Anhui Gujing Distillery Company Limited
Annual Report 2019
April 2020
Gujinggong Liquor Aged Original Liquor Annual Report 2019
The Board of Directors (or the “Board”), the Supervisory Committee as well as the
directors, supervisors and senior management of Anhui Gujing Distillery Company
Limited (hereinafter referred to as the “Company”) hereby guarantee the factuality,
accuracy and completeness of the contents of this Report and its summary, and shall
be jointly and severally liable for any misrepresentations, misleading statements or
material omissions therein.
Liang Jinhui, the legal representative, Ye Changqing, the Chief Accountant, and Zhu
Jiafeng, the head of the financial department (equivalent to financial manager)
hereby guarantee that the financial statements carried in this Report are factual,
accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this
Report and its summary.
Any plans for the future and other forward-looking statements mentioned in this
Report shall NOT be considered as absolute promises of the Company to investors.
Investors, among others, shall be sufficiently aware of the risk and shall differentiate
between plans/forecasts and promises. Again, investors are kindly reminded to pay
attention to possible investment risks.
The Board has approved a final dividend plan as follows: based on the Company’s
total shares on 31 December 2019, a cash dividend of RMB15.00 (tax inclusive) per 10
shares is to be distributed to the shareholders, with no bonus issue from either profit
or capital reserves.
This Report and its summary have been prepared in both Chinese and English.
Should there be any discrepancies or misunderstandings between the two versions,
the Chinese versions shall prevail.
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
Part I Important Notes, Table of Contents and Definitions 2
Part II Corporate Information and Key Financial Information 5
Part III Business Summary 10
Part IV Management Discussion and Analysis 11
Part V Significant Events 28
Part VI Share Changes and Shareholder Information 42
Part VII Preferred Shares 48
Part VIII Convertible bonds 49
Part IX Directors, Supervisors, Senior Management and Staff 50
Part X Corporate Governance 58
Part XI Corporate Bonds 65
Part XII Financial Statements 66
Part XIII Documents Available for Reference 253
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
Definitions
Term Definition
Anhui Gujing Distillery Company Limited inclusive of its consolidated
The “Company”, “ Gu Jing” or “we”
subsidiaries, except where the context otherwise requires
Anhui Gujing Distillery Company Limited exclusive of subsidiaries,
The Company as the parent
except where the context otherwise requires
Gujing Group Anhui Gujing Group Co., Ltd.
Yellow Crane Tower Yellow Crane Tower Distillery Co., Ltd.
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Gujing Distillery, Gujing Distillery-B
Stock code 000596, 200596
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 安徽古井贡酒股份有限公司
Abbr. 古井
Company name in English (if any) ANHUI GUJING DISTILLERY COMPANY LIMITED
Abbr. (if any) GU JING
Legal representative Liang Jinhui
Registered address Gujing Town, Bozhou City, Anhui Province, P.R.China
Zip code 236820
Office address Gujing Town, Bozhou City, Anhui Province, P.R.China
Zip code 236820
Company website http://www.gujing.com
Email address gjzqb@gujing.com.cn
II Contact Information
Board Secretary Securities Representative
Name Ye Changqing Mei Jia
Gujing Town, Bozhou City, Anhui Gujing Town, Bozhou City, Anhui
Address
Province, P.R.China Province, P.R.China
Tel. （0558）5712231 （0558）5710057
Fax （0558）5710099 （0558）5710099
Email address gjzqb@gujing.com.cn gjzqb@gujing.com.cn
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for
China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK)
information disclosure
Website designated by CSRC for publication of this http://www.cninfo.com.cn
Report
~ 5 ~
Gujinggong Liquor Aged Original Liquor Annual Report 2019
Place where this Report is lodged The Board Secretary’s Office
IV Change to Company Registered Information
Unified social credit code 913400001519400083
Change to principal activity of the Company
No change
since going public (if any)
Every change of controlling shareholder since
No change
incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name RSM China
Suite 901-22 to 901-26, Wai Jing Mao Building (Tower 1), No. 22 Fuchengmen Wai Street,
Office address
Xicheng District, Beijing, China
Accountants writing signatures Fu jinyong, Bao guangrong, Jiang jieyu
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2019-over-2018
2019 2018 2017
change (%)
Operating revenue (RMB) 10,416,961,584.23 8,686,140,336.89 19.93% 6,968,325,048.55
Net profit attributable to the listed
2,097,527,739.86 1,695,231,643.05 23.73% 1,148,740,644.93
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before
1,891,097,157.37 1,638,204,454.34 15.44% 1,069,457,368.70
exceptional gains and losses
(RMB)
Net cash generated from/used in
192,447,063.45 1,440,881,285.95 -86.64% 930,914,712.78
operating activities (RMB)
Basic earnings per share 4.17 3.37 23.74% 2.28
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
(RMB/share)
Diluted earnings per share
4.17 3.37 23.74% 2.28
(RMB/share)
Weighted average return on equity
25.55% 24.03% 1.52% 19.09%
(%)
Change of 31
December 2019 over
31 December 2019 31 December 2018 31 December 2017
31 December 2018
(%)
Total assets (RMB) 13,871,297,363.16 12,509,928,449.72 10.88% 10,152,862,119.05
Equity attributable to the listed
8,944,111,764.44 7,601,984,024.58 17.65% 6,459,078,378.38
company’s shareholders (RMB)
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 3,668,502,474.92 2,319,610,524.17 2,214,767,350.88 2,214,081,234.26
Net profit attributable to the listed
783,389,904.73 464,926,409.28 493,294,846.62 355,916,579.23
company’s shareholders
Net profit attributable to the listed
company’s shareholders before 749,094,364.21 416,776,614.89 444,504,344.99 280,721,833.28
exceptional gains and losses
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
Net cash generated from/used in
1,010,701,440.91 31,032,307.92 1,199,637,755.93 -2,048,924,441.31
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what
have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2019 2018 2017 Note
Gain or loss on disposal of non-current assets
(inclusive of impairment allowance -7,615,741.56 -10,060,019.55 -10,659,063.45
write-offs)
Government subsidies charged to current
profit or loss (exclusive of government
subsidies given in the Company’s ordinary 98,293,177.32 36,041,674.45 34,257,968.39
course of business at fixed quotas or amounts
as per the government’s uniform standards)
Gain or loss on fair-value changes in trading
financial assets and liabilities & investment
income from disposal of trading financial
assets and liabilities and available-for-sale 144,234,319.52 18,653,228.80 54,544,637.44
financial assets (exclusive of effective
portion of hedges that arise in the Company’s
ordinary course of business)
Reversed portion of impairment allowance
for accounts receivable which are tested 0.00 0.00 491,989.18
individually for impairment
Non-operating income and expense other
57,215,092.96 32,375,890.89 27,140,455.30
than the above
Less: Income tax effects 71,418,613.38 18,150,068.72 25,366,619.70
Non-controlling interests effects (net
14,277,652.37 1,833,517.16 1,126,090.93
of tax)
Total 206,430,582.49 57,027,188.71 79,283,276.23 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:
□ Applicable √ Not applicable
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
No such cases for the Reporting Period.
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Gujinggong Liquor Aged Original Liquor Annual Report 2019
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
Is the Company subject to any industry-specific disclosure requirements?
No.
The Company primarily produces and markets liquor and spirits.
As one of China’s traditional top eight liquor brands, the Company is the first listed liquor and spirits company with both A and B
stocks. It is located in Bozhou City, Anhui Province in China, the hometown of historic figures Cao Cao and Hua Tuo, as well as one
of the world’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period.
As the main product of the Company, the Gujing spirit originated as a “JiuYunChun Spirit”, together with its making secrets, being
presented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.
196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingering
aftertaste, the Gujing spirit has helped the Company win four national distilled spirit golden awards, a golden award at the 13th SIAL
Paris, the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the State
Protection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhui
provincial government, a title of “National Quality Benchmark”, among other honors.
In recent years, China’s top liquor companies have basically finished adjusting their teams, strategies, products, etc., and are
experiencing a continuous, strong recovery relying on their superior brand influence and product quality. The big picture for the
liquor industry has taken shape. Regional small and medium liquor producers are in face of a reshuffle, while regionally famous
liquor brands are busy dealing with competition from both larger and smaller fellow companies. As such, the liquor industry has
entered a new normal.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Not applicable.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
No material changes occurred to the Company’s core competitiveness in the Reporting Period.
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Part IV Management Discussion and Analysis
I Overview
In 2019, under the guidance of the spirit of the 19th National Congress of the Communist Party of China and President Xi Jinping’s
thought on socialism with Chinese characteristics for a new era, the Company further implemented various guidelines and policies.
Upholding the values of “Be Honest, Offer Quality Spirits, Be Stronger and Be Helpful to the Society”, the Company beefed up the
implementation of the new strategy of “Digitalization, Internationalization, and Stricter Compliance with Law and Regulations”, as
well as promoted the “Nie Guangrong Spirit”. It further improved corporate management, motivated employees, accelerated
transformation and upgrading, further implemented the “Distilled Spirits 5.0” strategy, and successfully achieved all the operating
objectives.
For 2019, the Company recorded operating revenue of RMB 10.417 billion, up 19.93% compared to 2018; a net profit attributable to
the Company as the parent of RMB 2.098 billion, rising 23.73% from the year earlier; earnings per share of RMB4.17, 23.74%
higher than 2018; and net cash generated from operating activities of RMB192 million, going down 86.64% on a year-on-year basis
（primarily driven by considerable increases in structured and term deposits that are not drawable in advance, as well as term
deposits put in pledge for the issuance of notes payable. Exclusive of the effects of the aforesaid factors, net cash generated from
operating activities stood at RMB1.997 billion）. Meanwhile, the brand value reached a new high of RMB146.98 billion.
The Company’s Overall Operation During the Reporting Period
1. Strengthen market construction to continuously rise the brand influence
By strengthening the market construction, the Company further enhanced the organization-driven. Focused on systemic competition,
the Company established a new marketing mechanism of upstream-downstream linkage, information exchange, quick response, and
overall coordination. The brand construction has been strengthened to gradually increase brand influence.
2. Accelerate the transformation of the Company and continuously improve the management
The Company stands firmly on Strategy 5.0 and promotes the depth of digital transformation. During the Reporting Period, the
digital marketing, Gujing SAP ERP and CRM projects were completed, and at the same time, these projects were successfully
switched online. The digital operation structure system with digital marketing (CRM) in the front line and SAP ERP as the main
channel in the backstage has been completed to lay a foundation for a new digital Gujing.
3. Stably optimize quality control and boost the application of scientific research transformation
The Company strengthened the management of production process, established a sound quality control system and standard,
optimized the inspection project of raw and auxiliary materials into the factory, standardized inspection standards and inspection
operations, improved supply efficiency, and avoided behavioral risks. The Company’s two technological innovation achievements
have reached the international leading level, one scientific achievement has reached the domestic leading level, one scientific
achievement has won a prize awarded by China Light Industry Council, one has won the third prize of Provincial Science and
Technology Award, and two scientific research achievements have been transformed within the company. Gujing Distillery Product
Design Center was recognized by the “National Industrial Design Center” and “China Light Industry Engineering Technology
Research Center”.
4. In-depth collaboration between production and sales ensures a prominent effect of balanced production
The Company implemented a coordinate mechanism between production and sales to continuously improve production efficiency
and supply satisfaction. A logistics system and a planting model with high-quality raw grain base have been built to ensure the
quality of raw materials and reduce supply risks.
5. Strictly abide by the bottom line of environmental protection and constantly improve the environmental protection
infrastructure
The Company continued to increase investment in environmental protection, and achieved the “Four Goals” for safe production
~ 11 ~
throughout 2019. The Company’s main pollutant indicators for environmental protection was stable and reached the standard, which
effectively controlled the energy loss rate and equipment failure rate. In the whole year, all the main environmental pollution
discharge pollutants met the standard, and no environmental pollution accidents occurred. The company was successfully selected
into the “National Green Factory” list.
6. Adhere to the guidance of the Party building and promote the “Nie Guangrong Spirit”
The Company implemented an in-depth educational activity on the theme of “Remain true to our original
aspiration and keep our mission firmly in mind”. According to the arrangement of the Central Committee, the Provincial Party
Committee and the Municipal Party Committee, the Company resolutely follows the main line of learning and implementing Xi
Jinping’s Thought on Socialism with Chinese Characteristics for a New Era. Focused on the general requirements of “remain true,
fulfill the Mission, find the reasons of falling behind, and emphasize the implementation”, the Company spared no effort to study and
education, investigation and research, inspection of problems, rectification and implementation throughout the entire process and
yielded prominent fruits. During this period, the Company held a grand activity “Report on Comrade Nie Guangrong’s Advanced
Deeds” in the Great Hall of the People in Beijing, making “Nie Guangrong Spirit” well spread and promoted.
7. During the Reporting Period, the Company still had the following pressures and inadequacies
(1) The complex macroeconomic environment has brought many uncertainties to the development of the liquor industry.
(2) The level of lean management of the Company falls behind the pace of the Company’s development.
(3) The system, mechanism and the vitality of the Company need to be further activated.
(4) Bold innovation is required in cultivating talents, inspiring talents, and retaining talents by system.
II Core Business Analysis
1. Overview
See relevant contents of “I Overview” in “Management Discussion and Analysis”, herein
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2019 2018
As % of total As % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 10,416,961,584.23 100.00% 8,686,140,336.89 100.00% 19.93%
By operating division
Manufacturing 10,416,961,584.23 100.00% 8,686,140,336.89 100.00% 19.93%
By product category
Distilled spirits 10,164,144,471.76 97.57% 8,519,862,666.82 98.09% 19.30%
Hotel services 88,659,455.17 0.85% 86,807,124.18 1.00% 2.13%
Other 164,157,657.30 1.58% 79,470,545.89 0.91% 106.56%
By operating segment
~ 12 ~
North China 557,017,590.00 5.35% 436,508,213.35 5.03% 27.61%
Central China 9,326,923,639.55 89.53% 7,867,207,092.57 90.57% 18.55%
South China 520,685,208.39 5.00% 367,741,836.37 4.23% 41.59%
Overseas 12,335,146.29 0.12% 14,683,194.60 0.17% -15.99%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
YoY change in YoY change in
Gross profit YoY change in
Operating revenue Cost of sales operating revenue gross profit
margin cost of sales (%)
(%) margin (%)
By operating division
Manufacturing 10,416,961,584.23 2,426,046,924.89 76.71% 19.93% 25.57% -1.05%
By product category
Distilled spirits 10,164,144,471.76 2,257,907,919.10 77.79% 19.30% 20.63% -0.24%
Hotel services 88,659,455.17 39,765,568.71 55.15% 2.13% 3.52% -0.60%
Other 164,157,657.30 128,373,437.08 21.80% 106.56% 485.97% -50.63%
By operating segment
North China 557,017,590.00 184,315,816.75 66.91% 27.61% 13.39% 4.15%
Central China 9,326,923,639.55 2,065,495,633.99 77.85% 18.55% 25.34% -1.20%
South China 520,685,208.39 170,592,892.09 67.24% 41.59% 46.96% -1.19%
Overseas 12,335,146.29 5,642,582.06 54.26% -15.99% 1.88% -8.02%
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2019 2018 Change (%)
Sales volume Ton 90,318.85 82,818.70 9.06%
Distilled spirits
Output Ton 93,798.87 83,254.25 12.67%
brewage
Inventory Ton 13,987.83 10,507.81 33.12%
Any over 30% YoY movements in the data above and why:
√□ Applicable □ Not applicable
The ending balance of inventory is 13987.83 tons, an increase of 33.12% compared with last year, which is mainly due to the
increase of inventory for Spring Festival.
~ 13 ~
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
2019 2018
Operating
Item As % of total cost As % of total cost Change (%)
division Cost of sales Cost of sales
of sales (%) of sales (%)
Food
Direct materials 1,807,661,503.73 74.51% 1,465,613,415.05 75.86% 23.34%
manufacturing
Food
Direct labor cost 214,328,787.10 8.83% 183,657,819.79 9.51% 16.70%
manufacturing
Food Manufacturing
147,018,800.80 6.06% 134,698,484.31 6.97% 9.15%
manufacturing expenses
Food
Fuels 88,898,827.47 3.66% 87,773,829.59 4.54% 1.28%
manufacturing
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√Yes □ No
Hubei Huanghelou Beverage Co., Ltd. was newly established this year.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 1,883,372,178.17
Total sales to top five customers as % of total sales of the
18.08%
Reporting Period (%)
Total sales to related parties among top five customers as % of
0.00%
total sales of the Reporting Period (%)
Information about top five customers:
Sales revenue contributed for
No. Customer As % of total sales revenue (%)
the Reporting Period (RMB)
~ 14 ~
1 Customer A 749,884,238.55 7.20%
2 Customer B 577,850,797.92 5.54%
3 Customer C 204,809,138.19 1.97%
4 Customer D 177,370,278.21 1.70%
5 Customer E 173,457,725.30 1.67%
Total -- 1,883,372,178.17 18.08%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 691,819,821.13
Total purchases from top five suppliers as % of total purchases
27.73%
of the Reporting Period (%)
Total purchases from related parties among top five suppliers
0.00%
as % of total purchases of the Reporting Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
1 Supplier A 273,330,053.07 10.96%
2 Supplier B 175,259,289.50 7.02%
3 Supplier C 104,833,589.08 4.20%
4 Supplier D 72,811,249.30 2.92%
5 Supplier E 65,585,640.18 2.63%
Total -- 691,819,821.13 27.73%
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2019 2018 Change (%) Reason for any significant change
Selling expense 3,184,894,221.10 2,682,535,305.26 18.73%
Administrative expense 685,280,546.45 644,997,046.65 6.25%
The main reason is the increase of
Finance costs -97,625,803.51 -51,572,629.73 -89.30%
interest income.
The main reason is the increase of R &
R&D expense 42,373,017.33 23,966,766.04 76.80%
D investment in this year.
~ 15 ~
4. R&D Expense
√ Applicable □ Not applicable
We carried out R&D projects in the current year to study and develop new products, improve the quality of our products, study the
intelligent brewage technique and new brewage technique.
R&D Achievements of the Company: The Company’s two technological innovation achievements have reached the international
leading level, one scientific achievement has reached the domestic leading level, one scientific achievement has won a prize awarded
by China Light Industry Council, one has won the third prize of Provincial Science and Technology Award, and two scientific
research achievements have been transformed within the company. The Key Technology for Ecological Cave Brewing and Base
Liquor Quality Improvement of Yellow Crane Tower won the first prize of Science and Technology Award of China National Food
Industry Association. Yellow Crane Tower Xianning Testing Center obtained the National Laboratory Accreditation Certificate
which is issued by China National Accreditation Service for Conformity Assessment (CNAS). Since 2019, the Company has licensed
115 patents.
Details about R&D expense:
2019 2018 Change (%)
Number of R&D personnel 938 968 -3.10%
R&D personnel as % of total
9.69% 11.63% -1.94%
employees
R&D expense (RMB) 269,107,374.89 224,585,370.62 19.82%
R&D expense as % of operating
2.58% 2.59% -0.01%
revenue
Capitalized R&D expense
0.00 0.00 0.00%
(RMB)
Capitalized R&D expense as %
0.00% 0.00% 0.00%
of total R&D expense
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2019 2018 Change (%)
Subtotal of cash generated from
12,080,069,939.92 9,950,615,569.29 21.40%
operating activities
Subtotal of cash used in
11,887,622,876.47 8,509,734,283.34 39.69%
operating activities
Net cash generated from/used in
192,447,063.45 1,440,881,285.95 -86.64%
operating activities
Subtotal of cash generated from
4,138,301,120.12 3,530,649,713.30 17.21%
investing activities
Subtotal of cash used in
1,466,159,130.60 4,656,442,207.19 -68.51%
investing activities
~ 16 ~
Net cash generated from/used in
2,672,141,989.52 -1,125,792,493.89 337.36%
investing activities
Subtotal of cash generated from
755,400,000.00 503,616,553.34 50.00%
financing activities
Subtotal of cash used in
-755,400,000.00 -503,616,553.34 -50.00%
financing activities
Net cash generated from/used in
2,109,189,052.97 -188,527,761.28 1,218.77%
financing activities
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
(1) Net cash generated from operating activities stood at RMB192,447,063.45 in the Reporting Period, down 86.64% year-on-year,
primarily driven by considerable increases in structured and term deposits that are not drawable in advance, as well as term deposits
put in pledge for the issuance of notes payable. Exclusive of the effects of the aforesaid factors, net cash generated from operating
activities stood at RMB1.997 billion.
(2) Net cash generated from investing activities stood at RMB2,672,141,989.52 in the Reporting Period, up 337.36% year-on-year,
primarily driven by an increase in cash proceeds from disinvestment.
(3) Net cash generated from financing activities stood at RMB-755,400,000.00 in the Reporting Period, down 50.00% year-on-year,
primarily driven by an increase in dividends distributed.
(4) Net increase in cash and cash equivalents stood at RMB2,109,189,052.97 in the Reporting Period, up 1,218.77% year-on-year,
primarily driven by the recovery of investments upon maturity.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
III Analysis of Non-Core Businesses
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2019 31 December 2018 Change in
Reason for any significant
As % of total As % of total percentage
Amount Amount change
assets assets (%)
Monetary assets 5,619,749,918.09 40.51% 1,705,760,865.12 13.64% 26.87%
Accounts
40,776,567.96 0.29% 29,748,068.74 0.24% 0.05%
receivable
Inventories 3,015,051,961.78 21.74% 2,407,306,664.86 19.24% 2.50%
Investment
4,710,086.02 0.03% 5,027,228.53 0.04% -0.01%
property
~ 17 ~
Long-term
equity 4,678,282.24 0.03% 4,900,000.00 0.04% -0.01%
investments
Fixed assets 1,722,572,998.79 12.42% 1,763,988,530.56 14.10% -1.68%
Construction in
183,984,816.07 1.33% 93,320,557.56 0.75% 0.58%
progress
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on Cumulative Impairment
fair-value fair-value allowance
Beginning Purchased in the Sold in the Other
Item changes in the changes for the Ending amount
amount Reporting Period Reporting Period changes
Reporting charged to Reporting
Period equity Period
Financial assets
1. Financial
assets at fair
value
through
profit or loss 2,965,016,000.42 17,585,151.48 0.00 0.00 1,053,830,000.00 3,527,400,054.88 0.00 509,031,097.02
(excluding
derivative
financial
assets)
Subtotal of
financial 2,965,016,000.42 17,585,151.48 0.00 0.00 1,053,830,000.00 3,527,400,054.88 0.00 509,031,097.02
assets
Total of the
2,965,016,000.42 17,585,151.48 0.00 0.00 1,053,830,000.00 3,527,400,054.88 0.00 509,031,097.02
above
Financial
0.00 0.00 0.00 0.00 0.00 0.00 0.00
liabilities
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
Item Ending carrying value (RMB) Reason for restriction
Bank deposits 2,675,000,000.00 Structured deposits and time deposits that
~ 18 ~
Item Ending carrying value (RMB) Reason for restriction
cannot be withdrawn in advance and time
deposits that are pledged for issuing bank
acceptance drafts
A pledge is used to issue a banker's
Notes receivable 349,377,134.82
acceptance draft
Total 3,024,377,134.82
~ 19 ~
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on
Cumulative
Variety fair value Purchased
Code of Name of Initial Accounting Beginning fair value Sold in the Gain/loss in Ending Source of
changes in in the
of measurement changes Reporting the Reporting Accounting title
securities securities investment cost the Reporting funds
model carrying value Reporting charged to Period Period Period carrying value
securities
equity
Period
ZXYSDP
1st Assets Fair value Available-for-sale Self-owned
Fund 200,000,000.00 206,393,107.46 5,491,397.78 0.00 0.00 0.00 15,000,000.00 211,884,505.24
Management method financial asset funds
Plan
~ 20 ~
Other ending holding securities
-- -- --
investments
Total 200,000,000.00 -- 206,393,107.46 5,491,397.78 0.00 0.00 0.00 15,000,000.00 211,884,505.24 -- --
Disclosure date of the
announcement about the board’s The Company held the 9th Meeting of the 8th Board of Directors on 26 April 2019, reviewed and approved the proposal on carrying out securities investment
consent for the securities business
investment
Disclosure date of the
announcement about the general
N/A
meeting’s consent for the
securities investment (if any)
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Proportion
of closing
Actual
Purchased in investment
Relationship Initial Beginning Sold in the Impairment Ending gain/loss
Connected Type of the amount in
Operator with the investment Starting date Ending date investment Reporting provision (if investment in the
transaction derivative Reporting the
Company amount amount Period any) amount Reporting
Period Company’s
Period
ending net
assets
Reverse Reverse 28
30 June
repurchase Naught No repurchase of 0.00 December 17,990 1,090 19,080 0.00 0.00 0.00% 0.35
2019
of national national debt 2018
~ 21 ~
debt
Total 0.00 -- -- 17,990 1,090 19,080 0.00 0.00 0.00% 0.35
Capital source for derivative investment Company’s own funds
Lawsuits involved (if applicable) N/A
Disclosure date of board announcement approving
30 August 2013
derivative investment (if any)
Disclosure date of shareholders’ meeting announcement
approving derivative investment (if any)
Analysis of risks and control measures associated with
derivative investments held in the Reporting Period
The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System.
(including but not limited to market risk, liquidity risk,
credit risk, operational risk, legal risk, etc.)
Changes in market prices or fair value of derivative
investments during the Reporting Period (fair value
Naught
analysis should include measurement method and
related assumptions and parameters)
Significant changes in accounting policies and specific
accounting principles adopted for derivative
Naught
investments in the Reporting Period compared to
previous reporting period
Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits
through investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle
Opinion of independent directors on derivative funds; in order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision
investments and risk control mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of
financial accounting; the derivative Investment business developed separately took national debts as mortgage object, which was met
with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the
~ 22 ~
Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3
billion.
5. Use of Funds Raised
□ Applicable √ Not applicable
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
Relationship Main
Company business
with the Registered capital Total assets Net assets Operating revenues Operating profit Net profit
name scope
Company
Bozhou Wholesales
Subsidiary 84,864,497.89 2,987,262,154.57 114,267,236.43 9,408,967,287.45 918,498,076.90 684,310,878.29
Gujing Sales of distilled
~ 23 ~
Co., Ltd spirit,
construction
materials,
feeds and
assistant
materials
Anhui Manufacture
Longrui and sale of
Subsidiary 86,660,268.98 334,367,483.96 283,457,347.19 263,211,742.36 47,521,309.38 40,366,861.19
Glass Co., glass
Ltd products
Yellow
Production
Crane Tower
and sales of
Wine Subsidiary 400,000,000.00 1,113,378,476.47 707,788,358.44 1,153,666,330.72 166,767,019.61 128,603,665.60
distilled
Industry Co.,
spirit
Ltd
Shanghai
Hotel
Gujing
management
Jinhao Hotel Subsidiary 54,000,000.00 197,339,647.17 77,032,345.33 78,097,168.09 18,396,718.11 10,829,628.99
and house
Management
lease
Co., Ltd.
Subsidiaries obtained or disposed in the Reporting Period:
√Applicable □Not applicable
Acquisition and disposal of subsidiaries during the reporting The impact on the overall production operation and
The name of the company
period performance
Optimize the internal management structure and enhance the
Hubei yellow crane tower beverage co. LTD Set up
internal driving force.
~ 24 ~
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
(I) Development Prospect of the Industry the Company is in
1. The epidemic of COVID-19 has accelerated industry reshuffle to make it more concentrated
As a strong pressure test for the liquor industry, theCOVID-19has disturbed the liquor industry in the short term, but the overall
stable trend of the industry remains unchanged. Liquor companies have periodical operating pressure. In the first half of the year,
they mainly focused on digesting market inventory, while in the second half of the year, with further differentiation and declined
frequency of alcohol consumption, famous liquor brands will speed up their recovery. The industry’s concentration will be further
improved to rapidly eliminate inferior capacity.
2. Continuous innovation in marketing model with integrated development of online and offline channels
The non-contact impact of the epidemic of COVID-19 has caused an outbreak of online Cloud Economy. Liquor manufacturers have
exposed their shortcomings of traditional offline channels. The importance and convenience of online channel sales stand out. After
the epidemic, a situation where offline and online promotions converge will appear, and the trend of online and offline integration
development will become more and more apparent. Online social e-commerce and the emerging “Cloud after-work drinks” will
become a new growth point; and new methods will be adopted for traditional offline sales channels to empower and endow new
meanings of the era. The wave of “community block sales” in the liquor industry is coming soon.
3. Quality strategy is prominent with the upcoming of the era of healthy consumption
Health and health-nurturing practices are green consumption and the trend of the liquor industry. Healthy drinking has become a
consumption concept. The trend of “drink less and drink better” is more prominent. Consumers demand for health is increasing. They
pay more attention to brand and quality. In pursuit of the concept of quality consumption, the strategy of dumb-type large single
product will become the standard of famous liquor. The volume of high-end and sub-high-end products will be further increased, and
high-quality light bottle liquor and small liquor are also popular because of their high quality-price ratio and rich self-drinking and
group-drinking scenes.
(II) Development Strategy of the Company
1. Firmly boost "Strategy 5.0, Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidly
create the "Five-Star Operation", enhance competitive force, improve quality and efficiency, optimize services and promote healthy
and efficient operation of the enterprise.
2. Firmly boost reform and innovation strategy
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of the
enterprise.
3. Firmly create “Talent Highland” strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism.
Innovate talent training mode and promote independent cultivation & development and absorption & attraction simultaneously.
4. Firmly boost the strategy of integration of Party governance
Comprehensively strengthen Party discipline, continuously strengthen “four-consciousness”, and strengthen political leadership.
Need to take firm political stand, strengthen political orientation, practically strengthen “four-consciousness”. Thoroughly study and
~ 25 ~
implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism with
Chinese Characteristics for a New Era, and guide all the Party members to enhance their thought and action consciousness to
maintain the core.
(III) Operating Revenue Plan of the Company in 2020
In 2020, the Company plans to achieve an operating revenue of RMB11.6 billion, rising 11.36% compared with that of last year; and
achieve a total profit of RMB2.99 billion, rising4.08% compared with that of last year.
(IV) Operating Risk of the Company
1. The adverse effect of the systematic risk in macro-economic environment on the development of the industry and the Company.
2. Impact of industrial policy adjustment and change on the sustainable development of the Company.
3. Impact of epidemic of COVID-19 on the comsumption behaviors and habits.
(V) Operating Measures
1. Marketing
In order to enhance the balance of the market, the Company has cemented the base of its headquarter; continued to better its
investment attraction in peripheral markets; further optimized product structure and the proportion of medium and high-end products,
and accelerated the nationalization of Gujinggong Liquor. As for brand construction, the Company continued to actively participate
in empowering the country by brand projects, adhered to the IP of brand communication, and increased domestic and foreign
promotion efforts. Through further optimizing dealer development policies, the Company strengthened dealer access, enlarged its
business networks and made it stronger by developing channels.
2. Product Management
The Company strictly implemented the production process, concentrated on the source control; paid great attention to the process
management and key linkage of production, strictly performed the standardization of work, strengthened technical quality work. It
continued to strengthen strict management of specific quality inspections, further improved the quality management system, focused
on process control to ensure that every bottle of Gujing that goes on the consumer’s table is of good quality.
3. Engineering Construction
The Company accelerated the planning design and phased construction of the smart technology transformation project (smart park)
for liquor production, prepared its fund planning and financing work, and adhered to high standards and high quality to promote the
construction of smart park projects.
4. Informatization Construction
The Company which took informatization into its whole management system and centered on SAP ERP system and digital marketing
project, actively pushed the second phase construction of the digital marketing project. By enhancing its data management,
strengthening data application empowerment, establishing smart management corporate and setting up an integrated corporate
management platform, the Company has achieved a concentrated control and operation to promote process standardization, data
visualization, and management standardization, and support its business innovation and development.
5. Human Resource
Based on the demands of the Company’s strategic development, the Company continuously optimized the channels for talents
introduction, further improved talent structure and salary structure; strengthened the orientation of performance appraisal,
continuously innovated performance management model; incessantly cemented talent echelon construction, conducted talent training
and cultivation in a comprehensive, multidimensional and targeted way.
6. Internal Management
The Company deeply carried out the “four revolutions” (ideological revolution, organizational revolution, behavioral revolution,
management revolution), and solidly implemented the “five goals and six projects”; adhered to the “four betters” orientation (better
positioning, better process, better state, better management), established the consciousness for the better, work hard on the word
~ 26 ~
“better”. Through transforming strict management into normalcy, the Company strengthened the ideological education of employees,
focused on management innovation, employed innovative thinking, made full use of new methods and tools to break the inertial work
mode, prevent aging mentality and old-fashioned manage, comprehensively improve work efficiency, and stimulate creative
organizations.
7. Corporate Culture Construction
The Company should continue to strengthen the leadership team’s construction, temper the core team of “loyalty and cleanness”;
continue to carry out warning education on integrity, and further build an ideological line of defense against corruption; continue to
rectify formalism, bureaucracy, and “laziness, randomness, fatigue, glibness and complacency” and dogmatism, cultivate pragmatic
and rigorous work style of cadres and employees; continue to strengthen ideological and political work, maintain the main position of
cultural propaganda and ideological work; continue to strengthen the leadership of Party building, and gather the strong power of the
revolution. At the same time, the Company needs to focus on the construction of civilization practice center for a new era and cultural
communication base of Gujing contribution, promote the “Nie Guangrong Spirit” to the entire industry, and further deepen the
Gujing corporate culture.
In 2020, the Company will continue to thoroughly implement the spirit of the 19th National Congress of the Party and the Second,
Third, and Fourth Plenary Sessions of the 19th CPC Central Committee. Guided by Xi Jinping’s Thought on Socialism with Chinese
Characteristics for a New Era, the Company remains true to the original aspiration and remembers its mission. Under the strong
leadership of Bozhou municipal government and Bozhou Municipal Committee, the Company has fully implemented the core values
of socialism and upholding the values of “Be Honest, Offer Quality Liquor, Be Stronger and Be Helpful to the Society”, and the spirit
of Nie Guangrong and the consciousness of better products. With a long-term vision and a strong focus, the Company will promote
the implementation of Strategy 5.0 in depth, earnestly implement the “four betters” working method, and strive to move towards “a
new Gujing of digitalization, internationalization, and rule of law.”
X Communications with the Investment Community such as Researches, Inquiries and
Interviews
1. During the Reporting Period
□ Applicable √ Not applicable
~ 27 ~
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revised
in the Reporting Period:
√ Applicable □ Not applicable
The 2018 Annual General Meeting held on 20 May 2019 reviewed and approved the Company’s Interest Distribution Scheme in
2018 that based on the total shares of 503,600,000 of the Company on 31 December 2018, cash dividends was distributed at
RMB15.00 per 10 shares (tax inclusive), and the total cash dividends distributed was RMB755,400,000.00 (tax inclusive).
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and played
Yes
their due role
Non-controlling interests are able to fully express their opinion
Yes
and desire and their legal rights and interests are fully protected
In case of adjusting or changing the cash dividend policy, the
conditions and procedures involved are in compliance with No adjustments or changes
applicable regulations and transparent
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the Reporting
Period) are summarized as follows:
1. 2017 profit distribution plan of the Company: distribute the cash of RMB10.00 (tax inclusive) for every 10 shares without bonus
issue from capital reserves;
2. 2018 profit distribution plan of the Company: distribute the cash of RMB15.00 (tax inclusive) for every 10 shares without bonus
issue from capital reserves.
3. 2019 profit distribution plan of the Company: distribute the cash of RMB15.00 (tax inclusive) for every 10 shares without bonus
issue from capital reserves.
Unit: RMB
Net profit
attributable to Cash Total cash
dividends
Cash ordinary dividends
A as % of B in other C as % of B D as % of B
Year dividends (tax shareholders of forms (such (including
(%) as share (%) (%)
inclusive) (A) the listed those in other
repurchase)
company in (C) forms) (D)
consolidated
~ 28 ~
statements for the
year (B)
2019 755,400,000.00 2,097,527,739.86 36.01% 0.00 0.00% 755,400,000.00 36.01%
2018 755,400,000.00 1,695,231,643.05 44.56% 0.00 0.00% 755,400,000.00 44.56%
2017 503,600,000.00 1,148,740,644.93 43.84% 0.00 0.00% 503,600,000.00 43.84%
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the
facts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to the
ordinary shareholders are positive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
Bonus issue from capital reserves for every 10
0
shares (share)
Dividend for every 10 shares (RMB) (tax inclusive) 15.00
Bonus issue from profit for every 10 shares (share) 0
Total shares as the basis for the final dividend plan
503,600,000
(share)
Total cash dividends (RMB) (tax inclusive) 755,400,000.00
Cash dividends in other ways (such as share
0.00
repurchase) (RMB)
Total cash bonus (including other methods) (RMB) 755,400,000.00
Distributable profits (RMB) 6,397,131,020.62
Percentage of cash dividends to the total distributed 100%
profits
Particulars about the cash dividends
other
Details of final dividend plan for the Reporting Period
The company intends to distribute rmb15 (tax included) per 10 shares based on the total number of shares at the end of the year,
totaling rmb755,400,000.00. This year does not send bonus, does not transfer to increase capital stock with accumulation fund.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
~ 29 ~
Date of
Type of Details of Term of
Commitment Promisor commitment Fulfillment
commitment commitment commitment
making
The Company
promised that
Yellow Crane
Tower
Distillery Co.,
Ltd. would
realize the
Anhui Gujing operating
Commitments made in acquisition
Distillery Performance revenue of Fulfilled in
documents or shareholding alteration 29 April 2016 Y2017-Y2021
Company commitment RMB1, 2019
documents
Limited 308.125
million (tax
inclusive) and
the net profit
margin would
be not lower
than 11.00%
in 2019.
Fulfilled on time Yes
Specific reasons for failing to fulfill
commitments on time and plans for N/A
next step (if any)
In accordance with the share transfer agreement signed by the Company with Wuhan Pride Investment Group Co., Ltd. and the
natural person Yan Hongye on the acquisition of Yellow Crane Tower Distillery Co., Ltd. (hereinafter referred to as “Yellow Crane
Tower Distillery”), the Company promised that the operating revenue (tax inclusive) of Yellow Crane Tower Distillery would reach
the following data:
Unit: RMB’0,000
Period Y2017 Y2018 Y2019 Y2020 Y2021
Committed operating revenue (tax inclusive) 80,500.00 100,625.00 130,812.50 170,056.25 204,067.50
Meanwhile, within five years since the delivery date (excluding the year in which the delivery date of target equity is located), the net
profit margin (net profit/operating revenue) of Yellow Crane Tower Distillery for each year shall be not lower than 11.00%. If the
audited net profit margin of Yellow Crane Tower Distillery for each year is lower than 11.00%, the Company should compensate the
balance as required by the agreement; if the net profit margin of Yellow Crane Tower Distillery is lower than 11.00% for consecutive
two years, the transferee has the right to repurchase all shares of Yellow Crane Tower Distillery held by the Company with the price
of RMB816 million.
The realization of commitment on performance in the single statement of Yellow Crane Tower Distillery in 2019 is as follows:
Unit: RMB’0,000
~ 30 ~
Item Actual amount Promised amount Difference Completion rate
Operating revenue (tax
131,006.46 130,812.50 193.96 100.15%
inclusive)
Net profit 12,860.37 12,298.61 561.76 104.57%
Net profit ratio 11.15% 11.00% 0.15% 101.36%
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√ Applicable □ Not applicable
Contents and reasons Approval procedures Notes
The Ministry of Finance issued Accounting
Standards for Business Enterprises
No.22-Recognition and Measurement of
Financial Instruments (CK [2017] No. 7),
Accounting Standards for Business
Enterprises No.23-Transfer of Financial Refer to Announcement on Changes in
Reviewed and approved on the 9th Meeting
Assets (CK [2017] No. 8), Accounting Accounting Policy on
of the 8th Board of Directors and the 8th
Standards for Business Enterprises http://www.cninfo.com.cn disclosed on the
Meeting of the 8th Supervisory Committee
No.24-Hedge Accounting (CK [2017] No. same date for details.
9) and Accounting Standards for Business
Enterprises No.37-Presentation of
Financial Instrument (CK [2017] No. 14).
The Company started to implement the
abovementioned new standards from 1
~ 31 ~
January 2019. According to the above
requirements, the Company implemented
the above new standards governing
financial instrument from 1 January 2019,
and changed relevant accounting polices in
line with the stipulations of the above new
standards governing financial instrument.
In accordance with the relevant
requirements of new standard governing
financial instrument, the retroactive
adjustment was not conducted to the same
period of last year, and no impact the
changes of accounting policies will occur
to the financial situation and operating
results in the prior period.
On 30 April 2019, Notes of Revising and
Printing the Format of 2019 General
Enterprises Financial Statement (CK
[2019] No. 6) (hereinafter referred to as
“Notes of Revising”) was issued by the
Ministry of Finance, making partial
amendments to the format of general
enterprises financial statements, stipulated
that the format is applicable to the interim Reviewed and approved on the 10th Refer to Announcement on Changes in
and annual financial statements in and after Meeting of the 8th Board of Directors and Accounting Policy on
2019 of non-financial business executing the 9th Meeting of the 8th Supervisory http://www.cninfo.com.cn disclosed on the
ASBE and the regulations of Notes of Committee same date for details.
Revising. The Company belongs to the
enterprise executed the new standards
governing financial instrument but not new
standards governing revenue and leases,
and shall adjust correspondingly to the
format of financial statements and part of
course presentation combined with the
requirements of Notes of Revising.
VII Retrospective Restatements due to Correction of Material Accounting Errors in the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
~ 32 ~
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
Principal stake（%）
Name of Nature of the
place of registered Make way
subsidiary business directly indirect
business
Hubei Yellow
Crane Tower Hubei Hubei Production and Hubei Yellow Crane Tower
51.00
beverage co. xianning xianning manufacturing beverage co. LTD
LTD
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor RSM Certified Public Accountants (LLP)
The Company’s payment to the domestic independent
155
auditor (RMB’0,000)
How many consecutive years the domestic independent
1
auditor has provided audit service for the Company
Names of the certified public accountants from the
domestic independent auditor writing signatures on the Fu jinyong, Bao guangrong, Jiang jieyu
auditor’s report
How many consecutive years the certified public
accountants have provided audit service for the 1
Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
√Yes □ No
Indicate by tick mark whether the independent auditor was changed for the audit period.
□Yes √ No
Indicate by tick mark whether the approval procedure was fulfilled to change independent auditor.
√Yes □ No
Particulars of reappointment and changes of independent auditor
Refer to announcement on changes of independent auditor on http://www.cninfo.com.cn disclosed on 28 November 2019 for details.
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company engaged RSM Certified Public Accountants (LLP) as the internal control auditor in 2019.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
~ 33 ~
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
~ 34 ~
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of cash entrusted for wealth management during the Reporting Period
Unit: RMB’0,000
Overdue unrecovered
Specific type Capital resources Amount incurred Undue Balance
amount
~ 35 ~
Trust financial products Self-owned funds 30,000.00 0.00 0.00
Bank financial products Self-owned funds 295,600.00 28,517.00 0.00
Broker financial
Self-owned funds 0.00 0.00 0.00
products
Others Self-owned funds 20,000.00 20,000.00 0.00
Total 345,600.00 48,517.00 0.00
Particulars of cash entrusted for wealth management with single significant amount or low security, bad liquidity, and no capital
preservation
Unit: RMB’0,000
Amou Actual
Plan for
nt of recove Overvi
entrusted
Type Determin Annua Estim actual ry of Allowa ews of
Sta En Legal asset
Name of Type of Capital ation l yield ate profit profit nce for events
Amo rt d Use of proced manage
the of the the resourc method of for profit or loss or loss impair and
unt dat da fund ures or ment in
trustee trustee prod e remunerat refere (if in in ment (if query
e te not the
uct ion nce any) Report Report any) index
future or
ing ing (if any
not
Period Period
Purchas
ing new
shares
offline,
CITIC
product
Wings Limite 1.2% of
s with
Asset d products’
Self-ow fixed
Manage Liabili 20,00 net value 1,500.
Fund ned earning 7.00% N/A Yes Yes
ment ty 0 and 20% 00
funds s,
Compan Comp of excess
reverse
y any earnings
repurch
Limited
ase of
nationa
l debt,
and etc.
20,00 1,500.
Total -- -- -- -- -- -- -- -- -- --
0 00
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for cash
entrusted for wealth management
□ Applicable √ Not applicable
~ 36 ~
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company disclosed Social Responsibilities Report of Enterprises for 2019 on 27 April 2020. (for details, see
http://www.cninfo.com.cn)
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
In accordance with the "organizations are responsible for villages and individuals are responsible for families” poverty alleviation
work arrangement of Bozhou Municipal Party Committee, the Company has established targeted support towards 178 poor families
with 306 people in Bali Village, Yanglou Village and Wuma Village, Wuma Town, Qiaocheng District, Bozhou, which have been
lifted out of poverty by the joint efforts of people in charge of poverty alleviation and three assistance and support villages as of the
end of December 2019.
(2) Summary of the Related Work Done in the Reporting Period
① The Company visited and helped 178 poor households. By uniformly purchasing 178 Chinese New Year gifts, the Company
arranged 90 persons in charge of assistance to send the gifts to the 178 poor households. The gifts were not only confined to rice,
spring couplets, festive liquor, lotus root and lotus root juice, but also including a sincere New Year blessing;
② The Company carried out the “Warm the Young with Love, Help the Young Realize Their Dreams” activity to care for young
people with difficulties. The Gujing Group Labor Union and the Youth League Committee respectively went to the three
administrative villages (Yanglou, Bali, and Wuma) in Wuma Town, and collected the “small wishes” of the poor young teenagers.
And on 25 January 2019, they sent coats, school bags and “love gift packages” to help teenagers to “realize their dream”, and sent
blessing and encouraged them to grow up healthily;
③ The Company organized activities to listen to the story of “initial intention” and ignited the dreams of the “the Young”. In order
to further implement the spirit of General Secretary Xi’s important speech at the educational work conference on the theme of
“remain true and remember mission”, and to firmly grasp the general ideas of the Communists to remain true, fulfill the mission, find
the reasons of falling behind, and emphasize the implementation, at the beginning of September, the Company’s logistics control
center organized all party members of the branch to Yangzhuang Village, Lumiao Town, where the poverty alleviation cadre was
selected by the corporate, to carry out branch team building activities.
~ 37 ~
(3) Subsequent Plans
① Learn the important discourse on poverty alleviation, and ensure political stand. General Party Secretary Xi Jinping's important
discourse on poverty alleviation work is both an ideological weapon and an action guide. The party organizations of all levels of the
Company shall work out a study plan carefully, strengthen the recognition of party members and management personnel on poverty
alleviation work, and put the poverty alleviation work as a major political task, a top livelihood project and a matter of primary
importance.
② Know about targeted poverty alleviation movement and report and pass it on well. Carry out the requirements of the
Organizational Department of the Municipal Committee and the Municipal Poverty Alleviation Bureau, unite under the leadership of
heads and fulfill the poverty alleviation work all-roundly.
③ Absorb aspiring youths in poverty and enlarge employment poverty alleviation and relief. Connect to three positioned assistance
and support villages and two stationed villages actively, absorb aspiring youths in poverty or children of households in poverty to
work in the Company, and widen the income increase channels of households in poverty.
④ According to the notification and requirement of the Bozhou Municipal Party Committee Organization Department, the Company
strictly implements the spirit of “Work Tips on the Role of Selecting and Helping Cadres in the Fight against the Epidemic
Prevention and Control”. By combining the actual needs of corporate to select and help the poor cadres and help villages, the
Company provided supplies and sent encouraging words to win the battle for epidemic prevention and control.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection
authorities.
Yes
Name of Number of Distribution Discharge Approved
Name of Way of Discharge Total Excessive
major discharge of discharge standards total
polluter discharge concentration discharge discharge
pollutants outlets outlets implemented discharge
Gujing
Anbui plant,
20.79mg/L
Gujing Directly Zhangji
COD 3 25.42mg/L ≦100mg/L 94.16t 155.05t Naught
Distillery discharge plant,
46.09mg/L
Co., Ltd. Headquarter
plant
Gujing
Anbui plant,
0.35mg/L
Gujing Directly Zhangji
NH3-N 3 0.48mg/L ≦10mg/L 2.18t 15.53t Naught
Distillery discharge plant,
1.17mg/L
Co., Ltd. Headquarter
plant
Anbui Organized Gujing Gujing plant,
3.34mg/m
Gujing discharge plant, Headquarter
Smoke 3 9.76mg/m 2.41t / Naught
Distillery through Zhangji plant
3.03mg/m
Co., Ltd. chimney plant, ≦10mg/m
~ 38 ~
Headquarter Zhangji plant
plant ≦20mg/m
Gujing
Gujing plant,
Anbui Organized plant,
2.14mg/m Headquarter
Gujing discharge Zhangji
Sulfur Dioxide 3 9.02mg/m plant≦35mg/m 3.92t / Naught
Distillery through plant,
5.99mg/m Zhangji plant
Co., Ltd. chimney Headquarter
≦50mg/m
plant
Gujing
Gujing plant,
Anbui Organized plant,
16.92mg/m Headquarter
Gujing Nitrogen discharge Zhangji
3 80.94mg/m plant≦50mg/m 15.33t / Naught
Distillery oxide through plant,
17.09mg/m Zhangji plant
Co., Ltd. chimney Headquarter
≦150mg/m
plant
No. 1
Anhui Organized furnace,
24.58mg/m
Longrui discharge No. 2
Smoke 3 / ≦200mg/m 10.56t / Naught
Glass Co., through furnace,
23.31mg/m
Ltd chimney No. 3
furnace
No. 1
Anhui Organized furnace,
2.95mg/m
Longrui discharge No. 2
Sulfur Dioxide 3 / ≦850mg/m 0.5t / Naught
Glass Co., through furnace,
Not detected
Ltd chimney No. 3
furnace
No. 1
Anhui Organized furnace,
178mg/m
Longrui Nitrogen discharge No. 2
3 / ≦700mg/m 78.64t / Naught
Glass Co., oxide through furnace,
139.33mg/m
Ltd chimney No. 3
furnace
Construction and operation of facilities for preventing pollution:
1. Construction and operation of the sewage control facilities of the listed Company and its subsidiary companies
(1) The sewage treatment capacity of the sewage treatment station of Zhangji plant of Anhui Gujing Distillery Co., Ltd is about 700
tons per day. IC anaerobic jar, improved A/O and in-depth treatment process has been adopted. The sewage is discharged after
treatment and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in Table 2 of
GB27631-2011 Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(2) The sewage treatment capacity of the sewage treatment station of the headquarters of Anhui Gujing Distillery Co., Ltd is about
4000 tons per day. IC anaerobic jar, A/O and in-depth treatment process has been adopted. The sewage is discharged after treatment
and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in Table 2 of GB27631-2011
~ 39 ~
Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(3) The sewage treatment capacity of the sewage treatment station of Gujing Subsidiary under Anhui Gujing Distillery Co., Ltd is
about 2800 tons per day. IC anaerobic jar, A/O and in-depth treatment process is adopted. The sewage is discharged after treatment
and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in Table 3 of GB27631-2011
Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(4) The production and living sewage of Anhui Longrui Glass Co., Ltd is discharged into the sewage treatment station of Zhangji
Plant under Anhui Gujing Distillery Company Limited, and it is discharged after treatment and up to the standard.
2. Construction and operation situation of waste gas control facilities of the listed Company and its subsidiaries
(1) The flue gas control facilities of thermal power stations of the Headquarters and Gujing Subsidiary of Anhui Gujing Distillery
Company Limited run well, and waste gas is discharged through the 65-meter-tall exhaust funnel after the waste gas treatment is up
to the standard, adopting the process of cloth-bag dust removal (original)+Limestone-Wet flue gas Desulfurization (renovated)
+SNCR Denitrification by non-catalytic reduction (original) + SCR Denitrification by catalytic reduction (newly added) + Wet
electrostatic precipitator (newly added), and discharge of flue gas meets the super-low discharge requirements (smoke ≤10mg/m3,
SO2≤35mg/m3, NOx≤50mg/m3).
(2) The coal-to-gas work has been completed and runs stably at Zhangji Plant under Anhui Gujing Distillery Company Limited, and
waste gas is discharged through the 20-meter-tall exhaust funnel, of which and discharge of flue gas meets the requirements for
coal-fired boiler in Table 2 of GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
(3) No. 2 furnace of Anhui Longrui Glass Co., Ltd has been stopped, and No. 2 and No. 3 furnaces have completed coal-to-gas work
and are running stably. SCR Denitrification by catalytic reduction has been adopted, waste gas from No. 1 furnace is discharged
through the 45-meter-tall exhaust funnel and waste gas from No. 3 furnace through the 45-meter-tall exhaust funnel after the waste
gas treatment is up to the standard. The discharge of flue gas meets the requirements in GB9078-1996 Emission Standard of Air
Pollutants for Boiler.
(4) The Headquarter of Anhui Gujing Distillery Company Limited and Gujing Branch finished product coding machine exhaust gas
treatment facilities are operating well. By adopting photocatalytic oxidation technology, the Company’s flue gas emissions comply
with the Table 1 standard requirements of DB12/524-2014 Emission Standard for Industrial Enterprises Volatile Organic Compounds.
(5) The Headquarters of Anhui Gujing Distillery Company Limited and the odor treatment facilities of Zhangji Sewage Station are
operating well. By adopting technologies like photocatalytic oxidation and activated carbon adsorption, and the Company’s emission
of exhaust gas meets the requirements of Table 2 of the Standard for Emission of Pollutants.
In 2019, the environment protection facilities of Anhui Gujing Distillery Company Limited and its subsidiaries ran normally in
general, main pollutants can achieve up-to-standard discharge, environment information is opened to the public normally, and they
have performed their social responsibilities properly.
Environmental impact assessment of construction project and other administrative license situation in respect of
environmental protection
No. Item Category of EIA EIA approval (filing) time EIA approval (filing) number
In-depth renovation project of
sewage treatment station in Environment affection
1 16 November 2019 BHB [2019] No. 36
industrial park of Anhui Gujing form
Distillery Company Limited
Emergency plan for sudden environment affairs
The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental Pollution
Accident, which has been filed with municipal environmental protection bureau. Emergency plan drill has been carried out according
to relevant requirements.
~ 40 ~
Environmental self-monitoring scheme
The Company has formulated the Self-Monitoring Scheme of Key Pollution Source Enterprises under the National Monitoring and
published it on the website of Bozhou Environmental Protection Bureau.
Other environment information that should be disclosed
Naught
Other related environment protection information
Naught
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
~ 41 ~
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as Shares as
dividend dividend
Percentage New Percentage
Shares converted converted Other Subtotal Shares
(%) issues (%)
from from capital
profit reserves
I. Restricted shares 0 0.00% 0 0.00%
II. Non-restricted shares 503,600,000 100.00% 503,600,000 100.00%
1 RMB ordinary shares 383,600,000 76.17% 383,600,000 76.17%
2 Domestically listed
120,000,000 23.83% 120,000,000 23.83%
foreign shares
III. Total shares 503,600,000 100.00% 503,600,000 100.00%
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
~ 42 ~
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of
preferred
Number of shareholders
ordinary with resumed
Number of preferred
Number of shareholders at voting rights at
shareholders with
ordinary 21,204 the month-end 29,696 0 the month-end 0
resumed voting rights (if
shareholders prior to the prior to the
any) (see note 8)
disclosure of this disclosure of
Report this Report (if
any) (see note
8)
5% or greater shareholders or top 10 shareholders
Total shares Increase/decrease Restricted Shares in pledge or frozen
Nature of Shareholding Non-restricted
Name of shareholder held at the in the Reporting shares
shareholder percentage shares held Status Shares
period-end Period held
ANHUI GUJING
State-owned
GROUP COMPANY 53.89% 271,404,022 271,404,022 In pledge 114,000,000
legal person
LIMITED
GAOLING Foreign
2.47% 12,446,408 12,446,408
FUND,L.P. legal person
AGRICULTURAL
BANK OF CHINA-
E FUND
CONSUMPTION
Other 2.45% 12,324,779 12,324,779
SECTOR STOCK
SECURITIES
INVESTMENT
FUND
CHINA INT'L Foreign 1.96% 9,871,986 9,871,986
~ 43 ~
CAPITAL CORP legal person
HONG KONG
SECURITIES LTD
HONG KONG
SECURITIES Foreign
1.72% 8,672,976 8,672,976
CLEARING legal person
COMPANY LTD.
INDUSTRIAL AND
COMMERCIAL
BANK OF CHINA
LIMITED-
INVESCO GREAT
Other 1.49% 7,500,000 7,500,000
WALL EMERGING
GROWTH HYBRID
SECURITIES
INVESTMENT
FUND
UBS (LUX)
EQUITY FUND -
Foreign
CHINA 1.40% 7,068,861 7,068,861
legal person
OPPORTUNITY
(USD)
CENTRAL HUIJIN
ASSET State-owned
1.30% 6,543,600 6,543,600
MANAGEMENT legal person
CO., LTD.
GREENWOODS
Foreign
CHINA ALPHA 1.12% 5,657,150 5,657,150
legal person
MASTER FUND
Foreign
NORGES BANK 1.03% 5,211,411 5,211,411
legal person
Strategic investor or general legal
person becoming a top-10
N/A
ordinary shareholder due to rights
issue (if any) (see note 3)
Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group
Company Limited—is not a related party of other shareholders; nor are they parties acting in
Related or acting-in-concert
concert as defined in the Administrative Measures on Information Disclosure of Changes in
parties among the shareholders
Shareholding of Listed Companies. As for the other shareholders, the Company does not know
above
whether they are related parties or whether they belong to parties acting in concert as defined in
the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
~ 44 ~
Companies.
Top 10 non-restricted shareholders
Shares by type
Name of shareholder Non-restricted shares held at the period-end
Type Shares
RMB
ANHUI GUJING GROUP
271,404,022 ordinary 271,404,022
COMPANY LIMITED
share
Domestically
GAOLING FUND,L.P. 12,446,408 listed foreign 12,446,408
stock
AGRICULTURAL BANK OF
CHINA- E FUND RMB
CONSUMPTION SECTOR 12,324,779 ordinary 12,324,779
STOCK SECURITIES share
INVESTMENT FUND
CHINA INT'L CAPITAL CORP Domestically
HONG KONG SECURITIES 9,871,986 listed foreign 9,871,986
LTD stock
RMB
HONG KONG SECURITIES
8,672,976 ordinary 8,672,976
CLEARING COMPANY LTD.
share
INDUSTRIAL AND
COMMERCIAL BANK OF
CHINA LIMITED-JINGSHUN RMB
GREATWALL EMERGING 7,500,000 ordinary 7,500,000
GROWTH HYBRID share
SECURITIES INVESTMENT
FUND
Domestically
UBS (LUX) EQUITY FUND -
7,068,861 listed foreign 7,068,861
CHINA OPPORTUNITY (USD)
stock
RMB
CENTRAL HUIJIN ASSET
6,543,600 ordinary 6,543,600
MANAGEMENT CO., LTD.
share
Domestically
GREENWOODS CHINA
5,657,150 listed foreign 5,657,150
ALPHA MASTER FUND
stock
Domestically
NORGES BANK 5,211,411 listed foreign 5,211,411
stock
~ 45 ~
Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group
Related or acting-in-concert
Company Limited—is not a related party of other shareholders; nor are they parties acting in
parties among top 10 unrestricted
concert as defined in the Administrative Measures on Information Disclosure of Changes in
public shareholders, as well as
Shareholding of Listed Companies. As for the other shareholders, the Company does not know
between top 10 unrestricted
whether they are related parties or whether they belong to parties acting in concert as defined in
public shareholders and top 10
the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
shareholders
Companies.
Top 10 ordinary shareholders
involved in securities margin N/A
trading (if any) (see note 4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by a local state-owned legal person
Type of the controlling shareholder: legal person
Legal
Name of controlling Unified social credit
representative/person Date of establishment Principal activity
shareholder code
in charge
Making beverage,
ANHUI GUJING GROUP
Liang Jinhui 16 January 1995 91341600151947437P construction materials and
COMPANY LIMITED
plastic products, etc.
Controlling shareholder’s
holdings in other listed The controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly
companies at home or abroad holds100,000,000 shares of Huaan Securities Co., Ltd. owning the proportion of shares of 2.76%.
in the Reporting Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Information about the Actual Controller
Nature of the actual controller: Local administrator for state-owned assets
Type of the actual controller: legal person
Legal
Date of Unified social credit
Name of actual controller representative/person Principal activity
establishment code
in charge
State-owned Assets Supervision N/A N/A N/A
~ 46 ~
and Administration
Commission of the People’s
Government of Bozhou
Other listed companies at home
or abroad controlled by the
N/A
actual controller in the
Reporting Period
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
~ 47 ~
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
~ 48 ~
Part VIII Convertible bonds
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
~ 49 ~
Part IX Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Increase Decreas
Beginning in the e in the Other Ending
Incumbent/Form Gende Ag Start of End of
Name Office title shareholdin Reportin Reportin increase/decrea shareholdin
er r e tenure tenure
g (share) g Period g Period se (share) g (share)
(share) (share)
Chairman
Liang 20 June 19 June
of the Incumbent Male 54
Jinhui 2017 2020
Board
20 June 19 June
Li Peihui Director Incumbent Male 47
2017 2020
Zhou Director, 20 June 19 June
Incumbent Male 46
Qingwu GM 2017 2020
Director,
Executive 20 June 19 June
Yan Lijun Incumbent Male 47
Deputy 2017 2020
GM
Director,
20 June 19 June
Xu Peng Deputy Incumbent Male 50
2017 2020
GM
Director,
Deputy
GM, Chief
Ye
Accountan 20 June 19 June
Changqin Incumbent Male 46
t, 2017 2020
g
Secretary
of the
Board
Wang Independe 20 June 19 June
Incumbent Male 55
Gao nt director 2017 2020
Song Independe 20 June 19 June
Incumbent Male 58
Shuyu nt director 2017 2020
27
Wang Independe 19 June
Incumbent Male 58 Septemb
Ruihua nt director 2020
er 2019
Sun Chairman Incumbent Male 55 20 May 19 June
~ 50 ~
Wanhua of 2019 2020
Supervisor
y
Committee
Yang 20 June 19 June
Supervisor Incumbent Male 53
Xiaofan 2017 2020
Wang Employee 20 June 19 June
Incumbent Male 50
Zibin supervisor 2017 2020
Lu 20 May 19 June
Supervisor Incumbent Male 40
Duicang 2019 2020
Employee 20 June 19 June
Zhang Bo Incumbent Male 55
supervisor 2017 2020
Zhang Deputy 20 June 19 June
Incumbent Male 52
Lihong GM 2017 2020
Zhu
GM 20 June 19 June
Xianghon Incumbent Male 46
assistant 2017 2020
g
Gao GM 20 June 19 June
Incumbent Male 50
Jiakun assistant 2017 2020
27
Independe 20 June
Du Jie Former Male 50 Septemb
nt director 2017
er 2019
Chairman
of
Wang 20 June 20 May
Supervisor Former Male 55
Feng 2017 2019
y
Committee
Fu 20 June 20 May
Supervisor Former Male 51
Qiangxin 2017 2019
Total -- -- -- -- -- --
II Change of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
Name Office title Type Date Reason
independent The independent
Du Jie September 27, 2019 Personal reasons.
director director
Chairman of the
Wang Feng Supervisory Left 20 May 2019 Job adjustment.
Committee
~ 51 ~
Fu Qiangxin Supervisor Left 20 May 2019 Job adjustment.
III Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
senior management:
1. Mr. Liang Jinhui, male, born in October 1966, is Political Engineer and a deputy to the 13 th National People’s Congress who has
educational experience of graduate student, incumbent president of the Company and president and Secretary of CPC of Gujing
Group. He ever took the post of MD, GM, Deputy GM, GM of Bozhou Gujing Sales Co., Ltd., Supervisor of Third Supervisory
Committee, Director of the 4th, 5th and 6th Board of Directors and Chairman of the 7th Board of Directors of the Company.
2. Mr. Li Peihui, male, born in July 1973, is a holder of master degree. He is a senior accountant, CPA and member of national
leading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC and president of Gujing Group. He had ever
served as deputy GM and GM of Financial Department, deputy chief accountant, chief accountant, Secretary of Board of Directors
and Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin Financial
Investment Group; executive vice president and CFO of Gujing Group; and director of the 7 th Board of Directors.
3. Mr. Zhou Qingwu, male, born in February 1974, is a senior accountant and national chief sommelier with educational experience
of graduate student. At present, he is Director and General Manager of the Company, Vice Secretary of CPC of Gujing Group. He
had ever acted as Chairman and General Manager of Bozhou Gujing Packing Material Co., Ltd., Deputy GM and deputy executive
GM of the Company and Director of the 5 th , 6th and 7th Board of Directors of the Company.
4. Mr. Yan Lijun, male, June 1973, is a holder of master degree with Senior Taster. Now he is Director, Executive Deputy GM of the
Company, member of CPC Committee of Gujing Group, Chairman of the Board and GM of Bozhou Gujing Sales Co., Ltd. He once
worked as a salesman of Sale Company, District Manager, Director of Market Research, Vice Manager of Planning Department,
Director of Hefei Strategic Operations Center, Vice GM and director of the 7 th Board of Directors of the Company.
5. Mr. Xu Peng, male, born in September 1970, has educational experience of undergraduate college. He is the Director and Deputy
GM of the Company, member of CPC Committee of Gujing Group, and Chairman of the Board of Yellow Crane Tower Liquor
Industry Co., Ltd. He had ever acted as Deputy Director and Director of Finance Second Office of Finance Department of the
Company, Manager of Finance Department of Anhui Laobada Co., Ltd., Vice Manager and Manager of Finance Department of the
Company, Deputy General Manager and Chief Supervisor of Market Supervision Department of Bozhou Gujing Sales Company,
Chairman of the Supervisory Committee of the Company, and Chairman of the 7 th Board of Directors.
6. Mr. Ye Changqing, male, born in October 1974, is a member of national leading accounting talents (back up) with master degree
and International Certified Internal Auditor. He is the incumbent Director, Deputy GM, Chief Accountant and Secretary of Board of
Directors of the Company. He had ever acted as Chief Auditor of Audit Department, Vice Manager of Audit Department and Vice
Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the 4 th Supervisory Committee of the Company;
Director and Secretary of the 5th, 6th, and 7th Board of Directors, and Chief Accountant of the Company.
7. Wang Gao, Male, born in April 1965, Doctor of Sociology graduated from Yale University, Professor of Marketing, Bao Steel
Chaired Professor, vice dean, member of Management Committee, Academic Director of CMO Project, Co-Academic Director of
Global CEO Project & WIT 120 Project in China Europe International Business School. He acts as the independent director in
GOME, Canature, Yunji, SINENG He once worked as Associate Professor, Deputy Dean of Department of Marketing in School of
Economics and Management, Tsinghua University, deputy director of China's Retail Research Center Academic Director of Harvard -
central Europe - Tsinghai university senior managers (SEPC) project. Strategic Analysis Manager of Minute Maid Branch of
Coca-Cola Company and senior counselor of The Information Resources Co., Ltd. (IRI).
8. Song Shuyu, male, born in November 1962, is Senior Engineer and Master of Chinese Wine with educational experience of
graduate student. Now, he is Deputy President and Secretary General of China Alcoholic Drinks Association, Secretary-general of
~ 52 ~
Liquor Branch Association, Secretary General of Market Professional Committee, Secretary General of White Wine Club Technical
Committee, specialist who enjoy the special allowance of the state council. He also is member of Chinese liquor standardization
technical committee, Deputy Secretary General of strong-flavor, Feng-flavour, soybean-flavor and rice flavour Liquor Technical
Committee of Chinese Liquor Standardization Technical Committee, Chairman of Committee of Te-flavour Chinese spirits and
Laobaigan-flavour Chinese spirits standardization technical committee.
9. Wang Ruihua, male, born in January 1962, is a non-practicing CPA with a doctor’s degree in management. Now he acts as a
professor and doctoral advisor in the Business School of Central University of Finance and Economics, the independent director in
Beijing Zhong Ke San Huan Hi-Tech Co., Ltd., Harbin Gloria Pharmaceuticals Co., Ltd. and Bank Of Beijing Co., Ltd.
10. Sun Wanhua, male, was born in October 1965 with a bachelor degree. Now he acts as the Chairman of the Supervisory
Committee of the Company, member of the Party Committee and vice president in Gujing Group. He once held the posts of the
member of Standing Committee of CPC County Committee, the Party Secretary of People’s Armed Forces Department and political
commissar in Minquan County, Henan Province, member of Standing Committee of Discipline Inspection Committee in Bozhou,
Deputy Director of Bozhou Supervision Bureau and Deputy Secretary of Bozhou Discipline Inspection Committee.
11. Mr. Yang Xiaofan, male, born in April 1967, is a holder of master degree. At present, he is Supervisor of the Company and Vice
President and member of CPC Committee of Gujing Group. He once acted as Vice President and General Manager of Anhui Gujing
Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5 th, 6th and 7th Board of Directors of the
Company and Supervisor of the 7th Supervisory Committee.
12. Wang Zibin, male, born in August 1970, a senior auditor, certified internal auditor and CPA with a college degree. Now he acts as
the Employee Supervisor of the Company, member of the Party Committee and Secretary of the Discipline Inspection Committee in
Gujing Group. He once held the posts of the GM of Audit Department in Gujing Group, Assistant GM in Bozhou Construction
Investment Real Estate Development Co., Ltd., CFO and Deputy GM in Hefei Marketing Center of Bozhou Gujing Sales Company,
the Supervisor of the 7th Supervisory Committee of the Company and Director in Audit Supervision Center of Gujing Group.
13. Lu Duicang, male, born in March 1980, a senior accountant with a bachelor degree. Now he serves as the Assistant Financial
Controller in Gujing Group. He once acted as the accountant, deputy director, and director of No.1 Center of Finance Department,
factory director of the Liquor and Spirits Bottling Branch and Manager of Finished Product Department in the Company, Controller
of the Financial Management Center in Gujing Group, GM of Anhui Huixin Finance Investment Group Co., Ltd. and the Supervisor
of the 5th, 6th and 7th Supervisory Committee of the Company.
14. Mr. Zhang Bo, male, born in July 1965, is an economist with bachelor degree. Now, he serves as Employee Supervisor of the
Company and Chairman of the Labor Union of Gujing Group. He once worked as Chairman of the board and GM of Bozhou Gujing
Printing Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board of Bozhou Ruineng Heat
and Power Co., Ltd. and Supervisor of the 7th Supervisory Committee of the Company.
15. Mr. Zhang Lihong, male, born in October 1968, is an economist with bachelor degree. He is incumbent Deputy GM of the
Company and member of CPC Committee and deputy secretary of Commission for Discipline and Inspection of Gujing Group. He
once acted as clerk, Secretary of Operation Department and Market Development Department, Deputy GM, Director of General
Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HR Department and Administrative Service Center
of the Company.
16. Mr. Zhu Xianghong, male, born in September 1974, is a senior Wine Taster with bachelor degree. He is incumbent assistant to
GM of the Company, and GM of Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of Product Department of
Bozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of Anhui Operating Centre and
standing Deputy GM of Sales Company.
17. Mr. Gao Jiakun, male, born in November 1970, is a holder of bachelor degree. He is incumbent assistant to GM of the Company.
He once served as GM of Production Management Department, Vice Director of Production Management Centre, Chairman of the
Board and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished Products Filling Centre and Production
~ 53 ~
Management Centre of the Company.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Office held in
Remuneration or
the
Name Shareholding entity Start of tenure End of tenure allowance from the
shareholding
shareholding entity
entity
Chairman of
the Board of
Directors,
Liang Jinhui Anhui Gujing Group Co., Ltd. 1 May 2014 Yes
Chairman of
Party
Committee
Deputy
Chairman of
31 October
Li Peihui Anhui Gujing Group Co., Ltd. Party Yes
2017
Committee,，
President
Vice
President,
31 October
Sun Wanhua Anhui Gujing Group Co., Ltd. member of Yes
2017
the Party
Committee
Vice
President,
1 November
Yang Xiaofan Anhui Gujing Group Co., Ltd. member of Yes
2009
the Party
Committee
Member of
the Party
Committee,
Wang Zibin Anhui Gujing Group Co., Ltd. Chairman of 23 May 2019 Yes
Discipline
Inspection
Committee
Assistant
27 November
Lu Duicang Anhui Gujing Group Co., Ltd. Financial Yes
2017
Controller
Chairman of
16 October
Zhang Bo Anhui Gujing Group Co., Ltd. the Labor Yes
2015
Union
Notes The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant
employment requirements of Company Law, Securities Law and never disciplined by CSRC, other relevant
~ 54 ~
departments and the Stock Exchange.
Offices held concurrently in other entities:
□ Applicable √ Not applicable
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
(I) Decision-making procedure of remuneration for Directors, Supervisors and Executive Officers
The Remuneration & Appraisal Committee under the Board of Directors is in charge of drafting appraisal index of senior
management and checking accomplishment of annual index.
(II) Determination basis of remuneration for Directors, Supervisors and Executive Officers
The remuneration is determined based on the annual performance of the Company and the appraisal result in accordance with the
spirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in Provincial Enterprises
(WF[2015] No. 28), and the Interim Procedures of Remuneration Management of Chargers in Municipal Enterprises (GZG[2017] No.
21) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui.
(III) Actual Payment of remuneration for Directors, Supervisors and Executive Officers
Payment of the remuneration of Directors, Supervisors and Executive Officers is distributed annually according to check.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total before-tax
remuneration Any remuneration
Name Office title Gender Age Incumbent/Former
from the from related party
Company
Chairman of the
Liang Jinhui Male 54 Incumbent Yes
Board
Li Peihui Director Male 47 Incumbent Yes
Zhou Qingwu Director, GM Male 46 Incumbent 146.58 No
Director,
Yan Lijun Executive Deputy Male 47 Incumbent 325.07 No
GM
Director, Deputy
Xu Peng Male 50 Incumbent 94.39 No
GM
Director, Deputy
GM, Chief
Ye Changqing Male 46 Incumbent 141.44 No
Accountant,
Secretary of the
~ 55 ~
Board
Independent
Wang Gao Male 55 Incumbent 7.50 No
director
Independent
Song Shuyu Male 58 Incumbent 7.50 No
director
Independent
Wang Ruihua Male 58 Incumbent 0.00 No
director
Chairman of
Sun Wanhua Supervisory Male 55 Incumbent Yes
Committee
Yang Xiaofan Supervisor Male 53 Incumbent Yes
Employee
Wang Zibin Male 50 Incumbent Yes
supervisor
Lu Duicang Supervisor Male 40 Incumbent Yes
Employee
Zhang Bo Male 55 Incumbent Yes
supervisor
Zhang Lihong Deputy GM Male 52 Incumbent 144.65 No
Zhu Xianghong GM assistant Male 46 Incumbent 306.48 No
Gao Jiakun GM assistant Male 50 Incumbent 127.02 No
Independent
Du Jie Male 50 Former 7.50 No
director
Chairman of
Wang Feng Supervisory Male 55 Former Yes
Committee
Fu Qiangxin Supervisor Male 51 Former Yes
Total -- -- -- -- 1,308.13 --
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent 5,642
Number of in-service employees of major subsidiaries 4,039
Total number of in-service employees 9,681
Total number of paid employees in the Reporting Period 9,681
Number of retirees to whom the Company as the parent or its 1,142
~ 56 ~
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 5,452
Sales 2,378
Technical 471
Financial 187
Administrative 1,193
Total 9,681
Educational backgrounds
Educational background Employees
Master or above 84
Bachelor 2,286
Junior college 1,965
High school or below 5,346
Total 9,681
2. Employee Remuneration Policy
The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operation
performance and profits of the Company and the relevant remuneration policy management.
3. Employee Training Plans
Employee training is significant in the Human resource management. The Company always pay high attention to the employee
training and development, the Company sets up effective training plan combining with the current situation of the Company, annual
plan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,
front-line employee operating skills training, management improvement training and part-time study. Continuously improve the
whole quality of the employees, realized a win-win situation and progress between the Company and the employees.
4. Labor Outsourcing
□ Applicable √ Not applicable
~ 57 ~
Part X Corporate Governance
I General Information of Corporate Governance
Since foundation, the Company constantly perfects corporate governance structure and standardize its management strictly in
accordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting up
Independent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations and
normative documents.
In the reporting period, the Company developed internal control activity, implemented Rules on Management of Assets Provision for
Impairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in Annual Report, Rules for Management of
External Information User and Rules for Management of Insider of Inner Information, perfected internal control system step by step,
promoted normative operation and healthy development. The Board of Directors, the Supervisory Committee and the management of
the Company make decisions, perform rights and assume obligation strictly according to the standard operation rules and inner
control system so as to make sure the standard operation of the Company in the frame of rules and systems.
In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares in
Shenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed information
disclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,
misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of the
Company.
After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, further
improve the standard operation of the Company.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,
Asset, Organization and Financial Affairs
The Company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,
personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,
independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’
general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities,
and there is no same trade competition state of the same products between the company and majority shareholders.
III Horizontal Competition
□ Applicable √ Not applicable
~ 58 ~
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor participation Index to disclosed
Meeting Type Date of the meeting Disclosure date
ratio information
Announcement on
Resolutions of the
The 2018 Annual Annual General
61.15% 20 May 2019 21 May 2019 2018 Annual General
General Meeting Meeting
Meeting disclosed on
www.cninfo.com.cn
Announcement on
Resolutions of the 1st
The 1st Extraordinary
Extraordinary Extraordinary
General Meeting of 64.61% 27 September 2019 28 September 2019
General Meeting General Meeting of
2019
2019 disclosed on
www.cninfo.com.cn
Announcement on
The 2nd Resolutions of the
Extraordinary Extraordinary 2nd Extraordinary
59.80% 26 November 2019 27 November 2019
General Meeting of General Meeting General Meeting of
2019 2019 disclosed on
www.cninfo.com.cn
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
The
Total number
independent
of board Board Board
Board director failed
meetings the Board meetings meetings meetings the General
Independent meetings to attend two
independent attended by way of attended independent meetings
director attended on consecutive
director was telecommunication through a director failed attended
site board
eligible to proxy to attend
meetings
attend
(yes/no)
~ 59 ~
Wang Gao 4 0 4 0 0 No 0
Song Shuyu 4 0 4 0 0 No 0
Wang Ruihua 1 0 1 0 0 No 0
Du Jie 3 1 2 0 0 No 2
Why any independent director failed to attend two consecutive board meetings:
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
During the Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company's
business decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, and
provided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing a
due role in safeguarding the legitimate rights and interests of the Company's shareholders.
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
1. Duty performance of the Strategy Committee
The Strategy Committee is under the leadership of the Board of Directors. In the Reporting Period, in strict compliance with the
Specific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making a
lot of constructive suggestions for the efficient execution of the Company’s strategy.
2. Duty performance of the Audit Committee
In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in the
relevant rules of the Company:
(1) It reviewed the annual report of the Company in 2019.
(2) Upon discussion with RSM China for the 2019 annual audit, it determined the schedule for the financial report and internal
control audit for 2019.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2019 annual audit.
(4) It reviewed the short form of the preliminary financial statements of 2019 prepared by the financial department of the Company
for the first time before the annual auditor came to the Company and made some helpful suggestions.
(5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on the
problems found in the audit and the submission time of the audit report.
(6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2019 annual financial statements again and made the
final resolution.
3. Duty performance of the Nomination Committee
~ 60 ~
In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
Committee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired in
compliance with laws and regulations.
(1) In the Reporting Period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
securities market.
(2) In the Reporting Period, the senior management staff of the Company were nominated and hired in line with the Company Law
and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
stock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal to
directors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reporting
period.
(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration level
complied with development of the Company; the remuneration level of directors, supervisors and senior executives accurately
reflected the overall performance situation of the Company and individual work performance, which complied with the remuneration
management system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did not
violate relevant national laws and regulations.
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration of
senior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measures
by linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,
healthy and orderly development of the Company and keep the stability of the Executive Officers, the Company annually sets up the
assessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration and
the rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operating
target.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
~ 61 ~
2. Internal Control Self-Evaluation Report
Disclosure date of the internal control
27 April 2020
self-evaluation report
Index to the disclosed internal control See www.cninfo.com.cn for the Anhui Gujing Distillery Company Limited
self-evaluation report Self-assessment Report of Internal Control
Evaluated entities’ combined assets as % of
99.26%
consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 99.89%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over financial Weaknesses in internal control not related
Type
reporting to financial reporting
Critical defect: Separate defect or other
defects that result in failure in preventing,
finding out and correcting major wrong
reporting in financial report in time. The
following circumstances are deemed as
critical defects: (1) Ineffective in controlling
Any of the following circumstances shall
the environment; (2) Malpractice of directors,
be deemed as a critical defect, and other
supervisors and senior management officers;
circumstances shall be deemed as major
(3) According to external auditing, there’s
or minor defects according to their degree
major wrong reporting in current financial
of impact.
report, which fails to be found by the
company in its operating process; (4) Major (1) Violate national laws, regulations or
defects found and reported to the top standardized documents;
management fail to be corrected within a (2) Major decision making procedure is
Nature standard
reasonable period of time; (5) The not scientific;
supervision of audit committee of the (3) Lack of systems results in systematic
company and its internal audit department for failure;
internal control is ineffective; (4) Critical or major defects fail to be
(6) Other defects that may affect correct rectified;
judgment of users of statements. Major (5) Other circumstances that have major
defect: Separate defect or other defects that impact on the company.
result in failure in preventing, finding out and
correcting wrong reporting in financial report
in time, which shall be noted by the top
management despite of not attaining or
exceeding critical level. Minor defect: Other
internal control defects not constituting
critical or major defects.
~ 62 ~
Critical defect:
(1) Wrong reporting ≥0.5% of total operating
revenue;
Critical defect: The defect with direct
(2) Wrong reporting ≥5% of total profit;
property loss amounting to over RMB10
(3) Wrong reporting ≥0.5% of total assets;
million, has great negative impact on the
(4) Wrong reporting ≥0.5% of total owner’s company and is disclosed in public in the
equity. form of announcement.
Major defect: Major defect: The defect with direct
(1) Wrong reporting ≥0.2% but ＜0.5% of property loss amounting to RMB1
total operating revenue; million to RMB10 million (included), or
(2) Wrong reporting ≥2% but ＜5% of total is penalized by governmental authority of
Quantitative standard profit; the country but has not resulted in
(3) Wrong reporting ≥0.2% but ＜0.5% of negative impact on the company.
total assets; Minor defect: The defect with direct
(4) Wrong reporting ≥0.2% but ＜0.5% of property loss no more than RMB1 million
total owner’s equity. (included), or is penalized by
governmental authority of the
Minor defect:
provincial-level or below but has not
(1) Wrong reporting＜0.2% of total operating
resulted in negative impact on the
revenue;
company.
(2) Wrong reporting＜2% of total profit;
(3) Wrong reporting＜0.2% of total assets;
(4) Wrong reporting＜0.2% of total owner’s
equity.
Number of material weaknesses in internal
0
control over financial reporting
Number of material weaknesses in internal
0
control not related to financial reporting
Number of serious weaknesses in internal
0
control over financial reporting
Number of serious weaknesses in internal
0
control not related to financial reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
We believe that the Company has maintained effective internal control on financial report in all significant respects according to the
Basic Rules for Enterprise Internal Control and relevant regulations on 31 December 2019
Independent auditor’s report on
Disclosed
internal control disclosed or not
Disclosure date 27 April 2020
~ 63 ~
Index to such report disclosed See www.cninfo.com.cn for Audit Report of Internal Control
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.
√ Yes □ No
~ 64 ~
Part XI Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of this
Report’s approval or were due but could not be redeemed in full?
No
~ 65 ~
Part XII Financial Statements
I Independent Auditor’s Report
Type of auditor’s opinion Unmodified unqualified opinion
Date of signing the auditor’s report 24 April 2020
Name of the auditor RSM China
No. of the auditor’s report Rongcheng audit character [2020] 230Z1808
Name of CPA Fu jinyong, Bao guangrong, Jiang jieyu
Text of the Auditor’s Report
To the Shareholders of Anhui Gujing Distillery Company Limited:
Opinion
We have audited the financial statements of Anhui Gujing Distillery Co., Ltd. (hereafter referred to as “Anhui Gujing”), which
comprises the consolidated and the parent company’s statement of financial position as at 31 December 2019, the consolidated and
the parent company’s statement of profit or loss and other comprehensive income, the consolidated and the parent company’s
statement of cash flows, the consolidated and the parent company’s statement of changes in equity for the year then ended, and the
notes to the financial statements.
In our opinion, the accompanying Anhui Gujing’s financial statements present fairly, in all material respects, the consolidated
and the company’s financial position as at 31 December 2019, and of their financial performance and cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises.
Basis for Opinion
We conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of Anhui Gujing in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified
Public Accountants, and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of the most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and
informing our opinion thereon, and we do not provide a separate opinion on these matters.
I. Revenue recognition
i. Description
Refer to notes to the consolidated financial statements "3. 29. Revenue" and "5. 34. Revenue and Cost of Sales ".
~ 66 ~
In 2019, the company achieved revenue of 10.417 billion yuan, an increase of 19.93% compared with the same period in 2018.
As revenue is one of the key performance indicators of the company, there may be the risk of material misstatement in whether the
revenue is recognized in an appropriate accounting period. Therefore, we regard revenue recognition as a key audit matter.
ii. Audit response
Our procedures for revenue recognition include:
i) Understand the internal control process design related to the sales business, and execute the walk-through test, perform
the control test on the identified key control points;
ii) Interview with the management, check the samples of sales contract, analyze the significant risk and reward transferring
point related to revenue recognition of liquor sales, and then evaluate whether the company's sales revenue recognition policy is
reasonable;
iii) Sampling inspection of supporting documents related to liquor sales revenue recognition, including sales orders, sales
invoices, outbound orders, etc.;
iv) Compared with the liquor sales data of other enterprises in the same industry, compared the liquor sales data of the last
period with the current period, analyzed the overall rationality of revenue and gross margin;
v) For the liquor sales revenue recognized before and after the balance sheet date, select samples to check the sales orders,
sales invoices, outbound orders, etc., in order to evaluate whether the sales revenue is recorded in an appropriate accounting period;
vi) Confirm the amount of liquor sold and the closing balance of the advance payment to the main distributor by sending
confirmation letter.
II. Accuracy of inventory balances
i. Description
Refer to notes to the consolidated financial statements "3 13. Inventory" and "5. 8. Inventory".
Anhui Gujing has a large inventory balance and needs to maintain an appropriate level of inventory to meet future market or
production demand. The inventory balance accounts for 21.74% of the company's total assets, and most of the inventory is
semi-finished products and work in progress products. As the most important asset of liquor production enterprises, inventory has a
high balance at the end of the year and a large proportion of the total assets. Therefore, we regard the accuracy of the company's
inventory balance as a key audit matter.
ii. Audit response
Our procedures for the accuracy of inventory balances include:
i) Understand the internal control process design related to inventory business, and carry out walk-through test, carry out
control tests for identified key control points;
ii) Obtain the stocktaking plan and stocktaking results of the company, understand the stocktaking methods and review
procedures of the company, and supervise the stocktaking;
iii) Understand the company's inventory cost accounting method, select several months of cost calculation sheet to review,
and select the main categories of inventory to carry out valuation test;
~ 67 ~
iv) To understand the provision method of the company's inventory impairment, evaluate the appropriateness of the provision
method, and review whether the provision amount is correct;
v) Perform analytical procedures and compare with companies in the same industry.
Other information
Management of Anhui Gujing is responsible for the other information. The other information comprises the information
included in the Annual Report of Anhui Gujing for the year of 2019, but does not include the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management of Anhui Gujing is responsible for the preparation and fair presentation of the financial statements in accordance
with Accounting Standards of Business Enterprises, and for the design, implementation and maintenance of such internal control as
management determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing Anhui Gujing’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate Anhui Gujing or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing Anhui Gujing’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
i) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
~ 68 ~
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
ii) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances.
iii) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
iv) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Anhui
Gujing’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause Anhui Gujing to cease to continue as a going concern.
v) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
vi) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within Anhui Gujing to express an opinion on the financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
RSM China CPA LLP [Name of CPA]：Fujinyong
ChinaBeijing [Name of CPA]：Baoguangrong
[Name of CPA]：Jangjieyue
[Date] 24 April 2020
~ 69 ~
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
31 December 2019
Unit: RMB
Item 31 December 2019 31 December 2018
Current assets:
Monetary assets 5,619,749,918.09 1,705,760,865.12
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 509,031,097.02 0.00
Financial assets at fair value through
0.00 622,892.96
profit or loss
Derivative financial assets
Notes receivable 1,004,217,431.56 1,347,427,811.34
Accounts receivable 40,776,567.96 29,748,068.74
Accounts receivable financing
Prepayments 197,453,313.96 182,558,000.75
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 25,746,957.22 43,342,878.22
Including: Interest receivable 1,908,788.81 24,923,178.08
Dividends receivable
Financial assets purchased under
resale agreements
Inventories 3,015,051,961.78 2,407,306,664.86
Contractual assets
Assets classified as held for sale
Current portion of non-current assets 0.00 300,000,000.00
Other current assets 114,439,167.07 3,012,478,687.20
~ 70 ~
Total current assets 10,526,466,414.66 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 4,678,282.24 4,900,000.00
Investments in other equity
instruments
Other non-current financial assets
Investment property 4,710,086.02 5,027,228.53
Fixed assets 1,722,572,998.79 1,763,988,530.56
Construction in progress 183,984,816.07 93,320,557.56
Productive living assets
Oil and gas assets
Use rights assets
Intangible assets 785,717,932.76 742,083,609.10
R&D expense
Goodwill 478,283,495.29 478,283,495.29
Long-term prepaid expense 70,240,106.82 83,561,473.46
Deferred income tax assets 90,494,544.51 86,580,171.06
Other non-current assets 4,148,686.00 16,544,407.51
Total non-current assets 3,344,830,948.50 3,480,682,580.53
Total assets 13,871,297,363.16 12,509,928,449.72
Current liabilities:
Short-term borrowings
Borrowings from the central bank
Interbank loans obtained
Held-for-trading financial liabilities
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 703,679,646.86 349,203,413.72
~ 71 ~
Accounts payable 563,494,195.40 484,952,598.59
Advances from customers 529,863,011.73 1,149,143,310.48
Contractual liabilities
Financial assets sold under
repurchase agreements
Customer deposits and interbank
deposits
Payables for acting trading of
securities
Payables for underwriting of
securities
Payroll payable 454,189,532.89 457,299,476.43
Taxes payable 482,903,109.59 372,993,624.18
Other payables 1,315,878,229.01 1,192,020,147.82
Including: Interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance payables
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities 197,484,121.41 295,164,745.44
Total current liabilities 4,247,491,846.89 4,300,777,316.66
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
Deferred income 72,778,437.92 76,636,500.55
Deferred income tax liabilities 118,872,366.61 102,764,515.11
~ 72 ~
Other non-current liabilities
Total non-current liabilities 191,650,804.53 179,401,015.66
Total liabilities 4,439,142,651.42 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 6,888,203,911.92 5,541,281,341.47
Total equity attributable to owners of
8,944,111,764.44 7,601,984,024.58
the Company as the parent
Non-controlling interests 488,042,947.30 427,766,092.82
Total owners’ equity 9,432,154,711.74 8,029,750,117.40
Total liabilities and owners’ equity 13,871,297,363.16 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 31 December 2019 31 December 2018
Current assets:
Monetary assets 2,919,818,830.20 1,078,172,917.59
Held-for-trading financial assets 489,861,097.02 0.00
Financial assets at fair value through
0.00 622,892.96
profit or loss
Derivative financial assets
Notes receivable 378,740,100.82 1,256,336,386.34
Accounts receivable 218,558,555.07 9,385,950.54
~ 73 ~
Accounts receivable financing
Prepayments 17,906,999.63 10,869,911.54
Other receivables 125,219,213.84 110,800,665.19
Including: Interest receivable 301,888.89 0.00
Dividends receivable
Inventories 2,688,839,871.27 2,125,826,967.11
Contractual assets
Assets classified as held for sale
Current portion of non-current assets
Other current assets 1,280,998.32 1,764,267,968.83
Total current assets 6,840,225,666.17 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 4,710,086.02 24,715,657.40
Fixed assets 1,310,704,771.36 1,290,714,455.79
Construction in progress 84,477,784.02 86,634,753.93
Productive living assets
Oil and gas assets
Use rights assets
Intangible assets 243,928,047.95 189,968,142.25
R&D expense
Goodwill
Long-term prepaid expense 48,354,967.15 56,643,945.05
Deferred income tax assets 31,360,809.87 37,415,458.17
Other non-current assets 574,026.00 12,474,026.00
Total non-current assets 2,872,324,157.69 3,053,173,211.37
~ 74 ~
Total assets 9,712,549,823.86 9,409,456,871.47
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 49,114,582.04 28,648,913.72
Accounts payable 450,303,984.53 362,290,556.21
Advances from customers 31,724.77 1,123,125,892.84
Contractual liabilities
Payroll payable 100,357,808.20 117,748,485.96
Taxes payable 371,012,223.50 161,176,957.25
Other payables 274,053,511.54 372,902,293.22
Including: Interest payable
Dividends payable
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities 11,953,800.20 32,605,794.55
Total current liabilities 1,256,827,634.78 2,198,498,893.75
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
Deferred income 33,229,246.47 36,417,554.85
Deferred income tax liabilities 22,799,814.64 4,828,737.52
Other non-current liabilities
Total non-current liabilities 56,029,061.11 41,246,292.37
~ 75 ~
Total liabilities 1,312,856,695.89 2,239,745,186.12
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 1,247,162,107.35 1,247,162,107.35
Less: Treasury stock
Other comprehensive income 0.00 4,794,830.59
Specific reserve
Surplus reserves 251,800,000.00 251,800,000.00
Retained earnings 6,397,131,020.62 5,162,354,747.41
Total owners’ equity 8,399,693,127.97 7,169,711,685.35
Total liabilities and owners’ equity 9,712,549,823.86 9,409,456,871.47
3. Consolidated Income Statement
Unit: RMB
Item 2019 2018
1. Revenue 10,416,961,584.23 8,686,140,336.89
Including: Operating revenue 10,416,961,584.23 8,686,140,336.89
Interest income
Premium income
Handling charge and
commission income
2. Costs and expenses 7,833,874,460.30 6,510,898,845.96
Including: Cost of sales 2,426,046,924.89 1,932,064,837.65
Interest expense
Handling charge and
commission expense
Surrenders
Net claims paid
Net amount provided as
insurance contract reserve
Expenditure on policy
dividends
~ 76 ~
Reinsurance premium
expense
Taxes and surcharges 1,592,905,554.04 1,278,907,520.09
Selling expense 3,184,894,221.10 2,682,535,305.26
Administrative expense 685,280,546.45 644,997,046.65
R&D expense 42,373,017.33 23,966,766.04
Finance costs -97,625,803.51 -51,572,629.73
Including: Interest
33,652,843.25 15,408,022.76
expense
Interest
133,813,626.35 68,964,800.42
income
Add: Other income 98,244,470.32 35,701,674.45
Return on investment (“-” for loss) 126,427,450.28 148,215,468.62
Including: Share of profit or loss
-221,717.76 0.00
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 (“-”
17,585,151.48 -161,541.19
for loss)
Credit impairment loss (“-” for
-932,729.84 0.00
loss)
Asset impairment loss (“-” for loss) -1,217,745.51 -12,726,868.74
Asset disposal income (“-” for
252,518.68 526,066.38
loss)
3. Operating profit (“-” for loss) 2,823,446,239.34 2,346,796,290.45
Add: Non-operating income 57,805,996.37 35,289,980.44
Less: Non-operating expense 8,410,456.65 13,160,175.48
4. Profit before tax (“-” for loss) 2,872,841,779.06 2,368,926,095.41
Less: Income tax expense 715,037,184.72 628,012,434.53
5. Net profit (“-” for net loss) 2,157,804,594.34 1,740,913,660.88
5.1 By operating continuity
5.1.1 Net profit from continuing
2,157,804,594.34 1,740,913,660.88
operations (“-” for net loss)
~ 77 ~
5.1.2 Net profit from discontinued
operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to
2,097,527,739.86 1,695,231,643.05
owners of the Company as the parent
5.2.1 Net profit attributable to
60,276,854.48 45,682,017.83
non-controlling interests
6. Other comprehensive income, net of
0.00 -48,725,996.85
tax
Attributable to owners of the Company
0.00 -48,725,996.85
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 -48,725,996.85
profit or loss
6.2.1 Other comprehensive
income that will be reclassified to profit
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 -48,725,996.85
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
~ 78 ~
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 2,157,804,594.34 1,692,187,664.03
Attributable to owners of the Company
2,097,527,739.86 1,646,505,646.20
as the parent
Attributable to non-controlling
60,276,854.48 45,682,017.83
interests
8. Earnings per share
8.1 Basic earnings per share 4.17 3.37
8.2 Diluted earnings per share 4.17 3.37
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2019 2018
1. Operating revenue 5,564,895,569.73 4,255,302,263.38
Less: Cost of sales 2,269,256,097.78 1,772,452,588.66
Taxes and surcharges 1,366,947,316.98 1,074,150,390.45
Selling expense 66,666,543.63 177,002,048.12
Administrative expense 449,947,174.03 443,945,470.10
R&D expense 21,923,357.07 17,321,657.06
Finance costs -34,323,060.49 -42,463,654.44
Including: Interest expense 33,506,232.15 15,408,022.76
Interest income 69,580,038.23 58,659,575.81
Add: Other income 54,224,566.00 15,340,983.23
Return on investment (“-” for
846,168,044.08 953,463,522.77
loss)
Including: Share of profit or
loss of joint ventures and associates
~ 79 ~
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 (“-”
17,585,151.48 -161,541.19
for loss)
Credit impairment loss (“-” for
-274,201.63 0.00
loss)
Asset impairment loss (“-” for
-948,348.71 -11,600,870.40
loss)
Asset disposal income (“-” for
36,552.41 0.00
loss)
2. Operating profit (“-” for loss) 2,341,269,904.36 1,769,935,857.84
Add: Non-operating income 45,105,856.60 29,427,413.82
Less: Non-operating expense 4,137,379.38 9,158,255.98
3. Profit before tax (“-” for loss) 2,382,238,381.58 1,790,205,015.68
Less: Income tax expense 396,856,938.96 227,402,111.65
4. Net profit (“-” for net loss) 1,985,381,442.62 1,562,802,904.03
4.1 Net profit from continuing
1,985,381,442.62 1,562,802,904.03
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
0.00 -48,659,905.79
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 -48,659,905.79
profit or loss
~ 80 ~
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 -48,659,905.79
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
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 1,985,381,442.62 1,514,142,998.24
7. Earnings per share
7.1 Basic earnings per share 3.94 3.10
7.2 Diluted earnings per share 3.94 3.10
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2019 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities
10,746,837,904.99 9,158,327,553.33
and rendering of services
Net increase in customer deposits and
interbank deposits
Net increase in borrowings from the
central bank
~ 81 ~
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 from acting trading of
securities
Tax rebates 9,498,718.50 18,279,633.65
Cash generated from other operating
1,323,733,316.43 774,008,382.31
activities
Subtotal of cash generated from
12,080,069,939.92 9,950,615,569.29
operating activities
Payments for commodities and
1,593,805,653.82 1,141,576,748.20
services
Net increase in loans and advances to
customers
Net increase in deposits in the central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
Net increase in interbank loans
granted
Interest, handling charges and
commissions paid
Policy dividends paid
Cash paid to and for employees 2,042,656,319.91 1,557,106,771.09
Taxes paid 3,292,028,435.78 3,095,830,374.91
Cash used in other operating
4,959,132,466.96 2,715,220,389.14
activities
Subtotal of cash used in operating
11,887,622,876.47 8,509,734,283.34
activities
Net cash generated from/used in
192,447,063.45 1,440,881,285.95
operating activities
~ 82 ~
2. Cash flows from investing activities:
Proceeds from disinvestment 4,007,300,054.88 3,392,057,566.06
Return on investment 126,649,168.04 137,503,636.38
Net proceeds from the disposal of
fixed assets, intangible assets and other 4,351,897.20 1,088,510.86
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
4,138,301,120.12 3,530,649,713.30
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other 412,329,130.60 307,319,114.99
long-lived assets
Payments for investments 1,053,830,000.00 4,349,123,092.20
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
1,466,159,130.60 4,656,442,207.19
activities
Net cash generated from/used in
2,672,141,989.52 -1,125,792,493.89
investing activities
3. Cash flows from financing activities:
Capital contributions received
Including: Capital contributions by
non-controlling interests to subsidiaries
Borrowings obtained
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
0.00 16,553.34
activities
~ 83 ~
Subtotal of cash used in financing
755,400,000.00 503,616,553.34
activities
Net cash generated from/used in
-755,400,000.00 -503,616,553.34
financing activities
4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash
2,109,189,052.97 -188,527,761.28
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
2,944,749,918.09 835,560,865.12
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2019 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities
4,469,643,061.53 3,047,700,512.72
and rendering of services
Tax rebates 4,448,500.00 4,523,679.80
Cash generated from other operating
530,824,780.80 744,922,683.25
activities
Subtotal of cash generated from
5,004,916,342.33 3,797,146,875.77
operating activities
Payments for commodities and
1,103,336,566.52 1,151,280,535.30
services
Cash paid to and for employees 674,939,745.53 556,958,789.26
Taxes paid 1,967,147,571.63 1,875,058,501.76
Cash used in other operating
1,195,092,963.86 606,222,797.89
activities
Subtotal of cash used in operating
4,940,516,847.54 4,189,520,624.21
activities
Net cash generated from/used in
64,399,494.79 -392,373,748.44
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 2,200,740,054.88 2,592,057,566.06
Return on investment 846,168,044.08 956,590,486.35
Net proceeds from the disposal of
fixed assets, intangible assets and other 2,760,011.69 153,914.79
long-lived assets
~ 84 ~
Net proceeds from the disposal of
0.00 3,587,238.24
subsidiaries and other business units
Cash generated from other investing
activities
Subtotal of cash generated from
3,049,668,110.65 3,552,389,205.44
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other 271,021,692.83 228,181,556.23
long-lived assets
Payments for investments 716,000,000.00 2,546,323,092.20
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
987,021,692.83 2,774,504,648.43
activities
Net cash generated from/used in
2,062,646,417.82 777,884,557.01
investing activities
3. Cash flows from financing activities:
Capital contributions received
Borrowings obtained
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
1,371,645,912.61 -118,089,191.43
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
2,079,818,830.20 708,172,917.59
period
~ 85 ~
7. Consolidated Statements of Changes in Owners’ Equity
2019
Unit: RMB
2019
Equity attributable to owners of the Company as the parent
Item Other equity Gener
Less: Other Specifi Non-controlli Total owners’
instruments Capital Surplus al Retained Othe
Share capital Treasur comprehensi c Subtotal ng interests equity
Preferre Perpetu Othe reserves reserves reserv earnings r
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
~ 86 ~
Adjustments
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
1,342,127,739. 1,342,127,739. 1,402,404,594.
the period 60,276,854.48
86 86 34
(“-” for
decrease)
3.1 Total
2,097,527,739. 2,097,527,739. 2,157,804,594.
comprehensi 60,276,854.48
86 86 34
ve income
3.2 Capital
increased
and reduced
by owners
~ 87 ~
3.2.1
Ordinary
shares
increased by
owners
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
~ 88 ~
3.3.3
Appropriatio
-755,400,000.0 -755,400,000.0 -755,400,000.0
n to owners
0 0 0
(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
~ 89 ~
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
3.6 Other
~ 90 ~
4. Balances
503,600,000. 1,295,405,592. 256,902,260. 6,888,203,911. 8,944,111,764. 488,042,947.3 9,432,154,711.
as at the end
00 25 27 92 44 0 74
of the period
2018
Unit: RMB
2018
Equity attributable to owners of the Company as the parent
Item Other equity Gener
Less: Other Specifi Non-controlli Total owners’
instruments Capital Surplus al Retained Othe
Share capital Treasur comprehensi c Subtotal ng interests equity
Preferre Perpetu Othe reserves reserves reserv earnings r
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
~ 91 ~
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
-48,725,996. 1,191,631,643. 1,142,905,646. 1,188,571,110.
the period 45,665,464.49
85 05 20 69
(“-” for
decrease)
3.1 Total
-48,725,996. 1,695,231,643. 1,646,505,646. 1,692,187,664.
comprehensi 45,682,017.83
85 05 20 03
ve income
3.2 Capital
increased
-16,553.34 -16,553.34
and reduced
by owners
~ 92 ~
3.2.1
Ordinary
shares
increased by
owners
3.2.2
Capital
increased by
holders of
other equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
-16,553.34 -16,553.34
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
~ 93 ~
3.3.3
Appropriatio
-503,600,000.0 -503,600,000.0 -503,600,000.0
n to owners
0 0 0
(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
~ 94 ~
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
3.6 Other
~ 95 ~
4. Balances
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.
as at the end 4,794,830.59
00 25 27 47 58 2 40
of the period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2019
Unit: RMB
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
the period (“-” for 1,229,981,442.62 1,229,981,442.62
decrease)
3.1 Total
1,985,381,442.62 1,985,381,442.62
comprehensive income
~ 96 ~
3.2 Capital
increased and reduced
by owners
3.2.1 Ordinary
shares increased by
owners
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
3.4 Transfers within
owners’ equity
~ 97 ~
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
3.6 Other
4. Balances as at the
503,600,000.00 1,247,162,107.35 251,800,000.00 6,397,131,020.62 8,399,693,127.97
end of the period
~ 98 ~
2018
Unit: RMB
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 -48,659,905.79 1,059,202,904.03 1,010,542,998.24
decrease)
3.1 Total
comprehensive -48,659,905.79 1,562,802,904.03 1,514,142,998.24
income
3.2 Capital
increased and
reduced by owners
~ 99 ~
3.2.1 Ordinary
shares increased by
owners
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
3.4 Transfers
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
~ 100 ~
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
3.6 Other
4. 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 period
~ 101 ~
Anhui Gujing Distillery Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019
（All amounts are expressed in Renminbi Yuan(“RMB”)unless otherwise stated）
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
Anhui Gujing Distillery Co., Ltd. (hereinafter “the Company” or "Company") was approved by
Anhui State-owned Assets Administration by WanGuoZiGongZi (1996) NO. 053. Anhui Gujing
Group Co., Ltd. was the sole sponsor of the Company. The Company was established by converting
the net assets of the main production and operating assets of its core enterprise Anhui Bozhou
Gujing Distillery into 155 million shares of state-owned shares with a net value of 377.1677 million
yuan. The registered place of the Company is Bozhou City, Anhui Province, People's Republic of
China. The Company was established on March 5, 1996 with the approval of Anhui Secretary of
Government (1996) No. 42 by the Anhui Provincial People's Government. The Company started its
founding meeting on May 28, 1996, and registered with the Anhui Provincial Administration for
Industry and Commerce on May 30, 1996.
The Company issued 60 million foreign-oriented shares for domestic listing (hereinafter “B”
shares) in June 1996 and 20 million domestic listed RMB ordinary shares (hereinafter “A” shares)
in September 1996, the par value of ordinary shares is RMB1per share. Both A share and B share
are listed on Shenzhen Stock exchange.
The headquarters of the Company is located in Gujing town, Bozhou city, Anhui province. The
Company and the subsidiaries (collectively called “Group”) is mainly engaged in liquor production
and sales; it belongs to the food manufacturing industry.
The original registered capital wasRMB 235 million, the total amount of shares was 235 million,
including state-owned shares 155 million, “B” shares 60 million, “A” shares 20 million with the
par value of RMB 1 per share.
On May 29, 2006, the shareholder meeting for the Company’s split share structure reform of
A-share market has discussed and approved the proposal of the split share structure reform, and
the reform was implemented in June 2006. After the implementation of the Company’s split share
structure reform, all shares of the Company became tradable shares, which included
147,000,000shares with restrictions on disposal, representing 62.55% of total share capital, and
88,000,000 shares without restrictions on disposal, representing 37.45% of total share capital.
~ 102 ~
On June 27, 2007, the Company issued the Announcement of release restriction shares by Anhui
Gujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with the restricted
condition on disposal became non-restricted in the stock market, and the conversion date is June
29, 2007. Hence, outstanding shares with the restrict condition on disposal are 135,250,000 shares,
representing 57.55% of total share capital, the share without restricting condition on disposal are
99,750,000 shares, representing 42.45% of total share capital.
On July 17, 2008, the Company issued the Announcement of release restriction shares by Anhui
Gujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with the restricted
condition on disposal became non-restricted in the stock market, and the conversion date is on
July 18, 2008. Hence, outstanding shares with the restricted condition on disposal were
123,500,000 shares, representing 52.55% of total share capital, the share without restricting
condition on disposal are 111,500,000 shares, representing 47.45% of total share capital.
On July 24, 2009, the Company issued the Announcement of release restriction shares by Anhui
Gujing Distillery Co., Ltd., the 123,500,000 restricted outstanding shares with the restricted
condition on disposal became non-restricted in the stock market, and the conversion date was on
July 29, 2009. Hence, all shares of the Company became outstanding shares without restricted
condition on disposal.
According to the approval by China Securities Regulatory Commission (the authorization file No.
zhengjianxuke[2011]943), on July 15, 2011, the Company privately issued 16,800,000 shares of
ordinary share (A shares) to specific investors, the par value was RMB 1 per share, and the
offering price was RMB 75 per share, the funds raised amounted to RMB 1,260 million. After
deducting the sundry issuing charges amounting to RMB 32,500,549.73, the actual funds raised
amounted to RMB 1,227,499,450.27. The position of the above raised funds has been verified by
Reanda Certified Public Accountants Co., Ltd. with a Capital Verification Report (REANDA YAN
ZI[2011]No.1065). After the non-public issuance, the share capital of the Company increased to
RMB 251.80 million.
According to the resolution of 2011 annual general meeting of stockholders, the Company
converted 10 shares for each10 shares from capital reserves based on the 251.80 million shares on
31 December 2011, the total number of converted shares was 251.80 million, and the transfer was
implemented in 2012. After the conversion, the registered capital increased to RMB 503.60
million.
As of 31 December 2019, the accumulated number of issued share capital was 503.60 million
shares.
The Company registered in Gujing town, Bozhou city, Anhui province.
~ 103 ~
The approved business scope of the Company: grain procurement (operation by license),
production of distilled spirits, brewing equipment, packaging materials, glass bottles, alcohol,
grease (limited to the by-products from alcohol production), high-tech development,
biotechnology development, deep processing of agricultural and sideline products, sales of
self-produced products.
The parent company of the Company and ultimate parent company is Anhui Gujing Group Co.,
Ltd. incorporated in China.
The financial statements were approved and authorized for issue, upon the resolution of the
Company’s Board of Directors meeting on April 24 2020.
1.2 Scope of Consolidation
(a) Incorporated subsidiaries of the Company
At 31 December 2019, subsidiaries of the Company are as follows:
Proportion of
Shareholding (or similar
Sequence Abbreviation of
Name of Subsidiaries equity interest) (%)
Number Subsidiaries
Direct Indirect
1 Bozhou Gujing Sales Co., Ltd. Gujing Sales 100.00 -
Anhui Jinyunlai Culture & Media Co.,
2 Jinyunlai 100.00 -
Ltd.
Anhui Ruisiweier Technology Co.,
3 Ruisiweier 100.00 -
Ltd.
4 Anhui Colorful Taste Wine Co., Ltd. Colorful Taste Wine 100.00 -
5 Anhui Longrui Glass Co., Ltd. Longrui Glass 100.00 -
Bozhou Gujing Waste Recycling Co.,
6 Gujing Waste 100.00 -
Ltd.
Shanghai Gujing Jinhao hotel
7 Jinhao Hotel 100.00 -
management company
8 Bozhou Gujing hotel Co., Ltd Gujing Hotel 100.00 -
Yuanqing
Anhui Yuanqing environmental
9 Environmental 100.00 -
protection Co., Ltd.
Protection
~ 104 ~
Anhui Gujing Yunshang Electronic Gujing Electronic
10 100.00 -
Commerce Co., Ltd Commerce
Anhui Zhenrui Construction Zhenrui Construction
11 100.00 -
Engineering Co., Ltd Engineering
Anhui RunanxinkeTesting Tech. Co.,
12 Runanxinke Testing 100.00 -
Ltd.
Yellow Crane Tower
13 Yellow Crane Tower Wine Co., Ltd 51.00 -
Wine
Yellow Crane Tower Wine (Suizhou) Suizhou Yellow
14 - 51.00
Co., Ltd Crane Tower
15 Hubei Junhe Advertising Co., Ltd. Junhe Advertising - 51.00
Hubei Yellow Crane Tower Beverage Yellow Crane Tower
16 - 51.00
Co., Ltd. Beverage
Yellow Crane Tower Wine (Xianning) Xianning Yellow
17 - 51.00
Co., Ltd. Crane Tower
18 Wuhan Yashibo tech. Co., Ltd. Yashibo - 51.00
Wuhan Tianlong Jindi Technology
19 Tianlong Jindi - 51.00
Development Co., Ltd.
20 Wuhan Junya Sales Co., Ltd. Junya Sales - 51.00
21 Xianning Junhe Sales Co., Ltd. Xianning Junhe - 51.00
22 Suizhou Junhe Commercial Co., Ltd. Suizhou Junhe - 51.00
For details of the subsidiaries mentioned above, please refer to Note 7 INTEREST IN OTHER
ENTITIES
(b) Change of the scope of consolidation
The newly incorporated subsidiaries during the reporting period are as follows:
Sequence Abbreviation of Reporting Period
Name of Subsidiaries
Number Subsidiaries
Hubei Yellow Crane Tower Yellow Crane Tower January 1 to
1
Beverage Co., Ltd. Beverage December 31, 2019
For the detail of the change of consolidation scope, please refer to Note 6 CHANGES IN THE
~ 105 ~
SCOPE OF CONSOLIDATION.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
2.1 Basis of Preparation
Based on going concern, according to actually occurred transactions and events, the Company
prepares its financial statements in accordance with the Accounting Standards for Business
Enterprises – Basic standards and concrete accounting standards, Accounting Standards for
Business Enterprises – Application Guidelines, Accounting Standards for Business Enterprises –
Interpretations and other relevant provisions (collectively known as “Accounting Standards for
Business Enterprises, issued by Ministry of Finance of PRC”). In addition, the company also
disclosed relevant financial information in accordance with the CSRC “Preparation Rules for
Information Disclosure by Companies Offering Securities to the Public No. 15—General Provisions
on Financial Reports (2014 Revision)”.
2.2 Going Concern
The Company has assessed its ability to continually operate for the next twelve months from the
end of the reporting period, and no any matters that may result in doubt on its ability as a going
concern were noted. Therefore, it is reasonable for the Company to prepare financial statements on
the going concern basis.
3.SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises. Businesses not
mentioned are complied with relevant accounting policies of the Accounting Standards for Business
Enterprises.
3.1 Statement of Compliance with the Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, truly and completely reflecting the Company’s
financial position as at 31 December 2019, and its operating results, changes in shareholders' equity,
cash flows and other related information for the year then ended.
3.2 Accounting Period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating Cycle
The normal operating cycle of the Company is twelve months.
3.4 Functional Currency
~ 106 ~
The Company takes Renminbi Yuan (“RMB”) as the functional currency.
The Company’s overseas subsidiaries choose the currency of the primary economic environment in
which the subsidiaries operate as the functional currency.
3.5 Accounting Treatment of Business Combinations under and not under Common Control
(a) Business combinations under common control
The assets and liabilities that the Company obtains in a business combination under common
control shall be measured at their carrying amount of the acquired entity at the combination date. If
the accounting policy adopted by the acquired entity is different from that adopted by the acquiring
entity, the acquiring entity shall, according to accounting policy it adopts, adjust the relevant items
in the financial statements of the acquired party based on the principal of materiality. As for the
difference between the carrying amount of the net assets obtained by the acquiring entity and the
carrying amount of the consideration paid by it, the capital reserve (capital premium or share
premium) shall be adjusted. If the capital reserve (capital premium or share premium) is not
sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
For the accounting treatment of business combination under common control by step acquisitions,
please refer to Note 3.6 (6).
(b) Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under common
control shall be measured at their fair value at the acquisition date. If the accounting policy adopted
by the acquired entity is different from that adopted by the acquiring entity, the acquiring entity
shall, according to accounting policy it adopts, adjust the relevant items in the financial statements
of the acquired entity based on the principal of materiality. The acquiring entity shall recognise the
positive balance between the combination costs and the fair value of the identifiable net assets it
obtains from the acquired entity as goodwill. The acquiring entity shall, pursuant to the following
provisions, treat the negative balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquired entity:
(i) It shall review the measurement of the fair values of the identifiable assets, liabilities and
contingent liabilities it obtains from the acquired entity as well as the combination costs;
(ii) If, after the review, the combination costs are still less than the fair value of the identifiable net
assets it obtains from the acquired entity, the balance shall be recognised in profit or loss of the
reporting period.
For the accounting treatment of business combination under the same control by step acquisitions,
please refer to Note 3.6 (f).
~ 107 ~
(c) Treatment of business combination related costs
The intermediary costs such as audit, legal services and valuation consulting and other related
management costs that are directly attributable to the business combination shall be charged in
profit or loss in the period in which they are incurred. The costs to issue equity or debt securities for
the consideration of business combination shall be recorded as a part of the value of the respect
equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements
(a) Scope of consolidation
The scope of consolidated financial statements shall be determined on the basis of control. It not
only includes subsidiaries determined based on voting power (or similar) or other arrangement, but
also structured entities under one or several contract arrangements.
Control exists when the Company has all the following: power over the investee; exposure, or rights
to variable returns from the Company’s involvement with the investee; and the ability to use its
power over the investee to affect the amount of the investor’s returns. Subsidiaries are the entities
that controlled by the Company (including enterprise, a divisible part of the investee, and structured
entity controlled by the enterprise). A structured entity (sometimes called a Special Purpose Entity)
is an entity that has been designed so that voting or similar rights are not the dominant factor in
deciding who controls the entity.
(b) Special requirement as the parent company is an investment entity
If the parent company is an investment entity, it should measure its investments in particular
subsidiaries as financial assets at fair value through profit or loss instead of consolidating those
subsidiaries in its consolidated and separate financial statements. However, as an exception to this
requirement, if a subsidiary provides investment-related services or activities to the investment
entity, it should be consolidated.
The parent company is defined as investment entity when meets following conditions:
a. Obtains funds from one or more investors for the purpose of providing those investors with
investment management services;
b. Commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income or both; and
c. Measures and evaluates the performance of substantially all of its investments on a fair value
basis.
If the parent company becomes an investment entity, it shall cease to consolidate its subsidiaries at
the date of the change in status, except for any subsidiary which provides investment-related
services or activities to the investment entity shall be continued to be consolidated. The
~ 108 ~
deconsolidation of subsidiaries is accounted for as though the investment entity partially disposed
subsidiaries without loss of control.
When the parent company previously classified as an investment entity ceases to be an investment
entity, subsidiary that was previously measured at fair value through profit or loss shall be included
in the scope of consolidated financial statements at the date of the change in status. The fair value of
the subsidiary at the date of change represents the transferred deemed consideration in accordance
with the accounting for business combination not under common control.
(c) Method of preparing the consolidated financial statements
The consolidated financial statements shall be prepared by the Company based on the financial
statements of the Company and its subsidiaries, and using other related information.
When preparing consolidated financial statements, the Company shall consider the entire group as
an accounting entity, adopt uniform accounting policies and apply the requirements of Accounting
Standard for Business Enterprises related to recognition, measurement and presentation. The
consolidated financial statements shall reflect the overall financial position, operating results and
cash flows of the group.
(i) Like items of assets, liabilities, equity, income, expenses and cash flows of the parent are
combined with those of the subsidiaries.
(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set) against
the parent’s portion of equity of each subsidiary.
(iii) Eliminate the impact of intragroup transactions between the Company and the subsidiaries or
between subsidiaries, and when intragroup transactions indicate an impairment of related assets, the
losses shall be recognised in full.
(iv) Make adjustments to special transactions from the perspective of the group.
(d) Method of preparation of the consolidated financial statements when subsidiaries are
acquired or disposed in the reporting period
(i) Acquisition of subsidiaries or business
Subsidiaries or business acquired through business combination under common control
When preparing consolidated statements of financial position, the opening balance of the
consolidated balance sheet shall be adjusted. Related items of comparative financial statements
shall be adjusted as well, deeming that the combined entity has always existed ever since the
ultimate controlling party began to control.
Incomes, expenses and profits of the subsidiary incurred from the beginning of the reporting period
to the end of the reporting period shall be included into the consolidated statement of profit or loss.
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Related items of comparative financial statements shall be adjusted as well, deeming that the
combined entity has always existed ever since the ultimate controlling party began to control.
Cash flows from the beginning of the reporting period to the end of the reporting period shall be
included into the consolidated statement of cash flows. Related items of comparative financial
statements shall be adjusted as well, deeming that the combined entity has always existed ever since
the ultimate controlling party began to control.
Subsidiaries or business acquired through business combination not under common control
When preparing the consolidated statements of financial position, the opening balance of the
consolidated statements of financial position shall not be adjusted.
Incomes, expenses and profits of the subsidiary incurred from the acquisition date to the end of the
reporting period shall be included into the consolidated statement of profit or loss.
Cash flows from the acquisition date to the end of the reporting period shall be included into the
consolidated statement of cash flows.
(ii) Disposal of subsidiaries or business
When preparing the consolidated statements of financial position, the opening balance of the
consolidated statements of financial position shall not be adjusted.
Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposal date
shall be included into the consolidated statement of profit or loss.
Cash flows from the beginning of the subsidiary to the disposal date shall be included into the
consolidated statement of cash flows.
(e) Special consideration in consolidation elimination
(i) Long-term equity investment held by the subsidiaries to the Company shall be recognised as
treasury stock of the Company, which is offset with the owner’s equity, represented as “treasury
stock” under “owner’s equity” in the consolidated statement of financial position.
Long-term equity investment held by subsidiaries between each other is accounted for taking
long-term equity investment held by the Company to its subsidiaries as reference. That is, the
long-term equity investment is eliminated (off- set) against the portion of the corresponding
subsidiary’s equity.
(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve, and being different
from retained earnings and undistributed profit, “Specific reserves” and “General risk provision”
shall be recovered based on the proportion attributable to owners of the parent company after
long-term equity investment to the subsidiaries is eliminated with the subsidiaries’ equity.
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(iii) If temporary timing difference between the book value of the assets and liabilities in the
consolidated statement of financial position and their tax basis is generated as a result of elimination
of unrealized inter-company transaction profit or loss, deferred tax assets of deferred tax liabilities
shall be recognised, and income tax expense in the consolidated statement of profit or loss shall be
adjusted simultaneously, excluding deferred taxes related to transactions or events directly
recognised in owner’s equity or business combination.
(iv) Unrealised inter-company transactions profit or loss generated from the Company selling assets
to its subsidiaries shall be eliminated against “net profit attributed to the owners of the parent
company” in full. Unrealized inter-company transactions profit or loss generated from the
subsidiaries selling assets to the Company shall be eliminated between “net profit attributed to the
owners of the parent company” and “non-controlling interests” pursuant to the proportion of the
Company in the related subsidiaries. Unrealized inter-company transactions profit or loss generated
from the assets sales between the subsidiaries shall be eliminated between “net profit attributed to
the owners of the parent company” and “non-controlling interests” pursuant to the proportion of the
Company in the selling subsidiaries.
(v) If loss attributed to the minority shareholders of a subsidiary in current period is more than the
proportion of non-controlling interest in this subsidiary at the beginning of the period,
non-controlling interest is still to be written down.
(f) Accounting for Special Transactions
(i) Purchasing of non-controlling interests
Where, the Company purchases non-controlling interests of its subsidiary, in the separate financial
statements of the Company, the cost of the long-term equity investment obtained in purchasing
non-controlling interests is measured at the fair value of the consideration paid. In the consolidated
financial statements, difference between the cost of the long-term equity investment newly obtained
in purchasing non-controlling interests and share of the subsidiary’s net assets from the acquisition
date or combination date continuingly calculated pursuant to the newly acquired shareholding
proportion shall be adjusted into capital reserve (capital premium or share premium). If capital
reserve is not enough to be offset, surplus reserve and undistributed profit shall be offset in turn.
(ii) Gaining control over the subsidiary in stages through multiple transactions
Business combination under common control in stages through multiple transactions
On the combination date, in the separate financial statement, initial cost of the long-term equity
investment is determined according to the share of carrying amount of the acquiree’s net assets in
the ultimate controlling entity’s consolidated financial statements after combination. The difference
between the initial cost of the long-term equity investment and the carrying amount of the long
-term investment held prior of control plus book value of additional consideration paid at
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acquisition date is adjusted into capital reserve (capital premium or share premium). If the capital
reserve is not enough to absorb the difference, any excess shall be adjusted against surplus reserve
and undistributed profit in turn.
In the consolidated financial statements, the assets and liabilities acquired during the combination
should be recognized at their carrying amount in the ultimate controlling entity’s consolidated
financial statements on the combination date unless any adjustment is resulted from the difference
in accounting policies. The difference between the carrying amount of the investment held prior of
control plus book value of additional consideration paid on the acquisition date and the net assets
acquired through the combination is adjusted into capital reserve (capital premium or share
premium). If the capital reserve is not enough to absorb the difference, any excess shall be adjusted
against retained earnings.
If the acquiring entity holds equity investment in the acquired entity prior to the combination date
and the equity investment is accounted for under the equity method, related profit or loss, other
comprehensive income and other changes in equity which have been recognised during the period
from the later of the date of the Company obtaining original equity interest and the date of both the
acquirer and the acquiree under common control of the same ultimate controlling party to the
combination date should be offset against the opening balance of retained earnings at the
comparative financial statements period respectively.
Business combination not under common control in stages through multiple transactions
On the consolidation date, in the separate financial statements, the initial cost of long-term equity
investment is determined according to the carrying amount of the original long-term investment
plus the cost of new investment.
In the consolidated financial statements, the equity interest of the acquired entity held prior to the
acquisition date shall be re-measured at its fair value on the acquisition date. Difference between the
fair value of the equity interest and its book value is recognised as investment income. The other
comprehensive income related to the equity interest held prior to the acquisition date calculated
through equity method, should be transferred to current investment income of the acquisition
period, excluding other comprehensive income resulted from the remeasurement of the net assets or
net liabilities under defined benefit plan. The Company shall disclose acquisition-date fair value of
the equity interest held prior to the acquisition date, and the related gains or losses due to the
remeasurement based on fair value.
(iii) Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of control,
when the Company prepares consolidated financial statements, difference between consideration
received from the disposal and the corresponding share of subsidiary’s net assets cumulatively
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calculated from the acquisition date or combination date shall be adjusted into capital reserve
(capital premium or share premium). If the capital reserve is not enough to absorb the difference,
any excess shall be offset against retained earnings.
(iv) Disposal of investment in subsidiaries with a loss of control
Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity investment, when
the consolidated financial statements are prepared, the retained equity interest should be
re-measured at fair value at the date of loss of control. The difference between i) the fair value of
consideration received from the disposal plus non-controlling interest retained; ii) share of the
former subsidiary’s net assets cumulatively calculated from the acquisition date or combination date
according to the original proportion of equity interest, shall be recognised in current investment
income when control is lost.
Moreover, other comprehensive income and other changes in equity related to the equity investment
in the former subsidiary shall be transferred into current investment income when control is lost,
excluding other comprehensive income resulted from the remeasurement of the movement of net
assets or net liabilities under defined benefit plan.
Disposal in stages
In the consolidated financial statements, whether the transactions should be accounted for as “a
single transaction” needs to be decided firstly.
If the disposal in stages should not be classified as “a single transaction”, in the separate financial
statements, for transactions prior of the date of loss of control, carrying amount of each disposal of
long-term equity investment need to be recognized, and the difference between consideration
received and the carrying amount of long-term equity investment corresponding to the equity
interest disposed should be recognized in current investment income; in the consolidated financial
statements, the disposal transaction should be accounted for according to related policy in “Disposal
of long-term equity investment in subsidiaries without a loss of control”.
If the disposal in stages should be classified as “a single transaction”, these transactions should be
accounted for as a single transaction of disposal of subsidiary resulting in loss of control. In the
separate financial statements, for each transaction prior of the date of loss of control, difference
between consideration received and the carrying amount of long-term equity investment
corresponding to the equity interest disposed should be recognised as other comprehensive income
firstly, and transferred to profit or loss as a whole when control is lost; in the consolidated financial
statements, for each transaction prior of the date of loss of control, difference between consideration
received and proportion of the subsidiary’s net assets corresponding to the equity interest disposed
should be recognised in profit or loss as a whole when control is lost.
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In considering of the terms and conditions of the transactions as well as their economic impact, the
presence of one or more of the following indicators may lead to account for multiple transactions as
a single transaction:
(a) The transactions are entered into simultaneously or in contemplation of one another.
(b) The transactions form a single transaction designed to achieve an overall commercial effect.
(c) The occurrence of one transaction depends on the occurrence of at least one other transaction.
(d) One transaction, when considered on its own merits, does not make economic sense, but when
considered together with the other transaction or transactions would be considered economically
justifiable.
(v) Diluting equity share of parent company in its subsidiaries due to additional capital injection by
the subsidiaries’ minority shareholders.
Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the
subsidiaries, which resulted in the dilution of equity interest of parent company in these subsidiaries.
In the consolidated financial statements, difference between share of the corresponding subsidiaries’
net assets calculated based on the parent’s equity interest before and after the capital injection shall
be adjusted into capital reserve (capital premium or share premium). If the capital reserve is not
enough to absorb the difference, any excess shall be adjusted against retained earnings.
3.7 Classification of Joint Arrangements and Accounting for Joint Operation
A joint arrangement is an arrangement of which two or more parties have joint control. Joint
arrangement of the Company is classified as either a joint operation or a joint venture.
(a) Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.
The Company shall recognise the following items in relation to shared interest in a joint operation,
and account for them in accordance with relevant accounting standards of the Accounting Standards
for Business Enterprises:
(i) its assets, including its share of any assets held jointly;
(ii) its liabilities, including its share of any liabilities incurred jointly;
(iii) its revenue from the sale of its share of the output arising from the joint operation;
(iv) its share of the revenue from the sale of the output by the joint operation; and
(v) its expenses, including its share of any expenses incurred jointly.
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(b) Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the arrangement.
The Company accounts for its investment in the joint venture by applying the equity method of
long-term equity investment.
3.8 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents include short-term (generally within three months of maturity at acquisition), highly
liquid investments that are readily convertible into known amounts of cash and which are subject to
an insignificant risk of changes in value.
3.9 Foreign Currency Transactions and Translation of Foreign Currency Financial
Statements
(a) Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the foreign
currency shall be translated into the amount in the functional currency at the spot exchange rate of
the transaction date, or at an exchange rate which is determined through a systematic and reasonable
method and is approximate to the spot exchange rate of the transaction date (hereinafter referred to
as the approximate exchange rate).
(b) Translation of monetary items denominated in foreign currency on the balance sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the balance
sheet date. The balance of exchange arising from the difference between the spot exchange rate on
the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the
balance sheet date shall be recorded into the profits and losses at the current period. The foreign
currency non-monetary items measured at the historical cost shall still be translated at the spot
exchange rate on the transaction date; for the foreign currency non-monetary items restated to a fair
value measurement, shall be translated into the at the spot exchange rate at the date when the fair
value was determined, the difference between the restated functional currency amount and the
original functional currency amount shall be recorded into the profits and losses at the current
period.
(c) Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and
accounting policy shall be adjusted so as to conform to the Company. The adjusted foreign
operation financial statements denominated in foreign currency (other than functional currency)
shall be translated in accordance with the following method:
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(i) The asset and liability items in the statement of financial position shall be translated at the spot
exchange rates at the date of that statement of financial position.. The owners’ equity items except
undistributed profit shall be translated at the spot exchange rates when they are incurred.
(ii) The income and expense items in the statement of profit and other comprehensive income shall
be translated at the spot exchange rates or approximate exchange rate at the date of transaction.
(iii) Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the
spot exchange rate or approximate exchange rate when the cash flows are incurred. The effect of
exchange rate changes on cash is presented separately in the statement of cash flows as an
adjustment item.
(iv) The differences arising from the translation of foreign currency financial statements shall be
presented separately as “other comprehensive income” under the owners’ equity items of the
consolidated statement of financial position.
When disposing a foreign operation involving loss of control, the cumulative amount of the
exchange differences relating to that foreign operation recognised under other comprehensive
income in the statement of financial position, shall be reclassified into current profit or loss
according to the proportion disposed.
3.10 Financial Instruments
Effective at 1st January 2019
Financial instrument is any contract which gives rise to both a financial asset of one entity and a
financial liability or equity instrument of another entity.
(a) Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognised in the statement of financial position
when, and only when, an entity becomes party to the contractual provisions of the instrument.
A financial asset can only be derecognised when meets one of the following conditions:
(i) The rights to the contractual cash flows from a financial asset expire
(ii) The financial asset has been transferred and meets one of the following derecognition
conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—i.e.,
when the obligation specified in the contract is discharged or cancelled or expires. An exchange of
the Company (borrower) and lender of debt instruments that carry significantly different terms or a
substantial modification of the terms of an existing liability are both accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability.
Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using
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trade date accounting. A regular-way purchase or sale of financial assets is a transaction under a
contract whose terms require delivery of the asset within the time frame established generally by
regulations or convention in the market place concerned. Trade date is the date at which the entity
commits itself to purchase or sell an asset.
(b) Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business model
for managing the financial asset and the contractual cash flow characteristics of the financial asset:
financial asset at amortised cost, financial asset at fair value through profit or loss (FVTPL) and
financial asset at fair value through other comprehensive income (FVTOCI). Reclassification of
financial assets is permitted if, and only if, the objective of the entity’s business model for
managing those financial assets changes. In this circumstance, all affected financial assets shall be
reclassified on the first day of the first reporting period after the changes in business model;
otherwise the financial assets cannot be reclassified after initial recognition.
Financial assets shall be measured at initial recognition at fair value. For financial assets measured
at FVTPL, transaction costs are recognised in current profit or loss. For financial assets not
measured at FVTPL, transaction costs should be included in the initial measurement. Notes
receivable or accounts receivable that arise from sales of goods or rendering of services are initially
measured at the transaction price defined in the accounting standard of revenue where the
transaction does not include a significant financing component.
Subsequent measurement of financial assets will be based on their categories:
(i)Financial asset at amortised cost
The financial asset at amortised cost category of classification applies when both the following
conditions are met: the financial asset is held within the business model whose objective is to hold
financial assets in order to collect contractual cash flows, and the contractual term of the financial
asset gives rise on specified dates to cash flows that are solely payment of principal and interest on
the principal amount outstanding. These financial assets are subsequently measured at amortised
cost by adopting the effective interest rate method. Any gain or loss arising from derecognition
according to the amortization under effective interest rate method or impairment are recognised in
current profit or loss.
(ii)Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following
conditions are met: the financial asset is held within the business model whose objective is achieved
by both collecting contractual cash flows and selling financial assets, and the contractual term of the
financial asset gives rise on specified dates to cash flows that are solely payment of principle and
interest on the principal amount outstanding. All changes in fair value are recognised in other
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comprehensive income except for gain or loss arising from impairment or exchange differences,
which should be recognised in current profit or loss. At derecognition, cumulative gain or loss
previously recognised under OCI is reclassified to current profit or loss. However, interest income
calculated based on the effective interest rate is included in current profit or loss.
The Company make an irrevocable decision to designate part of non-trading equity instrument
investments as measured through FVTOCI. All changes in fair value are recognised in other
comprehensive income except for dividend income recognised in current profit or loss. At
derecognition, cumulative gain or loss are reclassified to retained earnings.
(iii)Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for above mentioned financial asset at amortised cost or financial asset at fair
value through other comprehensive income (FVTOCI), should be classified as financial asset at fair
value through profit or loss (FVTPL). These financial assets should be subsequently measured at
fair value. All the changes in fair value are included in current profit or loss.
(c) Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through profit or
loss (FVTPL), loan commitments at a below-market interest rate and financial guarantee contracts
and financial asset at amortised cost.
Subsequent measurement of financial assets will be based on the classification:
(i)Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial
liabilities designated at FVTPL are classified as financial liabilities at FVTP. After initial
recognition, any gain or loss (including interest expense) are recognised in current profit or loss
except for those hedge accounting is applied. For financial liability that is designated as at FVTPL,
changes in the fair value of the financial liability that is attributable to changes in the own credit risk
of the issuer shall be presented in other comprehensive income. At derecognition, cumulative gain
or loss previously recognised under OCI is reclassified to retained earnings.
(ii)Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under specified
contract terms. The provision of impairment losses of loan commitments shall be recognised based
on expected credit losses model.
Financial guarantee contract is a contract that requires the Company to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due
in accordance with the original or modified terms of a debt instrument. Financial guarantee
contracts liability shall be subsequently measured at the higher of: The amount of the loss
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allowance recognised according to the impairment principles of financial instruments; and the
amount initially recognised less the cumulative amount of income recognised in accordance with
the revenue principles.
(iii)Financial liabilities at amortised cost
After initial recognition, the Company measured other financial liabilities at amortised cost using
the effective interest method.
Except for special situation, financial liabilities and equity instrument should be classified in
accordance with the following principles:
(i) If the Company has no unconditional right to avoid delivering cash or another financial
instrument to fulfill a contractual obligation, this contractual obligation meet the definition of
financial liabilities. Some financial instruments do not comprise terms and conditions related to
obligations of delivering cash or another financial instrument explicitly, they may include
contractual obligation indirectly through other terms and conditions.
(ii) If a financial instrument must or may be settled in the Company's own equity instruments, it
should be considered that the Company’s own equity instruments are alternatives of cash or another
financial instrument, or to entitle the holder of the equity instruments to sharing the remaining rights
over the net assets of the issuer. If the former is the case, the instrument is a liability of the issuer;
otherwise, it is an equity instrument of the issuer. Under some circumstances, it is regulated in the
contract that the financial instrument must or may be settled in the Company's own equity
instruments, where, amount of contractual rights and obligations are calculated by multiplying the
number of the equity instruments to be available or delivered by its fair value upon settlement. Such
contracts shall be classified as financial liabilities, regardless that the amount of contractual rights
and liabilities is fixed, or fluctuate totally or partially with variables other than market price of the
entity’s own equity instruments
(d) Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative contracts
are signed and subsequently measured at fair value. The derivative with a positive fair value shall be
recognized as an asset, and with a negative fair value shall be recognised as a liability.
Gains or losses arising from the changes in fair value of derivatives shall be recognised directly into
current profit or loss except for the effective portion of cash flow hedges which shall be recognised
in other comprehensive income and reclassified into current profit or loss when the hedged items
affect profit or loss.
An embedded derivative is a component of a hybrid contract with a financial asset as a host, the
Company shall apply the requirements of financial asset classification to the entire hybrid contract.
If a host that is not a financial asset and the hybrid contract is not measured at fair value with
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changes in fair value recognised in profit or loss, and the economic characteristics and risks of the
embedded derivative are not closely related to the economic characteristics and risks of the host,
and a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative, the embedded derivative shall be separated from the hybrid instrument
and accounted for as a separate derivative instrument. If the Company is unable to measure the fair
value of the embedded derivative at the acquisition date or subsequently at the balance sheet date,
the entire hybrid contract is designated as financial assets or financial liabilities at fair value through
profit or loss.
(e) Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses on a financial asset
that is measured at amortised cost, a debt investment at fair value through other comprehensive
income, a contract asset, a lease receivable, a loan commitment and a financial guarantee contract.
(i) Measurement of expected credit losses
Expected credit losses are the weighted average of credit losses of the financial instruments with the
respective risks of a default occurring as the weights. Credit loss is the difference between all
contractual cash flows that are due to the Company in accordance with the contract and all the cash
flows that the Company expects to receive, discounted at the original effective interest rate or
credit- adjusted effective interest rate for purchased or originated credit-impaired financial assets.
Lifetime expected credit losses are the expected credit losses that result from all possible default
events over the expected life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that represent the
expected credit losses that result from default events on a financial instrument that are possible
within the 12 months after the reporting date (or the expected lifetime, if the expected life of a
financial instrument is less than 12 months).
At each reporting date, the Company classifies financial instruments into three stages and makes
provisions for expected credit losses accordingly. A financial instrument of which the credit risk has
not significantly increased since initial recognition is at stage 1. The Company shall measure the
loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
A financial instrument with a significant increase in credit risk since initial recognition but is not
considered to be credit-impaired is at stage 2. The Company shall measure the loss allowance for
that financial instrument at an amount equal to the lifetime expected credit losses. A financial
instrument is considered to be credit-impaired as at the end of the reporting period is at stage 3. The
Company shall measure the loss allowance for that financial instrument at an amount equal to the
lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit risk
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at the reporting date and measure the loss allowance for that financial instrument at an amount equal
to 12-month expected credit losses.
For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue shall
be calculated by applying the effective interest rate to the gross carrying amount of a financial asset.
For financial instrument at stage 3, interest revenue shall be calculated by applying the effective
interest rate to the amortised cost after deducting of impairment loss.
For notes receivable, accounts receivable and accounts receivable financing, no matter it contains a
significant financing component or not, the Company shall measure the loss allowance at an amount
equal to the lifetime expected credit losses.
Receivables
For the notes receivable, accounts receivable, other receivables, accounts receivable financing and
long-term receivables which are demonstrated to be impaired by any objective evidence, or
applicable for individual assessment, the Company shall individually assess for impairment and
recognise the loss allowance for expected credit losses. If the Company determines that no objective
evidence of impairment exists for notes receivable, accounts receivable, other receivables, accounts
receivable financing and long-term receivables, or the expected credit loss of a single financial asset
cannot be assessed at reasonable cost, such notes receivable, accounts receivable, other receivables,
accounts receivable financing and long-term receivables shall be divided into several groups with
similar credit risk characteristics and collectively calculated the expected credit loss. The
determination basis of groups is as following:
Determination basis of notes receivable is as following:
Group 1: Commercial acceptance bills
Group 2: Bank acceptance bills
For each group, the Company calculates expected credit losses through default exposure and the
lifetime expected credit losses rate, taking reference to historical experience for credit losses and
considering current condition and expectation for the future economic situation.
Determination basis of accounts receivable is as following:
Group 1: Accounts receivables due from the company within the scope of consolidation
Group 2: Accounts receivables due from other customers
For each group, the Company calculates expected credit losses through preparing an aging analysis
schedule with the lifetime expected credit losses rate, taking reference to historical experience for
credit losses and considering current condition and expectation for the future economic situation.
Determination basis of other receivables is as following:
Group 1: Other receivables due from the company within the scope of consolidation
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Group 2: Other receivables due from others
For each group, the Company calculates expected credit losses through default exposure and the
12-months or lifetime expected credit losses rate, taking reference to historical experience for credit
losses and considering current condition and expectation for the future economic situation.
Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected credit loss
through the default exposure and the 12-month or lifetime expected credit loss rate based on the
nature of the investment, counterparty and the type of risk exposure.
(ii) Low credit risk
If the financial instrument has a low risk of default, the borrower has a strong capacity to meet its
contractual cash flow obligations in the near term and adverse changes in economic and business
conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to
fulfill its contractual cash flow obligations.
(iii) Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased
significantly since initial recognition, using the change in the risk of a default occurring over the
expected life of the financial instrument, through the comparison of the risk of a default occurring
on the financial instrument as at the reporting date with the risk of a default occurring on the
financial instrument as at the date of initial recognition.
To make that assessment, the Company shall consider reasonable and supportable information, that
is available without undue cost or effort, and that is indicative of significant increases in credit risk
since initial recognition, including forward-looking information. The information considered by the
Company are as following:
Significant changes in internal price indicators of credit risk as a result of a change in credit
risk since inception
Existing or forecast adverse change in the business, financial or economic conditions of the
borrower that results in a significant change in the borrower’s ability to meet its debt obligations；
An actual or expected significant change in the operating results of the borrower; An actual
or expected significant adverse change in the regulatory, economic, or technological environment of
the borrower；
Significant changes in the value of the collateral supporting the obligation or in the quality
of third-party guarantees or credit enhancements, which are expected to reduce the borrower’s
economic incentive to make scheduled contractual payments or to otherwise have an effect on the
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probability of a default occurring;
Significant change that are expected to reduce the borrower’s economic incentive to make
scheduled contractual payments;
Expected changes in the loan documentation including an expected breach of contract that
may lead to covenant waivers or amendments, interest payment holidays, interest rate step-ups,
requiring additional collateral or guarantees, or other changes to the contractual framework of the
instrument；
Significant changes in the expected performance and behaviour of the borrower；
Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether the credit
risk has increased significantly since initial recognition on an individual financial instrument or a
group of financial instruments. When assessed based on a group of financial instruments, the
Company can group financial instruments on the basis of shared credit risk characteristics, for
example, past due information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has increased
significantly since initial recognition when contractual payments are more than 30 days past due.
The Company can only rebut this presumption if the Company has reasonable and supportable
information that is available without undue cost or effort, that demonstrates that the credit risk has
not increased significantly since initial recognition even though the contractual payments are more
than 30 days past due.
(iv) Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred for
financial asset at amortised cost and debt investment at fair value through other comprehensive
income. A financial asset is credit-impaired when one or more events that have a detrimental impact
on the estimated future cash flows of that financial asset have occurred. Evidences that a financial
asset is credit-impaired include observable data about the following events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as a default
or past due event; the lender(s) of the borrower, for economic or contractual reasons relating to the
borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s)
would not otherwise consider；it is becoming probable that the borrower will enter bankruptcy or
other financial reorganisation；the disappearance of an active market for that financial asset because
of financial difficulties；the purchase or origination of a financial asset at a deep discount that
reflects the incurred credit losses.
(v) Presentation of impairment of expected credit loss
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In order to reflect the changes of credit risk of financial instrument since initial recognition, the
Company shall at each reporting date remeasure the expected credit loss and recognise in profit or
loss, as an impairment gain or loss, the amount of expected credit losses addition (or reversal). For
financial asset at amortised cost, the loss allowance shall reduce the carrying amount of the financial
asset in the statement of financial position; for debt investment at fair value through other
comprehensive income, the loss allowance shall be recognised in other comprehensive income and
shall not reduce the carrying amount of the financial asset in the statement of financial position.
(vi) Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the
Company has no reasonable expectations of recovering the contractual cash flow of a financial asset
in its entirety or a portion thereof. Such write-off constitutes a derecognition of the financial asset.
This circumstance usually occurs when the Company determines that the debtor has no assets or
sources of income that could generate sufficient cash flow to repay the write-off amount.
Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment
loss.
(f) Transfer of financial assets
Transfer of financial assets refers to following two situations:
Transfers the contractual rights to receive the cash flows of the financial asset;
Transfers the entire or a part of a financial asset and retains the contractual rights to receive the
cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one
or more recipients.
(i) Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial asset,
or neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset but has not retained control of the financial asset, the financial asset shall be derecognised.
Whether the Company has retained control of the transferred asset depends on the transferee’s
ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety to an
unrelated third party and is able to exercise that ability unilaterally and without needing to impose
additional restrictions on the transfer, the Company has not retained control.
The Company judges whether the transfer of financial asset qualifies for derecognition based on the
substance of the transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference between the
following shall be recognised in profit or loss:
The carrying amount of transferred financial asset;
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The sum of consideration received and the part derecognised of the cumulative changes in fair
value previously recognised in other comprehensive income (The financial assets involved in the
transfer are classified as financial assets at fair value through other comprehensive income in
accordance with Article 18 of the Accounting Standards for Business Enterprises No.22 -
Recognition and Measurement of Financial Instruments).
If the transferred asset is a part of a larger financial asset and the part transferred qualifies for
derecognition, the previous carrying amount of the larger financial asset shall be allocated between
the part that continues to be recognised (For this purpose, a retained servicing asset shall be treated
as a part that continues to be recognised) and the part that is derecognised, based on the relative fair
values of those parts on the date of the transfer. The difference between following two amounts shall
be recognised in profit or loss:
The carrying amount (measured at the date of derecognition) allocated to the part derecognised；
The sum of the consideration received for the part derecognised and part derecognised of the
cumulative changes in fair value previously recognised in other comprehensive income (The
financial assets involved in the transfer are classified as financial assets at fair value through other
comprehensive income in accordance with Article 18 of the Accounting Standards for Business
Enterprises No.22 - Recognition and Measurement of Financial Instruments).
(ii) Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a
transferred asset, and retains control of the transferred asset, the Company shall continue to
recognise the transferred asset to the extent of its continuing involvement and also recognise an
associated liability.
The extent of the Company’s continuing involvement in the transferred asset is the extent to which
it is exposed to changes in the value of the transferred asset
(iii) Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the transferred
financial asset, the Company shall continue to recognise the transferred asset in its entirety and the
consideration received shall be recognised as a financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent
accounting period, the Company shall continuously recognise any income (gain) arising from the
transferred asset and any expense (loss) incurred on the associated liability.
(g) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of financial
position and shall not be offset. When meets the following conditions, financial assets and financial
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liabilities shall be offset and the net amount presented in the statement of financial position:
The Company currently has a legally enforceable right to set off the recognised amounts; The
Company intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the Company
shall not offset the transferred asset and the associated liability.
(h) Determination of fair value of financial instruments
Determination of financial assets and financial liabilities please refer to Note 3.11
Following financial instruments accounting standard is applicable for year 2018 and before
(a) Classification of financial assets
(i) Financial assets at fair value through profit or loss
This category comprises financial assets defined as held for trading, or those designated as at fair
value through profit or loss. The former mainly includes shares, bonds, funds, and derivative
financial instruments investment that are not designated effective hedging instruments that are
acquired principally for the purpose of sale in the near future. Such financial assets are initially
recognised at fair values when acquired. Relevant transaction expenses are included in the current
profit or loss. Cash dividends that have been declared but not distributed and bond interests that
have matured but not been drawn included in the consideration paid are recognised as receivables
separately. The interests or cash dividends to be received during the holding period are recognised
as investment income. On the balance sheet date, this category of financial assets is measured at fair
value, and change in fair values is included in the current profit or loss. Difference between the fair
value and initial measurement amount is recognised as investment income upon disposal;
meanwhile, gains or losses from changes in fair values are written-off.
(ii) Held-to-maturity investments
Held-to-maturity investments refer to government bonds, corporate bonds with fixed or
determinable payments and fixed maturity, for which the Company has a positive intention and
ability to hold to maturity. Held-to-maturity investments are initially measured at fair values plus
the related transaction costs when acquired. Bond interests that have matured but not been drawn
included in the consideration paid is recognised as a receivable separately. The interest income
calculated at amortisation cost and effective interest rate during the holding period is recognised as
investment income. The difference between the amount received and the book value of the
investment is included in the investment income upon disposal.
(iii) Receivables
Receivables mainly include accounts receivable and other receivables. Receivables arise from
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external sales of goods or rendering of service by the Company. They are recognised initially at the
contract price or agreement price receivable from the purchasing party.
(iv) Available-for-sale financial assets
This category of financial assets comprises those financial assets that cannot be classified as
financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and
receivables. Available-for-sale financial assets are initially recognised at fair values plus the related
transaction costs when acquired. Cash dividends that have been declared but not distributed and
bond interests that have matured but not been drawn included in the consideration paid are
recognised as receivables separately. The interests or cash dividends to be received during the
holding period are recognised as investment income.
For available-for-sale financial assets that are foreign currency monetary financial assets, the
exchange gain or loss shall be recognised in current profit or loss. Interest of available-for-sale debt
instrument investment calculated using effective interest rate method shall be recognised in current
profit or loss; cash dividend of available-for-sale equity instrument investment shall be recognised
into current profit or loss when the investee declares the dividend. At the balance sheet date,
available-for-sale financial assets are measured at fair value and change in fair value shall be
included in other comprehensive income. The difference between the amount received and the book
value of the financial asset is included in the investment income upon disposal. Meanwhile, the
corresponding accumulated change in fair value recognised in other comprehensive income is
transferred into investment income.
(b) Classification of financial liabilities
(i) Financial liabilities at fair value through profit or loss
This category of financial liabilities comprises financial liabilities that are defined as held for
trading, or those that are designated as at fair value through profit or loss. This category of financial
liabilities is initially measured at fair value. Relevant transaction costs are included in the current
profit or loss. On the balance sheet date, change in fair values is included in the current profit or
loss.
(ii) Other financial liabilities
Other financial liabilities are those financial liabilities excluding financial liabilities at fair value
through profit or loss.
(c) Reclassification of financial assets
An investment will be reclassified as available-for-sale if, as a result of a change in intention or
ability, it fails to meet the requirements for classification as held-to-maturity. After the
reclassification, it will be subsequently measured at fair value. If the held-to maturity investment is
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partially disposed, or a large part of it has been reclassified, and not included in the exceptions
illustrated in provision 16 of “Accounting Standards for Enterprises No. 22 – Recognition and
Measurement of Financial Instruments”, as a result of which, the remaining of the investment fails
to meet the requirements for classification as held-to-maturity, any remaining held-to-maturity
investments should also be reclassified as available-for-sale, and subsequently measured at fair
value. However, it is prohibited that the above available-for-sale is reclassified back to
held-to-maturity within current fiscal year and the following two fiscal years.
On the date of reclassification, difference between carrying value of the investment and its fair
value is recorded in other comprehensive income, which shall be transferred out and recognised
directly in current profit or loss upon incurrence of impairment or de-recognition of the investment.
If, as a result of a change in intention or ability or a reliable measure of fair value is no longer
available or because the two preceding financial years have passed since the reclassification of
held-to-maturity to available-for-sale investment, it becomes appropriate to measure a financial
asset at cost or amortised cost rather than at fair value, the fair value or carrying amount of the
financial asset on the date of reclassification becomes its new cost or amortised cost, as applicable.
In the case of a financial asset with a fixed maturity, the gain or loss related to the financial asset
previously recoginsed in other comprehensive income shall be amortised to current profit or loss
over the remaining life of the financial asset using the effective interest method. Any difference
between the new amortised cost and maturity amount shall also be amortised over the remaining life
of the financial asset using the effective interest method and recognised in current profit or loss. In
the case that a financial asset does not have a fixed maturity, the gain or loss related to the financial
asset previously recoginsed in other comprehensive income shall remain in the equity and
recognised in profit or loss when the financial asset is sold or otherwise disposed of.
(d) Classification of financial liabilities and equity instruments
Except for special situation, financial liabilities and equity instrument should be classified in
accordance with the following principles:
(i) If the Company has no unconditional right to avoid delivering cash or another financial
instrument to fulfill a contractual obligation, this contractual obligation meet the definition of
financial liabilities. Some financial instruments do not comprise terms and conditions related to
obligations of delivering cash or another financial instrument explicitly, they may include
contractual obligation indirectly through other terms and conditions.
(ii) If a financial instrument must or may be settled in the entity's own equity instruments, it should
be considered that the entity’s own equity instruments are alternatives of cash or another financial
instrument, or to entitle the holder of the equity instruments to sharing the remaining rights over the
net assets of the issuer. If the former is the case, the instrument is a liability of the issuer. Otherwise,
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it is an equity instrument of the issuer. Under some circumstances, it is regulated in the contract that
the financial instrument must or may be settled in the entity's own equity instruments, where,
amount of contractual rights and obligations are calculated by multiplying the number of the equity
instruments to be available or delivered by its fair value upon settlement. Such contacts shall be
classified as financial liabilities, regardless that the amount of contractual rights and liabilities is
fixed, or fluctuate totally or partially with variables other than market price of the entity’s own
equity instruments.
(e) Transfer of Financial Assets
Transfer of financial assets include below situations:
The contractual rights to receive cash flows from the asset are transferred to another entity; or
The financial assets are totally or partially transferred to another entity, while the rights to
receive cash flows from the asset or obligations to pay the received cash flows to one or several
payees are retained.
(i) Derecognition of transferred financial assets
The financial assets should be derecognised if the Company has transferred substantially all the
risks and rewards of the asset, or the Company has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When judging whether control of the asset has been transferred or not, the Company shall lay
emphasis on the transferee’s substantial capability to sell the financial asset. If the transferee itself
can sell the financial asset as a whole to a third party that has no any relationship with it, without
any restrictions on this sale through supplemental terms, it is shown that the control of the asset has
been given up.
The principle of substance over form is adopted to determine whether the transfer of a financial
asset satisfies the criteria described above for derecognition of a financial asset.
If the entire transfer of financial asset satisfies the criteria for derecognition, the difference between
the amounts of the following two items shall be included in the current profit or loss:
The carrying amount of the transferred financial asset;
The sum of the consideration received from the transfer and the cumulative amount of the
changes in fair value originally and directly included in owners’ equity (where the financial asset
transferred is an available-for-sale financial asset).
If the transferred asset is part of a larger financial asset and the part transferred qualifies for
derecognition, the previous carrying amount of the financial asset shall be allocated between the
part that continues to be recognised and the part that is derecognised, based on the relative fair
values (In such circumstances，servicing asset shall be treated as a part that continues to be
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recognised）and the difference between the amounts of the following two items shall be recognised
in current profit or loss:
The carrying amount allocated to the part derecognised and;
The sum of the consideration received for the part derecognised and any cumulative fair value
change originally and directly recognised in other comprehensive income (where the financial asset
transferred is an available-for-sale financial asset).
(ii) Continuing involvement in transferred financial assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of
the financial asset, and retains control of the transferred financial asset, the Company shall continue
to recognise the transferred asset to the extent of its continuing involvement and also recognize an
associated liability.
The extent of the entity’s continuing involvement in the transferred financial asset is the extent to
which it is exposed to changes in the value of the transferred asset.
(iii) Continuing recognise transferred financial assets
If the Company retains substantially all the risks and rewards of ownership of a transferred financial
asset, the Company shall continue to recognise the transferred asset in its entirety and the
consideration received shall be recognised as a financial liability.
The financial asset and the associated liability shall not be offset. During the subsequent accounting
period, the Company shall continue to recognise any income arising on the transferred financial
asset and any expense incurred on the associated liability. If the transferred financial asset is
measured at amortised cost, to designate a financial liability as at fair value through profit or loss is
not applicable to the associated liability.
(f) Derecognition of financial liability
A financial liability shall be totally or partly derecognised if its present obligations are totally or
partly dissolved.
If the assets to be used to settle a financial liability is transferred to another institute or establish a
trust, where the present obligations still exist, either the financial liability or the assets transferred
shall not be derecognised.
Where the Company enters into an agreement with a creditor so as to substitute the existing
financial liabilities with any new financial liability, and the new financial liability is substantially
different from the contractual stipulations regarding the existing financial liability, it shall
derecognise the existing financial liability, and shall at the same time recognise a new financial
liability.
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Where substantial revisions are made to some or all of the contractual stipulations of the existing
financial liability, the Company shall derecognise the existing financial liability totally or partly,
and at the same time recognise the financial liability with revised contractual stipulations as a new
financial liability.
Upon total or partial derecognition of financial liabilities, the difference between the carrying
amount of the financial liabilities derecognised and the consideration paid (including non-cash
assets surrendered or new financial liabilities assumed) shall be included in the current profit or
loss.
(g) Offsetting financial assets and liabilities
Financial assets and liabilities shall be presented separately in the statement of financial position
and shall not be offset. However, they shall be presented on a net basis after offsetting if the
following criteria are both satisfied.
(i) The Company has a legal right to offset the recognised amounts, and the right is executable at
present; and
(ii) The Company has an intention to settle on a net basis or liquidate the asset and settle the
liability simultaneously.
Asset transfer that does not satisfy the criteria for derecognition of this asset, the transferor shall not
offset the transferred asset and the related liability.
(h) Impairment testing and impairment provision of financial assets
(i) Objective evidence for the impairment of the financial assets
The issuer or debtor encounters serious financial difficulties;
The debtor violates the terms of contract, for example, it cannot repay the interest or the
principal of the loan on schedule;
The creditor makes concessions to the debtor in financial difficulties from the respect of
economy or law;
The creditor is possible to bankrupt or execute other financial restructuration;
The financial asset is no longer traded in the active market since the issuer encounters
significant financial difficulties;
It is unrecognisable whether cash flows from an asset in one group of financial assets has
decreased, however, it is identifiable that the estimated future cash flows of the group of financial
assets has decreased and measurable since they are initially recognised through overall assessment
on them on the basis of public data;
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The debtor’s technological, market, economic or legal environment encounters significant
unfavorable change, as a result of which investment cost may not be recovered;
A serious or prolonged decline in the fair value of equity instrument.
Other objective evidence that indicate impairment of financial assets.
(ii) Impairment provision of the financial assets (excluding receivables)
Financial assets at amortised cost
When the financial asset is impaired, the carrying amount of the financial asset shall be written
down to the present value of its expected future cash flows (excluding future credit losses that have
not occurred); the amount written down shall be recognised as impairment loss in current profit or
loss.
The present value of the estimated future cash flows is determined by discounting at the original
effective rate of the held-to maturity investment, considering the value of related guaranty
(deducting expense incurred for obtaining or selling this guaranty). The original effective rate is the
effective rate calculated when the held-to maturity investment is initially recognised. For held-to
maturity investment with floating interest rate, when calculate the present value of expected future
cash flow, the current effective interest rate determined in the contract can be used as the discount
rate.
When assesses the impairment of financial asset at amortised cost, the Company recognize the
financial asset with the balance accounts for more than 5%（including 5%）of the total amount as
financial asset with individually significant balance and the balance below 5% of the total amount
as financial asset with individually insignificant balance.
When assesses the impairment of financial asset with individually significant balance, if there are
objective evidences indicate the assets have impaired, the Company shall recognize the impairment
loss and included in profit or loss; for financial asset with individually insignificant balance, the
Company could assess the impairment individually or included in the financial asset group with the
similar credit risk characteristics.
If the financial asset (including with individually significant and insignificant balance) is not
impaired through the individual assessment, it shall be assessed again in the assessment of the
financial asset group with the similar credit risk characteristics; if it has recognised the impairment
through the individual assessment, then shall not be included in the assessment of the financial asset
group with the similar credit risk characteristics.
If, in a subsequent period, the carrying amount of the financial asset at amortised cost increases and
the increase can be related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment losses are reversed, included in current profit or loss. But the
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carrying amount after the reversal shall not exceed the amortised cost in assuming that no
impairment loss been recognised at the date of reversal.
Impairment provision of available-for sale financial assets
For available-for sale financial assets that is impaired, when recognize the impairment loss, the
cumulative loss arising from the decline in fair value that has been recognised previously in other
comprehensive income shall be transferred out into the impairment loss of asset. After the
available-for sale debt instrument is impaired, the interest revenue shall be calculated by using the
discount rate that used to discount the future cash flows when determining the impairment loss.
If, in a subsequent period, the carrying amount of available-for-sale debt instruments investments
increases and the increase is related objectively to an event occurring after the impairment was
recognised, the previously recognised impairment losses are reversed, and included in current profit
or loss. Impairment loss of available-for sale equity instrument cannot be reversed through profit or
loss.
(i) Method of determining the fair value of financial assets and financial liabilities
Method of determining the fair value of financial assets and financial liabilities please refer to Note
3.11
3.11 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date.
The Company determines fair value of the related assets and liabilities based on market value in the
principal market, or in the absence of a principal market, in the most advantageous market price for
the related asset or liability. The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
The principal market is the market in which transactions for an asset or liability take place with the
greatest volume and frequency. The most advantageous market is the market which maximizes the
value that could be received from selling the asset and minimizes the value which is needed to be
paid in order to transfer a liability, considering the effect of transport costs and transaction costs
both.
If the active market of the financial asset or financial liability exists, the Company shall measure the
fair value using the quoted price in the active market. If the active market of the financial
instrument is not available, the Company shall measure the fair value using valuation techniques.
A fair value measurement of a non-financial asset takes into account a market participant’s ability
to generate economic benefits by using the asset in its highest and best use or by selling it to another
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market participant that would use the asset in its highest and best use.
Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, including the market approach, the income
approach and the cost approach. The Company shall use valuation techniques consistent with one or
more of those approaches to measure fair value. If multiple valuation techniques are used to
measure fair value, the results shall be evaluated considering the reasonableness of the range of
values indicated by those results. A fair value measurement is the point within that range that is
most representative of fair value in the circumstances.
When using the valuation technique, the Company shall give the priority to relevant observable
inputs. The unobservable inputs can only be used when relevant observable inputs is not available
or practically would not be obtained. Observable inputs refer to the information which is available
from market and reflects the assumptions that market participants would use when pricing the asset
or liability. Unobservable Inputs refer to the information which is not available from market and it
has to be developed using the best information available in the circumstances from the assumptions
that market participants would use when pricing the asset or liability.
Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs to
valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority
to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3 inputs. Level 1
inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
3.12 Receivables
Following accounts receivable accounting standard is applicable for year 2018 and before.
(a) Receivable with individually significant balance and recognised provision for bad debts
individually
(i) Assessment basis or standard of amount individually significant
The amount of accounts receivable over RMB 2 million and other receivables over RMB 2 million
is assessed individually significant.
(ii) Method of provision for bad debts of receivables which are individually significant
For accounts receivable with individually significant amount, the Company shall test impairment
separately. After separate impairment test, if there is objective evidence of impairment, the
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impairment loss of receivables shall be recognised at the difference between the individual
receivable’s carrying amount and the present value of estimated future cash flows and the provision
for bad debts shall be recognised accordingly.
If the difference between expected future cash flows and the present value of short-term accounts
receivable is very small, when determine the relevant impairment loss, the expected future cash
flows may not be discounted.
(b) Receivables with provision for bad debts recognised on the basis of similar credit risk
characteristics
Group 1: Except for the existence of objective evidence that the Company will not be able to
recover the amount in accordance with the original terms of receivables, no provision for bad debts
shall be made for the transactions between companies within the scope of the consolidated
statement of receivables.
Group 2 For accounts receivables with individually significant amount but with no impairment
indicated after a separate test, combined with the accounts receivables with individually
insignificant amount, the Company use aging as the credit risk characteristic.
Provision method for bad debt provision by group 2: aging analysis method
Provision ratio for bad debts on the basis of aging analysis:
Provision ratio for accounts Provision ratio for other
Aging
receivable% receivables%
Within1year(including1year)
Including:1-6months 1.00 1.00
7-12months 5.00 5.00
1-2years 10.00 10.00
2-3years 50.00 50.00
Over 3 years 100.00 100.00
(c) Receivables that are individually insignificant but with bad debt provided on an
individual basis
For receivables that are individually insignificant with objective evidence of impairment, if the
provision for bad debts based on the aging analysis method cannot reflect the actual situation, they
shall be separately assessed for impairment and recognise the impairment losses. Impairment loss
shall be recognised at the difference between the carrying amount and the present value of
estimated future cash flows and the provision for bad debts shall be recognised accordingly.
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3.13 Inventories
(a) Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business, in the
process of production for such sale, or in the form of materials or supplies to be consumed in the
production process or in the rendering of services, including raw materials, work in progress,
semi-finished goods, finished goods, goods in stock, turnover material, etc.
(b) Measurement method of cost of inventories sold or used
Inventories are initially measured at the actual cost. Cost of inventories includes purchase cost,
processing cost, and other costs. Cost of the issue is measured using the weighted average method.
(c) Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least once a year,
and surplus or losses of inventory stocktaking shall be included in current profit and loss.
(d) Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over net
realizable value of the inventories is recognised as provision for impairment of inventory, and
recognised in current profit or loss.
Net realizable value of the inventory should be determined on the basis of reliable evidence
obtained, and factors such as purpose of holding the inventory and impact of post balance sheet
event shall be considered.
(i) In normal operation process, finished goods, products and materials for direct sale, their net
realizable values are determined at estimated selling prices less estimated selling expenses and
relevant taxes and surcharges; for inventories held to execute sales contract or service contract, their
net realizable values are calculated on the basis of contract price. If the quantities of inventories
specified in sales contracts are less than the quantities held by the Company, the net realizable value
of the excess portion of inventories shall be based on general selling prices. Net realizable value of
materials held for sale shall be measured based on market price.
(ii) For materials in stock need to be processed, in the ordinary course of production and business,
net realisable value is determined at the estimated selling price less the estimated costs of
completion, the estimated selling expenses and relevant taxes. If the net realisable value of the
finished products produced by such materials is higher than the cost, the materials shall be
measured at cost; if a decline in the price of materials indicates that the cost of the finished products
exceeds its net realisable value, the materials are measured at net realisable value and differences
shall be recognised at the provision for impairment.
(iii) Provisions for inventory impairment are generally determined on an individual basis. For
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inventories with large quantity and low unit price, the provisions for inventory impairment are
determined on a category basis.
(iv) If any factor rendering write-downs of the inventories has been eliminated at the reporting date,
the amounts written down are recovered and reversed to the extent of the inventory impairment,
which has been provided for. The reversal shall be included in profit or loss.
(e) Amortisation method of low-value consumables
Low-value consumables: One-off writing off method is adopted
Package material: One-off writing off method is adopted
3.14 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor has control of, or
significant influence over, an investee, as well as equity investments in joint ventures. Associates of
the Company are those entities over which the Company has significant influence.
(a) Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement, and the arranged
relevant activity must be decided under unanimous consent of the parties sharing control. In
assessing whether the Company has joint control of an arrangement, the Company shall assess first
whether all the parties, or a group of the parties, control the arrangement. When all the parties, or a
group of the parties, considered collectively, are able to direct the activities of the arrangement, the
parties control the arrangement collectively. Then the Company shall assess whether decisions
about the relevant activities require the unanimous consent of the parties that collectively control
the arrangement. If two or more groups of the parties could control the arrangement collectively, it
shall not be assessed as have joint control of the arrangement. When assessing the joint control, the
protective rights are not considered.
Significant influence is the power to participate in the financial and operating policy decisions of
the investee but is not control or joint control of those policies. In determination of significant
influence over an investee, the Company should consider not only the existing voting rights directly
or indirectly held but also the effect of potential voting rights held by the Company and other
entities that could be currently exercised or converted, including the effect of share warrants, share
options and convertible corporate bonds that issued by the investee and could be converted in
current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting power of
the investee, it is presumed that the Company has significant influence of the investee, unless it can
be clearly demonstrated that in such circumstance, the Company cannot participate in the
decision-making in the production and operating of the investee.
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(b) Determination of initial investment cost
(i) Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control, if the Company makes
payment in cash, transfers non-cash assets or bears liabilities as the consideration for the business
combination, the share of carrying amount of the owners’ equity of the acquiree in the consolidated
financial statements of the ultimate controlling party is recognised as the initial cost of the
long-term equity investment on the combination date. The difference between the initial investment
cost and the carrying amount of cash paid, non-cash assets transferred and liabilities assumed shall
be adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributed
profit shall be offset in turn.
For a business combination involving enterprises under common control, if the Company issues
equity securities as the consideration for the business combination, the share of carrying amount of
the owners’ equity of the acquiree in the consolidated financial statements of the ultimate
controlling party is recognised as the initial cost of the long-term equity investment on the
combination date. The total par value of the shares issued is recognised as the share capital. The
difference between the initial investment cost and the carrying amount of the total par value of the
shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be
offset, undistributed profit shall be offset in turn.
For business combination not under common control, the assets paid, liabilities incurred or assumed
and the fair value of equity securities issued to obtain the control of the acquiree at the acquisition
date shall be determined as the cost of the business combination and recognised as the initial cost of
the long-term equity investment. The audit, legal, valuation and advisory fees, other intermediary
fees, and other relevant general administrative costs incurred for the business combination, shall be
recognised in profit or loss as incurred.
(ii) Long-term equity investments acquired not through the business combination, the investment
cost shall be determined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is the actually paid
purchase cost, including the expenses, taxes and other necessary expenditures directly related to the
acquisition of long-term equity investments.
For long-term equity investments acquired through issuance of equity securities, the initial cost is
the fair value of the issued equity securities.
For the long-term equity investments obtained through exchange of non-monetary assets, if the
exchange has commercial substance, and the fair values of assets traded out and traded in can be
measured reliably, the initial cost of long-term equity investment traded in with non-monetary
assets are determined based on the fair values of the assets traded out together with relevant taxes.
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Difference between fair value and book value of the assets traded out is recorded in current profit or
loss. If the exchange of non-monetary assets does not meet the above criterion, the book value of
the assets traded out and relevant taxes are recognised as the initial investment cost.
For long-term equity investment acquired through debt restructuring, the initial cost is determined
based on the fair value of the equity obtained and the difference between initial investment cost and
carrying amount of debts shall be recorded in current profit or loss.
(c) Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control shall be
accounted for at cost method. Long-term equity investment to a joint venture or an associate shall
be accounted for at equity method.
(i) Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment shall be
adjusted when additional amount is invested or a part of it is withdrawn. The Company recognises
its share of cash dividends or profits which have been declared to distribute by the investee as
current investment income.
(ii) Equity method
If the initial cost of the investment is in excess of the share of the fair value of the net identifiable
assets in the investee at the date of investment, the difference shall not be adjusted to the initial cost
of long-term equity investment; if the initial cost of the investment is in short of the share of the fair
value of the net identifiable assets in the investee at the date investment, the difference shall be
included in the current profit or loss and the initial cost of the long-term equity investment shall be
adjusted accordingly.
The Company recognises the share of the investee’s net profits or losses, as well as its share of the
investee’s other comprehensive income, as investment income or losses and other comprehensive
income respectively, and adjusts the carrying amount of the investment accordingly. The carrying
amount of the investment shall be reduced by the share of any profit or cash dividends declared to
distribute by the investee. The investor’s share of the investee’s owners’ equity changes, other than
those arising from the investee’s net profit or loss, other comprehensive income or profit
distribution, shall be recognised in the investor’s equity, and the carrying amount of the long-term
equity investment shall be adjusted accordingly. The Company recognises its share of the investee’s
net profits or losses after making appropriate adjustments of investee’s net profit based on the fair
values of the investee’s identifiable net assets at the investment date. If the accounting policy and
accounting period adopted by the investee is not in consistency with the Company, the financial
statements of the investee shall be adjusted according to the Company’s accounting policies and
accounting period, based on which, investment income or loss and other comprehensive income,
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etc., shall be adjusted. The unrealized profits or losses resulting from inter-company transactions
between the company and its associate or joint venture are eliminated in proportion to the
company’s equity interest in the investee, based on which investment income or losses shall be
recognised. Any losses resulting from inter-company transactions between the investor and the
investee, which belong to asset impairment, shall be recognised in full.
Where the Company obtains the power of joint control or significant influence, but not control, over
the investee, due to additional investment or other reason, the relevant long-term equity investment
shall be accounted for by using the equity method, initial cost of which shall be the fair value of the
original investment plus the additional investment. Where the original investment is classified as
available-for sale investment, difference between its fair value and the carrying value, in addition to
the cumulative changes in fair value previously recorded in other comprehensive income, shall be
recogised into current profit or loss using equity method.
If the Company loses the joint control or significant influence of the investee for some reasons such
as disposal of equity investment, the retained interest shall be measured at fair value and the
difference between the carrying amount and the fair value at the date of loss the joint control or
significant influence shall be recognised in profit or loss. When the Company discontinues the use
of the equity method, the Company shall account for all amounts previously recognised in other
comprehensive income under equity method in relation to that investment on the same basis as
would have been required if the investee had directly disposed of the related assets or liabilities.
(d) Equity investment classified as held for sale
Any retained interest in the equity investment not classified as held for sale, shall be accounted for
using equity method.
When an equity investment in an associate or a joint venture previously classified as held for sale
no longer meets the criteria to be so classified, it shall be accounted for using the equity method
retrospectively as from the date of its classification as held for sale. Financial statements for the
periods since classification as held for sale shall be amended accordingly.
(f) Impairment testing and provision for impairment loss
For investment in subsidiaries, associates or a joint venture, provision for impairment loss please
refer to Note 3.20.
3.15 Investment Properties
(a) Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both, including:
(i)Land use right leased out
(ii)Land held for transfer upon appreciation
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(iii)Buildings leased out
(b) The measurement model of investment property
The Company adopts the cost model for subsequent measurement of investment properties. For
provision for impairment please refer to Note 3.20.
The Company calculates the depreciation or amortization based on the net amount of investment
property cost less the accumulated impairment and the net residual value using straight-line method.
3.16 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing
commodities, rendering services, renting or business management with useful lives exceeding one
year.
(a) Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the following
criteria are satisfied:
(i) It is probable that the economic benefits relating to the fixed assets will flow into the Company;
(ii) The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition
criteria of fixed assets are satisfied, otherwise the expenditure shall be recorded in current profit or
loss when incurred.
(b) Depreciation methods of fixed assets
The Company begins to depreciate the fixed asset from the next month after it is available for
intended use using the straight-line-method. The estimated useful life and annual depreciation rates
which are determined according to the categories, estimated economic useful lives and estimated
net residual rates of fixed assets are listed as followings:
Estimated useful Residual Annual depreciation
Category Depreciation method
life (year) rates (%) rates (%)
Buildings and
straight-line-method 8.00-35.00 3.00-5.00 2.70-12.10
constructions
Machinery equipment straight-line-method 5.00-10.00 3.00-5.00 9.50-19.40
Vehicles straight-line-method 4.00 3.00 24.25
Office equipment and
straight-line-method 3.00 3.00 32.33
others
For the fixed assets with impairment provided, the impairment provision should be excluded from
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the cost when calculating depreciation.
At the end of reporting period, the Company shall review the useful life, estimated net residual
value and depreciation method of the fixed assets. Estimated useful life of the fixed assets shall be
adjusted if it is changed compared to the original estimation.
(c) Recognition criteria, valuation and depreciation methods of fixed assets obtained through
a finance lease
If the entire risk and rewards related to the leased assets have been substantially transferred, the
Company shall recognise the lease as a finance lease. The cost of the fixed assets obtained through a
finance lease is determined at the lower of the fair value of the leased assets and the present value of
the minimum lease payment on the date of the lease. The fixed assets obtained by a finance lease
are depreciated in the method which is consistent with the self-owned fixed assets of the Company.
For fixed assets obtained through a finance lease, if it is reasonably certain that the ownership of the
leased assets will be transferred to the lessee by the end of the lease term, they shall be depreciated
over their remaining useful lives; otherwise, the leased assets shall be depreciated over the shorter
of the lease terms or their remaining useful lives.
3.17 Construction in Progress
(a) Classification of construction in progress
Construction in progress is measured on an individual project basis.
(b) Recognition criteria and timing of transfer from construction in progress to fixed assets
The initial book values of the fixed assets are stated at total expenditures incurred before they are
ready for their intended use, including construction costs, original price of machinery equipment,
other necessary expenses incurred to bring the construction in progress to get ready for its intended
use and borrowing costs of the specific loan for the construction or the proportion of the general
loan used for the constructions incurred before they are ready for their intended use. The
construction in progress shall be transferred to fixed asset when the installation or construction is
ready for the intended use. For construction in progress that has been ready for their intended use
but relevant budgets for the completion of projects have not been completed, the estimated values of
project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, and
depreciation should be provided according to relevant policies of the Company when the fixed
assets are ready for intended use. After the completion of budgets needed for the completion of
projects, the estimated values should be substituted by actual costs, but depreciation already
provided is not adjusted.
3.18 Borrowing Costs
(a) Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the acquisition,
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construction or production of qualifying assets when meet the following conditions:
(i) Expenditures for the asset are being incurred;
(ii) Borrowing costs are being incurred, and;
(iii) Acquisition, construction or production activities that are necessary to prepare the assets for
their intended use or sale are in progress.
Other borrowing cost, discounts or premiums on borrowings and exchange differences on foreign
currency borrowings shall be recognized into current profit or loss when incurred.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction
or production of a qualifying asset is interrupted abnormally and the interruption is for a continuous
period of more than 3 months.
Capitalization of such borrowing costs ceases when the qualifying assets being acquired,
constructed or produced become ready for their intended use or sale. The expenditure incurred
subsequently shall be recognised as expenses when incurred.
(b) Capitalization rate and measurement of capitalized amounts of borrowing costs
When funds are borrowed specifically for purchase, construction or manufacturing of assets eligible
for capitalization, the Company shall determine the amount of borrowing costs eligible for
capitalisation as the actual borrowing costs incurred on that borrowing during the period less any
interest income on bank deposit or investment income on the temporary investment of those
borrowings.
Where funds allocated for purchase, construction or manufacturing of assets eligible for
capitalization are part of a general borrowing, the eligible amounts are determined by the
weighted-average of the cumulative capital expenditures in excess of the specific borrowing
multiplied by the general borrowing capitalization rate. The capitalization rate will be the weighted
average of the borrowing costs applicable to the general borrowing.
3.19 Intangible Assets
(a) Measurement method of intangible assets
Intangible assets are recognised at actual cost at acquisition.
(b) The useful life and amortisation of intangible assets
(i) The estimated useful lives of the intangible assets with finite useful lives are as follows:
Category Estimated useful life Basis
Land use right 50 years Legal life
Patent right 10 years The service life is determined by reference
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to the period that can bring economic
benefits to the Company
The service life is determined by reference
Software 3-5 years to the period that can bring economic
benefits to the Company
The service life is determined by reference
Trademark 10 years to the period that can bring economic
benefits to the Company
For intangible assets with finite useful life, the estimated useful life and amortisation method are
reviewed annually at the end of each reporting period and adjusted when necessary. No change
incurred in current year in the estimated useful life and amortisation method upon review.
(ii) Assets of which the period to bring economic benefits to the Company are unforeseeable are
regarded as intangible assets with indefinite useful lives. The Company reassesses the useful lives
of those assets at every year end. If the useful lives of those assets are still indefinite, impairment
test should be performed on those assets at the balance sheet date.
(iii) Amortisation of the intangible assets
For intangible assets with finite useful lives, their useful lives should be determined upon their
acquisition and systematically amortised on a straight-line basis over the useful life. The
amortisation amount shall be recognized into current profit or loss according to the beneficial items.
The amount to be amortised is cost deducting residual value. For intangible assets which has
impaired, the cumulative impairment provision shall be deducted as well. The residual value of an
intangible asset with a finite useful life shall be assumed to be zero unless: there is a commitment
by a third party to purchase the asset at the end of its useful life; or there is an active market for the
asset and residual value can be determined by reference to that market; and it is probable that such a
market will exist at the end of the asset’s useful life.
Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the
useful lives of those assets at every year end. If there is evidence to indicate that the useful lives of
those assets become finite, the useful lives shall be estimated and the intangible assets shall be
amortised systematically and reasonably within the estimated useful lives.
(c) Criteria of classifying expenditures on internal research and development projects into
research phase and development phase
Preparation activities related to materials and other relevant aspects undertaken by the Company for
the purpose of further development shall be treated as research phase. Expenditures incurred during
the research phase of internal research and development projects shall be recognised in profit or loss
when incurred.
Development activities after the research phase of the Company shall be treated as development
phase.
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(d) Criteria for capitalization of qualifying expenditures during the development phase
Expenditures arising from development phase on internal research and development projects shall
be recognised as intangible assets only if all of the following conditions have been met:
(i) Technical feasibility of completing the intangible assets so that they will be available for use or
sale;
(ii) Its intention to complete the intangible asset and use or sell it;
(iii) The method that the intangible assets generate economic benefits, including the Company can
demonstrate the existence of a market for the output of the intangible assets or the intangible assets
themselves or, if it is to be used internally, the usefulness of the intangible assets;
(iv) The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
(v) Its ability to measure reliably the expenditure attributable to the intangible asset.
3.20 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures,
investment properties, fixed assets and constructions in progress subsequently measured at cost,
intangible assets, shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any indication that an
asset may be impaired. If any such indication exists, the Company shall estimate the recoverable
amount of the asset and test for impairment. Irrespective of whether there is any indication of
impairment, the Company shall test for impairment of goodwill acquired in a business combination,
intangible assets with an indefinite useful life or intangible assets not yet available for use annually.
The recoverable amounts of the long-term assets are the higher of their fair values less costs to
dispose and the present values of the estimated future cash flows of the long-term assets. The
Company estimate the recoverable amounts on an individual basis. If it is difficult to estimate the
recoverable amount of the individual asset, the Company estimates the recoverable amount of the
groups of assets that the individual asset belongs to. Identification of an group of asset is based on
whether the cash inflows from it are largely independent of the cash inflows from other assets or
groups of assets.
If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying
amount, the carrying amount of the asset shall be reduced to its recoverable amount and the
provision for impairment loss shall be recognised accordingly.
For the purpose of impairment testing, goodwill acquired in a business combination shall, from the
acquisition date, be allocated to relevant group of assets based on reasonable method; if it is
difficult to allocate to relevant group of assets, good will shall be allocated to relevant combination
of asset groups. The relevant group of assets or combination of asset groups is a group of assets or
combination of asset groups that is benefit from the synergies of the business combination and is
not larger than the reporting segment determined by the Company.
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When test for impairment, if there is an indication that relevant group of assets or combination of
asset groups may be impaired, impairment testing for group of assets or combination of asset groups
excluding goodwill shall be conducted first, and calculate the recoverable amount and recognize the
impairment loss. Then the group of assets or combination of asset groups including goodwill shall
be tested for impairment, by comparing the carrying amount with its recoverable amount. If the
recoverable amount is less than the carrying amount, the Company shall recognise the impairment
loss.
The mentioned impairment loss will not be reversed in subsequent accounting period once it had
been recognised.
3.21 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be amortised over
current and subsequent periods with the amortisation period exceeding one year. Long-term
deferred expenses are evenly amortised over the beneficial period
3.22 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in
exchange for service rendered by employees or for the termination of employment relationship.
Employee benefits include short-term employee benefits, post-employment benefits, termination
benefits and other long-term employee benefits. Benefits provided to an employee's spouse,
children, dependents, family members of decreased employees, or other beneficiaries are also
employee benefits.
According to liquidity, employee benefits are presented in the statement of financial position as
“Employee benefits payable” and “Long-term employee benefits payable”.
(a) Short-term employee benefits
(i) Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service, actually
occurred short-term employee benefits as a liability, with a corresponding charge to current profit
except for those recognised as capital expenditure based on the requirement of accounting
standards.
(ii) Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred into
current profit or loss or related capital expenditure. Employee welfare shall be measured at fair
value as it is a non-monetary benefit.
(iii) Social insurance such as medical insurance, work injury insurance and maternity insurance,
housing funds, labor union fund and employee education fund
Payments made by the Company of social insurance for employees, such as medical insurance,
work injury insurance and maternity insurance, payments of housing funds, and labor union fund
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and employee education fund accrued in accordance with relevant requirements, in the accounting
period in which employees provide services, is calculated according to required accrual bases and
accrual ratio in determining the amount of employee benefits and the related liabilities, which shall
be recognised in current profit or loss or the cost of relevant asset.
(iv) Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid
absences when the employees render service that increases their entitlement to future paid absences.
The additional payable amounts shall be measured at the expected additional payments as a result of
the unused entitlement that has accumulated. The Company shall recognise relevant employee
benefit of non-accumulating paid absences when the absences actually occurred.
(v)Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing plan
when all of the following conditions are satisfied:
(i) The Company has a present legal or constructive obligation to make such payments as a result of
past events; and
(ii) A reliable estimate of the amounts of employee benefits obligation arising from the profit-
sharing plan can be made.
(b) Post-employment benefits
(i) Defined contribution plans
The Company shall recognise, in the accounting period in which an employee provides service, the
contribution payable to a defined contribution plan as a liability, with a corresponding charge to the
current profit or loss or the cost of a relevant asset.
When contributions to a defined contribution plan are not expected to be settled wholly before
twelve months after the end of the annual reporting period in which the employees render the
related service, they shall be discounted using relevant discount rate (market yields at the end of the
reporting period on high quality corporate bonds in active market or government bonds with the
currency and term which shall be consistent with the currency and estimated term of the defined
contribution obligations) to measure employee benefits payable.
(ii) Defined benefit plan
The present value of defined benefit obligation and current service costs
Based on the expected accumulative welfare unit method, the Company shall make estimates about
demographic variables and financial variables in adopting the unbiased and consistent actuarial
assumptions and measure defined benefit obligation, and determine the obligation period. The
Company shall discount the obligation arising from defined benefit plan using relevant discount rate
(market yields at the end of the reporting period on high quality corporate bonds in active market or
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government bonds with the currency and term which shall be consistent with the currency and
estimated term of the defined benefit obligations) in order to determine the present value of the
defined benefit obligation and the current service cost.
The net defined benefit liability or asset
The net defined benefit liability (asset) is the deficit or surplus recognised as the present value of
the defined benefit obligation less the fair value of plan assets (if any).
When the Company has a surplus in a defined benefit plan, it shall measure the net defined benefit
asset at the lower of the surplus in the defined benefit plan and the asset ceiling.
The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost, past service cost and any gain or loss on settlement.
Other service cost shall be recognised in profit or loss unless accounting standards require or allow
the inclusion of current service cost within the cost of assets.
Net interest on the net defined benefit liability (asset) comprising interest income on plan assets,
interest cost on the defined benefit obligation and interest on the effect of the asset ceiling, shall be
included in profit or loss.
The amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the remeasurements
including:
Actuarial gains and losses, the changes in the present value of the defined benefit obligation
resulting from experience adjustments or the effects of changes in actuarial assumptions;
Return on plan assets, excluding amounts included in net interest on the net defined benefit
liability or asset;
Any change in the effect of the asset ceiling, excluding amounts included in net interest on the
net defined benefit liability (asset).
Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive
income shall not be reclassified to profit or loss in a subsequent period. However, the Company
may transfer those amounts recognised in other comprehensive income within equity.
(c) Termination benefits
The Company providing termination benefits to employees shall recognise an employee benefits
liability for termination benefits, with a corresponding charge to the profit or loss of the reporting
period, at the earlier of the following dates:
(i) When the Company cannot unilaterally withdraw the offer of termination benefits because of
an employment termination plan or a curtailment proposal.
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(ii) When the Company recognises costs or expenses related to a restructuring that involves the
payment of termination benefits.
If the termination benefits are not expected to be settled wholly before twelve months after the end
of the annual reporting period, the Company shall discount the termination benefits using relevant
discount rate (market yields at the end of the reporting period on high quality corporate bonds in
active market or government bonds with the currency and term which shall be consistent with the
currency and estimated term of the defined benefit obligations) to measure the employee benefits.
(d) Other long-term employee benefits
(i) Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees satisfies the
conditions for classifying as a defined contribution plan, all those benefits payable shall be
accounted for as employee benefits payable at their discounted value.
(ii) Meet the conditions of the defined benefit plan
At the end of the reporting period, the Company recognised the cost of employee benefit from other
long-term employee benefits as the following components:
Service costs;
Net interest cost for net liability or asset of other long-term employee benefits
Changes resulting from the remeasurements of the net liability or asset of other long-term
employee benefits
In order to simplify the accounting treatment, the net amount of above items shall be recognised in
profit or loss or relevant cost of assets.
3.23 Estimated Liabilities
(a) Recognition criteria of estimated liabilities
The Company recognises the estimated liabilities when obligations related to contingencies satisfy
all the following conditions:
(i) That obligation is a current obligation of the Company;
(ii) It is likely to cause any economic benefit to flow out of the Company as a result of performance
of the obligation; and
(iii) The amount of the obligation can be measured reliably.
(b) Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of expenses
required for the performance of relevant present obligations. The Company, when determining the
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best estimate, has had a comprehensive consideration of risks with respect to contingencies,
uncertainties and the time value of money. The carrying amount of the estimated liabilities shall be
reviewed at the end of every reporting period. If conclusive evidences indicate that the carrying
amount fails to be the best estimate of the estimated liabilities, the carrying amount shall be
adjusted based on the updated best estimate.
3.24 Revenue
(a) Revenue from sale of goods
Revenue from sale of goods shall be recognised when the following criteria are satisfied:
(i) Significant risks and rewards related to ownership of the goods have been transferred to the
buyer;
(ii) The Company retains neither continuous management rights associated with ownership of the
goods sold nor effective control over the goods sold;
(iii) Relevant amount of revenue can be measured reliably;
(iv) It is probable that the economic benefits associated with the transaction will flow into the
Company; and
(v) Relevant amount of cost incurred or to be incurred can be measured reliably.
Revenue arising from domestic sales of goods is recognized when goods are dispatched and
delivered to the buyer, when significant risks and rewards attached to the ownership of the goods
sold are passed to the buyer, when neither continual involvement in the rights normally associated
with the ownership of the goods sold nor effective control over the goods controls are retained,
when revenue arising from the goods sold is reliably measurable, when inflow of future economic
benefits is probable, and when cost incurred or to be incurred associated with the goods sold is
reliably measurable. Revenue arising from non-domestic sales of goods is recognized when goods
are loaded on board and when the export clearance with the custom is completed.
(b) Revenue from rendering of services
When the outcome of rendering of services can be estimated reliably at the balance sheet date,
revenue associated with the transaction is recognised using the percentage of completion method.
Percentage of completion is determined based on the measurement of the work completed
The outcome of rendering of services can be estimated reliably when all of the following conditions
are satisfied: i) the amount of revenue can be measured reliably; ii) it is probable that the associated
economic benefits will flow to the Company; iii) the percentage of completion of the transaction
can be measured reliably; iv) the costs incurred and to be incurred for the transaction can be
measured reliably.
The Company shall determine the total revenue from rendering of services based on the received or
receivable price stipulated in the contract or agreement, unless the received or receivable amount as
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stipulated in the contract or agreement is unfair. At the end of the reporting period, the Company
shall recognise the revenue from rendering of the services in current period, based on the amount of
multiplying the total amount of revenues from rendering of the services by the percentage of
completion then deducting the accumulative revenues from rendering of the services that have been
recognised in the previous accounting periods. At the same time, the Company shall recognise the
current cost incurred for rendering of the services based on the amount of multiplying the total
estimated cost for rendering of the services by the percentage of completion and then deducting the
accumulative costs from rendering of the services that have been recognised in the previous
accounting periods.
If the outcome of rendering of services cannot be estimated reliably at the balance sheet date, the
accounting treatment shall be based on the following circumstances, respectively:
(i) When the costs incurred are expected to be recovered, revenue shall be recognised to the extent
of costs incurred and charge an equivalent amount of cost to the profit and loss;
(ii) When the costs incurred are not expected to be recovered, revenue shall not be recognised and
the costs incurred are recognised into current profit or loss
(c) Revenue from alienating the right to use assets
When it is probable that the economic benefits associated with the transaction will flow into the
Company and amount of revenue can be measured reliably, the Company shall recognise the
amount of revenue from the alienating of right to use assets based on the following circumstances,
respectively:
(i) Interest revenue should be calculated in accordance with the period for which the enterprise's
cash is used by others and the effective interest rate; or
(ii) The amount of royalty revenue should be calculated in accordance with the period and method
of charging as stipulated in the relevant contract or agreement.
3.25 Government Grants
(a) Recognition of government grants
A government grant shall not be recgonised until there is reasonable assurance that:
(i) The Company will comply with the conditions attaching to them; and
(ii) The grants will be received.
(b) Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable, and
non-monetary grants from the government shall be measured at their fair value or at a nominal
value of RMB 1.00 when reliable fair value is not available.
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(c) Accounting for government grants
(i) Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the
Company used for purchase or construction, or forming the long-term assets by other ways.
Government grants pertinent to assets shall be recognised as deferred income, and should be
recognised in profit or loss on a systematic basis over the useful lives of the relevant assets. Grants
measured at their nominal value shall be directly recognised in profit or loss of the period when the
grants are received. When the relevant assets are sold, transferred, written off or damaged before the
assets are terminated, the remaining deferred income shall be transferred into profit or loss of the
period of disposing relevant assets.
(ii) Government grants related to income
Government grants other than related to assets are classified as government grants related to income.
Government grants related to income are accounted for in accordance with the following principles:
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses in future periods, such government grants shall be recognised as deferred income
and included into profit or loss in the same period as the relevant expenses or losses are recognised;
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses incurred, such government grants are directly recognised into current profit or
loss
For government grants comprised of part related to assets as well as part related to income, each
part is accounted for separately; if it is difficult to identify different part, the government grants are
accounted for as government grants related to income as a whole.
Government grants related to daily operation activities are recognised in other income in
accordance with the nature of the activities, and government grants irrelevant to daily operation
activities are recognised in non-operating income.
(iii) Loan interest subsidy
When loan interest subsidy is allocated to the bank, and the bank provides a loan at lower-market
rate of interest to the Company, the loan is recognised at the actual received amount, and the interest
expense is calculated based on the principal of the loan and the lower-market rate of interest.
When loan interest subsidy is directly allocated to the Company, the subsidy shall be recognised as
offsetting the relevant borrowing cost.
(iv) Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of the
asset if the book value of the asset has been written down, or reducing the balance of relevant
~ 152 ~
deferred income if deferred income balance exists, any excess will be recognised into current profit
or loss; or directly recognised into current profit or loss for other circumstances.
3.26 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in the
statement of financial position and its tax base at the balance sheet date. The Company recognise
and measure the effect of taxable temporary differences and deductible temporary differences on
income tax as deferred tax liabilities or deferred tax assets using liability method. Deferred tax
assets and deferred tax liabilities shall not be discounted.
(a) Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the carryforward of
unused tax losses and the carryforward of unused tax credits to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, the carryforward
of unused tax losses and the carryforward of unused tax credits can be utilised at the tax rates that
are expected to apply to the period when the asset is realised, unless the deferred tax asset arises
from the initial recognition of an asset or liability in a transaction that:
(i) Is not a business combination; and
(ii) At the time of the transaction, affects neither accounting profit nor taxable profit (tax loss)
The Company shall recognise a deferred tax asset for all deductible temporary differences arising
from investments in subsidiaries, associates and joint ventures, only to the extent that, it is probable
that:
(i) The temporary difference will reverse in the foreseeable future; and
(ii) Taxable profit will be available against which the deductible temporary difference can be
utilised.
At the end of each reporting period, if there is sufficient evidence that it is probable that taxable
profit will be available against which the deductible temporary difference can be utilized, the
Company recognises a previously unrecognised deferred tax asset.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period.
The Company shall reduce the carrying amount of a deferred tax asset to the extent that it is no
longer probable that sufficient taxable profit will be available to allow the benefit of part or all of
that deferred tax asset to be utilised. Any such reduction shall be reversed to the extent that it
becomes probable that sufficient taxable profit will be available.
(b) Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that
are expected to apply to the period when the liability is settled.
~ 153 ~
(i) No deferred tax liability shall be recognised for taxable temporary differences arising from:
The initial recognition of goodwill; or
The initial recognition of an asset or liability in a transaction which: is not a business
combination; and at the time of the transaction, affects neither accounting profit nor taxable profit
(tax loss)
(ii) An entity shall recognise a deferred tax liability for all taxable temporary differences associated
with investments in subsidiaries, associates, and joint ventures, except to the extent that both of the
following conditions are satisfied:
The Company is able to control the timing of the reversal of the temporary difference; and
It is probable that the temporary difference will not reverse in the foreseeable future.
(c) Recognition of deferred tax liabilities or assets involved in special transactions or events
(i) Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a business
combination not under common control, a deferred tax liability or a deferred tax asset shall be
recognised, and simultaneously, goodwill recognised in the business combination shall be adjusted
based on relevant deferred tax expense (income).
(ii) Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be
recognised in equity. Such items include: other comprehensive income generated from fair value
fluctuation of available for sale investments; an adjustment to the opening balance of retained
earnings resulting from either a change in accounting policy that is applied retrospectively or the
correction of a prior period (significant) error; amounts arising on initial recognition of the equity
component of a compound financial instrument that contains both liability and equity component.
(iii) Unused tax losses and unused tax credits
Unsused tax losses and unused tax credits generated from daily operation of the Company itself
Deductible loss refers to the loss calculated and permitted according to the requirement of tax law
that can be offset against taxable income in future periods. The criteria for recognising deferred tax
assets arising from the carryforward of unused tax losses and tax credits are the same as the criteria
for recognising deferred tax assets arising from deductible temporary differences. The Company
recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that
there is convincing other evidence that sufficient taxable profit will be available against which the
unused tax losses or unused tax credits can be utilised by the Company. Income taxes in current
profit or loss shall be deducted as well.
~ 154 ~
Unsused tax losses and unused tax credits arising from a business combination
Under a business combination, the acquiree’s deductible temporary differences which do not satisfy
the criteria at the acquisition date for recognition of deferred tax asset shall not be recognised.
Within 12 months after the acquisition date, if new information regarding the facts and
circumstances exists at the acquisition date and the economic benefit of the acquiree’s deductible
temporary differences at the acquisition is expected to be realised, the Company shall recognise
acquired deferred tax benefits and reduce the carrying amount of any goodwill related to this
acquisition. If goodwill is reduced to zero, any remaining deferred tax benefits shall be recognised
in profit or loss. All other acquired deferred tax benefits realised shall be recognised in profit or
loss.
(iv) Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between carrying value
of the assets and liabilities in the consolidated financial statements and their taxable bases is
generated from elimination of inter-company unrealized profit or loss, deferred tax assets or
deferred tax liabilities shall be recognised in the consolidated financial statements, and income taxes
expense in current profit or loss shall be adjusted as well except for deferred tax related to
transactions or events recognised directly in equity and business combination.
(v) Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period in
which the expenses are recognised according to the accounting standards, the Company estimates
the tax base in accordance with available information at the end of the accounting period and the
temporary difference arising from it. Deferred tax shall be recognised when criteria of recognition
are satisfied. If the amount of estimated future tax deduction exceeds the amount of the cumulative
expenses related to share-based payment recognised according to the accounting standards, the tax
effect of the excess amount shall be recognised directly in equity.
3.27 Changes in Significant Accounting Policies and Accounting Estimates
(a) Changes in accounting polices
On 30 April 2019，Ministry of Finance announced the “Notice of Revising and Issuing the Format
of Financial Statements of General Enterprises for 2019” (Caikuai [2019] No.6) and required
enterprise which adopted the new financial instrument standard but not yet adopt the new revenue
standard and new lease standard to prepare the financial statements according to the following
requirements：
In the statement of financial position, “Notes receivable and Accounts receivable” are split into
“Notes receivable” and “Accounts receivable”; “Accounts receivable financing” are added to
reflect the notes receivable and accounts receivable which measured at fair value through other
~ 155 ~
comprehensive income on balance sheet date; “Notes payable and Accounts payable” are split into
“Notes payable” and “Accounts payable”;
In the statement of comprehensive income, “Gains /(losses) from derecognition of financial assets
measured at amortised cost” are added under the “Investment income/(losses)”.
On 19 September 2019, the Ministry of Finance issued “Notice of Revising and Issuing the Format
of Consolidated Financial Statements for 2019” (Caikuai [2019] No. 16), as a complement of the
announcement Caikuai [2019] No. 6.
The Company has prepared comparative financial statements in accordance with the requirement of
Caikuai [2019] No. 6 and and Caikuai [2019] No. 16, and changed the presentation by retrospective
adjustment method.
On 31 March 2017, the Ministry of Finance issued “Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments (Revised in 2017)” (Caikuai [2017]
No. 7), “Accounting Standard for Business Enterprises No. 23 - Transfer of financial assets
(Revised in 2017) ”(Caikuai [2017] No. 8), “Accounting Standards for Business Enterprises No. 24
- Hedging (Revised in 2017)” (Caikuai [2017] No. 9). On 2 May 2017, the Ministry of Finance
issued “Accounting Standards for Business Enterprises No. 37 - Presentation of Financial
Instruments (Revised in 2017)” (Caikuai [2017] No. 14) (the above standards are collectively
referred to as the “New Financial Instruments Standards”). Domestic listed companies are required
to implement the new financial instruments standards from 1 January 2019. The Company
implemented the above mentioned new financial instrument standards on 1January 2019, and
adjusted the relevant contents of accounting policies. Details please refer to Note 3.10.
If the recognition and measurement of financial instruments before 1 January 2019 was inconsistent
with the requirements of the new financial instruments’ standards, the Company retroactively
adjusted the classification and measurement (including impairment) of the financial instruments in
accordance with the new financial instrument standards. The difference between the original
carrying amount of the financial instrument and the new carrying amount on the date of
implementation of the new financial instruments’ standards (i.e. 1 January 2019) was recognised in
retained earnings or other comprehensive income at 1 January 2019. At the same time, the company
did not adjust the comparative financial statement data.
(b) Significant changes in accounting estimates
The Company has no significant changes in accounting estimates for the reporting period.
(c) Adjustments of the financial statements at the beginning of the reporting period for the
first year adoption of new financial instruments standards.
Consolidated Financial Statements
Unit: Yuan Currency: RMB
~ 156 ~
Items 31 December 2018 1 January 2019 Adjustment
Current assets:
Cash and cash equivalents 1,705,760,865.12 1,705,760,865.12 -
Held-for-trading financial assets N/a. 2,965,016,000.42 2,965,016,000.42
Financial assets at fair value through profit or
622,892.96 N/a. -622,892.96
loss
Notes receivable 1,347,427,811.34 1,347,427,811.34 -
Accounts receivable 29,748,068.74 29,748,068.74 -
Advances to suppliers 182,558,000.75 182,558,000.75 -
Other receivables 43,342,878.22 43,342,878.22 -
Including: Interests receivable 24,923,178.08 24,923,178.08 -
Dividend receivable - -
Inventories 2,407,306,664.86 2,407,306,664.86 -
Non-current assets maturing within one year 300,000,000.00 300,000,000.00 -
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:
Available-for-sale financial assets 206,393,107.46 N/a. -206,393,107.46
Long-term equity investments 4,900,000.00 4,900,000.00 -
Investment properties 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 -
Intangible assets 742,083,609.10 742,083,609.10 -
Goodwill 478,283,495.29 478,283,495.29 -
Long-term deferred expenses 83,561,473.46 83,561,473.46 -
Deferred 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
Notes payable 349,203,413.72 349,203,413.72 -
~ 157 ~
Items 31 December 2018 1 January 2019 Adjustment
Trade payables 484,952,598.59 484,952,598.59 -
Advances from customers 1,149,143,310.48 1,149,143,310.48 -
Employee benefits 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: Interests payables - -
Dividend payables - -
Other current liabilities 295,164,745.44 295,164,745.44 -
Total current liabilities 4,300,777,316.66 4,300,777,316.66 -
Deferred income 76,636,500.55 76,636,500.55 -
Deferred tax liabilities 102,764,515.11 102,764,515.11 -
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 -
Capital reserves 1,295,405,592.25 1,295,405,592.25 -
Other comprehensive income 4,794,830.59 -- -4,794,830.59
Surplus reserves 256,902,260.27 256,902,260.27 -
Retained earnings 5,541,281,341.47 5,546,076,172.06 4,794,830.59
Total owner’s equity attributable to parent -
7,601,984,024.58 7,601,984,024.58
company
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' equity 12,509,928,449.72 12,509,928,449.72 -
Financial Statements of Parent Company
Unit: Yuan Currency: RMB
Items 31 December 2018 1 January 2019 Adjustment
Current assets:
Cash and cash equivalents 1,078,172,917.59 1,078,172,917.59 -
Held-for-trading financial assets N/a. 1,807,016,000.42 -1,807,016,000.42
~ 158 ~
Items 31 December 2018 1 January 2019 Adjustment
Financial assets at fair value through profit or
622,892.96 N/a. -622,892.96
loss
Notes receivable 1,256,336,386.34 1,256,336,386.34 -
Accounts receivable 9,385,950.54 9,385,950.54 -
Advances to suppliers 10,869,911.54 10,869,911.54 -
Other receivables 110,800,665.19 110,800,665.19 -
Including: Interests receivable - -
Dividend receivable - -
Inventories 2,125,826,967.11 2,125,826,967.11 -
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:
Available-for-sale financial assets 206,393,107.46 N/a. -206,393,107.46
Long-term equity investments 1,148,213,665.32 1,148,213,665.32 -
Investment properties 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 -
Intangible assets 189,968,142.25 189,968,142.25 -
Long-term deferred expenses 56,643,945.05 56,643,945.05 -
Deferred 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:
Notes payable 28,648,913.72 28,648,913.72 -
Trade payables 362,290,556.21 362,290,556.21 -
Advances from customers 1,123,125,892.84 1,123,125,892.84 -
Employee benefits 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 -
~ 159 ~
Items 31 December 2018 1 January 2019 Adjustment
Including: Interests payables - -
Dividend payables - -
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:
Deferred income 36,417,554.85 36,417,554.85 -
Deferred tax liabilities 4,828,737.52 4,828,737.52 -
Total non-current liabilities 41,246,292.37 41,246,292.37 -
Total liabilities 2,239,745,186.12 2,239,745,186.12 -
Owners’ equity
Share capital 503,600,000.00 503,600,000.00 -
Capital reserves 1,247,162,107.35 1,247,162,107.35 -
Other comprehensive income 4,794,830.59 - -4,794,830.59
Surplus reserves 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' equity 9,409,456,871.47 9,409,456,871.47 -
(d) Retrospective restatement of previous comparative data for the first adoption of new
financial instruments standards
(i)At 1 January 2019, the comparative statements of classification and measurement for financial
assets before and after the adoption of new financial instruments standards
Consolidated Financial Statements
31 December 2018 (Original financial instruments standard) 1 January 2019 (New financial instruments standard)
Measurement Measurement
Items Carrying amount Items Carrying amount
category category
Cash and cash Cash and cash
Amortised cost 1,705,760,865.12 Amortised cost 1,705,760,865.12
equivalents equivalents
Financial assets at fair Fair value Fair value
Held-for-trading
value through profit or through profit or 622,892.96 through profit or 622,892.96
financial assets
loss loss loss
Notes receivable Amortised cost 1,347,427,811.34 Notes receivable Amortised cost 1,347,427,811.34
~ 160 ~
31 December 2018 (Original financial instruments standard) 1 January 2019 (New financial instruments standard)
Measurement Measurement
Items Carrying amount Items Carrying amount
category category
Accounts
Accounts receivable Amortised cost 29,748,068.74 Amortised cost 29,748,068.74
receivable
Other receivables Amortised cost 43,342,878.22 Other receivables Amortised cost 43,342,878.22
Fair value
through other Fair value
Available-for-sale Held-for-trading
comprehensive 206,393,107.46 through profit or 206,393,107.46
financial assets financial assets
income (equity loss
instrument)
Fair value
Held-for-trading
through profit or 2,758,000,000.00
financial assets
Other current assets Amortised cost 3,012,478,687.20 loss
Other current
Amortised cost 254,478,687.20
assets
Other non-current Other non-current
Amortised cost 16,544,407.51 Amortised cost 16,544,407.51
assets assets
Financial Statements of Parent Company
31 December 2018 (Original financial instruments standard) 1 January 2019 (New financial instruments standard)
Measurement Measurement
Items Carrying amount Items Carrying amount
category category
Cash and cash Cash and cash
Amortised cost 1,078,172,917.59 Amortised cost 1,078,172,917.59
equivalents equivalents
Financial assets at fair Fair value Fair value
Held-for-trading
value through profit or through profit or 622,892.96 through profit 622,892.96
financial assets
loss loss or loss
Notes receivable Amortised cost 1,256,336,386.34 Notes receivable Amortised cost 1,256,336,386.34
Accounts
Accounts receivable Amortised cost 9,385,950.54 Amortised cost 9,385,950.54
receivable
Other receivables Amortised cost 110,800,665.19 Other receivables Amortised cost 110,800,665.19
~ 161 ~
31 December 2018 (Original financial instruments standard) 1 January 2019 (New financial instruments standard)
Measurement Measurement
Items Carrying amount Items Carrying amount
category category
Fair value
Held-for-trading
through profit 1,600,000,000.00
financial assets
Other current assets Amortised cost 1,764,267,968.83 or loss
Other current
Amortised cost 164,267,968.83
assets
Fair value
through other Fair value
Available-for-sale Held-for-trading
comprehensive 206,393,107.46 through profit 206,393,107.46
financial assets financial assets
income (equity or loss
instrument)
Other non-current
Other non-current assets Amortised cost 12,474,026.00 Amortised cost 12,474,026.00
assets
(ii)At 1 January 2019, adjustments for carrying amount of original financial assets according to new
financial instruments standards
Consolidated Financial Statements
Carrying amount at
Carrying amount at 1
31 December 2018
Reclassificatio January 2019 (New
Items (Original financial Remeasurement
n financial instruments
instruments
standards)
standards)
Financial assets measured at fair value through profit or loss based on new financial instruments standards
Financial assets at fair value
622,892.96 - - -
through profit or loss
Other current assets 2,758,000,000.00 - - -
Add: Transfer from
available-for-sale financial - 206,393,107.46 - -
assets
Held-for-trading financial
- - - 2,965,016,000.42
assets
Financial Statements of Parent Company
~ 162 ~
Carrying amount at
Carrying amount at 1
31 December 2018
January 2019 (New
Items (Original financial Reclassification Remeasurement
financial instruments
instruments
standards)
standards)
Financial assets measured at fair value through profit or loss based on new financial instruments standards
Financial assets at fair value
622,892.96 - - -
through profit or loss
Other current assets 1,600,000,000.00 - - -
Add: Transfer from
available-for-sale financial - 206,393,107.46
assets
Held-for-trading financial
- - - 1,807,016,000.42
assets
(iii)At 1 January 2019, adjustments for impairment provision of original financial assets according
to new financial instruments standards
Consolidated Financial Statements
Carrying amount at
Carrying amount at 1
31 December 2018
January 2019 (New
Items (Original financial Reclassification Remeasurement
financial instruments
instruments
standards)
standards)
Financial assets measured at
amortised cost
Including: Impairment
provision of notes - - - -
receivable
Impairment provision of
649,289.27 - - 649,289.27
accounts receivable
Impairment provision of
42,374,086.73 - - 42,374,086.73
other receivables
Financial Statements of Parent Company
~ 163 ~
Carrying amount at
Carrying amount at 1
31 December 2018
January 2019 (New
Items (Original financial Reclassification Remeasurement
financial instruments
instruments
standards)
standards)
Financial assets measured at
amortised cost
Including: Impairment
- - - -
provision of notes receivable
Impairment provision of
141,121.87 - - 141,121.87
accounts receivable
Impairment provision of
41,631,537.21 - - 41,631,537.21
other receivables
4. TAXATION
4.1 Major Categories of Tax and Tax Rates Applicable to the Company
Categories of tax Basis of tax assessment Tax rate
Output VATs are calculated and paid on taxable 13%（16%）、10%、6%
revenues at a tax rateof 13%（16%）or 10% or 6%,
Value added tax (VAT)
and VATs are paid at the net amounts after
deducting input VATs for the reporting period
For the liquor sold, the
ad valorem
consumption tax shall
be calculated and paid
as RMB 1.00 yuan per
Consumption taxes The consumption taxes are paid on the taxable sales kilogram or 1000ml,
and the ad valorem
consumption tax shall
be calculated and paid
as per 20% of the
taxable sales
Urban maintenance and Urban maintenance and construction taxes are paid 7%、5%
construction tax on turnover taxes
~ 164 ~
Educational surcharge Educational surcharges are paid on turnover taxes 3%
Local educational Local educational surcharges are paid on turnover 2%
surcharge taxes
Enterprise income tax Business taxes are calculated and paid on taxable 25%
revenues
4.2 Tax Preference
(i) According to Response Letter for the First Batch of High-tech Enterprises to be put on record in
Anhui Province for 2019 (guokehuozi [2019] No.216) issued by Department of Science and
Technology of Anhui province, Department of Finance of Anhui province, and Anhui Provincial
Taxation Bureau of State Administration of Taxation, the subsidiary Longrui Glass was identified
as a high-tech enterprise in 2019, therefore was given High-tech Enterprise Certificate (Certificate
Number: GR201934001625) which is valid for 3 years. According to Enterprise Income Tax Law
and other relevant regulations, the company is subject to a national high-tech enterprise income tax
rate at 15% for three years from January 1, 2019 to December 31, 2021.
(ii) According to Response Letter for the First Batch of High-tech Enterprises to be put on record in
Anhui Province for 2019 (guokehuozi [2019] No.216) issued by Department of Science and
Technology of Anhui province, Department of Finance of Anhui province, and Anhui Provincial
Taxation Bureau of State Administration of Taxation, the subsidiary Ruisiweier was identified as a
high-tech enterprise in 2019, therefore was given High-tech Enterprise Certificate (Certificate
Number: GR201934000355) which is valid for 3 years. According to Enterprise Income Tax Law
and other relevant regulations, the company is subject to a national high-tech enterprise income tax
rate at 15% for three years from January 1, 2019 to December 31, 2021.
(iii) According to Response Letter for the Second Batch of High-tech Enterprises to be put on
record in Hubei Province for 2018 (guokehuozi [2019] No.43) issued by Department of Science
and Technology of Hubei province, Department of Finance of Hubei province, and Hubei
Provincial Taxation Bureau of State Administration of Taxation, the subsidiary Yashibo was
identified as a high-tech enterprise in 2018, therefore was given High-tech Enterprise Certificate
~ 165 ~
(Certificate Number:GR201842002339) which is valid for 3 years. According to Enterprise Income
Tax Law and other relevant regulations, the company is subject to a national high-tech enterprise
income tax rate at 15% for three years from January 1, 2018 to December 31, 2020.
(iv) According to Notice from Ministry of Finance and State Administration of Taxation on the
Implementation of Inclusive Tax Reduction Policy for Small and Micro Enterprises (Caishui [2019]
No.13), from January 1, 2019 to December 31, 2021 the portion of the enterprise's annual taxable
income which does not exceed 1 million yuan is reduced to 25% as taxable income, and income tax
is paid at a tax rate of 20%. For the annual taxable income of more than 1 million yuan but not more
than 3 million yuan, this part is reduced to 50% as taxable income, income tax is paid at the rate of
20%. The subsidiaries Gujing waste company, Junhe Advertising and Yellow Crane Tower
Beverage meet the condition of annual taxable income not exceeding 1 million yuan while actual
tax rate in 2019 was 5%. The subsidiary Zhenrui Construction meets the condition of annual taxable
income exceeding 1 million yuan but not exceeding 3 million yuan while actual tax rate for 2019
was 10%.
5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.1 Cash and Cash Equivalents
Items 31 December 2019 31 December 2018
Cash on hand 292,465.36 353,429.67
Cash in bank 5,618,712,121.81 1,705,175,643.46
Other monetary funds 745,330.92 231,791.99
Total 5,619,749,918.09 1,705,760,865.12
Notes: (i) At 31 December 2019, the structural deposits that cannot be withdrawn in
advance amounted to RMB 2,263 million, fixed deposits that cannot be withdrawn in
advance totaled 100 million yuan, and fixed deposits used to pledge and issue bank
acceptance bills totaled RMB 312 million. Except for that, no other monetary funds
are restricted to use or in some potential risks of recovery due to the mortgage,
pledge or freezing;
(ii)The closing balance has increased by 229.46%, which is mainly due to the increase
~ 166 ~
of collection of sales receivables as well as the decrease of closing balance of
financial products investment.
5.2 Held-for-trading financial assets
Items 31 December 2019 31 December 2018
Financial Assets at Fair Value through Profit or Loss 509,031,097.02 -
Including: bank financial products 297,146,591.78 -
Fund investment 211,884,505.24 -
Total 509,031,097.02 -
Note: The closing balance has increased RMB 509,031,097.02 yuan, mainly due to reclassify bank
financial products and fund investment to held-for-trading assets according to implemention of the
new financial instrument standard since January 1, 2019.
5.3 Financial Assets at Fair Value through Profit or Loss
Items 31 December 2019 31 December 2018
Held-for-trading financial assets: 622,892.96
Including: Equity instruments investment - 622,892.96
Total - 622,892.96
Note: The closing balance decreased RMB 622,892.96 yuan compared to the end of 2018, mainly
due to disposal of equity instruments investment in 2019.
5.4 Notes Receivable
(a) Notes receivable by category
Items 31 December 2019 31 December 2018
Provision Provision
Book Balance for bad Carrying amount Book Balance for bad Carrying amount
debt debt
Bank acceptance bills 1,002,758,533.39 - 1,002,758,533.39 1,347,427,811.34 - 1,347,427,811.34
Commercial
1,493,836.54 34,938.37 1,458,898.17 - - -
acceptance bills
Total 1,004,252,369.93 34,938.37 1,004,217,431.56 1,347,427,811.34 - 1,347,427,811.34
(b) Pledged notes receivable at 31 December 2019
~ 167 ~
Items Pledged amount
Bank acceptance bills 349,377,134.82
Total 349,377,134.82
(c) Notes receivable discounted or endorsed to third parties but not yet matured at 31
December 2019
Items Amount of derecognition Amount of recognition
Bank acceptance bills 1,185,260,793.87 -
Total 1,185,260,793.87 -
Note: The issuing bank of the bank acceptance bill of the Company for endorsement or discount are
commercial banks with higher credit. Therefore, when the bank acceptance bills are mature, they
are likely to get paid. The interest rate risk related to the bill has been transferred to the bank, so it
can be judged that the main risks and rewards of the bill ownership have been transferred, so need
to be derecogised.
(d) The company has no notes receivable transferred to accounts receivable due to drawers’
inability of fulfillment at 31 December 2019
(e) Notes receivable by bad debt provision method
31 December 2019
Book balance Provision for bad debt
Category
Provision ratio Carrying amount
Amount Proportion (%) Amount
(%)
Provision for bad debt
- - - - -
recognised individually
Provision for bad debt
1,004,252,369.93 100.00 34,938.37 0.00 1,004,217,431.56
recognised collectively
Including: Group 1 1,493,836.54 0.15 34,938.37 2.34 1,458,898.17
Group 2 1,002,758,533.39 99.85 - - 1,002,758,533.39
Total 1,004,252,369.93 100.00 34,938.37 0.00 1,004,217,431.56
(i)At 31 December 2019, notes receivable with provision for bad debt recognised by group 1
31 December 2019
Name Provision for bad
Notes receivable Provision ratio (%)
debt
~ 168 ~
31 December 2019
Name Provision for bad
Notes receivable Provision ratio (%)
debt
Within 1 year 1,493,836.54 34,938.37
Including:1-6months 993,836.54 9,938.37 1.00
7-12months 500,000.00 25,000.00 5.00
Total 1,493,836.54 34,938.37 2.34
(ii)Notes receivable with provision for bad debt recognised by group 2
At 31 December 2019, the Company measured provision for bad debt of bank acceptance bill
according to the lifetime expected credit loss. The Company believes that no significant credit risk
exists in the bank acceptance bills and no significant losses arises from default risk of banks or
other issuer’ failure of fulfillment.
For details of recognition criteria and explanation for provision of bad debt, please refer to Notes
3.10.
(f) Changes of provision for bad debt during the reporting period
31 Changes of Changes during the reporting period 31
1 January
Category December accounting Recovery or December
2019 Provision Write-off
2018 policy reversal 2019
Commercial
acceptance - - - 34,938.37 - - 34,938.37
bills
Total - - - 34,938.37 - - 34,938.37
(g) The company has no notes receivable write-off during the reporting period
5.5 Accounts Receivable
(a) Accounts receivable by aging
Aging 31 December 2019 31 December 2018
Within one year 41,004,875.62 29,725,877.02
Including:1-6months 37,333,246.24 26,516,294.24
7-12months 3,671,629.38 3,209,582.78
1-2 years 365,118.07 497,593.12
~ 169 ~
Aging 31 December 2019 31 December 2018
2-3 years - -
Over 3 years 141,121.87 173,887.87
Subtotal 41,511,115.56 30,397,358.01
Less: provision for bad debt 734,547.60 649,289.27
Total 40,776,567.96 29,748,068.74
(b) Accounts receivable by bad debt provision method
(i) At 31 December 2019
31 December 2019
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
Provision for bad debt recognised
- - - - -
individually
Provision for bad debt recognized
41,511,115.56 100.00 734,547.60 1.77 40,776,567.96
collectively
Including: Group1 - - - - -
Group2 41,511,115.56 100.00 734,547.60 1.77 40,776,567.96
Total 41,511,115.56 100.00 734,547.60 1.77 40,776,567.96
(ii) At 31 December 2018
31 December 2018
Book balance Provision for bad debt
Category
Provision ratio Carrying amount
Amount Proportion (%) Amount
(%)
Accounts receivable with
individually significant
- - - - -
balance and provision for bad
debt recognised individually
Accounts receivable with bad
debt provision recognised 30,397,358.01 100.00 649,289.27 2.14 29,748,068.74
collectively by similar credit
~ 170 ~
31 December 2018
Book balance Provision for bad debt
Category
Provision ratio Carrying amount
Amount Proportion (%) Amount
(%)
Accounts receivable with
individually significant
- - - - -
balance and provision for bad
debt recognised individually
risk characteristics
Accounts receivable with
individually insignificant
- - - - -
balance but provision for bad
debt recognised individual
Total 30,397,358.01 100.00 649,289.27 2.14 29,748,068.74
At 31 December 2019, accounts receivable with bad debt provision recognised by group 2
31 December 2019
Aging
Accounts receivable Provision for bad debt Provision ratio (%)
Within one year 41,004,875.62 556,913.92 1.36
Including:1-6months 37,333,246.24 373,332.45 1.00
7-12months 3,671,629.38 183,581.47 5.00
1-2 years 365,118.07 36,511.81 10.00
2-3 years - - -
Over 3 years 141,121.87 141,121.87 100.00
Total 41,511,115.56 734,547.60 1.77
For details of recognition criteria and explanation for provision for bad debt by group, please refer
to Notes 3.10.
At 31 December 2018, accounts receivable with bad debt provision recognised by aging analysis
31 December 2018
Aging
Accounts receivable Provision for bad debt Provision ratio (%)
Within one year 29,725,877.02 425,642.08 1.43
Including:1-6months 26,516,294.24 265,162.94 1.00
~ 171 ~
31 December 2018
Aging
Accounts receivable Provision for bad debt Provision ratio (%)
7-12months 3,209,582.78 160,479.14 5.00
1-2 years 497,593.12 49,759.32 10.00
2-3 years - - -
Over 3 years 173,887.87 173,887.87 100.00
Total 30,397,358.01 649,289.27 2.14
For details of recognition criteria and explanation for provision for bad debt by group, please refer
to Notes 3.12.
(c) Changes of provision for bad debt during the reporting period
31 Changes of Changes during the reporting period 31
1 January
Category December accounting Recovery or December
2019 Provision Write-off
2018 policy reversal 2019
Accounts
receivable
with
individually
insignificant
- - - - - - -
balance but
provision for
bad debt
recognised
individual
Group2:
Provision for
bad debt 649,289.27 - 649,289.27 175,624.33 90,366.00 734,547.60
recognized
collectively
Total 649,289.27 - 649,289.27 175,624.33 90,366.00 734,547.60
(d) Top five closing balances by entity
~ 172 ~
Proportion of the
Provision for bad
Entity name Balance at 31 December 2019 balance to the total
debt
accounts receivable (%)
No. 1 3,979,721.98 9.59 39,797.22
No. 2 3,748,388.91 9.03 37,483.89
No. 3 3,564,484.80 8.59 40,405.49
No. 4 2,529,753.91 6.09 25,297.54
No. 5 2,432,000.00 5.86 24,320.00
Total 16,254,349.60 39.16 167,304.14
(e) The closing balance has increased by 37.07% compared with the end of 2018, mainly due to the
growth of business scale of the Company.
5.6 Advances to Suppliers
(a) Advances to suppliers by aging
31 December 2019 31 December 2018
Aging
Amount Proportion (%) Amount Proportion (%)
Within one year 196,781,962.46 99.66 182,122,465.92 99.76
1 to 2 years 647,771.50 0.33 145,534.83 0.08
2 to 3 years - - - -
Over 3 years 23,580.00 0.01 290,000.00 0.16
Total 197,453,313.96 100.00 182,558,000.75 100.00
(b) Top five closing balances by entity
Proportion of the balance to the
Entity name Balance at 31 December 2019
total advances to suppliers (%)
No. 1 155,120,800.50 78.56
No. 2 3,228,301.96 1.63
No. 3 1,456,310.68 0.74
No. 4 1,437,916.44 0.73
No. 5 841,273.23 0.43
Total 162,084,602.81 82.09
5.7 Other Receivables
~ 173 ~
(a) Other receivables by category
Items 31 December 2019 31 December 2018
Interest receivable 1,908,788.81 24,923,178.08
Dividend receivable - -
Other receivables 23,838,168.41 18,419,700.14
Total 25,746,957.22 43,342,878.22
(b) Interest receivable
(i) Interest receivable by category
Items 31 December 2019 31 December 2018
Interest on large-denomination certificates of
1,908,788.81 24,923,178.08
deposit
Less: Provision for bad debt - -
Total 1,908,788.81 24,923,178.08
(c) Other Receivables
(i) Other receivables by aging
Aging 31 December 2019 31 December 2018
Within one year 21,391,891.49 17,617,762.53
Including:1-6months 16,704,667.12 16,726,199.24
7-12months 4,687,224.37 891,563.29
1-2 years 2,804,920.23 934,319.75
2-3 years 646,513.23 345,780.00
Over 3 years 42,087,287.44 41,895,924.59
Subtotal 66,930,612.39 60,793,786.87
Less: provision for bad debt 43,092,443.98 42,374,086.73
Total 23,838,168.41 18,419,700.14
(ii) Other receivables by nature
Nature 31 December 2019 31 December 2018
Investment in securities 40,850,949.35 40,850,949.35
~ 174 ~
Nature 31 December 2019 31 December 2018
Deposit and guarantee 5,343,741.34 4,749,457.78
Borrowing for business trip expenses 884,420.74 426,435.85
Rent, utilities and gasoline charges 8,479,446.65 6,786,659.62
Others 11,372,054.31 7,980,284.27
Subtotal 66,930,612.39 60,793,786.87
Less: provision for bad debt 43,092,443.98 42,374,086.73
Total 23,838,168.41 18,419,700.14
(iii) Other receivables by bad debt provision method
A. At 31 December 2019, provision for bad debt recognised based on three stages model
Stages Book balance Provision for bad debt Carrying acount
Stage 1 26,079,663.04 2,241,494.63 23,838,168.41
Stage 2 - - -
Stage 3 40,850,949.35 40,850,949.35 -
Total 66,930,612.39 43,092,443.98 23,838,168.41
A1. At 31 December 2019, provision for bad debt at stage 1:
12-month
expected Provision for Carrying
Category Book balance Reason
credit losses bad debt amount
rate (%)
Provision for bad debt
- - - - -
recognised individually
Provision for bad debt
26,079,663.04 8.59 2,241,494.63 23,838,168.41 26,079,663.04
recognised collectively
Including: Group1 - - - - -
Group2 26,079,663.04 8.59 2,241,494.63 23,838,168.41 26,079,663.04
Total 26,079,663.04 8.59 2,241,494.63 23,838,168.41 26,079,663.04
At 31 December 2019, other receivables with bad debt provision recognised collectively by group 2
~ 175 ~
31 December 2019
Aging
Book balance Provision for bad debt Provision ratio (%)
Within one year 21,391,891.49 401,407.90 1.88
Including:1-6months 16,704,667.12 167,046.67 1.00
7-12months 4,687,224.37 234,361.23 5.00
1-2 years 2,804,920.23 280,492.02 10.00
2-3 years 646,513.23 323,256.62 50.00
Over 3 years 1,236,338.09 1,236,338.09 100.00
Total 26,079,663.04 2,241,494.63 8.59
A2. At 31 December 2019, provision for bad debt at stage 3:
Lifetime
expected Provision for Carrying
Category Book balance Reason
credit losses bad debt amount
rate (%)
Provision for bad debt
40,850,949.35 100.00 40,850,949.35 - 40,850,949.35
recognised individually
Provision for bad debt
- - - - -
recognised collectively
Including: Group1 - - - - -
Group2 - - - - -
Total 40,850,949.35 100.00 40,850,949.35 - 40,850,949.35
A3.1. At 31 December 2019, other receivables with provision for bad debt recognised individually
31 December 2019
Entity name Provision for bad Provision ratio
Book balance Reason
debt (%)
Hengxin Securities Co., Ltd. The enterprise enters
the bankruptcy
29,010,449.35 29,010,449.35 100.00
liquidation
procedure
Jianqiao Securities Co., Ltd. The enterprise enters
11,840,500.00 11,840,500.00 100.00
the bankruptcy
~ 176 ~
liquidation
procedure
Total 40,850,949.35 40,850,949.35 100.00
B．At 31 December 2018, provision for bad debt using incurred loss model：
31 December 2018
Book balance Provision for bad debt
Category
Provision Carrying amount
Amount Proportion (%) Amount
ratio (%)
Other receivables with
individually significant balance
40,850,949.35 67.20 40,850,949.35 100.00 -
and provision for bad debt
recognised individually
Other receivables with bad debt
provision recognised
19,942,837.52 32.80 1,523,137.38 7.64 18,419,700.14
collectively by similar credit
risk characteristics
Other receivable with
individually insignificant
balance but recognised - - - - -
provision for bad debt
individually
Total 60,793,786.87 100.00 42,374,086.73 69.70 18,419,700.14
B1. At 31 December 2018, other receivables with individually significant balance and provision for
bad debt recognised individually
31 December 2018
Entity name Provision for bad
Other receivables Provision ratio (%) Reason
debt
Hengxin Securities Co., Ltd. The enterprise enters
29,010,449.35 29,010,449.35 100.00 the bankruptcy
liquidation procedure
Jianqiao Securities Co., Ltd. 11,840,500.00 11,840,500.00 100.00 The enterprise enters
~ 177 ~
31 December 2018
Entity name Provision for bad
Other receivables Provision ratio (%) Reason
debt
the bankruptcy
liquidation procedure
Total 40,850,949.35 40,850,949.35 100.00
B2. At 31 December 2018, other receivables with bad debt provision recognised collectively by
aging analysis:
31 December 2018
Aging
Accounts receivable Provision for bad debt Provision ratio (%)
Within one year 17,617,762.53 211,840.16 1.20
Including:1-6months 16,726,199.24 167,261.99 1.00
7-12months 891,563.29 44,578.17 5.00
1-2 years 934,319.75 93,431.98 10.00
2-3 years 345,780.00 172,890.00 50.00
Over 3 years 1,044,975.24 1,044,975.24 100.00
Total 19,942,837.52 1,523,137.38 7.64
(iv) Changes of provision for bad debt during the reporting period
Changes of Changes during the reporting period
31 December 1 January 31 December
Category accounting Recovery
2018 2019 Provision Write-off 2019
policy or reversal
Provision for
bad debt
40,850,949.35 - 40,850,949.35 - - - 40,850,949.35
recognised
individually
Provision for
bad debt
1,523,137.38 - 1,523,137.38 722,167.14 - 3,809.89 2,241,494.63
recognised
collectively
Total 42,374,086.73 - 42,374,086.73 722,167.14 - 3,809.89 43,092,443.98
(v) Top five closing balances by entity
~ 178 ~
Proportion of the
Balance at 31 balance to the total Provision for bad
Entity name Nature Aging
December 2019 other receivables debt
(%)
No. 1 Securities Over 3
29,010,449.35 43.34 29,010,449.35
investment years
No. 2 Securities Over 3
11,840,500.00 17.69 11,840,500.00
investment years
No. 3 Others Within 6
1,814,794.17 2.71 18,147.94
months
No. 4 Security Within 6
500,000.00 0.75 5,000.00
deposit months
No. 5 Security 7-12months
350,000.00 0.52 17,500.00
deposit
Total —— 43,515,743.52 —— 65.01 40,891,597.29
（vi）The closing balance has decreased by 40.60% compared to the end of 2018, which was mainly
due to the interest received from one-time repayment of principal and interest on
large-denomination certificates of deposits.
5.8 Inventories
(a) Inventories by category
31 December 2019 31 December 2018
Items Book Provision for Carrying Book Provision for Carrying
balance impairment amount balance impairment amount
Raw materials
177,976,56 163,204,5 144,856, 131,048,3
and package 14,772,001.80 13,808,554.40
6.48 64.68 930.02 75.62
materials
Semi-finished
2,291,945, 2,291,945, 1,957,45 1,957,452,
goods and work in - -
127.85 127.85 2,112.24 112.24
process
562,948,59 559,902,2 322,031, 318,806,1
Finished goods 3,046,322.32 3,225,665.20
1.57 69.25 842.20 77.00
~ 179 ~
3,032,870, 3,015,051, 2,424,34 2,407,306,
Total 17,818,324.12 17,034,219.60
285.90 961.78 0,884.46 664.86
(b) Provision for impairment
Increase during the Decrease during the
31 December reporting period reporting period 31 December
Items
2018 Reversal or 2019
Provision Others Others
written-down
Raw materials and
13,808,554.40 979,662.15 - 16,214.75 - 14,772,001.80
package materials
Finished goods 3,225,665.20 99,318.29 278,661.17 3,046,322.32
Total 17,034,219.60 1,078,980.44 294,875.92 17,818,324.12
5.9 Non-current Assets Maturing within One Year
Items 31 December 2019 31 December 2018
Non-current Assets Maturing within
- 300,000,000.00
One Year
Total - 300,000,000.00
Note: The balance of non-current assets muturing within one year at the end of 2018 was
large-denomination certificates of deposits, which was recovered during the reporting period.
5.10 Other Current Assets
Items 31 December 2019 31 December 2018
Financial products - 2,758,000,000.00
Pledge-style repo of treasury bonds - 179,900,000.00
Deductible tax 114,439,167.07 74,578,687.20
Total 114,439,167.07 3,012,478,687.20
Note: The closing balance of other current assets has decreased by 96.20%, which was mainly due
to the decrease of financial products at the end of 2019 and the reclassification of financial products
originally classified as other current assets changing into held-for-trading financial assets as the
Company ’s implementation of the new financial instruments standard, as well as the recovery of
pledge-style repo of treasury bonds.
~ 180 ~
5.11 Available-for-sale Financial Assets
(a) General information of available-for-sale financial assets
31 December 2019 31 December 2018
Items
Book Provision for Carrying Book Provision for Carrying
balance impairment amount balance impairment amount
Available-for-sale equity 206,393,10 206,393,107.4
- - - -
instruments 7.46 6
Including: measured by fair 206,393,10 206,393,107.4
- - - -
value 7.46 6
Total 206,393,10 206,393,107.4
- - - -
7.46 6
(b)Note: The closing balance of available-for-sale financial assets at the end of 2019 has decreased
206,393,100.00 yuan, which was caused by the reclassification of the fund investments to
held-to-trade financial assets as the Company's implementation of the new financial instruments
standard.
5.12 Long-term Equity Investments
Changes during the reporting period
31 Increase Decrease Gains /(losses) Adjustments of
Changes in
Investees Decemb during the during the on investments other
other
er 2018 reporting reporting under the equity comprehensive
equity
period period method income
Associates
Beijing Guge
4,900,0
Trading Co., - - -221,717.76 - -
00.00
Ltd.
4,900,0 - - -221,717.76 - -
Total
00.00
(Continued)
Investees Changes during the reporting period 31 December Provision for
~ 181 ~
2019 impairment at
Declaration of
31 December
cash dividends Provision for
Others 2019
or distribution of impairment
profit
Associates
Beijing Guge
- - - 4,678,282.24 -
Trading Co., Ltd.
Total - - - 4,678,282.24 -
5.13 Investment Properties
(a) Investment properties accounted for using cost model
Items Building and plants Land use rights Total
Initial cost:
Balance at 31 December 2018 8,680,555.75 2,644,592.00 11,325,147.75
Increase during the reporting
- - -
period
Decrease during the reporting
- - -
period
Balance at 31 December 2019 8,680,555.75 2,644,592.00 11,325,147.75
Accumulated depreciation and
amortisation:
Balance at 31 December 2018 5,654,245.92 643,673.30 6,297,919.22
Increase during the reporting period 261,115.95 56,026.56 317,142.51
(i) Provision 261,115.95 56,026.56 317,142.51
Decrease during the reporting
- - -
period
Balance at 31 December 2019 5,915,361.87 699,699.86 6,615,061.73
Provision for impairment
Balance at 31 December 2018 - - -
~ 182 ~
Increase during the reporting
- - -
period
Decrease during the reporting
- - -
period
Balance at 31 December 2019 - - -
Carrying amount:
Balance at 31 December 2019 2,765,193.88 1,944,892.14 4,710,086.02
Balance at 31 December 2018 3,026,309.83 2,000,918.70 5,027,228.53
5.14 Fixed Assets
(a) Fixed assets by category
Items 31 December 2019 31 December 2018
Fixed assets 1,722,572,998.79 1,763,988,530.56
Disposal of fixed assets - -
Total 1,722,572,998.79 1,763,988,530.56
(b) Fixed assets
(i) General information of fixed assets
Office
Buildings and Machinery
Items Vehicles equipment and Total
constructions equipments
others
Initial cost:
Balance at 31 2,006,674,799.7 58,064,314.2
920,022,112.79 157,194,996.51 3,141,956,223.20
December 2018 0 0
Increase during
the reporting 42,058,074.12 106,980,384.01 5,654,034.83 20,652,185.83 175,344,678.79
period
(i) Acquisition 1,841,669.47 32,454,864.01 5,654,034.83 13,339,053.16 53,289,621.47
(ii)Transfer
from
40,216,404.65 74,525,520.00 - 7,313,132.67 122,055,057.32
construction in
progress
~ 183 ~
Office
Buildings and Machinery
Items Vehicles equipment and Total
constructions equipments
others
Decrease during
the reporting 14,189,856.21 24,825,609.75 2,750,837.04 6,943,112.13 48,709,415.13
period
(i) Disposal 14,189,856.21 24,825,609.75 2,750,837.04 6,943,112.13 48,709,415.13
Balance at 31 2,034,543,017.6 1,002,176,887.0 60,967,511.9
170,904,070.21 3,268,591,486.86
December 2019 1 5 9
Accumulated
depreciation:
Balance at 31 49,030,197.4
737,756,223.41 495,710,974.90 90,459,858.92 1,372,957,254.65
December 2018 2
Increase during
the reporting 84,535,134.09 98,379,650.23 5,266,789.72 17,666,813.49 205,848,387.53
period
(i) Provision 84,535,134.09 98,379,650.23 5,266,789.72 17,666,813.49 205,848,387.53
Decrease during
the reporting 11,371,223.49 18,828,305.80 2,663,966.19 4,882,028.40 37,745,523.88
period
(i) Disposal 11,371,223.49 18,828,305.80 2,663,966.19 4,882,028.40 37,745,523.88
Balance at 31 51,633,020.9
810,920,134.01 575,262,319.33 103,244,644.01 1,541,060,118.30
December 2019 5
Provision for
impairment:
Balance at 31
3,396,292.79 1,020,057.51 7,047.07 587,040.62 5,010,437.99
December 2018
Increase during
the reporting - 138,765.07 - - 138,765.07
period
(i) Provision - 138,765.07 - - 138,765.07
Decrease during
the reporting 84,514.35 105,635.43 - 683.51 190,833.29
period
(i) Disposal 84,514.35 105,635.43 - 683.51 190,833.29
Balance at 31
3,311,778.44 1,053,187.15 7,047.07 586,357.11 4,958,369.77
December 2019
~ 184 ~
Office
Buildings and Machinery
Items Vehicles equipment and Total
constructions equipments
others
Carrying
amount:
Balance at 31 1,220,311,105.1
425,861,380.57 9,327,443.97 67,073,069.09 1,722,572,998.79
December 2019 6
Balance at 31 1,265,522,283.5
423,291,080.38 9,027,069.71 66,148,096.97 1,763,988,530.56
December 2018 0
(ii) Idle fixed assets
Accumulated Provision for Carrying
Item Initial cost Note
depreciation impairment amount
Buildings and
10,108,234.09 6,709,981.59 3,311,778.44 86,474.06 ——
constructions
Machinery
6,461,779.99 5,376,301.54 1,053,187.15 32,291.30 ——
equipments
Vehicles 58,119.66 49,329.00 7,047.07 1,743.59 ——
Office
equipment 896,981.09 283,728.04 586,357.11 26,895.94 ——
and others
Total 17,525,114.83 12,419,340.17 4,958,369.77 147,404.89 ——
(iii) Fixed assets without certificate of title
Items Carrying amount Reason
Buildings and constructions 739,313,343.70 Under processing
(iv) There are no fixed assets with limited on use such as mortgage at the end of the reporting
period.
5.15 Construction in Progress
(a) Construction in progress by category
Items 31 December 2019 31 December 2018
Construction in progress 183,984,816.07 93,320,557.56
~ 185 ~
Construction materials - -
Total 183,984,816.07 93,320,557.56
Note: Construction in progress listed above is the net result of construction in progress after
deducting construction materials.
(b) Construction in progress
(i) General information of construction in progress
31 December 2019 31 December 2018
Provision Provision
Items for Carrying for Carrying
Book balance Book balance
impairmen amount impairmen amount
t t
Brewing
automatization
17,307,83
technological 74,782,393.43 - 74,782,393.43 17,307,839.93 -
9.93
improvement
project
Furnace project 780,479.4
43,893,912.18 - 43,893,912.18 780,479.49 -
(No.5) 9
Suizhou new
2,597,498.
plant phase I 40,023,041.23 - 40,023,041.23 2,597,498.75 -
75
project
Machine 5,596,060.
10,393,296.42 - 10,393,296.42 5,596,060.05 -
installment 05
Liquid filling
line renovation 5,934,194.72 - 5,934,194.72 - - -
project
Gujing digital
marketing 2,150,943.39 - 2,150,943.39 - - -
project
Renovation
project of 1,263,728.
387,770.85 - 387,770.85 1,263,728.57 -
potential safety 57
concerns
Gujing plant
30,391,61
half-open wine - - - 30,391,615.08 -
5.08
cellar
~ 186 ~
31 December 2019 31 December 2018
Provision Provision
Items for Carrying for Carrying
Book balance Book balance
impairmen amount impairmen amount
t t
Gujing party
1,435,187.
building cultural - - - 1,435,187.95 -
95
museum
Desulfurization
and 28,768,11
- - - 28,768,115.33 -
denitrification 5.33
projects
Other individual 5,180,032.
6,419,263.85 - 6,419,263.85 5,180,032.41 -
project 41
93,320,55
Total 183,984,816.07 - 183,984,816.07 93,320,557.56 -
7.56
(ii) Changes in significant projects of construction in progress
Budget Decrease
Increase during Amount
(ten 31 December during the 31 December
Projects the reporting transferred to
thousand 2018 reporting 2019
period fixed asset
yuan) period
Brewing
automatization
technological 27,430.00 17,307,839.93 71,314,035.28 13,839,481.78 - 74,782,393.43
improvement
project
Furnace
7,134.35 780,479.49 43,113,432.69 - - 43,893,912.18
project (No.5)
Suizhou new
plant phase I 26,000.00 2,597,498.75 37,455,254.45 - 29,711.97 40,023,041.23
project
Machine
10,834.65 5,596,060.05 16,935,672.58 12,138,436.21 - 10,393,296.42
installment
Liquid filling
line renovation 4,000.00 - 5,934,194.72 - - 5,934,194.72
project
~ 187 ~
Gujing digital
marketing 4,190.15 - 31,169,697.46 - 29,018,754.07 2,150,943.39
project
Renovation
project of
18,010.76 1,263,728.57 519,468.76 1,395,426.48 - 387,770.85
potential safety
concerns
Gujing plant
half-open wine 11,194.15 30,391,615.08 9,655,471.24 40,047,086.32 - -
cellar
Gujing party
building
1,160.00 1,435,187.95 2,152,781.88 3,587,969.83 - -
cultural
museum
Desulfurization
and
7,176.00 28,768,115.33 10,246,755.41 39,014,870.74 - -
denitrification
project
SAP-ERP 4,450.00 31,669,064.53 - 31,669,064.53 -
Other
individual 7,628.67 5,180,032.41 24,100,638.06 12,031,785.96 10,829,620.66 6,419,263.85
project
Total 129,208.73 93,320,557.56 284,266,467.06 122,055,057.32 71,547,151.23 183,984,816.07
(Continued)
Cumulati
Including: Interest
ve
Proportion of interest capitalisatio
amount
project input Rate of capitalised n rate
Projects of Source of funds
to budgets progress during the during the
interest
(%) reporting reporting
capitalis
period period (%)
ation
Brewing
automatization Enterprise’s
35.59 73.00 - - -
technological own fund
improvement
~ 188 ~
Cumulati
Including: Interest
ve
Proportion of interest capitalisatio
amount
project input Rate of capitalised n rate
Projects of Source of funds
to budgets progress during the during the
interest
(%) reporting reporting
capitalis
period period (%)
ation
project
Furnace Enterprise’s
60.43 60.43 - - -
project(No.5) own fund
Suizhou new
Enterprise’s
plant phase I 15.40 15.40 - - -
own fund
project
Machine Enterprise’s
29.25 80.00 - - -
installment own fund
Liquid filling
Enterprise’s
line renovation 14.84 14.84 - - -
own fund
project
Gujing digital
Enterprise’s
marketing 74.39 74.39 - - -
own fund
project
Renovation
project of Enterprise’s
82.99 98.00 - - -
potential safety own fund
concerns
Gujing plant
Enterprise’s
half-open wine 74.64 100.00 - - -
own fund
cellar
Gujing party
building Enterprise’s
81.87 100.00 - - -
cultural own fund
museum
Desulfurization
and Enterprise’s
54.68 100.00 - - -
denitrification own fund
project
~ 189 ~
Cumulati
Including: Interest
ve
Proportion of interest capitalisatio
amount
project input Rate of capitalised n rate
Projects of Source of funds
to budgets progress during the during the
interest
(%) reporting reporting
capitalis
period period (%)
ation
Enterprise’s
SAP-ERP 71.17 100.00 - - -
own fund
Other
Enterprise’s
individual 97.77 97.77 - - -
own fund
project
Total —— —— —— —— —— ——
(iii) The carrying amount of construction in progress at the end of 2019 has increased by 97.15%
compared to the end of 2018, which was mainly due to the increasing investment in Brewing
automatization technological improvement project, Furnace project (No.5) and Suizhou new plant
phase I project.
5.16 Intangible Assets
(a) General information of intangible assets
Land use Patents and
Items Software Total
rights Trademark
Initial cost:
683,451,302.5 32,106,185. 930,563,554.4
Balance at 31 December 2018 215,006,066.19
6 73 8
Increase during the reporting 73,024,431.
- - 73,024,431.49
period 49
2,452,536.4
(i) Acquisition - - 2,452,536.47
7
(ii) Transfer from construction 70,571,895.
- 70,571,895.02
in progress 02
Decrease during the reporting - 45,299.14 - 45,299.14
~ 190 ~
Land use Patents and
Items Software Total
rights Trademark
period
(i) Disposal - 45,299.14 - 45,299.14
683,451,302.5 105,085,31 1,003,542,686
Balance at 31 December 2019 215,006,066.19
6 8.08 .83
Accumulated amortisation:
129,394,359.2 12,944,725. 188,479,945.3
Balance at 31 December 2018 46,140,860.88
7 23 8
Increase during the reporting 14,943,160.
14,383,598.77 48,077.76 29,374,836.96
period 43
14,943,160.
(i) Provision 14,383,598.77 48,077.76 29,374,836.96
43
Decrease during the reporting
- 30,028.27 - 30,028.27
period
(i) Disposal - 30,028.27 - 30,028.27
143,777,958.0 27,857,857. 217,824,754.0
Balance at 31 December 2019 46,188,938.64
4 39 7
Provision for impairment:
Balance at 31 December 2018 - - - -
Increase during the reporting
- - - -
period
Decrease during the reporting
- - - -
period
Balance at 31 December 2019 - - - -
Carrying amount: - -
539,673,344.5 77,227,460. 785,717,932.7
Balance at 31 December 2019 168,817,127.55
2 69 6
554,056,943.2 19,161,460. 742,083,609.1
Balance at 31 December 2018 168,865,205.31
9 50 0
(b) No Intangible Assets used for mortgage or guarantee at 31 December 2019
~ 191 ~
(c) No Land use rights without certificate of title at 31 December 2019
5.17 Goodwill
(a) Initial recognition
Increase during the Decrease during the
31 reporting period reporting period
Investees or matters that 31 December
December
goodwill arising from 2019
2018 Business
Others Disposal Others
combination
Yellow Crane Tower Wine 478,283,49 478,283,495.
- - - -
Co., Ltd. 5.29 29
Total 478,283,49 478,283,495.
- - - -
5.29 29
(b) Provision for impairment
Increase during the reporting Decrease during the
31 period reporting period 31
Investees or matters that
December December
goodwill arising from
2018 Other 2019
Provision Others Disposal
s
Yellow Crane Tower Wine
- - - - - -
Co., Ltd.
Total - - - - - -
(c) Information related to the CGUs or CGU groups that goodwill lies in
Investees
Book value (unit: RMB10,000) Whether
or
Main changes
matters Book Unconfirmed
components Determination during
that Book value of goodwill
of CGU or method the
goodwill value of goodwill attributable to Total
CGUs reporting
arising CGU to be non-controlling
period
from allocated interests
~ 192 ~
The
cash-generating
unit where
Operating goodwill lies in
Yellow asset of has an active
Crane Yellow market which
Tower Crane 74,474.31 47,828.35 45,952.73 168,255.39 could generate no
Wine Tower independent
Co., Ltd. Wine Co., cash flow,
Ltd therefore taking
it as an
individual
CGU.
Note: The book value of the CGU excludes surplus assets and non-operating assets and liabilities of Yellow Crane Tower Wine
Co., Ltd.
(d) Process of impairment testing, parameters and determination method of impairment loss
of goodwill
Recoverable amount of cash-generating units: determined according to present value of expected
future cash flow. The future cash flow is estimated based on the five-year financial budget of the
CGU metioned above approved by the management, and the perpetual cash flow after five years is
determined according to the cash flow in the fifth year. The discount rate for calculating the present
value is the appropriate discount rate reflecting the time value of the current market currency and
the specific risk of CGU. Other key assumptions used in the cash flow forecast of the asset group
include expected operating revenue, operating cost, growth rate and related expenses. The
assumptions above are based on the Company's operating performance, growth rate, industry level
and the management's expectation of market development in the previous year.
According to the goodwill impairment test of the Company as well as evaluation report
(zhongshuizhiyuanpingbaozi [2020] No. 020171) issued by Zhongshuizhiyuan Asset Appraisal Co.,
Ltd., at the end of the period the Company did not find the recoverable amount of the
cash-generating unit containing goodwill was lower than its book value, therefore we suppose no
provision for impairment is required.
(e) Impact on the impairment test of goodwill
The goodwill CGU of the company has performance commitment at the time of acquisition. For
details please refer to 12. COMMITMENTS AND CONTINGENCIES 12.1 Significant Commitments
(a)Performance commitment in this note. The performance commitment of the company has been
completed, which has no impact on goodwill impairment test.
5.18 Long-term Deferred Expenses
~ 193 ~
Increase during Decrease during the reporting
Items 31 December 2018 the reporting period 31 December 2019
period Amortisation Other decrease
Experience center 36,671,977.31 - 10,419,843.26 13,334.59 26,238,799.46
Pottery 6,244,584.78 - 4,407,942.21 1,836,642.57
Sewage treatment
3,050,000.00 1,640,000.00 922,622.95 3,767,377.05
project
Yellow Crane
Tower chateau 16,531,666.46 568,336.72 3,804,430.38 1,798,624.18 11,496,948.62
and museum
Gujing party
building cultural 5,909,090.91 - 1,181,818.18 4,727,272.73
center
Yantai wine
- 1,330,324.15 36,953.44 1,293,370.71
museum project
Other individual
project with
15,154,154.00 12,329,049.20 6,603,126.28 381.24 20,879,695.68
insignificant
amounts
Total 83,561,473.46 15,867,710.07 27,376,736.70 1,812,340.01 70,240,106.82
5.19 Deferred Tax Assets and Deferred Tax Liabilities
(a) Deferred tax assets before offsetting
31 December 2019 31 December 2018
Items Deductible Deductible
temporary Deferred tax assets temporary Deferred tax assets
differences differences
Provision for asset
22,776,693.89 5,688,693.81 65,051,818.84 16,221,329.97
impairment
Provision for credit
43,861,929.95 10,955,709.29 - -
impairment
Unrealized intragroup profit 32,086,076.52 8,021,519.13 16,788,054.95 4,181,824.54
Deferred income 72,778,437.92 17,941,534.40 76,636,500.55 18,877,272.61
Deductible losses - - 111,851.71 5,592.58
Changes in fair value of - - 117,161.92 29,290.48
~ 194 ~
held-for-trading financial
assets
Carry-over of payroll
payables deductible during 32,995,460.19 8,248,865.05 35,071,030.14 8,767,757.53
the next period
Accrued expenses and
158,552,891.33 39,638,222.83 153,988,413.40 38,497,103.35
discount
Total 363,051,489.80 90,494,544.51 347,764,831.51 86,580,171.06
(b) Deferred tax liabilities before offsetting
31 December 2019 31 December 2018
Items Deductible Deductible
Deferred tax Deferred tax
temporary temporary
liabilities liabilities
differences differences
Change in fair value of
available-for-sale financial - - 6,393,107.46 1,598,276.87
assets
Difference in accelerated
73,614,107.09 18,403,526.77 12,921,842.60 3,230,460.65
depreciation of fixed assets
Assets appreciation arising
from business combination 384,290,207.88 96,072,551.97 391,743,110.36 97,935,777.59
not under common control
Changes in fair value of
held-for-trading financial 17,585,151.48 4,396,287.87 - -
assets
Total 475,489,466.45 118,872,366.61 411,058,060.42 102,764,515.11
(c) Unrecognized deferred tax assets
Items 31 December 2019 31 December 2018
Deductible temporary differences - 16,214.75
Deductible losses 8,072,655.25 5,089,008.12
Total 8,072,655.25 5,105,222.87
(e) Deductible losses not recognised as deferred tax assets will expire in the following periods:
~ 195 ~
Year 31 December 2019 31 December 2018
2020 1,981,272.15 2,059,849.97
2021 1,463,251.49 1,444,700.17
2022 827,103.78 827,103.78
2023 757,354.20 757,354.20
2024 3,043,673.63 -
Total 8,072,655.25 5,089,008.12
5.20 Other Non-current Assets
Items 31 December 2019 31 December 2018
Prepayments for equipment and constructions 4,148,686.00 16,544,407.51
Total 4,148,686.00 16,544,407.51
Note: The closing balance of other non-current assets in 2019 has decreased by 74.92% compared
to the end of 2018, which was mainly due to the treansfer of prepaid equipment and constructions to
corresponding asset accounts after the acceptance inspection.
5.21 Notes Payable
(a) Notes payable by nature
Category 31 December 2019 31 December 2018
Bank acceptance bills 654,965,064.82 320,554,500.00
Commercial acceptance bills 48,714,582.04 28,648,913.72
Total 703,679,646.86 349,203,413.72
(b) At the end of the reporting period, there is no notes payable matured but not yet paid.
(c) The balance of notes payable in 2019 has increased by 101.51% compared with that at the end
of 2018, which was mainly due to using bank acceptance bills to settle at the end of reporting
period.
5.22 Accounts Payable
(a) Accounts payable by nature
Items 31 December 2019 31 December 2018
Payments for goods 399,583,249.41 277,765,943.47
~ 196 ~
Payments for constructions and equipment 88,412,144.22 111,498,555.89
Others 75,498,801.77 95,688,099.23
Total 563,494,195.40 484,952,598.59
(b) Significant accounts payable with aging of over one year
Items 31 December 2019 Reason
No. 1 2,252,093.02 Final payment
No. 2 577,691.84 Final payment
No. 3 393,392.70 Final payment
No. 4 348,350.03 Final payment
No. 5 244,906.28 Final payment
Total 3,816,433.87 ——
5.23 Advances from Customers
(a) Details of advances from customers
Items 31 December 2019 31 December 2018
Advances for goods 529,863,011.73 1,149,143,310.48
Total 529,863,011.73 1,149,143,310.48
(b)There is no significant advances from customers with aging of over one year.
5.24 Employee Benefits Payable
(a) Details of employee benefits payable
Increase during Decrease during
31 December 31 December
Items the reporting the reporting
2018 2019
period period
Short-term employee benefits 456,935,872.9
1,926,834,740.45 1,930,095,957.70 453,674,655.69
4
Post-employment benefits-defined
363,603.49 112,584,207.37 112,432,933.66 514,877.20
contribution plans
~ 197 ~
Termination benefits - - - -
457,299,476.4
Total 2,039,418,947.82 2,042,528,891.36 454,189,532.89
3
(b) Short-term employee benefits
Increase
Decrease during
31 December during the 31 December
Items the reporting
2018 reporting 2019
period
period
Salaries, bonuses, allowances and 1,675,987,714.
371,643,470.87 1,690,243,514.54 357,387,670.42
subsidies 09
Employee benefits 6,468,163.00 70,605,639.08 77,028,732.81 45,069.27
Social insurance 233,210.91 49,447,706.55 49,073,537.85 607,379.61
Health insurance 226,816.90 43,886,066.29 43,522,306.44 590,576.75
Injury insurance 1,487.67 2,055,399.22 2,051,156.46 5,730.43
Birth insurance 4,906.34 3,506,241.04 3,500,074.95 11,072.43
Housing accumulation fund 2,867,327.46 61,840,914.02 60,242,387.03 4,465,854.45
Labour union funds and employee
75,723,700.70 19,770,918.19 21,888,450.60 73,606,168.29
education funds
Enterprise annuity - 49,181,848.52 31,619,334.87 17,562,513.65
Total 1,926,834,740.
456,935,872.94 1,930,095,957.70 453,674,655.69
45
(c) Defined contribution plans
Increase during the Decrease during the
Items 31 December 2018 31 December 2019
reporting period reporting period
1. Basic endowment insurance 347,894.88 107,941,383.98 107,779,937.88 509,340.98
2. Unemployment insurance 15,708.61 4,642,823.39 4,652,995.78 5,536.22
Total 363,603.49 112,584,207.37 112,432,933.66 514,877.20
5.25 Taxes Payable
~ 198 ~
Items 31 December 2019 31 December 2018
Value added tax (VAT) 16,929,480.44 162,028,367.23
Consumption tax 347,582,441.49 99,133,181.43
Enterprise income tax 94,038,327.53 75,107,410.70
Individual income tax 1,173,190.21 1,307,281.11
Urban maintenance and construction tax 9,328,392.65 13,142,342.60
Stamp duty 1,058,588.17 549,270.06
Educational surcharge 7,991,963.70 12,301,477.16
Others 4,800,725.40 9,424,293.89
Total 482,903,109.59 372,993,624.18
5.26 Other Payables
(a) Other payables by category
Items 31 December 2019 31 December 2018
Interest payable - -
Dividend payable - -
Other payables* 1,315,878,229.01 1,192,020,147.82
Total 1,315,878,229.01 1,192,020,147.82
*: Other payables represent other payables except interest payable and dividend payable.
(b) Other payables
(i) Other payables by nature
Items 31 December 2019 31 December 2018
Security deposit and guarantee 1,206,935,123.77 1,064,059,562.95
Warranty 42,966,560.82 14,693,150.14
Personal housing fund paid by company 4,465,854.45 2,867,327.46
Unsettled discount - 30,212,626.88
Borrowing of business trip expenses 296,993.67 145,447.82
~ 199 ~
Others 61,213,696.30 80,042,032.57
Total 1,315,878,229.01 1,192,020,147.82
(ii) Significant other payables with aging of over one year
Other payables balance with aging of over one year totaled RMB 481,317,422.48 yuan, which are
mainly security deposit and warrenty not yet matured.
5.27 Other Current Liabilities
Items 31 December 2019 31 December 2018
Accrued expenses 197,484,121.41 295,164,745.44
Total 197,484,121.41 295,164,745.44
5.28 Deferred Income
(a) General information of deferred income
Decrease during
Increase during the
Items 31 December 2018 the reporting 31 December 2019 Reason
reporting period
period
Grants
Government grants 76,636,500.55 975,800.00 4,833,862.63 72,778,437.92 received from
government
Total 76,636,500.55 975,800.00 4,833,862.63 72,778,437.92
(b) Items related to government grants
Recognised in
Increase
other income Related to
31 December during the Other 31 December
Items during the assets/Related to
2018 reporting changes 2019
reporting profit or loss
period
period
Wine production system
255,208.43 - 62,499.96 - 192,708.47 Related to asset
technical transformation
Instrument subsidy 992,250.00 843,000.00 284,812.50 - 1,550,437.50 Related to asset
Intelligent solid brewing
151,041.57 - 31,250.04 - 119,791.53 Related to asset
technology innovation project
~ 200 ~
Anhui province development
of direct funds of service 1,087,805.00 - 292,682.88 - 795,122.12 Related to asset
industry
Anhui province subsidy of
innovative province
2,678,665.00 - 730,545.00 - 1,948,120.00 Related to asset
construction capacity for
independent innovation
Energy efficiency renovation
project for coal industrial 12,750.00 - 12,750.00 - - Related to asset
boiler and glass furnace
Bozhou logistics center
60,000.00 - 60,000.00 - - Related to asset
project
Equipment subsidy 1,252,062.37 19,000.00 203,034.21 - 1,068,028.16 Related to asset
Finance subsidy for technical
415,930.90 - 415,930.90 - - Related to asset
reconstruction
Enterprise development funds 52,500.00 - 30,000.00 - 22,500.00 Related to asset
Internet traceability system
2,970,000.00 - 1,113,750.00 - 1,856,250.00 Related to asset
project
Subsidy for suizhou new
35,338,000.00 - - - 35,338,000.00 Related to asset
factory infrastructure
Motor and boiler
energy-saving technical 412,500.20 - 137,499.96 - 275,000.24 Related to asset
transformation project
Automation of check and
storage, on-line monitoring of 359,375.00 - 93,750.00 - 265,625.00 Related to asset
product quality
Funds for research projects of
886,200.00 113,800.00 - - 1,000,000.00 Related to asset
koji-making Technology
Gujing Zhangji wine cellar
optimization and 882,708.39 - 47,499.96 - 835,208.43 Related to asset
reconstruction project
Subsidy for food safety
827,586.25 - 137,931.00 - 689,655.25 Related to asset
improvement project
~ 201 ~
Subsidy for key technical
cooperation project on the
600,000.00 - - - 600,000.00 Related to asset
authenticity of important food
isotopes
Comprehensive subsidy fund
for air pollution prevention 2,608,083.33 - 263,000.04 - 2,345,083.29 Related to asset
and control
Funds for strategic emerging
industry agglomeration 1,020,800.00 - 222,720.00 - 798,080.00 Related to asset
development base
Refund of Land payment 23,113,034.11 - 550,206.18 - 22,562,827.93 Related to asset
Specific funds for side
management of power 660,000.00 - 144,000.00 - 516,000.00 Related to asset
demand
Total 76,636,500.55 975,800.00 4,833,862.63 - 72,778,437.92 ——
5.29 Share Capital
Changes during the reporting period (+,-)
31 December Capitalisat
New Bonus 31 December 2019
2018 ion of Others Subtotal
issues issues
reserves
Number of
503,600,000
total - - - - - 503,600,000.00
.00
shares
5.30 Capital Reserves
Increase during Decrease during
Items 31 December 2018 the reporting the reporting 31 December 2019
period period
Capital premium (share
1,262,552,456.05 - - 1,262,552,456.05
premium)
Other capital reserves 32,853,136.20 - - 32,853,136.20
Total 1,295,405,592.25 - - 1,295,405,592.25
~ 202 ~
5.31 Other Comprehensive Income
Changes during the reporting period
Less: Items
previously
recognized in
31 Changes of 1 Less: 31
Amount other Attributable to Attributable to
Items December accounting January Income December
before comprehensive owners of the non-controlling
2018 policy 2019 tax 2019
tax income being Company interest
expenses
reclassified to
current profit or
loss
Other
comprehensive
income will not be - - - - - - - - -
reclassified into
profit or loss
Other
comprehensive
income will be
4,794,830.59 -4,794,830.59 - - - - - - -
reclassified into
profit or loss under
equity method
Gains /(losses)
arising from
changes in fair
4,794,830.59 -4,794,830.59 - - - - - - -
value of
available-for-sale
financial assets
Total 4,794,830.59 -4,794,830.59 - - - - - - -
5.32 Surplus Reserves
Increase Decrease
Changes of
during the during the
Items 31 December 2018 accounting 1 January 2019 31 December 2019
reporting reporting
policy
period period
~ 203 ~
Increase Decrease
Changes of
during the during the
Items 31 December 2018 accounting 1 January 2019 31 December 2019
reporting reporting
policy
period period
Statutory
surplus 256,902,260.27 - 256,902,260.27 - - 256,902,260.27
reserves
Total 256,902,260.27 - 256,902,260.27 - - 256,902,260.27
Note: Pursuant to the Company Law of the People's Republic of China and Articles of Association,
the Company appropriates 10% of net profit to the statutory surplus reserves. If the cumulative
amount of the statutory surplus reserve is more than 50% of the registered capital of the company, it
can be not appropriated any more.
5.33 Retained Earnings
Items 2019 2018
Balance at the end of last period before adjustments 5,541,281,341.47 4,349,649,698.42
Adjustments for the opening balance (increase /(decrease)) 4,794,830.59 -
Balance at the beginning of the reporting period after
5,546,076,172.06 4,349,649,698.42
adjustments
Add: net profit attributable to owners of the parent
2,097,527,739.86 1,695,231,643.05
company for the reporting period
Payment of ordinary share dividends 755,400,000.00 503,600,000.00
Balance at the end of the reporting period 6,888,203,911.92 5,541,281,341.47
5.34 Revenue and Cost of Sales
2019 2018
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 10,359,521,016.94 2,389,208,627.75 8,643,055,572.55 1,902,024,741.16
Other activities 57,440,567.29 36,838,297.14 43,084,764.34 30,040,096.49
Total 10,416,961,584.23 2,426,046,924.89 8,686,140,336.89 1,932,064,837.65
5.35 Taxes and Surcharges
~ 204 ~
Items 2019 2018
Consumption tax 1,310,755,555.59 1,018,772,391.98
Urban maintenance and construction tax
239,699,123.64 215,702,291.57
and educational surcharge
Property tax 11,812,243.00 16,405,271.90
Land use tax 9,702,285.09 11,230,378.26
Stamp duty 9,282,035.09 6,914,493.16
Others 11,654,311.63 9,882,693.22
Total 1,592,905,554.04 1,278,907,520.09
5.36 Selling and Distribution Expenses
Items 2019 2018
Employment benefits 539,175,110.66 443,674,013.14
Travel fees 133,377,266.84 105,558,192.51
Advertisement fees 876,445,646.88 643,845,577.77
Transportation charges 52,250,930.23 50,301,343.18
Comprehensive promotion costs 969,501,572.71 981,647,916.98
Service fees 516,683,260.54 374,712,968.67
Others 97,460,433.24 82,795,293.01
Total 3,184,894,221.10 2,682,535,305.26
5.37 General and Administrative Expenses
Items 2019 2018
Employment benefits 418,480,165.12 381,810,225.86
Office fees 45,087,603.23 36,115,375.96
Maintenance expenses 44,265,385.52 75,819,068.26
Depreciation 65,103,145.01 59,437,594.57
Amortization of intangible assets 29,074,836.91 19,959,184.85
~ 205 ~
Items 2019 2018
Pollution discharge 18,771,523.15 14,533,149.92
Travel expenses 7,637,602.20 2,868,419.04
Water and electricity charges 11,057,588.66 10,176,771.91
Others 45,802,696.65 44,277,256.28
Total 685,280,546.45 644,997,046.65
5.38 Research and Development Expenses
Items 2019 2018
Labour cost 20,441,413.41 10,076,055.90
Direct input costs 3,975,855.83 2,932,841.66
Depreciation 3,474,875.34 2,652,902.88
Others 14,480,872.75 8,304,965.60
Total 42,373,017.33 23,966,766.04
Note:Research and development expenses in 2019 has increased by 76.80% compared with that in
2018, mainly due to the increase of research and development input of the Company.
5.39 Finance Costs
Items 2019 2018
Interest expenses 33,652,843.25 15,408,022.76
Less: Interest income 133,813,626.35 68,964,800.42
Net interest expenses -100,160,783.10 -53,556,777.66
Net foreign exchange losses 1,594,072.93 674,321.43
Bank charges and others 940,906.66 1,309,826.50
Total -97,625,803.51 -51,572,629.73
Note: Finance cost in 2019 has decreased by 89.30% compared with that in 2018, mainly due to the
increase of interest income.
5.40 Other Income
~ 206 ~
Items 2019 2018 Related to assets /income
1. Government grant
recognised in other imcome
Including: Government grant
related to deferred income 4,833,862.63 7,025,202.67 Related to assets
(related to assets)
Government grant
directly recognised in current
93,410,607.69 28,676,471.78 Related to income
profit or loss (related to
income)
Total 98,244,470.32 35,701,674.45
Note: Other income in 2019 has increased by 175.18% compared with that in 2018. The main
reason is that the tax return received in this period is higher than that in the previous period, and the
return fund about stable postition received from Bozhou Social Insurance Administration Bureau in
this period.
5.41 Investment Income
Items 2019 2018
Investment income from long-term
-221,717.76 -
equity investments under equity method
Gains on disposal of financial assets at
- 1,238,951.28
fair value through profit or loss
Investment income from
held-to-maturity investments during - 96,034,262.28
holding period
Investment income from
available-for-sale financial assets during - 22,103,586.91
holding period
Gains on disposal of available-for-sale
- 17,575,818.71
financial assets
Investment income from held-for-trading
126,649,168.04 -
financial assets during holding period
Others - 11,262,849.44
Total 126,427,450.28 148,215,468.62
~ 207 ~
5.42 Gains on Changes in Fair Values
Sources of gains on changes in fair value 2019 2018
Held-for-trading financial assets
Including: Changes in fair value of
designated as held-for-trading 17,585,151.48 -161,541.19
financial assets
Total 17,585,151.48 -161,541.19
Note: The gains on changes in fair values in 2019 increased significantly compared with that in
2018, mainly due to the increase in fair value of held-for-trading financial assets in 2019.
5.43 Impairment Loss of Credit
Items 2019 2018
Bad debt of notes receivable -34,938.37 —
Bad debt of accounts receivable -175,624.33 —
Bad debt of other receivables -722,167.14 —
Total -932,729.84 —
Note: Impairment loss of credit in 2019 increased by RMB 932,729.84 yuan compared with that in
2018, which was mainly bacause bad debt loss originally classified in impairement loss of assets
reclassified to impairment loss of credit according to Notice on revising and printing the financial
statement format of general enterprises in 2019 (Caikuai [2019] No. 6) issued by Ministry of
finance.
5.44 Impairment Loss of Assets
Items 2019 2018
Bad debt of receivables - -164,473.83
Impairment of inventories -1,078,980.44 -12,377,889.37
Impairment of fixed assets -138,765.07 -184,505.54
Total -1,217,745.51 -12,726,868.74
~ 208 ~
Note: Impairment loss of assets decreased by 11,509,123.23 yuan compared with that in 2018,
mainly because of the decrease of impairment of inventories in 2019.
5.45 Gains/ (losses) from Disposal of Assets
Items 2019 2018
Gains/(losses) from disposal of fixed
assets, construction in progress,
productive biological assets and 252,518.68 526,066.38
intangible assets not classified as held
for sale
Including: Fixed assets 252,518.68 526,066.38
Total 252,518.68 526,066.38
5.46 Non-operating Income
(a) Details of non-operating income
Recognized in current
Items 2019 2018 extraordinary gains and
losses
Gains from damage or
277,478.76 75,031.16 277,478.76
scrapping of non-current asset
Government grants irrelevant to
48,707.00 340,000.00 48,707.00
daily operation activities
Income from penalties and
26,507,159.08 18,476,297.19 26,507,159.08
compensation
Sales of wastes 3,575,405.84 15,074,253.13 3,575,405.84
Accounts payable no need to
19,614,848.78 248,222.02 19,614,848.78
pay back
Others 7,782,396.91 1,076,176.94 7,782,396.91
Total 57,805,996.37 35,289,980.44 57,805,996.37
(b) Government grants irrelevant to daily operation activities
~ 209 ~
Related to assets
Grant program 2019 2018
/income
Other incentives
48,707.00 140,000.00 Related to income
Taxpayer bonus in
- 100,000.00 ——
Xianning high-tech district
Yaohai district shengli
- 100,000.00 ——
street awards
Total 48,707.00 340,000.00 ——
(c)The non-operating income has increased by 63.80% compared with that in 2018, mainly because
of the increase in accounts payable not required to be paid as confirmed by property inspection.
5.47 Non-operating Expenses
Recognised in current
Items 2019 2018 extraordinary gains and
losses
Loss from damage or scrapping
6,966,429.07 10,661,117.09 6,966,429.07
of non-current assets
Others 1,444,027.58 2,499,058.39 1,444,027.58
Total 8,410,456.65 13,160,175.48 8,410,456.65
Note: Non-operating expenses decreased 36.09% compared with that in 2018, mainly because of
the decrease of loss from damage or scrapping of non-current assets.
5.48 Income Tax Expenses
(a) Details of income tax expenses
Items 2019 2018
Current tax expenses 702,843,706.67 623,207,719.69
Deferred tax expenses 12,193,478.05 4,804,714.84
Total 715,037,184.72 628,012,434.53
(b) Reconciliation of accounting profit and income tax expenses
Items 2019
~ 210 ~
Items 2019
Profit before tax 2,872,841,779.06
Income tax expense at the statutory /applicable tax rate 718,210,444.77
Effect of different tax rate of subsidiaries -9,655,744.33
Adjustments of impact from prior period income tax -21,122,989.53
Effect of income that is exempt from taxation -1,008,198.34
Effect of non-deductible costs, expenses or losses 28,518,918.92
Effect of previously unrecognized deductible losses recognised as deferred tax
6,216,697.88
assets
Effect of deductible temporary differences and deductible losses not recognised
760,918.41
as deferred tax assets
R&D expenses plus deduction -6,282,863.06
Tax rate adjustment to the beginning balance of deferred income tax
-
assets/liabilities
Income tax credits -600,000.00
Total 715,037,184.72
5.49 Other Comprehensive Income
For details of the other comprehensive income and related tax effect, transfer to profit or loss and
adjustment of other comprehensive income, please refer to Note 5.31 Other Comprehensive Income
5.50 Notes to the Statement of Cash Flow
(a) Other cash received relating to operating activities
Items 2019 2018
Security deposit, guarantee and warrenty 171,148,971.50 159,476,594.48
Government grants 84,936,396.19 50,692,038.13
Interest income 156,828,015.62 68,964,800.42
Release of restricted monetary funds 870,200,000.00 460,000,000.00
Others 40,619,933.12 34,874,949.28
Total 1,323,733,316.43 774,008,382.31
(b) Other cash payments relating to operating activities
~ 211 ~
Items 2019 2018
Cash paid in sales and distribution
expenses and general and administrative 2,255,773,662.59 1,837,245,742.21
expense
Security deposit, guarantee and warrenty 594,283.56 -
Time deposits or deposits pledged for the
312,000,000.00 200,000.00
issuance of notes payable
Structured time deposits that cannot be
2,363,000,000.00 870,000,000.00
withdrawn in advance
Others 27,764,520.81 7,774,646.93
Total 4,959,132,466.96 2,715,220,389.14
(c) Other cash payments relating to financing activities
Items 2019 2018
Cancellation of registration of subsidiary - 16,553.34
Total - 16,553.34
5.51 Supplementary Information to the Statement of Cash Flows
(a) Supplementary information to the statement of cash flows
Supplementary information 2019 2018
(i) Adjustments of net profit to cash flows from
operating activities:
Net profit 2,157,804,594.34 1,740,913,660.88
Add: Provisions for impairment of assets 2,150,475.35 12,726,868.74
Depreciation of fixed assets, Investment Properties,
206,165,530.04 194,327,557.29
oil and gas asset and productive biological assets
Amortisation of intangible assets 29,374,836.96 19,959,184.85
Amortisation of long-term deferred expenses 27,376,736.70 21,492,764.36
Losses /(gains) on disposal of fixed assets, intangible
-252,518.68 -526,066.38
assets and other long-term assets
~ 212 ~
Losses /(gains) on scrapping of fixed assets 6,688,950.31 10,586,085.93
Losses /(gains) on changes in fair value -17,585,151.48 161,541.19
Finance costs /(income) 35,246,916.18 15,408,022.76
Investment losses /(income) -126,427,450.28 -148,215,468.62
Decreases /(increases) in deferred tax assets -3,914,373.45 5,577,306.68
Increases /(decreases) in deferred tax liabilities 16,107,851.50 -772,591.84
Decreases /(increases) in inventories -608,824,277.36 -328,785,250.90
Decreases /(increases) in operating receivables 258,842,362.46 -876,884,454.15
Increases /(decreases) in operating payables 14,492,580.86 1,192,137,327.83
Others* -1,804,800,000.00 -417,225,202.67
Net cash flows from operating activities 192,447,063.45 1,440,881,285.95
(ii)Significant investing and financing activities not
involving cash receipts and payments:
Conversion of debt into capital - -
Convertible corporate bonds maturing within one year - -
Fixed assets acquired under finance leases - -
(iii)Net increases in cash and cash equivalents:
Cash at the end of the reporting period 2,944,749,918.09 835,560,865.12
Less: Cash at the beginning of the reporting period 835,560,865.12 1,024,088,626.40
Add: Cash equivalents at the end of the reporting
- -
period
Less: Cash equivalents at the beginning of the
- -
reporting period
Net increase in cash and cash equivalents 2,109,189,052.97 -188,527,761.28
* “Others” refer to impact of restricted funds on net cash flow generated from operating activities of the reporting period.
(b) The components of cash and cash equivalents
Items 31 December 2019 31 December 2018
~ 213 ~
(i) Cash 2,944,749,918.09 835,560,865.12
Including: Cash on hand 292,465.36 353,429.67
Cash in bank available for
2,943,712,121.81 835,175,643.46
immediate use
Other monetary funds available for
745,330.92 31,791.99
immediate use
(ii) Cash equivalents
Including: Bond investments maturing within
three months
(iii) Cash and cash equivalents at the end of
2,944,749,918.09 835,560,865.12
the reporting period
Including: Restricted cash and cash
equivalents of the parent company and the
subsidiaries of the group
5.52 Restricted Assets
Items Carrying amount at 31 December Reason
2019
Structured deposit and fixed deposit
Cash and cash equivalents
which cannot be withdrawn in advance
2,675,000,000.00
as well as time deposits pledged for
issuance of bank acceptance bills
Notes receivable Pledged for issuance of bank acceptance
349,377,134.82
bills
Total 3,024,377,134.82 ——
5.53 Government Grants
(a) Government grants related to assets
Items Recognised in current profit or loss or Presented items that
Items Amount
presented in directly as deduct of related cost recognised in current
~ 214 ~
the statement profit or loss or
of financial 2019 2018 directly as deduct of
position related cost
Technical
transformation of
Deferred
brewing 192,708.47 62,499.96 Other income
income
production
system
Equipment Deferred
1,550,437.50 284,812.50 Other income
subsidy income
Intelligent solid
brewing Deferred
119,791.53 31,250.04 Other income
technology income
innovation project
Guiding funds for
the development
Deferred
of service 795,122.12 292,682.88 Other income
income
industry in Anhui
Province
Subsidy for the
construction of
independent Deferred
1,948,120.00 730,545.00 Other income
innovation income
capacity of Anhui
Province
Energy saving
transformation
project of Deferred
- 12,750.00 Other income
coal-fired income
industrial boiler
and glass furnace
Project fund of
Deferred
Bozhou - 60,000.00 Other income
income
logistics center
Equipment Deferred
1,068,028.16 203,034.21 162,166.54 Other income
subsidy income
~ 215 ~
Items Recognised in current profit or loss or Presented items that
presented in directly as deduct of related cost recognised in current
Items Amount the statement profit or loss or
of financial 2019 2018 directly as deduct of
position related cost
Financial subsidy
Deferred
for technological - 415,930.90 Other income
income
transformation
Special funds for
Deferred
enterprise 22,500.00 30,000.00 Other income
income
development
Internet of things
Deferred
traceability 1,856,250.00 1,113,750.00 Other income
income
system project
Electric motor
and boiler energy
Deferred
saving technology 275,000.24 137,499.96 Other income
income
transformation
project
Whole process
online monitoring
Deferred
of hook and store 265,625.00 93,750.00 Other income
income
automation and
product quality
Gujing Zhangji
liquor warehouse
Deferred
optimization and 835,208.43 47,499.96 Other income
income
transformation
project
Subsidy for food
safety Deferred
689,655.25 137,931.00 Other income
improvement income
project
Comprehensive
subsidy fund Deferred
2,345,083.29 263,000.04 2,098,202.98 Other income
for air income
pollution
~ 216 ~
Items Recognised in current profit or loss or Presented items that
presented in directly as deduct of related cost recognised in current
Items Amount the statement profit or loss or
of financial 2019 2018 directly as deduct of
position related cost
prevention and
control
Funds for
strategic
emerging
Deferred
industry 798,080.00 222,720.00 - Other income
income
agglomeration
development
base
Refund for Deferred
22,562,827.93 550,206.18 Other income
land payment income
Suizhou new
Deferred
plant construction 35,338,000.00 - - Other income
income
subsidy
Funds for
research
Deferred
projects of 1,000,000.00 - - Other income
income
koji-making
technology
Subsidy for
key technical
cooperation
Deferred
project on the 600,000.00 - - Other income
income
authenticity of
important food
isotopes
Specific funds
for side Deferred
516,000.00 144,000.00 60,000.00 Other income
management of income
power demand
Total 72,778,437.92 - 4,833,862.63 2,320,369.52
(b) Government grants related to income
Items presented Recognised in current profit or loss or Presented items that
Items Amount
in the statement directly as deduct of related cost recognised in current
~ 217 ~
of financial profit or loss or
position 2019 2018 directly as deduct of
related cost
Tax refund 34,825,848.70 Other income 34,825,848.70 18,279,633.65 Other income
Energy saving
and
environmental 500,000.00 Other income 500,000.00 Other income
protection
industry fund
Bonus of
Bozhou
science and 800,000.00 Other income 800,000.00 Other income
technology
bureau
Incentive
payment for
manufacturer's
subsidiary
separation of 500,000.00 Other income 500,000.00 Other income
national
development and
Reform
Commission
2019 strong
industrial cities
special fund for 750,000.00 Other income 750,000.00 Other income
developing
private economy
Unemployment
insurance
funds and 39,641,870.00 Other income 39,641,870.00 Other income
stabilization
allowance
Standardization
work of Bozhou
market 450,000.00 Other income 450,000.00 Other income
supervision
administration in
~ 218 ~
Recognised in current profit or loss or Presented items that
Items presented
directly as deduct of related cost recognised in current
in the statement
Items Amount profit or loss or
of financial
2019 2018 directly as deduct of
position
related cost
2018
Subsidy for robot
300,000.00 Other income 300,000.00 Other income
project
Subsidy from
Social Security 3,750,000.00 Other income 3,750,000.00 Other income
Bureau
Project funds
from Bozhou
economic and 1,100,000.00 Other income 1,100,000.00 Other income
Information
Bureau
2018 patent
400,000.00 Other income 400,000.00 Other income
project award
Special funds
for industrial Other income 2,100,000.00 Other income
development
Projects funds
for
manufacturing
Other income 1,800,000.00 Other income
strong
provinces in
2018
Standardized
Other income 1,109,249.00 Other income
reward
National
intellectual
property
1,200,000.00 Other income 1,200,000.00 Other income
demonstration
enterprise
award
~ 219 ~
Recognised in current profit or loss or Presented items that
Items presented
directly as deduct of related cost recognised in current
in the statement
Items Amount profit or loss or
of financial
2019 2018 directly as deduct of
position
related cost
Subsidy from
Bozhou Market
559,000.00 Other income 559,000.00 Other income
Supervision
Administration
Others 8,633,888.99 Other income 8,633,888.99 5,387,589.13 Other income
Other not related Non-operating Non-operating
48,707.00 48,707.00 340,000.00
to daily operation income income
Total 93,459,314.69 —— 93,459,314.69 29,016,471.78 ——
6.CHANGES OF THE SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
6.1 Other Reasons of Changes in the Scope of Consolidation
The subsidiary Yellow Crane Tower Beverage Co., Ltd. was established during 2019, whose
registered capital is 5,000,000.00 yuan. The address is Industrial park, Development District of
Xian'an District, Xianning City. The subsidiary Yellow Crane Tower Wine Co., Ltd holds 100% of
its equity.
7. INTERESTS IN OTHER ENTITIES
7.1 Interests in Subsidiaries
(a) Composition of corporate group
Percentage of equity
Principal
Name of Registered Nature of interests by the Company
place of Ways of acquisition
subsidiary Address business (%)
business
Direct Indirect
Bozhou
Gujing Sales
Commercial Investment
Co., Ltd. Anhui Bozhou Anhui Bozhou 100.00
trade establishment
(hereafter
Gujing Sales)
~ 220 ~
Anhui
Longrui Glass
Co., Ltd Investment
Anhui Bozhou Anhui Bozhou Manufacture 100.00
(hereafter establishment
Longrui
Glass)
Bozhou
Gujing Waste
Reclamation
Investment
Co., Ltd. Anhui Bozhou Anhui Bozhou Waste recycle 100.00
establishment
(hereafter
Gujing
Waste)
Anhui
Jinyunlai
Culture & Advertisement Investment
Anhui Hefei Anhui Hefei 100.00
Media Co., marketing establishment
Ltd. (hereafter
Jinyunlai)
Anhui
Ruisiweier Technical Investment
Anhui Bozhou Anhui Bozhou 100.00
Technology research establishment
Co., Ltd.
Anhui
Investment
colorful taste Anhui Bozhou Anhui Bozhou Manufacture 100.00
establishment
wine co., Ltd.
Shanghai
Gujing Jinhao Business
Hotel
hotel Shanghai Shanghai 100.00 combination under
management
management common control
company
Bozhou Business
Anhui Bozhou Anhui Bozhou Hotel operating 100.00
Gujing hotel combination under
~ 221 ~
Co., Ltd common control
Anhui
Yuanqing
Sewage Investment
environmental Anhui Bozhou Anhui Bozhou 100.00
treatment establishment
protection
Co., Ltd.
Anhui Gujing
Yunshang
Electronic Investment
Electronic Anhui Hefei Anhui Hefei 100.00
commerce establishment
Commerce
Co., Ltd
Anhui
Zhenrui
Investment
Construction Anhui Bozhou Anhui Bozhou Construction 100.00
establishment
Engineering
Co., Ltd
Anhui
RunanxinkeT Investment
Anhui Bozhou Anhui Bozhou Food testing 100.00
esting Tech. establishment
Co., Ltd.
Business
Yellow Crane
combination not
Tower Wine Hubei Wuhan Hubei Wuhan Manufacture 51.00
under common
Co., Ltd
control
Yellow Crane Business
Tower Wine Hubei Hubei combination not
Manufacture 51.00
(Xianning) Xianning Xianning under common
Co., Ltd control
Yellow Crane Business
Hubei Suizhou Hubei Suizhou Manufacture 51.00
Tower Wine combination not
~ 222 ~
(Suizhou) under common
Co., Ltd control
Wuhan
Business
Tianlong Jindi
Commercial combination not
Technology Hubei Wuhan Hubei Wuhan 51.00
trade under common
Development
control
Co., Ltd
Business
Xianning
Hubei Hubei Commercial combination not
Junhe Sales 51.00
Xianning Xianning trade under common
Co., Ltd
control
Business
Hubei Junhe
Advertisement combination not
Advertising Hubei Wuhan Hubei Wuhan 51.00
marketing under common
Co., Ltd
control
Hubei Yellow
Crane Tower Investment
Hubei Wuhan Hubei Wuhan Manufacture 51.00
Beverage Co., establishment
Ltd
Wuhan
Yashibo Technology Investment
Hubei Wuhan Hubei Wuhan 51.00
Technology development establishment
Co., Ltd.
Wuhan Junya Commercial Investment
Hubei Wuhan Hubei Wuhan 51.00
Sales Co., Ltd trade establishment
Suizhou
Junhe Commercial Investment
Hubei Suizhou Hubei Suizhou 51.00
Commercial trade establishment
Co., Ltd.
(b) Significant non-wholly owned subsidiaries
~ 223 ~
Proportion of
Profit or loss Dividends declared
ownership
attributable to non- to distribute to Non-controlling
interest held by
Name of subsidiary controlling non-controlling interests at the end of thehe
non-
interests during the interests during the reporting period
controlling
reporting period reporting period
interests (%)
Yellow Crane
Tower Wine Co., 49.00 60,276,854.48 - 488,042,947.30
Ltd
(c) Main financial information of significant non-wholly owned subsidiaries
31 December 2019
Name of
Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities
assets liabilities liabilities
Yellow Crane
Tower Wine 755,439,438.85 742,229,246.05 1,497,668,684.90 369,369,757.38 132,292,912.62 501,662,670.00
Co., Ltd
(Continued)
31 December 2018
Name of
Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities
assets liabilities liabilities
Yellow Crane
Tower Wine 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
Co., Ltd
2019
Total
Name of subsidiary Net cash flows from
Revenue Net profit/(loss) comprehensive
operating activities
income
Yellow Crane Tower Wine
1,153,666,330.72 123,013,988.73 123,013,988.73 78,635,264.01
Co., Ltd
(Continued)
Name of subsidiary 2018
~ 224 ~
Total
Net cash flows from
Revenue Net profit/(loss) comprehensive
operating activities
income
Yellow Crane Tower Wine
866,368,765.24 93,215,106.83 93,215,106.83 172,572,976.32
Co., Ltd
7.2 No Interests in Joint Arrangements or Associates
8. RISKS RELATED TO FINANCIAL INSTRUMENTS
Risks related to the financial instruments of the Company arise from the recognition of various
financial assets and financial liabilities during its operation, including credit risk, liquidity risk and
market risk.
Management of the Company is responsible for determining risk management objectives and
policies related to financial instruments. Operational management is responsible for the daily risk
management through functional departments. Internal audit department is responsible for the daily
supervision of implementation of the risk management policies and procedures, and report their
findings to the audit committee in a timely manner.
Overall risk management objective of the Company is to establish risk management policies to
minimize the risks without unduly affecting the competitiveness and resilience of the Company.
8.1 Credit Risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because the
other party of the financial instrument fails to fulfill its obligation. The credit risk of the Company is
related to cash and equivalent, notes receivable, accounts receivables, other receivables and
long-term receivables. Credit risk of these financial assets is derived from the counterparty’s breach
of contract. The maximum risk exposure is equal to the carrying amount of these financial
instruments.
Cash and cash equivalent of the Company has lower credit risk, as they are mainly deposited in
such financial institutions as commercial bank, of which the Company thinks with higher reputation
and financial position.
For notes receivable, other receivables and long-term receivables, the Company establishes related
policies to control their credit risk exposure. The Company assesses credit capability of its
customers and determines their credit terms based on their financial position, possibility of the
guarantee from third party, credit record and other factors. The Company monitors its customers’
credit record periodically, and for those customers with poor credit record, the Company will take
measures such as written call, shortening or cancelling their credit terms so as to ensure the overall
credit risk of the Company is controllable.
~ 225 ~
8.2 Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by
delivering cash or other financial assets. The Company is responsible for the capital management of
all of its subsidiaries, including short-term investment of cash surplus and dealing with forecasted
cash demand by raising loans. The Company’s policy is to monitor the demand for short-term and
long-term floating capital and whether the requirement of loan contracts is satisfied so as to ensure
to maintain adequate cash and cash equivalents.
8.3 Market Risk
(a) Foreign currency risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The core
business of the Company is on the mainland of China and trading with RMB. Foreign exchange risk
risk is minimal.
(b)Interest rate risk
The operating fund of the Company is sufficient, and there is no loan in recent years so that the risk
of interest is very small for the Company.
(c) Other price risk
The Held-for-trading financial assets of the Company is measured by fair value. So, the Company
bears the risk of the change of security market. To decrease the risk, the management decided that
the Company held a combination of several equities and securities.
9. FAIR VALUE DISCLOSURES
The inputs used in the fair value measurement in its entirety are to be classified in the level of the
hierarchy in which the lowest level input that is significant to the measurement is classified.
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or
liabilities
Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are either
directly or indirectly observable.
Level 3: Inputs are unobservable inputs for the assets or liabilities
9.1 Assets and Liabilities Measured at Fair Value at 31 December 2019
Fair value at 31 December 2019
Items
Level 1 Level 2 Level 3 Total
~ 226 ~
Recurring fair value measurements
(a) Held-for-trading financial assets
(i) Financial assets at fair value through
- 509,031,097.02 - 509,031,097.02
profit or loss
Debt instruments - - - -
Bank financial products - 297,146,591.78 - 297,146,591.78
Fund investment - 211,884,505.24 - 211,884,505.24
Total assets measured at fair value on a
- 509,031,097.02 - 509,031,097.02
recurring basis
The fair value of financial instruments traded in an active market is based on quoted market prices
at the reporting date. The fair value of financial instruments not traded in an active market is
determined by using valuation techniques. Specific valuation techniques used to value the above
financial instruments include discounted cash flow and market approach to comparable company
model. Inputs in the valuation technique include risk-free interest rates, benchmark interest rates,
exchange rates, credit spreads, liquidity premiums, discount for lack of liquidity.
9.2 Valuation Technique(s), Qualitative and Quantitative Information about the Significant
Inputs Used for Fair Value Measurement in Level 2 on a Recurring or Nonrecurring Basis
The items of fair value measurement in Level 2 of the Company are mainly about bank financial
products and fund investments. For bank financial products, the Company shall calculate its rate of
return based on the observable market rate of return on the financial products, in order to determine
the gains or losses arising from the changes in fair value , and then finally recognize the value of
held-for-trading financial assets. For fund investment, the Company shall determine the gains or
losses arising from changes in fair value and the value of held-for-trading financial assets according
to the valuation table of securities investment fund provided by asset management company.
10. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
Recognition of related parties: The Company has control or joint control of, or exercise significant
influence over another party; or the Company is controlled or jointly controlled, or significant
influenced by another party.
10.1 General Information of the Parent Company
Registered Nature of Registered Percentage of equity Voting rights
Name of the parent
address the business capital interests in the in the
~ 227 ~
Company (%) Company (%)
Drink,
building
AnhuiGujing Group Co., materials, 1,000,000,000.
Anhui Bozhou 53.89 53.89
Ltd.
manufactur 00
e plastic
production
(b) Ultimate controlling party of the Company
The ultimate controller is the government of Bozhou, Anhui province.
10.2 General Information of Subsidiaries
Details of the subsidiaries please refer to Notes 7 INTERESTS IN OTHER ENTITIES.
10.3 Joint Ventures and Associates of the Company
(a) General information of significant joint ventures and associates
Details of significant joint ventures and associates please refer to Notes 7 INTERESTS IN OTHER
ENTITIES
10.4 Other Related Parties of the Company
Name Relationship with the Company
An affiliate of the actual controller and controlling
Anhui Ruifuxiang Food Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Ruijing catering management Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Haochidian Catering Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Shanghai Ruiyao Hotel Management Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Shanghai Beihai Hotel Co., Ltd
shareholder
An affiliate of the actual controller and controlling
Anhui Ruijing Business Travel (Group) Co., Ltd.
shareholder
Bozhou Hotel Co., Ltd. An affiliate of the actual controller and controlling
~ 228 ~
shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Real Estate Group Co., Ltd.
shareholder
Orient Ruijing Enterprise Investment Development Co., An affiliate of the actual controller and controlling
Ltd. shareholder
An affiliate of the actual controller and controlling
Anhui Hengxin Pawn Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Bozhou Ruineng Thermal Power Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Hefei Gujing Holiday Hotel Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Bozhou Furuixiang high protein feed Co. Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Ruijing restaurant management Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Ruixin pawn Co. Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Zhongxin finance lease Co. Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Huixin finance invest group Co., Ltd
shareholder
An affiliate of the actual controller and controlling
Hefei Longxin Financial Management Consulting Co., Ltd
shareholder
An affiliate of the actual controller and controlling
Bozhou Anxin Micro Finance Co., Ltd.
shareholder
Dazhongyuan Wine valley culture tourism development An affiliate of the actual controller and controlling
Co., Ltd. shareholder
An affiliate of the actual controller and controlling
Anhui Xinyuan Municipal Garden Engineering Co., Ltd
shareholder
An affiliate of the actual controller and controlling
Anhui gujing hotel management Co., Ltd.
shareholder
~ 229 ~
An affiliate of the actual controller and controlling
Anhui Youxin Financing guarantee Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Aoxin Real estate development Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Lixin Electronic commerce Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Xinxin Property management Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Huishenglou Catering Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Bozhou Gujing Junlai Hotel Management Co., Ltd
shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Property Management Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Real estate development Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Gujing international tourism Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Jinzhai Gujing Real Estate Development Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Health Industry Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Lejiu Home Tourism Management Co., Ltd.
shareholder
An affiliate of the actual controller and controlling
Anhui Shenglong Commercial Co., Ltd.
shareholder
10.5 Related Party Transactions
(a) Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Related parties Nature of the 2019 2018
~ 230 ~
transaction(s)
Labor and
Anhui Gujing international
accommodation 2,742,924.44 1,208,159.67
tourism Co., Ltd.
service
Anhui Gujing Group Co., Ltd. Labor service - 62,068.97
Purchase of
Anhui Gujing Group Co., Ltd. 3,900.00 -
materials
Purchase of
Anhui Gujing Health Industry
materials and 19,433.63 195,685.75
Co., Ltd.
labor service
Catering and
Anhui gujing hotel
accommodation 606,319.42 854,430.39
management Co., Ltd.
service
Purchase of
Anhui gujing hotel
materials and 138,836.65 -
management Co., Ltd.
labor service
Catering and
Anhui Haochidian Catering
accommodation 52,807.43 558,175.10
Co., Ltd.
service
Purchase of
Anhui Haochidian Catering
materials and 12,906,491.94 -
Co., Ltd.
labor service
Anhui Huixin finance invest
Labor service 57,200.80 212,248.30
group Co. Ltd.
Anhui Ruifuxiang Food Co., Purchase of
24,227.98 -
Ltd. materials
Anhui Ruijing catering
Catering service 51,171.00 51,631.00
management Co., Ltd.
Purchase of
Anhui Ruijing Business Travel
materials and 4,872,511.46 43,413.71
(Group) Co., Ltd.
labor service
Anhui Xinyuan Municipal
Labor service 31,849.06 1,173,301.27
Garden Engineering Co., Ltd
Bozhou Hotel Co., Ltd. Catering and 5,761,744.42 5,007,403.41
~ 231 ~
accommodation
service
Catering and
Bozhou Gujing Huishenglou
accommodation 6,058,768.50 3,233,671.00
Catering Co., Ltd.
service
Dazhongyuan Wine valley Purchase of
culture tourism development materials and 89,950.55
Co., Ltd. labor service
Purchase of
Anhui Lvyuan ecological
materials and 1,226,503.81
agriculture Co.,Ltd
labor service
Hefei Gujing Holiday Hotel Purchase of
520,630.53 -
Co., Ltd. materials
Catering and
Hefei Gujing Holiday Hotel
accommodation 15,915.26 403,358.10
Co., Ltd.
service
Total —— 35,181,186.88 13,003,546.67
Sales of goods and rendering of services:
Nature of the
Related parties 2019 2018
transaction(s)
Anhui Aoxin Real estate
Sales of liquor - 13,424.13
development Co., Ltd.
Anhui Gujing Real Estate
Labor service - 397,665.85
Group Co., Ltd.
Anhui Gujing Real Estate
Sales of liquor - 347,880.88
Group Co., Ltd.
Catering and
Anhui Gujing international
accommodation 206.00 51,744.46
tourism Co., Ltd.
service
Anhui Gujing international Sales of small
702.45 -
tourism Co., Ltd. materials
Catering and
Anhui Gujing international
accommodation 1,009.71 -
tourism Co., Ltd.
service
~ 232 ~
Catering and
Anhui Gujing Group Co., Ltd. accommodation 246,231.14 384,753.34
service
Anhui Gujing Group Co., Ltd. Labor service - 16,587.36
Sales of small
Anhui Gujing Group Co., Ltd. 217,725.29 283,450.69
materials
Catering and
Anhui Gujing Health Industry
accommodation 37,207.00 9,966.00
Co., Ltd.
service
Anhui Gujing Health Industry
Labor service 844,992.46 226,290.57
Co., Ltd.
Anhui Gujing Health Industry
Sales of liquor 10,075,939.40 6,396,104.00
Co., Ltd.
Anhui Gujing Health Industry Sales of small
10,036.51 39,450.74
Co., Ltd. materials
Anhui gujing hotel
Sales of liquor 93,532.67 135,940.30
management Co., Ltd.
Anhui Haochidian Catering
Labor service - 33,962.26
Co., Ltd.
Anhui Haochidian Catering
Sales of liquor 23,362.83 36,433.69
Co., Ltd.
Anhui Hengxin Pawn Co., Ltd. Sales of liquor 5,352.21 8,380.14
Anhui Huixin finance invest Sales of liquor
470,513.04 1,552,580.62
group Co. Ltd.
Anhui Jinzhai Gujing Real Sales of liquor
- 143,796.76
Estate Development Co., Ltd.
Anhui Lejiu Home Tourism Sales of
305,723.42 71,030.79
Management Co., Ltd. hydropower
Catering and
Anhui Lejiu Home Tourism
accommodation - 5,595.00
Management Co., Ltd.
service
Anhui Lejiu Home Tourism
Labor service - 7,547.17
Management Co., Ltd.
~ 233 ~
Anhui Lejiu Home Tourism Sales of small
11,685.59 64,006.61
Management Co., Ltd. materials
Anhui Lejiu Home Tourism
Sales of liquor 6,837.04 -
Management Co., Ltd.
Anhui Lixin Electronic
Sales of liquor 335,889.03 117,628.42
commerce Co., Ltd.
Anhui Ruifuxiang Food Co.,
Sales of liquor - 588,449.78
Ltd.
Catering and
Anhui Ruijing Business Travel
accommodation 49,989.56 93,389.27
(Group) Co., Ltd.
service
Anhui Ruijing Business Travel
Sales of liquor 5,370,339.55 8,239,198.27
(Group) Co., Ltd.
Sales of
Anhui Ruijing Business Travel
packaging - 832.76
(Group) Co., Ltd.
materials
Anhui Ruixin pawn Co. Ltd. Sales of liquor 6,453.98 14,452.08
Catering and
Anhui Shenglong Commercial
accommodation 17,223.00 16,270.00
Co., Ltd.
service
Anhui Shenglong Commercial
Sales of liquor 1,045,891.85 470,660.35
Co., Ltd.
Catering and
Anhui Xinyuan Municipal
accommodation - 400.00
Garden Engineering Co., Ltd
service
Anhui Xinyuan Municipal Sales of small
1,551.27 30,008.04
Garden Engineering Co., Ltd materials
Anhui Xinxin Property Sales of liquor
- 39,795.45
management Co., Ltd.
Anhui youxin financing Sales of liquor
5,925.58 7,672.40
guarantee Co,.Ltd
Anhui Zhongxin finance lease Sales of liquor
11,559.56 13,259.55
Co. Ltd.
Bozhou Anxin Micro Finance Sales of liquor 9,927.68 13,270.29
~ 234 ~
Co., Ltd.
Bozhou Hotel Co., Ltd. Labor service - 113,206.84
Bozhou Hotel Co., Ltd. Sales of liquor 17,379.31 61,271.22
Bozhou Gujing Hotel Co.,Ltd Sales of liquor - 16,408.09
Bozhou Gujing Huishenglou
Sales of liquor 41,023.88 43,547.75
Catering Co., Ltd.
Bozhou Gujing Property Sales of liquor
- 60,892.13
management Co., Ltd.
Catering and
Bozhou Gujing Real Estate
accommodation - 1,360.00
Group Co., Ltd.
service
Bozhou Gujing Real Estate
Sales of liquor - 19,694.42
Group Co., Ltd.
Bozhou Ruifuxiang High Sales of liquor
11,405.17 32,141.00
Protein Feed Co., Ltd.
Bozhou Ruineng Thermal
Sales of liquor 312,907.44 258,281.65
Power Co., Ltd.
Bozhou Ruineng Thermal
Labor service 24,866.94 269,024.61
Power Co., Ltd.
Dazhongyuan Wine valley
Sales of small
culture tourism development - 29,526.70
materials
Co., Ltd.
Dazhongyuan Wine valley Catering and
culture tourism development accommodation 5,155.00 22,241.00
Co., Ltd. service
Dazhongyuan Wine valley
culture tourism development Labor service 17,459.86 167,030.67
Co., Ltd.
Dazhongyuan Wine valley
culture tourism development Sales of liquor 2,016,097.62 1,959,896.18
Co., Ltd.
Dazhongyuan Wine valley
culture tourism development Utility fees 68,741.74 64,024.27
Co., Ltd.
~ 235 ~
Catering and
Hefei Gujing Holiday Hotel
accommodation 13,139.65 57,216.80
Co., Ltd.
service
Hefei Gujing Holiday Hotel Sales of liquor
- 15,517.24
Co., Ltd.
Hefei Longxin Financial Sales of liquor
Management Consulting Co., - 2,684.82
Ltd
Shanghai Beihai Hotel Co., Ltd Sales of liquor 16,566.37 -
Anhui Lvyuan ecological
Labor service 10,058.85 -
agriculture Co.,Ltd
Anhui Lvyuan ecological Sales of small
14,258.21 -
agriculture Co.,Ltd materials
Catering and
Anhui Gujing International
accommodation 11,940.00 -
development Co,.Ltd
service
Anhui Gujing International
Sales of liquor 531,906.52 -
development Co,.Ltd
Total —— 22,318,714.38 23,065,843.41
(b) Leases
The Company as lessor:
The lessee Type of assets 2019 2018
Anhui gujing hotel management Buildings and
1,088,012.40 493,611.91
Co., Ltd. constructions
Total —— 1,088,012.40 493,611.91
The Company as lessee:
The lessor Type of assets 2019 2018
Buildings and
Anhui Gujing Group Co., Ltd. 1,799,774.91 2,190,476.20
constructions
Total —— 1,799,774.91 2,190,476.20
~ 236 ~
(c) Key management personnel compensation
Items 2019 2018
Key management personnel
12,856,300.00 9,473,400.00
compensation
10.6 Receivables and Payables with Related Parties
(a) Receivables
31 December 2019 31 December 2018
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Anhui Gujing Real
Other receivables Estate Group Co., - - 25,342.50 253.43
Ltd.
Bozhou Ruineng
Other receivables Thermal Power Co., - - 14,521.45 145.21
Ltd.
(b) Payables
Items Related parties 31 December 2019 31 December 2018
Anhui Ruijing Business Travel
Accounts payable 147,120.00 -
(Group) Co., Ltd.
Advances from Anhui Ruijing Business Travel
913,047.40 4,085,856.31
customers (Group) Co., Ltd.
Dazhongyuan Wine valley
Advances from
culture tourism development 490,292.90 1,881,236.80
customers
Co., Ltd.
Advances from Anhui Gujing Health Industry
6,625,624.40 4,036,729.60
customers Co., Ltd.
Advances from Bozhou Ruineng Thermal
2,883.84 43,200.00
customers Power Co., Ltd.
Advances from Anhui Gujing International 1,038,479.00 -
~ 237 ~
customers development Co., Ltd.
Advances from Anhui Shenglong Commercial
144,580.50 -
customers Co., Ltd.
Anhui Gujing Hotel
Other payables 50,000.00 50,000.00
Development Co., Ltd.
Anhui Ruijing Business Travel
Other payables 85,000.00 35,000.00
(Group) Co., Ltd.
Dazhongyuan Wine valley
Other payables culture tourism development 50,000.00 -
Co., Ltd.
Anhui Gujing International
Other payables 16,200.00 -
development Co., Ltd.
Anhui Shenglong Commercial
Other payables 4,300.00 -
Co., Ltd.
11. COMMITMENTS AND CONTINGENCIES
11.1 Significant Commitments
(a) Performance commitment
According to the equity transfer agreement regarding the acquisition of Yellow Crane Tower Wine
Co., Ltd. (herinafter, Yellow Crane Tower Wine) between Wuhan Tianlong Investment Group Co.,
Ltd., the natural person YAN, Hongye and the Company, the Company promised that the operating
revenues of Yellow Crane Tower Wine would be no less than the following data (tax inclusive):
Unit: RMB 10,000 yuan
Year 2017 2018 2019 2020 2021
Promised operating revenue
80,500.00 100,625.00 130,812.50 170,056.25 204,067.50
(Tax inclusive)
Meanwhile, within five years after the delivery date (excluding the year in which the target stock is
delivered), the net profit margin on sales of Yellow Crane Tower Wine (the actual net profit /
operating revenues of Yellow Crane Tower Wine in current year) shall be no less than 11% for each
year. If the audited net profit margin on sales of Yellow Crane Tower Wine is less than 11% per
annum, the Company shall compensate for the difference in accordance with the agreement. If the
net profit margin on sales of Yellow Crane Tower Wine is less than 11% for consecutive two years,
the transferor will have the right to repurchase all of the shares of Yellow Crane Tower held by the
~ 238 ~
Company, and the repurchase price is RMB 816 million.
The achievement of performance commitment in the separate financial statements of Yellow Crane
Tower Wine for the year 2019 is as follows:
Unit: RMB 10,000 yuan
Items Actual number Commitment number Difference Completion rate
Operating revenues (including tax) 131,006.46 130,812.50 193.96 100.15%
Net profit 12,860.37 12,298.61 561.76 104.57%
The net profit margin on sales 11.15% 11.00% 0.15% 101.36%
11.2 Contingencies
As at 31st December 2019, The Company has no contingencies need to be disclosed.
12. EVENTS AFTER THE REPORTING PERIOD
12.1 Profit Distribution
On April 24, 2020, the Company held the 10th meeting of eighth session Board of Directors which
approved profit distribution plan for the year of 2019. The Company plans to use the total share of
503,600,000.00 of the Company at 31/12/2019 as a base, to distribute RMB 15.00 (before tax) for
every 10 shares, and as a result to distribute RMB 755,400,000.00 to all shareholders. The profit
distribution plan is pending the approval of the General Meeting of shareholders of the Company.
12.2 As at April 24, 2020, except for the above mentioned matter, the Company has no other
events after the reporting period need to be disclosed
13. OTHER SIGNIFICANT MATTERS
13.1 Segment Information
(a) Basis of identification and accounting policies of reportable segments
The Company did not determine the operating segment in accordance with the internal
organizational structure, management requirements, and internal reporting system, so there was no
need to disclose segment information report based on the operating segments.
14. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE
PARENT COMPANY
14.1 Accounts Receivable
(a) Accounts receivable by aging
~ 239 ~
Aging 31 December 2019 31 December 2018
Within one year 218,558,555.07 9,385,950.54
Including:1-6months 218,558,555.07 9,385,950.54
7-12months - -
1-2 years - -
2-3 years - -
Over 3 years 141,121.87 141,121.87
Subtotal 218,699,676.94 9,527,072.41
Less: provision for bad debt 141,121.87 141,121.87
Total 218,558,555.07 9,385,950.54
(b) Accounts receivable by bad debt provision method
31 December 2019
Book balance Provision for bad debt
Category
Provision ratio Carrying amount
Amount Proportion (%) Amount
(%)
Provision for bad debt
- - - - -
recognised individually
Provision for bad debt
218,699,676.94 100.00 141,121.87 0.06 218,558,555.07
recognized collectively
Including: Group1 218,558,555.07 99.94 - - 218,558,555.07
Group2 141,121.87 0.06 141,121.87 100.00 -
Total 218,699,676.94 100.00 141,121.87 0.06 218,558,555.07
（Continued）
31 December 2018
Book balance Provision for bad debt
Category
Proportion Provision Carrying amount
Amount Amount
(%) ratio (%)
Accounts receivable with
individually significant
- - - - -
balance and provision for bad
debt recognised individually
~ 240 ~
31 December 2018
Book balance Provision for bad debt
Category
Proportion Provision Carrying amount
Amount Amount
(%) ratio (%)
Accounts receivable with
individually significant
- - - - -
balance and provision for bad
debt recognised individually
Accounts receivable with bad
debt provision recognised
9,527,072.41 100.00 141,121.87 1.48 9,385,950.54
collectively by similar credit
risk characteristics
Accounts receivable with
individually insignificant
- - - - -
balance but provision for bad
debt recognised
Total 9,527,072.41 100.00 141,121.87 1.48 9,385,950.54
At 31 December 2019, accounts receivable with bad debt provision recognised collectively by
group 1
31 December 2019
Aging Provision
Accounts receivable Provision for bad debt
ratio (%)
Related parties within the
218,558,555.07 - -
scope of consolidation
Total 218,558,555.07 - -
At 31 December 2019, accounts receivable with bad debt provision recognised collectively by
group 2
31 December 2019
Aging Provision
Accounts receivable Provision for bad debt
ratio (%)
Within one year
1-2 years - - -
2-3 years - - -
~ 241 ~
Over 3 years 141,121.87 141,121.87 100.00
Total 141,121.87 141,121.87 100.00
Note: for details of recognition criteria and explanation for provision for bad debt by group, please
refer to Notes 3.10.
At 31 December 2018, accounts receivable with bad debt provision recognised collectively by
group 1
31 December 2018
Aging Provision
Accounts receivable Provision for bad debt
ratio (%)
Related parties within the
9,385,950.54 - -
scope of consolidation
Total 9,385,950.54 - -
At 31 31 December 2018, accounts receivable with bad debt provision recognised collectively by
group 2
31 December 2018
Aging Provision
Accounts receivable Provision for bad debt
ratio (%)
Within one year
1-2 years - - -
2-3 years - - -
Over 3 years 141,121.87 141,121.87 100.00
Total 141,121.87 141,121.87 100.00
Note: for details of recognition criteria and explanation for provision for bad debt by group, please
refer to Notes 3.12.
(c) Changes of provision for bad debt during the reporting period
31 Changes of Changes during the reporting period 31
1 January
Category December accounting Recovery or December
2019 Provision Write-off
2018 policy reversal 2019
Provision
for bad debt - - - - - - -
recognised
~ 242 ~
31 Changes of Changes during the reporting period 31
1 January
Category December accounting Recovery or December
2019 Provision Write-off
2018 policy reversal 2019
individually
Provision
for bad debt
141,121.87 - 141,121.87 - - - 141,121.87
recognized
collectively
Total 141,121.87 - 141,121.87 - - - 141,121.87
(d) At 31 December 2019, top five closing balances by entity
Balance at 31 December Proportion of the balance to the Provision for bad
Entity name
2019 total accounts receivable (%) debt
No. 1 216,474,060.56 98.98 -
No. 2 1,354,558.76 0.62 -
No. 3 587,904.33 0.27 -
No. 4 141,121.87 0.06 141,121.87
No. 5 96,544.61 0.04 -
Total 218,654,190.13 99.97 141,121.87
14.2 Other Receivables
(a) Other receivables by category
Items 31 December 2019 31 December 2018
Interest receivable 301,888.89 -
Dividend receivable - -
Other receivables 124,917,324.95 110,800,665.19
Total 125,219,213.84 110,800,665.19
(b) Other receivables
(i) Other receivables by aging
Aging 31 December 2019 31 December 2018
~ 243 ~
Aging 31 December 2019 31 December 2018
Within one year 64,773,476.22 110,277,405.24
Including:1-6months 50,595,906.92 37,174,657.11
7-12months 14,177,569.30 73,102,748.13
1-2 years 59,983,186.13 614,189.72
2-3 years 525,794.00 -
Over 3 years 41,540,607.44 41,540,607.44
Subtotal 166,823,063.79 152,432,202.40
Less: provision for bad debt 41,905,738.84 41,631,537.21
Total 124,917,324.95 110,800,665.19
(ii) Other receivables by nature
Nature 31 December 2019 31 December 2018
Related parties within the scope of
120,200,301.28 108,389,173.96
consolidation
Security investment 40,850,949.35 40,850,949.35
Security deposit and guarantee 1,850,139.09 909,657.06
Rent, water, electricity and gas 853,843.90 639,732.73
Others 3,067,830.17 1,642,689.30
Total 166,823,063.79 152,432,202.40
(iii) Other receivables by bad debt provision method
A. At 31 December 2019, provision for bad debt recognised based on three stages model
Stages Book balance Provision for bad debt Book value
Stage 1 125,972,114.44 1,054,789.49 124,917,324.95
Stage 2 - - -
Stage 3 40,850,949.35 40,850,949.35 -
合计 166,823,063.79 41,905,738.84 124,917,324.95
A1. At 31 December 2019, provision for bad debt in stage 1
~ 244 ~
12-month
expected Provision for
Category Book balance Carrying amount
credit losses bad debt
rate (%)
Provision for bad debt recognised individually - - - -
Provision for bad debt recognized collectively 125,972,114.44 0.84 1,054,789.49 124,917,324.95
Including: Group1 120,200,301.28 - - 120,200,301.28
Group2 5,771,813.16 18.27 1,054,789.49 4,717,023.67
Total 125,972,114.44 0.84 1,054,789.49 124,917,324.95
At 31 December 2019, other receivables with bad debt provision recognised collectively by group 2
31 December 2019
Aging
Book balance Provision for bad debt Provision ratio (%)
Within one year 4,312,272.07 77,825.50 1.80
Including:1-6months 3,444,702.77 34,447.03 1.00
7-12months 867,569.30 43,378.47 5.00
1-2 years 244,089.00 24,408.90 10.00
2-3 years 525,794.00 262,897.00 50.00
Over 3 years 689,658.09 689,658.09 100.00
Total 5,771,813.16 1,054,789.49 18.27
A2. At 31 December 2019, provision for bad debt at stage 3:
Lifetime
expected Provision for Carrying
Category Book balance
credit losses bad debt amount
rate (%)
Provision for bad debt recognised individually 40,850,949.35 100.00 40,850,949.35 -
Provision for bad debt recognized collectively - - - -
Including: Group1 - - - -
Group2 - - - -
Total 40,850,949.35 100.00 40,850,949.35 -
~ 245 ~
At 31 December 2019, other receivables with provision for bad debt recognised individually
31 December 2019
Entity name Provision for bad Provision ratio
Book balance Reason
debt (%)
Enterprise enters the
bankruptcy
Hengxin securities Co., Ltd. 29,010,449.35 29,010,449.35 100.00
liquidation
procedure
Enterprise enters the
bankruptcy
Jiaoqiao securities Co., Ltd. 11,840,500.00 11,840,500.00 100.00
liquidation
procedure
Total 40,850,949.35 40,850,949.35 - -
B. At 31 December 2018, provision for bad debt using incurred loss model：
31 December 2018
Book balance Provision for bad debt
Category
Provision Carrying amount
Amount Proportion (%) Amount
ratio (%)
Other receivables with
individually significant balance
40,850,949.35 26.80 40,850,949.35 100.00 -
and provision for bad debt
recognised individually
Other receivables with bad debt
provision recognised
111,581,253.05 73.20 780,587.86 0.70 110,800,665.19
collectively by similar credit
risk characteristics
Other receivable with
individually insignificant
balance but recognised - - - -
provision for bad debt
individually
Total 152,432,202.40 100.00 41,631,537.21 27.31 110,800,665.19
~ 246 ~
B1. At 31 December 2018, other receivables with individually significant balance and recognised
provision for bad debt individually
31 December 2018
Entity name Provision for bad Provision ratio
Other receivables Reason
debt (%)
Enterprise enters the
Hengxin securities Co., Ltd. 29,010,449.35 29,010,449.35 100.00
bankruptcy liquidation
Enterprise enters the
Jiaoqiao securities Co., Ltd. 11,840,500.00 11,840,500.00 100.00
bankruptcy liquidation
Total 40,850,949.35 40,850,949.35 - -
B2. At 31 December 2018, other receivables with bad debt provision recognised collectively by
aging analysis
31 December 2018
Aging Provision ratio
Other receivables Provision for bad debt
(%)
Within one year 1,888,231.28 29,510.79 1.56
Including:1-6months 1,622,519.22 16,225.19 1.00
7-12months 265,712.06 13,285.60 5.00
1-2 years 614,189.72 61,418.98 10.00
2-3 years - - -
Over 3 years 689,658.09 689,658.09 100.00
Total 3,192,079.09 780,587.86 24.45
(iv) Changes of provision for bad debt during the reporting period
Changes of Changes during the reporting period
31 December 1 January 31 December
Category accounting Recovery
2018 2019 Provision Write-off 2019
policy or reversal
Provision for
40,850,949.35 - 40,850,949.35 - - - 40,850,949.35
bad debt
~ 247 ~
Changes of Changes during the reporting period
31 December 1 January 31 December
Category accounting Recovery
2018 2019 Provision Write-off 2019
policy or reversal
recognised
individually
Provision for
bad debt
780,587.86 - 780,587.86 274,201.63 - - 1,054,789.49
recognized
collectively
Total 41,631,537.21 - 41,631,537.21 274,201.63 41,905,738.84
(v) Top five closing balances by entity
Proportion of the
Balance at 31 balance to the total Provision for bad
Entity name Nature Aging
December 2019 other receivables debt
(%)
Related party
Within 1
No. 1 within the scope 87,260,433.13 52.31 -
year
of consolidation
Security
Over 3 years
No. 2 29,010,449.35 17.39 29,010,449.35
Investment
Related party
Within 1
No. 3 within the scope 16,080,553.93 9.64 -
year
of consolidation
Security
Over 3 years
No. 4 11,840,500.00 7.10 11,840,500.00
Investment
Related party
Within 1
No. 5 within the scope 11,445,506.42 6.86 -
year
of consolidation
Total —— 155,637,442.83 —— 93.30 40,850,949.35
14.3 Long-term Equity Investments
31 December 2019 31 December 2018
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
~ 248 ~
1,148,213,665. 1,148,213,665 1,148,213,665 1,148,213,665
Subsidiaries - -
32 .32 .32 .32
1,148,213,665. 1,148,213,665 1,148,213,665 1,148,213,665
Total - -
32 .32 .32 .32
(a) Investments in subsidiaries
Provision
Increase Decrease Provision for for
31 December during the during the 31 December impairment impairment
Investees
2018 reporting reporting 2019 during the at 31
period period reporting period December
2019
Bozhou Gujing
68,949,286.89 - - 68,949,286.89 - -
Sales Co., Ltd.
Anhui Longrui
85,267,453.06 - - 85,267,453.06 - -
Glass Co., Ltd
Shanghai Gujing
Jinhao Hotel
49,906,854.63 - - 49,906,854.63 - -
Management Co.,
Ltd.
Bozhou Gujing
648,646.80 - - 648,646.80 - -
Hotel Co., Ltd.
Anhui Ruisiweier
Technology Co., 40,000,000.00 - - 40,000,000.00 - -
Ltd
Anhui Baiweilu
30,000,000.00 - - 30,000,000.00 - -
Liquor Co., Ltd.
Anhui Yuanqing
Environmental
16,000,000.00 - - 16,000,000.00 - -
Protection Co.,
Ltd.
Anhui Gujing
5,000,000.00 - - 5,000,000.00 - -
Yunshang
~ 249 ~
Electronic
Commerce Co.,
Ltd.
Anhui Zhenrui
Construction
10,000,000.00 - - 10,000,000.00 - -
Engineering Co.,
Ltd
Yellow Crane
816,000,000.0 816,000,000.0
Tower Wine Co., - - - -
0 0
Ltd
Anhui Jinyunnan
Cultural Media 15,000,000.00 - - 15,000,000.00 - -
Co., Ltd.
Bozhou Gujing
Waste Recycling 1,441,423.94 - - 1,441,423.94 - -
Co., Ltd.
Anhui
Runanxinke
Testing 10,000,000.00 - - 10,000,000.00 - -
Technology Co.,
Ltd.
1,148,213,665 1,148,213,665
Total - - - -
.32 .32
14.4 Revenue and Cost of Sales
2019 2018
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 5,485,034,001.70 2,217,395,489.41 4,170,643,216.51 1,706,721,317.44
Other activities 79,861,568.03 51,860,608.37 84,659,046.87 65,731,271.22
Total 5,564,895,569.73 2,269,256,097.78 4,255,302,263.38 1,772,452,588.66
14.5 Investment Income
~ 250 ~
Items 2019 2018
Investment income from long-term equity
770,000,042.30 838,858,228.79
investments under cost method
Gains on disposal of financial assets at fair
- 1,238,951.28
value through profit or loss
Investment income from held-to-maturity
- 75,591,043.12
investments during the holding period
Investment income from available-for-sale
- 20,344,605.22
financial assets during the holding period
Gains on disposal of available-for-sale financial
- 17,430,694.36
assets
Investment income from held-for-trading
76,168,001.78 -
financial assets during the holding period
Total 846,168,044.08 953,463,522.77
15. SUPPLEMENTARY INFORMATION
15.1 Extraordinary Gains or Losses
Descripti
Items 2019 2018
on
Gains /(losses) on disposal of non-current assets -7,615,741.56 -10,060,019.55
Government grants recognised in current profit or loss
(except government grants that is closely related to operations
98,293,177.32 36,041,674.45
and determined based on a fixed scale according to the
national unified standard)
Gains /(losses) arising from changes in fair value of
held-for-trading financial assets, derivative financial assets,
held-for-trading financial liabilities and derivative financial
liabilities during the holding period and investment income
144,234,319.52 18,653,228.80
arising from disposal of held-for-trading financial assets,
derivative financial assets, held-for-trading financial
liabilities, derivative financial liabilities and other debt
investment except effective hedging transactions related to
~ 251 ~
the Company's principal activities
Other non-operating income/expenses except for items
57,215,092.96 32,375,890.89
mentioned above
Other extraordinary gains/(losses) defined - -
Total extraordinary gains/(losses) 292,126,848.24 77,010,774.59
Less: tax effect 71,418,613.38 18,150,068.72
Less: net extraordinary gains/(losses) attributable to
14,277,652.37 1,833,517.16
non-controlling interest
Net extraordinary gains/(losses) attributable to ordinary
206,430,582.49 57,027,188.71
shareholders
15.2 Return on Net Assets and Earnings Per Share (‘EPS’)
Weighted average EPS
Profit for the reporting period return on net assets
Basic Diluted
(%)
Net profit attributable to ordinary shareholders 25.55 4.17 4.17
Net profit attributable to ordinary shareholders
23.03 3.76 3.76
after extraordinary gains and losses
~ 252 ~
Part XIII Documents Available for Reference
(I) The financial statements carrying the signatures and stamps of the Company’s
legal representative, Chief Accountant and head of the accounting department;
(II) The original copy of the Independent Auditor's Report stamped by the CPA firm
as well as signed and stamped by the engagement certified public accountants;
(III) The originals of all the Company’s announcements and documents disclosed on
media designated by the China Securities Regulatory Commission during the
Reporting Period; and
(IV) The annual report disclosed in other securities markets.
Chairman of the Board:
(Liang Jinhui)
Anhui Gujing Distillery Company Limited
24 April 2020
~ 253 ~
