of Board of Directors and
Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin Financial
Investment Group.
(III) Mr. Zhou Qingwu, 43 year-old, is Economist who has educational experience of graduate student. At present, he is Director and
General Manager of the Company, Vice Secretary of CPC of Gujing Group. He had ever acted as Chairman and General Manager of
Bozhou Gujing Packing Material Co., Ltd., Director of the 5th and 6th Board of Directors and Vice General Manager.
(IV) Mr. Yan Lijun, 46 year-old, holder of master degree with Senior Taster. Now he is Director, deputy executive GM of the
Company, Chairman of the Board and GM of Bozhou Gujing Sales Co., Ltd.. He once worked as salesman of Sale Company, District
Manager, Director of Market Research, Vice Manager of Planning Department, Director of Hefei Strategic Operations Center and
Vice GM of the Company
(V) Mr. Ye Changqing, 43 year-old, holder of master degree and International Certified Internal Auditor. Incumbent Director, Chief
Accountant and acting Secretary of Board of Directors of the company; had ever acted as Chief Auditor of Audit Department, Vice
Manager of Audit Department and Vice Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the
Fourth Supervisory Committee; Director and Secretary of the 5 th and 6th Board of Directors, Chief Accountant.
(VI) Mr. Xu Peng, 47 year-old, has educational experience of undergraduate college. He is incumbent Director and Deputy GM of
the Company, Chairman of the Board of Wuhan Tianlong Yellow Crane Tower Liquor Industry Co., Ltd.. And he had ever acted as
Deputy Director and Director of Finance Second Office of Finance Department of the Company, Manager of Finance Department of
Anhui Laobada Co., Ltd., and Vice Manager and Manager of Finance Department of the Company, Deputy General Manager and
Chief Supervisor of Market Supervision Department of Bozhou Gujing Sales Company and Chairman of the Supervisory Committee
of the Company.
(VII) Mr. Wang Ruihua, 55 year-old, doctor degree in accounting, not Practicing Certified Public Accountant. Accounting Professor
of School of Business of Central University of Finance and Economics, tutor of PHD student, Independent Director of ZHONG KE
SAN HUAN, DATANG TELECOM TECHNOLOGY CO., LTD..
(VIII) Wang Gao, Male, 52 years old, Doctor of Sociology，Professor of Marketing in China Europe International Business School.
Academic Director of Chief Marketing Officer (CMO) Project, Co-Director of Chinese Enterprise Globalization Research Center. He
~ 47 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
once worked as Associate Professor, Deputy Dean of Department of Marketing in School of Economics and Management, Tsinghua
University, deputy director of China's Retail Research Center Academic Director of Harvard - central Europe - tsinghua university
senior managers (SEPC) project. Strategic Analysis Manager of Minute Maid Branch of Coca-Cola Company and senior counselor of
The Information Resources Co., Ltd. (IRI).
(IX) Song Shuyu, male, 55 years old, who has educational experience of graduate student. Senior Engineer, Master of Chinese wine.
Now, he is Deputy Secretary General of China Alcoholic Drinks Association, Secretary-general of Liquor Branch Association,
Secretary General of Market Professional Committee, Secretary General of White Wine Club Technical Committee, specialist who
enjoy the special allowance of the state council. He also is member of Chinese liquor standardization technical committee, Deputy
Secretary General of strong-flavor, Feng-flavour, soybean-flavor and rice flavour Liquor Technical Committee of Chinese Liquor
Standardization Technical Committee, Chairman of Committee of Te-flavour Chinese spirits and Laobaigan-flavour Chinese spirits
standardization technical committee.
(X) Mr. Wang Feng, 52 year-old, is Senior Economic Engineer who is postgraduate degree holder, incumbent Chairman of the
Supervisor committee, Deputy Secretary of CPC of Gujing Group and Secretary of Discipline Inspection Commission. He had ever
acted as Director, Secretary of the board, Vice General Manager, and General Manager of the Second Board of Directors; Director
and Chairman of the Third Board of Directors, and Director as well as Chairman of the Fourth Board of Directors; Director of the 5th
and 6th Board of Directors.
(XI) Mr. Yang Xiaofan, 49 year-old, holder of master degree. At present, he is Supervisor and Vice President of Gujing Group. Vice
President and General Manager of Anhui Gujing Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of
the 5th and 6th Board of Directors.
(XII) Mr. Fu Qiangxin, 47 year-old, bachelor degree, accountant, incumbent Supervisor and Vice Secretary of Discipline Inspection
Commission of Audit. He ever took posts of accountant of Bozhou Gujing Hotel, Manager of Finance of Bozhou Gujing Integrated
Services Company and Bozhou Gujing Import and Export Trade Company, clerk of Planning and Finance Department of Gujing
Group, Chief Inspector of Internal Audit Center.
(XIII) Mr. Zhang Bo, 52 year-old, bachelor degree, economist, incumbent Employee Supervisor of the Company and Chairman of
the Labor Union of Gujing Group. He once worked as Chairman of the board and GM of Bozhou Gujing Printing Co., Ltd. and
Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board of Bozhou Ruineng Heat and Power Co., Ltd..
(XIV) Mr. Wang Zibin, 48 year-old, college degree, CIA and CPA. At present he is Employee Supervisor of the Company and
Director of Audit and Supervisory Centre of the Group. He once served as GM of Auditing Department of Gujing Group and vice
director of Hefei marketing centre of Bozhou Gujing Sales Company.
(XV) Mr. Zhang Lihong, 48 year-old, bachelor degree and economist. He is incumbent Deputy GM of the Company and director of
Administrative Service Centre. He once acted as clerk, Secretary of Operation Department and Market Development Department,
Deputy GM, Director of General Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd. and Director of HR
Department of the Company.
(XVI) Mr. Zhu Xianghong, 43 year-old, bachelor degree and senior Wine Taster. He is incumbent assistant to GM of the Company,
and GM of Wuhan Tianlong Yellow Crane Tower Liquor Industry Co., Ltd.. He once acted as GM of Product Department of Bozhou
Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of Anhui Operating Centre and standing
Deputy GM of Sales Company.
(XVII) Mr.Gao Jiakun, bachelor degree, incumbent assistant to GM of the Company. He once served as GM of Production
Management Department, Vice Director of Production Management Centre, Chairman of the Board and GM of Bozhou Pairuite
Packing Products Co., Ltd., the Company’s Director of Finished Products Filling Centre and Production Management Centre.
Post-holding in shareholder units
√Applicable □ Not applicable
~ 48 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Name of the
Position in
person holding Receives payment
the Beginning date Ending date of
any post in any Name of the shareholder unit from the
shareholder of office term office term
shareholder shareholder unit?
unit
unit
Chairman of
the Board of
Directors,
Liang Jinhui Anhui Gujing Group Co., Ltd. 05/01/2014 Yes
Chairman of
Party
Committee
Deputy
Chairman of
Party
Committee,
Wang Feng Anhui Gujing Group Co., Ltd. 08/01/2010 Yes
Chairman of
Discipline
Inspection
Committee
Executive
Vice
Li Peihui Anhui Gujing Group Co., Ltd. 05/01/2014 Yes
President,
CFO
Vice
Yang Xiaofan Anhui Gujing Group Co., Ltd. 11/01/2009 Yes
President
Deputy
Chairman of
Zhou Qingwu Anhui Gujing Group Co., Ltd. 11/01/2009 No
Party
Committee
Chief
Inspector of
Fu Qiangxin Anhui Gujing Group Co., Ltd. Financial 07/01/2014 Yes
Management
Center
Chairman of
Zhang Bo Anhui Gujing Group Co., Ltd. the Labor 10/16/2015 Yes
Union
Chairman of
Audit and
Wang Zi Bin Anhui Gujing Group Co., Ltd. 4/27/2015 Yes
Supervision
Center
~ 49 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Notes to
The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant
post-holding in
employment requirements of Company Law, Securities Law and never were disciplined by CSRC, other relevant
shareholder
departments and the Stock Exchange.
units
Particulars about the Company's current directors, supervisors and senior executives ‘punishments from Securities Regulatory
Institution of recent three years in Reporting Period
□ Applicable √ Not applicable
IV Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior
management
(I) Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and senior
management
The Remuneration & Appraisal Committee under the Board of Directors is in charge of drafting appraisal index of senior
management and checking accomplishment of annual index.
(II) Basis for determining the remuneration of directors, supervisors and senior management
Remuneration of directors, supervisors and senior management is calculated by appraisal index drafted in year-begin and weight.
Financial index is on base of Auditor’s Report issued by certified public accountant, and comprehensive appraisal index is appraised
and discussed by the Remuneration & Appraisal Committee under the Board of Directors.
(III) Actual payment of the remuneration of directors, supervisors and senior management
Payment of the remuneration of directors, supervisors and senior management is with certain amount in advance monthly and
distributed annually according to check.
Remuneration of the directors, supervisors and senior management of the Company during the reporting period is as follow:
Unit: RMB’0,000
Whether gained
Total
remuneration
remuneration
Name Position Gender Age Current/former from the related
gained from the
parties of the
Company
Company
Chairman of the
Liang Jinhui Male 52 Current Yes
Board
Li Peihui Director Male 44 Current Yes
Zhou Qingwu Director, GM Male 43 Current 72.90 No
Director, Male Current No
Yan Lijun Executive Deputy 46 121.46
GM
Director, Deputy Male Current No
General Manager,
Ye Changqing 43 68.89
Secretary of the
Board, Chief
~ 50 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Accountant
Director, Deputy Male Current No
Xu Peng 47 64.30
GM
Independent Male Current No
Wang Ruihua 55 7.50
director
Independent Male Current No
Wang Gao 52 7.50
director
Independent Male Current No
Song Shuyu 55 7.50
director
Chairman of the Male Current Yes
Wang Feng Supervisory 52
Committee
Yang Xiaofan Supervisor Male 49 Current Yes
Fu Qiangxin Supervisor Male 47 Current Yes
Employee Male Current Yes
Zhang Bo 52
Supervisor
Employee Male Current Yes
Wang Zibin 48
Supervisor
Deputy General Male Current No
Zhang Lihong 48 65.22
Manager
General Manager Male Current No
Zhu Xianghong 43 106.56
Assistant
General Manager Male Current No
Gao Jiakun 47 55.53
Assistant
Total -- -- -- -- 577.36 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during the Reporting
Period
□ Applicable √ Not applicable
V About employees
1. Number of employee, professional structure and education
Amount of the incumbent employees of the Company 5,264
Amount of the incumbent employees of the main subsidiaries 514
Total amount of the incumbent employees 5,778
Total number of employees accepted salaries(person) 5,778
Number of retirees whose retirement pension shall be borne by 781
~ 51 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
the Company and the main subsidiaries
Professional structure
Category Number
Production personnel 4,425
Sales personnel 489
Technicians 264
Financial personnel 100
Administrative personnel 500
Total 5,778
Education
Category Number
High school or below 4,298
Junior college 772
Bachelor 678
Master or above 30
Total 5,778
2. Remuneration policy
The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operation
performance and profits of the Company and the relevant remuneration policy management.
3. Employee training plans
Employee training is significant in the Human resource management. The Company always pay high attention to the employee
training and development, the Company sets up effective training plan combining with the current situation of the Company, annual
plan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,
front-line employee operating skills training, management improvement training and part-time study. Continuously improve the
whole quality of the employees, realized a win-win situation and progress between the Company and the employees.
4. Particulars about labor outsourcing
□ Applicable √ Not applicable
~ 52 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section IX Corporate Governance
I Basic details of corporate governance
Since foundation, the Company constantly perfects corporate governance structure and standardize its management strictly in
accordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting up
Independent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations and
normative documents.
In the reporting period, the Company developed internal control activity, implemented Rules on Management of Assets Provision for
Impairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in Annual Report, Rules for Management of
External Information User and Rules for Management of Insider of Inner Information, perfected internal control system step by step,
promoted normative operation and healthy development. The Board of Directors, the Supervisory Committee and the management of
the Company make decisions, perform rights and assume obligation strictly according to the standard operation rules and inner
control system so as to make sure the standard operation of the Company in the frame of rules and systems.
In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares in
Shenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed information
disclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,
misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of the
Company.
After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, further
improve the standard operation of the Company.
Whether it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
II Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, organization and financial affairs
The company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,
personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,
independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’
general meeting to directly or indirectly interfere with the company’s decisions and legal production and operation activities, and
there is no same trade competition state of the same products between the company and majority shareholders.
III Horizontal competition
□ Applicable √ Not applicable
~ 53 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
IV Particulars about the annual shareholders’ general meeting and special shareholders’
general meetings held during the reporting period
1. Particulars about the shareholders’ general meeting in reporting period
Proportion of
Index to the
Session Type investors' Convening date Disclosure date
disclosed
participation
On the cninfo
website
The Annual
The Annual Announcement on
Shareholders’
Shareholders’ 10.77% 05/26/2016 05/27/2016 Resolutions Passed
General Meeting
General Meeting on the 2015 Annual
of 2015
Shareholders’
General Meeting
On the cninfo
website
The First Special Announcement on
Special
Shareholders’ Resolutions Passed
Shareholders’ 1.92% 08/23/2016 08/24/2016
General Meeting for on The First Special
General Meeting
2016 Shareholders’
General Meeting for
2016
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right
□ Applicable √ Not applicable
V Performance of the Independent Directors
1. Particulars about the independent directors attending the board sessions and the shareholders’ general
meetings
Particulars about the independent directors attending the board sessions
Independent Sessions Attendance in Attendance by Entrusted Absence rate Non-attendanc
director required to person way of presence e in person for
attend during telecommunica (times) two
the reporting tion consecutive
period times
Wang Ruihua 4 1 3 No
Wang Gao 4 0 4 No
~ 54 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Song Shuyu 4 1 3 No
General meetings sat in on by 2
independent directors
Note to non-attendance in person for two consecutive times
2. Particulars about independent directors proposing objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the Company.
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
During Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company's
business decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, and
provided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing a
due role in safeguarding the legitimate rights and interests of the Company's shareholders.
VI Performance of the Special Committees under the Board during the reporting period
1. Duty performance of the Strategy Committee
The Strategy Committee is under the leadership of the Board of Directors. In the reporting period, in strict compliance with the
Specific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making a
lot of constructive suggestions for the efficient execution of the Company’s strategy.
2. Duty performance of the Audit Committee
In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in the
relevant rules of the Company:
(1) It reviewed the periodical reports of the Company in 2016.
(2) Upon discussion with Ruihua Certified Public Accountants for the 2016 annual audit, it determined the schedule for the financial
report and internal control audit for 2016.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2016 annual audit.
(3) It reviewed the short form of the preliminary financial statements prepared by the financial department of the Company for the
first time before the annual auditor came to the Company and made some helpful suggestions.
(5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on the
problems found in the audit and the submission time of the audit report.
(6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2016 annual financial statements again and made the
final resolution.
3. Duty performance of the Nomination Committee
~ 55 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
Committee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired in
compliance with laws and regulations.
(1) In the reporting period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
securities market.
(2) In the reporting period, the senior management staff of the Company were nominated and hired in line with the Company Law
and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
stock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal to
directors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reporting
period.
(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration level
complied with development of the Company; the remuneration level of directors, supervisors and senior executives accurately
reflected the overall performance situation of the Company and individual work performance, which complied with the remuneration
management system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did not
violate relevant national laws and regulations.
VII Performance of the Supervisory Committee
During the reporting period, the Supervisory Committee found whether there was risk in the Company in the supervisory activity
□ Yes √ No
The Supervisory Committee has no objection on the supervised events during the reporting period.
VIII Performance Evaluation and Incentive Mechanism for Senior Management Staff
The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration of
senior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measures
by linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,
healthy and orderly development of the company and keep the stability of the senior executives, the company annually sets up the
assessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration and
the rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operating
target.
IX Internal Control
1. Particulars about significant defects found in the internal control during reporting period
□ Yes √ No
~ 56 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
2. Self-appraisal report on internal control
Disclosure date of the Self-appraisal
04/28/2017
Report on Internal Control
Disclosure index of the Self-appraisal Cninfo website (www.cninfo.com.cn) “ Anhui Gujing Distillery Company Limited
Report on Internal Control Self-assessment Report of Internal Control”
The proportion of total assets included in
evaluation scope entities in the
98.37%
Company's total assets of the consolidated
financial statements
The proportion of operation revenue
included in evaluation scope entities in
99.26%
the Company's operation revenue of the
consolidated financial statements
Defect judging standards
Category Financial Report Non-Financial Report
Critical defect: Separate defect or other
defects that result in failure in preventing,
finding out and correcting major wrong
reporting in financial report in time. The
following circumstances are deemed as
Any of the following circumstances shall
critical defects: (1) Ineffective in controlling
be deemed as a critical defect, and other
the environment; (2) Malpractice of
circumstances shall be deemed as major
directors, supervisors and senior
or minor defects according to their
management officers; (3) According to
degree of impact.
external auditing, there’s major wrong
reporting in current financial report, which (1) Violate national laws, regulations or
fails to be found by the company in its standardized documents;
operating process; (4) Major defects found (2) Major decision making procedure is
Qualitative criteria
and reported to the top management fail to not scientific;
be corrected within a reasonable period of (3) Lack of systems results in systematic
time; (5) The supervision of audit committee failure;
of the company and its internal audit (4) Critical or major defects fail to be
department for internal control is ineffective; rectified;
(6) Other defects that may affect correct (5) Other circumstances that have major
judgment of users of statements. Major impact on the company.
defect: Separate defect or other defects that
result in failure in preventing, finding out
and correcting wrong reporting in financial
report in time, which shall be noted by the
top management despite of not attaining or
exceeding critical level. Minor defect: Other
~ 57 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
internal control defects not constituting
critical or major defects.
Critical defect:
(1) Wrong reporting ≥0.5% of total operating
revenue;
Critical defect: The defect with direct
(2) Wrong reporting ≥5% of total profit;
property loss amounting to over RMB10
(3) Wrong reporting ≥0.5% of total assets;
million, has great negative impact on the
(4) Wrong reporting ≥0.5% of total owner’s company and is disclosed in public in the
equity. form of announcement.
Major defect: Major defect: The defect with direct
(1) Wrong reporting ≥0.2% but ＜0.5% of property loss amounting to RMB 1
total operating revenue; million to RMB10 million (included), or
(2) Wrong reporting ≥2% but ＜5% of total is penalized by governmental authority
Quantitative criteria profit; of the country but has not resulted in
(3) Wrong reporting ≥0.2% but ＜0.5% of negative impact on the company.
total assets; Minor defect: The defect with direct
(4) Wrong reporting ≥0.2% but ＜0.5% of property loss no more than RMB 1
total owner’s equity. million (included), or is penalized by
governmental authority of the
Minor defect:
provincial-level or below but has not
(1) Wrong reporting ＜ 0.2% of total
resulted in negative impact on the
operating revenue;
company.
(2) Wrong reporting＜2% of total profit;
(3) Wrong reporting＜0.2% of total assets;
(4) Wrong reporting＜0.2% of total owner’s
equity.
Number of significant defects of financial
0
report (Piece)
Number of significant defects of non-
0
financial report (Piece)
Number of important defects of financial
0
report (Piece)
Number of important defects of
0
non-financial report (Piece)
X Audit report on internal control
√Applicable □ Not applicable
Audit opinion paragraphs in the Audit Report on Internal Control
We believe that the Company has maintained effective internal control on financial report in all significant respects according to the
Basic Rules for Enterprise Internal Control and relevant regulations on December 31, 2016.
~ 58 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Particulars about Audit Report on
Disclosure
Internal Control
Disclosure date of the Audit Report
04/28/2017
on Internal Control
Disclosure index of the Audit
Cninfo website (www.cninfo.com.cn) “Audit Report of Internal Control”
Report on Internal Control
Type of Audit Report on Internal
Unqualified auditor's report
Control
Whether there is significant defect
No
in non-financial report
Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or
not?
√ Yes □ No
~ 59 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section X Financial Report
I Audit Report
Type of audit opinion Standard unqualified audit opinion
Date of signing audit report April 26, 2017
Ruihua Certified Public Accountants (Special General
Name of audit institution
Partnership)
Reference number of audit report RuiHua Shen Zi [2017] No 48380010
Name of CPA Pan Xinhua, Zhang Xianfa
Audit Report
To the Shareholders of Anhui Gujing Distillery Co., Ltd.:
We have audited the attached financial statements of Anhui Gujing Distillery Co., Ltd. (“Gujing”), which comprise the consolidated
and the Company’s balance sheet as at December 31, 2016, the consolidated and the Company’s income statement, the consolidated
and the Company’s cash flow statement, the consolidated and the Company’s statement of changes in owners’ equity for the year
then ended, and the notes to financial statements.
I. Responsibilities of the management concerning the financial statements
The management of the Company is responsible for the preparation of these financial statements and fair presentation. These
responsibilities include: (1) preparing financial statements according to the Accounting Standards for Business Enterprises and
make them a fair presentation; and (2) designing, implementing and maintaining internal control relevant to the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
II. Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with the Chinese Certified Public Accountants' Auditing Standards. These standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation of the consolidation financial statements and fair presentation in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Opinion
In our opinion, the financial statements have been prepared in accordance with the requirements of the Enterprises Accounting
Standards promulgated by the People’s Republic of China in all material respects, and present fairly the consolidated operating
results of Anhui Gujing Distillery Co., Ltd. and its subsidiaries as at December 31, 2016 and consolidated operating results and cash
flow in 2016 as well as the operating results at December 31, 2016 and the operating results & cash flow in 2016 of Anhui Gujing
Distillery Co., Ltd..
~ 60 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
II Financial statements
Unit of statements in the notes appended to financial report is RMB Yuan
1. Consolidated balance sheet
Prepared by Anhui Gujing Distillery Company Limited
December 31, 2016
Unit: RMB
Item Closing balance Opening balance
Current Assets:
Monetary funds 532,909,026.07 1,087,319,158.77
Settlement reserves
Intra-group lendings
Financial assets measured at fair
value of which changes are recorded in 429,190.68 322,223.28
current profits and losses
Derivative financial assets
Notes receivable 534,386,586.59 539,442,903.31
Accounts receivable 12,287,262.88 4,948,074.84
Accounts paid in advance 74,784,221.59 80,373,083.59
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable 2,843,178.08 0.00
Dividend receivable
Other accounts receivable 10,765,397.03 8,617,955.68
Financial assets purchased under
agreements to resell
Inventories 1,786,433,036.50 1,396,712,050.87
Assets held for sale
Non-current assets due within 1 year
Other current assets 1,750,278,829.24 1,500,970,860.37
Total current assets 4,705,116,728.66 4,618,706,310.71
Non-current assets:
Loans by mandate and advances
~ 61 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
granted
Available-for-sale financial assets 404,029,552.27 313,881,190.47
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment
Investing real estate 8,402,944.74 9,715,451.89
Fixed assets 1,865,691,585.06 1,691,028,804.32
Construction in progress 71,771,324.26 62,562,971.78
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 700,684,529.08 298,372,239.96
R&D expense
Goodwill 478,283,495.29 0.00
Long-term deferred expenses 93,588,397.35 127,815,668.37
Deferred income tax assets 107,654,597.15 61,065,003.63
Other non-current assets 300,982,000.00 0.00
Total of non-current assets 4,031,088,425.20 2,564,441,330.42
Total assets 8,736,205,153.86 7,183,147,641.13
Current liabilities:
Short-term borrowings
Borrowings from Central Bank
Customer bank deposits and due to
banks and other financial institutions
Intra-group borrowings
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial liabilities
Notes payable 11,298,583.00 93,768,583.00
Accounts payable 340,972,366.21 378,187,452.07
Accounts received in advance 623,990,614.91 608,565,152.50
Financial assets sold for repurchase
Handling charges and commissions
~ 62 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
payable
Payroll payable 288,027,136.09 253,901,700.72
Tax payable 486,959,651.85 358,087,353.80
Interest payable
Dividend payable
Other accounts payable 641,472,271.53 452,193,188.94
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities held for sale
Non-current liabilities due within 1
year
Other current liabilities 241,487,812.54 138,135,604.82
Total current liabilities 2,634,208,436.13 2,282,839,035.85
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income 43,978,795.45 46,123,314.33
Deferred income tax liabilities 117,287,002.52 20,463,660.87
Other non-current liabilities
Total non-current liabilities 161,265,797.97 66,586,975.20
Total liabilities 2,795,474,234.10 2,349,426,011.05
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Of which: preferred shares
~ 63 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Perpetual bonds
Capital reserves 1,295,405,592.25 1,294,938,493.19
Less: Treasury stock
Other comprehensive income 36,144,477.95 54,481,886.51
Specific reserves
Surplus reserves 256,902,260.27 256,902,260.27
Provisions for general risks
Retained profits 3,503,069,053.49 2,723,798,990.11
Total equity attributable to owners of
5,595,121,383.96 4,833,721,630.08
the Company
Minority interests 345,609,535.80 0.00
Total owners’ equity 5,940,730,919.76 4,833,721,630.08
Total liabilities and owners’ equity 8,736,205,153.86 7,183,147,641.13
Legal representative: Liang Jinhui Person-in-charge of the accounting work: Ye Changqing
Chief of the accounting division: Zhu Jiafeng
2. Balance sheet of the Company
Unit: RMB
Item Closing balance Opening balance
Current Assets:
Monetary funds 225,792,686.26 548,650,832.84
Financial assets measured at fair
value of which changes are recorded in 429,190.68 322,223.28
current profits and losses
Derivative financial assets
Notes receivable 449,016,169.03 288,101,188.68
Accounts receivable 6,377,346.00 4,350,437.24
Accounts paid in advance 11,815,064.19 5,876,678.41
Interest receivable
Dividend receivable
Other accounts receivable 105,514,906.34 107,625,019.85
Inventories 1,549,397,565.11 1,374,311,894.88
Assets held for sale
Non-current assets due within 1 year
~ 64 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Other current assets 1,750,000,000.00 1,500,000,000.00
Total current assets 4,098,342,927.61 3,829,238,275.18
Non-current assets:
Available-for-sale financial assets 403,547,952.27 313,881,190.47
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 1,155,089,408.32 354,089,408.32
Investing real estate 30,846,736.84 9,715,451.89
Fixed assets 1,375,089,823.91 1,471,584,047.66
Construction in progress 68,022,146.66 62,355,022.07
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 186,370,081.28 187,468,810.92
R&D expense
Goodwill
Long-term deferred expenses 92,695,064.02 127,815,668.37
Deferred income tax assets 36,366,330.90 42,154,627.44
Other non-current assets 982,000.00 0.00
Total of non-current assets 3,349,009,544.20 2,569,064,227.14
Total assets 7,447,352,471.81 6,398,302,502.32
Current liabilities:
Short-term borrowings
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial liabilities
Notes payable 28,583.00 828,583.00
Accounts payable 307,649,868.02 371,636,772.06
Accounts received in advance 1,003,521,896.65 659,484,624.07
Payroll payable 90,742,908.53 88,513,920.05
Tax payable 320,037,309.94 237,459,964.06
Interest payable
~ 65 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Dividend payable
Other accounts payable 282,570,379.80 268,035,753.60
Liabilities held for sale
Non-current liabilities due within 1
year
Other current liabilities 37,589,367.67 61,660,494.13
Total current liabilities 2,042,140,313.61 1,687,620,110.97
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income 42,745,851.74 46,123,314.33
Deferred income tax liabilities 15,385,289.84 20,463,660.87
Other non-current liabilities
Total non-current liabilities 58,131,141.58 66,586,975.20
Total liabilities 2,100,271,455.19 1,754,207,086.17
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 1,247,162,107.35 1,247,162,107.35
Less: Treasury stock
Other comprehensive income 37,315,555.64 54,481,886.51
Specific reserves
Surplus reserves 251,800,000.00 251,800,000.00
Retained profits 3,307,203,353.63 2,587,051,422.29
Total owners’ equity 5,347,081,016.62 4,644,095,416.15
Total liabilities and owners’ equity 7,447,352,471.81 6,398,302,502.32
~ 66 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
3. Consolidated income statement
Unit: RMB
Item 2016 2015
I. Total operating revenues 6,017,143,660.56 5,253,411,479.40
Including: Sales income 6,017,143,660.56 5,253,411,479.40
Interest income
Premium income
Handling charge and commission
income
II. Total operating costs 4,997,581,551.14 4,392,354,606.21
Including: Cost of sales 1,523,585,779.51 1,509,536,099.28
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 charges 955,988,399.10 790,205,631.87
Selling and distribution expenses 1,980,127,377.89 1,557,800,618.96
Administrative expenses 556,513,607.99 543,822,606.51
Financial expenses -30,253,967.33 -20,334,406.40
Asset impairment loss 11,620,353.98 11,324,055.99
Add: Gain/(loss) from change in fair
-5,598.43 42,203.41
value (“-” means loss)
Gain/(loss) from investment (“-”
97,837,461.25 69,256,030.30
means loss)
Including: share of profits in
associates and joint ventures
Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss) 1,117,393,972.24 930,355,106.90
Add: non-operating income 41,914,946.46 44,974,004.61
~ 67 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Including: Gains on disposal of
420,864.59 68,505.82
non-current assets
Less: non-operating expense 8,554,634.67 9,059,670.65
Including: Losses on disposal of
6,740,484.31 1,059,201.01
non-current assets
IV. Total profit (“-” means loss) 1,150,754,284.03 966,269,440.86
Less: Income tax expense 300,436,186.51 250,691,071.18
V. Net profit (“-” means loss) 850,318,097.52 715,578,369.68
Net profit attributable to owners of
829,630,063.38 715,578,369.68
the Company
Minority shareholders’ income 20,688,034.14 0.00
VI. After-tax net amount of other
-18,337,408.56 37,812,282.44
comprehensive incomes
After-tax net amount of other
comprehensive incomes attributable to -18,337,408.56 37,812,282.44
owners of the Company
(I) Other comprehensive incomes
that will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees that
cannot be reclassified into gains and
losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and -18,337,408.56 37,812,282.44
losses
1. Enjoyable shares in other
comprehensive incomes in investees that
will be reclassified into gains and losses
under the equity method
2. Gains and losses on fair
value changes of available-for-sale -18,337,408.56 37,812,282.44
financial assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
~ 68 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
statement translation difference
6. Other
After-tax net amount of other
comprehensive incomes attributable to
minority shareholders
VII. Total comprehensive incomes 831,980,688.96 753,390,652.12
Attributable to owners of the
811,292,654.82 753,390,652.12
Company
Attributable to minority
20,688,034.14 0.00
shareholders
VIII. Earnings per share
(I) Basic earnings per share 1.65 1.42
(II) Diluted earnings per share 1.65 1.42
Legal representative: Liang Jinhui Person-in-charge of the accounting work: Ye Changqing
Chief of the accounting division: Zhu Jiafeng
4. Income statement of the Company
Unit: RMB
Item 2016 2015
I. Total sales 3,308,399,250.03 3,007,068,150.18
Less: cost of sales 1,436,794,457.51 1,536,318,251.80
Business taxes and surcharges 857,620,971.74 748,278,391.57
Distribution expenses 271,599,513.92 194,497,701.34
Administrative expenses 390,774,681.63 393,964,851.14
Financial costs -12,139,559.51 -19,235,711.99
Impairment loss 13,749,391.73 8,555,178.79
Add: gain/(loss) from change in fair
-5,598.43 53,028.41
value (“-” means loss)
Gain/(loss) from investment (“-”
507,037,614.00 574,517,573.20
means loss)
Including: income from
~ 69 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
investment on associates and joint
ventures
II. Business profit (“-” means loss) 857,031,808.58 719,260,089.14
Add: non-operating income 35,019,767.09 32,153,857.76
Including: Gains on disposal of
non-current assets
Less: non-operating expense 6,151,343.05 6,944,814.78
Including: Losses on disposal of
6,135,718.34 494,461.74
non-current assets
III. Total profit (“-” means loss) 885,900,232.62 744,469,132.12
Less: Income tax expense 115,388,301.28 46,777,999.81
IV. Net profit (“-” means loss) 770,511,931.34 697,691,132.31
V. After-tax net amount of other
-17,166,330.87 37,812,282.44
comprehensive incomes
(I) Other comprehensive incomes that
will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and -17,166,330.87 37,812,282.44
losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair value
changes of available-for-sale financial -17,166,330.87 37,812,282.44
assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
~ 70 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
losses on cash flows
5. Foreign-currency financial
statement translation difference
6. Other
VI. Total comprehensive incomes 753,345,600.47 735,503,414.75
VII. Earnings per share
(I) Basic earnings per share 1.53 1.39
(II) Diluted earnings per share 1.53 1.39
5. Consolidated cash flow statement
Unit: RMB
Item 2016 2015
I. Cash flows from operating activities:
Cash received from sale of
7,031,888,740.85 6,316,130,596.88
commodities and 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 financial
assets measured at fair value of which
changes are recorded into current gains
and losses
Cash received from interest, handling
charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
~ 71 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Tax refunds received 16,218,721.25 13,999,000.00
Other cash received relating to
345,789,490.57 175,581,055.15
operating activities
Subtotal of cash inflows from operating
7,393,896,952.67 6,505,710,652.03
activities
Cash paid for goods and services 1,761,253,852.47 1,758,283,730.78
Net increase of customer lendings
and advances
Net increase of funds deposited in the
central 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 employees 1,130,548,519.54 1,000,365,212.81
Various taxes paid 2,041,224,545.61 1,872,063,119.51
Other cash payment relating to
1,277,638,226.99 1,084,889,053.92
operating activities
Subtotal of cash outflows from
6,210,665,144.61 5,715,601,117.02
operating activities
Net cash flows from operating activities 1,183,231,808.06 790,109,535.01
II. Cash flows from investing activities:
Cash received from withdrawal of
3,325,502,933.15 2,205,995,542.82
investments
Cash received from return on
78,724,727.77 63,870,974.91
investments
Net cash received from disposal of
fixed assets, intangible assets and other 4,761,778.98 87,371.84
long-term assets
Net cash received from disposal of
subsidiaries or other business units
Other cash received relating to
2,481,400.00 9,384,300.00
investing activities
Subtotal of cash inflows from investing
3,411,470,839.90 2,279,338,189.57
activities
Cash paid to acquire fixed assets, 172,716,601.62 237,769,057.80
~ 72 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
intangible assets and other long-term
assets
Cash paid for investment 3,973,944,183.44 2,372,945,376.50
Net increase of pledged loans
Net cash paid to acquire subsidiaries
805,830,032.45 0.00
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
4,952,490,817.51 2,610,714,434.30
investing activities
Net cash flows from investing activities -1,541,019,977.61 -331,376,244.73
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Including: Cash received from
minority shareholder investments by
subsidiaries
Cash received from borrowings 1,000,000.00 0.00
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
1,000,000.00 0.00
activities
Repayment of borrowings 1,000,000.00 0.00
Cash paid for interest expenses and
50,360,000.00 100,720,000.00
distribution of dividends or profit
Including: dividends or profit
paid by subsidiaries to minority
shareholders
Other cash payments relating to
104,376,537.45 0.00
financing activities
Sub-total of cash outflows from
155,736,537.45 100,720,000.00
financing activities
Net cash flows from financing activities -154,736,537.45 -100,720,000.00
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
~ 73 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
V. Net increase in cash and cash
-512,524,707.00 358,013,290.28
equivalents
Add: Opening balance of cash
1,040,373,733.07 682,360,442.79
and cash equivalents
VI. Closing balance of cash and cash
527,849,026.07 1,040,373,733.07
equivalents
6. Cash flow statement of the Company
Unit: RMB
Item 2016 2015
I. Cash flows from operating activities:
Cash received from sale of
4,048,263,462.34 3,095,958,832.08
commodities and rendering of service
Tax refunds received 15,009,167.60 13,999,000.00
Other cash received relating to
44,493,823.06 83,789,843.81
operating activities
Subtotal of cash inflows from operating
4,107,766,453.00 3,193,747,675.89
activities
Cash paid for goods and services 1,629,164,465.68 1,750,534,302.48
Cash paid to and for employees 491,016,401.44 439,242,793.90
Various taxes paid 1,345,928,486.58 1,069,706,330.70
Other cash payment relating to
89,125,570.51 58,446,169.89
operating activities
Subtotal of cash outflows from
3,555,234,924.21 3,317,929,596.97
operating activities
Net cash flows from operating activities 552,531,528.79 -124,181,921.08
II. Cash flows from investing activities:
Cash received from retraction of
3,271,955,614.05 2,152,485,489.19
investments
Cash received from return on
492,653,360.82 569,743,711.19
investments
Net cash received from disposal of
fixed assets, intangible assets and other 3,995,766.04
long-term assets
Net cash received from disposal of
subsidiaries or other business units
Other cash received relating to 1,167,400.00 9,384,300.00
~ 74 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
investing activities
Subtotal of cash inflows from investing
3,769,772,140.91 2,731,613,500.38
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 157,553,414.54 219,472,454.26
assets
Cash paid for investment 3,621,248,401.74 2,323,189,828.98
Net cash paid to acquire subsidiaries
816,000,000.00 0.00
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
4,594,801,816.28 2,542,662,283.24
investing activities
Net cash flows from investing activities -825,029,675.37 188,951,217.14
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
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 borrowings
Cash paid for interest expenses and
50,360,000.00 100,720,000.00
distribution of dividends or profit
Other cash payments relating to
financing activities
Sub-total of cash outflows from
50,360,000.00 100,720,000.00
financing activities
Net cash flows from financing activities -50,360,000.00 -100,720,000.00
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
-322,858,146.58 -35,950,703.94
equivalents
Add: Opening balance of cash 548,650,832.84 584,601,536.78
~ 75 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
and cash equivalents
VI. Closing balance of cash and cash
225,792,686.26 548,650,832.84
equivalents
~ 76 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
7. Consolidated statement of changes in owners’ equity
2016
Unit: RMB
2016
Equity attributable to owners of the Company
Item Other equity instruments Minority Total owners’
Less: Other General
Specific
Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve risk Retained profit interests equity
Other reserve
shares bonds stock incomes reserve
I. Balance at the end
503,600,000.00 1,294,938,493.19 54,481,886.51 256,902,260.27 2,723,798,990.11 4,833,721,630.08
of the previous year
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the
503,600,000.00 1,294,938,493.19 54,481,886.51 256,902,260.27 2,723,798,990.11 4,833,721,630.08
beginning of the year
III. Increase/
decrease in the 467,099.06 -18,337,408.56 779,270,063.38 345,609,535.80 1,107,009,289.68
period (“-” means
~ 77 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
decrease)
(I) Total
comprehensive -18,337,408.56 829,630,063.38 20,688,034.14 831,980,688.96
incomes
(II) Capital
increased and
reduced by owners
1. Common
shares increased by
shareholders
2. Capital
increased by holders
of other equity
instruments
3. Amounts of
share-based
payments recognized
in owners’ equity
4. Other
(III) Profit
-50,360,000.00 -50,360,000.00
distribution
1.
Appropriations to
surplus reserves
2.
Appropriations to
~ 78 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
general risk
provisions
3.
Appropriations to
-50,360,000.00 -50,360,000.00
owners (or
shareholders)
4. Other
(IV) 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
(V) Specific reserve
1. Withdrawn
for the period
2. Used in the
~ 79 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
period
(VI) Other 467,099.06 324,921,501.66 325,388,600.72
IV. Closing balance 503,600,000.00 1,295,405,592.25 36,144,477.95 256,902,260.27 3,503,069,053.49 345,609,535.80 5,940,730,919.76
2015
Unit: RMB
2015
Equity attributable to owners of the Company
Item Other equity instruments Minority Total owners’
Less: Other General
Specific
Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve risk Retained profit interests equity
Other reserve
shares bonds stock incomes reserve
I. Balance at the end of
503,600,000.00 1,294,938,493.19 16,669,604.07 256,902,260.27 2,108,940,620.43 4,181,050,977.96
the previous year
Add: change of
accounting policy
Correction of errors
in previous periods
Business mergers
under the same control
Other
II. Balance at the
503,600,000.00 1,294,938,493.19 16,669,604.07 256,902,260.27 2,108,940,620.43 4,181,050,977.96
beginning of the year
III. Increase/ decrease in
the period (“-” means 37,812,282.44 614,858,369.68 652,670,652.12
decrease)
~ 80 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
(I) Total
37,812,282.44 715,578,369.68 753,390,652.12
comprehensive incomes
(II) Capital increased
and reduced by owners
1. Common shares
increased by
shareholders
2. Capital increased
by holders of other
equity instruments
3. Amounts of
share-based payments
recognized in owners’
equity
4. Other
(III) Profit distribution -100,720,000.00 -100,720,000.00
1. Appropriations to
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
-100,720,000.00 -100,720,000.00
owners (or shareholders)
4. Other
(IV) Internal
carry-forward of owners’
equity
~ 81 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
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
(V) Specific reserve
1. Withdrawn for
the period
2. Used in the
period
(VI) Other
IV. Closing balance 503,600,000.00 1,294,938,493.19 54,481,886.51 256,902,260.27 2,723,798,990.11 4,833,721,630.08
8. Statement of changes in owners’ equity of the Company
2016
Unit: RMB
2016
Other equity instruments Less: Other
Item Specific Total owners’
Share capital Capital reserve treasury comprehensive Surplus reserve Retained profit
Preferred Perpetual Other reserve equity
stock incomes
~ 82 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
shares bonds
I. Balance at the end of
503,600,000.00 1,247,162,107.35 54,481,886.51 251,800,000.00 2,587,051,422.29 4,644,095,416.15
the previous year
Add: change of
accounting policy
Correction of errors
in previous periods
Other
II. Balance at the
503,600,000.00 1,247,162,107.35 54,481,886.51 251,800,000.00 2,587,051,422.29 4,644,095,416.15
beginning of the year
III. Increase/ decrease in
the period (“-” means -17,166,330.87 720,151,931.34 702,985,600.47
decrease)
(I) Total comprehensive
-17,166,330.87 770,511,931.34 753,345,600.47
incomes
(II) Capital increased
and reduced by owners
1. Common shares
increased by shareholders
2. Capital increased
by holders of other equity
instruments
3. Amounts of
share-based payments
recognized in owners’
equity
~ 83 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
4. Other
(III) Profit distribution -50,360,000.00 -50,360,000.00
1. Appropriations to
surplus reserves
2. Appropriations to
-50,360,000.00 -50,360,000.00
owners (or shareholders)
3. Other
(IV) 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
(V) Specific reserve
1. Withdrawn for the
period
2. Used in the period
(VI) Other
~ 84 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
IV. Closing balance 503,600,000.00 1,247,162,107.35 37,315,555.64 251,800,000.00 3,307,203,353.63 5,347,081,016.62
2015
Unit: RMB
2015
Other equity instruments Less: Other
Item Specific Total owners’
Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Retained profit
Other reserve equity
shares bonds stock incomes
I. Balance at the end of the
503,600,000.00 1,247,162,107.35 16,669,604.07 251,800,000.00 1,990,080,289.98 4,009,312,001.40
previous year
Add: change of
accounting policy
Correction of errors
in previous periods
Other
II. Balance at the
503,600,000.00 1,247,162,107.35 16,669,604.07 251,800,000.00 1,990,080,289.98 4,009,312,001.40
beginning of the year
III. Increase/ decrease in
the period (“-” means 37,812,282.44 596,971,132.31 634,783,414.75
decrease)
(I) Total comprehensive
37,812,282.44 697,691,132.31 735,503,414.75
incomes
(II) Capital increased
and reduced by owners
1. Common shares
increased by shareholders
~ 85 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
2. Capital increased
by holders of other equity
instruments
3. Amounts of
share-based payments
recognized in owners’
equity
4. Other
(III) Profit distribution -100,720,000.00 -100,720,000.00
1. Appropriations to
surplus reserves
2. Appropriations to
-100,720,000.00 -100,720,000.00
owners (or shareholders)
3. Other
(IV) 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
~ 86 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
4. Other
(V) Specific reserve
1. Withdrawn for the
period
2. Used in the period
(VI) Other
IV. Closing balance 503,600,000.00 1,247,162,107.35 54,481,886.51 251,800,000.00 2,587,051,422.29 4,644,095,416.15
~ 87 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Anhui Gujing Distillery Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2016
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
Note 1: Company Profile
Anhui Gujing Distillery Co., Ltd. (hereafter “the Company” or "Company") was the company limited by shares approved by Administration Bureau
of State-owned Property of Anhui province following the approval WanGuoZiGongZi (1996) NO. 053 (皖国资工字(1996)第053号文), Anhui
Gujing Group Co., Ltd. as the sole sponsors, established net assets in the assessment of main production operating assets of its core company
Anhui Bozhou Gujing distillery 377.1677 million transferred into the 155,000,000 state-owned shares, and the registered location was the Bozhou
City of People's Republic of China. The company was registered in the The People's Republic of China on 5 March 1996 and was approved by
People’s Government of Anhui province following the approval WanZhengMin (1996) NO.42 (皖政秘(1996)42 号文). The company convoked the
founding meeting on 28 May 1996, and registrated on 30 May 1996 by Administration for Industry and Commerce of Anhui province. The
registration number of Business License for Enterprise as a Legal Person is: 14897271-1.
The Company has been issued 60,000,000 domestic listed foreign shares (hereafter “B” shares) in June 1996 and 20,000,000 domestic listed
CNY ordinary shares (hereafter “A” shares) in September 1996, the par value of ordinary shares is CNY1.00 per share. Both A share and B share
are listed in Shenzhen Stock exchange.
The headquarters of the company is located in Gujing town, Bozhou city, Anhui province. The company and the subsidiaries (collectively called
“Group”) is mainly engaged in liquor production and sales, it belongs to the food manufacturing industry.
The original registered capital was CNY 235 million, the total amount of shares were 235 million, including state-owned shares 155 million and
domestic listed foreign shares 60 million, the par value is CNY 1 per share.
On 29 May 2006, the shareholder meeting for the Company’s shareholdings reform of A-share market have been discussed and approved the
proposal of the shareholdings reform, and that has been implemented in June 2006. After the Company’s shareholdings reform implemented, all
shares of the Company became floating shares, which including 147,000,000 shares with restrict condition on disposal, represent 62.55% of
total share capital, and 88,000,000 shares without restrict condition on disposal, represent 37.45% of total share capital.
On 27 June 2007, the Company issued the , the 11,750,000
restricted outstanding shares with restrict condition on disposal became non-restricted in stock market, and the conversion date is on 29 June
2007. Hence, outstanding shares with restrict condition on disposal are 135,250,000 shares, representing 57.55% of total share capital, the
share without restrict condition on disposal are 99,750,000 shares, representing 42.45% of total share capital.
On 17 July 2008, the Company issued the , the 11,750,000
restricted outstanding shares with restrict condition on disposal became non-restricted in stock market, and the conversion date is on 18 July
2008. Hence, outstanding shares with restrict condition on disposal are 123,500,000 shares, representing 52.55% of total share capital, the
share without restrict condition on disposal are 111,500,000 shares, representing 47.45% of total share capital.
~ 88 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
On 24 July 2009, the Company issued the , the
123,500,000 restricted outstanding shares with restrict condition on disposal became non-restricted in stock market, and the
conversion date is on 29 July 2009. Hence, all shares of the Company were became outstanding shares without restrict condition on disposal.
According to the approval by China Securities Regulatory Commission (the authorization file No. zhengjianxuke[2011]943), on 15th July 2011, the
Company private issued 16,800,000 shares of ordinary share (A shares) to specific investors, the par value in CNY 1 per share, and the offering
price is CNY 75 per share, the funds raised amounting to CNY 1,260 million, deduct those sundry issuing charges amounting to CNY
32,500,549.73, the actual funds raised net amounting to CNY 1,227,499,450.27. The above funds have been reviewed by Reanda Certified Public
Accountants Co., Ltd., and issued the Capital Verification Report (REANDA YAN ZI[2011]No.1065). After private issued, the share capital was
increased to CNY 251.8 million.
According to the resolution of 2011 annual general meeting of stockholders, every 10 shares transferred to increase 10 shares by capital reserves
used the base of the 251.8 million shares on 31 December, 2011, the total amount of increase by transferring were 251.8 million shares and has
been implemented in 2012. After increase by transferring the registered capital was increased to CNY 503.6 million.
Up to 31 December 2016, the accumulated total amount of issued capital was 503.6 million shares, see Note 6.27.
The company registered in Gujing town, Bozhou city, Anhui province.
The approved business scope of the Company: grain procurement (operation by license), manufacture of distilled spirits, beer, red wine,
facilities for wine making, packaging materials, and glass bottles, alcohol, feeds, grease (limited to the by-products from alcohol manufacture),
development of high-tech, biotechnology development agricultural and sideline products deep processing, sales of goods from own production.
The parent company of the group and ultimate parent company is the Anhui Gujing Group Co., Ltd.
The financial statement is approved by the resolution of board of directors on 26 April, 2017. According to the articles of association, the financial
statements will be submitted to the shareholders meeting for consideration.
The combination scope includes total 21 subsidiaries in 2016, please see Note 8 “Interest in other entities” for details. The combination scope
increase 10 subsidiary than prior year and please see Note 7 “Changes of scope of consolidated financial statements” for details.
Note 2: Basis for preparation of the financial statements
The financial statements of company have been prepared on basis of going concern in conformity with Chinese Accounting Standards for Business
Enterprises and the Accounting Systems for Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of
Finance issued order No.33, the Ministry of Finance revised order No.76) on15 February 2006, and revised Accounting Standards (order 41 of the
Ministry of Finance) and Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 – General Provisions
on Financial Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC).
According to the relevant accounting regulations in Chinese Accounting Standards for Business Enterprises, the company has adopted the accrual
basis of accounting. Except for certain financial instruments which are measured by at fair value, the Company adopts the historical cost as the
principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with
relevant requirements.
~ 89 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Note 3: Statement of compliance with Enterprise Accounting Standards
The financial statements of the company are recognized and measured in accordance with the regulations in the Chinese Accounting Standards for
Business Enterprises and they give a true and fair view of the financial position, business result and cash flow of the Company as of 31 December
2016. In addition, the financial statements of the company comply, in all material respects, with the revised disclosing requirements for financial
statements and the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15—General Provisions on
Financial Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.
Note 4: Signaficant accounting policies and accounting estimates
The company and subsidiaries are mainly engaged in liquor production and sales. The company formulates the specific accounting policies and
accounting estimates for revenue recognition and other transactions and events in accordance with the actual business operation characteristics of
the company and subsidiaries, and provisions of the relevant accounting standard for business enterprises, please see Note 4.23 “Revenue” for
details. The description of significant account judgment and estimates made by management please see Note 4.28 “Significant accounting
judgment and estimates”.
4.1 Accounting period
The accounting period of the Company is classified as interim period and annual period. Interim period refers to the reporting period shorter than a
complete annual period. The accounting period of the Company is the calendar year from 1 January to 31 December.
4.2 Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of assets for processing until. The company has
a 12 -month operating cycle, and its assets and liabilities as liquidity criteria for the classification.
4.3 Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the
Company and its domestic subsidiaries choose CNY as their functional currency. The Company adopts CNY to prepare its functional statements.
4.4 Business combination
A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business combinations
are classified into business combinations involving enterprises under common control and business combinations not involving enterprises under
common control.
4.4.1 Business combination involving entities under common control
A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are
ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of another
enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being
absorbed. Combination date is the date on which the absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being combined at the combination date.
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The difference between the carrying amount of the net assets obtained and the carrying amount of consideration paid for the combination (or the
total face value of shares issued) is adjusted to the capital premium (or share premium) in the capital reserve. If the balance of the capital premium
(or share premium) is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to the combination shall be recognized as an
expense through profit or loss for the current period when incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in which all of the combining enterprises are not
ultimately controlled by the same party or parties both before and after the business combination.
For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another
enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree. Acquisition
date is the date on which the acquirer effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, at the acquisition
date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the
acquirer in respect of auditing, legal services, valuation and consultancy services etc and other associated administrative expenses attributable to
the business combination are recognized in profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities shall be initially recognized as equity securities or liability securities.
The contingent consideration related to the combination shall be booked as combination cost at the fair value at the acquisition date. If, within the
12 months after acquisition, additional information can prove the existence of related information at acquisition date and the contingent
consideration need to be adjusted, goodwill can be adjusted.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired through the business combination shall be measured
by the fair value at the acquisition date. Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the difference shall be accounted for according to the following requirements: (i) the acquirer shall reassess the
measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination;
(ii) if after that reassessment, the cost of combination is still less than the acquirer’s interest in the fair values of the acquiree’s identifiable net
assets, the acquirer shall recognize the remaining difference immediately in profit or loss for the current period.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity with the conditions applied for recognition of
deferred income tax, if, within the 12 months after acquisition, additional information can prove the existence of related information at acquisition
date and the expected economic benefits on the acquisition date arose from deductible temporary difference by the acquiree can be achieved,
relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of the
current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the recognition of deferred income tax assets is related to
the combination.
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For a business combination not involving enterprise under common control, which achieved in stages that involves multiple exchange transactions,
according to “The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and
Article 51 of “Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements” on the “package deal” criterion (see Note
4.5.2), to judge the multiple exchange transactions whether they are the "package deal". If it belong to the “package deal” in reference to the
preceding paragraphs of this section and the Notes described in 4.13 “long-term investment” accounting treatment, if it does not belong to the
“package deal” to distinguish the individual financial statements and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book value of the acquiree's equity investment before the acquisition date and the cost of
new investment at the acquisition date, as the initial cost of the investment, the acquiree's equity investment before the acquisition date involved in
other comprehensive income, in the disposal of the investment will be in other comprehensive income associated with the use of infrastructure and
the acquiree directly related to the disposal of assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or liabilities other than in the corresponding
share of the lead, and the rest into the current investment income).
In the combination financial statements, the equity interest in the acquiree previously held before the acquisition date re-assessed at the fair value
at the acquisition date, with any difference between its fair value and its carrying amount is recorded as investment income. The previously-held
equity interest in the acquiree involved in other comprehensive income and other comprehensive income associated with the purchase of the
foundation should be used party directly related to the disposal of assets or liabilities of the same accounting treatment (that is, except in
accordance with the equity method of accounting in the acquiree is remeasured defined benefit plans other than changes in net liabilities or net
assets due to a corresponding share of the rest of the acquisition date into current investment income).
4.5 Preparation of the consolidated financial statements
4.5.1 The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of control. Control is the power to govern the
financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The scope of consolidation includes the
Company and all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant elements involved in the control of the change, the
company will be re-evaluated.
4.5.2 Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from the date when the control over the net assets and business
decisions of the subsidiary is effectively obtained, and excluded from the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before the date of disposal (the date when control is lost) are
included in the consolidated income statement and consolidated statement of cash flows, as appropriate. For a subsidiary disposed during the
period, no adjustment is made to the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating results and cash flows from the acquisition (the
date when the control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriated; no
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adjustment is made to the opening balance and comparative figures in the consolidated financial statements.
Where a subsidiary was acquired during the reporting period, through a business combination involving enterprises under common control, the
financial statements of the subsidiary are included in the consolidated financial statements. The results of operations and cash flow are included in
the consolidated balance sheet and the consolidated income statement, respectively, based on their carrying amounts, from the date that common
control was established, and the opening balances and the comparative figures of the consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary
adjustments to the financial statements of the subsidiary based on the Company’s own accounting period or accounting policies. Where a
subsidiary was acquired during the reporting period through a business combination not under common control, the financial statements was
reconciliated on the basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group balances and transactions, and any
unrealized profit or loss arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are presented separately in the consolidated balance sheet
within shareholders’/ owners’ equity and net profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented separately
as minority interest in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders’ portion
of the opening balance of shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining equity
investment is re-measured at its fair value at the date when control is lost. The difference between 1) the total amount of consideration received
from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and 2) the carrying amounts of the
interest in the former subsidiary’s net assets immediately before the loss of the control is recognized as investment income for the current period
when control is lost. Other comprehensive income related to the former subsidiary's equity investment, using the foundation and the acquiree
directly related to the disposal of the same assets or liabilities are accounted when the control is lost (ie, in addition to the former subsidiary is
remeasured at the net defined benefit plan or changes in net assets and liabilities resulting from, the rest are transferred to the current investment
income). The retained interest is subsequently measured according to the rules stipulated in the - “Chinese Accounting Standards for Business
Enterprises No.2 - Long-term equity investment” or “Chinese Accounting Standards for Business Enterprises No.22 - Determination and
measurement of financial instruments”. See Note 4.13 Long-term equity investments and Note 4.9 Financial instruments for details.
Where loss of control over a subsidiary results from multiple transactions (agreements), asssessment shall be made as to whether the multiple
agreements shall be viewed as a whole as a single transaction. Multiple agreements giving rise to loss of control over a subsidiary is generally
viewed as a whole as a single transaction if the terms, conditions and economic implications of the multiple agreements satisfy one or more of the
following conditions: 1) the agreements are entered into simultaneously or taking into account the implication of each other; 2) the business
objective cannot be achieved without successful completion of all the agreements; 3)the occurrance of one agreement is dependent on the result of
at least another one agreement; and/or 4) any one single agreement is not recognised as economic and the agreements as a whole is economic.
Where multiple agreements do not satisfy the conditions of being viewed as a single transaction, each agreement shall be treated and accounted
for in accordance with the provisions of disposal of long-term equity investments not resulting loss of control (see Note 4.13.2.4) or loss of control
due to disposal of shares or other events (see the previous paragraph). Where nultiple agreements satisfy the conditions of being viewed as a
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single transaction, each agreement shall be treated and accounted for as a transaction which results in loss of control; differences between the
consideration for disposals prior to loss of control and the net assets proportionate to the shares disposed prior to loss of control are recognised as
other comprehensive income in the consolidated financial statements and transfered to profit or loss at the time of loss of control.
4.6 Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. A joint arrangement is either a joint operation or a joint
venture, depending of the rights and obligation of the Company in the joint arrangement. A joint operation is a joint arrangement whereby the
Company has rights to the assets, andobligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the
Company has rights to the net assets of the arrangement.
The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.
The company, a joint operator, recognizes in relation to its interest in a joint operation:(a)its assets, including its share of any assets held
jointly;(b)its liabilities, including its share of any liabilities incurred jointly;(c)its revenue from the sale of its share of the output arising from the joint
operation;(d)its share of the revenue from the sale of the output by the joint operation; and (e)its expenses, including its share of any expenses
incurred jointly.
When the Company enters into a transaction with a joint operation in which it is a joint operator, such as a sale or contribution of assets, the
Company, prior to disposal of the assets to a third party by the joint operation, recognizes gains and losses resulting from such a transaction only to
the extent of the other parties' interests in the joint operation. When there is evidence of a reduction in the net realizable value of the assets to be
sold or contributed to the joint operation, or of an impairment loss of those assets which is in line with provision stipulated by CAS 8, those losses
are recognized fully by the Company. When there is evidence of a reduction in the net realizable value of the assets to be purchased or of an
impairment loss of those assets, the Company shall recognize its share of those losses.
4.7 Cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having short holding term (normally will
be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
measured reliably and have low risks of change.
4.8 Foreign exchange
4.8.1 Translation in foreign exchange transactions
Transactions denominated in foreign currencies are translated into the functional currency using the transaction-date spot exchange rates. Where a
transaction is conducted purely for the purpose of exchange one currency into another currency, the exchange rate used to translate the foreign
currency into the functional currency is the exchange rate that is actually used for the currency exchange.
4.8.2 Translation of monetary foreign currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet date. All the exchange
differences thus resulted are taken to profit or loss, except for ①those relating to foreign currency borrowings specifically for construction and
acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs, ②hedging accounting,
the exchange difference related to hedging instruments for the purpose of net oversea operating investment is recorded in the comprehensive
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income till the date of disposal and recognized in profit or loss of the period; exchange difference from changes of other account balance of foreign
currency monetary items, ③available-for-trade is recorded into profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate prevailing on the transaction
date, and the amount denominated in the functional currency is not changed. Non-monetary foreign currency items measured at fair value are
translated at the spot exchange rate prevailing at the date when the fair values are determined. The exchange difference thus resulted are
recognized in profit or loss for the current period or as capital reserve.
4.9 Financial instruments
4.9.1 Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction. For a financial instrument which has an active market, the Company uses quoted price in the active market to establish its fair value.
The quoted price in the active market refers to the price that can be regularly obtained from exchange market, agencies, industry associations,
pricing authorities; it represents the fair market trading price in the actual transaction.
For a financial instrument which does not have an active market, the Company establishes fair value by using a valuation technique. Valuation
techniques include using recent arm’s length market transactions between knowledgeable, willing parties, reference to the current fair value of
another instrument that is substantially the same, discounted cash flow analysis and option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at the value of a competitor’s interest rate swap quoted by
a recognised financial institution as at the Company’s balance sheet date in accordance with the principle of consistency.
4.9.2 Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. On initial recognition, the Company’s
financial assets are classified into one of the four categories, including financial assets at fair value though profit or loss, held-to maturity
investments, loans and receivables and available-for-trade financial assets. A financial asset is recognized initially at fair value. In the case of
financial assets at fair value through profit or loss, relevant transaction costs are immediately charged to the profit and loss of the current period;
transaction costs relating to financial assets of other categories are included in the amount initially recognized.
4.9.2.1 Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence
indicating that the enterprise recently manages this portfolio for the purpose of short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging instrument, or a financial guarantee contract, or
a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose
fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one of the following conditions:
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A. the designation eliminates or significantly reduces the inconsistency in the measurement or recognition of relevant gains or losses that would
otherwise arise from measuring the financial instruments on different bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis, and is reported to the enterprise’s key
management personnels. Formal documentation regarding risk management or investment strategy has prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains or losses arising from changes in the fair
value and any dividends or interest income earned on the financial assets are recognized in the profit or loss.
4.9.2.2 Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the
positive intention and ability to hold to maturity. Such kind of financial assets are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition, impairment or amortization are recognized in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life of the financial asset or financial
liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Company shall estimate future cash flow considering all contractual terms of the financial asset or
financial liability without considering future credit losses, and also consider all fees paid or received between the parties to the contract giving rise to
the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
4.9.2.3 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted in an active market. Financial assets
classified as loans and receivables by the Company include note receivables, account receivables, interest receivable dividends receivable and
other receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition,
impairment or amortization is recognized in profit or loss.
4.9.2.4 Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on initial recognition as available for trade, and
financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are
recognized as other comprehensive income and included in the capital reserve, except that impairment losses and exchange differences related to
amortized cost of monetary financial assets denominated in foreign currencies are recognized in profit or loss, until the financial assets are
derecognized, at which time the gains or losses are released and recognized in profit or loss.
Interests obtained and dividends declared by the investee during the period in which the financial assets available-for-trade are held, are
recognized in investment gains.
4.9.3 Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that measured by the fair
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value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment.
4.9.3.1 Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The
difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it
is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial
assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the
reserving date.
4.9.3.2 Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily according to the integrated relevant factors, an
available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value that had been recognized in capital
reserve shall be removed and recognized in profit or loss. The amount of the cumulative loss that is removed shall be difference between the
acquisition cost with deduction of recoverable amount less amortized cost, current fair value and any impairment loss on that financial asset
previously recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value of the financial asset is recovered, and it is objectively
related to an event occurring after the impairment loss was recognized, the initial impairment loss can be reversed and the reserved impairment
loss on available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on available-for-trade debt instrument is
recorded in the current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair value cannot be reliably measured, or impairment loss on
a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument shall not be reversed.
4.9.4 Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
a. the rights to receive cash flows from the asset have expired;
b. the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through arrangement; or
c. the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards
of the asset, or (b) has neither transferred norretained substantially all the risks and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the asset is recognized according
to the extent it exists as financial asset, and correspondent liability is recognized. The extent of existence refers the level of risk by the financial
asset changes the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount of the financial asset transferred;
and (b) the sum of the consideration received from the transfer and any cumulative gain or loss that had been recognized in other comprehensive
income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is allocated between the
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part that continues to be recognized and the part that is derecognized, based on the relative fair value of those parts. The difference between (a)
the carrying amount allocated to the part derecognized; and (b) the sum of the consideration received for the part derecognized and any cumulative
gain or loss allocated to the part derecognized which has been previously recognized in other comprehensive income, is recognized in profit or
loss.
4.9.5 Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss and other financial
liabilities. For financial liabilities at fair value through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the
current period, and transaction costs relating to other financial liabilities are included in the initial recognition amounts.
4.9.5.1 Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at the initial recognition to be measured by the fair
value follows the same criteria as the classification by which financial assets held-for-trade and financial assets designed at the initial recognition to
be measured by the fair value and their changes are recorded in the current profit or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values are adopted for subsequent
measurement. All the gains or losses on the change of fair value and the expenses on dividends or interests related to these financial liabilities are
recognized in profit or loss for the current period.
4.9.5.2 Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market and their fair value cannot be
measured reliably, is subsequently measured by cost Other financial liabilities are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for the current period.
4.9.6 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is discharged or cancelled or has
expired. An agreement between the Company (an existing borrower) and existing lender to replace original financial liability with a new financial
liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of the financial liability
(or part of the financial liability) derecognized the consideration paid (including any non-cash assets transferred or new financial liabilities assumed)
in profit or loss.
4.9.7 Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and
are substantially re-measured at fair value. The gain or loss caused by the fair value change of the hedging instrument which the hedging is highly
efficiency will be recorded into specific period in accordance with the hedging accounting according the hedging relationship. Except for the hedging
above, the resulting gain and loss of other derivatives is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial
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liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded
derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms
as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately
either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair
value through profit or loss.
4.9.8 Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either
to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be
presented separately in the balance sheet and shall not be offset.
4.9.9 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The
consideration received from issuing equity instruments, net of transaction costs, are added to shareholders’ equity. All types of distribution
(excluding stock dividends) made by the Company to holders of equity instruments are deducted from shareholders’ equity. The Company does not
recognize any changes in the fair value of equity instruments.
4.10 Receivables
The receivables by the Company include account receivables, and other receivables.
4.10.1 Impairment of receivables
Receivables are assessed for impairment on balance sheet dates. An impairment allowance for receivables is recognised if any of the following is
present upon assessment:
a. significant financial difficulty of the issuer or obligor; or
b. a breach of contract, such as a default or delinquency in interest or principal payments; or
c. it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
d. other objective evidence indicating impairment.
4.10.2 Impairment allowance for receivables
4.10.2.1 Receivables of individual significance subject to individual assessment and the relevant impairment allowance
Individual receivables equal to or over CNY 2,000,000.00 are classified as receivables of individual significance.
Receivables of individual significance are individually assessed for impairment. Receivables of individual significance assessed as non-impaired
upon individual assessment are incorporated into portfolios of financial assets of similar credit risk characteristics for assessment for impairment
by portfolio. Receivables of individual significance assessed as impaired upon individual assessment are no longer subject to assessment for
impairment by portfolio.
4.10.2.2 Portfolios of receivables of similar credit risk characteristics and the relevant impairment allowance
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A. Classification of portfolios
Receivables of individual insignificance and non-impaired receivables of individual significance upon individual assessment are classified into
portfolios of financial assets on the basis of similarity and relevance of credit risk characteristics. Credit risk characteristics represent the ability of
the issuers or obligors to make payments in accordance with contracts and future cash flows of the relevant assets.Evidence of portfolios：
Portfolio Criteria
Portfolio by age Age of receivables
Related party portfolios Entities within the scope of the consolidation.
B. Impairment allowance for portfolios
Impairment allowance for portfolios is measured with reference to portfolio structure, credit risk characteristics (the ability of the issuers or obligors
to make payments in accordance with contracts) of each portfolio, historical experience, current market economic conditions, and recognised
impairment in each portfolio.
Measurement method for impairment allowance for portfolios
Portfolio Measurement method
Portfolio by age Age analysis method
Related party portfolios No allowance for bad debt
a. Impairment allowance measured by age analysis
Proportion to other receivables
Age group Proportion to accounts receivable (%)
(%)
Less than 1 year (inclusive, same applies to the
following)
Including: 1 to 6 months 1.00 1.00
7 to 12 months 5.00 5.00
1 to 2 years 10.00 10.00
2 to 3 years 50.00 50.00
Over 3 years 100.00 100.00
4.10.2.3 Receivables of individual insignificance subject to individual assessment
Receivables of individual insignificance are individually assessed for impairment is any of the following is present:
there is disagreement with the issuer or obligor; or are subject to litigation; or it is clearly evidential that the issuer or obligor is very likely not
capable of fulfilling its commitments.
When a receivable of individual insignificance is impaired upon individual assessment for impairment, impairment loss is recognised as the excess
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of its carrying amount over the present value of its future cash flows and an impairment allowance of the same amount is recognised.
4.10.3 Reversal of impairment allowance for receivables
After the impairment is recognised, if events subsequent to the recognition of the impairment are objectively evidential that the impairment no
longer exists, the impairment allowance and impairment loss are reversed; however, the reversal shall not cause the carrying amount of the
receivable exceeds its carrying amount as at the reversal date as if no impairment allowance was recognised.
4.11 Inventories
4.11.1 Classification of inventory
The Company’s inventory mainly includes raw materials, semi-finished product, work-in-progress and finished products.
4.11.2 Costing of inventories
Inventories are initially carried at the actual cost. Cost of inventories includes purchase cost, conversion cost and other cost. Cost of issue is
measured using the weighted average method.
4.11.3 Determination of net realisable value of inventories and impairment allowance for inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs
necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost
of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories,
provision for decline in value is made based on categories of inventories. For items of inventories relating to a product line that are produced and
marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from
other items in that product line provision for decline in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below
cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed
and the reversal is included in profit or loss for the period.
4.11.4 Physical inventories are managed by the perpetual inventory taking system.
4.11.5 Amortisation of low value consumables and packaging materials
Low value consumables and packaging materials are fully amortised at the time of issuance.
4.12 Held-for-sale assets
A non-current asset is classified as held-for-sale if all of the following conditions are satisfied:
a. the asset is immediately sellable at its current condition per usual sales term applicable to the type of assets to which it belongs;
b. the Company's has completed official decision to dispose the asset;
c. the Company has entered into irrevokable sales contract with the purchaser; and
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d. the sales will be completed within one year.
Amortisation or depreciation of the held-for-sale asset ceases at the time of classification. The asset is measured at the lower of its book value and
its classification date fair value minus disposal costs upon classification. Held-for-sale non-current assets include individual assets and disposal
groups. If a disposal group satisfy the conditions of the asset group defined by CAS 8 - Asset Impairment and includes goodwill arising from
business combination allocated in accordance with CAS 8 or the disposal group is an operation with an asset group, the disposal group include
goodwill arising from business combination.
Individual non-current assets held for sale and assets of disposal groups held for sale are collectively presented on the (consolidated) statement of
financial position as a line item of current assets. Liabilities of disposal groups held for sale are collectively presented on the (consolidated)
statement of financial position as a line item of current liabilities.
A held-for-sale asset or held-for-sale disposal group is reclassified from held-for-sale when the conditions for classification of the asset (disposal
group) as held-for-sale are no longer satisfied and is measured at the lower of its classification date book value minus cumulative depreciation,
amortisation and impairment as if it has not been reclassified as held-for-sale and it recoverable amount as of the date on which the conditions for
classification of the asset (disposal group) as held-for-sale are no longer satisfied.
4.13 Long-term equity investments
Long-term equity investments in this section refers to the long-term investment through which the Company has control, joint control, or material
influence on the investee. Long-term equity investments through which the Company does not have control, joint control or material influence on
the investee shall be recognised as available-for-sale financial assets or financial assets measured by fair value with changes in fair value
recognised in profit or loss. See Note 4.9 for details.
Joint control is the contractually agreed sharing of control over an economicactivity, and exists only when the strategic financial and operating
decisionsrelating to the activity require the unanimous consent of the parties sharingcontrol. Significant influence is the power to participate in the
financial and operatingpolicy decisions of the investee but is not control or joint control over thosepolicies.
4.13.1 Determination of Investment cost
Long-term equity investment acquired through business combination under common control are measured at the acquirer's share of the
combination date book value of the acquiree's net equity in the ultimate controller's consolidated financial statements. The difference between the
initial cost and cash paid, non-monetary assets transferred and liabilities assumed by is adjusted to capital reserves, and to retained earnings if
capital reserves are insufficient. If the consideration is paid by issuing equity instruments, the initial cost is measured at the acquirer's share of the
combination date book value of the acquiree's net equity in the ultimate controller's consolidated financial statements, with the face value of the
equity instruments issued recognised as share capital and the difference between the intial cost and the face value of the equity instruments issued
adjusted to capital reserves, and to retained earnings if capital reserves is insufficient.For business combination involving entities under common
control achieved through multiple transactions (acquistion in stages), the multiple agreements are assessed to determine whether they should be
viewed as a lump-sum purchase. Where multiple agreements of an acquisition in stages are viewed as a lump-sum purchase, the transactions are
viewed as one transation that acquire the control power. Where multiple agreements of an acquisition fail the conditions of a lump-sum purchase,
long-term equity investment acquired through business combination under common control are measured at the acquirer's share of the combination
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date book value of the acquiree's net equity in the ultimate controller's consolidated financial statements. The difference between the initial cost,
and the book value of the long-term equity investment before combination date and considerations paid to acquire new shares on the combination
date, is adusted to capital reserves, and toretained earnings if capital reserves are insufficient.
Long-term equity investment acquired through business combination not under common control is measured at combination cost on the
combination date. The combination cost includes assets contributed by the purchaser, lialilities iccurred or assumed by, and fair value of the equity
instruments issued by the acquirer. For business combination involving entities not under common control achieved through multiple transactions
(acquistion in stages), the multiple agreements are assessed to determine whether they should be viewed as a lump-sum purchase. Where multiple
agreements of an acquisition in stages are viewed as a lump-sum purchase, the transactions are viewed as one transation that acquire the control
power. Where multiple agreements of an acquisition fail the conditions of a lump-sum purchase, long-term equity investment acquired through
business combination not under common control are measured at the sum of the original book value of the equity investment on the investee and
the new investment cost, which is regarded as the new initial cost of the long-term investment when transferred to cost method. If the original equity
is measured by equity method, not accounting treatment is applied to relevant other comprehensive income temporarily.
Audit, legal services, valuation, and other directly associated administrative expenses incurred by the acquirer are recognised in profit or loss on the
transaction dates.
Long-term equity investments acquired not through business combination are measured at cost on initial recognition. Depending on the way of
acquisition, the cost of acquisition can be the total cash paid, the fair value of equity instrument issued, the contract price, the fair value or book
value of the assets given away in the case of non-monetary asset exchange, or the fair value of the relevant long-term equity investments. The cost
of acquisition of a long-term equity investment acquired not through business combination also includes all directly associated expenses, applicable
taxes and fees, and other necessary expenses. When the Company increase investment to have material influence or joint control, but not control
over the investee, long-term investments are measured at the sum of fair value of initial equity investment and cost of new investment as defined in
CAS22-Recognition and Measurement of Financial Assets.
4.13.2 Subsequent measurement and recognition and measurement of gain or loss
Where a long-term equity investment gives the Company either joint control or significant influence over the respective investee, the investment is
subsequently measured using the equity method.
Where a long-term equity investment gives the Company control over the respective investee, the investment is subsequently measured at cost.
4.13.2.1 Long-term equity investments measured at cost
A long-term equity investment is measured at cost of investment, excluding declared cash dividends or profit pending distribution included in the
consideration paid. Investment income for the relevant period from a long-term equity investment measured at cost is recognised as the Company's
share of the cash dividends or profit declared for distribution by the investee.
4.13.2.2 Long-term equity investments measured using the equity method
When the cost of a long-term equity investment measured using the equity method on initial recognition exceeds the Company's share of the fair
value of the respective investee's net identifiable assets, no adjustment is made to the cost of the investment for the excess. When the Company's
share of the fair value of an investee's net identifiable assets exceeds the cost of the respective long-term equity investment measured using the
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equity method on initial recognition, adjustment is made to the cost of the investment for the difference and the difference is carried to profit or loss
for the period during which the investment is recognised.
Investment income or loss and other comprehensive income for the relevant period from a long-term equity investment measured using the equity
method is measured at the Company's share of the net profit or loss and other comprehensive income of the respective investee for the relevant
period, and the book value of long-term equity investments is adjusted accordingly. If the investee declares profit distribution or cash dividends,
long-term equity investments are reduced by the Company’s share of declared profit distribution or cash dividends in the investee.Long-term equity
investments will be adjusted and capital reserves are recognised with variationsother than net profit or loss, other comprehensive income, and profit
distribution. When computing the Company's share of the net profit or loss of the investee for the relevant period, net profit or loss of the investee
for the relevant period is adjusted, if necessary, for the fair value of the investee's identifiable assets and identifiable liabilities on acquisition and the
Company's accounting policies and accounting period. Investment income and other comprehensive income is recognised accordingly. The
computation of the Company's share of the net profit or loss of the investee for the relevant period also eliminates unrealised profit and lossarising
from transactions between the Company and the investee (a joint venture or associate, whichever is applicable) and contributing or selling assets to
the investee which forms an operation,to the extent of the Company's share calculated by the Company's shareholding in the investee for the
relevant period, except for the unrealised loss resulted from impairment of transferred assets. When contributing assets to the joint venture or
associate by the Company forms an operation and the investor acquires the long-term equity investment without control, long-term equity
investments are measured at fair value of the contributed operations, with the difference between initial investment cost and book value of the
contributed operation fully recognised in profit or loss for the period. When selling assets to the joint venture or associate by the Company forms an
operation, the difference between considerations received and book value of the operation is fully recognised in profit and loss for the period. When
purchasing assets from the joint venture or associate by the Company belongs to an operation, income and losses are fully recognised as specified
in CAS20-Business Combination.
When the Company's share of an investee's net loss exceeds the sum of the carrying amount of the respective long-term equity investment
measured using the equity method and other investments in the investee, the carrying amount of the long-term equity investment and other
investments in the investee is reduced to zero. If the Company is obliged to share loss of the investee after its long-term equity investment and
other investments have been reduced to zero, an investment loss and provision is recognised to the extent of the estimated obligation. If the
investee reports profit in subsequent periods, the Company only recognises its share of profit after its share of profit equals the share of loss not
recognised.
For long-term equity investments in associates and joint ventures which had been held by the Company before its first time adoption of new
accounting standards, where the initial investment cost of a long-term equity investment exceeds the Company’s share in the investee’s net assets
at the time of acquisition, the excess is amortised and is recognised in profit or loss on a straight line basis over the original remaining life.
4.13.2.3 Acquisition of minority interests
If minority interests in an investee is acquired by the Company, during the Company's preparation of the consolidated financial statements, the
difference between the Company's cumulative share of the investees net assets calculated on the basis of the new shareholding in the investee
from the acquisition date (or combination date) and the Company's investment in the investee following the minority interest acquisition is adjusted
to capital reserves, and to retained earnings if capital reserves is insufficient.
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4.13.2.4 Disposal of long-term equity investments
On the consolidated financial statements, when partly disposal of a long-term equity investment in a subsidiary which does not cause loss of control
over the subsidiary, the difference between the consideration for disposal and the net identifiable asset given away proportionate to the disposed
shares in the subsidiary is recognised in equity; partly disposal of a long-term equity investment in a subsidiary which cause loss of control over the
subsidiary is accounted for in accordance with Note 4.5.2.
The difference between the consideration for disposal of long-term equity investments and the carrying amount of the long-term equity investments
disposed is recognised in profit or loss for the period during which the investments are disposed.
When a long-term equity investment measured using the equity method is disposed and the residual equity after disposal is still measured using
equity method, the respective cumulative other comprehensive income recognised in equity proportionate to the disposed investment shall adopt
the same accounting treatment as the investee disposes relevant assets or liabilities directly. Movement in invstee’s equity other than changes in
net profit or loss, other comprehensive income, and profit distribution is recognised in profit or loss proportionally.
When a long-term equity investment measured using the cost method is disposed and the residual equity after disposal is still measured using cost
method, other comprehensive income,which is recognised by equity method or recognition and measurement applicable to financial instruments
prior to the Company's acquisition of control over the investee, shall adopt the same accounting treatment as the the investee disposes relevant
assets or liabilities directly on the date of loss of control, and profit or loss is recognised proportionally. Movement in invstee’s equity other than
changes in net profit or loss, other comprehensive income, and profit distribution is recognised in profit or loss proportionally.
Where the Company's control over an investee is lost due to partial disposal of investment in the investee and the Company continues to have
significant influence over the investee after the partial disposal, the investment is measured by equity method in the Company's separate financial
statements; where the Company's control over an investee is lost due to partial disposal of investment in the investee and the Company ceases to
have significant influence over the investee after the partial disposal, the investment is measured in accordance with the recognition and
measurement principles applicable to financial instruments in the Company's separate financial statements and the difference between the fair
value and book value of the remaining investment at the date of loss of control is recognised in profit or loss. Cumulative other comprehensive
income relevant to the investment, which is recognised by equity method or recognition and measurement principles applicable to financial
instruments prior to the Company's acquisition of control over the investee,shall adopt the same accounting treatment as the the investee disposes
relevant assets or liabilities directly on the date of loss of control, The investee's equity movement other than changes in net profit or loss, other
comprehensive income and profit distribution, as a result of accounting by equity method, is reocgnised in profit or loss when control is lost. Where
the remaining investment is measured by equity method, the fore-mentioned other comprehensive income and other equity movement are
recognised in profit or loss proportionate to the disposal; Where the remaining investment is measured in accordance with the recognition and
measurement principles applicable to financial instruments, the fore-mentioned other comprehensive income and other equity movement are fully
recognised in profit or loss.
Where the Company's joint control or significant influence over an investee is lost due to partial disposal of investment in the investee, the
remaining investment in the investee is measured in accordance with the recognition and measurement principles applicable to financial
instruments, the difference between the fair value and the book value of the remaining investment at the date of loss of joint control or significant
influence is recognised in profit or loss.Cumulative other comprehensive income relevant to the investment, which is recognised by equity method
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or recognition and measurement principles applicable to financial instruments prior to the Company's acquisition of control over the investee, shall
adopt the same accounting treatment as the the investee disposes relevant assets or liabilities directly on the date of loss of control, The investee's
equity movement other than changes in net profit or loss, other comprehensive income and profit distribution, as a result of accounting by equity
method, is reocgnised in profit or loss when control is lost.
Where the Company's control over an investee is lost through multiple disposals and the multiple disposals can be viewed as a lum-sum
transaction, the multiple disposals is accounted for one single transaction which results in the Company's loss of control over the investee.
Difference between the consideration received and the book value of the investment disposed at each time of disposal is recognised in other
comprehensive income and reclassified in full to profit or loss at the period when control over the investee is lost.
4.14 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. Investment property is initially measured at cost. Subsequent expenditures related to an
investment real estate are likely to flow about the economic benefits of the asset and its cost can be measured reliably, is included in the cost of
investment real estate. Other subsequent expenditure in the profit or loss when it incurred.
The Group uses the cost model for subsequent measurement of investment property, and in accordance with the depreciation or amortization of
buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in Note 20 “Non-current and non-financial assets
impairment".
Occupied real estate for investment property or investment property is transferred to owner-occupied real estate or stock conversion as the
recorded value after the conversion, according to the book value before the conversion.
Investment property change into the Owner-occupied real estate, since the change of date for the investment property is transferred to fixed assets
or intangible assets. Change the owner-occupied property held to earn rentals or for capital appreciation, since the change of date, the fixed assets
or intangible assets to investment property. Conversion occurs when converted to investment property using the cost model, as the book value
before the conversion of the recorded value after the conversion; converted to investment property measured at fair value model, the fair value of
the conversion date as the recorded value after conversion.
Derecognised when the investment property is disposed of or permanently withdrawn from use and the expected economic benefits can not be
obtained from the disposal of investment property. Proceeds on disposal of investment property is sold, transferred, retired or damaged through
profit or loss after deducting the book value and related taxes.
4.15 Fixed assets
4.15.1 Definition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities, rendering labor service, renting or business
management and their useful life is in excess of one fiscal year.
4.15.2 Depreciation of fixed assets
Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial measurement. From the following month of
state of intended use, depreciation method of the straight-line method is used for different categories of fixed assets to take depreciation. The
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recognition of the classification, useful life and estimated residual rate are as follows:
Category Expected useful life Estimated residual value (%) Depreciation (%)
Houses and building 8.00-35.00 3.00-5.00 2.70-12.10
Machineries 5.00-10.00 3.00-5.00 9.50-19.40
Vehicles 4.00 3.00 24.25
Administrative equipment and others 3.00 3.00 32.33
Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal of the asset less the estimated
costs of disposal amount, assuming the asset is out of useful life and state the expected service life in the end.
4.15.3 Assessment for impairment and impairment allowance
Impairment and provisions of fixed assets are disclosed on Note 4.20 Impairment of non-current and non-financial assets.
4.15.4 Recognition and measurement of fixed assets held under financial lease
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually
be transferred.
Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for the fixed assets owned by the
Company. If it can be reasonably determined that the ownership of the leased assets can be obtained at the end of the lease period, the leased
assets are depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms and the useful lives
of the leased assets.
4.15.5 Other relevant information
A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Company and the cost of the asset
can be measured reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the
fixed asset, and the carrying amount of the component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall
be recognized in profit or loss in the period in which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation methods of the fixed asset at least on an annual
base. Any change is regarded as change in accounting estimates.
4.16 Construction in progress
The cost of construction in progress is measured at the actual expenditure incurred, including construction expenditure and capitalisation of
borrowing costs and other applicable costs incurred prior to the completion. An item of construction in progress is reclassified to fixed asset upon
completion.
See Note 4.20 for details of assessment for impairment of construction in progress and impairment allowance for construction in progress.
4.17 Borrowing costs
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Borrowing costs include interests on loans, amortisation of discount or premium, ancillary expenses, and foreign exchange difference on loans
denominated in foreign currencies. Borrowing costs directly associated with the acquisition of construction of a qualifying asset are eligible for
capitalisation. Capitalisation starts when expenditure on the qualifying asset is incurred, borrowing costs are incurred, or production or
construction of the qualifying asset for its intended use or sales is started, whichever is later. Capitalisation stops when the qualifying assets reach
the condition of its intended use or sales. All other borrowing costs are recognised in profit or loss for the period during which they are incurred.
When a loan is taken out specifically for the construction of a particular qualifying asset, the interest expense capitalised for a particular period is
the residual amount after deducting interest income from unused facilities for the period and/or income from temporary investment of the unused
facilities for the period from the interest expense incurred for the period. Borrowing costs on general purpose financing is calculated by multiplying
the weighted average of the excess of cumulative capital expenditure over the designated financing facilities with the capitalisation rate of general
purpose financing. Capitalisation rate of general purpose financing is calculated as the weighted average of the interest rates of general purpose
financing.
Foreign exchange difference on designated financing denominated in foreign currencies incurred during the capitalisation period is wholly
capitalised. Foreign exchange difference on general purpose financing denominated in foreign currencies is recognised in profit or loss for the
period during which it is incurred.
A qualifying asset is an item of fixed assets, investment property, inventories, etc. which requires substantial period of time for the construction or
production for its intended use of sales.
If the construction or production of a qualifying asset stops for a period longer than three months, capitalisation of borrowing costs is suspended
until the construction or production is resumed.
4.18 Intangible assets
4.18.1 Intangible asset
An intangible asset is an identifiable non-monetary asset without a physical form which is owned or control by the Company.
Intangible assets are measured at cost on initial recognition. If it is probable that economic benefits associated with expenditure directly
associated with an item of intangible assets will flow to the Company and the cost of the expenditure can be reliably measured, the expenditure is
measured as part of the intangible asset's initial cost; all other expenditure is recognised in profit or loss for the period during which it is incurred.
Land use rights acquired are generally recognised as intangible assets. In the case of self-constructed building, the costs of acquiring the
respective land use right(s) and the costs of building construction are separately recognised and measured as intangible assets and fixed assets
respectively. In the case of purchased building, the costs of acquisition are allocated to land use right(s) and building; if the reasonable allocation
is impossible, the costs of acquisition as a whole are recognised and measured as fixed assets.
For an item of intangible assets which is with a finite useful life, the residual amount after deducting its estimated residual value and previously
recognised impairment from its cost is amortised over its estimated remaining useful life using the straight-line method starting from the month in
which it reaches the conditions of its intended use of sales. Intangible assets with infinite useful life are not amortised.
Useful lives of intangible assets are review on each balance-sheet date. If circumstances indicate that there is a change in the useful life of an
item of intangible assets with a finite useful life, a change in accounting estimates is carried out. If circumstances indicate that the useful life of an
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item of intangible assets with infinite useful life becomes finite, the useful life of the intangible asset is estimated and the intangible asset is
amortised accordingly.
4.18.2 Research and development expenditure
A research and development project is divided into research stage and development stage.
Expenditure incurred during the research stage is recognised in profit or loss for the period during which it is incurred.
Expenditure incurred during the development stage is recognised as intangible assets if all of the following conditions are satisfied:
a. it is technically feasible to complete the intangible asset so that it can be used or sold; and
b. the Company has clear intention to complete the intangible asset and to use it or sell it; and
c. it is evidential that the intangible asset will generate economic benefits either by selling the intangible asset itself or the goods produced by the
intangible asset or by using it internally; and
d. there are sufficient technical, financial and other resources to complete the intangible asset and the Company is able to use it or sell it, and
e. expenditure incurred in the development stage of the intangible asset can be reliably measured.
Where a research and development project cannot be separated into the research stage and development stage, all expenditure incurred for the
project is recognised in profit or loss for the period during which it is incurred.
4.18.3 Assessment for impairment and impairment allowance
See Note 4.20 for details of assessment for impairment of intangible assets and impairment allowance for intangible assets.
4.19 Deferred charges
An item of deferred charges is an expense incurred which brings economic benefits to the Company for a period exceeding one year starting from
transaction date. An item of deferred charges is amortised over its estimated useful life using the straight-line method.
4.20 Impairment of non-current assets
Non-current non-monetary assets, such as fixed assets, construction in progress, intangible assets with finite useful life, investment property
measured by cost, and long-term equity investments in subsidiaries, joint ventures and associates, are assessed for impairment on each
balance-sheet date. If circumstances on a balance-sheet date indicate that a non-current non-monetary asset is impaired, the recoverable amount
of the asset is estimated. The recoverable amounts of goodwill, intangible assets with infinite useful live and intangible assets which have not yet
reached the conditions of their intended use or sales are estimated at least once a year regardless of whether there is indication of impairment.
If the carrying amount of a non-current non-monetary asset exceeds its estimated recoverable amount, the excess of the carrying amount over the
estimated recoverable amount is recognised as impairment allowance and an impairment loss of the same amount is recognised. The estimated
recoverable amount of an asset is the higher of the residual amount after deducting disposal expense of the asset from its fair value and the
present value of its future cash flows. Where there is a sales contract for an asset and the contract is entered into for an arm's length transaction,
the fair value of the asset is the contract price; where there isn't a sales contract for an asset but there is an active market for it, the fair value of
the asset is price offered by the buyer; where there is neither a sales contract nor an active market for an asset, the fair value of the asset is best
estimate based on all available information. The disposal cost of an asset includes legal expenses, applicable taxes and fees and transportation
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costs directly associated with the asset's disposal and all direct costs necessary to bring the asset to its sellable condition. The present value of an
asset's future cash flows is calculated by multiplying the cash flows arising from continual use of the asset and its disposal by an appropriate
discount rate. Impairment allowance is generally calculated on the basis of individual assets. If it is not possible to estimate the recoverable
amount of an individual asset, the recoverable amount of a cash-generating unit to which the asset belongs is estimated. A cash-generating unit is
the smallest combination of assets that is capable of cash flow generation.
Goodwill separately presented on the (consolidated) financial statements is allocated to cash-generating units or groups of units that are expected
to benefit from the synergy of business combination for impairment testing. Where the recoverable amount a cash-generating unit (or group of
units) is lower than its carrying amount, an impairment loss is recognised. The impairment loss is firstly allocated to the goodwill allocated to the
unit (or group of units) and then to individual assets pro rota on the basis of the carrying amount of each asset in the unit (or group of unites)
Impairment loss recognised in accordance with this section is irreversible in subsequent periods.
4.21 Employee Benefits
The employee benefits of the company include short-term employee benefits, post-employment benefits, termination benefits and other long-term
employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health insurance , maternity insurance, work injury
insurance, housing funds, labor union funds, employee education funds, non-monetary benefits and etc. Short-term employee benefits are
recognised as liabilitiesand profit or loss account or the costs associated with the asset during the accounting period when employees actually
provide services.The non -monetary benefits are measured at fair value.
Post-employment benefits include defined contribution plans and defined benefit plans. Defined contribution plan which includes the basic pension,
unemployment insurance and annuities shall be recognised as cost of related assets or profit or loss.
When the Company terminates the labor relationship with employees prior to the employment contracts, or encourages employees to accept
voluntary redundancy compensation proposals in this company, a provision shall be recognised for the compensation arising from the termination
of employment relationship with employees at the time when the Company can not unilaterally withdraw layoff proposal termination benefits
provided due to termination of employment, or the company ensures the costs related to the payment for termination benefits related to the
restructuring, which one is early to confirm employee benefits liabilities, and recorded as profit or loss. However, if termination benefits can not be
fully paid after twelve months of the reporting date the liability shall be processed in accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits. The salaries and insurance to be paid from the date when employees stop
providing services to the date of normal retirementshall be recognised in profit or loss (termination benefits) when satisfying the requirements of a
provision.
Other long-term employee benefits provided by the company to employees that is in line with defined contribution plans shall adopt the accounting
treatment in accordance with defined contribution plans, otherwise the accounting treatment of defined benefit plans.
4.22 Provisions
A contingent liability is recognised as provision if all or the following conditions are satisfied:
a. it is a present obligation assumed by the Company; and
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b. it is probable that the fulfillment of the obligation will cause economic benefit flows from the Company; and
c. the amount of the obligation can be reliably measured.
A provision is measured on a balance-sheet date as the best estimate of the amount that is required for the fulfillment of the present obligation
after taking into account of the risks and uncertainty associated with the respective contingent events and the time value of money.
If the amount required for settlement of a provision is wholly or partly reimbursed by a third party, the reimbursement is recognised separately as
an asset to the extent of the carrying amount of the provision if it is probable that the reimbursement becomes receivable.
4.23 Revenue
4.23.1 Revenue from sales of goods
Revenue arising from sales of goods are recognised if all of the following conditions are satisfied: significant risks and rewards attached to the
ownership of the goods have been transferred to the buyer; and the Company neither retains continual involvement with management generally
associated with the ownership of the goods nor exercise effective control over the goods sold; and the amount of revenue can be reliably
measured; and it is probable that economic benefits arising from the sales will flow to the Company; and expenses incurred or to be incurred
associated with the goods sold can be reliably measured.
Revenue arising from domestic sales of goods is recognized when goods are dispatched and delivered to the buyer, when significant risks and
rewards attached to the ownership of the goods sold are passed to the buyer, when neither continual involvement in the rights normally associated
with the ownership of the goods sold nor effective control over the goods controls are retained, when revenue arising from the goods sold is
reliably measurable, when inflow of future economic benefits is probable, and when cost incurred or to be incurred associated with the goods sold
is reliably measurable. Revenue arising from non-domestic sales of goods is recognized when goods are loaded on board and when the export
clearance with the custom is completed.
4.23.2 Revenue from rendering of services
When the outcome of service rendered can be reliably estimated, revenue arising from rendering of the service is recognised based on
percentage of completion on the respective balance-sheet date. The percentage of completion of service rendered is determined by the proportion
that costs incurred to date bear to the estimated total costs.
The outcome of service rendered can be reliably estimated if all of the following conditions are satisfied: a. the amount of revenue can be reliably
measured; b. it is probable that associated economic benefits will flow to the Company; c. the percentage of completion of service rendered can
be reliably measured; and d. costs incurred to date and to be incurred can be reliably measured.
When the outcome of service rendered cannot be reliably estimated, revenue is recognised to the extent that costs incurred to date and to be
incurred are expected to be reimbursed and costs incurred to date are recognised in profit or loss for the periods during which they are incurred.
When costs incurred are not expected to be reimbursed, no revenue is recognised.
If a contract entered into by the Company and a counter party involves both sales of goods and rendering of services and revenue arising from
goods sold and services rendered can be distinguished, revenue from sales of goods and rendering of services are separately accounted for; if,
however, revenue arising from goods sold and services rendered cannot be distinguished or can be distinguished but cannot be separately
measured, all revenue is accounted for as revenue arising from sales of goods.
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4.23.3 Royalty income
Royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement.
4.23.4 Interest income
Interest income is determined by the length of time over which the Company's finance resources are used by other parties using the effective
interest rate method.
4.24 Government Grants
A government grant is a transfer of monetary and non-monetary assets from the government to the Company for no consideration, excluding
resources transferred to the Company by the government in the capacity of shareholder. Government grants include grants related to assets and
grants related to income.
Government grants obtained by the Company which are relevant to construction or acquisition of long-term assets are classified as asset-related
government grants; all other government grants are classified as revenue-related government grants. For government grants without speficied
beneficiary, the Company performs classification in accordance with the following criteria.
a. Where a grant is obtained for a specified project, the grant is spitted into asset-related and revenue related portions proportionate to the project's
investment to expense ratio; the classification is reviewed on each balance sheet date and revised if necessary.
b. Where a grant is obtained for general purpose, the grant as a whole is classified as a revenue-related government grant.
If a government grant is in the form of monetary assets, it is measured at the amount received or receivable. If a government grant is in the form of
non-monetary assets, it is measured by fair value of the assets; if the fair value of the assets granted cannot be reliably measured, the grant is
measured by nominal value of the assets and is recognised immediately in profit or loss for the relevant period.
In general, the Company recognises a government grant when it is actually received and measures at the amount actually received. However, a
government grant may be recognised as receivable if it is objectively evidential on the reporting date that conditions for the grant receipt are
satisfied and that the grant is receivable. A government grant is recognised as receivable if all following conditions are satisfied:
a. the amount of the grant is expressly stipulated in official publication by the authorised governmental agency or can be reasonably estimated in
accordance with fiscal pronouncement issued by the authorised governmental agency and the estimate is not subject to significant uncertainty;
b. the grant is offcially disclosed as part of publicly disclosed fiscal subsidised projects by the local fiscal government bodies in accordance with the
Government Information Disclosure Directives and is managed in accordance with the fiscal plan published and the management of the grant if not
entity specific, ie. every eligible entity is entitled to apply;
c. the term for payment is expressly stipulated in the offical pronouncement and the payment is backed by fiscal planning so that it is reasonable to
expect receipt within the term of the payment; and
d. other conditions (in applicable) need to be satisfied taking into account the Company's circumstances.
Grants related to assets are recognised as deferred income and amortised over the useful life of the relevant assets using the straight-line method.
A grant related to income is recognised as deferred income if it is related to expenses or loss to be incurred in the future and is carried to profit or
loss for the period during which the relevant expenses or loss are recognised; it is recognised in profit or loss for the period during which it is
received or becomes receivable if it is related to expenses or loss already incurred.
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Where a recognised grant becomes repayable, the amount repayable is firstly charged to the remaining deferred income (if any); the remaining
amount after charge to deferred income is recognised in profit or loss for the period during which it becomes repayable.
4.25 Deferred tax assets and deferred tax liabilities
4.25.1 Current income tax
The current income tax liability (asset) on a balance-sheet date is measured at the amount of current income tax payable (receivable) computed in
accordance with the relevant tax law. Current income tax expense is computed on the basis of taxable profit (loss) which is the amount after the
adjustment of the relevant accounting profit (loss) in accordance with the relevant tax law.
4.25.2 Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are recognised on an accrual basis for the temporary difference between the carrying amounts of
assets and liabilities and their tax bases and the temporary difference arising from difference in recognition criteria for assets and liabilities between
CAS and relevant tax provisions.
No deferred tax liability is recognised for the taxable temporary difference arising from the initial recognition of goodwill and the initial recognition of
assets and liabilities acquired or assumed resulting from transactions which are not business combination and which do not have impact on both
accounting profit and taxable profit (deductable tax loss) at the time of their occurrence. Similarly, deferred tax liability is not recognised for taxable
temporary difference associated with investments in subsidiaries, associates and joint ventures if the Company can control the reverse of the
temporary difference and it is probable that the temporary difference is not expected to reverse in the foreseeable future. Except for the
circumstances described hereabove, deferred tax liability is recognised for all other taxable temporary difference.
No deferred tax asset is recognised for the deductable temporary difference arising from the initial recognition of assets and liabilities acquired or
assumed resulting from transactions which are not business combination and which do not have impact on both accounting profit and taxable profit
(deductable tax loss) at the time of their occurrence. Similarly, deferred tax asset is not recognised for deductable temporary difference associated
with investments in subsidiaries, associates and joint ventures if the Company can control the reverse of the temporary difference and it is probable
that the temporary difference is not expected to reverse in the foreseeable future. Except for the circumstances described hereabove, deferred tax
asset is recognised for all other deductable temporary difference to the extent that it is probable that taxable profit will be available against which
the deductible temporary difference can be utilised.
Deferred tax asset is recognised for deductable tax loss and tax credit carrying forward to the extent that it is probable that taxable profit will be
available against which the deductable tax loss and tax credit carrying forward can be utilised.
Deferred tax assets and deferred tax liabilities are measured on a balance-sheet date on the basis of tax rates expected to be applicable in
accordance with relevant tax law at the time when the relevant assets are recovered or relevant liabilities settled.
The carrying amount of deferred tax assets is reviewed on each balance-sheet date. If it is probable that insufficient taxable profit is available to
utilise the deferred tax assets, the carrying amount of deferred tax assets is reduced. When it is probable that sufficient taxable profit becomes
available after the carrying amount of deferred tax assets has been reduced, the reduction is reversed.
4.25.3 Income tax expenses
Income tax expenses include current income tax expenses and deferred income tax expenses.
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Gujing Distillery Original Chinese Spirits Annual Report 2016
All current income tax expenses (credit) and deferred income tax expenses (gains) are recognised in profit or loss for the relevant period except for
a. current income tax and deferred income tax on transactions and events which are accounted for in other comprehensive income or directly in
equity, which are included in other comprehensive income or directly recognised in equity depending on the treatment of its underlying transactions
and events, and b. deferred income tax arising from business combination, which is accounted for as an adjustment to the carrying amount of the
respective goodwill.
4.25.4 Offsetting of income tax
A current income tax liability and current income tax asset are presented on (consolidated) financial statements after netting only if the Company is
permitted by law to settle the asset and liability net in cash and is planning to do so or to simultaneously recover the asset and settle the liability.
A deferred tax asset and deferred tax liability are presented on (consolidated) financial statements after netting only if all of the following conditions
are satisfied: the Company is permitted by law to settle the current asset and liability related to an income tax net in cash; and the deferred tax
asset and deferred tax liability arising from that income tax is levied by the same tax authority on the same entity or on different entities but the
relevant entities are planning to settle the underlying income tax net in cash or simultaneously recover the relevant assets and settle the relevant
liabilities during each future period during which significant deferred tax assets and deferred tax liabilities are reversed.
4.26 Lease
A financial lease is a lease which in substance transfers all risks and rewards attached to the ownership of the leased asset to the leasee although
the ownership of the leased asset ultimately may or may not be transferred. An operating lease is any lease that does not fall within the meaning of
a financial lease.
4.26.1 Operating lease to which the Company is the leasee
Lease payments for a operating lease to which the Company is the leasee is amortised over the lease term using the straight-line method and
recognised in the cost of the relevant asset or as expense, whichever is applicable. Initial expenses incurred for activities directly attributable to the
lease are recognised in profit or loss for the period during which they are incurred. Contingent rental payments are recognised in profit or loss when
they are incurred.
4.26.2 Operating lease to which the Company is the leasor
Rental income from an operating lease to which the Company is the leasor is amortised over the lease term using the straight-line method.
Significant initial expenses incurred for activities directly attributable to the lease are capitalised at the time when they are incurred and amortised
over the lease term in the same manner as the amortisation of rental income; insignificant expenses initial expenses incurred for activities directly
attributable to the lease are recognised in profit or loss for the period during which they are incurred. Contingent rental income is recognised in
profit or loss when it is received or becomes receivable.
4.26.3 Financial lease to which the Company is the leasee
At the commencement of a financial lease to which the Company is the Leasee, the lower of the lease-commencement-date fair value of the leased
asset and the present value of the minimum lease payment is recognised as the cost of the leased asset; the minimum lease payment is
recognised as a long-term payable; and the excess of the long-term payable over the amount recognised as the cost of the leased asset is
recognised as unrecognised lease expenditure. Expenses incurred during the negotiation and signing of the lease contract for activities directly
attributable to the lease are recognised as part of the cost of the leased asset. The residual amount after deducting the unrecognised lease
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Gujing Distillery Original Chinese Spirits Annual Report 2016
expenditure from the long-term payable is divided into non-current liability and non-current liability due within one year depending on maturity and
presented on (consolidated) financial statements separately.
The unrecognised lease expenditure is amortised over the lease term using the effective interest rate method and the amortisation is recognised as
lease expense in profit or loss for the relevant period. Contingency lease rental is recognised in profit or loss when it is incurred.
4.26.4 Financial lease to which the Company is the leasor
At the commencement of a financial lease to which the Company is the leasor, the sum of the minimum lease rental receivable and the initial
expenses incurred for activities directly attributable to the lease is recognised as the initial amount of the respective financial lease rental receivable;
unguaranteed residual value is recorded, if any; the excess of the present value of the sum of the minimum lease rental receivable, the initial
expenses incurred for activities directly attributable to the lease and the unguaranteed residual value over the sum itself is recognised as
unrecognised lease income. The residual amount after deducting the unrecognised lease income from the financial lease rental receivable is
divided into non-current receivable and non-current receivable due within one year depending on maturity and presented on (consolidated) financial
statements separately.
The unrecognised lease income is amortised over the lease term using the effective interest rate method and the amortisation is recognised as
lease income in profit or loss for the relevant period. Contingency lease rental income is recognised in profit or loss when it is received or becomes
receivable.
4.27 Changes in major accounting policies and accounting estimates
4.27.1 Change of accounting policies
There is no significant change of accounting policies for the company during the reporting period.
4.27.2 Change of accounting estimates
There is no significant change of accounting estimates for the company during the reporting period.
4.28 Significant account judgment and estimates
During the application of accounting policies, judgements, estimates and presumption need to be made for elements of financial statements which
cannot be precisely measured due to inherent uncertainty existing in operation activities. The judgements, estimates and presumption are made on
the basis of the Company's past experience and other relevant factors. The exercise of judgements, estimates and presumption has impact on the
measurement of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities on the balance-sheet date. However, the
inherent uncertainty of the judgements, estimates and presumption may result in future significant adjustments to be made to the measurement of
the affected assets and liabilities.
The judgements, estimates and presumption are reviewed regularly on the basis of going concern. Where a change in accounting estimates is
applicable, its impact on financial statements is recognised in the period during which the change occurs if the change has impact on the financial
statements for that period only; and in subsequent periods if the change also has impact on the financial statements for subsequent periods.
Significant elements of financial statements and areas that are subject to judgements, estimates and presumption on the balance-sheet date
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Gujing Distillery Original Chinese Spirits Annual Report 2016
include the following.
4.28.1 Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule stipulated in the Accounting Standard for Business
Enterprises No. 21--Leasing. The management shall make analysis and judgment on whether the risks and rewards related to the title of leased
assets has been transferred to the leaser, or whether the Company has substantially held the risks and rewards related to the ownership of leased
assets.
4.28.2 Recognition of impairment allowance for receivables
In accordance with accounting policies applicable to receivables, loss arising from impairment of receivables is accounted for by allowance.
Impairment of receivables are assessed on the basis of the collectability of receivables and the assessment requires judgements and estimates
exercised by the management. Difference between actual results and the estimates will have impact on the carrying amount of receivables and the
recognition and reverse of impairment allowance for receivable for the period during which the estimates are changed.
4.28.3 Recognition of impairment allowance for inventories
In accordance with accounting policies applicable to inventories, impairment allowance for inventories is recognised for inventories of which the
carrying amount exceeds the net realisable value and inventories which are obsolete or have impaired salability. Loss arising from impairment of
inventories is measured on the basis of the salability and net realisable value of the respective inventories. Judgements and estimates regarding
impairment allowance for inventories require conclusive evidence obtained by the management and consideration of the purpose of inventory
holding, impact of post balance-sheet-date events and other relevant factors. Difference between actual results and the estimates will have impact
on the carrying amount of inventories and the recognition and reverse of impairment allowance for inventories for the period during which the
estimates are changed.
4.28.4 Fair value of financial instruments
Fair value of financial instruments which are not quoted in an active market are measured by valuation techniques such as the discounted cash flow
model, etc. Estimates of future cash flows, credit risks, market movement and relevance and choice of the appropriate discount rates are required
for the measurement. Inherent uncertainty is inevitable in making these estimates and the change of estimates will have impact of the fair value of
the respective financial instruments.
4.28.5 Impairment of financial assets available-for-sale
Impairment of available-for-sale financial assets and hence recognition of impairment loss recognised in profit or loss general depend on estimates
and presumption made by the management. In making the judgements and estimates, the Company assesses the extent and duration that the cost
of an available-for-sale financial asset exceeding its fair value and considers the investee's financial position and short-term prospects, including
factors such as industry environment, technology advances, credit rating, default rates, and risks faced by peer entities.
4.28.6 Impairment of non-financial, non-current assets
Non-current assets are assessd for indication of impairment on each balance-sheet date. In addition, intangible assets with infinite useful life are
subject to impairment testing on each balance-sheet date and whenever there is evidence indicating impairment; other non-financial non-current
assets are subject to impairment testing only if there evidence indicating that the carrying amount becomes non-collectible.
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Impairment exists when the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, which is higher of the residual
amount after deducting necessary expenses for disposal from its fair value and the present value of its future cash flows.
An asset's residual amount after deducting necessary expenses for disposal is determined by reference to the residual amount after deducting the
incremental costs to dispose the asset from the selling price provided by contracts for sales of similar assets or the observable market price of
similar assets.
When estimating the present value of future cash flows of an asset or cash-generating unit, significant judgements have to be made regarding the
production capacity, selling price, relevant operating costs of the asset or cash-generating unit and relevant discount rates for discounting the cash
flows. The Company considers all available relevant information when determining the recoverable amount, including estimates regarding future
production capacity, selling price and relevant operating costs made on the basis of reasonable and supportive presumption.
Goodwill is assessed for impairment at least annually. The assessment involves estimate of the present value of the future cash flows associated
with the assets or groups of assets to which goodwill has been allocated. The estimate takes into account the future cash flows associated with the
assets or groups of assets to which goodwill has been allocated and the applicable discount rates for cash flow discounting.
4.28.7 Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated (amortised) over their useful lives using the straight-line method after taking
into account of their residual value. Useful lives of these assets are reviewed regularly for the purpose of determining the depreciation and
amortisation recognised for each period. Useful lives are determined on the basis of the Company's past experience on similar assets and expected
new technology development. If existing estimates change significantly, adjustment is made to the depreciation and amortisation for future periods.
4.28.8 Deferred tax assets
All unutilised tax loss are recognised as deferred tax assets to the extent it is probable that taxable profit will be available against which the
deductable tax loss can be utilised. Significant judgements are required to estimate the timing and amount of future taxable profit and to consider
tax planning strategy so as to determine the amount of deferred tax assets to be recognised.
4.27.9 Income tax
During the ongoing operation of the Company, there is uncertainty in the treatment for and amounts of certain transactions for income tax purpose.
For example, the deductibility of certain expenses for income tax purpose is subject to the approval by relevant tax authority. If the ultimate outcome
of the uncertainty differs from the original estimate, the difference will have impact on the current income tax expenses and deferred income tax
expenses for the relevant period.
4.28.10 Accrued liabilities
Provision is recognised for product warranty, onerous contract, buy-back obligation, etc. on the basis of contract terms, current knowledge and past
experiences. A provision is recognised when a contingent event has resulted in a present obligation, the fulfillment of the present obligation will
result in outflow of economic benefits. The amount recognised is the best estimate of expenses that would be incurred to fulfill the present
obligation. The recognition and measurement of provisions significantly depend on judgements of the management. In exercising judgement, the
Company assesses risks and uncertainty associated with the contingent events and time value of money, etc.
Note 5: Taxation
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Gujing Distillery Original Chinese Spirits Annual Report 2016
5.1 Major taxes and tax rate
Tax Tax rate (%)
Out put VAT is charged at 6% or 17% on taxable income; VAT payable is calculated at the
Value added tax
excess of output VAT over input VAT.
The consumption taxes have been provided at the rate of CNY 1.00 yuan per kg or 1,000 ml
Consumption tax follow the quantity, and the consumption tax have been provided at the rate of 20% of the
taxable sales.
Business tax Business tax rate is the 5% of taxable income.
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable for the reporting
and construction surcharge period, and exempt and deductible tax at the rate of 1, 5, 7%.
Sum of VAT payable, consumption duty payable and business tax payable for the reporting
Education surcharge
period, and exempt and deductible tax at the rate of 3%.
Sum of VAT payable, consumption duty payable and business tax payable for the reporting
Local education surcharge
period, and exempt and deductible tax at the rate of 2%.
Corporate income tax See the table below.
The income tax rate of entites:
Entity Income tax rate
Anhui Longrui Glass Co.,Ltd 15%
Anhui Ruisiweier Technology Co., Ltd 15%
Bozhou Gujing waste recycling limited liability company 10%
Anhui Gujing Distillery Co.,Ltd and other subsidiaries 25%
5.2 Tax incentives and approval
5.2.1 Anhui Longrui Glass Co., Ltd., a subsidiary of the Company, was granted the High-tech Enterprise Certificate (No. GR201634001204) on
December 5, 2016 upon qualification of high-tech enterprise. The certificate valids for three years and the applicable income tax rate in 2016 is
15%.
5.2.2 Anhui Ruisiweier Technology Co., Ltd, a subsidiary of the Company, was granted the High-tech Enterprise Certificate (No. GR201634000832)
on October 21, 2016 upon qualification of high-tech enterprise. The certificate valids for three years and the applicable income tax rate in 2016
is15%.
Note 6: Notes to significant elements of the financial statements
Unless otherwise stated (incl. notes to significant elements of the financial statements is), the current year is 2016, prior year is 2015 respectively.
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Gujing Distillery Original Chinese Spirits Annual Report 2016
6.1 Monetary funds
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Cash in hand 323,885.02 373,724.24
Bank deposit 527,379,498.81 1,040,000,008.83
Other monetary fund 5,205,642.24 46,945,425.70
Total 532,909,026.07 1,087,319,158.77
Including: The total amount of deposit abroad 0.00 0.00
Note: Other monetary fund frozen by the Court for litigation amounted to CNY 5,060,000.00 as at the reporting date. There was no other
restrictions on the use of money due to mortgages, pledges etc. as at the reporting date; there was no restriction on cross-border remittance of
cash deposited in banks outside China..
6.2 Financial assets measured by fair value with changes in fair value recognised in profit or loss
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Held for trading financial assets 429,190.68 322,223.28
Including: invest in equity instrument 429,190.68 322,223.28
Total 429,190.68 322,223.28
6.3 Notes receivable
6.3.1 Disclosure by classification
Classification Balance as at 31/12/2016 Balance as at 31/12/2015
Bank acceptance 534,386,586.59 539,442,903.31
Total 534,386,586.59 539,442,903.31
6.3.2 Pledged notes receivable at the end of current year
Item Amount
Bank acceptance 33,483,200.00
Total 33,483,200.00
6.3.3 Immature notes receivable transferred at the end of current year
Item Amount derecognised as at 31/12/2016 Amount not derecognised as at 31/12/2016
Bank acceptance 308,579,773.03 0.00
Total 308,579,773.03 0.00
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Gujing Distillery Original Chinese Spirits Annual Report 2016
6.4 Accounts receivable
6.4.1 Disclosure by classification
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual significance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Accounts receivable portfolio subject to
14,155,948.37 100.00 1,868,685.49 13.20 12,287,262.88
impairment by credit risk:
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 14,155,948.37 100.00 1,868,685.49 13.20 12,287,262.88
(Continued)
Balance as at 31/12/2015
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual significance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Accounts receivable portfolio subject to
6,226,590.29 100.00 1,278,515.45 20.53 4,948,074.84
impairment by credit risk:
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 6,226,590.29 100.00 1,278,515.45 20.53 4,948,074.84
Disclosure by age:
Age Balance as at 31/12/2016
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Carrying amount Allowance for bad debt % of total
Within 1 year 11,813,549.50 122,713.18 1.04
Including: within 6 months 11,699,433.48 117,007.38 1.00
7– 12 months 114,116.02 5,705.80 5.00
1-2years 658,012.07 65,801.21 10.00
2-3years 8,431.41 4,215.71 50.00
Over3years 1,675,955.39 1,675,955.39 100.00
Total 14,155,948.37 1,868,685.49 13.20
6.4.2 Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the year is CNY 590,170.04.
6.4.3 Accounts receivable written off during the current reporting period.
There has no accounts receivable written off during the current reporting period.
6.4.4 Details of top five accounts receivable
The total amount of top five accounts receivables summaried by debtors as at the end of current year is CNY 4,659,103.58, accounting for 32.91%
of the total accounts receivable as at the end of current year, the total corresponding allowance for bad debts is CNY326,042.07.
6.5 Advances to suppliers
6.5.1 Disclosure by age
Balance as at 31/12/2016 Balance as at 31/12/2015
Age
Amount % of total Amount % of total
Within 1 year 73,928,796.23 98.86 80,083,715.48 99.64
1 to 2 years 853,434.06 1.14 285,694.11 0.36
2 to 3 years 1,991.30 0.00 0.00 0.00
Over 3 years 0.00 0.00 3,674.00 0.00
Total 74,784,221.59 100.00 80,373,083.59 100.00
6.5.2 Details of top five advance to suppliers
The total amount of top five advance to suppliers as at the end of current year is CNY 69,715,246.69, accounting for 93.22% of the total advance
to suppliers.
6.6 Interest recveivables
Items Balance as at 31/12/2016 Balance as at 31/12/2015
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Interests on certified savings 2,843,178.08 0.00
Total 2,843,178.08 0.00
6.7 Other receivables
6.7.1 Disclosure by classification
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 41,342,938.53 78.14 41,342,938.53 100.00 0.00
impairment
Other receivable portfolio subject to
11,564,231.44 21.86 798,834.41 6.91 10,765,397.03
impairment by credit risk:
Other receivable of individually insignificance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Total 52,907,169.97 100.00 42,141,772.94 79.65 10,765,397.03
(Continued)
Balance as at 31/12/2015
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 41,342,938.53 81.90 41,342,938.53 100.0 0.00
impairment
Other receivable portfolio subject to
9,134,457.26 18.10 516,501.58 5.65 8,617,955.68
impairment by credit risk:
Other receivable of individually insignificance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Total 50,477,395.79 100.00 41,859,440.11 82.93 8,617,955.68
6.7.1.1 Other receivables of individual significance and subject to individual impairment assessment
Debtor Balance as at 31/12/2016
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Carrying Allowance for Rate of
Reason for allowance
amount bad debt Allowance (%)
Enterprise is in the proceeding
Jianqiao Securities 11,840,500.00 11,840,500.00 100.00
of liquidation bankruptcy
Enterprise is in the proceeding
Hengxin Securities 29,502,438.53 29,502,438.53 100.00
Of liquidation bankruptcy
Total 41,342,938.53 41,342,938.53 100.00
6.7.1.2 Accounts receivable using the age analysis method for measurement of impairment allowances:
Balance as at 31/12/2016
Age
Carrying amount Allowance for bad debt % of total
Within 1 year 12,229,096.23 225,204.96 1.84
Including: within 6 months 9,648,695.33 96,184.91 1.00
7-12 months 530,400.90 26,520.05 5.00
1-2 years 269,727.60 26,972.76 10.00
2-3 years 932,501.84 466,250.92 50.00
Over 3years 182,905.77 182,905.77 100.00
Total 11,564,231.44 798,834.41 6.91
6.7.2 Recognization, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the current year is CNY 282,332.83.
6.7.3 The situation of other receivable the is written off in current year
There has no other receivable written off during the current reporting period.
6.7.4 The classification of other receivable
Nature Balance at 31/12/2016 Balance at 31/12/2015
Investment in securities 41,342,938.53 41,342,938.53
Deposit and guarantee 1,457,444.95 1,642,346.71
Loan for business trip 2,024,382.20 2,789,864.26
Rent and water, electric and gas expense 4,242,987.61 2,432,526.57
Others 3,839,416.68 2,269,719.72
Total 52,907,169.97 50,477,395.79
~ 123 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
6.7.5 Details of top five other receivable:
Allowance balance
Debtor nature Carrying amount age % of total amount
at the year end
The first Investment in securities 29,502,438.53 Over 3 years 55.76 29,502,438.53
The second Investment in securities 11,840,500.00 Over 3 years 22.38 11,840,500.00
The third Prepaid for oil fee 2,754,767.41 Within 6 months 5.21 27,547.67
The forth Prepaid for oil fee 558,145.20 Within 6 months 1.05 5,581.45
The fifth Deposit 500,000.00 Within 6 months 0.95 5,000.00
Total 45,155,851.14 85.35 41,381,067.65
6.8 Inventories
6.8.1 Disclosure by classification
Balance as at 31/12/2016
Items Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Raw material 122,173,639.41 8,897,753.50 113,275,885.91
Work in progress 1,426,282,016.97 0.00 1,426,282,016.97
Finished goods 255,258,344.54 8,383,210.92 246,875,133.62
Total 1,803,714,000.92 17,280,964.42 1,786,433,036.50
(Continued)
Balance as at 31/12/2015
Items Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Raw material 102,293,838.52 6,976,129.27 95,317,709.25
Work in progress 1,130,825,408.23 0.00 1,130,825,408.23
Finished goods 177,900,253.21 7,331,319.82 170,568,933.39
Total 1,411,019,499.96 14,307,449.09 1,396,712,050.87
6.8.2 Impairment allowance for inventories
Items Balance as at 31/12/2015 Increase in current year Decrease in current year Balance as at 31/12/2016
~ 124 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Recovered or
Accrual Other Other
Written off
Raw material 6,976,129.27 5,872,712.72 0.00 3,951,088.49 0.00 8,897,753.50
Finished goods 7,331,319.82 5,585,052.45 0.00 4,533,161.35 0.00 8,383,210.92
Total 14,307,449.09 11,457,765.17 0.00 8,484,249.84 0.00 17,280,964.42
6.8.3 Reason for impairment recognition and reversal or written-off
The reason of recovering The reasons for inventory
The basis of recognition of impairment allowance
Items impairment allowance for impairment writen-off at current
for inventories
inventories year
Raw Market prices decrease, and resulting in raw
Material scrap and application
material material’s net realizable value lower than cost
Finished Market prices decrease, and resulting in Finished
Scrap of the product
goods goods’ net realizable value lower than cost
6.9 Other current assets
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Financial products 1,750,000,000.00 1,500,000,000.00
Deductible tax 278,829.24 970,860.37
Total 1,750,278,829.24 1,500,970,860.37
6.10 Available-for-sale financial assets
6.10.1 The situation of available-for-sale financial assets
Balance as at 31/12/2016 Balance as at 31/12/2015
Items Carrying Carrying Net carrying
Impairment Net carrying amount Impairment
amount amount amount
Available for sale equity
404,029,552.27 0.00 404,029,552.27 213,881,190.47 0.00 213,881,190.47
instruments
Including: measured by
404,029,552.27 0.00 404,029,552.27 213,881,190.47 0.00 213,881,190.47
fair value
Measured by cost 0.00 0.00 0.00 0.00 0.00 0.00
Other 0.00 0.00 0.00 100,000,000.00 0.00 100,000,000.00
~ 125 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Total 404,029,552.27 0.00 404,029,552.27 313,881,190.47 0.00 313,881,190.47
6.10.2 The available for sale financial asset which is measured by fair value at the year end
Equity instrument Debt instrument
Classification of the available for sale financial asset Total
available for sale available for sale
The cost of the equity instrument or the amortized cost of the debt instrument 355,836,914.98 0.00 355,836,914.98
Fair value 404,029,552.27 0.00 404,029,552.27
The amount of the fair value change recognized intocomprehensive income 48,192,637.29 0.00 48,192,637.29
Impairment allowance 0.00 0.00 0.00
6.10.3 The measurement of the cost of available for sale financial assets at the end of current year
Balance as at 31/12/2016 Impairment
Increase Increase
Balance as Balance as Balance as Decrease
Investee in Decrease in in Balance as ‘’at
at at at in current
current current year current 31/12/2016
31/12/2015 31/12/2016 31/12/2015 year
year year
Hongtai No.55 assembled funds trust plan 100,000,000.00 0.00 100,000,000.00 0.00 0.00 0.00 0.00 0.00
Total 100,000,000.00 0.00 100,000,000.00 0.00 0.00 0.00 0.00 0.00
6.11 Investment property
6.11.1 Investment property measured using the historical cost
Items Houses and buildings Land use rights Total
1. Cost:
1.1 Balance as at 31/12/2015 23,148,813.75 2,644,592.00 25,793,405.75
1.2 Increased in current year 0.00 0.00 0.00
1.3 Decreased in current year 10,196,437.59 0.00 10,196,437.59
1.3.1 Disposal 0.00 0.00 0.00
1.3.2 Other transfer out 10,196,437.59 0.00 10,196,437.59
1.4 Balance as at 31/12/2016 12,952,376.16 2,644,592.00 15,596,968.16
2. Accumulated Depreciation and
accumulated amortization
2.1Balance as at 31/12/2015 15,583,897.24 494,056.62 16,077,953.86
~ 126 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Houses and buildings Land use rights Total
2.2 Increased in current year 842,185.11 62,014.56 904,199.67
2.2.1 Accrual or amortization 842,185.11 62,014.56 904,199.67
2.3 Decreased in current year 9,788,130.11 0.00 9,788,130.11
2.3.1 Disposal 0.00 0.00 0.00
2.3.2 Other decrease 9,788,130.11 0.00 9,788,130.11
2.4 Balance as at 31/12/2016 6,637,952.24 556,071.18 7,194,023.42
3. Impairment allowance
3.1Balance as at 31/12/2015 0.00 0.00 0.00
3.2 Increased in current year 0.00 0.00 0.00
3.2.1 Accrual 0.00 0.00 0.00
3.3 Decreased in current year 0.00 0.00 0.00
3.3.1 Disposal 0.00 0.00 0.00
3.3.2 Other transfer out 0.00 0.00 0.00
3.4 Balance as at 31/12/2016 0.00 0.00 0.00
4. Carrying amount
4.1 Carrying amount as at 31/12/2016 6,314,423.92 2,088,520.82 8,402,944.74
4.2 Carrying amount as at 31/12/2015 7,564,916.51 2,150,535.38 9,715,451.89
6.12 Fixed assets
6.12.1 Circumstance of fixed assets
Houses and Office equipment and
Items Machineries Vehicles Total
buildings other
1. Cost:
1.1 Balance as at 31/12/2015 1,661,241,240.92 774,600,299.46 52,684,498.92 60,208,697.42 2,548,734,736.72
1.2 Increased in current year 308,554,631.99 93,696,820.20 13,447,873.06 66,808,288.36 482,507,613.61
1.2.1 Purchase 475,610.15 2,627,685.03 2,814,502.54 11,776,191.04 17,693,988.76
1.2.2 Transferred from
1,335,840.52 36,836,650.82 0.00 30,842,626.14 69,015,117.48
construction in-progress
~ 127 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Houses and Office equipment and
Items Machineries Vehicles Total
buildings other
1.2.3 Increase from business
296,546,743.73 54,232,484.35 10,633,370.52 24,189,471.18 385,602,069.78
combination
1.2.4 Recovered from rental housing 10,196,437.59 0.00 0.00 0.00 10,196,437.59
1.3 Decreased in current year 14,756,095.73 25,256,040.34 6,589,193.50 7,121,671.02 53,723,000.59
1.3.1 Disposal or scrap 14,756,095.73 25,256,040.34 6,589,193.50 7,121,671.02 53,723,000.59
1.4 Balance as at 31/12/2016 1,955,039,777.18 843,041,079.32 59,543,178.48 119,895,314.76 2,977,519,349.74
2. Accumulated Depreciation
2.1 Balance as at 31/12/2015 475,454,089.21 288,129,635.62 42,255,683.05 45,592,394.27 851,431,802.15
2.2 Increased in current year 128,471,414.37 109,435,349.31 12,485,592.88 45,630,148.86 296,022,505.42
2.2.1 Accrual 51,873,989.94 86,686,409.28 6,349,374.10 35,307,308.92 180,217,082.24
2.2.2 Increase from business
66,809,294.32 22,748,940.03 6,136,218.78 10,322,839.94 106,017,293.07
combination
2.2.3 Recovered from rental housing 9,788,130.11 0.00 0.00 0.00 9,788,130.11
2.3 Decreased in current year 9,949,057.72 19,951,368.96 6,390,107.37 5,381,328.80 41,671,862.85
2.3.1 Disposal or scrap 9,949,057.72 19,951,368.96 6,390,107.37 5,381,328.80 41,671,862.85
2.4 Balance as at 31/12/2016 593,976,445.86 377,613,615.97 48,351,168.56 85,841,214.33 1,105,782,444.72
3. Impairment allowance
3.1Balance as at 31/12/2015 4,133,377.10 2,140,753.15 0.00 0.00 6,274,130.25
3.2 Increased in current year 58,893.76 94,642.28 7,047.07 580,345.64 740,928.75
3.2.1 Accrual 58,893.76 94,642.28 7,047.07 580,345.64 740,928.75
3.3 Decreased in current year 0.00 969,739.04 0.00 0.00 969,739.04
3.3.1 Disposal or scrap 0.00 969,739.04 0.00 0.00 969,739.04
3.4 Balance as at 31/12/2016 4,192,270.86 1,265,656.39 7,047.07 580,345.64 6,045,319.96
4. Carrying amount
4.1 Carrying amount as at 31/12/2016 1,356,871,060.46 464,161,806.96 11,184,962.85 33,473,754.79 1,865,691,585.06
4.2 Carrying amount as at 31/12/2015 1,181,653,774.61 484,329,910.69 10,428,815.87 14,616,303.15 1,691,028,804.32
6.12.2 Temporarily idle fixed assets
Item Carrying value Depreciation Impairment Book value Notes
~ 128 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Houses and buildings 15,969,525.54 11,633,943.26 4,192,270.86 143,311.42
Machineries 8,175,846.51 6,857,209.57 1,265,656.39 52,980.55
Vehicles 58,119.66 49,329.00 7,047.07 1,743.59
Office equipment and other 873,232.11 266,689.51 580,345.64 26,196.96
Total 25,076,723.82 18,807,171.34 6,045,319.96 224,232.52
6.12.3 Fixed assets with pending ownership registration
Item Book value The reason of pending ownership registration
Houses and buildings 835,438,702.80 In the process
Total 835,438,702.80
6.13 Construction in progress
6.13.1 Details of construction in progress
Balance as at 31/12/2016 Balance as at 31/12/2015
Carrying amount Carrying amount
Items impairment Net carrying impairment Net carrying
before impairment before impairment
allowance amount allowance amount
allowance allowance
Based liquor relocation of the
transformation and facilities 903,846.31 0.00 903,846.31 32,051.44 0.00 32,051.44
projects
Gujing operating network system 4,932,008.56 0.00 4,932,008.56 3,305,555.56 0.00 3,305,555.56
Information integration system 2,828,626.03 0.00 2,828,626.03 1,186,500.00 0.00 1,186,500.00
Gujing CRM system 0.00 0.00 0.00 769,230.77 0.00 769,230.77
Renovation project of potential
47,819,516.27 0.00 47,819,516.27 47,025,894.49 0.00 47,025,894.49
safety concerns
Wine culture museum remould 4,449,398.37 0.00 4,449,398.37 2,167,605.55 0.00 2,167,605.55
Light and shadow show digital
0.00 0.00 0.00 3,657,367.52 0.00 3,657,367.52
demonstration project
Automation transformation 0.00 0.00 0.00 965,000.00 0.00 965,000.00
Shanghai experience centre 0.00 0.00 0.00 2,299,961.53 0.00 2,299,961.53
Xianning Huanghelou 20MT
1,785,629.19 0.00 1,785,629.19 0.00 0.00 0.00
filling depot project
~ 129 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Balance as at 31/12/2016 Balance as at 31/12/2015
Carrying amount Carrying amount
Items impairment Net carrying impairment Net carrying
before impairment before impairment
allowance amount allowance amount
allowance allowance
Hefei experience centre design
2,822,179.84 0.00 2,822,179.84 0.00 0.00 0.00
and integration project
Process pipeline and Gujing
mixing and storage automatic 1,133,754.23 0.00 1,133,754.23 0.00 0.00 0.00
control system
Other individual project with
5,096,365.46 0.00 5,096,365.46 1,153,804.92 0.00 1,153,804.92
small amounts
Total 71,771,324.26 0.00 71,771,324.26 62,562,971.78 0.00 62,562,971.78
6.13.2 Movement of significant construction in progress
Transferred to
Increase during Other decrease
Including: fixed assets
the current during the
Balance as at increase from during the Balance as at
Items Budgeted cost reporting current
31/12/2015 business current 31/12/2016
period reporting
combination reporting
period
period
Based liquor relocation of
the transformation and 800,000,000.00 32,051.44 903,846.15 0.00 32,051.28 0.00 903,846.31
facilities projects
Gujing operating network
8,350,000.00 3,305,555.56 1,626,453.00 0.00 0.00 0.00 4,932,008.56
system
Information integration
6,000,000.00 1,186,500.00 1,642,126.03 0.00 0.00 0.00 2,828,626.03
system
Gujing CRM system 8,000,000.00 769,230.77 1,794,871.79 0.00 0.00 2,564,102.56 0.00
Renovation project of
180,107,581.00 47,025,894.49 51,172,814.03 0.00 50,379,192.25 0.00 47,819,516.27
potential safety concerns
Wine culture museum
6,900,000.00 2,167,605.55 2,281,792.82 0.00 0.00 0.00 4,449,398.37
remould
Light and shadow show 5,500,000.00 3,657,367.52 914,341.88 0.00 4,571,709.40 0.00 0.00
~ 130 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Transferred to
Increase during Other decrease
Including: fixed assets
the current during the
Balance as at increase from during the Balance as at
Items Budgeted cost reporting current
31/12/2015 business current 31/12/2016
period reporting
combination reporting
period
period
digital demonstration
project
Automation transformation 5,880,000.00 965,000.00 0.00 0.00 643,333.33 321,666.67 0.00
Winery landscape upgrade 3,000,000.00 0.00 2,912,621.36 0.00 0.00 2,912,621.36 0.00
Steaming palnt 5,340,000.00 0.00 2,885,470.14 0.00 2,885,470.14 0.00 0.00
Zhengzhou experience
8,500,000.00 0.00 4,723,099.95 0.00 0.00 4,723,099.95 0.00
Centre
Video conferencing system 6,200,000.00 0.00 3,409,312.06 0.00 3,409,312.06 0.00 0.00
Shanghai experience
16,000,000.00 2,299,961.53 2,199,418.52 0.00 0.00 4,499,380.05 0.00
centre
Xianning Huanghelou 20MT
5,000,000.00 0.00 1,785,629.19 137,471.83 0.00 0.00 1,785,629.19
filling depot project
Hefei experience centre
design and integration 9,000,000.00 0.00 2,822,179.84 0.00 0.00 0.00 2,822,179.84
project
Process pipeline and
Gujing mixing and storage 4,388,251.25 0.00 1,133,754.23 0.00 0.00 0.00 1,133,754.23
automatic control system
Other individual project with
23,614,868.39 1,153,804.92 12,934,633.65 16,000.00 7,094,049.02 1,898,024.09 5,096,365.46
small amounts
Total 1,101,780,700.64 62,562,971.78 95,142,364.64 153,471.83 69,015,117.48 16,918,894.68 71,771,324.26
(Continued)
Weight of The Including: Capitalisation
Stage of Source of
Items cost to date cumulative interests rate applicable to
completion finance
in budgeted amount of capitalised the current
~ 131 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
cost interest during the reporting
capitalized current period %
reporting
period
Based liquor relocation of the transformation
92.73 100.00 0.00 0.00 0.00 Owned fund
and facilities projects
Gujing operating network system 62.58 95.00 0.00 0.00 0.00 Owned fund
Information integration system 47.14 97.00 0.00 0.00 0.00 Owned fund
Gujing CRM system 32.05 100.00 0.00 0.00 0.00 Owned fund
Renovation project of potential safety concerns 56.24 91.61 0.00 0.00 0.00 Owned fund
Wine culture museum remould 64.48 90.00 0.00 0.00 0.00 Owned fund
Light and shadow show digital demonstration project 83.12 100.00 0.00 0.00 0.00 Owned fund
Automation transformation 48.60 100.00 0.00 0.00 0.00 Owned fund
Winery landscape upgrade 97.00 100.00 0.00 0.00 0.00 Owned fund
Steaming palnt 54.00 100.00 0.00 0.00 0.00 Owned fund
Zhengzhou experience Centre 56.00 100.00 0.00 0.00 0.00 Owned fund
Video conferencing system 55.00 100.00 0.00 0.00 0.00 Owned fund
Shanghai experience centre 28.11 100.00 0.00 0.00 0.00 Owned fund
Xianning Huanghelou 20MT filling depot project 35.71 30.00 0.00 0.00 0.00 Owned fund
Hefei experience centre design and integration project 31.36 32.30 0.00 0.00 0.00 Owned fund
Process pipeline and Gujing mixing and storage automatic control system 26.00 30.00 0.00 0.00 0.00 Owned fund
Other individual project with small amounts 50.00 80.00 0.00 0.00 0.00 Owned fund
Total - - 0.00 0.00 0.00
6.14 Intangible assets
Items Land rights Patents Software Trademark Total
1. Cost:
1.1 Balance as at 31/12/2015 351,249,420.80 38,150,000.00 4,869,402.68 0.00 394,268,823.48
1.2 Increased in current year 277,029,881.76 7,716,942.63 5,189,552.28 169,116,600.00 459,052,976.67
~ 132 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Land rights Patents Software Trademark Total
1.2.1 Purchase 0.00 0.00 196,581.20 0.00 196,581.20
1.2.2 Internal research and development 0.00 0.00 0.00 0.00 0.00
1.2.3 Transferred from construction in progress 0.00 0.00 3,993,658.18 0.00 3,993,658.18
1.2.4 Increase from business combination 277,029,881.76 7,716,942.63 999,312.90 169,116,600.00 454,862,737.29
1.3 Decreased in current year 0.00 0.00 0.00 0.00 0.00
1.3.1 Disposal 0.00 0.00 0.00 0.00 0.00
1.4 Balance as at 31/12/2016 628,279,302.56 45,866,942.63 10,058,954.96 169,116,600.00 853,321,800.15
2. Accumulated amortization
2.1 Balance as at 31/12/2015 54,759,386.45 38,150,000.00 2,987,197.07 0.00 95,896,583.52
2.2 Increased in current year 47,247,075.03 7,564,910.47 1,928,702.05 0.00 56,740,687.55
2.2.1 Accrual 10,894,606.38 34,013.69 1,255,663.35 0.00 12,184,283.42
2.2.2 Increase from business combination 36,352,468.65 7,530,896.78 673,038.70 0.00 44,556,404.13
2.3 Decreased in current year 0.00 0.00 0.00 0.00 0.00
2.3.1 Disposal 0.00 0.00 0.00 0.00 0.00
2.4 Balance as at 31/12/2016 102,006,461.48 45,714,910.47 4,915,899.12 0.00 152,637,271.07
3. Impairment allowance
3.1 Balance as at 31/12/2015 0.00 0.00 0.00 0.00 0.00
3.2 Increased in current year 0.00 0.00 0.00 0.00 0.00
3.2.1 Accrual 0.00 0.00 0.00 0.00 0.00
3.3 Decreased in current year 0.00 0.00 0.00 0.00 0.00
3.3.1 Disposal 0.00 0.00 0.00 0.00 0.00
3.4 Balance as at 31/12/2016 0.00 0.00 0.00 0.00 0.00
4. Carrying amount
4.1 Carrying amount as at 31/12/2016 526,272,841.08 152,032.16 5,143,055.84 169,116,600.00 700,684,529.08
4.2 Carrying amount as at 31/12/2015 296,490,034.35 0.00 1,882,205.61 0.00 298,372,239.96
6.15 Goodwill
The name of the investee or the formation of goodwill Balance as at Increased in current year Decreased in current year Balance as at
~ 133 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
31/12/2015 Business 31/12/2016
Others Disposal Others
combination
Wuhan Tianlong Yellow Crane Tower Wine Co., Ltd 0.00 478,283,495.29 0.00 0.00 0.00 478,283,495.29
Total 0.00 478,283,495.29 0.00 0.00 0.00 478,283,495.29
Note: According to the actual financial data and budget information, the Company estimated net cash flow of the assets to determine the
recoverable amount and according to the “Asset appraisal report” (Huaxin Zhonghe Pingbao Zi [2017] S1008 Hao) issued by Beijing Huaxin Public
Assets Appraisal Co., Ltd. Shenzhen Branch, the future net cash flow is greater than the book value and there is no impairment of the goodwill.
6.16 Long-term deferred charge
The
Amortisation for the Other
Balance as at Increase in Balance as at reason for
Items current decrease in
31/12/2015 current year 31/12/2016 other
reporting period current year
decrease
Mold culture shelf and Mold culture bed 2,918,368.91 0.00 1,523,358.84 0.00 1,395,010.07
Transformation of high - quality base liquor 7,305,261.80 0.00 3,721,401.72 0.00 3,583,860.08
Wine library shelves 1,408,903.13 0.00 563,561.25 0.00 845,341.88
Decoration works of exclusive Shop 17,226,636.96 17,414.87 12,691,861.97 0.00 4,552,189.86
Decoration works of Beijing experience
17,455,429.04 4,729,106.90 2,426,832.57 0.00 19,757,703.37
center
Relocation compensation of Beijing
11,366,500.00 258,500.00 1,500,000.00 0.00 10,125,000.00
experience center
Pottery jars storeage 19,216,518.59 226,467.95 4,382,499.68 0.00 15,060,486.86
Decoration works of spirits culture
1,041,359.68 0.00 430,925.57 0.00 610,434.11
Museum
improvement project of Sewage Treatment
4,850,000.00 0.00 600,000.00 0.00 4,250,000.00
Plant
Green cost 27,703,158.38 0.00 15,618,953.18 323,044.10 11,761,161.10
Decoration project of Gujing villa 4,941,948.33 0.00 4,941,948.33 0.00 0.00
Potential safety hazard transfermation 3,607,861.23 424,433.74 1,614,493.88 0.00 2,417,801.09
Shenzhen experience center 6,217,336.14 0.00 1,332,286.32 0.00 4,885,049.82
Other 2,556,386.18 1,052,811.47 1,150,318.56 0.00 2,458,879.09
~ 134 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
The
Amortisation for the Other
Balance as at Increase in Balance as at reason for
Items current decrease in
31/12/2015 current year 31/12/2016 other
reporting period current year
decrease
Winery landscape upgrade 0.00 2,912,621.36 80,906.15 0.00 2,831,715.21
Zhengzhou experience centre 0.00 4,723,099.95 43,732.41 0.00 4,679,367.54
Shanghai experience centre 0.00 4,499,380.05 124,982.78 0.00 4,374,397.27
Total 127,815,668.37 18,843,836.29 52,748,063.21 323,044.10 93,588,397.35
6.17 Deferred tax assets and deferred tax liabilities
6.17.1 Details of Rrecognized deferred tax assets
Balance as at 31/12/2016 Balance as at 31/12/2015
Items Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Allowance for bad debt 44,010,458.43 10,996,043.87 43,137,779.39 10,784,271.97
Allowance for inventories
17,280,964.42 4,268,065.64 14,307,449.09 3,576,862.28
impairment
Allowance for fixed assets
6,017,322.50 1,504,126.30 6,246,132.79 1,561,533.20
impairment
Deferred income 43,978,795.45 10,964,946.75 46,123,314.33 11,530,828.58
Accrued expenses 241,487,812.54 60,371,953.14 134,446,030.45 33,611,507.60
Recoverable tax loss 74,310,846.55 18,577,711.64 0.00 0.00
Not realized internal profit 3,886,999.22 971,749.81 0.00 0.00
Total 430,973,199.11 107,654,597.15 244,260,706.05 61,065,003.63
6.17.2 Details of Rrecognized deferred tax liabilities
Balance as at 31/12/2016 Balance as at 31/12/2015
Items Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Changes in fair value of tradable financial asset 157,639.98 39,410.00 163,238.41 40,809.60
Changes in fair value of available-for-sale financial assets 48,192,637.29 12,048,159.32 72,642,515.35 18,160,628.84
~ 135 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Difference in addional deduction of fixed assets 11,629,445.21 2,907,361.30 9,048,889.73 2,262,222.43
Appreciation of assets by business combination under
409,168,287.60 102,292,071.90 0.00 0.00
non-common control
Total 469,148,010.08 117,287,002.52 81,854,643.49 20,463,660.87
6.17.3 Unrecognized deferred tax assets
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Deductible temporary difference 27,997.46 28,173.63
Taxable temporary differences 3,504,550.14 2,059,849.97
Total 3,532,547.60 2,088,023.60
6.17.4 The deductible losses of unrecognized deferred tax assets will be expired in the following year
Year Balance as at 31/12/2016 Balance as at 31/12/2015 Note
Year 2017 0.00 0.00
Year 2018 0.00 0.00
Year 2019 0.00 0.00
Year 2020 2,059,849.97 2,059,849.97
Year 2021 1,444,700.17 0.00
Total 3,504,550.14 2,059,849.97
6.18 Other non-current assets
Balance as
Items Content Balance as at 31/12/2015
at 31/12/2016
Certified saveings Certified savings 300,000,000.00 0.00
Prepayments for equipment Prepayments for equipment 982,000.00 0.00
Total 300,982,000.00 0.00
6.19 Notes payable
Type Balance as at 31/12/2016 Balance as at 31/12/2015
Bankers' acceptance 11,270,000.00 92,940,000.00
Trade acceptance 28,583.00 828,583.00
Total 11,298,583.00 93,768,583.00
Note: The unpaid matured notes payable is amount CNY 28,583.00, as at year ended and due to the supplayer do not make the solution pay
~ 136 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
on matured note.
6.20 Accounts payable
6.20.1 Detail for accounts payable
Item Balance as at 31/12/2016 Balance as at 31/12/2015
Within 1 year 278,284,194.09 299,081,452.13
Over 1 year 62,688,172.12 79,105,999.94
Total 340,972,366.21 378,187,452.07
6.20.2 The details of significant accounts payable remaining unsettled for more than 1 year
Creditors Balance as at 31/12/2016 Reason(s) for unsettlement
A company 7,507,940.81 Residual project balance
B company 1,246,379.45 Residual project balance
C company 1,090,000.00 Residual equipment balance
D company 1,068,404.82 Residual project balance
E company 820,826.60 Payment for material
Total 11,733,551.68
6.21 Advances from customers
Item Balance as at 31/12/2016 Balance as at 31/12/2015
Payment for goods 623,990,614.91 608,565,152.50
Total 623,990,614.91 608,565,152.50
6.22Employment benefits payable
6.22.1 Disclosure by classification
Increase upon
Balance as at Increase during the Decrease during the Balance as
Items business
31/12/2015 current year current year at 31/12/2016
combination
1. Short-term employee benefits 253,376,275.54 3,347,004.08 1,087,110,918.12 1,056,306,787.63 287,527,410.11
2. Post-employment benefits 525,425.18 0.00 73,030,936.63 73,056,635.83 499,725.98
3. Termination benefits 0.00 0.00 0.00 0.00 0.00
4. Other benefits due within one year 0.00 0.00 0.00 0.00 0.00
Total 253,901,700.72 3,347,004.08 1,160,141,854.75 1,129,363,423.46 288,027,136.09
~ 137 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
6.22.2 Disclosure by classification of short-term employee benefits
Increase upon
Balance as at Increase during the Decrease during Balance as at
Category business
31/12/2015 current year the current year 31/12/2016
combination
1. Wages, salaries and subsidies 202,138,836.94 3,347,004.08 940,346,847.39 913,911,554.95 231,921,133.46
2. Employee welfare 0.00 0.00 51,260,447.30 51,260,447.30 0.00
3. Social insurance: 36,873.97 0.00 22,470,017.28 22,439,836.66 67,054.59
Including: Medical insurance 27,079.95 0.00 21,271,964.59 21,245,068.14 53,976.40
Employment injury insurance 4,771.50 0.00 763,193.66 761,260.89 6,704.27
Maternity insurance 5,022.52 0.00 434,859.03 433,507.63 6,373.92
4. Housing provident fund 12,784,777.20 0.00 49,944,795.56 54,348,610.36 8,380,962.40
5. Labour union fee and employee
38,415,787.43 0.00 23,088,810.59 14,346,338.36 47,158,259.66
education fee
6. Short-term paid absence 0.00 0.00 0.00 0.00 0.00
7. Short-term profit sharing plan 0.00 0.00 0.00 0.00 0.00
Total 253,376,275.54 3,347,004.08 1,087,110,918.12 1,056,306,787.63 287,527,410.11
6.22.3 Disclosure by defined contribution plan
Increase upon
Balance as Increase during Decrease during the Balance as
Items business
at 31/12/2015 the current year current year at 31/12/2016
combination
1. Basic pension 499,446.46 0.00 69,833,408.93 69,861,758.45 471,096.94
2. Unemployment insurance 25,978.72 0.00 3,197,527.70 3,194,877.38 28,629.04
Total 525,425.18 0.00 73,030,936.63 73,056,635.83 499,725.98
6.23 Taxes and fees payable
Tax (Fee) Balance as at 31/12/2016 Balance as at 31/12/2015
VAT 118,133,291.16 87,099,637.75
Consumption tax 219,571,438.66 137,743,836.68
Business tax 0.00 1,567,227.74
Enterprise income tax 94,273,743.45 70,375,692.68
~ 138 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Tax (Fee) Balance as at 31/12/2016 Balance as at 31/12/2015
Personal income tax 1,562,260.59 2,747,356.67
Urban construction and maintenance tax 19,129,378.01 10,339,184.61
Stamp duty 871,395.56 1,096,999.83
Education surcharge 18,650,757.21 10,327,628.89
Others 14,767,387.21 36,789,788.95
Total 486,959,651.85 358,087,353.80
6.24 Other payables
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Security deposit 587,919,286.15 349,397,678.43
Business trip borrowing 2,207,592.61 1,369,843.17
Guarantee 10,478,503.90 42,153,589.56
Personal housing provident fund paid by company 8,380,962.40 12,784,777.20
Others 32,485,926.47 46,487,300.58
Total 641,472,271.53 452,193,188.94
6.25 Other current liabilities
Items Balance as at 31/12/2016 Balance as at 31/12/2015
Accrued expense 241,487,812.54 138,135,604.82
Total 241,487,812.54 138,135,604.82
6.26 Deferred income
Balance as at Increase during Decrease during Balance as at
Items Reasons
31/12/2015 the current year the current year 31/12/2016
Receive government
Government grants 46,123,314.33 2,481,400.00 4,625,918.88 43,978,795.45
grants concerning assets
Total 46,123,314.33 2,481,400.00 4,625,918.88 43,978,795.45 —
Involving government grants’ project:
~ 139 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Amount
Recognised
Balance as at recognised as Other Balance as at Related to asset or
Items during current
31/12/2015 non-operating movement 31/12/2016 income
year
income
Wine production system technical
442,708.37 0.00 62,500.02 0.00 380,208.35 Related to asset
transformation
Instrument subsidies 1,653,750.00 0.00 220,500.00 0.00 1,433,250.00 Related to asset
Intelligent solid brewing technology
244,791.66 0.00 31,250.01 0.00 213,541.65 Related to asset
innovation project
Anhui province development of direct
1,965,853.62 0.00 292,682.86 0.00 1,673,170.76 Related to asset
funds of service industry
Anhui provience subsidies of innovative
province construction capacity for 4,870,300.00 0.00 730,545.00 0.00 4,139,755.00 Related to asset
independent innovation
Energy efficiency renovation project for
471,750.00 0.00 153,000.00 0.00 318,750.00 Related to asset
coal industrial boiler and glass furnace
Bozhou Logistics Center Project 240,000.00 0.00 60,000.00 0.00 180,000.00 Related to asset
Equipment subsidy 0.00 1,314,000.00 81,056.29 0.00 1,232,943.71 Related to asset
Finance subsidy for energy saving
1,529,204.04 0.00 531,623.59 0.00 997,580.45 Related to asset
projects
Finance subsidy for technical
2,018,595.46 0.00 534,221.52 0.00 1,484,373.94 Related to asset
reconstruction
Within financial budget, interest subsidy
3,333.45 0.00 3,333.45 0.00 0.00 Related to asset
for deposit technical reconstruction
Within financial budget, Enterprise
142,500.00 0.00 30,000.00 0.00 112,500.00 Related to asset
development funds
IOT traceability system project 6,311,250.00 0.00 1,113,750.00 0.00 5,197,500.00 Related to asset
Rebate of land 24,763,652.65 0.00 550,206.18 0.00 24,213,446.47 Related to asset
Electric machine improvement for energy
825,000.08 0.00 137,499.96 0.00 687,500.12 Related to asset
saving project
~ 140 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Amount
Recognised
Balance as at recognised as Other Balance as at Related to asset or
Items during current
31/12/2015 non-operating movement 31/12/2016 income
year
income
Product quality online monitor 640,625.00 0.00 93,750.00 0.00 546,875.00 Related to asset
Subsidy for intelligent distillery yeast
0.00 217,400.00 0.00 0.00 217,400.00 Related to asset
research
Gujing Zhangji wine tank optimization
0.00 950,000.00 0.00 0.00 950,000.00 Related to asset
upgrade project
Total 46,123,314.33 2,481,400.00 4,625,918.88 0.00 43,978,795.45
6.27 Share capital
Balance as at Movements during the current reporting period (+、－) Balance as
Items
31/12/2015 Share issue Bonus issue Conversion from reserves Others Subtotal at 31/12/2016
Total shares 503,600,000.00 0.00 0.00 0.00 0.00 0.00 503,600,000.00
6.28 Capital reserves
Balance as at Increase during the Decrease during the Balance as at
Items
31/12/2015 current year current year 31/12/2016
Share premium 1,262,552,456.05 0.00 0.00 1,262,552,456.05
Other capital reserves 32,386,037.14 467,099.06 0.00 32,853,136.20
Total 1,294,938,493.19 467,099.06 0.00 1,295,405,592.25
6.29 Other comprehensive income
Items Balance as at Total amount in current year Balance as at
~ 141 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
31/12/2015 Less: 31/12/2016
previously
recognized in After tax After tax
Amount for the other Less: Income attributable to attributable
year before tax comprehensive tax expense the parent to minority
income company shareholders
transferred into
profit or loss
1.Other comprehensive income
that will not be reclassified into 0.00 0.00 0.00 0.00 0.00 0.00 0.00
income or loss in the future
2.Other comprehensive income
that will be reclassified into 54,481,886.51 -24,449,878.06 0.00 -6,112,469.50 -18,337,408.56 0.00 36,144,477.95
income or loss in the future
Including: fair value change of
54,481,886.51 -24,449,878.06 0.00 -6,112,469.50 -18,337,408.56 0.00 36,144,477.95
financial asset available for sale
Total of other comprehensive
54,481,886.51 -24,449,878.06 0.00 -6,112,469.50 -18,337,408.56 0.00 36,144,477.95
income
6.30 Surplus reserves
Increase during Decrease during
Items Balance as at 31/12/2015 Balance as at 31/12/2016
the current year the current year
Statutory surplus reserve 256,902,260.27 0.00 0.00 256,902,260.27
Total 256,902,260.27 0.00 0.00 256,902,260.27
Note: In accordance with the Company Lows and regulations in PRC, statutory surplus reserve is accrued at 10 % of net profit of the Company
until accumulated amount of such reserve balance reaches 50% of the Company’s registered capital.
After the company draws the statutory surplus reserve, it may, upon a resolution made by the shareholders' meeting or the shareholders’
assembly, draw a discretionary surplus reserve from the after-tax profits. Discretionary surplus reserve as approved by the shareholders in our
shareholders' meeting can be used to make good previous years’ losses or to increase the capital.
6.31 Retained earning
Items Current year Prior year
Pre-adjustment balance brought forward 2,723,798,990.11 2,108,940,620.43
Total adjustment to retained earnings b/f (+, -) 0.00 0.00
~ 142 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Current year Prior year
Retained earnings b/f after adjustment 2,723,798,990.11 2,108,940,620.43
Add: Net profit attributable to shareholders of the parent 829,630,063.38 715,578,369.68
Less: Appropriation to statutory surplus reserve 0.00 0.00
Appropriation to discretionary surplus reserve 0.00 0.00
General reserve 0.00 0.00
Ordinary dividends declared 50,360,000.00 100,720,000.00
Ordinary dividends transformed into capital share 0.00 0.00
Balance carrying forward 3,503,069,053.49 2,723,798,990.11
6.32 Operating revenues and costs
Current year Prior year
Items
Operating revenues Operating costs Operating revenues Operating costs
Principal operating income 5,979,035,166.48 1,491,385,954.17 5,217,544,152.04 1,479,038,970.28
Other operating income 38,108,494.08 32,199,825.34 35,867,327.36 30,497,129.00
Total 6,017,143,660.56 1,523,585,779.51 5,253,411,479.40 1,509,536,099.28
6.33 Business tax and surcharges
Items Current year Prior year
Consumption tax 762,768,550.26 650,932,115.38
Business tax 1,287,301.81 5,550,244.99
Urban maintenance and construction tax, Education surcharge 165,783,127.78 132,834,880.86
Urban land used tax 8,708,036.38 0.00
Property tax 10,499,272.17 0.00
Stamp duty 3,831,107.79 0.00
Other 3,111,002.91 888,390.64
Total 955,988,399.10 790,205,631.87
Note: The provision standards for taxes and surcharges refer to Note 5 Taxation.
6.34 Sales expenses
Items Current year Prior year
Employment benefits 262,525,597.79 192,032,269.16
~ 143 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Current year Prior year
Travel 74,878,606.52 72,490,928.96
Advertisement 465,688,890.38 397,458,962.42
Transportation charges 32,209,900.34 26,799,503.76
Sales promotion costs 602,532,363.04 421,404,543.74
Sample wine 226,433,506.70 151,639,742.58
Service fee 235,762,832.21 241,596,791.54
Other sales expenses 80,095,680.91 54,377,876.80
Total 1,980,127,377.89 1,557,800,618.96
6.35 General and administrative expenses
Items Current year Prior year
Employment benefits 316,223,141.03 279,870,693.46
Office fees 13,542,347.24 16,719,397.83
Taxes and surcharges 16,703,686.11 39,314,997.74
Maintenance expenses 27,222,700.92 31,218,976.13
Depreciation 56,518,251.81 48,065,605.86
Amortization of intangible assets 12,184,283.42 8,520,464.58
Pollution discharge 8,262,877.02 14,585,009.71
Spillage of material 36,189,753.39 44,837,410.39
Travel expenses 2,313,349.72 2,216,750.98
Water and electricity charges 9,409,893.23 9,692,830.19
Others 57,943,324.10 48,780,469.64
Total 556,513,607.99 543,822,606.51
6.36 Financial costs
Items Current year Prior year
Interest expenses 915,880.51 0.00
Less: Interest income 32,844,024.42 28,676,438.02
Less: Capitalised interest 0.00 0.00
Exchange gain or loss 87,679.59 367,172.57
~ 144 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Current year Prior year
Less: Capitalised exchange gain or loss 0.00 0.00
Others 1,586,496.99 7,974,859.05
Total -30,253,967.33 -20,334,406.40
6.37 Impairment loss on assets
Items Current year Prior year
Allowance for bad debt -578,339.94 468,227.39
Allowance for inventory impairment 11,457,765.17 10,691,127.79
Allowance for intangible assets impairment 740,928.75 164,700.81
Total 11,620,353.98 11,324,055.99
6.38 Gain from changes in fair value
Source of fair value change Current year Prior year
Financial assets measured by fair value with changes in fair value recognised in profit or loss -5,598.43 42,203.41
Including: Derivative financial assets 0.00 0.00
Total -5,598.43 42,203.41
6.39 Investment income
Items Current year Prior year
Investment income from financial assets measured by fair value with
0.00 0.00
changes in fair value recognized in profit or loss during the holding period
Investment income from disposal of financial assets measured by fair
15,987,963.26 7,800,070.97
value with changes in fair value recognised in profit or loss
Investment income from available for sale financial asset during the holding period 78,724,727.77 61,455,959.33
Investment income from disposal of financial assets available for sale 281,592.14 0.00
Other 2,843,178.08 0.00
Total 97,837,461.25 69,256,030.30
6.40 Non-operating income
Recognized into current
Items Current year Prior year year non-recurring profit
and loss
~ 145 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Recognized into current
Items Current year Prior year year non-recurring profit
and loss
Gain on non-current asset disposals 420,864.59 68,505.82 420,864.59
Including : Gain on fixed asset disposals 420,864.59 68,505.82 420,864.59
Government grants (See details of government grants) 25,336,275.56 19,931,320.03 25,336,275.56
Income from penalties 3,699,832.32 13,447,521.81 3,699,832.32
Sales of wastes 5,262,867.74 5,824,298.47 5,262,867.74
Accounts payable no need to pay back 376,663.74 232,103.59 376,663.74
Others 6,818,442.51 5,470,254.89 6,818,442.51
Total 41,914,946.46 44,974,004.61 41,914,946.46
Details of government grant:
Government assistance Current year Prior year Related to assets or income
Energy-saving subsidies 0.00 105,000.00 Related to income
Science and technology innovation award 680,000.00 258,400.00 Related to income
Standardization of the government reward 0.00 120,000.00 Related to income
Gujing industrial park land use tax, house
15,009,167.60 13,999,000.00 Related to income
property tax refund
River water pollution prevention and control
0.00 590,000.00 Related to income
of special funds
Technology innovation demonstration funds 0.00 300,000.00 Related to income
Trademark reward 0.00 100,000.00 Related to income
Business development special funds 0.00 64,800.00 Related to income
Business bureau subsidies 0.00 59,000.00 Related to income
Social security subsidies 320,700.00 208,750.00 Related to income
Assets amortization related government for deferred revenue 4,625,918.88 4,100,947.53 Related to assets
Anhui long-leave brand honorary title award 100,000.00 0.00 Related to income
Patent award 728,400.00 0.00 Related to income
Anhui industrial boutique award 100,000.00 0.00 Related to income
~ 146 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Government assistance Current year Prior year Related to assets or income
National Quality Benchmark Award 200,000.00 0.00 Related to income
Provincial industrial design center awards 100,000.00 0.00 Related to income
Income break bonus 500,000.00 0.00 Related to income
Air Pollution Control Subsidy 900,000.00 0.00 Related to income
City Federation of Trade Unions technical
5,000.00 0.00 Related to income
contest award
Environmental company tax refund 1,209,553.65 0.00 Related to income
Wuhan Hanyang District Economic and
4,000.00 0.00 Related to income
Information Bureau subsidy
Hanyang” Excellence plan” subsidy 400,000.00 0.00 Related to income
Hanyang made quality award 300,000.00 0.00 Related to income
Employment stablisation subsidies 47,500.00 0.00 Related to income
Other awards 106,035.43 25,422.50 Related to income
Total 25,336,275.56 19,931,320.03
6.41 Non-operating expenses
Recognized in current year
Items Current year Prior year
non-recurring profit and loss
Loss on non-current asset disposals 6,740,484.31 1,059,201.01 6,740,484.31
Within: Loss on fixed asset disposals 6,740,484.31 1,059,201.01 6,740,484.31
Late fee 0.00 6,245,908.75 0.00
Others 1,814,150.36 1,754,560.89 1,814,150.36
Total 8,554,634.67 9,059,670.65 8,554,634.67
6.42 Income tax expenses
6.42.1 Classification
Items Current year Prior year
Current tax calculated in accordance with relevant tax law 331,596,712.46 246,239,548.03
~ 147 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Current year Prior year
Deferred tax -31,160,525.95 4,451,523.15
Total 300,436,186.51 250,691,071.18
6.42.2 The adjustment process of accounting profit and income tax expenses
Items Current year
Profit before tax 1,150,754,284.03
According to the statutory/applicable tax rate calculation of the income tax expenses 287,688,571.01
Influence of different tax rates of subsidiaries -3,905,409.41
The effect of adjustment prior period income tax 2,016,966.69
The influence of the untaxable income -898,049.82
The influence of the undeduction of costs, expenses and losses 18,213,035.02
The influence of using the preliminary period deductible losses of unconfirmed deferred income tax
0.00
assets
The influence of the unconfirmed deferred income tax assets attributable to the deductible temporary
361,377.00
difference or deductible losses
Tax rate adjustment to the beginning balance of deferred income tax assets/liabilities -202,347.52
Income tax credits 0.00
Collectively deductions -2,837,956.46
Income tax expenses 300,436,186.51
6.43 Other comprehensive income
Please see Note 6.29 for detail.
6.44 Notes to the statement of cash flows
6.44.1 Other cash received relating to operating activities
Items Current year Prior year
Guarantee deposit 238,706,509.48 77,505,284.21
Government grants 4,491,635.43 1,831,372.50
Interest income 32,844,024.42 30,890,237.41
Withdrawn pledged deposit 0.00 36,100,000.00
~ 148 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Current year Prior year
Release of restricted monetary funds 51,945,425.70 0.00
Others 17,801,895.54 29,254,161.03
Total 345,789,490.57 175,581,055.15
6.44.2 Other cash payments relating to operating activities
Items Current year Prior year
Cash paid in sales expenses and general and administrative expense 1,275,520,798.23 1,029,809,058.13
To issue notes payable and the pledge of deposit or store paper margin 0.00 46,945,425.70
Others 2,117,428.76 8,134,570.09
Total 1,277,638,226.99 1,084,889,053.92
6.44.3 Other cash received relating to investing activities
Items Current year Prior year
Government grants related to assets 2,481,400.00 9,384,300.00
Total 2,481,400.00 9,384,300.00
6.44.4 Other cash payments relating to financing activities
Items Current year Prior year
Repayment of the original shareholder funds 104,376,537.45 0.00
Total 104,376,537.45 0.00
6.45 Supplementary information to the statement of cash flows
6.45.1 Reconciliation of cash flows from operating activities to net profit
Items Current year Prior year
① Reconciliation of cash flows from operating activities to net profit:
Net profit 850,318,097.52 715,578,369.68
Add: Loss on asset impairment 11,620,353.98 -7,804,074.59
Depreciation of fixed assets, oil and gas assets, biological assets held for production 180,217,082.24 160,229,665.09
Amortisation of Investment properties 904,199.67 732,249.62
Amortisation of intangible assets 12,184,283.42 8,520,464.58
~ 149 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Items Current year Prior year
Amortisation of Long-term deferred expenditure 52,748,063.21 44,946,646.26
Loss on non-current assets disposal (gain presented by "-" prefix) 6,319,619.72 990,695.19
Loss on scrap of fixed assets (gain presented by "-" prefix) 0.00 0.00
Loss on fair value changes (gain presented by "-" prefix) 5,598.43 -42,203.41
Financial costs (gain presented by "-" prefix) 915,880.51 -2,060,867.27
Investment loss (gain presented by "-" prefix) -97,837,461.25 -69,256,030.30
Decrease of deferred tax assets (increase presented by "-" prefix) -30,599,267.22 2,178,749.87
Increase of deferred tax liabilities (increase presented by "-" prefix) -561,258.73 2,272,773.28
Decrease of inventories (increase presented by "-" prefix) -148,841,752.05 -170,547,934.01
Decrease of operating receivables (increase presented by "-" prefix) 98,273,049.63 -73,439,119.87
Increase of operating payables (decrease presented by "-" prefix) 252,191,237.86 181,911,098.42
Amortization of deferred income -4,625,918.88 -4,100,947.53
Net cash flows generated from operating activities 1,183,231,808.06 790,109,535.01
② Significant investing and financing activities involve no cash:
Debt-to-capital conversion 0.00 0.00
Convertible loan due within one year 0.00 0.00
Fixed assets acquired under financial lease 0.00 0.00
③ Movement of cash and cash equivalents:
Cash as at 31/12/2016 527,849,026.07 1,040,373,733.07
Less: Cash as at 1/1/2016 1,040,373,733.07 682,360,442.79
Add: Cash equivalents as at 31/12/2016 0.00 0.00
Less: Cash equivalents as at 1/1/2016 0.00 0.00
Net increase of cash and cash equivalents -512,524,707.00 358,013,290.28
6.45.2 Composition of cash and cash equivalents
Balance as at
Items Balance as at 31/12/2016
31/12/2015
① Cash 527,849,026.07 1,040,373,733.07
~ 150 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Balance as at
Items Balance as at 31/12/2016
31/12/2015
Including: Cash at hand 323,885.02 373,724.24
Demand bank deposit 527,379,498.81 1,040,000,008.83
Demand other monetary funds 145,642.24 0.00
② Cash equivalents 0.00 0.00
Including: Debt instrument matured within three months 0.00 0.00
③ Cash and cash equivalents as at 31/12/2016 527,849,026.07 1,040,373,733.07
6.46 Asses of which using rights are limited
Items Balance at 31/12/2016 Reasons for limited
Monetary funds 5,060,000.00 Frozen by the Court
Notes receivable 33,483,200.00 Pledged
Total 38,543,200.00
Note 7: Changes of scope of consolidated financial statements
7.1 Business combination involving entities not under common control
7.1.1 Business combination involving entities not under common control during the current year
The acquiree’s
The time of % of the The way of The evidence to income from The acquiree’s net profit
The cost of Purchase
The name of acquiree equity equity the equity determine the purchase date to from purchase date to
equity acquisition date
acquisition acquisition acquisition purchase date the end of the the end of the year
year
Payment of funds,
Wuhan Tianlong Yellow Crane equity and property
2016-5-31 816,000,000.00 51.00 purchase 2016-5-31 354,950,364.64 42,220,477.84
Tower Wine Co., Ltd management rights
transfer.
7.1.2 Merger costs and goodwill
Item Wuhan Tianlong Yellow Crane Tower Wine Co., Ltd
Merger costs
-Cash 816,000,000.00
Total of the merger costs 816,000,000.00
~ 151 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Item Wuhan Tianlong Yellow Crane Tower Wine Co., Ltd
Less:fair value of the identifiable net assets obtained 337,716,504.71
Goodwill / the merger costs less than the fair value of the identifiable net assets obtained 478,283,495.29
7.1.3 Identifiable assets and liabilities of the acquiree on the purchase date
Wuhan Tianlong Yellow Crane Tower Wine Co., Ltd
Item Fair value on purchase date Book value on purchase date
Assets：
Monetary funds 20,229,967.55 20,229,967.55
Accounts receivable 34,760,201.56 34,760,201.56
Advances from suppliers 4,407,727.79 4,407,727.79
Other receivables 9,738,404.96 9,738,404.96
Inventories 243,852,748.91 243,852,748.91
Fixed assets 279,584,776.71 243,277,198.99
Construction in progress 153,471.83 153,471.83
Intangible asets 410,306,333.16 32,625,633.17
Deferred tax assets 15,990,326.30 15,990,326.30
Liabilities:
Notes payable 5,000,000.00 5,000,000.00
Accounts payable 52,341,472.38 52,341,472.38
Advances from customers 52,282,383.20 52,282,383.20
Employment benefits payable 3,347,004.08 3,347,004.08
Taxes and fees payable 21,780,839.62 21,780,839.62
Other payables 111,712,680.59 111,712,680.59
Other current liabilities 6,873,284.08 6,873,284.08
Deferred tax liabilities 103,497,069.90 0.00
Net assets 662,189,224.92 351,698,017.11
Less: minority interests 324,472,720.21 172,332,028.38
The net assets obtained 337,716,504.71 179,365,988.73
~ 152 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
7.2 Other changes
The Company has newly incorporated direct subsidiaries Anhui Gujing Yunshang Electronic Commerce Co., Ltd. and Anhui Zhenrui Construction
Engineering Co., Ltd.A direct subsidiary Bozhou Gujing Packing Co., Ltd was liquidated during the current reporting year.
Note 8: Interest in other entities
8.1 Interest in subsidiaries
8.1.1 The construction of the group
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Bozhou Gujing Sales Co., Ltd. (hereafter
Anhui Bozhou Anhui Bozhou Commercial trade 100.00 Set up
Gujing Sales)
Bozhou Gujing Transportation Co., Ltd.
Anhui Bozhou Anhui Bozhou Motor transport 99.00 1.00 Set up
(hereafter Gujing Transportation)
Anhui Longrui Glass Co., Ltd (hereafter
Anhui Bozhou Anhui Bozhou Manufacture 99.00 1.00 Set up
Longrui Glass)
Bozhou Gujing Waste Reclamation Co.,
Anhui Bozhou Anhui Bozhou Waste recycle 100.00 Set up
Ltd. (hereafter Gujing Waste)
Anhui Jinyunlai Culture & Media Co.,Ltd. Advertisement
Anhui Hefei Anhui Hefei 100.00 Set up
(hereafter Jinyunlai) marketing
Anhui Ruisiweier Technology Co., Ltd. Anhui Bozhou Anhui Bozhou Technical research 100.00 Set up
Anhui colorful taste wine co., Ltd. Anhui Bozhou Anhui Bozhou Manufacture 100.00 Set up
Shanghai Gujing Jinhao hotel Bussiness Combinations
Shanghai Shanghai Hotel manage 100.00
management company Under the Same control
Bussiness Combinations
Bozhou Gujing hotel Co.Ltd Anhui Bozhou Anhui Bozhou Hotel operating 100.00
Under the Same control
Anhui Yuanqing environmental
Anhui Bozhou Anhui Bozhou Sewage treatment 100.00 Set up
protection Co., Ltd.
Anhui Gujing Yunshang Electronic Electronic
Anhui Hefei Anhui Hefei 100.00 Set up
Commerce Co., Ltd commerce
Anhui Zhenrui Construction Engineering
Anhui Bozhou Anhui Bozhou Construction 100.00 Set up
Co., Ltd
Bozhou Gujing Distillery Mrketing Co.,
Anhui Bozhou Anhui Bozhou Commercial trade 100.00 Set up
Ltd
~ 153 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Bussiness Combinations
Wuhan Tianlong Yellow Crane Tower
Hubei Wuhan Hubei Wuhan Manufacture 51.00 Not Under the Same
Wine Co., Ltd
control
Bussiness Combinations
Tianlong Yellow Crane Tower Wine Hubei Hubei
Manufacture 51.00 Not Under the Same
Xianning Co., Ltd Xianning Xianning
control
Bussiness Combinations
Hubei Yellow Crane Tower Wine Co., Ltd Hubei Suizhou Hubei Suizhou Manufacture 51.00 Not Under the Same
control
Bussiness Combinations
Wuhan Tianlong Jindi Technology
Hubei Wuhan Hubei Wuhan Commercial trade 51.00 Not Under the Same
Development Co., Ltd
control
Bussiness Combinations
Hubei Hubei
Xianning Junhe Sales Co., Ltd Commercial trade 51.00 Not Under the Same
Xianning Xianning
control
Bussiness Combinations
Advertisement
Hubei Junhe Advertising Co., Ltd Hubei Wuhan Hubei Wuhan 51.00 Not Under the Same
marketing
control
Technology
Wuhan Yashibo Technology Co., Ltd. Hubei Wuhan Hubei Wuhan 51.00 Set up
development
Wuhan Junya Sales Co., Ltd Hubei Wuhan Hubei Wuhan Commercial trade 51.00 Set up
Note 9: The risk associated with financial instruments
The main financial instruments of the Company include equity investments, financial products, trust investment, accounts receivable, accounts
payable and etc., please see Note 6 for detail of related items. The risk associated with financial instruments, and risk management policies which
the company uses to reduce these risks are described below. The management of the Company manages and supervises the risks to ensure that
the risks can be controlled within a limited range.
9.1 The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to reduce the negative impact that is caused by the
risk of the Company to the lowest level, and to maximize the benefits of shareholders and other equity investors. Based on the targets of risk
management, the basic strategy of the Company’s risk management is to identify and analyze the risks which are faced by the Company, establish
~ 154 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
suitable risk tolerance baseline and proceed the risk management, and supervise a variety of risks timely and reliably, and control the risk within a
limited range.
9.1.1 Market Risk
9.1.1.1 Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The main business of the company is in the mainland of
China and trading with RMB, the market risk is very small
9.1.1.2 Interest rate risk - the risk of changes in cash flow
The operating fund of the company is sufficient and there is no loan in recent years, so that the risk of interest is very small for the company.
9.1.1.3 Other price risk
The financial asset available for sale and financial asset for trading of the company are measured by fair value. So the company bears the risk of
the change of security market. To decrease the risk, the company hold a combination of several equities and securities.
9.1.2. Credit Risk
The maxmum risk exposure that could cause the Company’s financial losses is associated with the default by the other party of a transation and the
financial guarantee provided by the Company as at 31 December 2016. The detail is listed below:
The carrying value of the Financial assets that is recognized in the consolidated financial statement. For the financial instrument measured by fair
value, the carrying value only represents the risk exposre, but the maxmum risk exposure will change with the future fair value.
The company only trade with authorized company with high credit record and large scale. According to the policies of the company, the client needs
to pay first then receive the goods. Only a few companies are provided with credit. Credit review is performed for customers trading with credit.
The current asset of the company is deposited in the bank with the high credit record. So the credit risk of the current asset is low
9.1.3 Liquidity risk
When managing liquidity risk, the Companymaintains and monitors adequate cash and cash equivalents decided by the management in order to
meet the needs of operation of the Company, and to reduce the impact of fluctuations in cash flows.
Note 10: Disclosure of the fair value
10.1 The fair value at the end of current year of assets and liabilities which are measured by fair value
The fair value at the end of current year
The first level The second level The third level
Items
measured by fair measured by fair measured by fair Total
value value value
1. Continuous measurement by fair value
1.1 The financial assets are measured by fair
429,190.68 429,190.68
value and the changes are recognized into current
~ 155 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
The fair value at the end of current year
The first level The second level The third level
Items
measured by fair measured by fair measured by fair Total
value value value
profit or loss
1.1.1 Trading financial assets 429,190.68 429,190.68
Equity instruments investment 429,190.68 429,190.68
1.2 Financial asset available for sale 404,029,552.27 404,029,552.27
Equity instruments investment 404,029,552.27 404,029,552.27
Total amount of liabilities continuous
404,458,742.95 404,458,742.95
measurement by fair value
10.2 Determined on the basis of continuous first level for fair value measurement of the market of project
The sustaining fair value measurement project is the stock that publicly traded in Shanghai stock exchange or Shenzhen stock exchange, and the
price is confirmed based on the stock’s closing price on the balance sheet date. If the holdings of shares in a restricted period, in accordance with
the securities and futures commission as stated in the KUAIJI ZI [2007] 21 HAO related valuation method to determine the value.
Note 11: Related parties and related party transaction
11.1 Details of the parent
Registered Shareholding Voting right
Parents Relationship Nature of business
capital in the Company % in the Company %
Drink, building materials, manufacture
Gujing Group Anhui 1,000,000,000.00 53.89 53.89
plastic products
Note: The ultimate controller is the government of Bozhou, Anhui province.
11.2 Subsidiaries
See Note 8.1 The equity in subsidiaries for details.
11.3 Details of other related parties
Other related parties Relationship
Anhui Ruifuxiang Food Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Ruijing catering management Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Haochidian Catering Co., Ltd. Affiliate of the actual controller and controlling shareholder
~ 156 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Other related parties Relationship
Shanghai Ruiyao Hotel Management Co., Ltd. Affiliate of the actual controller and controlling shareholder
Shanghai Beihai Hotel Co., Ltd Affiliate of the actual controller and controlling shareholder
Anhui Ruijing Business Travel (Group) Co., Ltd. Affiliate of the actual controller and controlling shareholder
Bozhou Hotel Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Gujing Real Estate Group Co., Ltd. Affiliate of the actual controller and controlling shareholder
Orient Ruijing Enterprise Investment Development Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Hengxin Pawn Co., Ltd. Affiliate of the actual controller and controlling shareholder
Bozhou Ruineng Thermal Power Co., Ltd. Affiliate of the actual controller and controlling shareholder
Hefei Gujing Holiday Hotel Co., Ltd. Affiliate of the actual controller and controlling shareholder
Bozhou Furuixiang high protein feed Co. Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Ruijing restaurant management Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Ruixin pawn Co. Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Zhongxin finance lease Co. Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Huixin finance invest group Co.Ltd. Affiliate of the actual controller and controlling shareholder
Hefei Longxin Financial Management Consulting Co., Ltd Affiliate of the actual controller and controlling shareholder
Bozhou Anxin Micro Finance Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Gujing Ecological industrial park management Co.Ltd. Affiliate of the actual controller and controlling shareholder
Dazhongyuan Wine valley culture tourism development Co., Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Xinyuan Municipal Garden Engineering Co., Ltd Affiliate of the actual controller and controlling shareholder
Anhui gujing hotel management Co.,Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Youxin Financing guarantee Co.,Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Aoxin Real estate development Co.,Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Lixin Electronic commerce Co.,Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Xinxin Property management Co.,Ltd. Affiliate of the actual controller and controlling shareholder
Anhui Gujing Huishenglou Catering Co.,Ltd. Affiliate of the actual controller and controlling shareholder
Bozhou Gujing Junlai Hotel management Co.,Ltd Affiliate of the actual controller and controlling shareholder
Anhui Gujing Property management Co.,Ltd. Affiliate of the actual controller and controlling shareholder
~ 157 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Other related parties Relationship
Anhui Gujing Real estate development Co.,Ltd. Affiliate of the actual controller and controlling shareholder
11.4 Transactions with related parties
11.4.1 Transactions through purchase or sell goods and accept or supply services
11.4.1.1 The situation of purchases goods or accepts services
Content Total amount during Total amount during
Related parties
of transaction current year prior year
Anhui Ruifuxiang Food Co., Ltd Purchase of material 1,827,574.51 2,852,022.30
Accept catering and
Bozhou Hotel Co., Ltd. 2,495,522.44 1,217,174.90
accommodation service
Anhui Ruijing Catering management Co., Ltd Accept catering 65,282.00 0.00
Anhui Xinyuan Municipal Garden Engineering Co., Ltd Afforestation fees 377,811.42 0.00
Hefei Gujing Holiday Hotel Purchase of goods 608,321.93 3,359,534.47
Accept restaurant and hotel
Hefei Gujing Holiday Hotel 33,317.89 141,502.71
service
Accept restaurant and hotel
Anhui gujing hotel management Co.,Ltd. 210,415.00 121,487.00
service
Accept restaurant and hotel
Bozhou Gujing Junlai Hotel management Co.,Ltd 459,023.00 552,171.00
service
Accept restaurant and hotel
Anhui Gujing Huishenglou Catering Co.,Ltd. 3,559,381.00 4,378,795.00
service
Total 9,636,649.19 12,622,687.38
11.4.1.2 The situation of sells goods or rendering services
Total amount during Total amount during
Related parties Content of transaction
current year prior year
Gujing Group Sales of micro metrail 62,081.16 200,364.98
Provide catering and
Gujing Group 338,828.62 294,505.60
accommodation service
Gujing Group Provide advertising service 5,849.06 0.00
~ 158 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Total amount during Total amount during
Related parties Content of transaction
current year prior year
Anhui Ruifuxiang Food Co., Ltd Sales of distilled spirit 362,589.75 199,461.54
Bozhou Hotel Co., Ltd. Sales of distilled spirit 79,658.12 131,538.47
Bozhou Gujing Hotel Co., Ltd. Sales of distilled spirit 30,094.36 10,153.85
Anhui Gujing Real Estate Group Co., Ltd. Sales of distilled spirit 53,125.12 44,692.31
Anhui Gujing Real Estate Group Co., Ltd. Provide advertising service 28,301.88 0.00
Provide catering and
Anhui Gujing Real Estate Group Co., Ltd. 0.00 5,550.00
accommodation service
Anhui Ruijing catering Co., Ltd. Sales of distilled spirit 3,076.92 109,786.32
Anhui Haochidian Catering Co., Ltd. Sales of distilled spirit 3,051.28 0.00
Shanghai Ruiyao Hotel Management Co., Ltd. Sales of distilled spirit 4,461.54 0.00
Shanghai Beihai Hotel Co., Ltd Sales of distilled spirit 8,153.85 0.00
Hefei Longxin Financial Management Consulting Co., Ltd Sales of distilled spirit 6,923.08 0.00
Bozhou Ruineng Thermal Power Co., Ltd. Sales of distilled spirit 168,252.32 132,923.07
Bozhou Ruineng Thermal Power Co., Ltd. Provide advertisement service 0.00 14,245.28
Anhui Hengxin Pawn Co., Ltd. Sales of distilled spirit 9,300.51 4,692.31
Bozhou Anxin Micro fiannce Co., Ltd Sales of distilled spirit 7,081.03 2,230.77
Provide catering and
Bozhou Anxin Micro fiannce Co., Ltd 1,960.00 0.00
accommodation service
Anhui Ruijing Business Travel (Group) Co., Ltd Sales of distilled spirit 3,058,386.32 1,045,620.52
Provide catering and
Anhui Ruijing Business Travel (Group) Co., Ltd 5,500.00 0.00
accommodation service
Anhui Xinyuan Municipal Garden Engineering Co., Ltd Sales of micro metrail 5,461.03 0.00
Anhui Xinyuan Municipal Garden Engineering Co., Ltd Sales of distilled spirit 10,341.88 0.00
Hefei Gujing Holiday Hotel Co., Ltd Sales of distilled spirit 0.00 703,846.16
Provide catering and
Hefei Gujing Holiday Hotel Co., Ltd 4,369.31 0.00
accommodation service
~ 159 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Total amount during Total amount during
Related parties Content of transaction
current year prior year
Anhui gujing hotel management Co.,Ltd. Sales of distilled spirit 55,384.64 453,495.71
Provide catering and
Anhui Zhongxin finance lease Co. Ltd. 3,000.00 0.00
accommodation service
Anhui Zhongxin finance lease Co. Ltd. Sales of distilled spirit 7,157.96 1,999.99
Anhui Ruixin pawn Co. Ltd. Sales of distilled spirit 27,363.09 2,153.85
Anhui Huixin finance invest group Co.Ltd. Sales of distilled spirit 17,841.03 17,307.69
Anhui Huixin finance invest group Co.Ltd. Provide advertisment service 0.00 5,566.04
Bozhou Furuixiang high protein feed Co. Ltd. Sales of micro metrail 0.00 45,853.01
Bozhou Furuixiang high protein feed Co. Ltd. Sales of distilled spirit 23,641.03 15,073.07
Anhui Youxin Financing guarantee Co.,Ltd. Sales of distilled spirit 14,335.39 3,445.57
Provide catering and
Anhui Youxin Financing guarantee Co.,Ltd. 580.00 0.00
accommodation service
Anhui Youxin Financing guarantee Co.,Ltd. Provide advertisment service 0.00 2,830.19
Dazhongyuan Wine valley culture tourism development Co., Ltd. Sales of distilled spirit 370,904.61 2,230.77
Dazhongyuan Wine valley culture tourism development Co., Ltd. Sales of micro metrail 36,044.26 43,506.53
Provide catering and
Dazhongyuan Wine valley culture tourism development Co., Ltd. 42,840.00 0.00
accommodation service
Dazhongyuan Wine valley culture tourism development Co., Ltd. Water and electricity fees 62,374.00 0.00
Anhui Aoxin Real estate development Co.,Ltd. Sales of distilled spirit 7,581.55 1,230.76
Anhui Lixin Electronic commerce Co.,Ltd. Sales of distilled spirit 7,021.54 1,076.92
Anhui Xinxin Property management Co.,Ltd. Sales of distilled spirit 31,998.97 10,615.39
Anhui Gujing Huishenglou Catering Co.,Ltd. Sales of distilled spirit 26,794.87 151,598.29
Bozhou Gujing Junlai Hotel management Co.,Ltd Sales of distilled spirit 5,076.92 6,153.85
Anhui Gujing Property management Co.,Ltd. Sales of distilled spirit 43,230.77 14,538.46
Anhui Gujing Real estate development Co.,Ltd. Sales of distilled spirit 95,537.44 180,923.07
Anhui Gujing Real estate development Co.,Ltd. Provide catering and 1,220.00 0.00
~ 160 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Total amount during Total amount during
Related parties Content of transaction
current year prior year
accommodation service
Anhui Gujing Ecological industrial park management Co.Ltd. Sales of micro metrail 0.00 251,503.76
Total 5,136,775.21 4,110,714.10
11.4.2 Lease between related parties
11.4.2.1 The Company is as the Leasee
Lease rental recognized in Lease rental recognized in
leasor Classification
current year prior year
Gujing Group Buildings and constructions 2,190,476.25 2,300,000.00
Bozhou Hotel Co.Ltd. Buildings and constructions 20,000.00 0.00
11.4.2.2 The Company is as the leasor
Lease rental recognized in Lease rental recognized in
Leasee Classification
current year prior year
Anhui gujing hotel management Co.,Ltd. Buildings and constructions 347,402.13 201,055.54
11.5 The balance of payables and receivables among related parties
11.5.1 Receivables owed by related parties
Related party Balance as at 31/12/2016 Balance as at 31/12/2015
Other receivables:
Dazhongyuan Wine valley culture tourism development Co., Ltd. 0.00 6,186.47
Total 0.00 6,186.47
11.5.2 Payables owed to related parties
Related party Balance as at 31/12/2016 Balance as at 31/12/2015
Receivable in advance:
Anhui Ruijing catering management Co., Ltd. 599,136.01 299,280.01
Hefei Gujing Holiday Hotel Co., Ltd. 0.00 16,100.00
Bozhou Hotel Co., Ltd. 36,000.00 10,000.00
Anhui Gujing Real Estate Group Co., Ltd. 0.00 5,015.00
Anhui Lixin Electronic commerce Co.,Ltd. 0.00 2,419.20
~ 161 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Related party Balance as at 31/12/2016 Balance as at 31/12/2015
Bozhou Furuixiang high protein feed Co. Ltd. 13,200.00 0.00
Anhui Haochidian catering Co., Ltd. 115,200.00 0.00
Anhui Ruifuxiang Food Co., Ltd 195,200.00 0.00
Total 958,736.01 332,814.21
Accounts payable
Anhui Gujing Huishenglou Catering Co.,Ltd. 0.00 10,000.00
Total 0.00 10,000.00
Other payable:
Anhui Gujing Huishenglou Catering Co.,Ltd. 15,500.00 24,500.00
Anhui Ruifuxiang Food Co., Ltd. 0.00 2,000.00
Hefei Gujing Holiday Hotel Co., Ltd. 0.00 24,000.00
Anhui gujing hotel management Co.,Ltd. 0.00 3,600.00
Anhui Ruijing restaurant management Co., Ltd. 0.00 1,200.00
Anhui Ruijing Business Travel (Group) Co., Ltd 38,043.40 69,568.74
Bozhou Hotel Co., Ltd. 0.00 23,400.00
Total 53,543.40 148,268.74
Note 12: Commitments and contingencies
12.1 Important commitments
Irrevocable lease contracts under performance and their financial effects as at the end of current year.
Items Balance as at 31/12/2016 Balance as at 31/12/2015
The minimum lease payments of irrevocable operating lease
contracts:
1st year after the balance sheet date 2,300,000.00 2,300,000.00
2nd year after the balance sheet date 2,300,000.00 2,300,000.00
3rd year after the balance sheet date 2,300,000.00 2,300,000.00
Subsequent years 23,958,333.33 26,258,333.33
Total 30,858,333.33 33,158,333.33
12.2 Contingencies
~ 162 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
12.2.1 Because of the infringement of the Company’s trademark rights in the market, the Company filed lawsuits against the behavior of
infringement. Since the claimed amounts are insignificant individually or in aggregate, it is not expected to have a significant impact on the
Company.
12.2.2 Other than the above matters, the Company has no other contingencies.
Note 13: Post reporting date events
On 26 April 2017, the Company held 8th meeting of seventh session board of directors which approved profit distribution plan for the year of 2016.
The company plan to use the total share of 503,600,000.00 of the company at 31/12/2016 as a base, to distribute CNY 6.00 (before tax) for every
10 shares, and as result to distribute CNY 302,160,000.00to the all shareholder. The profit distribution plan is pending resolution by the
shareholders’ meeting.
Note 14: Other signification events
Operation division information
The company donot confirmed the operation division in accordance with the internal organizational structure, management requirements and
internal reporting system, so that there has no need to disclose division information report on the basis of the operation division.
Note 15: Notes to the main elements of the separate financial statement of the Company
15.1 Accounts receivable
15.1.1 Disclosure by classification
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Accounts receivable portfolio subject to
6,979,229.19 100.00 601,883.19 8.62 6,377,346.00
impairment by credit risk
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 6,979,229.19 100.00 601,883.19 8.62 6,377,346.00
(Continued)
Items Balance as at 31/12/2015
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Accounts receivable portfolio subject to
4,940,776.33 100.00 590,339.09 11.95 4,350,437.24
impairment by credit risk
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 4,940,776.33 100.00 590,339.09 11.95 4,350,437.24
15.1.1.1 Accounts receivable using the age analysis method for measurement of allowance for bad debt
Balance as at 31/12/2016
Age
Carrying amount Allowance for bad debt % of total
Within 1 year 0.00 0.00 0.00
Include：within 6 months 0.00 0.00 0.00
7-12 months 0.00 0.00 0.00
1 to 2 year 141,121.87 14,112.19 10.00
2 to 3 year 0.00 0.00 0.00
Over 3 years 587,771.00 587,771.00 100.00
Total 728,892.87 601,883.19 82.57
15.1.1.2 Accounts receivable using the other method for measurement of allowance for bad debt
Balance as at 31/12/2016
Related parties
Carrying amount Allowance for bad debt % of total
Related parties 6,250,336.32 0.00 0.00
Total 6,250,336.32 0.00 0.00
15.1.2 Recognization, recovery and reversal of allowance for bad debt
Reversal of the allowance is CNY 11,544.10.
15.1.3 Accounts receivable written off during the current year
~ 164 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
There is no accounts receivable written off during the current year.
15.1.4 Details of top five accounts receivable
The total amount of top five accounts receivables which are summaried by the balance as at the end of current year is CNY6,716,483.19,
accounting for 96.24% of the total accounts receivable balance as at the end of current year, the total amount of corresponding allowence for bad
debts is CNY 506,657.19.
15.2 Other receivable
15.2.1 Disclosure by classification
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 41,342,938.53 28.07 41,342,938.53 100.00 0.00
impairment
Other receivable portfolio subject to
105,925,699.86 71.93 410,793.52 0.39 105,514,906.34
impairment by credit risk
Other receivable of individually insignificance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Total 147,268,638.39 100.00 41,753,732.05 28.35 105,514,906.34
(Continued)
Balance as at 31/12/2015
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 41,342,938.53 27.69 41,342,938.53 100.00 0.00
impairment
Other receivable portfolio subject to
107,957,715.78 72.31 332,695.93 0.31 107,625,019.85
impairment by credit risk
Other receivable of individually insignificance
0.00 0.00 0.00 0.00 0.00
subject to individually assessment for
~ 165 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Balance as at 31/12/2015
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
impairment
Total 149,300,654.31 100.00 41,675,634.46 27.91 107,625,019.85
15.2.1.1 Other receivable of individual significance subject to individually assessment for impairment
Balance at 31/12/2016
Other receivable
Other receivable Allowance % of total Reasons
Jiaoqiao securities 11,840,500.00 11,840,500.00 100.00 Company went through bankrupt
Hengxin securities 29,502,438.53 29,502,438.53 100.00 Company went through bankrupt
Total 41,342,938.53 41,342,938.53 ——
15.2.1.2 Other receivables using the age analysis method for measurement of allowance for bad debt
Balance as at 31/12/2016
Age
Carrying amount Allowance for bad debt % of total
Within 1 year 1,088,982.87 12,358.67 1.13
Include：within 6 months 1,052,261.97 10,522.62 1.00
7 to 12 months 36,720.90 1,836.05 5.00
1 to 2 years 19,870.70 1,987.07 10.00
2 to 3 years 704,476.40 352,238.20 50.00
Over 3 years 44,209.58 44,209.58 100.00
Total 1,857,539.55 410,793.52 22.11
15.2.1.3 Accounts receivable using the other method for measurement of allowance for bad debt
Balance as at 31/12/2016
Related parties
Carrying amount Allowance for bad debt % of total
Related parties 104,068,160.31 0.00 0.00
Total 104,068,160.31 0.00 0.00
15.2.2 Recognition, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the current year is CNY 78,097.59.
~ 166 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
15.2.3 Accounts receivable written off during the current year
There has no other receivable written off during the current reporting period.
15.2.4 Classification of other receivable
Nature Balance at 31/12/2016 Balance at 31/12/2015
Related party balance in consolidation 104,068,160.31 105,475,000.00
Investment in securities 41,342,938.53 41,342,938.53
Deposit and Assurant 1,191,658.09 1,295,081.09
Employee borrowing 72,924.00 209,766.20
Rent, water and gas 296,244.71 327,679.52
Others 296,712.75 650,188.97
Total 147,268,638.39 149,300,654.31
15.2.5 Details of top five other receivable:
Related party Balance as at % of total Allowance balance
Debtor Nature Age
relationships 31/12/2016 amount at the year end
The first Subsidiary Related party balance 87,465,000.00 Within 3 years 59.39 0.00
The second Third party Invest in securities 29,502,438.53 Over 3 years 20.03 29,502,438.53
The third Subsidiary Related party balance 16,171,003.05 Within 6 months 10.98 0.00
The forth Third party Invest in securities 11,840,500.00 Over 3 years 8.04 11,840,500.00
The fift Third party Prepaid electricity fee 102,265.55 Within 6 months 0.07 1,022.66
Total — 145,081,207.13 — 98.51 41,343,961.19
15.3 Long-term equity investments
15.3.1 Disclosure by classification
Balance as at 31/12/2016 Balance as at 31/12/2015
Items Carrying allowance for Net carrying Carrying allowance for Net carrying
amount bad debts amount amount bad debts amount
Invest to
1,155,089,408.32 0.00 1,155,089,408.32 354,089,408.32 0.00 354,089,408.32
subsidiaries
Total 1,155,089,408.32 0.00 1,155,089,408.32 354,089,408.32 0.00 354,089,408.32
15.3.2 Details of long-term equity investments
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Gujing Distillery Original Chinese Spirits Annual Report 2016
Carrying
amount of
Balance as at Increase during Decrease during Balance as at Impairment
Name impairment
31/12/2015 current year current year 31/12/2016 allowance
allowance as
at 31/12/2016
Gujing Sales 84,864,497.89 0.00 0.00 84,864,497.89 0.00 0.00
Longrui Glass 85,793,666.00 0.00 0.00 85,793,666.00 0.00 0.00
Shanghai Gujing Jinhao 49,906,854.63 0.00 0.00 49,906,854.63 0.00 0.00
Gujing Hotel 648,646.80 0.00 0.00 648,646.80 0.00 0.00
Gujing Transportation 6,875,743.00 0.00 0.00 6,875,743.00 0.00 0.00
Gujing Packaging 30,000,000.00 0.00 30,000,000.00 0.00 0.00 0.00
Anhui Ruisiweier 50,000,000.00 0.00 0.00 50,000,000.00 0.00 0.00
Anhui colorful taste Co.Ltd 30,000,000.00 0.00 0.00 30,000,000.00 0.00 0.00
Anhui Yuanqing
environmental protection Co., 16,000,000.00 0.00 0.00 16,000,000.00 0.00 0.00
Ltd.
Anhui Gujing Yunshang
Electronic Commerce Co., 0.00 5,000,000.00 0.00 5,000,000.00 0.00 0.00
Ltd.
Anhui Zhenrui Construction
0.00 10,000,000.00 0.00 10,000,000.00 0.00 0.00
Engineering Co., Ltd
Wuhan Tianlong Yellow
0.00 816,000,000.00 0.00 816,000,000.00 0.00 0.00
Crane Tower Wine Co., Ltd
Total 354,089,408.32 831,000,000.00 30,000,000.00 1,155,089,408.32 0.00 0.00
15.4 Operating revenues and costs
Current year Prior year
Items
Revenue Costs Revenue Costs
Revenue from principal operating activities 3,255,168,021.47 1,396,232,148.48 2,964,146,832.70 1,505,986,199.51
Revenue from other operating activities 53,231,228.56 40,562,309.03 42,921,317.48 30,332,052.29
Total operating revenue 3,308,399,250.03 1,436,794,457.51 3,007,068,150.18 1,536,318,251.80
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Gujing Distillery Original Chinese Spirits Annual Report 2016
15.5 Investment income
Items Current year Prior year
Investment income from long term equity investment using cost mothed 415,883,385.13 505,901,386.51
Investment income from disposal of financial assets measured by fair value
13,091,633.55 7,160,227.36
with changes in fair value recognised in profit or loss
Investment income from available for sale financial asset during the holding period 77,779,247.77 61,455,959.33
Investment income from disposal of available for sale financial assets 283,347.55 0.00
Total 507,037,614.00 574,517,573.20
Note 16: Supplementary information
16.1 Extraordinary gains or losses for current year
Supplemental information Total amount Explanation
Gains or losses arising from disposal of non-current assets -6,319,619.72
Tax repayments or waiving of taxes not officially authorized or not with proper authorization 0.00
Government grants accounted for through profit or loss for the current reporting period (excl. grants
25,336,275.56
directly associated with the Company’s operations and subject to national quotas)
Cost of monetary funds charged on non-financial institutions accounted for through profit or loss for the
0.00
current reporting period
Gains from the investment costs paid less than the acquirer’s interest in the fair value of the
0.00
bargainor’s identifiable net assets( During acquire subsidiary、joint venture and associates)
Gains or losses arising from non-monetary assets exchange 0.00
Gains or losses arising from entrusted assets and investments 0.00
Impairment allowances arising from force majeure, such as natural disasters 0.00
Gain or loss arising from debt restructuring 0.00
Restructuring expenses, such as employee settlement and relocation costs and costs of integration 0.00
Gains or losses arising from transactions of which the prices are deemed unfair (the difference
0.00
between the price and the fair value)
Net profit or loss of subsidiaries acquired through business combination under common control from
0.00
the beginning of the current reporting period to the combination dates.
Gains or losses arising from contingent events not associated with the Company’s operating activities 0.00
~ 169 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Supplemental information Total amount Explanation
Gains or losses arising from changes in the fair values of financial instruments held for trading (excl.
effective hedging instruments associated with the Company’s operating activities) or disposal of
16,263,956.97
financial instruments held for trading and available-for-sale financial assets (excl. effective hedging
instruments associated with the Company’s operating activities)
Recovery of impairment allowance for receivables subject to individual assessment for impairment 0.00
Gains or losses arising from entrusted borrowings 0.00
Gains or losses arising from changes in the fair values of investment property measured at fair value 0.00
Impact of one-off adjustment required by tax laws, accounting standards and relevant regulations on
0.00
the profit or loss for the current reporting period
Revenue arising from entrusted operation 0.00
Other non-operating revenue and non-operating expenses not listed above 14,343,655.95
Other gains or losses satisfying the definition of extraordinary gains or losses 0.00
Subtotal 49,624,268.76
Less: Effect of corporate income tax 12,229,198.63
Less: Net amount attributable to minority interests (after tax) 299,105.29
Total 37,095,964.84
Note: Extraordinary gains or losses event use “+”express revenue and income, “-” express loss and expenditure.
The Company recognized non-recurring categories of activities in accordance with the Explanatory Announcement regarding Information Disclosure
by Publicly Listed Company No. 1 - Non-recurring Profit and Loss (ZhengjianhuiGonggao [2008] No.43).
16.2 Yield Rate of Net Assets and Earnings per Share
Earnings Per Share(Yuan per share)
Profits for the reporting period Weighted average yield rate of net assets%
Basic EPS Diluted EPS
Net profits attributable to ordinary
15.88 1.65 1.65
shareholders
Net profits attributable to ordinary
shareholders (excl. extraordinary gains or 15.17 1.57 1.57
losses)
~ 170 ~
Gujing Distillery Original Chinese Spirits Annual Report 2016
Section XI Documents Available for Reference
(I) Financial statements carrying the signatures and stamps of the Company Principal, the Chief
Financial Officer and the person in charge of the accounting organ;
(II) Original copy of the Auditor's Report stamped by the accounting firm and signed and stamped
by the registered accountants;
(III) All originals of the Company’s documents and announcements, which have been publicly
disclosed in media designated by the China Securities Regulatory Commission in the Reporting
Period as well as the originals of all the announcements placed in the office of the Company.
(IV) Annual Report disclosed in other security markets.
Chairman of the Board:
Anhui Gujing Distillery Company Limited
April 26, 2017
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