ANHUI GUJING DISTILLERY COMPANY LIMITED
SEMI-ANNUAL FINANCIAL REPORT 2019
August 2019
I. Auditor’s Report
Whether the interim report has been audited?
□Yes √ No
The interim report of the Company has not been audited.
II. Financial Statements
The unit of the financial statements attached: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
30 June 2019
Unit: RMB
Item 30 June 2019 31 December 2018
Current assets:
Monetary capital 3,179,334,513.57 1,705,760,865.12
Settlement reserve
Interbank loans granted
Trading financial assets 1,573,596,291.10 0.00
Financial assets at fair value through
0.00 622,892.96
profit or loss
Derivative financial assets
Notes receivable 1,317,423,562.34 1,347,427,811.34
Accounts receivable 30,086,692.70 29,748,068.74
Financing backed by accounts
receivable
Prepayments 129,888,415.85 182,558,000.75
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 48,528,411.45 43,342,878.22
Including: Interest receivable 30,443,178.08 24,923,178.08
Dividends receivable
Financial assets purchased under
resale agreements
2
Inventories 2,417,356,086.41 2,407,306,664.86
Contract assets
Assets classified as held for sale
Current portion of non-current assets 300,000,000.00 300,000,000.00
Other current assets 29,538,776.67 3,012,478,687.20
Total current assets 9,025,752,750.09 9,029,245,869.19
Non-current assets:
Loans and advances to customers
Investments in debt obligations
Available-for-sale financial assets 0.00 206,393,107.46
Investments in other debt obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 4,735,005.81 4,900,000.00
Investments in other equity
instruments
Other non-current financial assets
Investment property 4,868,657.29 5,027,228.53
Fixed assets 1,684,243,384.48 1,763,988,530.56
Construction in progress 162,876,312.37 93,320,557.56
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 733,039,684.21 742,083,609.10
R&D expense
Goodwill 478,283,495.29 478,283,495.29
Long-term prepaid expense 75,772,600.79 83,561,473.46
Deferred income tax assets 149,917,708.59 86,580,171.06
Other non-current assets 200,574,026.00 16,544,407.51
Total non-current assets 3,494,310,874.83 3,480,682,580.53
Total assets 12,520,063,624.92 12,509,928,449.72
Current liabilities:
Short-term borrowings
Borrowings from central bank
3
Interbank loans obtained
Trading financial liabilities
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 476,808,340.53 349,203,413.72
Accounts payable 337,532,981.76 484,952,598.59
Advances from customers 517,109,674.60 1,149,143,310.48
Financial assets sold under repurchase
agreements
Customer deposits and interbank
deposits
Payables for acting trading of
securities
Payables for underwriting of
securities
Payroll payable 310,846,649.23 457,299,476.43
Taxes payable 368,743,282.05 372,993,624.18
Other payables 1,337,734,331.13 1,192,020,147.82
Including: Interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance payables
Contract liabilities
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities 443,198,383.65 295,164,745.44
Total current liabilities 3,791,973,642.95 4,300,777,316.66
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred shares
4
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
Deferred income 74,300,122.46 76,636,500.55
Deferred income tax liabilities 104,491,018.40 102,764,515.11
Other non-current liabilities
Total non-current liabilities 178,791,140.86 179,401,015.66
Total liabilities 3,970,764,783.81 4,480,178,332.32
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 1,295,405,592.25 1,295,405,592.25
Less: Treasury stock
Other comprehensive income 0.00 4,794,830.59
Specific reserve
Surplus reserves 256,902,260.27 256,902,260.27
General reserve
Retained earnings 6,038,992,486.07 5,541,281,341.47
Total equity attributable to owners of
8,094,900,338.59 7,601,984,024.58
the Company as the parent
Non-controlling interests 454,398,502.52 427,766,092.82
Total owners’ equity 8,549,298,841.11 8,029,750,117.40
Total liabilities and owners’ equity 12,520,063,624.92 12,509,928,449.72
Legal representative: Liang Jinhui The Company’s chief accountant: Ye Changqing
Head of the Company’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2019 31 December 2018
5
Current assets:
Monetary capital 1,802,891,540.10 1,078,172,917.59
Trading financial assets 1,283,596,291.10 0.00
Financial assets at fair value through
0.00 622,892.96
profit or loss
Derivative financial assets
Notes receivable 1,108,974,294.31 1,256,336,386.34
Accounts receivable 10,652,383.81 9,385,950.54
Financings backed by accounts
receivable
Prepayments 32,040,928.40 10,869,911.54
Other receivables 105,037,195.62 110,800,665.19
Including: Interest receivable
Dividends receivable
Inventories 2,054,730,290.11 2,125,826,967.11
Contract assets
Assets classified as held for sale
Current portion of non-current assets
Other current assets 10,900,000.00 1,764,267,968.83
Total current assets 6,408,822,923.45 6,356,283,660.10
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets 0.00 206,393,107.46
Investments in other debt obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 1,148,213,665.32 1,148,213,665.32
Investments in other equity
instruments
Other non-current financial assets
Investment property 4,868,657.29 24,715,657.40
Fixed assets 1,250,784,248.86 1,290,714,455.79
Construction in progress 152,636,993.95 86,634,753.93
Productive living assets
Oil and gas assets
6
Right-of-use assets
Intangible assets 186,197,455.70 189,968,142.25
R&D expense
Goodwill
Long-term prepaid expense 51,792,292.31 56,643,945.05
Deferred income tax assets 25,828,182.26 37,415,458.17
Other non-current assets 574,026.00 12,474,026.00
Total non-current assets 2,820,895,521.69 3,053,173,211.37
Total assets 9,229,718,445.14 9,409,456,871.47
Current liabilities:
Short-term borrowings
Trading financial liabilities
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 49,462,005.58 28,648,913.72
Accounts payable 250,260,975.12 362,290,556.21
Advances from customers 1,270,017,763.69 1,123,125,892.84
Contract liabilities
Payroll payable 94,335,702.40 117,748,485.96
Taxes payable 155,090,249.07 161,176,957.25
Other payables 267,083,819.65 372,902,293.22
Including: Interest payable
Dividends payable
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities 3,203,092.77 32,605,794.55
Total current liabilities 2,089,453,608.28 2,198,498,893.75
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
7
Long-term payables
Long-term payroll payable
Provisions
Deferred income
Deferred income tax liabilities 34,425,436.60 36,417,554.85
Other non-current liabilities 7,546,971.67 4,828,737.52
Total non-current liabilities
Total liabilities 41,972,408.27 41,246,292.37
Owners’ equity: 2,131,426,016.55 2,239,745,186.12
Share capital
Other equity instruments 503,600,000.00 503,600,000.00
Including: Preferred shares
Perpetual bonds
Capital reserves
Less: Treasury stock 1,247,162,107.35 1,247,162,107.35
Other comprehensive income
Specific reserve 0.00 4,794,830.59
Surplus reserves
General reserve 251,800,000.00 251,800,000.00
Retained earnings 5,095,730,321.24 5,162,354,747.41
Total owners’ equity 7,098,292,428.59 7,169,711,685.35
Total liabilities and owners’ equity 9,229,718,445.14 9,409,456,871.47
3. Consolidated Income Statement
Unit: RMB
Item H1 2019 H1 2018
1. Revenue 5,988,112,999.09 4,783,083,895.33
Including: Operating revenue 5,988,112,999.09 4,783,083,895.33
Interest income
Premium income
Handling charge and
commission income
2. Costs and expenses 4,416,581,005.79 3,629,658,388.11
Including: Cost of sales 1,394,156,734.55 1,042,675,468.24
8
Interest expense
Handling charge and
commission expense
Surrenders
Net claims paid
Net amount provided as
insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
expense
Taxes and surcharges 869,527,762.04 729,467,173.53
Selling expense 1,840,489,439.70 1,597,300,315.17
Administrative expense 302,045,457.13 272,473,203.36
R&D expense 14,664,237.67 8,027,134.36
Finance costs -4,302,625.30 -20,284,906.55
Including: Interest
14,173,972.09 0.00
expense
Interest
20,466,649.02 21,644,883.48
income
Add: Other income 30,783,918.68 4,487,036.05
Return on investment (“-” for loss) 77,347,047.53 68,775,019.95
Including: Share of profit or loss
of joint ventures and associates
Income from the
derecognition of financial assets at
amortized cost (“-” for loss)
Foreign exchange gain (“-” for
loss)
Net gain on exposure hedges (“-”
for loss)
Gain on changes in fair value (“-”
11,320,345.56 236,707.77
for loss)
Credit impairment loss (“-” for
loss)
Asset impairment loss (“-” for loss) -6,421,818.07 -1,171,911.36
Asset disposal income (“-” for 119,488.56 154,437.81
9
loss)
3. Operating profit (“-” for loss) 1,684,680,975.56 1,225,906,797.44
Add: Non-operating income 11,150,763.53 14,758,797.76
Less: Non-operating expense 1,737,611.07 4,438,013.04
4. Profit before tax (“-” for loss) 1,694,094,128.02 1,236,227,582.16
Less: Income tax expense 419,145,404.31 320,789,915.24
5. Net profit (“-” for net loss) 1,274,948,723.71 915,437,666.92
5.1 By operating continuity
5.1.1 Net profit from continuing
1,274,948,723.71 915,437,666.92
operations (“-” for net loss)
5.1.2 Net profit from discontinued
operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to
1,248,316,314.01 892,422,337.64
owners of the Company as the parent
5.2.1 Net profit attributable to
26,632,409.70 23,015,329.28
non-controlling interests
6. Other comprehensive income, net of
0.00 -45,102,275.58
tax
Attributable to owners of the Company
0.00 -45,102,275.58
as the parent
6.1 Items that will not be
reclassified to profit or loss
6.1.1 Changes caused by
remeasurements on defined benefit
pension schemes
6.1.2 Other comprehensive
income that will not be reclassified to
profit or loss under the equity method
6.1.3 Changes in the fair value of
investments in other equity instruments
6.1.4 Changes in the fair value of
the company’s credit risks
6.1.5 Other
6.2 Items that will be reclassified to
0.00 -45,102,275.58
profit or loss
6.2.1 Other comprehensive
income that will be reclassified to profit
10
or loss under the equity method
6.2.2 Changes in the fair value of
investments in other debt obligations
6.2.3 Gain/Loss on changes in the
fair value of available-for-sale financial 0.00 -45,102,275.58
assets
6.2.4 Other comprehensive
income arising from the reclassification
of financial assets
6.2.5 Gain/Loss arising from the
reclassification of held-to-maturity
investments to available-for-sale financial
assets
6.2.6 Allowance for credit
impairments in investments in other debt
obligations
6.2.7 Reserve for cash flow
hedges
6.2.8 Differences arising from the
translation of foreign
currency-denominated financial
statements
6.2.9 Other
Attributable to non-controlling
interests
7. Total comprehensive income 1,274,948,723.71 870,335,391.34
Attributable to owners of the Company
1,248,316,314.01 847,320,062.06
as the parent
Attributable to non-controlling
26,632,409.70 23,015,329.28
interests
8. Earnings per share
8.1 Basic earnings per share 2.48 1.77
8.2 Diluted earnings per share 2.48 1.77
Legal representative: Liang Jinhui The Company’s chief accountant: Ye Changqing
Head of the Company’s financial department: Zhu Jiafeng
11
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2019 H1 2018
1. Operating revenue 3,144,682,463.58 2,373,509,719.96
Less: Cost of sales 1,277,918,576.91 962,446,727.32
Taxes and surcharges 764,598,846.12 612,880,006.38
Selling expense 45,886,471.81 90,185,702.99
Administrative expense 202,658,261.68 183,435,604.67
R&D expense 9,036,129.81 7,385,784.90
Finance costs -2,059,057.16 -17,205,534.12
Including: Interest expense 14,006,847.09 0.00
Interest income 17,740,923.04 20,244,281.30
Add: Other income 3,372,718.25 2,363,480.01
Return on investment (“-” for
31,883,868.76 61,302,268.33
loss)
Including: Share of profit or
loss of joint ventures and associates
Income from the
derecognition of financial assets at
amortized cost (“-” for loss)
Net gain on exposure hedges (“-”
for loss)
Gain on changes in fair value (“-”
11,320,345.56 236,707.77
for loss)
Credit impairment loss (“-” for
loss)
Asset impairment loss (“-” for
-6,131,316.45 -1,440,847.72
loss)
Asset disposal income (“-” for
36,552.41 0.00
loss)
2. Operating profit (“-” for loss) 887,125,402.94 596,843,036.21
Add: Non-operating income 9,342,723.23 12,278,301.09
Less: Non-operating expense 1,225,313.77 3,316,344.52
3. Profit before tax (“-” for loss) 895,242,812.40 605,804,992.78
Less: Income tax expense 211,262,069.16 162,576,738.06
4. Net profit (“-” for net loss) 683,980,743.24 443,228,254.72
12
4.1 Net profit from continuing
683,980,743.24 443,228,254.72
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
0.00 -45,064,475.58
tax
5.1 Items that will not be reclassified
to profit or loss
5.1.1 Changes caused by
remeasurements on defined benefit
pension schemes
5.1.2 Other comprehensive income
that will not be reclassified to profit or
loss under the equity method
5.1.3 Changes in the fair value of
investments in other equity instruments
5.1.4 Changes in the fair value of
the company’s credit risks
5.1.5 Other
5.2 Items that will be reclassified to
0.00 -45,064,475.58
profit or loss
5.2.1 Other comprehensive income
that will be reclassified to profit or loss
under the equity method
5.2.2 Changes in the fair value of
investments in other debt obligations
5.2.3 Gain/Loss on changes in the
fair value of available-for-sale financial 0.00 -45,064,475.58
assets
5.2.4 Other comprehensive income
arising from the reclassification of
financial assets
5.2.5 Gain/Loss arising from the
reclassification of held-to-maturity
investments to available-for-sale
financial assets
5.2.6 Allowance for credit
impairments in investments in other
debt obligations
13
5.2.7 Reserve for cash flow hedges
5.2.8 Differences arising from the
translation of foreign
currency-denominated financial
statements
5.2.9 Other
6. Total comprehensive income 683,980,743.24 398,163,779.14
7. Earnings per share
7.1 Basic earnings per share 1.36 0.88
7.2 Diluted earnings per share 1.36 0.88
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2019 H1 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities
5,352,480,704.00 4,168,785,414.04
and rendering of services
Net increase in customer deposits and
interbank deposits
Net increase in borrowings from
central bank
Net increase in loans from other
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Interest, handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Net proceeds for acting trading of
securities
Tax rebates 15,816,253.89 1,526,552.28
14
Cash generated from other operating
276,731,904.68 578,221,173.31
activities
Subtotal of cash generated from
5,645,028,862.57 4,748,533,139.63
operating activities
Payments for commodities and
899,005,913.59 805,659,265.35
services
Net increase in loans and advances to
customers
Net increase in deposits in central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
Net increase in financial assets held
for trading
Net increase in interbank loans
granted
Interest, handling charges and
commissions paid
Policy dividends paid
Cash paid to and for employees 1,006,137,070.65 777,363,928.00
Taxes paid 2,001,653,338.87 1,875,377,764.19
Cash used in other operating
696,498,790.63 621,185,290.48
activities
Subtotal of cash used in operating
4,603,295,113.74 4,079,586,248.02
activities
Net cash generated from/used in
1,041,733,748.83 668,946,891.61
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 2,576,300,054.88 1,050,984,415.12
Return on investment 72,002,136.32 64,643,822.92
Net proceeds from the disposal of
fixed assets, intangible assets and other 33,700.00 170,207.20
long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other investing
activities
Subtotal of cash generated from 2,648,335,891.20 1,115,798,445.24
15
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other 152,296,054.86 160,906,209.61
long-lived assets
Payments for investments 1,222,560,163.50 1,221,541,796.23
Net increase in pledged loans granted
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
1,374,856,218.36 1,382,448,005.84
activities
Net cash generated from/used in
1,273,479,672.84 -266,649,560.60
investing activities
3. Cash flows from financing activities:
Capital contributions received
Including: Capital contributions by
non-controlling interests to subsidiaries
Borrowings obtained
Net proceeds from issuance of bonds
Cash generated from other financing
activities
Subtotal of cash generated from
financing activities
Repayments of borrowings
Payments for interest and dividends 755,400,000.00 503,600,000.00
Including: Dividends paid by
subsidiaries to non-controlling interests
Cash used in other financing
activities
Subtotal of cash used in financing
755,400,000.00 503,600,000.00
activities
Net cash generated from/used in
-755,400,000.00 -503,600,000.00
financing activities
4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash 1,559,813,421.67 -101,302,668.99
16
equivalents
Add: Cash and cash equivalents,
835,560,865.12 1,024,088,626.40
beginning of the period
6. Cash and cash equivalents, end of the
2,395,374,286.79 922,785,957.41
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2019 H1 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities
3,351,164,696.89 1,823,943,040.35
and rendering of services
Tax rebates
Cash generated from other operating
248,907,013.29 637,265,577.14
activities
Subtotal of cash generated from
3,600,071,710.18 2,461,208,617.49
operating activities
Payments for commodities and
847,532,691.56 621,024,637.00
services
Cash paid to and for employees 355,855,901.15 299,547,110.96
Taxes paid 1,260,288,640.64 1,185,933,500.57
Cash used in other operating
145,296,084.94 122,550,902.77
activities
Subtotal of cash used in operating
2,608,973,318.29 2,229,056,151.30
activities
Net cash generated from/used in
991,098,391.89 232,152,466.19
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 1,400,740,054.88 860,984,415.12
Return on investment 31,890,794.48 62,684,376.34
Net proceeds from the disposal of
fixed assets, intangible assets and other 41,304.23 0.00
long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other investing
activities
17
Subtotal of cash generated from
1,432,672,153.59 923,668,791.46
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other 116,751,759.47 84,656,707.92
long-lived assets
Payments for investments 726,900,163.50 621,541,796.23
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
843,651,922.97 706,198,504.15
activities
Net cash generated from/used in
589,020,230.62 217,470,287.31
investing activities
3. Cash flows from financing activities:
Capital contributions received
Borrowings obtained
Net proceeds from the issuance of
bonds
Cash generated from other financing
activities
Subtotal of cash generated from
financing activities
Repayments of borrowings
Payments for interest and dividends 755,400,000.00 503,600,000.00
Cash used in other financing
activities
Subtotal of cash used in financing
755,400,000.00 503,600,000.00
activities
Net cash generated from/used in
-755,400,000.00 -503,600,000.00
financing activities
4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash
824,718,622.51 -53,977,246.50
equivalents
Add: Cash and cash equivalents,
708,172,917.59 826,262,109.02
beginning of the period
6. Cash and cash equivalents, end of the 1,532,891,540.10 772,284,862.52
18
period
19
7. Consolidated Statements of Changes in Owners’ Equity
H1 2019
Unit: RMB
H1 2019
Equity attributable to owners of the Company as the parent
Other equity Gener
Item Less: Other Specifi Non-controlli Total owners’
instruments Capital Surplus al Retained Othe
Share capital Treasur comprehensi c Subtotal ng interests equity
reserves reserves reserv earnings r
Preferre Perpetu Othe y stock ve income reserve
d shares al bonds r e
1. Balances
as at the end 503,600,000. 1,295,405,592. 256,902,260. 5,541,281,341. 7,601,984,024. 427,766,092.8 8,029,750,117.
4,794,830.59
of the prior 00 25 27 47 58 2 40
year
Add:
Adjustments
-4,794,830.5
for changed 4,794,830.59
9
accounting
policies
Adjustments
for
corrections
of previous
errors
Adjustments
20
for business
combinations
under
common
control
Other
adjustments
2. Balances
as at the 503,600,000. 1,295,405,592. 256,902,260. 5,546,076,172. 7,601,984,024. 427,766,092.8 8,029,750,117.
beginning of 00 25 27 06 58 2 40
the year
3. Increase/
decrease in
the period 492,916,314.01 492,916,314.01 26,632,409.70 519,548,723.71
(“-” for
decrease)
3.1 Total
1,248,316,314. 1,248,316,314. 1,274,948,723.
comprehensi 26,632,409.70
01 01 71
ve income
3.2 Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased by
21
shareholders
3.2.2
Capital
increased by
holders of
other equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit -755,400,000.0 -755,400,000.0 -755,400,000.0
distribution 0 0 0
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to general
reserve
3.3.3 -755,400,000.0 -755,400,000.0 -755,400,000.0
Appropriatio 0 0 0
22
n to owners
(or
shareholders)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
23
Changes in
defined
benefit
pension
schemes
transferred to
retained
earnings
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase in
the period
3.5.2
Used in the
period
3.6 Other
24
4. Balances
503,600,000. 1,295,405,592. 256,902,260. 6,038,992,486. 8,094,900,338. 454,398,502.5 8,549,298,841.
as at the end 0.00
00 25 27 07 59 2 11
of the period
H1 2018
Unit: RMB
H1 2018
Equity attributable to owners of the Company as the parent
Other equity Gener
Item Less: Other Specifi Non-controlli Total owners’
instruments Capital Surplus al Retained Othe
Share capital Treasur comprehensi c Subtotal ng interests equity
reserves reserves reserv earnings r
Preferre Perpetu Othe y stock ve income reserve
d shares al bonds r e
1. Balances
as at the end 503,600,000. 1,295,405,592. 53,520,827.4 256,902,260. 4,349,649,698. 6,459,078,378. 382,100,628.3 6,841,179,006.
of the prior 00 25 4 27 42 38 3 71
year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for
corrections
of previous
errors
25
Adjustments
for business
combinations
under
common
control
Other
adjustments
2. Balances
as at the 503,600,000. 1,295,405,592. 53,520,827.4 256,902,260. 4,349,649,698. 6,459,078,378. 382,100,628.3 6,841,179,006.
beginning of 00 25 4 27 42 38 3 71
the year
3. Increase/
decrease in
-45,102,275.
the period 388,822,337.64 343,720,062.06 23,015,329.28 366,735,391.34
58
(“-” for
decrease)
3.1 Total
-45,102,275.
comprehensi 892,422,337.64 847,320,062.06 23,015,329.28 870,335,391.34
58
ve income
3.2 Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
26
increased by
shareholders
3.2.2
Capital
increased by
holders of
other equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit -503,600,000.0 -503,600,000.0 -503,600,000.0
distribution 0 0 0
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to general
reserve
3.3.3 -503,600,000.0 -503,600,000.0 -503,600,000.0
27
Appropriatio 0 0 0
n to owners
(or
shareholders)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Loss offset
by surplus
reserves
28
3.4.4
Changes in
defined
benefit
pension
schemes
transferred to
retained
earnings
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase in
the period
3.5.2
Used in the
period
29
3.6 Other
4. Balances
503,600,000. 1,295,405,592. 256,902,260. 4,738,472,036. 6,802,798,440. 405,115,957.6 7,207,914,398.
as at the end 8,418,551.86
00 25 27 06 44 1 05
of the period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2019
Unit: RMB
H1 2019
Other equity instruments Less: Other
Item Specific Surplus Retained Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive Other
Other reserve reserves earnings equity
shares bonds stock income
1. Balances as at the
503,600,000.00 1,247,162,107.35 4,794,830.59 251,800,000.00 5,162,354,747.41 7,169,711,685.35
end of the prior year
Add: Adjustments for
changed accounting -4,794,830.59 4,794,830.59
policies
Adjustments for
corrections of previous
errors
Other adjustments
2. Balances as at the
503,600,000.00 1,247,162,107.35 251,800,000.00 5,167,149,578.00 7,169,711,685.35
beginning of the year
3. Increase/ decrease in
-71,419,256.76 -71,419,256.76
the period (“-” for
30
decrease)
3.1 Total
683,980,743.24 683,980,743.24
comprehensive income
3.2 Capital increased
and reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit
-755,400,000.00 -755,400,000.00
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
-755,400,000.00 -755,400,000.00
owners (or
shareholders)
3.3.3 Other
31
3.4 Transfers within
owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit pension
schemes transferred to
retained earnings
3.4.5 Other
comprehensive income
transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in
the period
3.5.2 Used in the
period
32
3.6 Other
4. Balances as at the
503,600,000.00 1,247,162,107.35 0.00 251,800,000.00 5,095,730,321.24 7,098,292,428.59
end of the period
H1 2018
Unit: RMB
H1 2018
Other equity instruments Less: Other
Item Specific Surplus Retained Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive Other
Other reserve reserves earnings equity
shares bonds stock income
1. Balances as at the
503,600,000.00 1,247,162,107.35 53,454,736.38 251,800,000.00 4,103,151,843.38 6,159,168,687.11
end of the prior year
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Other adjustments
2. Balances as at the
503,600,000.00 1,247,162,107.35 53,454,736.38 251,800,000.00 4,103,151,843.38 6,159,168,687.11
beginning of the year
3. Increase/ decrease
in the period (“-” for -45,064,475.58 -60,371,745.28 -105,436,220.86
decrease)
3.1 Total
-45,064,475.58 443,228,254.72 398,163,779.14
comprehensive
33
income
3.2 Capital
increased and
reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit
-503,600,000.00 -503,600,000.00
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
-503,600,000.00 -503,600,000.00
owners (or
shareholders)
3.3.3 Other
34
3.4 Transfers
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
pension schemes
transferred to
retained earnings
3.4.5 Other
comprehensive
income transferred to
retained earnings
3.4.6 Other
3.5 Specific
reserve
3.5.1 Increase in
the period
35
3.5.2 Used in
the period
3.6 Other
4. Balances as at the
503,600,000.00 1,247,162,107.35 8,390,260.80 251,800,000.00 4,042,780,098.10 6,053,732,466.25
end of the period
36
Anhui Gujing Distillery Company Limited
Notes to Financial Statements for H1 2019
(Currency Unit Is RMB Unless Otherwise Stated)
I. Company Profile
Authorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property, Anhui
Gujing Distillery Company Limited (“the Company”) was established as a limited liability company with net assets
of RMB377,167,700 and state-owned shares of 155,000,000 shares and considered Anhui Gujing Company as the
only promoter. The registration place was Bozhou Anhui China. The Company was established on 5 March 1996 by
document of WZM (1996) No.42 of Anhui People’s Government. The Company set up plenary session on 28 May
1996 and registered in Anhui on 30 May 1996 with business license of 14897271-1.
The Company has issued 60,000,000 domestic listed foreign shares (“B” shares) in June 1996 and 20,000,000
ordinary shares (“A shares) on September 1996, ordinary shares are listed in national and par value is RMB1.00 per
share. Those A shares and B shares are listed in Shenzhen Stock exchange.
Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company)
specialize in producing and selling white spirit.
Registered capitals of the Company were RMB235,000,000 with stocks of 235,000,000, of which 155,000,000
shares were issued in China, B shares of 60,000,000 shares and A shares of 20,000,000 shares. The book value of
the stocks of the Company was of RMB1 per share.
On 29 May 2006, a shareholder meeting was held to discuss and approval a program of equity division of A share,
the program was implement in June 2006. After implementation, all shares are outstanding share, which include
147,000,000 shares with restrict condition on disposal, represent 62.55% of total equity, and 88,000,000 shares
without restrict condition on disposal, represent 37.45% of total equity.
The Company issued
on 27 June 2007, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 29
June 2007. Up to that day, outstanding shares with restrict condition on disposal are 135,250,000, representing
57.55% of total equity, the share without restrict condition are 99,750,000, representing 42.45% of total equity.
The Company issued
on 17 July 2008, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 18
July 2008. Up to that day, outstanding shares with restrict condition on disposal are 123,500,000, representing
52.55% of total equity, the share without restrict condition are 111,500,000, representing 47.45% of total equity.
The Company issued
on 24 July 2009, 123,500,000 outstanding shares with restrict condition on disposal are listed in stock market on 29
July 2009. Up to that day, the Company’s all shares are all tradable.
Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943, the Company privately offered 16,800,000
~37~
ordinary shares (A-shares) to special investors on 15 July 2011, with a par value of RMB1 and the price of
RMB75.00 per share, raising RMB1,260,000,000.00 in total, the net amount of raised funds stood at
RMB1,227,499,450.27 after deducting RMB32,500,549.73 of various issuance expenses. Certified Public
Accountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi
[2011] No. 1065. After private issuance, the share capital of the Company increased to RMB251.8 million.
Pursuant to the Resolution of The 2011 Annual General Meeting, the Company that considered 251,800,000 shares
as base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 shares for per 10
shares” accounting for 251,800,000 shares and implemented in the year of 2012. Upon the transference, the
registered capitals increased to RMB503,600,000.
In April 2016, the Company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane Tower
Co., Ltd., creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spirit in
Hubei Province, it features unique mellow taste, elegant appearance and tempting smell. Moreover, Yellow Crane
Tower White Spirit won the Golden Prize respectively in 1984 and 1989 National White Spirit Appraisal
Competition as one of the business card representing Hubei Province’s economy. At present, the Company has
established three major bases in Wuhan, Xianning and Suizhou, of which, Xianning Base has integrated modernism,
ecologism and high technology as a new spirit-making base, known as “the most beautiful chateau in China”. In
2016, Yellow Crane Tower Spirit won “2015 Top 10 Star Product in Hubei Province”.
By 30 June 2019, the Company issued 503,600,000 shares.
The Company is registered at Gujing Town, Bozhou City, Anhui Province.
The approved business of the Company including procurement of grain (operating with business license),
manufacture of distilled spirits, wine distilling facilities, packaging material, bottles, alcohol, grease (limited to
byproducts from wine manufacture), and research and development of high-tech, biotechnology development,
agricultural and sideline products deep processing, as well as sale of self-manufacturing products.
The Company as the parent and the final company as the parent is Anhui Gujing Company Co., Ltd in China.
Financial statement of the Company will be released on 23 August 2019 by the Board of Directors.
On 30 June 2019, there were 22 subsidiaries included in the consolidation scope. Please refer to Note VIII “Rights
and Interests in other Entities” for details. During the Reporting Period, only 1 subsidiary was added into the
consolidation scope when compared to that of the same period of last year. Please refer to Note VII “Change of the
Consolidation Scope” for details.
II. Basis for the Preparation of Financial Statements
1. Basis for the Preparation
With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
the Company prepared financial statements in accordance with the ASBE-Basic Standard (No. 33 issued decreed by
Ministry of Finance and No. 76 revised decreed by Ministry of Finance), the 41 specific standards of Accounting
~38~
Standards for Business Enterprises issued by Ministry of Finance of the PRC on 15 February 2006 and revised
thereafter, Application Guidance of Accounting Standard for Business Enterprises, Interpretation of Accounting
Standards for Business Enterprises and other regulations(hereinafter referred to as “the Accounting Standards for
Business Enterprises”, “China Accounting Standards” or “CAS”), Rules for Preparation Convention of Disclosure
of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China
Securities Regulatory Commission.
In line with relevant rules of ASBE, financial accounting of the Company is based on accrual system. Except
financial instruments and instrument real estate, the financial statement is calculated on the basis of history costs.
Available-for-sale non-current assets are calculated by the lower one of fair value deducting estimated costs and
original costs meeting the standard of available-for-sale. If assets confront impairment, it shall be withdrawn
provision for impairment in line with relevant stipulations.
2. Continuous Operation
The management of the Company executed the assessment on the continuation ability and had not discovered any
event or situation caused significant suspicion on the continuation ability. Thus, the financial statements compiled
based on the hypothesis of the continuation.
III. Declaration of Compliance with the Enterprise Accounting Standards
The financial statements of the Company have been prepared in accordance with the Enterprise Accounting
Standards to present truly and completely the financial position of the Company on 30 June 2019, operating results,
cash flow from January to June in 2019 and other relevant information. The financial statement of the Company
met the relevant disclosure requirements of financial statement and notes of “Compiling stipulations of public
information disclosure No.15---general rules of financial statement” (revised in 2014).
IV. Main Accounting Policies and Accounting Estimates
The Company and various subsidiaries are mainly specialized in manufacturing and selling white spirit. According
to the actual production & operation and related ASBE provisions, this company and various subsidiaries have
formulated some specific accounting policies and estimations related to various transactions and matters including
revenue recognition. Please refer to Note IV. 24 “Revenues” for details. For any description of major accounting
judgment and estimations made by the company’s management, please refer to Note IV. 28 “Other Significant
Accounting Policies and Estimates” for details.
1. Accounting Period
Accounting Period is divided to annual term and interim term. Accounting medium refers to reporting period
shorter than a complete accounting period. The Company employs a period of calendar days from January 1 st to
December 31st each year as accounting year.
2. Operating Cycle
Normal operating cycle refers to the period from the Company purchases the assets for processing to realize the
~39~
cash or cash equivalents. The Company regards 12 months as an operating cycle and regards which as the partition
criterion of the mobility of the assets and liabilities.
3. Bookkeeping Base Currency
Renminbi is the dominant currency used in the economic circumstances where the Company and its domestic
subsidiaries are involved. Therefore, the Company and its domestic subsidiaries use Renminbi as their bookkeeping
base currency. And the Company adopted Renminbi as the bookkeeping base currency when preparing the financial
statements for the reporting period.
4. Accounting Treatment Methods for Business Combinations Under the Same Control and those not Under
the Same Control
The term “business combinations” refers to a transaction or event bringing together two or more separate
enterprises into one reporting entity. Business combinations are classified into the business combinations under the
same control and the business combinations not under the same control.
(1) Accounting treatment of the business combination that is under the same 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 business
combination, and that control is not transitory. The assets and liabilities obtained are measured at the carrying
amounts as recorded by the enterprise being combined at the combination date. 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 share premium in the capital reserve. If the balance of share premium is
insufficient, any excess is adjusted to retained earnings. Other direct expenses occur when the Company conducting
business combinations is recognized in current profit and loss. The combination date is the date on which one
combining enterprise effectively obtains control of the other combining enterprises.
Those assets and liabilities obtained by the Company during the business combination should be recognized in the
carrying value of the equity of the merged party on the merger date. The difference between the carrying amount of
the net assets obtained and carrying amount of the merger consideration (or total par value of issued shares) paid
shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall
be adjusted against retained earnings.
Direct costs of a business combination shall be reckoned into current gains and losses.
(2) Accounting treatment of the business combination that is not under the same control
A business combination involving entities not under common control is a business combination in which all of the
combining entities are not ultimately controlled by the same party or parties both before and after the business
combination. In business combination not under the same control, acquirer refers to party obtaining control of other
combining corporations in the date of acquisition and acquiree refers to corporation participating in combination.
~40~
Date of acquire refers to the date the acquirer actually obtaining control of the acquiree.
As for combination not under the same control, costs of combination includes assets that acquirers occur in the date
of combination in order to obtain control of acquirees, loans, fair value of issued equity securities, intermediary
costs such as audit, legal services and evaluation consultation, and other administrative fees occurred in the
reporting period. As for trading costs that acquirers as combination consideration issue equity securities or debt
securities, it shall be reckoned into initial accounts of equity securities or debt securities. As for business
combination realized by several exchanges and trades, in the combined financial statement of the Company, the
Company shall recalculate the stock right obtained by acquirees before the date of acquisition in line with fair value
of the stock right in the date of acquisition. When the Company acts as the combination party, the cost of a business
combination paid by the acquirer is the aggregate of the fair value at the acquisition date of assets given (including
share equity of the acquiree held before the combination date), liabilities incurred or assumed, and equity securities
issued by the acquirer. Any excess of the cost of a business combination over the acquirer’s interest in the fair value
of the acquiree’s identifiable net assets is recognized as goodwill, while any excess of the acquirer’s interest in the
fair value of the acquiree’s identifiable net assets over the cost of a business combination is recognized in profit or
loss. The cost of equity securities or liability securities as on combination consideration offering is recognized in
initial recording capital on equity securities or liability securities. Other direct expenses occur when the Company
conducting business combinations is recognized in current profit and loss. The difference between the fair value
and the carrying amount of the assets given is recognized in profit or loss. The Company, at the acquisition date,
recognized the acquiree’s identifiable asset, liabilities and contingent liabilities at their fair value at that date. The
acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
As for deductible temporary difference of acquirers obtained by acquirers which can’t be confirmed due to failure
of meeting the confirmation requirements of deferred income tax assets, if there is newly information proving the
existence of relevant situation in the date of acquisition in a year after the acquisition date and financial benefits of
deductible temporary difference of acquirers in the date of acquisition are estimated to be realized, deferred income
tax assets shall be confirmed. At the same time, goodwill shall be decreased. If goodwill is insufficient, the
difference shall be reckoned into current gains and losses; except the above circumstance, reliable deferred income
tax assets relevant to the Company shall be reckoned into current gains and losses.
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 Enterprises No.
33 – Consolidated Financial Statements on the “package deal” criterion (see Note IV. 5 (2)), to judge the multiple
exchange transactions whether they are the “package deal”. If it belongs to the “package deal” in reference to the
preceding paragraphs of this section and the Notes described in Note IV. 14 “long-term equity investment”
accounting treatment, if it does not belong to the “package deal” to distinguish the individual financial statements
~41~
and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the sum of the book value and new investment cost of the Company holds in
the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related
comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring
date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when
disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets
with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others
shall be transferred into current investment gains).
In the Company’s consolidated financial statements, as for the equity interests that the Company holds in the
acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the
positive difference between their fair values and carrying amounts shall be recorded into the investment gains for
the period including the acquiring date. Other related comprehensive gains in relation to the equity interests that the
Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly
disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share
in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from
the acquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date).
5. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The term “control” is the
power of the Company upon an investee, with which it can take part in relevant activities of the investee to obtain
variable returns and is able to influence the amount of returns. The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by the
Company.
The Company would reassess it if the involved relevant factors of above control definitions changed, which was
caused by changes of relevant facts and situations.
(2) Methods for preparing the consolidated financial statements
The Company begins to include subsidiaries into consolidation scope from the date obtaining net assets of
subsidiaries and actual control of production and operation and terminates to include subsidiaries into consolidation
scope from the date losing actual control of subsidiaries. As for the disposal of subsidiaries, operating results and
cash flow are included in consolidated income statement and consolidated statement of cash flow before the date of
the disposal; as for current disposal of subsidiaries, opening balance of the consolidated balance sheet shall not be
adjusted. As for subsidiaries increased in the combination not under the same control, operating results and cash
flow after the date of the acquisition are included in consolidated income statement and consolidated statement of
cash flow, in addition, opening balance of the consolidated balance sheet shall not be adjusted. As for subsidiaries
~42~
increased in the combination under the same control and combined parties under acquisition, operating results and
cash flow from the beginning of combination to the date of combination are included in consolidated income
statement and consolidated statement of cash flow, in addition, opening balance of the consolidated balance sheet
shall be adjusted.
Where a subsidiary was acquired during the reporting period, through a business combination involving entities
under common control, the financial statements of the subsidiary are included in the consolidated financial
statements as if the combination had occurred at the date that common control was established. Therefore the
opening balances and the comparative figures of the consolidated financial statements are restated. In the
preparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations are
included in the consolidated balance sheet based on their carrying amounts; while results of operations are included
in the consolidated income statement, from the date that common control was established.
All the significant inter-company balances, trading and unrealized profits shall be offset when preparing the
consolidated financial statement.
If current loss shoulder by minority shareholders of a subsidy over the proportion enjoyed by minority shareholders
in a subsidy at owners’ equity at period-begin, its balance still offset minority shareholders’ equity.
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. Intra-Company balances and transactions, and any unrealized profit or
loss arising from intra-Company transactions, are eliminated in preparing the consolidated financial statements.
Unrealized losses resulting from intra-Company transactions are eliminated in the same way as unrealized gains but
only to the extent that there is no evidence of impairment.
When losing control right of subsidiaries because of the disposal of stock right investment or other reasons, the
Company shall recalculate residual stock right in accordance to the fair value in the date of losing control right. As
for remaining equity investment after disposal, the Company will re-account it according to the fair value at the
date the control was lost. Any profit or loss occurred shall be recorded into the investment income during the period
of losing control right. Then follow-up measurement of remaining equity shall be arranged in line with “No.
2—Long-term Equity Investment” or “No. 22—Affirmation and Calculation of Financial Instrument”. More details
please refer to Note IV, 14 “Long-term Equity Investment” or Note IV, 9 “Financial Instrument”.
The Company through multiple transactions step deals with disposal of the subsidiary's equity investment until the
loss of control; need to distinguish between equity until the disposal of a subsidiary's loss of control over whether
the transaction is package deal. Terms of the transaction disposition of equity investment in a subsidiary, subject to
the following conditions and the economic impact of one or more of cases, usually indicates that several
transactions should be accounted for as a package deal: ① these transactions are considered simultaneously, or in
the case of mutual influence made, ② these transactions as a whole in order to achieve a complete business results;
③ the occurrence of a transaction depends on occurs at least one other transaction ; ④ a transaction look alone is
~43~
not economical, but when considered together with other transaction is economical. If they do not belong to the
package deal, each of them separately, as the case of a transaction in accordance with “without losing control over
the disposal of a subsidiary part of long-term equity investments” (see Note IV. 14. (2) ④)) and “due to the disposal
of certain equity investments or other reasons lost control of a subsidiary of the original” (see previous paragraph)
principles applicable accounting treatment. Until the disposal of the equity investment loss of control of a
subsidiary of the transactions belonging to the package deal, the transaction will be used as a disposal of a
subsidiary and the loss of control of the transaction. However, before losing control of the price of each disposal
entitled to share in the net assets of the subsidiary's investment corresponding to the difference between the
disposals, recognized in the consolidated financial statements as other comprehensive income, loss of control over
the transferred together with the loss of control or loss in the period.
6. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above. The Company
classifies joint arrangements into joint operations and joint ventures according to its rights and duties in the joint
arrangements. A joint operation refers to a joint arrangement where the Company enjoys assets and has to bear
liabilities related to the arrangement. A joint venture refers to a joint arrangement where the Company is only
entitled to the net assets of the arrangement.
The Company’s investments in joint ventures are measured at the equity method according to the accounting
policies mentioned in Note IV. 14 (2) ② “Long-term equity investments measured at the equity method”.
For a joint operation, the Company, as a joint operator, recognizes the assets and liabilities that it holds and bears in
the joint operation, and recognizes the jointly-held assets and jointly-borne liabilities according to the Company’s
stake in the joint operation; recognizes the income from sale of the Company’s share in the output of the joint
operation; recognizes the income from sale of the joint operation’s outputs according to the Company’s stake in it;
and recognizes the expense solely incurred to the Company and the expense incurred to the joint operation
according to the Company’s stake in it.
When the Company, as a joint operator, transfers or sells assets (the assets not constituting business, the same
below) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party,
the Company only recognizes the share of the other joint operators in the gains and losses arising from the sale.
Where impairment occurs to the assets as prescribed in , the Company shall fully recognizes the loss for a transfer or sale of assets to a
joint operation; and shall recognize the loss according to its stake in the joint operation for a purchase of assets
from the joint operation.
7. Recognition Standard for Cash and Cash Equivalents
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
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easy to be exchanged into certain amount of cash that can be measured reliably and have low risks of change.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Accounting treatments for translation of foreign currency transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [the
spot exchange rate on the date of the transaction / an exchange rate that approximates the actual spot exchange rate
on the date of transaction]. The exchange of foreign currency and transactions related to the foreign exchange are
translated at the spot exchange rate.
(2) Accounting treatments for translation of foreign currency monetary items and non-monetary items
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 ① those
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, ② hedging accounting, the
exchange difference related to hedging instruments for the purpose of net oversea operating investment is recorded
in the comprehensive 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.
9. Financial Instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument
contract.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets into financial assets measured at amortized cost, financial assets
measured by the fair value and the changes recorded in other comprehensive income and financial assets at fair
value through profit or loss based on the business model for financial assets management and characteristics of
contractual cash flow of financial assets. Financial assets initially recognized shall be measured at their fair values.
For financial assets measured at their fair values and of which the variation is recorded into the profit or loss of the
current period, the transaction expenses thereof shall be directly included into the current profit or loss; for other
financial assets, the transaction expenses thereof shall be included into the initially recognized amount.
①Financial assets measured by the amortized cost
The business mode of the Company to manage the financial assets targets at collecting the contractual cash flow,
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that is, the cash flow generated in the specific date is the payment of the interest based on the principal and
outstanding principal amount. This kind of financial assets of the Company shall be subsequently measured based
on the amortized cost and effective interest method, and the gains or losses arising from the amortization,
impairment shall be included into current profit and loss.
②Financial assets measured at the fair value with its changes included into other comprehensive income
Business mode for managing financial assets of the Company takes contract cash flow collected as target and
selling as target. The Company calculates such financial assets as per fair value whose change is included into
corresponding comprehensive income, but impairment loss or gain, exchange gain or loss and interest income
calculated as per actual interest rate method are included into the current profit and loss. Furthermore, the Company
designates partial non-tradable equity vehicle investment as the financial asset measured with fair value whose
change is included into other comprehensive income. The Company includes the related dividend income of such
financial assets into the current profit and loss with the change in fair value included into other comprehensive
income. At the time of derecognition of such financial assets, accumulated gain or loss included into other
comprehensive income before will be shifted to retained earnings from other comprehensive incomes but not
included into the current profit and loss.
③Financial assets at fair value through profit or loss
The Company classifies financial assets except for above-mentioned financial assets measured with amortized cost
and financial assets measured with fair value whose change is included into other comprehensive income into
financial assets at fair value through profit or loss
(2) Classification, recognition 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 financial liabilities measured with amortized cost.
①Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial liabilities which are subsequently
measured at fair value and the changes of fair value are recorded into the current profit or loss. When the liabilities
are derecognized, the difference between their fair values and their initial recorded amount was recognized as
investment income and at the same time the gains and losses of fair value shall be adjusted.
②Financial liabilities with amortized cost
Financial liabilities with amortized cost shall be subsequently measured at the amortized cost. And gains or losses
generated from derecognition or amortization shall be recorded into the current profit or loss.
(3) Recognition basis and measurement of financial assets transfer
A financial asset when one of the following conditions is met will be derecognized:
①the rights to receive cash flows from the asset have expired;
②the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through
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arrangement; or
③the 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 nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
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 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.
If the Company endorses the financial assets sold by right of recourse and holding financial assets, it needs to
confirm that whether almost all risks and remuneration in the ownership of financial assets have been transferred or
not. Where an enterprise has transferred nearly all of the risks and rewards related to the ownership of the financial
asset to the transferee, it shall stop recognizing the financial asset； If it retained nearly all of the risks and rewards
related to the ownership of the financial asset, it shall not stop recognizing the financial asset. If the Company does
not transfer or retain nearly all of the risks and rewards related to the ownership of the financial asset, then it
continuously judges that whether the Company retain the control of the assets, and conducts accounting treatment
according to the principles described in former paragraphs.
(4) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the
financial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a
creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the
contractual stipulations regarding the new financial liability is substantially different from that regarding the
existing financial liability, it terminates the recognition of the existing financial liability, and at the same time
recognizes the new financial liability. Where the recognition of a financial liability is totally or partially terminated,
the enterprise concerned shall include into the profits and losses of the current period for the gap between the book
value which has been terminated from recognition and the considerations it has paid (including the non-cash assets
it has transferred out and the new financial liabilities it has assumed)
(5) Determination of financial assets and liabilities’ fair value
For a financial instrument which has an active market, the Company uses quoted price in the active market to
establish its fair value. For a financial instrument which does not have an active market, the Company establishes
fair value by using a valuation technique. In valuation, the Company adopts applicable valuation techniques
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supported by sufficient utilizable data and other information in current circumstances, selects input values
consistent with asset or liability characteristics considered in relevant asset or liability transactions of market
participators and prioritizes the applying relevant observable input values. Unobservable input values shall not be
applied unless relevant observable input values are not accessible or feasible.
(6) Impairment of financial assets
The Company estimates the expected credit loss of financial assets measured at the amortized cost and those
measured at fair value and whose changes are included in other comprehensive income (debt instruments) based on
expected credit loss. The measurement of expected credit loss depends on whether the credit risk of financial assets
has increased significantly since the initial confirmation. In case of d significant increase, the Company measures
its loss provisions according to the amount equivalent to the expected credit loss of the financial instrument during
its entire life; otherwise, the Company measures its loss provisions according to the amount equivalent to the
expected credit loss of the financial instrument in the next 12 months, and the increased or reversed amount of loss
provisions resulting therefrom shall be included in profits and losses of the current period as impairment losses or
gains.
10. Notes Receivable
All notes receivable settled of the Company are bank’s acceptance bill and L/C. Based on the credit risk
characteristics of notes receivable and comprehensive evaluation of their credit risk characteristics, the Company
does not withdraw credit impairment losses for notes receivable.
11. Receivables
The receivables by the Company include accounts receivable, and other receivables.
(1) Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving
that the receivables have been impaired, an impairment provision shall be made:
1) A serious financial difficulty occurs to the issuer or debtor;
2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of
interests or the principal, etc.;
3) The debtor will probably become bankrupt or carry out other financial reorganizations;
4) Other objective evidences showing the impairment of the receivables.
(2) Method for bad debts provision
① Provisions of bad debts in accounts receivables that is individually significant.
The Company recognized the accounts receivable which amounted to more than 2 million as the accounts
receivable that is individual significant.
For an accounts receivable that is individually significant, the asset is individually assessed for impairment, the
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impairment loss is recognized at the difference between the present value of future cash flow less the carrying
amount, and provision is made accordingly.
② Provisions of bad debts in accounts receivable that individually insignificant item with similar credit risk
characteristics that have significant risk:
A. Evidence of credit risk characteristics
Whether the financial asset is individually significant or not individually significant, it is included in a group of
financial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit risk
reflects the repayment of all due amount under the contract, and is related to the estimation of future cash flow
expected to be derived from the assets.
Evidence of portfolios:
Item Basis
Age portfolios Age
Related party portfolios Companies within the combination scope of the Company
B. Provision by credit risk characteristics
During the Company impairment test, the amount of bad debts provisions is determined by the assessed result from
the experience of historical loss and current economic status and the existing loss in the estimated account
receivables according to the set of account receivables and credit risk characteristic.
Provision for different portfolios:
Item Provision
Age portfolios Age analysis method
Don’t withdraw the bad debts provision unless the related-party lost the repaying
Related party portfolios
capability
a. Portfolio by age analysis
Aging Proportion for accounts receivable (%) Proportion for other receivables (%)
Within 1 year (including 1 year, similarly hereinafter)
Including: [within 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
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③Accounts receivable with insignificant amount but being individually withdrawn bad debts provision
When making individual impairment test on accounts receivable with insignificant amount but high credit risk, the
impairment loss shall be recognized based on the difference of the book values higher than the present value of
future cash flows, then withdraw the bad debts provision. For example, accounts receivable of related parties;
accounts receivable involving dispute or litigation, arbitration; accounts receivable having clear signs to indicate
that debtor probably cannot implement obligations of payment.
(3) Reversal of provision for bad debt
If there is any provident demonstrating recovery of the value of the accounts receivable and objectively correlating
to the issues after the confirmation of the losses, the original confirmed losses would be reversed and recorded into
current gains and losses. However, the reserved book value shall not exceed the amortized costs of the accounts
receivable under non-withdrawing impairment circumstance.
12. Inventory
(1) Category of inventory
Inventory mainly includes raw materials, packing materials, self-made semi-manufactured products, goods in
process and finished goods, etc.
(2) Pricing method for outgoing inventories
Inventory is priced by actual costs when it is obtained. Inventory costs include procurement costs, processing costs
and other costs. Weighted average method is used to price inventory when it is received and delivered.
(3) Recognition basis of net realizable value and withdrawal method of falling price provision for inventories
Net realizable value in daily activity, it is referred to the estimated selling price minus the estimated selling
expenses and related tax and fees in normal operating process. When confirming the net realizable value of
inventories, the Company shall take the intention of inventories into consideration and influence of issues after
balance sheet date.
On the balance sheet date, the evaluation criteria should base on the lower value between costs and net realizable
value. When net realizable value is lower than costs, falling price provision of inventories shall be made. Under
normal circumstances, the Company withdraws the falling price provision in according to individual inventory
items, but for large quantity and low-unit-price inventories, falling price provision of inventories shall be made
based on the category of inventories; for those inventories that relating to the same product line that have similar
purposes or end uses, are produced and marketed in the same geographical area, and cannot be practicably
evaluated separately from other items in that product line, their falling price provision of inventories shall be
consolidated.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any write-down of the
inventories, have disappeared, the amount of write-down shall be recovered and reversed from the original amount
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of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses of the
current period.
(4) Inventory system for inventories is perpetual inventory system
(5) Amortization method of the low-value consumption goods and packing articles
Low-value consumption goods: one-off amortization method; Packing articles: one-off amortization method
13. Assets Held for Sale and Disposal Group
The Company classifies a non-current asset or disposal group as held for sale if its carrying amount will be
recovered principally through a sale transaction rather than through continuing use. For this to be the case, the
following conditions shall be met: a) the asset (or disposal group) must be available for immediate sale in its
present condition subject to terms that are usual and customary for sales of such assets or disposal groups; b) the
company has made the resolution on the disposal plan and must be committed to a plan to sell the asset (or disposal
group); c) the sale is expected to be completed within one year from the date of classification. A disposal group is a
group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities
directly associated with those assets that will be transferred in the transaction. The group shall include goodwill
acquired in a business combination if the group is a cash-generating unit to which goodwill has been allocated in
accordance with the requirements of Accounting Standard for Business Enterprises No. 8 – Impairment of assets.
The Company measure a non-current asset or disposal group classified as held for sale at the lower of its carrying
amount and fair value less costs to sell on initial recognition and subsequent remeasuremnt on the balance sheet
date. An impairment loss is recognized when the carrying amount is higher than the fair value less costs to sell, and
allowance for impairment is recognized accordingly. For the disposal group, the recognized impairment loss on
assets is offset against the carrying amount of the goodwill in the disposal group, and then reduced in proportion of
the book value of the non-current assets applicable to "Accounting Standard for Business Enterprises No. 42 -
Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter referred to as "held for
sale accounting principle") measurement requirements. The company shall recognize a gain during the period for
any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment
loss that has been recognized after the reclassification to non-current assets held for sale. The book value of assets
in the disposal group is increased proportionately according to the proportion of the book value of each non-current
asset except for goodwill. Impairment loss recognized before the reclassification to non-current assets held for sell
shall not be recovered.
Non-current asset or non-current asset in the disposal group classified as held for sale is not subject to depreciation
or amortization. The interest and other expenses on liabilities held in the disposal group for sale are continuously
recognized.
Non-current assets or disposal group that no longer meet the conditions of non-current asset held for sell shall be
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removed from the category, and shall be measured at the lower of the following: (1) The carrying amount before
classification as held for sale after adjustment of depreciation, amortization or impairment that should be
recognized if it is not classified as non-current assets held for sell; (2) recoverable amount.
14. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that the Company has
control, joint control or significant influence over the investees. The long-term equity investment that the Company
does not have control, joint control or significant influence over the investees, should be recognized as
available-for-sale financial assets or be measured by fair value with the changes should be included in the financial
assets accounting of the current gains and losses, and please refer the details of the accounting policies to Notes IV.
9 “Financial instrument”.
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the
Company and the relevant activities of the arrangement should be decided only after the participants which share
the control right make consensus. Significant influence refers to the power of the Company which could anticipate
in the finance and the operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the
share of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the
initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity
investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the
merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained
earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall,
on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on the
consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment.
The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the
initial cost of the long-term equity investment and total face value of the shares issued shall offset against the
capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities of
the combined party which respectively acquired through multiple transaction under the same control that ultimately
form into the combination of the enterprises under the same control, should be disposed according whether belongs
to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the
Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the date of
merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise on the
consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment,
and as for the difference between the initial investment cost of the long-term equity investment and sum of the book
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value of the long-term equity investment before the combination and the book value of the consideration of the new
payment that further required on the combination date, should adjust the capital reserve; if the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted. The equity investment held before the combination
date which adopted the equity method for accounting, or the other comprehensive income confirmed for the
available-for-sale financial assets, should not have any accounting disposal for the moment.
For the long-term investment required from the business combination under different control, the initial investment
cost regarded as long-term equity investment on the purchasing date according to the combination cost, the
combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and the
equity securities issued by the Company. The equities of the acquirees which respectively acquired through
multiple transaction that ultimately form into the combination of the enterprises under the different control, should
be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be
executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to
package deal, the sum of the book value of the original held equity investment of the acquirees and the newly added
investment cost should be regarded as the initial investment cost of the long-term equity investment that changed to
be accounted by cost method. If the original held equity is calculated by cost method, the other relevant
comprehensive income would not have any accounting disposal for the moment. If the original held equity
investment is the financial assets available for sale, its difference between the fair value and the book value as well
as the accumulative changes of the fair value that include in the other comprehensive income, should transfer into
the current gains and losses.
The commission fees for audit, law services, assessment and consultancy services and other relevant expenses
occurred in the business combination by the combining party or the purchase party, shall be recorded into current
profits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bonds
securities which are as consideration for combination by the combining party, should be recorded as the initial
amount of equity securities and bonds securities.
Besides the long-term equity investments formed by business combination, the other long-term equity investments
shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash
payment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of the
investment contract or agreement, the fair value or original carrying amount of exchanged assets from
non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses,
taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be
recorded into investment cost. The long-term equity investment cost for those could execute significant influences
on the investees because of appending the investment or could execute joint control but not form as control, should
be as the sum of the fair value of the original held equity investment and the newly added investment cost
recognized according to the No. 22 of Accounting Standards for Business Enterprises—Recognition and
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Measurement of Financial Instrument.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which forms into
common operators) or significant influence over the investors should be measured by equity method. Moreover,
long-term equity investment adopting the cost method in the financial statements, and which the Company has
control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included at its initial
investment cost and append as well as withdraw the cost of investing and adjusting the long-term equity investment.
The return on investment at current period shall be recognized in accordance with the cash dividend or profit
announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit
included in the actual payment or consideration upon gaining the investment.
②Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company’s attributable share of the fair value of
the invested entity’s identifiable net assets for the investment, the initial cost of the long-term equity investment
may not be adjusted. If the initial cost of a long-term equity investment is less than the Company’s attributable
share of the fair value of the invested entity’s identifiable net assets for the investment, the difference shall be
included in the current profits and losses and the cost of the long-term equity investment shall be adjusted
simultaneously.
When measured by adopting equity method, respectively recognize investment income and other comprehensive
income according to the net gains and losses as well as the portion of other comprehensive income which should be
enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding
reduce the book value of the long-term equity investment according to profits which be declared to distribute by the
investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except
for the net gains and losses, other comprehensive income and the owners’ equity except for the profits distribution
of the investees, should adjust the book value of the long-term equity investment as well as include in the capital
reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity
when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity
after it adjusts the net profits of the invested entity. If the accounting policies adopted by the investees is not accord
with that of the Company, should be adjusted according to the accounting policies of the Company and the financial
statement of the investees during the accounting period and according which to recognize the investment income as
well as other comprehensive income. For the transaction happened between the Company and associated
enterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the
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unrealized gains and losses of the internal transaction, which belongs to the Company according to the calculation
of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the
unrealized internal transaction happened between the Company and the investees which belongs to the impairment
losses of the transferred assets, should not be neutralized. The assets launched by the Company to the associated
enterprises or the joint ventures if could form into business, the long-term equity investment without control right
which acquired by the investors, should regard the fair value of the launched business as the initial investment cost
the newly added long-term equity investment, and for the difference between the initial investment cost and the
book value of the launched business, should be included into the current gains and losses with full amount. The
assets sold by the Company to the associated enterprises or the joint ventures if could form into business, the
difference between the acquired consideration and the book value of the business should be included in the current
gains and losses with full amount. The assets purchased by the Company to the associated enterprises or the joint
ventures if could form into business, should be accounting disposed according to the regulations of No. 20 of
ASBE—Business Combination, and should be recognized gains or losses related to the transaction with full
amount.
The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity
investment and other long-term rights and interests which substantially form the net investment made to the
invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall
be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment
losses at current period. If the invested entity realizes any net profits later, the Company shall, after the amount of
its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing
its attributable share of profits.
For the long-term equity investment held by the Company before the first execution of the new accounting criterion
of the associated enterprises and joint ventures, if there is debit difference of the equity investment related to the
investment, should be included in the current gains and losses according to the amount of the straight-line
amortization during the original remained period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term equity investment
increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the
increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the
capital reserves are not sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity investment on
subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net
assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity; where the
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Company losses the controlling right by disposing part of long-term equity investment on such subsidiaries, it shall
treated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method on preparation of combined
financial statements”.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed
equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still
adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control of
the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees and should be carried forward into the current gains and losses according to the
proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as the
remained equity after disposal could execute joint control or significant influences on the investees, should change
to measure by equity method when compiling the individual financial statement and should adjust the measurement
of the remained equity to equity method as adopted since the time acquired; if the remained equity after disposal
could not execute joint control or significant influences on the investees, should change the accounting disposal
according to the relevant regulations of the recognition and measurement standards of financial instrument, and its
difference between the fair value and book value on the date lose the control right should be included in the current
gains and losses. For the other comprehensive income recognized by adopting equity method for measurement or
the recognition and measurement standards of financial instrument before the Company acquired the control of the
investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the
relevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes of
the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
distribution among the net assets of the investees which recognized by adopting the equity method for measurement,
should be carried forward into the current gains and losses according to the proportion. Of which, for the disposed
remained equity which adopted the equity method for measurement, the other comprehensive income and the other
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owners’ equity should be carried forward according to the proportion; for the disposed remained equity which
changed to execute the accounting disposal according to the recognition and measurement standards of financial
instrument, the other comprehensive income and the other owners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
remained equity should change to calculate according to the recognition and measurement standards of financial
instrument, and difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the
equity method.
The Company respectively disposes the equity investment of the subsidiaries through multiple transactions until
lose the control right, if the above transactions belongs to the package deal, should execute the accounting disposal
by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose the control
right, while the difference between each expenses of the disposal and the book value of the long-term equity
investment in accord with the disposed equity before losing the control right, should firstly be recognized as other
comprehensive income then be transferred into the current gains and losses of losing the control right along until
the time when lose it.
15. 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. Besides, for the idle
constructions held by the Company for operation and lease, if the Board of Directors (or the similar institutions)
made the written resolutions which affirmatively disclosed to use which for operation and lease with the intention
would not change in the short term, should also be presented as the investment property.
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 expenditures of gains or losses should be recorded in the current gains
and losses when occurred.
The Company 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 IV. 20 “Long-term
assets impairment”.
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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.
From the date of transference, investment properties shall be transferred into fixed assets or intangible assets when
investment properties transfer into self-owned properties. From the date of transference, fixed assets or intangible
assets shall be transferred into investment properties when the intention of self-owned properties changes to be
earning rents. Upon transference, investment properties using cost modeling shall use its book value before
transference as the entry value after transference; investment properties using fair value shall use its fair value in
the date of transference as the entry value after transference.
As for investment property disposed or perpetually out of use, and estimated without economic benefits from the
disposal, confirmation shall be terminated. Disposal consideration of the investment property after sale,
transference, discard or damage deducting its book value and relating taxes shall be recorded into current gains and
losses.
16. Fixed Assets
(1) Recognized standard of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they 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.
(2) Depreciation methods of fixed assets
The initial measurement of a fixed asset shall be made at its cost after considering the effect of expected discard
expenses. The Group shall withdraw the depreciation of fixed assets by adopting the straight-line method since the
second month of its useful life. Useful life, expected net salvage value (refers to the expected amount that the
Group may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at the
expiration of its expected useful life) and annual depreciation rate of each fixed assets are as below:
Expected net salvage
Category of fixed assets Method Useful life (Y) Annual deprecation (%)
value (%)
Housing and building Straight-line method 8.00-35.00 3.00-5.00 2.70-12.10
Machinery equipments Straight-line method 5.00-10.00 3.00-5.00 9.50-19.40
Transportation vehicle Straight-line method 4.00 3.00 24.25
Office equipment and Straight-line method 3.00 3.00 32.33
others
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.
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(3) Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note IV. 21 “Long-term assets impairment”.
(4) Fixed Assets under finance leases
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.
(5) Others
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.
17. Construction in Progress
Construction in progress is measured at its actual cost. The actual costs include various construction expenditures
during the construction period, borrowing costs capitalized before it is ready for intended use and other relevant
costs. Construction in progress is transferred to a fixed asset when it is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method for provision impairment
please refer to Note IV. 21 “Long-term assets impairment”.
18. Borrowing Costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs
incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency
borrowings. The borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an expense in the
period in which they are incurred. Qualifying assets are asset (fixed assets, investment property and inventories,
etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for
their intended use or sale.
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Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds
before being used on the asset or any investment income on the temporary investment of those funds. Where funds
are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by
applying a weighted average interest rate to the weighted average of the excess amounts of accumulated
expenditure on the asset over and above the amounts of specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in
foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are
recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long time
of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production
of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use
or sale, when the interruption is for a continuous period of more than 3 months. Borrowing costs incurred during
these periods recognized as an expense for the current period until the acquisition, construction or production is
resumed.
19. Intangible Assets
(1) Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or
controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic
benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be
measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked in the
profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plants
that are developed and constructed by the Company, and relevant land use rights and buildings, are accounted for as
intangible assets and fixed assets, respectively. Payments for the land and buildings purchased are allocated
between the land use rights and the buildings; if they cannot be reasonably allocated all of the land use rights and
buildings should accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value and
any accumulate impairment losses is amortized over its estimated useful life using the straight-line method. An
intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at
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the end of the period, and makes adjustment when necessary. An additional review is also carried out for useful life
of the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period of
economic benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortize
according to the policy of intangible assets with definite useful life.
(2) Research and development cost
Cost of research and development is distinguished into the research phase and the development phases.
Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.
Unless the following conditions are satisfied, cost of the development phase is recognized in the profit or loss in the
period in which it is incurred:
① it is technically feasible to complete the intangible asset so as to use it or sell it;
② it is clearly invented to complete the intangible asset in order to use it or sell it;
③ it is probable that the intangible asset is capable of generating future economic benefit, such as the market for
the product produced by the intangible asset or the intangible asset itself, it is objectively evidential that the
intangible asset is economically usable if it is going to be used internally;
④ there are sufficient technical, financial and other resources to complete the intangible asset and to use it or sell it;
⑤ the cost of the development of the intangible can be measured reliably.
If the cost cannot be distinguished into the search phase and the development phase, it is recognized in the profit or
loss for the period in which it is incurred.
(3) Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note IV. 21 “Long-term assets impairment”.
20. Long-term Deferred Expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (a
period during which an expense is expected to bring economic benefits to an entity) which is longer than one year
and which includes at least part of the reporting period during which the expense was incurred and subsequent
reporting periods. An item of long-term deferred expenses is recognized at the actual amount of the expense
incurred and allocated in each month of the beneficial period using the straight line method.
21. Long-term Assets Impairment
Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets with
definite useful lives, investment properties measured by cost methods and long-term equity investment on
subsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for all
non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is estimated
if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets not
ready for use, are tested for impairment annually regardless of indicators of impairment.
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Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets is
lower than the book value. The recoverable value is the higher of estimated present value of the future expected
cash flows from the asset and net fair value of the asset less disposed cost. The fair value of asset is determined by
the sales agreement price within an arm’s length transaction. In case there is no sales agreement, but there is active
market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor active
market, the fair value of the asset can be estimated based on the best information obtained. Disposal expenses
include expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready for
sale. When calculating the present value of expected future cash flows from an asset or asset Group, the
management shall estimate the expected future cash flows from the asset or asset Group and choose a suitable
discount rate in order to calculate the present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individual
asset is hard to estimate, the recoverable amount can be determined by the asset Group where subject asset belongs.
Asset Group is the smallest set of assets that can have cash flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of
the present value of the future expected cash flows from the asset Groups or sets of asset Groups to which the
goodwill is allocated. Estimating the present value requires the Company to make an estimate of the expected
future cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount rate in order to
calculate the present value of those cash flows.
Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in the subsequent
periods.
22. Payroll
The payroll of the Company mainly includes the short-term employee compensation, welfare after demission,
demission welfare and other long-term employee benefits. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits,
medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor
union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually
happened during the accounting period when the active staff offering the service for the Group should be
recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the
non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includes
basic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and deposit
amount should be included into the relevant assets cost or the current gains and losses when happen.
If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor
contract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a
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layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier date
between the time when the Group could not one-sided withdraw the demission welfare which offered by the plan or
layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to the
reorganization of the payment of the demission welfare and at the same time includes which into the current gains
and losses. But if the demission welfare is estimated that could not totally pay after the end of the annual report
within 12 months, should be disposed according to other long-term payroll payment.
The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare.
The group would recorded the salary and the social security insurance fees paid and so on from the employee’s
service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the
condition that they meet the recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should be
accounting disposed according to the setting drawing plan, while the rest should be disposed according to the
setting revenue plan.
23. Provisions
Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee on
quality of product, cut-down plan, loss of contract, recombine obligation, obligation on abandon fixed asset, and
meet the follow condition simultaneously would determined as liabilities: (1) This obligation is current obligation
of the Company; and, (2) The performance of this obligation will probably cause economic benefits outflow of the
Company; and, (3) The amount of this obligation can be reliably measured.
On balance sheet date the Company performed relate obligation that consider risk, incertitude, time value of
currency of contingency factor. According to the best estimate of the expenditure required to settle the present
obligation for estimated liabilities measured.
If the expenditure required to settle the liability is expected to be fully or partly compensated by a third party, to
determine the amount of compensation will be received at the basic, separately recognized as an asset, and is
recognized in the amount of compensation does not exceed the carrying value of estimated liabilities.
24. Revenues
(1) Commodity sales revenues
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the
significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the
enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective
control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant
economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in
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a reliable way.
In the Company’s daily accounting practices, as for the domestic sales, when the products had shipped out of the
library and had handed over to the buyers, and the major risk as well as the reward on the ownership of the products
had transferred to them, without keeping any continued management right which commonly related to the
ownership nor carrying out any effective control of the products which had been sold, and at the same time the
amounts received could be calculated reliably, and the relevant economic interest may flow into the enterprise, as
well as the relevant costs which had occurred or is going to occur could be calculated reliably, should recognize the
implementation of the commodity sales revenues. As for the overseas sales, should recognize the implementation of
the revenues when the goods had made shipment and gained the customs export declaration.
(2) Revenues from providing labor services
If an enterprise can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall
recognize the revenue from providing services employing the percentage-of-completion method on the balance
sheet date. The percentage-of-completion is determined by the proportion of the costs incurred against the
estimated total costs.
The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means
that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable
way; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion under
the transaction can be confirmed in a reliable way; ④ The costs incurred or to be incurred in the transaction can be
measured in a reliable way.
If the Company can not measure the result of a transaction concerning the providing of labor services in a reliable
way, it shall be conducted in accordance with the following circumstances, respectively: If the cost of labor services
incurred is expected to be compensated, the compensation amount for the cost of labor services shall be recognized
as the revenue from providing labor service, and the cost of labor service incurred shall be as the current cost; if the
cost of labor services incurred is not expected to compensate, no revenue from the providing of labor services may
be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling goods and providing
of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from each
other and can be measured respectively, the part of sale of goods and the part of providing labor services shall be
treated respectively. If the part of selling goods and the part of providing labor services can not be distinguished
from each other, or if the part of sale of goods and the part of providing labor services can be distinguished from
each other but can not be measured respectively, both parts shall be conducted as selling goods.
(3) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue
on accrual basis. In the Company’s daily accounting practices, it should be calculated and recognized according to
the chargeable time and methods in accordance with the relevant contract or agreement.
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(4) Interest revenue
In accordance with the time that others use the Group’s monetary capital and the actual rate.
25. Government Subsidies
Government grants are transfer of monetary assets and non-monetary assets from the government to the Company
at no consideration, excluding the capital invested by the government as equity owner. Government grant can be
classified as grant related to the assets and grants related to the income. The government grants which were
acquired by the Company will be used to purchase or otherwise form become long-term assets will be defined as
grant related to the assets; the others will be defined as grants related to the income. If the files have not clearly
defined government grants objects, it will be divided in the following manner compartmentalize the grants into rant
related to the assets and grants related to the income: (1) government documents defined specific projects targets,
according to the relative proportion of the budgets of specific items included the expenditure of to form assets and
the expenditure will be charged into expense to be divided, the division ratio required at each balance sheet date for
review and make changes if necessary; (2) government documents to make a general presentation purposes only,
does not specify a particular project, as grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair
value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a
nominal amount is recognized immediately in profit or loss for the period.
When received the government grants actually, recognized and measured them by the actual amount received.
However, there is strong evidence that the end of fiscal support policies able to meet the conditions specified in the
relevant funds are expected to be able to receive financial support, measured at the amount receivable. Government
grants are measured according to the amount receivable shall also comply with the following conditions: (1) grants
receivable of government departments issued a document entitled have been confirmed, or could reasonably
estimated in accordance with the relevant provisions of its own official release of financial resources management
approach, and the expected amount of a material uncertainty which does not exist; (2) it is based on the local
financial sector to be officially released and financial support for the project and its financial fund management
approach voluntarily disclosed in accordance with the provisions of “Regulations on Disclosure Government
Information”, and the management approach should be (inclusive of any compliance business conditions may
apply), and not specifically formulated for specific businesses;(3) related grants approval has been clearly
committed the deadline, and is financed by the proceeds of a corresponding budget as a guarantee, so that will be
received within the prescribed period with the a reasonable assurance; (4) according to the specific circumstances
of the Company and the subsidy matter, should satisfy the other conditions (if any).
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over
the useful life of the related asset in a reasonable and systematic manner. For a government grant related to income,
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if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant is
recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are
recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized
immediately in profit or loss for the period.
Government subsidies including both assets-related parts and income-related parts should be treated separately. If it
is difficult to separate, the government subsidies as a whole will be classified as income-related government grants.
The government grants related to the daily activities of the Company are included in other income or offset the
related costs according to the essence of the economic business. The government grants unrelated to the daily
activities are included in the non-operating income and expenses.
For repayment of a government grant already recognized, if there is a related deferred income, the repayment is
offset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for the
period. If there is no related deferred income, the repayment is recognized immediately in profit or loss for the
period.
26. Deferred Tax Assets and Deferred Tax Liabilities
(1) Income tax for the current period
At the balance sheet date, current income tax liabilities or assets for the current and prior periods are measured at
the amount expected to be paid (or recovered) according to the requirements of tax laws. The calculation for
income tax expenses in the current period is based on the taxable income according to the related tax laws after
adjustment to the accounting profit of the reporting period.
(2) Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or between
the nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be
determined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liability
method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset
or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor
taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For
taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint
ventures, no deferred income tax liability related is recognized except where the Company is able to control the
timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except the ones
mentioned above are recognized.
For temporary deductible differences associated with the initial recognition of an asset or liability arising from a
transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible
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losses) at the time of transaction, no deferred tax asset is recognized. For taxable temporary deductible differences
associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax
asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is
not probable to obtain taxable income which can be used for the deduction of the temporary difference in the future.
Except mentioned above, the Company recognizes other deferred income tax assets that can deduct temporary
differences to the extent that it is probable that taxable profits will be available against which the deductible
temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary
differences are recognized to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws,
which are expected to apply in the period in which the asset is realized or the liability is settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer
probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax
assets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction is
reversed when it becomes probable that sufficient taxable profit will be available.
(3) Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit or loss
in current accounting period, except expense for income tax of the current period and deferred income tax that
booked into other income or equity and adjusted carrying value of deferred income tax goodwill arose from
business combination.
(4) Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount or through the asset
acquisition and liability fulfillment simultaneously, the Company shall present the net value from the offset
between current income tax asset and current income tax liability in the financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and current income
tax liability, and the deferred income tax asset and deferred income tax liability are related to the same taxable
subject under the same tax payer, or related to different taxable subject, but the intension of net value settlement in
regard of the current income tax asset and current income tax liability, the Company shall present net value after the
offset of deferred income tax asset and deferred income tax liability.
27. Leases
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. An operating lease is a lease other than a finance lease.
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(1) The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, and
either included in the cost of the related asset or charged to profit or loss for the current period. The contingent rents
shall be recorded in the profit or loss of the period in which they actually arise.
(2) The Company as Leaser under operating Lease
Lease income from operating leases shall be recognized by the leaser in profit or loss on a straight-line basis over
the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis is
more systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period in
which they actually arise.
(3) The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the lower
of its fair value at the lease commencement and the present value of the minimum lease payments, and the
minimum lease payment is recorded as the carrying amount of the long-term payables; the difference between the
recorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognized
finance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the lease
agreement shall be added to the amount recognized for the leased asset. The net amount of minimum lease payment
deducted by the unrecognized finance shall be separated into long-term liabilities and long-term liability within one
year for presentation.
Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingent
rent shall be booked into profit or loss when actually incurred.
(4) In the case of the lessor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception of
the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value is
recorded at the same time; the difference between the aggregate of the minimum lease receipt, initial direct costs,
and unguaranteed residual value, and the aggregate of their present values, is recognized as unearned finance
income, which is amortized using the effective interest rate method over each period during the lease term. Finance
lease receivable less unearned finance income shall be separated into long-term liabilities and long-term liability
within one year for presentation.
Unearned finance income shall be computed by the effective interest method during the lease term. Contingent rent
shall be credited into profit or loss in which actually incurred.
28. Other Significant Accounting Policies and Estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the
financial statements that cannot be measured accurately, due to the internal uncertainties of operation activities.
These judgments, estimates and assumptions are based on historical experiences of the Company’s management as
~68~
well as other factors that are considered to be relevant. These judgments, estimates and assumptions may affect
value of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the
balance sheet date. However, the result derived from those uncertainties in estimates may lead significant
adjustments to the carrying amounts of the assets or liabilities affected in the future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern.
Where the changes in accounting estimates only affect the period when changes occurred, and they are recognized
within the same period. Where the changes in accounting estimates affect both current period and future period, the
changes are recognized within the period of change and future period.
At balance sheet date, the followings are the significant areas where the Company needs to make judgment,
estimates and assumptions over the value of items in the financial statements:
(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.
(2) Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is used for bad
debt’s calculation. The impairment of receivables is calculated based on the assessment of recoverable of
receivables. Assurance of receivable impairment needs judgments and estimations from the management. The
difference between actual results and original estimates shall have impact on the carrying amount of receivables
and receivable bad debt provisions or the reverse during the change of estimation.
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accounting
policies in regard of inventories and provisions for decline in value of inventories are made if the cost is higher than
their net realizable value and obsolete and slow-movement inventories. Inventories decline in value to net
realizable value is the estimated selling price in the ordinary course of business. Net realizable value is determined
on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect
of post balance sheet events. The difference between the actual result and the original estimates shall have impact
on reverse of the carrying amount of the inventories and their decline in value or provisions during the period of
change.
(4) The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using various
valuation methods, including of discounted cash flow analysis model. The Company needs to estimate future cash
flow, credit risk, volatility and relationship during the valuation and choose appropriate discount rate. Such
assumptions have uncertainties and their changes shall have impact on the fair value of financial instruments.
~69~
(5) Impairment of long-term assets
The Company assesses whether there are any indicators of impairment for all non-current assets other than
financial assets at the balance sheet date. For an intangible asset that has indefinite useful life, impairment test is
made in addition to the annual impairment test if there is any indication of impairment. For non-current assets other
than financial assets, impairment test is made when there is any indication that its account balance cannot be
recovered.
Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal and
present value of the future cash flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the price of similar
product in a sale agreement in an arm’s length transaction or an observable market price less the additional cost
directly attributable to the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made over the asset’s production,
selling price and relevant operating expenses, and discount rate used to calculate present value. All available
materials that are considered to be relevant shall be used in the estimation of recoverable value. These materials
include estimations of production, selling price and operating expenses based on reasonable and supportable
assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an estimation of
present value of future cash flow of the assets or assets group where goodwill has been allocated. The Company
shall makes estimation on the future cash flow derived from assets or assets group and determine an appropriate
discount rate for the present value of future cash flow when the estimation of present value of future cash flow is
made.
(6) Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line method
over their useful lives after taking into account residual value. The useful lives are regularly reviewed to determine
the depreciation and amortization costs charged in each reporting period. The useful lives are determined based on
historical experience of similar assets and the estimated technical changes. If there is an indication that there has
been a change in the factor used to determine the depreciation or amortization, the rate of depreciation or
amortization is revised.
(7) Deferred tax assets
The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that future
taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. This
requires the management of the Company make a lot of judgments over the estimation of time period, value and tax
planning strategies when future taxable profit incurs so that the value of deferred tax assets can be determined.
(8) Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the Company’s
~70~
everyday operation. If it is possible for any item to make expenditure before tax that needs to be approved from
competent tax authorities. If there is any difference between finalized determination value and their initial
estimations value, the difference shall have the impact on the income tax and deferred income tax of the current
period during the final determination.
(9) Provisions
According with the terms of the contract, the existing knowledge and historical experience, product quality
assurance and expected contract losses, delay in delivery of liquidated damages are estimated and recognized as
accrued liabilities. In these matters has been the formation of a current obligation, and fulfilling the duty is likely to
lead to the outflow of economic benefits of the Company, the Company or the best estimate of the current
obligation expenditure required recognized as a accrued liabilities. Recognition and measurement of accrued
liabilities is dependent on the judgment of management. In the processing of judgment the company needed to
appraise the related risks, uncertainties and time value of money and other factors.
29. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
Contents of changes in accounting policies
Approval procedures Note
and reasons thereof
The Ministry of Finance issued the Notice
on Revising and Issuing of Formats of
2019 Financial Statements for General
Enterprises (CK[2019]No.6) (hereinafter
referred to as “Revising Notice”) on 30
April 2019, in which the formats of
financial statements for general enterprises
are revised and non-financial enterprises
carrying out accounting standards for
business enterprises are required to prepare For details, please refer to the
Reviewed and approved on the 10th
the financial statements for 2019, H1 of announcement on changes in accounting
Meeting of the 8th Board of Directors and
2019 and subsequent periods in accordance policies disclosed on
the 9th Meeting of the 8th Supervisory
with provisions stipulated in accounting http://www.cninfo.com.cn
Committee
standards for business enterprises and the
Revising Notice. The Company belongs to
the company that has implemented the new
standards governing financial instruments
but not carried out the new standards
governing revenue and new standards
governing leases. The Company adjusted
the formats of financial statements and
presentation of some items as required by
the Revising Notice.
~71~
In line with provisions of the Revising Notice, the Company adjusted the formats of financial statements as
follows:
① Balance sheet
The item of “notes receivable and accounts receivable” is split into two items of “notes receivable” and “accounts
receivable”;
The item of “notes payable and accounts payable” is split into two items of “notes payable” and “accounts
payable”;
The item of “financing backed by accounts receivable” is added to reflect the notes receivable and accounts
receivable measured at fair value and changes thereof recorded into other comprehensive income on the balance
sheet date.
② Income statement
The “less: asset impairment loss” is adjusted into “add: asset impairment loss (“-“ for loss)”;
The “less: credit impairment loss” is adjusted into “add: credit impairment loss (“-“ for loss);
For the item of “R&D expense”, the amortization of developing intangible assets recorded into administrative
expense is supplemented;
The item of “income from the derecognition of financial assets at amortized cost” is added to reflect gains or losses
of the Company from the derecognition of financial assets at amortized cost due to cases like transfer. This item
shall be filled based on the amount of classification item related to “investment income”, and “-“ for loss.
③ Cash flow statement
For cash flow statements, the filling requirements governing government subsidies are clarified that government
subsidies no matter related to assets or income are presented in the item of “cash generated from other operating
activities”.
④ Statements of changes in owners’ equity
For statements of changes in owners’ equity, the filling requirements governing “capital increased by holders of
other equity instruments” are clarified to reflect the amount of capital increased by holders of financial instruments
except ordinary shares issued by the Company and classified as equity instruments. The item is filled based on the
amount of classification item related to financial instruments.
(2) Significant Changes in Accounting Estimates
Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New Standards
Governing Financial Instruments, Revenue or Leases
Consolidated Balance Sheet
Unit: RMB
Item 31 December 2018 1 January 2019 Adjusted
~72~
Current assets:
Monetary capital 1,705,760,865.12 1,705,760,865.12
Settlement reserve
Interbank loans granted
Trading financial assets 0.00 2,965,016,000.42 2,965,016,000.42
Financial assets at fair
622,892.96 0.00 -622,892.96
value through profit or loss
Derivative financial assets
Notes receivable 1,347,427,811.34 1,347,427,811.34
Accounts receivable 29,748,068.74 29,748,068.74
Financing backed by
accounts receivable
Prepayments 182,558,000.75 182,558,000.75
Premiums receivable
Reinsurance receivables
Receivable reinsurance
contract reserve
Other receivables 43,342,878.22 43,342,878.22
Including: Interest
24,923,178.08 24,923,178.08
receivable
Dividends
receivable
Financial assets purchased
under resale agreements
Inventories 2,407,306,664.86 2,407,306,664.86
Contract assets
Assets classified as held
for sale
Current portion of
300,000,000.00 300,000,000.00
non-current assets
Other current assets 3,012,478,687.20 254,478,687.20 -2,758,000,000.00
Total current assets 9,029,245,869.19 9,235,638,976.65 206,393,107.46
Non-current assets:
Loans and advances to
customers
Investments in debt
obligations
~73~
Available-for-sale financial
206,393,107.46 0.00 -206,393,107.46
assets
Investments in other debt
obligations
Held-to-maturity
investments
Long-term receivables
Long-term equity
4,900,000.00 4,900,000.00
investments
Investments in other equity
instruments
Other non-current financial
assets
Investment property 5,027,228.53 5,027,228.53
Fixed assets 1,763,988,530.56 1,763,988,530.56
Construction in progress 93,320,557.56 93,320,557.56
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 742,083,609.10 742,083,609.10
R&D expense
Goodwill 478,283,495.29 478,283,495.29
Long-term prepaid
83,561,473.46 83,561,473.46
expense
Deferred income tax assets 86,580,171.06 86,580,171.06
Other non-current assets 16,544,407.51 16,544,407.51
Total non-current assets 3,480,682,580.53 3,274,289,473.07 -206,393,107.46
Total assets 12,509,928,449.72 12,509,928,449.72
Current liabilities:
Short-term borrowings
Borrowings from central
bank
Interbank loans obtained
Trading financial liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial
liabilities
~74~
Notes payable 349,203,413.72 349,203,413.72
Accounts payable 484,952,598.59 484,952,598.59
Advances from customers 1,149,143,310.48 1,149,143,310.48
Financial assets sold under
repurchase agreements
Customer deposits and
interbank deposits
Payables for acting trading
of securities
Payables for underwriting
of securities
Payroll payable 457,299,476.43 457,299,476.43
Taxes payable 372,993,624.18 372,993,624.18
Other payables 1,192,020,147.82 1,192,020,147.82
Including: Interest
payable
Dividends
payable
Handling charges and
commissions payable
Reinsurance payables
Contract liabilities
Liabilities directly
associated with assets
classified as held for sale
Current portion of
non-current liabilities
Other current liabilities 295,164,745.44 295,164,745.44
Total current liabilities 4,300,777,316.66 4,300,777,316.66
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities
~75~
Long-term payables
Long-term payroll payable
Provisions
Deferred income 76,636,500.55 76,636,500.55
Deferred income tax
102,764,515.11 102,764,515.11
liabilities
Other non-current
liabilities
Total non-current liabilities 179,401,015.66 179,401,015.66
Total liabilities 4,480,178,332.32 4,480,178,332.32
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Including: Preferred
shares
Perpetual
bonds
Capital reserves 1,295,405,592.25 1,295,405,592.25
Less: Treasury stock
Other comprehensive
4,794,830.59 0.00 -4,794,830.59
income
Specific reserve
Surplus reserves 256,902,260.27 256,902,260.27
General reserve
Retained earnings 5,541,281,341.47 5,546,076,172.06 4,794,830.59
Total equity attributable to
owners of the Company as 7,601,984,024.58 7,601,984,024.58
the parent
Non-controlling interests 427,766,092.82 427,766,092.82
Total owners’ equity 8,029,750,117.40 8,029,750,117.40
Total liabilities and owners’
12,509,928,449.72 12,509,928,449.72
equity
Note for adjustment:
In 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments (CK[2017]No.7) , the Accounting Standards for Business Enterprises No. 23 – Transfer of
Financial Assets (CK[2017]No.8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017]No.9),
and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017]No.14). The
Company starts to implement aforesaid new standards since 1 January 2019. In line with the link up rules, when the data of financial
statements involved in prior years are inconsistent with the new standards, no adjustment is necessary. Specific items and amount
~76~
thereof affected are presented in above adjustment statements.
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2018 1 January 2019 Adjusted
Current assets:
Monetary capital 1,078,172,917.59 1,078,172,917.59
Trading financial assets 0.00 1,807,016,000.42 1,807,016,000.42
Financial assets at fair
622,892.96 0.00 -622,892.96
value through profit or loss
Derivative financial assets
Notes receivable 1,256,336,386.34 1,256,336,386.34
Accounts receivable 9,385,950.54 9,385,950.54
Financings backed by
accounts receivable
Prepayments 10,869,911.54 10,869,911.54
Other receivables 110,800,665.19 110,800,665.19
Including: Interest
receivable
Dividends
receivable
Inventories 2,125,826,967.11 2,125,826,967.11
Contract assets
Assets classified as held
for sale
Current portion of
non-current assets
Other current assets 1,764,267,968.83 164,267,968.83 -1,600,000,000.00
Total current assets 6,356,283,660.10 6,562,676,767.56 206,393,107.46
Non-current assets:
Investments in debt
obligations
Available-for-sale financial
206,393,107.46 0.00 -206,393,107.46
assets
Investments in other debt
obligations
Held-to-maturity
investments
Long-term receivables
~77~
Long-term equity
1,148,213,665.32 1,148,213,665.32
investments
Investments in other equity
instruments
Other non-current financial
assets
Investment property 24,715,657.40 24,715,657.40
Fixed assets 1,290,714,455.79 1,290,714,455.79
Construction in progress 86,634,753.93 86,634,753.93
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 189,968,142.25 189,968,142.25
R&D expense
Goodwill
Long-term prepaid
56,643,945.05 56,643,945.05
expense
Deferred income tax assets 37,415,458.17 37,415,458.17
Other non-current assets 12,474,026.00 12,474,026.00
Total non-current assets 3,053,173,211.37 2,846,780,103.91 -206,393,107.46
Total assets 9,409,456,871.47 9,409,456,871.47
Current liabilities:
Short-term borrowings
Trading financial liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial
liabilities
Notes payable 28,648,913.72 28,648,913.72
Accounts payable 362,290,556.21 362,290,556.21
Advances from customers 1,123,125,892.84 1,123,125,892.84
Contract liabilities
Payroll payable 117,748,485.96 117,748,485.96
Taxes payable 161,176,957.25 161,176,957.25
Other payables 372,902,293.22 372,902,293.22
Including: Interest
~78~
payable
Dividends
payable
Liabilities directly
associated with assets
classified as held for sale
Current portion of
non-current liabilities
Other current liabilities 32,605,794.55 32,605,794.55
Total current liabilities 2,198,498,893.75 2,198,498,893.75
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Long-term payables
Long-term payroll payable
Provisions
Deferred income
Deferred income tax
36,417,554.85 36,417,554.85
liabilities
Other non-current
4,828,737.52 4,828,737.52
liabilities
Total non-current liabilities
Total liabilities 41,246,292.37 41,246,292.37
Owners’ equity: 2,239,745,186.12 2,239,745,186.12
Share capital
Other equity instruments 503,600,000.00 503,600,000.00
Including: Preferred
shares
Perpetual
bonds
Capital reserves
Less: Treasury stock 1,247,162,107.35 1,247,162,107.35
Other comprehensive
income
~79~
Specific reserve 4,794,830.59 0.00 -4,794,830.59
Surplus reserves
General reserve 251,800,000.00 251,800,000.00
Retained earnings 5,162,354,747.41 5,167,149,578.00 4,794,830.59
Total owners’ equity 7,169,711,685.35 7,169,711,685.35
Total liabilities and owners’
9,409,456,871.47 9,409,456,871.47
equity
Note for adjustment:
In 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments (CK[2017]No.7) , the Accounting Standards for Business Enterprises No. 23 – Transfer of
Financial Assets (CK[2017]No.8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017]No.9),
and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017]No.14). The
Company starts to implement aforesaid new standards since 1 January 2019. In line with the link up rules, when the data of financial
statements involved in prior years are inconsistent with the new standards, no adjustment is necessary. Specific items and amount
thereof affected are presented in above adjustment statements.
V. Taxation
1. Main Taxes and Tax Rate
Category of taxes Particulars about specific tax rate
Income tax was in accordance with 16%,13%, 10%,9% and 6% of tax rate to calculate
VAT output tax and according to the balance of the current the deductibility deduct the input
tax to calculate value added tax.
Sales of wine RMB1 per 1000 ml or per kg to calculate the amount of consumption tax, a
Consumption tax flat rate, 20% of the annual turnover to calculate the amount of consumption tax at
valorem.
Urban maintenance and construction tax 1%, 5%, 7% of the actual taxable turnover amount.
Education expenses surcharge 3% of the actual taxable turnover amount.
Local education surcharge 2% of the actual taxable turnover amount.
Enterprise income tax For details, see the table below.
Table of income tax rate of different entities:
Name of the entities Income tax rate
Anhui Longrui Glass Co., Ltd 15%
Anhui Ruisiweier Technology Co., Ltd 15%
Bozhou Gujin Rubbish Recycling Co., Ltd 5%
Wuhan Yashibo Technology Co., Ltd 5%
~80~
Name of the entities Income tax rate
Hubei Hechuanyuan Trade Co., Ltd 5%
Anhui Gujing Distillery Company Limited and its other
5%
subsidiaries
Anhui Longrui Glass Co., Ltd 25%
2. Tax Preference and Approval
(1) On 5 December 2016, the Company’s subsidiary Anhui Longrui Glass Co., Ltd. was attested to be qualified as a
hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO. GR201634001204) which shall be valid in 3
years. Corresponding corporate income tax was also paid at the rate of 15% from January to June in 2019;
(2) On 21 October 2016, the Company’s subsidiary Anhui Swisse Will Science & Technology Co., Ltd. was
attested to be qualified as a hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO. GR201634000832)
which shall be valid in 3 years. Corresponding corporate income tax was also paid at the rate of 15% from January
to June in 2019;
(3) According to Notification for implementation of inclusive income tax relief policy for small enterprises with
low profits (Financial and taxation (2019) No. 13), published by Ministry of Finance of the People’s Republic of
China and State Administration of Taxation, from 1 January 2019 to 31 December 2021, for small enterprises with
low profits, of which the annual taxable income amount is under RMB1 million, the income tax deduction shall be
50% of the taxable income amount and the corporate income tax rate shall be reduced to 20%; and for the part of
the annual taxable income amount exceeds RMB1 million but less than RMB3 million, the income tax deduction
shall be 50% of the taxable income amount and the corporate income tax rate shall be reduced to 20%. For
subsidiaries of the Company, Bozhou Gujing Recycling Co., Ltd, Wuhan Yashibo Technology Co., Ltd., Hubei
Junhe Advertising Co., Ltd. and Hubei Yellow Crane Tower Beverage Co., Ltd., which satisfy conditions for small
enterprises with low profits, the actual prevailing tax shall be reduced to 5% from January to June in 2019.
VI. Notes on Major Items in Consolidated Financial Statements of the Company
The following notes (including notes on major items in consolidated financial statements of the Company), unless
otherwise noted, the opening period was 1 January 2019, the closing period was 30 June 2019.
1. Monetary Funds
Item Ending balance Beginning balance
Cash in treasury 374,122.81 353,429.67
Bank deposit 3,164,869,696.55 1,705,175,643.46
Other monetary funds 14,090,694.21 231,791.99
Total 3,179,334,513.57 1,705,760,865.12
~81~
Item Ending balance Beginning balance
Of which: The total amount deposited in overseas 0.00 0.00
Note: At the end of this period, the amount of RMB770 million is structural time deposit of the bank deposit that
cannot be withdrawn in advance before the due date; at the end of this period, the amount of RMB13,960,226.78
was restricted for pledge due to the opening of bank’s acceptance bill among the other monetary fund. There’s no
limitation and restriction on the usage and remittance of funds deposited abroad due to pledge and mortgage, etc.
2. Trading Financial Assets
Item Ending balance Beginning balance
Financial assets at fair value through profit
1,573,596,291.10 2,965,016,000.42
or loss
Of which:
Equity instrument investment 217,596,291.10 207,016,000.42
Other 1,356,000,000.00 2,758,000,000.00
Total 1,573,596,291.10 2,965,016,000.42
3. Notes Receivable
(1) Notes receivable Listed by Category
Item Ending balance Beginning balance
Bank acceptance bill 1,317,423,562.34 1,347,427,811.34
Trade acceptance bill 0.00 0.00
Total 1,317,423,562.34 1,347,427,811.34
(2) Notes Receivable Pledged at the Period-end
Item Pledged amount at the period-end
Bank acceptance bill 159,686,231.66
Trade acceptance bill 0.00
Total 159,686,231.66
(3) Notes Receivable which had Endorsed by the Company or had Discounted and had not Due on the Balance
Sheet Date at the Period-end
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 1,257,471,419.07 0.00
~82~
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Trade acceptance bill 0.00 0.00
Total 1,257,471,419.07 0.00
4. Accounts Receivable
(1) Accounts Receivable Classified by Category
Ending balance
Carrying amount Bad debt provision
Category Carrying
Proport Withdrawal
Amount Amount value
ion (%) proportion (%)
Accounts receivable with significant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
Accounts receivable withdrawal of bad debt provision of by credit risks 30,811,51 724,824 30,086,69
100.00 2.35
characteristics: 7.08 .38 2.70
Accounts receivable with insignificant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
30,811,51 724,824 30,086,69
100.00 2.35
Total 7.08 .38 2.70
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Carrying
Proport Withdrawal
Amount Amount value
ion (%) proportion (%)
Accounts receivable with significant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
Accounts receivable withdrawal of bad debt provision of by credit risks 30,397,35 649,289 29,748,06
100.00 2.14
characteristics: 8.01 .27 8.74
Accounts receivable with insignificant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
Total 30,397,35 100.00 649,289 2.14 29,748,06
~83~
Beginning balance
Carrying amount Bad debt provision
Category Carrying
Proport Withdrawal
Amount Amount value
ion (%) proportion (%)
8.01 .27 8.74
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision
Ending balance
Aging Withdrawal proportion
Account receivable Bad debt provision
(%)
Within 1 year 29,358,361.66 422,193.75 1.44
[Of which: within 6 months] 26,143,108.14 261,431.08 1.00
[7-12 months] 3,215,253.52 160,762.67 5.00
1 to 2 years 1,277,227.55 127,722.76 10.00
2 to 3 years 2,040.00 1,020.00 50.00
Over 3 years 173,887.87 173,887.87 100.00
Total 30,811,517.08 724,824.38 2.35
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The reversed amount of the bad debt provision during the Reporting Period was of RMB75,535.11.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
There was no actual verification of accounts receivable during the Reporting Period.
(4) Top Five of the Ending Balance of the Accounts Receivable Collected According to the Arrears Party
The total amount of top five of account receivable of ending balance collected by arrears party was
RMB12,677,581.98, 41.15% of total closing balance of account receivable, the relevant ending balance of bad debt
provision withdrawn was RMB246,974.31.
5. Prepayment
(1) List by Aging Analysis
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 125,311,525.02 96.48 182,122,465.92 99.76
1 to 2 years 4,576,890.83 3.52 145,534.83 0.08
~84~
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
2 to 3 years 0.00 0.00 0.00
Over 3 years 0.00 0.00 290,000.00 0.16
Total 129,888,415.85 100.00 182,558,000.75 100.00
(2) Top Five of the Ending Balance of the Prepayment Collected According to the Prepayment Target
The total amount of top five of account receivable of ending balance collected by arrears party was
RMB60,552,355.25, 46.62% of total ending balance of account receivable.
6. Other Accounts Receivable
Item Ending balance Beginning balance
Interest receivable 30,443,178.08 24,923,178.08
Dividend receivable 0.00 0.00
Other accounts receivable 18,085,233.37 18,419,700.14
Total 48,528,411.45 43,342,878.22
(1) Interest Receivable
Item Ending balance Beginning balance
Interest of certificate of deposit 30,443,178.08 24,923,178.08
Total 30,443,178.08 24,923,178.08
(2) Other Accounts Receivable
① Other Accounts Receivable Disclosed by Category
Ending balance
Carrying amount Bad debt provision
Category Propor Carrying
Withdrawal
Amount tion Amount value
proportion (%)
(%)
Other accounts receivable with significant single amount for which bad 40,850,9 40,850,9
67.12 100.00 0.00
debt provision separately accrued 49.35 49.35
Other accounts receivable withdrawn bad debt provision according to 20,009,4 1,924,17 18,085,2
32.88 9.62
credit risks characteristics 05.04 1.67 33.37
Other accounts receivable with insignificant single amount for which bad 0.00 0.00 0.00 0.00 0.00
~85~
Ending balance
Carrying amount Bad debt provision
Category Propor Carrying
Withdrawal
Amount tion Amount value
proportion (%)
(%)
debt provision separately accrued
60,860,3 42,775,1 18,085,2
Total 100.00 70.28
54.39 21.02 33.37
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
Other accounts receivable with significant single
amount for which bad debt provision separately 40,850,949.35 67.20 40,850,949.35 100.00 0.00
accrued
Other accounts receivable withdrawn bad debt
19,942,837.52 32.80 1,523,137.38 7.64 18,419,700.14
provision according to credit risks characteristics
Other accounts receivable with insignificant
single amount for which bad debt provision 0.00 0.00 0.00 0.00 0.00
separately accrued
Total 60,793,786.87 100.00 42,374,086.73 69.70 18,419,700.14
A. Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
Ending balance
Other accounts receivable (by unit) Other accounts Bad debt Withdrawal proportion
Withdrawal reason
receivable provision (%)
29,010,449.35 29,010,449.35 100.00 Enter enterprise bankruptcy
Hengxin Securities Co., Ltd.
liquidation
Jianqiao Securities Co., Ltd. 11,840,500.00 11,840,500.00 100.00 Enter enterprise bankruptcy
~86~
Ending balance
Other accounts receivable (by unit) Other accounts Bad debt Withdrawal proportion
Withdrawal reason
receivable provision (%)
29,010,449.35 29,010,449.35 100.00 Enter enterprise bankruptcy
Hengxin Securities Co., Ltd.
liquidation
liquidation
Total 40,850,949.35 40,850,949.35 100.00
B. In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision
Ending balance
Aging
Other accounts receivable Other accounts receivable
Within 1 year 17,302,210.29 218,377.57 1.26
[Of which: within 6 months] 16,168,323.61 161,683.24 1.00
[7-12 months] 1,133,886.68 56,694.33 5.00
1 to 2 years 861,702.24 86,170.22 10.00
2 to 3 years 451,737.27 225,868.64 50.00
Over 3 years 1,393,755.24 1,393,755.24 100.00
Total 20,009,405.04 1,924,171.67 9.62
② Other Account Receivable Classified by Account Nature
Nature Ending carrying amount Beginning carrying amount
Securities investment 40,850,949.35 40,850,949.35
Margin &cash pledge 3,648,377.30 4,749,457.78
Business travel borrowing charges 1,176,663.88 426,435.85
Rent and utilities fee 8,688,782.19 6,786,659.62
Others 6,495,581.67 7,980,284.27
Total 60,860,354.39 60,793,786.87
③ Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawn bad debt provision of Reporting Period was of RMB401,034.29.
④ Particulars of the Actual Verification of Other Accounts Receivable during the Reporting Period
There was no actual verification of other accounts receivable during the Reporting Period.
~87~
⑤ Top 5 of the Ending Balance of the Other Accounts Receivable Collected According to the Arrears Party
Name of the Bad debt provision
Relationship Nature Ending balance Aging Proportion (%)
entity Ending balance
Securities
No.1 Non-related party 29,010,449.35 Over 3 years 47.67 29,010,449.35
investment
Securities
No.2 Non-related party 11,840,500.00 Over 3 years 19.46 11,840,500.00
investment
Prepayment of Within 6
No. 3 Non-related party 5,935,503.54 9.75 59,355.04
oil fee
months
Within 6 mon
No. 4 Non-related party Cash deposit 640,288.05 1.05 6,402.88
ths
Prepayment of Within 6 mon
No. 5 Non-related party 500,000.00 0.82 5,000.00
oil fee
ths
Total -- -- 47,926,740.94 -- 78.75 40,921,707.27
7. Inventory
(1) Category of Inventory
Ending balance
Item
Carrying amount Falling price reserves Carrying value
Raw materials& package 158,807,985.16 19,753,803.07 139,054,182.09
Homemade semi-finished products and goods in process 2,107,408,415.79 0.00 2,107,408,415.79
Finished product 173,141,865.95 2,248,377.42 170,893,488.53
Total 2,439,358,266.90 22,002,180.49 2,417,356,086.41
(Continued)
Beginning balance
Item
Carrying amount Falling price reserves Carrying value
Raw materials& package 144,856,930.02 13,808,554.40 131,048,375.62
Homemade semi-finished products and goods in process 1,957,452,112.24 0.00 1,957,452,112.24
Finished product 322,031,842.20 3,225,665.20 318,806,177.00
Total 2,424,340,884.46 17,034,219.60 2,407,306,664.86
~88~
(2) Falling Price Reserves of Inventory
Increase Decrease
Item Beginning balance Ending balance
Withdrawal Others Reverse or write-off Others
Raw materials&
13,808,554.40 5,945,248.67 0.00 0.00 0.00 19,753,803.07
package
Finished product 3,225,665.20 0.00 0.00 977,287.78 0.00 2,248,377.42
Total 17,034,219.60 5,945,248.67 0.00 977,287.78 0.00 22,002,180.49
(3) Withdrawal Provision Basis of the Falling Price of the Inventory and the Reasons of the Reserve or
Write-off
Reaso
Specific basis of withdrawal of falling ns for
Item Reasons for write-off
price reserves of inventory revers
al
Raw materials& The realizable net value was lower than The raw material withdrawn impairment disposed in
--
package the cost Reporting Period
The realizable net value was lower than The raw material withdrawn impairment disposed in
Finished product --
the cost Reporting Period
8. Other Current Assets
Item Ending balance Beginning balance
Pledged reverse repurchase of national debt 10,900,000.00 179,900,000.00
Tax to be deducted 18,638,776.67 74,578,687.20
Total 29,538,776.67 254,478,687.20
9. Current Portion of Non-current Assets
Item Ending balance Beginning balance Notes
Current portion of non-current assets 300,000,000.00 300,000,000.00
Total 300,000,000.00 300,000,000.00
10. Long-term Equity Investment
Investee Beginnin Increase/decrease
~89~
g balance Additio Reduce
nal d Gains and losses recognized under the Adjustment of other Changes of other
equity method comprehensive income
investm investm equity
ent ent
I.Associa
ted
enterpris
e
Beijing
Guge 4,900,000
0.00 0.00 -164,994.19 0.00 0.00
Trading .00
Co., Ltd.
4,900,000
Total 0.00 0.00 -164,994.19 0.00 0.00
.00
(Continued)
Increase/decrease
Ending balance
Cash bonus or
Investee Ending balance impairment
profits announced Withdrawal of impairment provision Other
to issue provision
I.Associated enterprise
Beijing Guge Trading
0.00 0.00 0.00 4,735,005.81 0.00
Co., Ltd.
Total 0.00 0.00 0.00 4,735,005.81 0.00
11. Investment Property
Item Houses and buildings Land use right Total
I. Original carrying value
1. Beginning balance 8,680,555.75 2,644,592.00 11,325,147.75
2. Increased amount of the period 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00
(1) Transfer to fixed assets 0.00 0.00 0.00
(2) Other transfer 0.00 0.00 0.00
~90~
Item Houses and buildings Land use right Total
4. Ending balance 8,680,555.75 2,644,592.00 11,325,147.75
II. Accumulative depreciation and accumulative amortization
1. Beginning balance 5,654,245.92 643,673.30 6,297,919.22
2. Increased amount of the period 130,557.96 28,013.28 158,571.24
Withdrawal or amortization 130,557.96 28,013.28 158,571.24
Transfer from fixed assets 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00
(1) Transfer to fixed assets 0.00 0.00 0.00
(2) Other transfer 0.00 0.00 0.00
4. Ending balance 5,784,803.88 671,686.58 6,456,490.46
III. Depreciation reserves
1. Beginning balance 0.00 0.00 0.00
2. Increased amount of the period 0.00 0.00 0.00
Withdrawal 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00
(1) Transfer to fixed assets 0.00 0.00 0.00
(2) Other transfer 0.00 0.00 0.00
4. Ending balance 0.00 0.00 0.00
IV. Carrying value
1. Ending carrying value 2,895,751.87 1,972,905.42 4,868,657.29
2. Beginning carrying value 3,026,309.83 2,000,918.70 5,027,228.53
12. Fixed Assets
Item Ending balance Beginning balance
Fixed assets 1,684,243,384.48 1,763,988,530.56
Disposal of fixed assets 0.00 0.00
Total 1,684,243,384.48 1,763,988,530.56
(1) List of Fixed Assets
~91~
Houses and Machinery Transportation Office equipment
Item Total
buildings equipment equipment and other
I. Original carrying value
1. Beginning balance 2,006,674,799.70 920,022,112.79 58,064,314.20 157,194,996.51 3,141,956,223.20
2. Increased amount of the period 10,628,048.20 6,493,754.22 2,466,474.24 3,765,714.87 23,353,991.53
(1) Purchase 10,547,596.62 5,568,337.36 2,466,474.24 2,209,832.53 20,792,240.75
(2) Transfer of project under
80,451.58 925,416.86 0.00 1,555,882.34 2,561,750.78
construction
(3) Enterprise combination
0.00 0.00 0.00 0.00 0.00
increase
(4) Taking back of rental housing 0.00 0.00 0.00 0.00 0.00
3. Decreased amount of the period 186,521.55 4,308,790.12 1,212,091.63 650,860.17 6,358,263.47
(1) Disposal or scrap 186,521.55 4,308,790.12 1,212,091.63 650,860.17 6,358,263.47
(2) Transfer to investment
0.00 0.00 0.00 0.00 0.00
property
4. Ending balance 2,017,116,326.35 922,207,076.89 59,318,696.81 160,309,851.21 3,158,951,951.26
II. Accumulative depreciation
1. Beginning balance 737,756,223.41 495,710,974.90 49,030,197.42 90,459,858.92 1,372,957,254.65
2. Increased amount of the period 35,879,060.65 49,319,894.61 2,484,811.80 14,393,028.27 102,076,795.33
(1) Withdrawal 35,879,060.65 49,319,894.61 2,484,811.80 14,393,028.27 102,076,795.33
(2) Enterprise combination
0.00 0.00 0.00 0.00 0.00
increase
(3) Taking back of rental housing 0.00 0.00 0.00 0.00 0.00
3. Decreased amount of the period 163,672.92 3,326,105.71 1,166,618.20 633,731.57 5,290,128.40
(1) Disposal or scrap 163,672.92 3,326,105.71 1,166,618.20 633,731.57 5,290,128.40
(2) Transfer to investment
0.00 0.00 0.00 0.00 0.00
property
4. Ending balance 773,471,611.14 541,704,763.80 50,348,391.02 104,219,155.62 1,469,743,921.58
III. Depreciation reserves
1. Beginning balance 3,396,292.79 1,020,057.51 7,047.07 587,040.62 5,010,437.99
2. Increased amount of the period 0.00 0.00 0.00 0.00 0.00
(1) Withdrawal 0.00 0.00 0.00 0.00 0.00
3. Decreased amount of the period 17,252.98 27,856.30 0.00 683.51 45,792.79
(1) Disposal or scrap 17,252.98 27,856.30 0.00 683.51 45,792.79
~92~
Houses and Machinery Transportation Office equipment
Item Total
buildings equipment equipment and other
4. Ending balance 3,379,039.81 992,201.21 7,047.07 586,357.11 4,964,645.20
IV. Carrying value
1. Ending carrying value 1,240,265,675.40 379,510,111.88 8,963,258.72 55,504,338.48 1,684,243,384.48
2. Beginning carrying value 1,265,522,283.50 423,291,080.38 9,027,069.71 66,148,096.97 1,763,988,530.56
(2) List of Temporarily Idle Fixed Assets
Original carrying Accumulative Impairment
Item Carrying value Notes
value depreciation provision
Houses and buildings 10,553,688.29 7,074,810.79 3,379,039.81 99,837.69
Machinery equipment 7,337,349.26 6,287,337.89 992,201.21 57,810.16
Transportation equipment 58,119.66 49,329.00 7,047.07 1,743.59
Office equipment and others 923,873.41 309,813.59 586,357.11 27,702.71
Total 18,873,030.62 13,721,291.27 4,964,645.20 187,094.15
(3) Details of Fixed Assets Failed to Accomplish Certification of Property
Item Carrying value Reason
Houses and building 756,078,944.64 In process
Total 756,078,944.64 --
13. Construction in Progress
Item Ending balance Beginning balance
Construction in process 162,876,312.37 93,320,557.56
Engineering materials 0.00 0.00
Total 162,876,312.37 93,320,557.56
(1) List of Construction in Progress
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserves value amount reserves value
Digital marketing system 10,191,844. 0.00 10,191,84 0.00 0.00 0.00
60 4.60
~93~
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserves value amount reserves value
SAP ERP system 20,742,671. 0.00 20,742,67 0.00 0.00 0.00
34 1.34
Gujing Party Construction Cultural 1,435,187.9 1,435,187
0.00 0.00 0.00 0.00
Center 5 .95
Renovation project of potential safety
1,263,728.5 0.00 1,263,728. 1,263,728.5 0.00 1,263,728
concerns
7 57 7 .57
9,283,726. 5,596,060.0 5,596,060
Equipment installation project 9,283,726.6 0.00 0.00
61 5 .05
1
Desulfurization and denitrification 29,676,888. 29,676,88 28,768,115. 28,768,11
0.00 0.00
project 70 8.70 33 5.33
Technical improvement project of 43,388,604. 43,388,60 17,307,839. 17,307,83
0.00 0.00
automation of brewing 05 4.05 93 9.93
33,804,583. 33,804,58 30,391,615. 30,391,61
Half open wine library in Gujing plant 0.00 0.00
10 3.10 08 5.08
4,431,551.8 4,431,551. 2,597,498.7 2,597,498
Phase I of Suizhou new factory 0.00 0.00
1 81 5 .75
10,092,713. 10,092,71 5,960,511.9 5,960,511.
Other projects with small single amount 0.00 0.00
59 3.59 0 90
162,876,31 162,876,3 93,320,557. 93,320,55
Total 0.00 0.00
2.37 12.37 56 7.56
(2) Changes of Significant Construction in Progress
~94~
Amount
that Other
Estimate
Beginning Increase transferred decreased Ending
Name o f item d
balance Amount to fixed amount of balance
number
assets of the period
the period
Digital marketing system 0.00 10,191,844. 0.00 0.00 10,191,844.
3,500.00
60 60
SAP, ERP system 0.00 20,742,671. 0.00 0.00 20,742,671.
4,450.00
34 34
1,435,187.9 2,319,051.7 3,754,239.
Gujing Party Construction Cultural Center 1,160.00 0.00 0.00
5 1 66
18,010.7 1,263,728.5 1,263,728.5
Renovation project of potential safety concerns 0.00 0.00 0.00
6 7 7
Equipment installation project 10,834.6 5,596,060.0 3,687,666.5 0.00 0.00 9,283,726.6
5 5 6 1
Desulfurization and denitrification project 28,768,115. 908,773.37 0.00 0.00 29,676,888.
7,176.00
33 70
Technical improvement project of automation
27,430.0 17,307,839. 26,080,764. 0.00 0.00 43,388,604.
of brewing
0 93 12 05
Half open wine library in Gujing plant 11,194.1 30,391,615. 3,412,968.0 0.00 0.00 33,804,583.
5 08 2 10
26,000.0 2,597,498.7 1,834,053.0 4,431,551.8
Phase I of Suizhou new factory 0.00 0.00
0 5 6 1
5,960,511.9 9,772,036.5 2,561,750. 3,078,084. 10,092,713.
Other projects with small single amount 7,628.67
0 9 78 12 59
~95~
Amount
that Other
Estimate
Beginning Increase transferred decreased Ending
Name o f item d
balance Amount to fixed amount of balance
number
assets of the period
the period
117,384. 93,320,557. 78,949,829. 2,561,750. 6,832,323. 162,876,312
Total
23 56 37 78 78 .37
(Continued)
Of
which:
Proportion
the
estimated Accumulati Capitalizati
amount
of the Project ve amount on rate of
of the Capital
Project name project Progre of the interests
capitaliz resources
accumulati ss (%) capitalized of the
ed
ve input interests period (%)
interests
(%)
of the
period
Self-owned
Digital marketing system 29.12 65.00 0.00 0.00 0.00
fund
Self-owned
SAP, ERP system 46.61 60.00 0.00 0.00 0.00
fund
Self-owned
Gujing Party Construction Cultural Center 81.87 100.00 0.00 0.00 0.00
fund
Self-owned
Renovation project of potential safety concerns 82.00 93.00 0.00 0.00 0.00
fund
Self-owned
Equipment installation project 17.02 30.00 0.00 0.00 0.00
fund
Self-owned
Desulfurization and denitrification project 41.67 96.00 0.00 0.00 0.00
fund
Technical improvement project of automation of Self-owned
19.06 19.00 0.00 0.00 0.00
fund
brewing
Self-owned
Half open wine library in Gujing plant 69.06 97.00 0.00 0.00 0.00
fund
Phase I of Suizhou new factory 1.70 5.00 0.00 0.00 0.00 Self-owned
~96~
Of
which:
Proportion
the
estimated Accumulati Capitalizati
amount
of the Project ve amount on rate of
of the Capital
Project name project Progre of the interests
capitaliz resources
accumulati ss (%) capitalized of the
ed
ve input interests period (%)
interests
(%)
of the
period
fund
Self-owned
Other projects with small single amount 82.13 82.00 0.00 0.00 0.00
fund
Total -- -- 0.00 0.00 0.00 --
14. Intangible Assets
Item Land use right Patent right Software Trademark Total
I. Original carrying value
1. Beginning balance 683,451,302.56 45,889,466.19 32,106,185.73 169,116,600.00 930,563,554.48
2. Increased amount of the period 0.00 0.00 3,151,610.32 0.00 3,151,610.32
(1) Purchase 0.00 0.00 188,679.29 0.00 188,679.29
(2) Internal R & D 0.00 0.00 0.00 0.00 0.00
(3) Transfer of construction in progress 0.00 0.00 2,962,931.03 0.00 2,962,931.03
3. Decreased amount of the period 0.00 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00 0.00
4. Ending balance 683,451,302.56 45,889,466.19 35,257,796.05 169,116,600.00 933,715,164.80
II. Accumulated amortization
1. Beginning balance 129,394,359.27 45,769,591.73 12,944,725.23 371,269.15 188,479,945.38
2. Increased amount of the period 7,191,799.45 24,038.88 4,979,696.88 0.00 12,195,535.21
(1) Withdrawal 7,191,799.45 24,038.88 4,979,696.88 0.00 12,195,535.21
3. Decreased amount of the period 0.00 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00 0.00
~97~
Item Land use right Patent right Software Trademark Total
4. Ending balance 136,586,158.72 45,793,630.61 17,924,422.11 371,269.15 200,675,480.59
III. Depreciation reserves
1. Beginning balance 0.00 0.00 0.00 0.00 0.00
2. Increased amount of the period 0.00 0.00 0.00 0.00 0.00
(1) Withdrawal 0.00 0.00 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00 0.00
4. Ending balance 0.00 0.00 0.00 0.00 0.00
IV. Carrying value
1. Ending carrying value 546,865,143.84 95,835.58 17,333,373.94 168,745,330.85 733,039,684.21
2. Beginning carrying value 554,056,943.29 119,874.46 19,161,460.50 168,745,330.85 742,083,609.10
15. Goodwill
Increase Decrease
Generated from
Item Beginning balance Ending balance
enterprise Other Disposal Other
merger
Yellow Crane Tower Distillery Co., Ltd. 478,283,495.29 0.00 0.00 0.00 0.00 478,283,495.29
Total 478,283,495.29 0.00 0.00 0.00 0.00 478,283,495.29
16. Long-term Unamortized Expenses
Other
Beginning Increased Amortization
Item decreas Ending balance
balance amount amount
e
Experience center 36,671,977.31 36,354.70 4,748,907.28 0.00 31,959,424.73
Pottery jar warehouse 6,244,584.78 0.00 2,203,971.00 0.00 4,040,613.78
Sewage Treatment Project 3,050,000.00 1,640,000.00 461,311.50 0.00 4,228,688.50
Yellow Crane Tower
16,531,666.46 0.00 2,328,900.37 0.00 14,202,766.09
Chateau and museum
Gujing Party Construction 5,909,090.91 3,754,239.66 1,112,331.25 0.00 8,550,999.32
~98~
Other
Beginning Increased Amortization
Item decreas Ending balance
balance amount amount
e
Cultural Center
Other projects with small
15,154,154.00 267,253.54 2,631,299.17 0.00 12,790,108.37
single amount
Total 83,561,473.46 5,697,847.90 13,486,720.57 0.00 75,772,600.79
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) List of Deferred Income Tax Assets
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Bad debt provision 43,499,945.40 10,866,529.15 43,023,376.00 10,749,392.31
Impairment of inventories 21,985,965.74 5,461,318.38 17,018,004.85 4,219,328.16
Impairment provision of the
4,964,645.20 1,241,161.31 5,010,437.99 1,252,609.50
fixed assets
Deferred income 74,300,122.46 18,308,505.09 76,636,500.55 18,877,272.61
Accrued expenses and discount 437,378,318.85 109,344,579.72 153,988,413.40 38,497,103.35
Deductible losses 1,768,111.99 410,365.65 111,851.71 5,592.58
Unrealized internal profits 17,201,753.99 4,285,249.29 16,788,054.95 4,181,824.54
Change of fair value of trading
0.00 0.00 117,161.92 29,290.48
financial assets
Deducted payroll payable
carryingforward to the next 0.00 0.00 35,071,030.14 8,767,757.53
period
Total 601,098,863.63 149,917,708.59 347,764,831.51 86,580,171.06
(2) Lists of Deferred Income Tax Liabilities
Ending balance Beginning balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Change of fair value of trading 17,596,291.10 4,399,072.78 0.00 0.00
~99~
financial assets
Change in fair value of
6,393,107.46 1,598,276.87
available-for-sale financial assets
accelerated depreciation of
12,591,595.58 3,147,898.89 12,921,842.60 3,230,460.65
difference of fixed assets
Asset evaluation increment of
business combination not under the 387,776,186.92 96,944,046.73 391,743,110.36 97,935,777.59
same control
Total 417,964,073.60 104,491,018.40 411,058,060.42 102,764,515.11
(3) List of Unrecognized Deferred Income Tax Assets
Item Ending balance Beginning balance
Deductible temporary difference 16,214.75 16,214.75
Deductible losses 5,432,144.69 5,089,008.12
Total 5,448,359.44 5,105,222.87
18. Other Non-current Assets
Item Ending balance Beginning balance
Certificate of deposit 200,000,000.00 0.00
Prepayment of equipment and house 16,544,407.51
574,026.00
purchase
Total 200,574,026.00 16,544,407.51
19. Notes Payable
Category Ending balance Beginning balance
Bank acceptance bill 428,927,100.00 320,554,500.00
Trade acceptance 47,881,240.53 28,648,913.72
Total 476,808,340.53 349,203,413.72
20. Accounts Payable
(1) List of Accounts Payable
Item Ending balance Beginning balance
Payment for materials 205,184,631.16 277,765,943.47
Prepayment for projects and equipment 67,828,201.29 111,498,555.89
Others 64,520,149.31 95,688,099.23
~100~
Item Ending balance Beginning balance
Total 337,532,981.76 484,952,598.59
(2) Significant Accounts Payable Aging over One Year
Item Ending balance Unpaid/ Un-carry-over reason
A Company 1,115,215.57 Final payment of the project
B Company 7,544,026.71 Final payment of the project
C Company 3,744,927.40 Final payment of the project
D Company 1,300,000.00 Final payment of the project
E Company 3,445,131.03 Final payment of the project
Total 17,149,300.71 --
21. Advance from Customers
Item Ending balance Beginning balance
Loans 517,109,674.60 1,149,143,310.48
Total 517,109,674.60 1,149,143,310.48
22. Payroll Payable
(1) List of Payroll Payable
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 456,935,872.94 787,677,386.74 934,115,923.79 310,497,335.89
II. Post-employment benefit-defined
363,603.49 69,442,152.68 69,456,442.83 349,313.34
contribution plans
III. Termination benefits 0.00 0.00 0.00 0.00
IV. Other benefits due within one
0.00 0.00 0.00 0.00
year
Total 457,299,476.43 857,119,539.42 1,003,572,366.62 310,846,649.23
(2) List of Short-term Salary
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus, allowance, subsidy 371,643,470.87 709,042,606.80 850,536,199.87 230,149,877.80
2. Employee welfare 6,468,163.00 9,972,320.26 16,440,483.26 0.00
3. Social insurance 233,210.91 27,163,747.13 27,393,663.48 3,294.56
~101~
Item Beginning balance Increase Decrease Ending balance
Of which: Medical insurance premiums 226,816.90 24,127,024.75 24,350,547.09 3,294.56
Work-related injury insurance 1,487.67 949,793.30 951,280.97 0.00
Maternity insurance 4,906.34 2,086,929.08 2,091,835.42 0.00
4. Housing fund 2,867,327.46 30,502,119.49 29,425,126.35 3,944,320.60
5.Labor union budget and employee
75,723,700.70 10,996,593.06 10,320,450.83 76,399,842.93
education budget
6. Short-term paid absence 0.00 0.00 0.00 0.00
7. Short-term profits sharing plan 0.00 0.00 0.00 0.00
Total 456,935,872.94 787,677,386.74 934,115,923.79 310,497,335.89
(3) List of Drawing Scheme
Item Beginning balance Increase Decrease Ending balance
1. Basic pension benefits 347,894.88 66,950,290.72 66,948,872.26 349,313.34
2. Unemployment insurance 15,708.61 2,491,861.96 2,507,570.57 0.00
Total 363,603.49 69,442,152.68 69,456,442.83 349,313.34
23. Taxes Payable
Item Ending balance Beginning balance
VAT 89,384,986.50 162,028,367.23
Consumption tax 113,591,123.33 99,133,181.43
Corporate income tax 139,532,581.81 75,107,410.70
Personal income tax 1,564,596.45 1,307,281.11
Urban maintenance and construction tax 10,863,973.17 13,142,342.60
Stamp tax 746,938.60 549,270.06
Education Surcharge 10,275,939.43 12,301,477.16
Others 2,783,142.76 9,424,293.89
Total 368,743,282.05 372,993,624.18
24. Other Accounts Payable
Nature Ending balance Beginning balance
~102~
Nature Ending balance Beginning balance
Interest payable 0.00 0.00
Dividend payable 0.00 0.00
Other accounts payable 1,337,734,331.13 1,192,020,147.82
Total 1,337,734,331.13 1,192,020,147.82
(1) Other Accounts Payable
① Listed by Account Nature
Nature Ending balance Beginning balance
Margin and cash pledge 1,211,205,092.51 1,064,059,562.95
Business travel charges advance 72,197.21 145,447.82
Quality guarantee deposit 33,390,136.01 14,693,150.14
Housing deduction 3,944,320.60 2,867,327.46
Unsettled sales discount 18,404,995.42 30,212,626.88
Others 70,717,589.38 80,042,032.57
Total 1,337,734,331.13 1,192,020,147.82
② Significant Accounts Payable Aging over One Year
There is no significant account payable aging over one year at the end of period.
25. Other Current Liabilities
Item Ending balance Beginning balance
Accrued expenses 443,198,383.65 295,164,745.44
Total 443,198,383.65 295,164,745.44
26. Deferred Revenue
Item Beginning balance Increase Decrease Ending balance Formed reason
Government subsidies 76,636,500.55 113,800.00 2,450,178.09 74,300,122.46 Related to assets
Total 76,636,500.55 113,800.00 2,450,178.09 74,300,122.46 --
Of which, items involved in government subsidies:
Newly-increased Recorded into Recorded Related to
Beginning Other Ending
Item amount of non-operating into other assets/related
balance changes balance
subsidy revenue income to income
~103~
Newly-increased Recorded into Recorded Related to
Beginning Other Ending
Item amount of non-operating into other assets/related
balance changes balance
subsidy revenue income to income
Technical reform of wine Related to
255,208.43 0.00 0.00 31,249.98 0.00 223,958.45
the assets
production system
Related to
Instruments subsidies 992,250.00 0.00 0.00 110,250.00 0.00 882,000.00
the assets
Intelligent solid brewing Related to
151,041.57 0.00 0.00 15,625.02 0.00 135,416.55
the assets
technology innovation project
Anhui service industry Related to
1,087,805.00 0.00 0.00 146,341.44 0.00 941,463.56
the assets
development guide fund
Anhui innovative province
construction independent Related to
2,678,665.00 0.00 0.00 365,272.50 0.00 2,313,392.50
the assets
innovation ability construction
subsidy
Energy-saving and reform
Related to
project of coal-fired industry 12,750.00 0.00 0.00 12,750.00 0.00 0.00
the assets
boiler and glass furnace
Bozhou city logistics center Related to
60,000.00 0.00 0.00 30,000.00 0.00 30,000.00
the assets
project
Related to
Equipment subsidy 1,252,062.37 0.00 0.00 101,399.82 0.00 1,150,662.55
the assets
Financial subsidy for technology Related to
415,930.90 0.00 0.00 267,110.76 0.00 148,820.14
the assets
innovation
Special fund to enterprise Related to
52,500.00 0.00 0.00 15,000.00 0.00 37,500.00
the assets
development
Related to
Iot traceability system project 2,970,000.00 0.00 0.00 556,875.00 0.00 2,413,125.00
assets
Infrastructure subsidies of Related to
35,338,000.00 0.00 0.00 0.00 0.00 35,338,000.00
assets
Suizhou new factory
Motor and boiler energy-saving Related to
412,500.20 0.00 0.00 68,749.98 0.00 343,750.22
assets
reform project
Related to
Automated storage hook and 359,375.00 0.00 0.00 46,875.00 0.00 312,500.00
assets
~104~
Newly-increased Recorded into Recorded Related to
Beginning Other Ending
Item amount of non-operating into other assets/related
balance changes balance
subsidy revenue income to income
product quality online
monitoring
Research fund on smart Related to
886,200.00 113,800.00 0.00 0.00 0.00 1,000,000.00
assets
Koji-making technology
Renovation of Gujing Zhangji Related to
882,708.39 0.00 0.00 23,749.98 0.00 858,958.41
assets
Spirit Room
Food security enhancement Related to
827,586.25 0.00 0.00 68,965.50 0.00 758,620.75
assets
project
Key technical cooperation on
Related to
isotopic authenticity of important 600,000.00 0.00 0.00 0.00 0.00 600,000.00
assets
food
Comprehensive subsidies for air Related to
2,608,083.33 0.00 0.00 131,500.02 0.00 2,476,583.31
assets
pollution prevention
Fund of strategic emerging
Related to
industries cluster development 1,020,800.00 0.00 0.00 111,360.00 0.00 909,440.00
assets
foundation
Related to
Land refund 23,113,034.11 0.00 0.00 275,103.09 0.00 22,837,931.02
assets
Special fund to power demand Related to
660,000.00 0.00 0.00 72,000.00 0.00 588,000.00
assets
side management
Total 76,636,500.55 113,800.00 0.00 2,450,178.09 0.00 74,300,122.46 --
27. Share Capital
Increase/decrease in Reporting Period (+/-)
Item Beginning balance Newly Bonus Bonus issue Ending balance
Others Subtotal
issue share shares from profit
The sum of shares 503,600,000.00 0.00 0.00 0.00 0.00 0.00 503,600,000.00
28. Capital Reserves
Item Beginning balance Increase Decrease Ending balance
Capital premium 1,262,552,456.05 0.00 0.00 1,262,552,456.05
~105~
Item Beginning balance Increase Decrease Ending balance
Other capital reserves 32,853,136.20 0.00 0.00 32,853,136.20
Total 1,295,405,592.25 0.00 0.00 1,295,405,592.25
29. Surplus Reserves
Item Beginning balance Increase Decrease Ending balance
Statutory surplus reserves 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
Notes: Based on the regulations of the Corporation Law and Article of Association, the Company should
withdraw 10% of the statutory surplus reserves according to the net profits. If the accumulated amount of the
statutory surplus reserves exceeded the 50% of the registered capital, the Company could no more withdraw.
30. Retained Profits
Same period of last
Item Reporting Period
year
Beginning balance of retained profits before adjustments 5,541,281,341.47 4,349,649,698.42
Total beginning balance of retained profits before adjustments (Increase+, decrease-) 4,794,830.59 0.00
Beginning balance of retained profits after adjustments 5,546,076,172.06 4,349,649,698.42
Add: Net profit attributable to owners of the Company 1,248,316,314.01 1,695,231,643.05
Less: Withdrawal of statutory surplus reserves 0.00 0.00
Withdrawal of discretional surplus reserves 0.00 0.00
Withdrawal of generic risk reserve 0.00 0.00
Dividend of common stock payable 755,400,000.00 503,600,000.00
Dividend of common stock transfer into share capital 0.00 0.00
Ending retained profits 6,038,992,486.07 5,541,281,341.47
31. Operating Revenues and Costs
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 5,958,624,293.86 1,380,565,871.04 4,761,127,411.98 1,030,168,914.20
Other operations 29,488,705.23 13,590,863.51 21,956,483.35 12,506,554.04
Total 5,988,112,999.09 1,394,156,734.55 4,783,083,895.33 1,042,675,468.24
~106~
32. Business Taxes and Surcharges
Item Reporting Period Same period of last year
Consumption tax 711,806,689.93 563,325,650.24
Urban maintenance, construction tax and educational surcharge 138,007,221.23 142,213,013.80
Urban land use tax 3,447,726.79 6,015,282.37
Real estate tax 4,547,732.36 8,375,687.33
Stamp duty 5,043,756.63 3,804,040.42
Others 6,674,635.10 5,733,499.37
Total 869,527,762.04 729,467,173.53
Note: The measurement standards of business tax and surcharges see Notes V. Taxation.
33. Sales Expenses
Item Reporting Period Same period of last year
Employee’s remuneration
197,359,561.67 136,422,226.05
Business travel charges
60,001,666.01 46,668,654.04
Advertising expense
442,193,538.62 340,669,501.89
Transport fees
27,580,054.90 26,869,004.77
Comprehensive promotion fees 787,961,795.81 815,172,181.29
Labor cost
281,570,342.23 194,269,250.64
Other sales expenses
43,822,480.46 37,229,496.49
Total 1,840,489,439.70 1,597,300,315.17
34. Administration Expenses
Item Reporting Period Same period of last year
Employee’s remuneration
180,945,738.54 156,429,758.02
Office expenses
17,415,335.29 15,386,308.57
Repair charge
17,708,807.57 30,444,032.33
Depreciation charge
30,873,944.56 29,064,059.09
Amortization of intangible assets
9,656,033.10 8,489,059.99
Sewage charge
9,730,796.01 6,066,176.72
~107~
Item Reporting Period Same period of last year
Business travel charges
1,375,252.69 1,093,709.89
Water & electricity fees
6,162,660.18 5,668,025.21
Others
28,176,889.19 19,832,073.54
Total 302,045,457.13 272,473,203.36
35. R&D Expenses
Item Reporting Period Same period of last year
Employee’s remuneration 8,702,736.52 4,225,844.44
Direct input expense 1,225,388.53 665,769.98
Depreciation expense 1,633,752.38 1,071,724.10
Other related expense 3,102,360.24 2,063,795.84
Total 14,664,237.67 8,027,134.36
36. Financial Expenses
Item Reporting Period Same period of last year
Interest expenses 14,173,972.09 0.00
Less: Interest income 20,466,649.02 21,644,883.48
Exchange gains and losses 1,577,281.36 608,331.71
Others 412,770.27 751,645.22
Total -4,302,625.30 -20,284,906.55
Note: The interest expenses in the Reporting period are the discount interest of bank acceptance bills.
37. Asset Impairment Loss
Item Reporting Period Same period of last year
Bad debt loss -476,569.40 105,638.14
Inventory falling price loss -5,945,248.67 -1,277,549.50
Total -6,421,818.07 -1,171,911.36
38. Gain on Changes in Fair Value
Sources Reporting Period Same period of last year
Trading financial assets 11,320,345.56 236,707.77
Of which: gains on changes in fair value of derivative financial assets 0.00 0.00
~108~
Sources Reporting Period Same period of last year
Total 11,320,345.56 236,707.77
39. Investment Income
Item Reporting Period Same period of last year
Long-term equity investment income
-164,994.19 0.00
accounted by equity method
Investment income from disposal of long-term
equity investment
Investment income from holding of trading
financial assets
Investment income from disposal of trading
0.00 1,271,471.00
financial assets
Dividend income from holding of other equity
instrument investment
Investment income from holding of
0.00 0.00
held-to-maturity investment
Investment income from holding of
0.00 50,743,630.89
available-for-dale financial assets
Investment income from disposal of
0.00 10,999,123.54
available-for-sale financial assets
Investment income from disposal of
held-to-maturity investment
Income from remeasurement of residual stock
rights at fair value after losing control power
Interest income from holding of creditors’
investment
Interest income from holding of other
creditors’ investment
Interest income from disposal of other
creditors’ investment
Other investment income 77,512,041.72 5,760,794.52
Total 77,347,047.53 68,775,019.95
40. Asset Disposal Income
Same period of
Item Reporting Period Amount recorded in the current non-recurring profit or loss
last year
Fixed assets disposal income 119,488.56 154,437.81 119,488.56
~109~
Same period of
Item Reporting Period Amount recorded in the current non-recurring profit or loss
last year
Total 119,488.56 154,437.81 119,488.56
41. Other Income
Same
Reporting Amount recorded in the current non-recurring
Item period of
Period
last year profit or loss
1,426,552.
Tax rebates 15,816,253.89 15,816,253.89
29
2,566,383.
Amortization of differed income 2,450,178.09 2,450,178.09
76
Government subsidy related to routine business
12,517,486.70 494,100.00 12,517,486.70
activities
4,487,036.
Total 30,783,918.68 30,783,918.68
05
42. Non-operating Income
Amount recorded in the
Same period of last
Item Reporting Period current non-recurring
year
profit or loss
Gains from damage or scrap of non-current assets 146,982.76 728,876.14 146,982.76
Government subsidy unrelated to routine business activities 20,000.00 221,000.00 20,000.00
Income from penalty and compensations 9,154,446.13 7,587,991.61 9,154,446.13
Sales of scrap 1,527,143.43 5,808,369.37 1,527,143.43
Other 302,191.21 412,560.64 302,191.21
Total 11,150,763.53 14,758,797.76 11,150,763.53
Government subsidies recorded into current profit or loss:
Reporting Period Same period of last year
Related to the
Recorded into Recorded Offse Recorded into Recorded Offse
Item assets/related to
non-operating into other t non-operating into other t
income
income income costs income income costs
Other rewards 20,000.00 0.00 0.00 21,000.00 0.00 0.00 Related to income
~110~
Reporting Period Same period of last year
Related to the
Recorded into Recorded Offse Recorded into Recorded Offse
Item assets/related to
non-operating into other t non-operating into other t
income
income income costs income income costs
Reward of taxpayer in
Xiannning high-tech 0.00 0.00 0.00 100,000.00 0.00 0.00 Related to income
zone
Fund for postdoctoral
innovation practice 0.00 0.00 0.00 100,000.00 0.00 0.00 Related to income
base
Total 20,000.00 0.00 0.00 221,000.00 0.00 0.00 --
43. Non-operating Expense
Amount recorded in the
Item Reporting Period Same period of last year current non-recurring profit
or loss
Losses on damage or scrap of non-current assets 576,926.25 4,303,286.91 576,926.25
Other 1,160,684.82 134,726.13 1,160,684.82
Total 1,737,611.07 4,438,013.04 1,737,611.07
44. Income Tax Expense
(1) List of Income Tax Expense
Item Reporting Period Same period of last year
Current income tax expense 479,158,161.69 452,080,424.72
Deferred income tax expense -60,012,757.38 -131,290,509.48
Total 419,145,404.31 320,789,915.24
45. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Item Reporting Period Same period of last year
Margin 103,959,881.28 52,007,634.47
Government subsidies 11,786,600.00 615,100.00
Interest income 20,466,649.02 21,644,883.48
Recovery of restricted monetary capital 100,200,000.00 460,000,000.00
~111~
Item Reporting Period Same period of last year
Other 40,318,774.38 43,953,555.36
Total 276,731,904.68 578,221,173.31
(2) Cash Used in Other Operating Activities
Item Reporting Period Same period of last year
Cash paid in selling expense and administrative expense 657,188,029.24 526,682,839.55
Pledged fixed term deposits used to issue notes payable or cash deposit of notes 13,960,226.78 45,000,000.00
Structural deposit not withdrawable in advance 0.00 0.00
Other 25,350,534.61 49,502,450.93
Total 696,498,790.63 621,185,290.48
46. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated from operating
activities
Net profit 1,274,948,723.71 915,437,666.92
Add: Provision for impairment of assets 6,421,818.07 1,171,911.36
Depreciation of fixed assets, oil-gas assets, and productive living assets 102,076,795.33 96,520,768.95
Amortization of investment property 158,571.24 168,913.08
Amortization of intangible assets 12,195,535.21 8,489,059.99
Amortization of long-term prepaid expenses 13,486,720.57 10,844,242.64
Losses on disposal of fixed assets, intangible assets and other long-lived assets
154,437.81
(gains: negative) -119,488.56
Losses on scrap of fixed assets (gains: negative) 429,943.49 3,574,410.77
Losses from variation of fair value (gains: negative) -11,320,345.56 -236,707.77
Finance costs (gains: negative) 14,173,972.09 608,331.71
Investment loss (gains: negative) -77,347,047.53 -68,775,019.95
Decrease in deferred income tax assets (gains: negative) -63,337,537.53 -131,582,903.72
Increase in deferred income tax liabilities
292,394.23
(“-” means decrease) 3,324,780.16
~112~
Same period of last
Supplemental information Reporting Period
year
Decrease in inventory (gains: negative) -14,040,094.66 -77,733,707.57
Decrease in accounts receivable generated from operating activities (gains:
-1,205,967,657.32
negative) 146,484,134.95
Increase in accounts payable used in operating activities (decrease: negative) 708,414,366.71
-463,552,554.06
Amortization of deferred income -2,450,178.09 2,566,383.76
Certificate of deposit 100,200,000.00 405,000,000.00
Net cash generated from/used in operating activities 1,041,733,748.83 668,946,891.61
2. Significant investing and financing activities without involvement of cash
receipts and payments
Conversion of debt into capital 0.00 0.00
Convertible corporate bonds due within one year 0.00 0.00
Fixed assets under financing lease 0.00 0.00
3. Net increase/decrease of cash and cash equivalents:
Ending balance of cash 2,395,374,286.79 922,785,957.41
Less: Beginning balance of cash 835,560,865.12 1,024,088,626.40
Add: Ending balance of cash equivalents 0.00 0.00
Less: Beginning balance of cash equivalents 0.00 0.00
Net increase in cash and cash equivalents 1,559,813,421.67 -101,302,668.99
(2) Cash and Cash Equivalent
Item Ending balance Beginning balance
I. Cash 2,395,374,286.79 835,560,865.12
Of which: cash on hand 374,122.81 353,429.67
Bank deposits on demand 2,394,869,696.55 835,175,643.46
Other monetary funds on demand 130,467.43 31,791.99
II. Cash and cash equivalents 0.00 0.00
Of which: Bond investment due within three months 0.00 0.00
III. Ending balance of cash and cash equivalents 2,395,374,286.79 835,560,865.12
(3) Non-cash Negotiability Amount of Trade Bills
~113~
Item Reporting Period
Negotiability amount of trade bills 639,142,983.76
Of which: Payment for goods 630,885,014.82
Purchase of fixed assets and other long-term assets 8,257,968.94
47. Assets with Restricted Ownership or Use Right
Item Ending carrying value Restriction reason
Structural deposit not withdrawable in
Other monetary capital 770,000,000.00
advance, due within 3 months
Notes receivable 159,686,231.66 Pledge for issuing bank acceptance bill
Other monetary capital 13,960,226.78 Bill deposit
Total 943,646,458.44 --
48. Government Subsidy
(1) Information of Government Subsidy
Amount recorded
into
Category Amount Presented item
current profit or
loss
15,816,253.8
Tax rebates Other income 15,816,253.89
9
Project fund of 2018 manufacturing industry province 9,180,000.00 Other income 9,180,000.00
Reward of demonstration enterprise in national intellectual property 1,200,000.00 Other income 1,200,000.00
Subsidy for stabilizing posts of unemployment insurance fund 2,000.00 Other income 2,000.00
Subsidy of Bureau of Science and Technology of Xianning 50,000.00 Other income 50,000.00
Subsidy for special workstation of Bureau of Science and Technology
200,000.00 Other income 200,000.00
of Wuhan
Fund for industrial enterprise technology project in Xianning high-tech
200,000.00 Other income 200,000.00
zone
Reward of Bureau of Science and Technology of Bozhou 50,000.00 Other income 50,000.00
Fund for robot project of Economy and Information Technology
300,000.00 Other income 300,000.00
Committee
Research fund on smart Koji-making technology 113,800.00 Deferred income 0.00
~114~
Amount recorded
into
Category Amount Presented item
current profit or
loss
Other rewards 470,800.00 Other income 470,800.00
Additional deduction of VAT 864,686.70 Other income 864,686.70
Non-operating
Other rewards 20,000.00 20,000.00
income
Total 28,467,540.5 -- 28,353,740.59
9
(2) The Return of Government Subsidy in the Reporting Period
There is no return of government subsidy in the Reporting Period.
VII. Changes of Consolidation Scope
The subsidiary, Hubei Yellow Crane Tower Beverage Co., Ltd. is newly established in the Reporting Period.
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main Holding percentage
Registration Nature of
Name operating (%) Way of gaining
place business
place Directly Indirectly
Bozhou, Business
Bozhou Gujing Sales Co., Ltd. Bozhou, Anhui 100.00 Investment
Anhui trading
Bozhou,
Anhui Longrui Glass Co., Ltd. Bozhou, Anhui Production 100.00 Investment
Anhui
Bozhou Gujing Waste Reclamation Bozhou,
Bozhou, Anhui Waste cycled 100.00 Investment
Co., Ltd. Anhui
Anhui Jinyunlai Culture & Media Co.,
Hefei Anhui Hefei Anhui Ads marketing 100.00 Investment
Ltd.
Anhui Swisse Will Science & Bozhou, Technology
Bozhou, Anhui 100.00 Investment
Technology Co., Ltd. Anhui research
Bozhou,
Anhui Subway Cordial Wine Co., Ltd. Bozhou, Anhui Production 100.00 Investment
Anhui
Shanghai Gujing Jinhao Hotel Hotel Business combination
Shanghai Shanghai 100.00
Management Co., Ltd. management
under the same control
~115~
Main Holding percentage
Registration Nature of
Name operating (%) Way of gaining
place business
place Directly Indirectly
Bozhou, Business combination
Bozhou Gujing Hotel Co., Ltd. Bozhou, Anhui Hotel operating 100.00
Anhui
under the same control
Anhui Yuanqing Environmental Co. , Bozhou, Sewage
Bozhou, Anhui 100.00 Investment
Ltd. Anhui Treatment
Anhui Gujing Cloud E-commerce Co.,
Hefei, Anhui Hefei, Anhui E-commerce 100.00 Investment
Ltd.
Anhui Zhenrui Construction Bozhou, Engineering
Bozhou, Anhui 100.00 Investment
Engineering Co., Ltd. Anhui construction
Anhui RunAnXinKe Testing Bozhou,
Bozhou, Anhui Food detection 100.00 Investment
Anhui
Technology Co., Ltd
Business combination
Wuhan Pride Yellow Crane Tower Wuhan,
Wuhan, Hubei Production 51.00 not under the same
Distillery Co., Ltd. Hubei
control
Business combination
Pride Yellow Crane Tower Distillery Xianning, Xianning,
Production 51.00 not under the same
(Xianning) Co., Ltd. Hubei Hubei
control
Business combination
Hubei Yellow Crane Tower Distillery Suizhou,
Suizhou, Hubei Production 51.00 not under the same
Co., Ltd. Hubei
control
Business combination
Wuhan, Commercial
Tian Long Jin Di (Wuhan) Co., Ltd. Wuhan, Hubei 51.00 not under the same
Hubei trade
control
Business combination
Xianning, Xianning, Commercial
Xianning Junhe Sales Co., Ltd. 51.00 not under the same
Hubei Hubei trade
control
Business combination
Wuhan,
Hubei Junhe Advertising Co., Ltd. Wuhan, Hubei Ads marketing 51.00 not under the same
Hubei
control
Wuhan Junya Shibo Technology Co., Wuhan, Wuhan, Hubei Technology 51.00 Investment
~116~
Main Holding percentage
Registration Nature of
Name operating (%) Way of gaining
place business
place Directly Indirectly
Ltd. Hubei development
Wuhan, Commercial
Wuhan Junya Sales Co., Ltd. Wuhan, Hubei 51.00 Investment
Hubei trade
Suizhou, Business
Suizhou Junhe Trading Co., Ltd. Suizhou, Hubei 51.00 Investment
Hubei trading
Hubei Yellow Crane Tower Beverage Xianning, Xianning, Business
51.00 Investment
Co., Ltd. Hubei Hubei trading
Note: Hubei Yellow Crane Tower Beverage Co., Ltd. is set up in March 2019.
The Composition of the Company
(2) Significant Not Wholly-owned Subsidiary
Shareholding The profit or loss Declaring dividends
Ending balance of
proportion of attributable to distributed to
Name non-controlling
non-controlling non-controlling non-controlling
interests
interests interests interests
Wuhan Pride Yellow Crane Tower
49.00 26,632,409.70 0.00 454,398,502.52
Distillery Co., Ltd.
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Ending balance
Name Non-current Non-current
Current assets Total assets Current liabilities Total liabilities
assets liability
Wuhan Pride Yellow
Crane Tower Distillery 647,335,956.02 713,870,487.69 1,361,206,443.71 300,618,523.68 133,244,037.34 433,862,561.02
Co., Ltd
(Continued 1)
Beginning balance
Name Current
Current assets Non-current assets Total assets Non-current liability Total liabilities
liabilities
Wuhan Pride
Yellow Crane 587,458,925.80 731,191,284.72 1,318,650,210.52 311,342,786.19 134,315,398.16 445,658,184.35
Tower Distillery
~117~
Beginning balance
Name Current
Current assets Non-current assets Total assets Non-current liability Total liabilities
liabilities
Co., Ltd
(Continued 2)
Reporting Period Same period of last year
Cash flows Cash flows
Total Total
Name Operating from Operating from
Net profit comprehensive Net profit comprehensive
revenue operating revenue operating
income income
activities activities
Wuhan
Pride
Yellow
Crane 457,947,025.03 54,351,856.52 54,351,856.52 39,866,055.42 429,495,365.21 46,956,428.75 46,956,428.75 73,102,943.91
Tower
Distillery
Co., Ltd.
IX. The Risk Related to Financial Instruments
The main financial instruments of the Company are equity investment, financial product, trust investment,
accounts receivable and accounts payable, etc, the specific explanation of each financial instrument are in
relevant item of Note VI. Risk related to these financial instruments and the risk management policies the
Company adopted to reduce the risk is as follows: the management of the Company monitors and manages the
risk exposure to ensure the aforesaid risk within the limit scope of control.
(I) Risk Management Objectives and Policies
The goals of the Company is to maintain a proper balance between the risk and the income, reduce the
negative influence of risk to the operation performance of the Company to a minimum, and maximize profits
of shareholders and other equity investors, basing on the risk management goal, the Company basis policies
are to recognize and analyze each risk the Company faced, establish proper risk bottom line and conduct risk
management, timely and reliably supervise each risk, control the risks within the limit scope .
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign
exchange risk is referred to the risk of loss from the change of exchange rate. The main operation of the
Company is within the territory of China, mainly settled by RMB, only small amount of export business and
~118~
the influence of the proportion in the total income is rather small; the exchange rate risk is very little.
(2) Interest Rate Risk- Cash Flow Change Risk
The operation capital of the Company is sufficient, there is no external borrowing in the Company; the interest
rate risk is very little.
(3) Other Price Risk
What the Company held are classified as available-for-sale financial assets and trading financial assets
measured at fair value on balance sheet date. Thus, the Company bares the risk change of securities market.
The Company adopts variety of equity group to reduce the price risk in equity security investment.
2. Credit Risk
On 30 June 2019, the largest credit risk exposure what may lead to the financial losses was the other party of
the contract failed to fulfill the obligations and causes loss of the Company’s financial assets and financial
guarantee, which including: carrying value of financial assets recognized in consolidated balance sheet; as for
the financial instruments measured at fair value, the carrying value reflects its risk exposure, but not the
largest one, the largest risk exposure will change when the future fair value changes.
The Company only trade with the third party authorized with good credit and large scale. In line with the
policies of the Company and the items of sale contracts, the Company gives priority to first payment shipment,
only small amount of credit transactions and examines and verifies the credit of the client who trading with by
credit way.
The Company’s working capital was in bank with higher credit rating, so credit risk of working capital was
low.
3. Liquidity Risk
When managing liquidity risk, the Company maintained the management’s believe that supervising the
sufficient cash and cash equivalents to meet the operating demand of the Company and reduce the influence of
the fluctuation of cash flow.
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Ending fair value
Fair value Fair value Fair value
Item
measurement items measurement measurement Total
at level 1 items at level 2 items at level 3
I. Consistent fair value measurement
(I) Trading financial assets 1,573,596,291.10 1,573,596,291.10
1. Financial assets at fair value through profit
or loss
~119~
Ending fair value
Fair value Fair value Fair value
Item
measurement items measurement measurement Total
at level 1 items at level 2 items at level 3
(1) Debt instrument investment 1,356,000,000.00 1,356,000,000.00
(2) Equity instrument investment 217,596,291.10 217,596,291.10
(3) Derivative financial assets
Total assets consistently measured at fair
1,573,596,291.10 1,573,596,291.10
value
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at
Level 1
The consistent fair value measurement items were the share public trade on Shanghai Stock Exchange or
Shenzhen Stock Exchange, the market price recognition basis was the closing price of the share on balance
sheet date. When the shares held were in the restricted period, the price shall be determined according to the
relevant valuation methods mentioned in SFC [2007] No. 21.
XI. Connected Party and Connected Transaction
1. Information Related to the Company as the Parent of the Company
Proportion of
Proportion of voting
share held by the
rights owned by the
Registration Company as the
Name Nature of business Registered capital Company as the
place parent against
parent against the
the Company
Company (%)
(%)
Beverage, Construction
materials, and plastic
Anhui Gujing Group Co., Ltd. Anhui 1,000,000,000.00 53.89 53.89
productions
manufacture
Notes: The finial controller of the Company was State-owned Assets Supervision Commission of People’s
Government of Bozhou, Anhui
2. Subsidiaries of the Company
Refer to Note VIII-1. Equity in Subsidiaries.
3. Information on Other Connected Parties
Name Relationship
Anhui Ruifuxiang Food Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruijing Restaurant Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
~120~
Name Relationship
Anhui Haochidian Catering Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Shanghai Ruiyao Hotel Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Shanghai Beihai Restaurant Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruijing Trade Travel (Group) Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
Bozhou Hotel Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing Real Estates Group Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
East Ruijing Enterprise Investment Development Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
Anhui Hengxin Pawn Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Bozhou Ruineng Thermoelectricity Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Holiday Inn Hefei Affiliated enterprise of controlling shareholder and actual controller
Bozhou Rufuxiang High-protein Feed Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing Hotel Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruixin Pawn Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
Anhui Zhongxin Financial Leasing Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Huixin Finance Investment Group Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Hefei Longxin Financial Management Consulting Co.,
Affiliated enterprise of controlling shareholder and actual controller
Ltd.
Bozhou Anxin Microcredit Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
Large Central Plain Wine Valley Culture Tourism Affiliated enterprise of controlling shareholder and actual controller
Development Co., Ltd.
Anhui Xinyuan Government Landscape Engineering Co., Affiliated enterprise of controlling shareholder and actual controller
Ltd.
Anhui Lvyuan Ecological Agriculture Development Co.,
Affiliated enterprise of controlling shareholder and actual controller
Ltd.
Bozhou Gujing Hotel Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
Anhui Youxin Financing Guarantee Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Aoxin Real Estate Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Lixin E-Commerce Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
~121~
Name Relationship
Anhui Xinxin Property Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Bozhou Huisheng Building Catering Company Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Junlai Hotel Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Real Estates Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Real Estates Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing International Travel Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Jinzhai Gujing Real Estate Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing Health Industry Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Lejiu Home Tourism Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Shenglong Trading Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing International Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
4. List of Connected Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
① Information on Acquisition of Goods and Reception of Labor Service
Connected party Content Reporting Period Same period of last year
Anhui Gujing International Travel Co., Ltd. Accepting labor service 786,329.00 38,228.00
Anhui Gujing Health Industry Co., Ltd. Purchase of materials 19,433.63 0.00
Anhui Gujing Hotel Development Co., Ltd. Accepting labor service 31.51 156.04
Anhui Gujing Hotel Development Co., Ltd. Accepting food and
16,766.00 4,819.00
accommodation services
Anhui Haochidian Catering Co., Ltd. Purchase of materials 245,594.50 0.00
Accepting food and
Anhui Haochidian Catering Co., Ltd. 34,440.00 30,300.00
accommodation services
Anhui Huixin Finance Investment Group Co.,
Accepting labor service 55,722.40 134,803.75
Ltd.
Anhui Lvyuan Ecological Agriculture
Accepting labor service 25,821.13 0.00
Development Co., Ltd.
Anhui Lvyuan Ecological Agriculture
Afforestation fees 404,865.62 0.00
Development Co., Ltd.
Anhui Ruijing Restaurant Management Co., Accepting food and 33,725.00 23,043.00
~122~
Connected party Content Reporting Period Same period of last year
Ltd. accommodation services
Anhui Xinyuan Government Landscape
Afforestation fees 31,849.06 482,050.39
Engineering Co., Ltd.
Accepting food and
Beijing Anhui Building 1,285.00 0.00
accommodation services
Accepting food and
Bozhou Hotel Co., Ltd. 3,257,170.88 1,859,506.20
accommodation services
Accepting food and
Bozhou Huisheng Building Catering Company 2,695,540.00 1,349,445.00
accommodation services
Bozhou Gujing Junlai Hotel Management Co., Accepting food and
234,710.54 259,021.00
Ltd. accommodation services
Holiday Inn Hefei Purchase of materials 387,017.20 132,717.52
Accepting food and
Holiday Inn Hefei 14,865.26 41,549.36
accommodation services
Anhui Ruijing Trade Travel (Group) Co., Ltd Purchase of materials 3,076,852.09 0.00
Anhui Gujing Group Co., Ltd. Accepting labor service 63,716.81 0.00
Total -- 11,385,735.63 4,355,639.26
② Information of Sales of Goods and Provision of Labor Service
Reporting Same period of last
Connected party Content
Period
year
Sales of white
Anhui Aoxin Real Estate Development Co., Ltd. 0.00 7,553.44
spirit
Sales of white
Anhui Gujing Real Estates Group Co., Ltd. 0.00 531,449.33
spirit
Providing
catering and
Anhui Gujing International Travel Co., Ltd. 206.00 46,824.00
accommodatio
n services
Sales of white
Anhui Gujing International Travel Co., Ltd. 389.36 0.00
spirit
Sales of small
Anhui Gujing International Travel Co., Ltd. 404.78 470.95
sized materials
Providing
Anhui Gujing Group Co., Ltd. 87,090.19 124,239.79
catering and
~123~
Reporting Same period of last
Connected party Content
Period
year
accommodatio
n services
Sales of small
Anhui Gujing Group Co., Ltd. 63,778.94 19,624.03
sized materials
Providing
catering and
Anhui Gujing Health Industry Co., Ltd. 29,059.00 0.00
accommodatio
n services
Providing
Anhui Gujing Health Industry Co., Ltd. 501,596.23 0.00
labor service
Sales of white
Anhui Gujing Health Industry Co., Ltd. 5,473,459.08 3,103.45
spirit
Sales of small
Anhui Gujing Health Industry Co., Ltd. 3,136.93 10,061.26
sized materials
Sales of white
Anhui Gujing Hotel Development Co., Ltd. 45,325.31 73,937.00
spirit
Sales of white
Anhui Huixin Finance Investment Group Co., Ltd. 452,567.02 1,236,821.89
spirit
Anhui Lejiu Home Tourism Management Co., Ltd. Utilities 179,311.29 0.00
Sales of white
Anhui Lejiu Home Tourism Management Co., Ltd. 3,114.91 0.00
spirit
Sales of small
Anhui Lejiu Home Tourism Management Co., Ltd. 5,849.50 0.00
sized materials
Sales of white
Anhui Lixin E-Commerce Co., Ltd. 63,756.26 64,181.89
spirit
Sales of small
Anhui Lvyuan Ecological Agriculture Development Co., Ltd 3,724.33 0.00
sized materials
Sales of small
Anhui Xinyuan Government Landscape Engineering Co., Ltd. 0.00 8,100.01
sized materials
Providing
catering and
Anhui Ruijing Trade Travel (Group) Co., Ltd. 22,829.26 12,388.57
accommodatio
n services
Sales of white
Anhui Ruijing Trade Travel (Group) Co., Ltd. 2,979,148.41 5,718,162.07
spirit
Anhui Ruixin Pawn Co., Ltd. Sales of white 2,731.85 9,755.53
~124~
Reporting Same period of last
Connected party Content
Period
year
spirit
Providing
catering and
Anhui Shenglong Trading Co., Ltd. 5,909.00 6,900.00
accommodatio
n services
Sales of white
Anhui Shenglong Trading Co., Ltd. 6,206.90 247,600.01
spirit
Sales of white
Anhui Xinxin Property Management Co., Ltd. 0.00 23,587.69
spirit
Sales of white
Anhui Youxin Financing Guarantee Co., Ltd. 2,203.45 4,374.98
spirit
Sales of white
Anhui Zhongxin Finance Leasing Co., Ltd. 3,956.90 7,026.79
spirit
Sales of white
Bozhou Anxin Small Loan Co., Ltd. 3,724.14 7,399.60
spirit
Sales of white
Bozhou Hotel Co., Ltd. 17,379.31 47,383.29
spirit
Sales of white
Bozhou Gujing Huishenglou Catering Co., Ltd. 17,767.24 34,082.23
spirit
Sales of white
Bozhou Gujing Junlai Hotel Management Company 4,655.17 9,270.55
spirit
Sales of white
Bozhou Ruifuxiang High Protein Feed Co., Ltd. 11,405.17 18,051.34
spirit
Sales of white
Bozhou Ruinong Thermal Power Co., Ltd. 190,103.02 145,564.41
spirit
Sales of white
Bozhou Gujing Hotel Co., Ltd. 0.00 9,363.27
spirit
Large Central Plain Wine Valley Culture Tourism Development Co., Water and
36,105.11 39,974.95
Ltd. electricity
Providing
Large Central Plain Wine Valley Culture Tourism Development Co., catering and
2,735.00 10,818.00
Ltd. accommodatio
n services
Large Central Plain Wine Valley Culture Tourism Development Co.,
Providing 15,665.68 15,057.68
Ltd.
~125~
Reporting Same period of last
Connected party Content
Period
year
services
Large Central Plain Wine Valley Culture Tourism Development Co., Sales of white
902,976.02 1,135,798.58
Ltd. spirit
Large Central Plain Wine Valley Culture Tourism Development Co., Sales of small
841.63 2,516.56
Ltd. materials
Providing
catering and
Holiday Inn Hefei 2,937.76 56,825.49
accommodatio
n services
Sales of white
Shanghai Beihai Restaurant Co., Ltd. 7,964.60 0.00
spirit
Sales of white
Anhui Jinzhai Gujing Real Estate Development Co., Ltd. 0.00 95,255.39
spirit
Providing
Anhui Gujing Real Estates Group Co., Ltd. 0.00 6,756.76
services
Providing
Bozhou Ruineng Thermoelectricity Co., Ltd. 0.00 252,252.25
services
Anhui Ruijing Trade Travel (Group) Co., Ltd. Sales materials 0.00 356.00
Sales of white
Bozhou Rufuxiang High-protein Feed Co., Ltd. 0.00 331,900.64
spirit
Sales of white
Anhui Hengxin Pawnbroking Co., Ltd. 0.00 3,683.59
spirit
Sales of white
Anhui Haochidian Catering Co., Ltd. 0.00 25,571.62
spirit
Sales of white
Hefei Longxin Financial Management Consulting Co., Ltd. 0.00 1,510.68
spirit
Sales of small
Anhui Medieval Tourism Development Co., Ltd. 0.00 120.85
materials
Anhui Medieval Tourism Development Co., Ltd. Providing 0.00 13,125.00
~126~
Reporting Same period of last
Connected party Content
Period
year
catering and
accommodatio
n services
Sales of white
Bozhou Gujing Real Estate Development Co., Ltd. 0.00 11,475.45
spirit
Sales of white
Bozhou Gujing Property Management Co., Ltd. 0.00 39,987.82
spirit
Total -- 11,150,014.75 10,470,264.68
(2) Information on Connected Lease
The Company serves as the leasee
The lease income confirmed The lease income confirmed
Name of lessor Category of leased assets
in the Reporting Period
in the Same period of last year
Anhui Gujing Group Co., Ltd. Houses and buildings 1,095,238.10 1,095,238.10
The Company serves as the lessor
The lease income confirmed
The lease income confirmed
Name of lessee Category of leased assets in the Same period of last
in the Reporting Period
year
Anhui Gujing Hotel Management Co., Ltd. Houses and buildings 689,124.81 246,190.48
5. Accounts Receivable and Payable of Connected Party
(1) Accounts Receivable
Item Ending balance Beginning balance
Other accounts receivable:
Bozhou Ruineng Thermoelectricity Co., Ltd. 14,521.45 14,521.45
Anhui Gujing Real Estates Group Co., Ltd. 0.00 25,342.50
Total 14,521.45 39,863.95
(2) Accounts Payable
Item Ending balance Beginning balance
Advances from customers:
Anhui Ruijing Trade Travel (Group) Co., Ltd. 1,866,176.31 4,085,856.31
~127~
Item Ending balance Beginning balance
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. 1,744,615.38 1,881,236.80
Anhui Gujing Health Industry Co., Ltd. 1,858,304.40 4,036,729.60
Bozhou Ruineng Thermoelectricity Co., Ltd. 0.00 43,200.00
Anhui Shenglong Trading Co., Ltd. 141,581.50 0.00
Total 5,610,677.59 10,047,022.71
Other accounts payable:
Anhui Gujing Hotel Development Co., Ltd. 50,000.00 50,000.00
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. 50,000.00 0.00
Anhui Ruijing Trade Travel (Group) Co., Ltd. 85,000.00 35,000.00
Total 185,000.00 85,000.00
XII. Commitments and Contingency
1. Significant Commitments
Operating Lease Commitments
As of the balance sheet date, the irrevocable operating lease contracts the Company signed were listed as
follows:
Item Ending balance Beginning balance
Minimum lease payments of irrevocable operating lease
1 year after balance date 2,300,000.00 2,300,000.00
2 years after balance date 2,300,000.00 2,300,000.00
3 years after balance date 2,300,000.00 2,300,000.00
Subsequent years 18,208,333.33 19,358,333.33
Total 25,108,333.33 26,258,333.33
2. Contingency
(1) Due to the infringement behaviors on the Company’s trademark in the market, the Company filed lawsuits against
such infringement acts. Since the individual and overall amount of action was relatively small, the contingency is
expected to have no significant impacts on the Company.
(2) There was no other contingency of the Company other than the above-mentioned event.
~128~
XIII. Events after the Balance Sheet Date
As of 30 June 2019, there was no significant event of the Company after the balance sheet date.
XIV. Other Significant Events
Segment Information
There was no segment information based on operating segments to disclose, since the Company didn’t determine
operating segments in accordance with internal organizational structure, management requirements and internal
report systems.
XV. Notes of Main Items in the Financial Statements of the Company
1. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Ending balance
Carrying amount Bad debt provision
Category Carrying
Proport Withdrawal
Amount Amount value
ion (%) proportion (%)
Accounts receivable with significant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
Accounts receivable withdrawal of bad debt provision of by credit risks 10,793,50 141,121 10,652,38
100.00 1.31
characteristics: 5.68 .87 3.81
Accounts receivable with insignificant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
10,793,50 141,121 10,652,38
Total 100.00 1.31
5.68 .87 3.81
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Carrying
Proporti Proportion
Amount Amount value
on (%) (%)
Accounts receivable with significant single amount for which bad debt provision
0.00 0.00 0.00 0.00 0.00
separately accrued
Accounts receivable withdrawal of bad debt provision of by credit risks 9,527,072 141,121. 9,385,950
100.00 1.48
characteristics: .41 87 .54
Accounts receivable with insignificant single amount for which bad debt 0.00 0.00 0.00 0.00 0.00
~129~
Beginning balance
Carrying amount Bad debt provision
Category Carrying
Proporti Proportion
Amount Amount value
on (%) (%)
provision separately accrued
9,527,072 141,121. 9,385,950
Total 100.00 1.48
.41 87 .54
① In the groups, accounts receivable adopted aging analysis method to withdraw bad debt provision
Ending balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 0.00 0.00 0.00
[Of which: Within 6 months] 0.00 0.00 0.00
[7-12 months] 0.00 0.00 0.00
1 to 2 years 0.00 0.00 0.00
2 to 3 years 0.00 0.00 0.00
Over 3 years 141,121.87 141,121.87 100.00
Total 141,121.87 141,121.87 100.00
② In the groups, accounts receivable adopted other methods to withdraw bad debt provision
Ending balance
Name of the group
Accounts receivable Bad debt provision Withdrawal proportion (%)
Connected group within the
10,652,383.81 0.00 0.00
combination scope
Total 10,652,383.81 0.00 0.00
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The amount of bad debt provision withdrawn during the Reporting Period was RMB 0.00.
(3) Particulars of Accounts Receivable with Actual Verification during the Reporting Period
The amount of accounts receivable actually verified during the Reporting Period was RMB 0.00.
(4) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
Total amount of the Top 5 accounts receivable in ending balance collected according to the arrears party was
RMB10,270,716.85, accounting for 95.16% of the total ending balance of accounts receivable, and the total of
ending balance of bad debt provision withdrawn was RMB0.00.
~130~
2. Other Accounts Receivable
Item Ending balance Beginning balance
Interest receivable 0.00 0.00
Dividend receivable 0.00 0.00
Other accounts receivable 105,037,195.62 110,800,665.19
Total 105,037,195.62 110,800,665.19
(1) Other Accounts Receivable Disclosed by Category
Ending balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
Other accounts receivable with significant single
amount for which bad debt provision separately 40,850,949.35 27.82 40,850,949.35 100.00 0.00
accrued
Other accounts receivable withdrawn bad debt
106,003,851.26 72.18 966,655.64 0.91 105,037,195.62
provision according to credit risks characteristics
Other accounts receivable with insignificant
single amount for which bad debt provision 0.00 0.00 0.00 0.00 0.00
separately accrued
Total 146,854,800.61 100.00 41,817,604.99 28.48 105,037,195.62
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Proportio Carrying value
Amount Amount proportion
n (%)
(%)
Other accounts receivable with significant single
amount for which bad debt provision separately 40,850,949.35 26.80 40,850,949.35 100.00 0.00
accrued
Other accounts receivable withdrawn bad debt
111,581,253.05 73.20 780,587.86 0.70 110,800,665.19
provision according to credit risks characteristics
Other accounts receivable with insignificant 0.00 0.00 0.00 0.00 0.00
~131~
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Proportio Carrying value
Amount Amount proportion
n (%)
(%)
single amount for which bad debt provision
separately accrued
Total 152,432,202.40 100.00 41,631,537.21 27.31 110,800,665.19
A. Other receivable with single significant amount for which bad debt provision separately accrued at the end
of the period
Ending balance
Other accounts receivable (by unit) Other accounts Bad debt Withdrawal proportion
Withdrawal reason
receivable provision (%)
100.00 Under the bankruptcy
Hengxin Securities 29,010,449.35 29,010,449.35
liquidation
100.00 Under the bankruptcy
Jianqiao Securities 11,840,500.00 11,840,500.00
liquidation
Total 40,850,949.35 40,850,949.35 --
B. In the groups, other accounts receivable adopted aging analysis method to withdraw bad debt provision
Ending balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 3,685,136.21 49,084.05 1.33
[Of which: Within 6 months] 3,379,319.03 33,793.19 1.00
[7-12 months] 305,817.18 15,290.86 5.00
1 to 2 years 392,570.00 39,257.00 10.00
2 to 3 years 377,313.00 188,656.50 50.00
Over 3 years 689,658.09 689,658.09 100.00
Total 5,144,677.30 966,655.64 18.79
C. In the groups, other accounts receivable adopted other methods to withdraw bad debt provision
Ending balance
Name of the group
Other accounts receivable Bad debt provision Withdrawal proportion (%)
~132~
Ending balance
Name of the group
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Connected group within the
100,859,173.96 0.00 0.00
consolidation scope
Total 100,859,173.96 0.00 0.00
② Other Accounts Receivable Classified by Account Nature
Nature Ending carrying amount Beginning carrying amount
Intercourse funds between entities within 100,859,173.96 108,389,173.96
combination scope
Securities investment 40,850,949.35 40,850,949.35
Margin and cash pledge 2,508,139.09 909,657.06
Rent and utilities fee 807,179.22 639,732.73
Others 1,829,358.99 1,642,689.30
Total 146,854,800.61 152,432,202.40
③ Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The amount of bad debt provision withdrawn during the Reporting Period was RMB 186,067.78.
④ Particulars about Other Accounts Receivable with Actual Verification during the Reporting Period
No such cases in the Reporting Period.
⑤ Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Proportion to
Name of total ending
Ending balance of
the Relationship Nature Ending balance Aging balance of
bad debt provision
other accounts
entity
receivable (%)
Related party
within Related party within
No.1 86,909,097.13 Within 3 years 59.18 0.00
combination combination scope
scope
Non-connected
No.2 Securities investment 29,010,449.35 Over 3 years 19.75 29,010,449.35
party
Related party
Related party within
No. 3 within 13,950,076.83 Within 3 years 9.50 0.00
combination scope
combination
~133~
Proportion to
Name of total ending
Ending balance of
the Relationship Nature Ending balance Aging balance of
bad debt provision
other accounts
entity
receivable (%)
scope
Non-connected
No. 4 Securities investment 11,840,500.00 Over 3 years 8.06 11,840,500.00
party
Non-connected Within 6
No. 5 Margin 500,000.00 0.34 5,000.00
party months
Total -- -- 142,210,123.31 -- 96.83 40,855,949.35
3. Long-term Equity Investment
(1) Category of Long-term Equity Investment
Ending balance Beginning balance
Item Carrying Depreciatio Carrying Depreciation
Carrying value Carrying value
amount n reserve amount reserve
Investment to 1,148,213,665. 1,148,213,665. 1,148,213,665. 1,148,213,665.
0.00 0.00
subsidiaries
32 32 32 32
1,148,213,665. 1,148,213,665. 1,148,213,665. 1,148,213,665.
Total 0.00 0.00
32 32 32 32
(2) Investment to Subsidiaries
Ending balance
Depreciation reserve
Investee Beginning balance Increase Decrease Ending balance of depreciation
withdrawn
reserve
Bozhou Gujing Sales Co., Ltd. 68,949,286.89 0.00 0.00 68,949,286.89 0.00 0.00
Anhui Longrui Glass Co., Ltd. 85,267,453.06 0.00 0.00 85,267,453.06 0.00 0.00
Shanghai Gujing Jinhao Hotel
49,906,854.63 0.00 0.00 49,906,854.63 0.00 0.00
Management Co., Ltd.
Bozhou Gujing Hotel Co., Ltd. 648,646.80 0.00 0.00 648,646.80 0.00 0.00
Anhui Swisse Will Science & Technology
40,000,000.00 0.00 0.00 40,000,000.00 0.00 0.00
Co., Ltd.
Anhui Subway Cordial Wine Co., Ltd. 30,000,000.00 0.00 0.00 30,000,000.00 0.00 0.00
Anhui Yuanqing Environmental Co. , Ltd. 16,000,000.00 0.00 0.00 16,000,000.00 0.00 0.00
~134~
Ending balance
Depreciation reserve
Investee Beginning balance Increase Decrease Ending balance of depreciation
withdrawn
reserve
Anhui Gujing Cloud E-commerce Co., Ltd. 5,000,000.00 0.00 0.00 5,000,000.00 0.00 0.00
Anhui Zhenrui Construction Engineering
10,000,000.00 0.00 0.00 10,000,000.00 0.00 0.00
Co., Ltd.
Wuhan Pride Yellow Crane Tower Distillery
816,000,000.00 0.00 0.00 816,000,000.00 0.00 0.00
Co., Ltd.
Anhui Jinyunlai Culture & Media Co., Ltd. 15,000,000.00 0.00 0.00 15,000,000.00 0.00 0.00
Bozhou Gujing Waste Reclamation Co., Ltd. 1,441,423.94 0.00 0.00 1,441,423.94 0.00 0.00
Anhui RunAnXinKe Testing Technology
10,000,000.00 0.00 0.00 10,000,000.00 0.00 0.00
Co., Ltd
Total 1,148,213,665.32 0.00 0.00 1,148,213,665.32 0.00 0.00
4. Operating Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 3,104,047,962.07 1,254,351,553.67 2,331,145,973.42 930,097,754.58
Other operations 40,634,501.51 23,567,023.24 42,363,746.54 32,348,972.74
Total 3,144,682,463.58 1,277,918,576.91 2,373,509,719.96 962,446,727.32
5. Investment Income
Item Reporting Period Same period of last year
Investment income generating from
long-term equity accounted by cost method
Investment income generating from
long-term equity accounted by equity
method
Investment income from disposal of
long-term equity investment
Investment income from holding of trading
0.00 1,271,471.00
financial assets
Investment income from disposal of trading
financial assets
Dividend income from holding of other
equity instrument investment
Investment income from holding of
~135~
held-to-maturity investment
Investment income from holding of
0.00 49,031,673.79
available-for-dale financial assets
Investment income from disposal of
0.00 10,999,123.54
available-for-sale financial assets
Investment income from disposal of
held-to-maturity investment
Income from remeasurement of residual
stock rights at fair value after losing control
power
Interest income from holding of credit
investment
Interest income from holding of other credit
investment
Interest income from disposal of other credit
investment
Other investment income 31,883,868.76 0.00
Total 31,883,868.76 61,302,268.33
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
Item Amount Explanation
Gains/losses on the disposal of non-current assets -310,454.93
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of official
approval documents
Government grants recognized in the current period, except for those acquired in the ordinary
course of business or granted at certain quotas or amounts according to the government’s 30,803,918.68
unified standards
Capital occupation charges on non-financial enterprises that are recorded into current gains
and losses
Gains due to that the investment costs for the Company to obtain subsidiaries, associates and
joint ventures are lower than the enjoyable fair value of the identifiable net assets of the
investees when making the investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or asset management
~136~
Item Amount Explanation
Asset impairment provisions due to acts of God such as natural disasters
Gains and losses from debt restructuring
Expenses on business reorganization, such as expenses on staff arrangements, integration, etc.
Gain/loss on the part over the fair value due to transactions with distinctly unfair prices
Current net gains and losses of subsidiaries acquired in business combination under the same control
from period-begin to combination date
Profit and loss from contingencies irrelative to the normal business operations of company
Gain/loss from change of fair value of trading financial assets and liabilities, and investment
gains from disposal of trading financial assets and liabilities and available-for-sale financial 83,312,387.28
assets, other than valid hedging related to the Company’s common businesses
Depreciation reserves returns of receivables with separate depreciation test
Gain/loss on entrustment loans
Gain/loss on change of the fair value of investing real estate of which the subsequent
measurement is carried out adopting the fair value method
Effect on current gains/losses when a one-off adjustment is made to current gains/losses
according to requirements of taxation, accounting and other relevant laws and regulations
Custody fee income when entrusted with operation
Other non-operating income and expense other than the above 9,823,095.95
Project confirmed with the definition of non-recurring gains and losses and losses
Subtotal 123,628,946.98
Income tax effects 30,769,441.49
Non-controlling interests effects (after tax) 10,414,170.58
Total 82,445,334.91
Note: The number “+” among the non-current gains and losses items refers to profits and revenues, while “-”
referred to losses or expenditure.
The recognition of the non-current gains and losses items was executed according to the regulations of No.1 of the
Information Disclosure Explanatory Notice of the Companies Public Offering Securities-Non-current Gains and
losses (Z-J-H-Announcement [2008] No. 43) .
2. Return on Equity and Earnings Per Share
Profit as of Reporting Period Weighted average ROE (%) EPS (Yuan/share)
~137~
EPS-basic EPS-diluted
Net profit attributable to ordinary
16.71 2.48 2.48
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
15.61 2.32 2.32
deduction of non-recurring profit
and loss
~138~
