Luzhou Laojiao Co., Ltd.
2023 Annual Report
April 2024
2023 Annual Report
Section I Important Statements, Contents and DefinitionsThe Board of Directors, Board of Supervisors, directors, supervisors and senior management guaranteethat the information presented in this report is free of any false records, misleading statements ormaterial omissions, and shall individually and together be legally liable for truthfulness, accuracy andcompleteness of its contents.
Liu Miao, responsible person for the Company, Xie Hong, responsible person for accounting work andSong Ying, responsible person for the Company’s financial affairs (Accounting Supervisor) havewarranted that the financial statements in this report are true, accurate and complete.
Other directors attended the board meeting to deliberate this report by themselves except the followingdirectors.
| Name of directors who did not attend the meeting in person | Position of directors who did not attend the meeting in person | Reason for not attending the meeting in person | Name of deputies |
| Liu Miao | Chairman of the board | Work | Lin Feng |
Affected by risks, uncertainties and assumptions, the forward-looking statements concerning businessobjectives and future plans made in this report based on the subjective assumptions and judgments ofthe future policies and economic conditions may be significantly different from the actual results. Suchstatements shall not be considered as virtual promises of the Company to investors, and the investorsand relevant persons shall maintain adequate risk awareness and shall understand the differencesbetween plans, forecasts and commitments.
In the annual report, the potential risks in the operation of the Company have been disclosed. Investorsare kindly reminded to pay attention to possible investment risks.
The profit distribution plan approved by the board of directors: based on 1,471,987,769 shares, a cashdividend of CNY 54.00 (tax inclusive) will be distributed for every 10 existing shares held, 0 shares ofbonus shares (tax inclusive), and reserves would not be converted into share capital.
This Report has been prepared in both Chinese and English. Should there be any discrepancies ormisunderstandings between the two versions, the Chinese version shall prevail.
Contents
Section I Important Statements, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Results ...... 6
Section III Management Discussion and Analysis ...... 12
Section IV Corporate Governance ...... 53
Section V Environmental and Social Responsibility ...... 79
Section VI Significant Events ...... 91
Section VII Changes in Shares and Information about Shareholders ...... 99
Section VIII Preferred Shares ...... 110
Section IX Information about Bond ...... 111
Section X Financial Report ...... 117
Documents Available for Reference
1. Financial statements signed and stamped by the responsible person for the Company, theresponsible person for accounting work and the responsible person for the Company’s financial affairs(Accounting Supervisor);
2. The original of the auditor’s report with the seal of the accounting firm, and signed and stamped byCPAs; and
3. The originals of all company documents and announcements that are disclosed to the public duringthe reporting period.
Definitions
| Term | Reference | Definition |
| Company, the Company, Luzhou Laojiao | Refer to | Luzhou Laojiao Co., Ltd. |
| Laojiao Group | Refer to | Luzhou Laojiao Group Co., Ltd. |
| XingLu Group | Refer to | Luzhou XingLu Investment Group Co., Ltd. |
| SASAC of Luzhou | Refer to | State-owned Assets Supervision and Administration Commission of Luzhou |
| Huaxi Securities | Refer to | Huaxi Securities Co., Ltd. |
| Luzhou Bank | Refer to | Luzhou Bank Co., Ltd. |
| Sales Company | Refer to | Luzhou Laojiao Sales Co., Ltd. |
| Brewing Company | Refer to | Luzhou Laojiao Brewing Co., Ltd. |
Section II Company Profile and Key Financial Results
1. Corporate information
| Stock abbreviation | Luzhou Laojiao | Stock code | 000568 |
| Stock exchange where the shares of the Company are listed | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | 泸州老窖股份有限公司 | ||
| Abbr. of the Company name in Chinese | 泸州老窖 | ||
| Name of the Company in English (if any) | Luzhou Laojiao Co., Ltd. | ||
| Abbr. of the Company name in English (if any) | LZLJ | ||
| Legal representative | Liu Miao | ||
| Registered address | Guojiao Square, Luzhou City, Sichuan Province, China | ||
| Postal code | 646000 | ||
| Past changes of registered address | The Company’s registered address has changed from 46 Guihua Street, Luzhou City, Sichuan Province, China to Guojiao Square, Luzhou City, Sichuan Province, China in 2000. | ||
| Business address | Luzhou Laojiao Command Center, 71 Nanguang Road, Luzhou City, Sichuan Province, China | ||
| Postal code | 646000 | ||
| Company website | www.lzlj.com | ||
| lzlj@lzlj.com | |||
2. Contact us
| Secretary of the board | Representative for securities affairs | |
| Name | Li Yong | Wang Chuan |
| Address | Luzhou Laojiao Command Center, 71 Nanguang Road, Luzhou City, Sichuan Province, China | |
| Tel. | (0830)2398826 | (0830)2398826 |
| Fax | (0830)2398864 | (0830)2398864 |
| dsb@lzlj.com | dsb@lzlj.com | |
3. Information disclosure and place where the annual report is kept
| Stock exchange website where this Report is disclosed | China Securities Journal, Securities Times, Securities Daily |
| Media and website where this Report is disclosed | http://www. cninfo.com.cn |
| Place where the annual report of the Company is kept | Board office |
4. Company registration and alteration
| Unified social credit code | 91510500204706718H |
| Changes in main business activities since the Company was listed (if any) | None |
| Changes of controlling shareholders of the Company (if any) | Before September 2009, the controlling shareholder was the SASAC of Luzhou. After the equity transfer in September 2009, the controlling shareholder was changed to Laojiao Group, but the actual controller is still the SASAC of Luzhou. |
5. Other relevant information
Accounting firm engaged by the Company
| Name of the accounting firm | Sichuan Huaxin (Group) CPA Firm |
| Business address of the accounting firm | 28/F., South Jinmaolidu, NO.18 Ximianqiao Street, Chengdu City, Sichuan Province. |
| Name of accountants for writing signature | Li Wulin, Tang Fangmo, and Fan Bo |
Sponsors engaged by the Company to continuously perform its supervisory function during thereporting period
□ Applicable ? N/A
Financial adviser engaged by the Company to continuously perform its supervisory function duringthe reporting period.? Applicable ? N/A
6. Key accounting data and financial indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data.? Yes ? No
| 2023 | 2022 | YoY Change | 2021 | |
| Operating revenues (CNY) | 30,233,301,388.26 | 25,123,563,271.62 | 20.34% | 20,642,261,724.37 |
| Net profits attributable to shareholders of the Company (CNY) | 13,246,394,700.59 | 10,365,383,281.80 | 27.79% | 7,955,554,351.73 |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses (CNY) | 13,150,392,806.65 | 10,321,481,236.93 | 27.41% | 7,884,384,055.60 |
| Net cash flows from operating activities (CNY) | 10,648,364,935.46 | 8,262,648,269.72 | 28.87% | 7,698,648,104.51 |
| Basic earnings per share (CNY/share) | 9.02 | 7.06 | 27.76% | 5.43 |
| Diluted earnings per share (CNY/share) | 9.02 | 7.06 | 27.76% | 5.43 |
| Weighted average ROE | 35.07% | 33.32% | 1.75% | 31.15% |
| At the end of 2023 | At the end of 2022 | YoY Change | At the end of 2021 | |
| Total assets (CNY) | 63,294,455,201.60 | 51,385,481,354.52 | 23.18% | 43,211,782,005.68 |
| Net assets attributable to shareholders of the Company (CNY) | 41,391,410,494.89 | 34,207,871,130.03 | 21.00% | 28,040,247,005.94 |
Whether the lower of the net profits attributable to shareholders of the Company before and after non-recurring gains and losses was negative for the last three accounting years, and the latest auditor’sreport indicated that there was uncertainty about the Company’s ability to continue as a goingconcern? Yes ? No
Whether the lower of the net profits attributable to shareholders of the Company before and after non-recurring gains and losses was negative? Yes ? No
7. Differences in accounting data under domestic and overseasaccounting standards
7.1. Differences in the net profits and net assets disclosed in the financial reportsprepared under the international and China accounting standards? Applicable ? N/ANo such differences for the reporting period.
7.2. Differences in the net profits and net assets disclosed in the financial reportsprepared under the overseas and China accounting standards? Applicable ? N/ANo such differences for the reporting period.
8. Key financial results by quarter
Unit: CNY
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenues | 7,610,153,819.27 | 6,982,897,954.87 | 7,349,670,544.39 | 8,290,579,069.73 |
| Net profits attributable to shareholders of the Company | 3,712,618,630.92 | 3,377,808,156.15 | 3,475,695,183.38 | 2,680,272,730.14 |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses | 3,688,940,523.35 | 3,351,998,052.28 | 3,448,863,775.13 | 2,660,590,455.89 |
| Net cash flows from operating activities | 1,508,783,232.53 | 4,138,977,564.51 | 3,404,807,099.84 | 1,595,797,038.58 |
Whether there are any material differences between the financial indicators above or their summationsand those which have been disclosed in quarterly or semi-annual reports? Yes ? No
9. Non-recurring profits and losses
? Applicable ? N/A
Unit: CNY
| Item | 2023 | 2022 | 2021 | Note |
| Profit or loss from disposal of non-current assets (including the write-off portion of the impairment | 44,694,238.37 | 19,805,093.70 | -347,429.88 | See "Section X Note 5.48" for details. |
| provision) | ||||
| Government grants accounted for, in the profit or loss for the current period (except for the government grants closely related to the business of the Company and given in accordance with defined criteria and in compliance with government policies, and have a continuing impact on the Company's profit or loss) | 51,950,003.11 | 34,931,161.52 | 51,756,953.15 | See "Section X Note 5.44" for details. |
| Gain or loss on fair-value changes in financial assets and liabilities held by a non-financial enterprise, as well as on disposal of financial assets and liabilities (exclusive of the effective portion of hedges that is related to the Company's normal business operations) | 68,181,502.73 | -2,585,156.72 | 6,352,241.79 | See "Section X Note 5.45 and 5.46" for details. |
| Reversed portions of impairment allowances for receivables which are tested individually for impairment | 80,000,000.00 | |||
| Other non-operating income and expenditure except above-mentioned items | -35,875,412.66 | 7,873,927.25 | -40,241,672.68 | See "Section X Note 5.49 and 5.50" for details. |
| Less: Corporate income tax | 31,697,444.12 | 14,413,895.31 | 24,082,098.59 | |
| Minority interests (after tax) | 1,250,993.49 | 1,709,085.57 | 2,267,697.66 | |
| Total | 96,001,893.94 | 43,902,044.87 | 71,170,296.13 | -- |
Other items that meet the definition of non-recurring gain/loss:
? Applicable ? N/ANo such cases for the reporting period.
Explain the reasons if the Company classifies any non-recurring gain/loss item mentioned in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities tothe Public-Non-Recurring Gains and Losses as a recurring gain/loss item.? Applicable ? N/ANo such cases for the reporting period.
Section III Management Discussion and Analysis
1. Industry overview for the reporting period
In 2023, as the consumer market gradually returned to normal, the baijiu industry showed a trend ofthe coexistence of consumption upgrading and degradation, intensified differentiation, and moreintense competition. Capacity optimisation, quality upgrading, technological innovation, culturaldevelopment, consumer experience, and service enhancement became the era characteristics for thebaijiu industry of high-quality development. The industry development showed an increasinglyobvious trend of concentrating on well-known production areas, famous brands, excellent culture, andhigh quality. The baijiu industry was gradually entering the era of existing competition and giantcompetition. Only enterprises that could create excellent products and services for consumers, hadsound governance structures, and social values could stand out.
2. Business scope in the reporting period
The Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
Holding three food business licenses, the Company operates within the baijiu subdivision industrywhich belongs to the liquor & wine, beverage and refined tea production industry with specializedbaijiu product design, production and sales as its main business model. The Company’s primaryproducts are baijiu series such as "National Cellar 1573" and "Luzhou Laojiao", and its maincomprehensive performance indicators rank high in the baijiu industry. For the reporting period,operating revenue amounted to CNY 30.233 billion, up 20.34% year on year; and the net profitattributable to the shareholders of the listed company reached CNY 13.246 billion, up 27.79% year onyear.
For the Company's brand operations, please refer to "4.1 Overview" under “4. Analysis of mainbusiness” in this section. The Company’s main products are classified as follows:
| Main product types | Classification criteria | Representative brand name |
| Mid- and high-end baijiu | Tax-inclusive sales price ≥ CNY 150 per bottle | National Cellar 1573, Luzhou Laojiao Tequ, and Century-old Luzhou Laojiao Jiaoling Baijiu |
| Other baijiu | Tax-inclusive sales price < CNY 150 per bottle | Luzhou Laojiao Touqu and Luzhou Laojiao · Hey Guys |
Main sales models:
Currently, the Company has two main sales models:
1. Traditional channel operation model: It is mainly authorized distribution of the offline distributors. TheCompany establishes cooperative relationships with the distributors by product lines and regions. TheCompany directly supplies goods to the distributors, and then distributors sell them to consumers andterminal outlets.
2. Emerging channel operation model: It is mainly online sales operations. The Company establishescooperative relationships with e-commerce platforms, self-media and webcasters, and sells the goodsto consumers through flagship stores, specialty stores, live streaming rooms on online platforms andother network terminals.
Distribution models:
? Applicable □N/A
1. Main sales models
Unit: CNY
| Operating revenue | Cost of sales | Gross profit margin | YoY change of operating revenue | YoY change of cost of sales | YoY change of gross profit margin | |
| By sales model | ||||||
| Traditional channel | 28,657,038,767.86 | 3,143,781,427.06 | 89.03% | 22.98% | 6.94% | 1.65% |
operation modelEmerging channeloperation model
| Emerging channel operation model | 1,420,240,091.72 | 340,763,293.04 | 76.01% | -2.97% | 24.17% | -5.24% |
2. Distributors
| Region | Number of distributors at the end of the reporting period | Increased number during the reporting period | Decreased number during the reporting period | YoY change of number of distributors (%) | Reason for any significant change |
| Domestic | 1710 | 28 | 21 | 0.41 | |
| Overseas | 104 | 2 | 24 | -17.46 |
3. Main settlement method for distributors and distribution method
The Company's main settlement method for distributors is payment before delivery. The distributionmethod is authorized distribution.
4. Top five distributors
The Company had no accounts receivable from the top five distributors at the end of the period. Fordetails, please refer to Section III 4.2.8. "Main customers and suppliers".
Store sales terminals accounted for more than 10%
□ Applicable ? N/A
Online direct sales? Applicable □N/AFor the sales of the Company's main products, please refer to Section III 4.2.1. "Breakdown ofoperating revenues". The Company's complete series of products are sold online. Its main cooperationplatforms included JD.com and Tmall.
Sales price of main products contributing over 10% of the total operating revenues for the currentperiod changed by more than 30% from the previous reporting period
□ Applicable ? N/A
Purchase model and purchase content
Unit: CNY
| Purchase model | Purchase content | Amount of main purchase content |
| Organic raw grains are purchased through cooperative model and supplied by organic raw grain bases; other raw grains and packaging materials are purchased through bid invitation | Raw materials | 3,656,343,649.12 |
| Purchase based on the unified pricing of the National Development and Reform Commission and the price bureau, and purchase through bid invitation | Fuels and energies | 184,372,751.40 |
| Purchase through bid invitation | Low-value consumables | 64,065,969.51 |
The purchase of raw materials from cooperatives or farmers accounted for more than 30% of the totalpurchase amount
□ Applicable ? N/A
The price of main raw materials purchased externally changed by more than 30% year-on-year
□ Applicable ? N/A
Main production model:
The Company's main production model is self-production.
Commissioned processing and production
□ Applicable ? N/A
Main breakdown items of cost of sales
Unit: CNY
| By business segment | Item | 2023 | 2022 | YoY Change | ||
| Amount | As % of cost of sales | Amount | As % of cost of sales | |||
| Baijiu | Raw materials | 2,938,909,467.97 | 84.34% | 2,757,973,459.70 | 85.80% | 6.56% |
Baijiu
| Baijiu | Labor costs | 261,260,432.24 | 7.50% | 208,363,976.36 | 6.48% | 25.39% |
| Baijiu | Manufacturing overhead | 284,374,819.89 | 8.16% | 247,916,280.85 | 7.71% | 14.71% |
Production volume and inventory
1. Production volume, sales volume and inventory of main products
| Product classification | Production volume (ton) | Sales volume (ton) | Inventory (ton) | YoY change of production volume (%) | YoY change of sales volume (%) | YoY change of inventory | Description of major changes |
Mid- andhigh-endbaijiu
| Mid- and high-end baijiu | 31,258.42 | 37,583.88 | 36,551.55 | -23.43 | 1.24 | -14.75 | |
| Other baijiu | 52,698.07 | 58,694.24 | 5,699.32 | 11.94 | 19.64 | -51.27 | The YoY decrease in inventory was mainly due to the increased sales volume of other baijiu in the current period. |
2. Inventory at the end of the reporting period
Unit: Ton
| Finished baijiu | Semi-finished baijiu (including base baijiu) |
| 42,250.87 | 430,838.17 |
3. Capacity
Unit: Ton
| Main products | Design capacity | Actual capacity | Capacity in progress |
| Baijiu | 170,000 | 170,000 | 80,000 |
3. Analysis of core competitiveness
A. Geographical advantageLuzhou City, where the Company is located, is known as the “City of Baijiu” and the origin of China’sstrong aromatic baijiu culture. It sits in the transitional area between the southern rim of the SichuanBasin and the Yunnan-Guizhou Plateau, featuring a warmer and more humid sub-tropical climatecompared to other areas at the same latitude, with a temperature above 0℃ throughout the year. Theunique climate and soil are agreeable to grow grains for baijiu brewing. The glutinous red sorghum andsoft wheat grown in this area are the primary raw materials for the baijiu of the Company. The cellars inwhich the Company brews its baijiu are made of the local loessal clay characterized by strong viscosity,rich minerals and excellent moisture retention. In addition, the abundant and quality water in the regioncreates a unique geographical advantage for the production of the Company’s baijiu.
B. Advantage of cellars and brewing techniqueAged cellars are the most essential condition for a strong aromatic baijiu maker to produce good qualitybaijiu. The Cellars of National Treasure 1573, founded in 1573, was granted by the State Council as thefirst Cultural Relic of National Importance in the industry under the Protection of the State in December1996. 1,619 cellars of Luzhou Laojiao which have been continuously used for over 100 years, togetherwith its 16 ancient brewing workshops and three natural cellar holes, were all selected as the fourthbatch of Cultural Relics of National Importance under the Protection of the State in 2013. They areunique resources that cannot be replicated. In both 2006 and 2012, Luzhou Laojiao Daqu Cellars weretwice selected into the preliminary list of China for World Heritage. In November 2018, Luzhou LaojiaoCellars and Brewing Workshops were selected into China’s Industrial Heritage List. The time-honoredTraditional Brewing Technique of Luzhou Laojiao is a 24-generation inheritance and a classic brewingtechnique for strong aromatic baijiu. This technique was selected as the first batch of NationalIntangible Cultural Heritage in May 2006. The Cellars of National Treasure 1573 and the TraditionalBrewing Technique of Luzhou Laojiao together provide the most essential basis and assurance for thequality of the product series of National Cellar 1573 and Luzhou Laojiao. Additionally, Huangyi BreweryEco-Park has moved into full production in late 2020. Upholding the cultural connotations of
“inheritance of ancient ways, pure-grain brewing, traditional techniques, and intelligent technologies”,the Company carried out brewing technical renovation featuring automatic, intelligent and informationtechnology-based transformation. As such, it has established a baijiu brewery eco-park comprisingbrewing workshops, leaven making workshops, and base baijiu storage cellars, along with energy andsewage treatment facilities. This brewery eco-park brings with it new production capacities of 100,000tons of quality pure-grain solid baijiu and 100,000 tons of leaven in addition to a new storage capacity of380,000 tons of baijiu per year, marking a substantial increase in the Company’s production capacity.
C. Brand advantageBrand is a key business resource for baijiu producers. The Company’s reputation is greatly built on itssuperiority in brand. National Cellar 1573, which is of a connoisseurship level, is a world-famous high-end brand. Luzhou Laojiao Tequ, a classic brand for strong aromatic baijiu, was selected in 1952 by thefirst national tasting competition judges as one of the four most famous baijiu brands in China. It is theonly strong aromatic baijiu brand that won the title of “National Famous Baijiu” for five consecutive times,as well as the pioneer with regard to the “Tequ” variety of baijiu. In recent years, the Company hassuccessfully put in place a brand system of “dual brands, three product series, and major singleproducts” with great clarity and focus. The programs carried out to promote the brand of National Cellar1573 and revive the brand of Luzhou Laojiao have produced remarkable results, with significantimprovement in brand influence. The Company’s baijiu is increasingly known by consumers as anational brand of strong aromatic baijiu and of authentic flavor.
D. Quality and R&D advantageThe Company is committed to producing high-quality baijiu, advocating a healthy lifestyle and “makingthe quality visible”. The first “Organic Sorghum Planting Base” was established and the six-factormanagement system (including organic, quality, safety, environment, measurement and energy) wasbuilt and improved. The research platforms are established, including National Engineering ResearchCenter of Solid-State Brewing, National Liquor Test Center, National Postdoctoral Workstation, etc,which all support the innovation and upgrading of products with their strong technical force. In recentyears, the Company has put in a lot of efforts in researching Tequ production, brewing informatization &intelligent transformation. Relying on the technological innovation platforms such as the NationalIndustrial Design Center, and continuously deepening the cooperation with universities and scientificresearch institutes including the Chinese Academy of Sciences and the Tsinghua University, theCompany has undertaken dozens of national- or provincial-level projects and has been grantedhundreds of invention or utility model patents. And remarkable results have been achieved with respectto improvement of the quality of base Baijiu, as well as production efficiency improvement.
E. Talent advantageThe Company has 1 inheritor of national intangible cultural heritage, 4 masters of Chinese brewing, 2masters of Chinese baijiu, 2 Chinese liquor connoisseurs, 1 master of Chinese baijiu technique, 13senior professor engineers, 8 experts who receive special allowances from the State Council, 4 nationaltechnicians, 2 national model workers, 3 national Labor Day Medal winners, 3 academic and
technologic leaders of Sichuan province, 1 expert with outstanding contribution in Sichuan province, 1innovation leader of Tianfu, 1 excellent engineer of Tianfu, 1 skills leader of Tianfu, 3 craftsmen ofTianfu, 2 craftsmen of Sichuan province, 1 technological elite of Tianfu, 1 young science andtechnology talent of Tianfu, 4 technicians of Sichuan province, as well as hundreds of highly skilledpersonnel including national baijiu judges, senior brewing technicians and brewing technicians. Thecomprehensive and professional personnel system assures the sound development of the Company.
4. Analysis of main business
4.1. Overview
2023 marked the 450th anniversary of the building of the Cellars of National Treasure 1573 of LuzhouLaojiao. The Company firmly implemented the annual development theme of "promoting reform,enhancing collaboration, focusing on main areas and achieving leapfrog development", pursuinginnovation while maintaining integrity, and striving for progress. The Company took solid steps inpromoting the high-quality development of Luzhou Laojiao and achieved outstanding results thatreached a new historical high. For the reporting period, operating revenue amounted to CNY 30.233billion, up 20.34% year on year; and the net profit attributable to the shareholders of the listed companyreached CNY 13.246 billion, up 27.79% year on year. The Company’s main operations and the resultsin the reporting period are summarized as follows:
A. Making a breakthrough in sales with a surging business volumeThe Company vigorously overcame challenges around the marketing theme of "reform deepening,concentration on breakthroughs, digital empowerment, and going all out", with significant salesperformance and market layout results. The business volume hit a new high. The brand of NationalCellar 1573 achieved comprehensive coverage in the domestic market and was fully promoted inoverseas markets; the brand of Luzhou Laojiao gained a strong basis in the granary market, and astable and penetrating presence in the opportunity market. This move yielded more practical results.The deepening of key projects such as the "Hundred Cities Programme" further activated marketconsumption and increased market share. Operations led to increasing traffic. The "LighthouseProgramme" was deeply implemented, and the application of scene scanning was deepened, leading togeometric consumer growth. The campaigns set more benchmarks. The proactive marketingstrategy was fully implemented, and the Chunlei Action focused on "promoting five codes, expanding
outlets, and strengthening the atmosphere", continuously consolidating the channel foundation; theAutumn Harvest Action was conducted around "raising prices, strengthening channels, and promotingsell-through", continuing to strengthen the market consumption basis.
B. Promoting consumption and upgrading ecosystemsThe Company continued to focus on consumer promotion and ecosystem building, and fully promotedthe implementation and operation of the three-level public relations system. The quality of theecosystem was better. The Company fully leveraged the role of public relations departments at alllevels to carry out public relations activities in various ecosystems, building a larger ecosystem withbetter quality. Public relations operations had higher efficiency. The Company integrated publicrelations resources and cultivated and developed ecosystems, laying the foundation for salesconversion; it established a marketing service centre, developed a strong product promotion system,and fully leveraged the powerful role of sales, service sales, and promotion. The public relations teamhad stronger capabilities. The incentive mechanism for public relations professionals wascontinuously optimised, and the labour competition in the public relations system was successfully held,cultivating and outputting a large number of skilled professionals in business, organisation, andmarketing.
C. Guaranteeing production and improving quality and efficiencyThe Company's capabilities in capacity guarantee, quality guarantee, product guarantee, scientificresearch guarantee were constantly improved. Capacity guarantee was as solid as a rock. TheCompany fully leveraged the advantages of the Cellars of National Treasure and intelligent brewing,and continuously improved the utilisation rate of brewing resources and production efficiency. Qualityguarantee was continuously perfected. The Company continuously carried out external audits onquality, food safety and organic systems, with a 100% pass rate. It participated in drafting and revisingover 20 standards at all levels including national and industrial standards, and received nationalhonours such as the "National Excellent Enterprise with Quality and Credit" and "National Quality andIntegrity Benchmark Enterprise". Product guarantee was lean and efficient. The packaging materialguarantee rate, product guarantee completion rate, and on-time delivery rate were constantlyincreasing; digital logistics operations achieved comprehensive coverage. The scientific researchguarantee achieved remarkable results. The Company declared more than 20 scientific researchprojects for governments, associations, and other organisations at all levels; it organised 103 patentapplications and published 44 scientific research papers; it was approved to establish the NationalBaijiu Industry Metrology and Testing Centre, which achieved a breakthrough from "zero" in the buildingof the national industry metrology and testing centre in Sichuan Province.
D. Revitalizing brands and taking culture as the foundationThe Company focused on the theme of "the 450th anniversary of continuous brewing of the Cellars ofNational Treasure 1573", and extensively carried out various cultural activities to promote thecontinuous recovery of the value of Luzhou Laojiao as a famous baijiu brand. The brand profunditywas constantly enriched. The Company continuously explored and enriched the cultural connotationsof "Living Dual National Treasures", and its brand culture shaping case won the first prize of NationalOutstanding Achievements in Corporate Culture; as the unique Sichuan baijiu brand, the Company was
successfully selected as a national-level demonstration base for the productive protection of intangiblecultural heritage from 2023 to 2025. The brand breadth was constantly expanded. The Companyprioritised the precision and coverage of brand promotion to expand brand breadth, and opened up anew battlefield for brand building and consumer promotion through innovative marketing methods suchas "Cellar Owner Festival"; by accurately pushing brand content through new media, the Companyeffectively reached and connected millions of young people. The brand height was continuouslyraised. With the help of global events such as the Belt and Road Forum for International Cooperation,the brand image was constantly enhanced. In collaboration with top competition events such as theAustralian Open and the International Table Tennis Federation, the Company continuously upgradedcrossover marketing in the cultural and sports fields; by carrying out a global cultural tour, the Companyinterpreted the spiritual connotation of "letting the world taste the Chinese flavour" through practicalactions. The rankings of the Company's two brands were significantly improved in the lists such as theannual Hurun Most Successful Chinese Heritage Brands and the Kantar BrandZ Top 100 MostValuable Chinese Brands.
E. Empowered by digital and intelligent technologies and driven by innovationThe Company firmly promoted the building of "digital and intelligent Luzhou Laojiao" and was awardedthe title of Digital Intelligence Pioneer Enterprise of Sichuan Province. The benefits of digitalmarketing doubled. The Company continuously promoted the digitisation of channels, consumers, andemployees, and established a digital management system and labelling system for core consumptionassets. The digital and intelligent production efficiency was improved. The intelligent packagingcentre was completed and put into operation, the first phase of the intelligent production schedulingcommand centre was completed, and the building of the production information system was smoothlypromoted. These showed that the level of digital production was far ahead. The efficiency of digitalmanagement was innovated. The Company accelerated the digitisation process in supply chainmanagement, financial management, safety production, and knowledge management, with top-leveldesign blueprints and diverse management applications. The Company's production and operationfurther achieved cluster-based efficiency innovation and all-round data circulation.
F. Implementing fine management and consolidating foundationThe Company's headquarters achieved significant results in capacity building. Basic managementcontinued to improve. The Company established a management framework based on organisation,with finance as the core, assessment as the guarantee, and digital intelligence as the support,integrating authorisation, systems, and processes. Risk prevention and control continued to bestrengthened. The Company continuously strengthened audit efforts, carried out inspections andsupervision on key production and operation tasks, strictly controlled legal risks, and adhered tocompliant operations. Talent selection and cultivation was constantly strengthened. The Companyfurther enriched the talent pool and continued to carry out the targeted training work; it led theestablishment of the Professional Committee of Baijiu Brewing and Baijiu Body Design of the ChineseWorkers' Technical Association. The employee innovation project was awarded the second prize of theNational Excellent Innovation Achievement Award for Employees, and the Company was awarded the"National May First Labor Medal".
G. Assuming responsibilities and promoting a shared future with harmonyThe Company actively practiced the corporate philosophy of "Baijiu for the World, a Shared Future",reflecting the responsibilities of a state-owned enterprise, and it won the "Social Welfare Award at the30th anniversary of the China Alcoholic Drinks Association". Assistance was provided forunderdeveloped counties to ensure their basic needs to be met. The Company actively promotedseven types of assistance projects, including rural infrastructure building, industrial assistance,education assistance, and condolence donations. The implementation of social charitable activitieswas promoted. The Company continuously carried out donation projects for education such as "LittleSchoolbag, Big Love", " Pillars Project", "Luzhou Laojiao Scholarship", and "Luzhou Laojiao Teacher'sPointer". Low-carbon and sustainable ecological development was practiced. The Companypromoted resource recycling and improved the level of clean production, achieving remarkable resultsin green and low-carbon development, and it was included on the list of the "2023 China IndustryCarbon Peaking Leaders". Social responsibility reporting was constantly improved. The ESGproject comprehensively showcased the good image of Luzhou Laojiao that actively assumed socialresponsibility, and the Company was included into the "ESG Pioneer 100 List of Listed Companies inChina".
4.2. Revenues and cost of sales
4.2.1. Breakdown of operating revenues
Unit: CNY
| 2023 | 2022 | YoY Change | |||
| Amount | As % of operating revenues | Amount | As % of operating revenues | ||
| Total | 30,233,301,388.26 | 100% | 25,123,563,271.62 | 100% | 20.34% |
| By business segment | |||||
| Baijiu | 30,077,278,859.58 | 99.48% | 24,766,121,998.49 | 98.58% | 21.45% |
| Other revenues | 156,022,528.68 | 0.52% | 357,441,273.13 | 1.42% | -56.35% |
| By product | |||||
| Mid- and high-end baijiu | 26,841,342,073.14 | 88.78% | 22,132,546,058.64 | 88.10% | 21.28% |
| Other baijiu | 3,235,936,786.44 | 10.70% | 2,633,575,939.85 | 10.48% | 22.87% |
| Other revenues | 156,022,528.68 | 0.52% | 357,441,273.13 | 1.42% | -56.35% |
| By geographical segment | |||||
| Domestic | 30,056,130,668.72 | 99.41% | 24,970,484,945.58 | 99.39% | 20.37% |
| Overseas | 177,170,719.54 | 0.59% | 153,078,326.04 | 0.61% | 15.74% |
| By sales model | |||||
| Traditional channel operation model | 28,657,038,767.86 | 94.79% | 23,302,396,093.43 | 92.75% | 22.98% |
| Emerging channel operation model | 1,420,240,091.72 | 4.70% | 1,463,725,905.06 | 5.83% | -2.97% |
| Other revenues | 156,022,528.68 | 0.51% | 357,441,273.13 | 1.42% | -56.35% |
4.2.2. Business segments, products, geographical segments or sales modelscontributing over 10% of the operating revenues or profits? Applicable ? N/A
Unit: CNY
| Operating revenue | Cost of sales | Gross profit margin | YoY change of operating revenue | YoY change of cost of sales | YoY change of gross profit margin | |
| By business segment | ||||||
| Baijiu | 30,077,278,859.58 | 3,484,544,720.10 | 88.41% | 21.45% | 8.41% | 1.39% |
| By product | ||||||
| Mid- and high-end baijiu | 26,841,342,073.14 | 2,076,149,454.34 | 92.27% | 21.28% | 4.80% | 1.22% |
| Other baijiu | 3,235,936,786.44 | 1,408,395,265.76 | 56.48% | 22.87% | 14.21% | 3.31% |
| By geographical segment | ||||||
| Domestic | 30,056,130,668.72 | 3,511,380,225.10 | 88.32% | 20.37% | 4.83% | 1.73% |
| By sales model | ||||||
| Traditional channel operation model | 28,657,038,767.86 | 3,143,781,427.06 | 89.03% | 22.98% | 6.94% | 1.65% |
Under the circumstances that the statistical standards for the Company’s main business data wereadjusted in the reporting period, the Company’s main business data in the current year is calculatedbased on adjusted statistical standards at the end of the reporting period? Applicable ? N/A
4.2.3. Whether revenue from sales of goods is higher than revenue of renderingservices
? Yes ? No
| By business segment | Item | Unit | 2023 | 2022 | YoY Change |
| Baijiu | Sales volume | Ton | 96,278.12 | 86,182.65 | 11.71% |
| Production volume | Ton | 83,956.49 | 87,902.60 | -4.49% |
| Inventory | Ton | 42,250.87 | 54,572.50 | -22.58% |
Reason for any over 30% YoY movements in the data above? Applicable ? N/A
4.2.4. Execution of significant sales or purchase contracts in the reporting period
? Applicable ? N/A
4.2.5. Breakdown of cost of sales
By business segment
Unit: CNY
| By business segment | Item | 2023 | 2022 | YoY Change | ||
| Amount | As % of cost of sales | Amount | As % of cost of sales | |||
| Baijiu | Raw materials | 2,938,909,467.97 | 84.34% | 2,757,973,459.70 | 85.80% | 6.56% |
| Baijiu | Labor costs | 261,260,432.24 | 7.50% | 208,363,976.36 | 6.48% | 25.39% |
| Baijiu | Manufacturing overhead | 284,374,819.89 | 8.16% | 247,916,280.85 | 7.71% | 14.71% |
4.2.6. Change in the scope of the consolidated financial statements for thereporting period
? Yes ? NoDuring the current period, two subsidiaries, Luzhou Baonuo Biotechnology Co., Ltd. and LuzhouLaojiao Custom Liquor Co., Ltd., were liquidated and de-registered in October 2023 and December2023, respectively. And they have been excluded from the consolidated financial statements sincetheir de-registration.
4.2.7. Major changes in the business, products or services in the reporting period
? Applicable ? N/A
4.2.8. Main customers and suppliers
Sales to main customers of the Company
| Total sales to top five customers（CNY） | 18,830,449,252.26 |
| Total sales to top five customers as % of the total sales | 62.28% |
| Total sales to related parties among top five customers as % of the total sales | 0.00% |
Information on top five customers
| No. | Customer | Sales amount (CNY) | As % of the total sales for the year |
| 1 | Customer A | 13,257,808,911.04 | 43.85% |
| 2 | Customer B | 1,969,215,689.38 | 6.51% |
| 3 | Customer C | 1,758,771,037.59 | 5.82% |
| 4 | Customer D | 1,250,271,768.33 | 4.13% |
| 5 | Customer E | 594,381,845.92 | 1.97% |
| Total | -- | 18,830,449,252.26 | 62.28% |
Other information on main customers? Applicable ? N/A
Main suppliers of the Company
| Total purchases from top five suppliers（CNY） | 1,332,690,651.98 |
| Total purchases from top five suppliers as % of the total purchases | 34.12% |
| Total purchases from related parties among top five suppliers as % of the total purchases | 4.91% |
Information on top five suppliers
| No. | Supplier | Purchases (CNY) | As % of the total purchases for the year |
| 1 | Supplier A | 386,156,811.99 | 9.89% |
| 2 | Supplier B | 316,848,393.44 | 8.11% |
| 3 | Supplier C | 237,525,381.97 | 6.08% |
| 4 | Supplier D | 200,350,449.71 | 5.13% |
| 5 | Supplier E | 191,809,614.87 | 4.91% |
| Total | -- | 1,332,690,651.98 | 34.12% |
Other information on main suppliers? Applicable ? N/A
4.3. Expenses
Unit: CNY
| 2023 | 2022 | YoY Change | Reason for any significant change | |
| Selling and distribution expenses | 3,974,425,526.92 | 3,448,771,046.02 | 15.24% | |
| General and administrative expenses | 1,139,480,677.23 | 1,162,422,257.23 | -1.97% | |
| Finance expenses | -371,152,206.41 | -286,376,927.48 | ||
| R&D expenses | 225,955,797.33 | 206,248,486.57 | 9.56% |
The Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
4.3.1. Breakdown of selling and distribution expenses
Unit: CNY
| Selling and distribution expenses | 2023 | 2022 | YoY Change | Reason for any significant change |
| Advertising expenses | 1,614,086,963.33 | 1,880,179,769.91 | -14.15% |
Sales promotionexpenses
| Sales promotion expenses | 1,479,620,839.26 | 712,641,702.96 | 107.62% | Mainly due to the increased sales promotion activities in the current period |
| Warehousing and logistics expenses | 198,741,925.26 | 138,589,417.94 | 43.40% | Mainly due to the increased sales revenue from baijiu, leading to a corresponding increase in warehousing and logistics expenses |
| Labor costs | 297,757,314.24 | 355,699,286.88 | -16.29% | |
| Other | 384,218,484.83 | 361,660,868.33 | 6.24% |
4.3.2. Breakdown of advertising expenses
Unit: CNY
| Advertising | Expenses |
| Online advertising (exclusive of TV advertising) | 292,940,860.00 |
| Offline advertising | 329,644,361.77 |
| TV advertising | 378,942,183.00 |
| Other (inclusive of branding ideas, exhibitions & showcases, advertising materials, activity planning, etc.) | 612,559,558.56 |
4.4. R&D investments
? Applicable ? N/A
| Major R&D projects | Purpose | Progress | Specific objectives | Expected impact on the Company |
| Thermochemical Energy- and Resource-based Coupled Utilization Technology of Brewing Waste | The project is a national key R&D program during the "13th Five-year Plan" period undertaken by Luzhou Laojiao, which aims to realize the energy- and resource-based utilization of brewing waste with thermochemical technology, and develop a complete | Taking brewing waste as the research target and the energy- and resource-based research and development of thermochemical treatment as the technical breakthrough, the project develops and completes one pilot line for drying and | To develop an intelligent equipment system with packaged technology for the resource- and energy-based utilization of brewing waste, successfully build a demonstration base for the project industrialization, and achieve more than 90% of resource- | Realize a large-scale resource- and energy-based utilization of brewing waste and achieve both ecological and economic benefits. |
| set of intelligent equipment systems for the resource- and energy-based utilization of brewing waste. | pyrolysis of distiller's grains, and realizes the processing capacity of five tons/day for distiller's grains. Currently, the Company is building an industrial demonstration line with a processing capacity of 100,000 tons/year, making a systematic breakthrough in the resource-based utilization technology of brewing waste and industrialization in China. | and energy-based utilization of brewing waste to ensure the low-carbon, green development of the Chinese baijiu industry. | ||
| Study on the Expression Regulation of Key Genes in Leaven Microorganisms in China and Japan and the Improvement of Chinese Leaven Quality | The project is an international project that the Company jointly undertook, which studies the evolution pattern and formation mechanism of microbiomes during the natural leaven-marking and fermentation, and screens for microbial strains with specific functions for the production of functional enhanced leaven. | A study on the diversity of microorganisms in the incised notopterygium has been carried out. Multiple omics analyses including macro-genomic and metabolomic analysis of strong-flavor baijiu were completed. Functional enhanced leaven was developed, and corporate standards for finished strong-flavor baijiu and other products were formulated. | To develop functional leaven according to different quality indicator requirements based on functional leaven-marking microorganisms and key gene expression regulation, systematically evaluate the efficacy of leaven and optimize the process. | Improve the leaven and baijiu quality and enhance the Company's core competitiveness. |
| High-value Patent Incubation Center Project of Luzhou Laojiao | The project is to implement national standards for intellectual property management, and achieve efficient management of the Company in the creation, application and protection of intellectual property. An all-round layout of intellectual property is made around the core key technologies of the industrial chain to promote the creation | The Company has continuously improved the enterprise's intellectual property management system, and passed the annual supervision and audit of the management system; the Company has passed the annual assessment of national intellectual property demonstration enterprises; focusing | The Company has strengthened the close integration of intellectual property creation and protection with the whole process of technological innovation, enhanced the capability of the enterprise to create intellectual property and prevent potential intellectual property risks. The Company has strengthened the analysis and application of patent | The Company has established a sound intellectual property management system, strengthened the creation and protection of intellectual property, and enhanced the core competitiveness of the enterprise. |
| of high-quality patents and build a patent pool for core technologies. | on key technologies, the Company has fully utilised patent analysis tools to conduct competitive situation analysis, and prepare situation analysis and layout reports; the Company has organised high-value patent cultivation training and technical discussions and exchanges to enhance the awareness of intellectual property creation and protection among all staff. | information, laid out and explored intellectual property around core key technologies, and formed a series of high-value patents with technical, economic, and legal value. | ||
| Establishment of Sichuan Innovation Center for Solid-state Brewing Technologies | The Company took the lead to jointly build the Sichuan Innovation Center for Solid-state Brewing Technologies with several universities, institutes and other enterprises, aiming to overcome a batch of core technological challenges in solid-state brewing and resolve the major problem of "large scale but weak capacity" faced by the solid-state brewing sector. | The Company has developed and improved the policy system for the Innovation Center, perfected the infrastructure of the Innovation Center, and continued to carry out solid-sate brewing technology research, industry exchanges, result transformation and talent training. Relying on the Innovation Center as the carrier, Luzhou Laojiao initiated the establishment of the "Solid-state Brewing Technology Innovation Alliance in the Chengdu-Chongqing Twin City Economic Circle", and served as the first chairman unit of the Alliance. The Alliance absorbed more than 60 member units upstream and downstream of the industrial chain to serve the development of the | To gathering innovative resources in solid-state brewing, create an innovation alliance in the solid-sate brewing sector, make breakthroughs in core key technologies in the solid-sate brewing sector, and form a science and technology innovation center with national influence. | Successfully build a technological innovation platform, thereby improving the Company's scientific and technological innovation capabilities and level. |
| solid-state brewing industry. | ||||
| A Study on the Optimization of Key Intelligent Equipment and the System Control for Brewing | By applying modern technologies such as intelligent sensing, image recognition, spectral technology and bio-chips, the project aims to develop core technologies for each link of brewing production, including fermentation, vinasse-based ingredient making, distillation of grains in retorts and baijiu selection, and build intelligent brewing production lines with independent optimization, production decision-making and execution capabilities to comprehensively upgrade the solid-state brewing technologies in the baijiu industry. | Luzhou Laojiao carries out industry-university-research cooperation with universities and research institutes in the field of intelligent brewing, deeply analyzes traditional production processes and fermentation principles, innovatively applies simulation technology, automation technology, online testing, industrial robots, big data analysis, intelligent decision-making and other technologies to the brewing engineering renovation project of Luzhou Laojiao, breaks through the key bottleneck of intelligent brewing technology, and forms the first intelligent baijiu brewing demonstration solution for the whole brewing process in the industry. The project results were appraised by an expert committee with Academician Sun Baoguo as the chairman as "international leading level" and won the First Prize of Sichuan Science and Technology Progress Award. | To build an intelligent brewing demonstration production line. | Level up the Company's intelligent brewing and promote the transformation and upgrading of the traditional brewing industry. |
| Construction of the Brewing Microbial Resources and Data Platform | The project aims to carry out collection of brewing microbial resources, rapid isolation, authentication, review and transfer | Luzhou Laojiao carries out industry-university-research cooperation with universities, and has screened and obtained a series of | To establish a brewing microbial strain bank of a certain scale, which can achieve long-term safe preservation of | Master the core resources of baijiu brewing microorganisms and enhance the Company's ability to protect and utilize |
| of microbial resources in the brewing process of baijiu and development of excellent strains for industrial use, establish a brewing microbial strain library and related enzymology library, and promote the protection, sharing and sustainable utilization of brewing microbial resources. | new species and key functional microorganisms such as the "Laojiao Lactobacillus", "Laojiao Syntrophococcus", and "Laojiao Clostridium" in the pit mud based on the analysis of the metabolic basics of the microbial flora in the mud of the 400-year-old national treasure fermentation pit. 20 applications for invention patents related to functional strains have been filed, of which three have been granted. The Company analyzed their brewing performance and applied them to brewing production, which has strongly improved the sensory quality and quality of the base baijiu. The relevant achievements have won the First Prize of Sichuan Patent Award and the First Prize of 2023 Science & Technology Progress Award of China Alcoholic Drinks Association. | strains and is supplemented by special information technology to manage strain information. | brewing microbial resources. |
Information about R&D personnel
| 2023 | 2022 | YoY Change | |
| Number of R&D personnel | 468 | 480 | -2.50% |
| R&D personnel as % of total employees | 12.55% | 13.31% | -0.76% |
| Educational backgrounds of R&D personnel | |||
| Bachelor’s degree | 307 | 320 | -4.06% |
| Master’s degree | 131 | 133 | -0.01% |
| Doctoral degree (including postdoctoral | 30 | 27 | 11.11% |
| workstations) | |||
| Age structure of R&D personnel | |||
| Below 30 | 217 | 218 | -0.46% |
| 30~40 | 204 | 219 | -6.85% |
Information about R&D investments
| 2023 | 2022 | YoY Change | |
| R&D investments (CNY) | 267,474,647.16 | 206,248,486.57 | 29.69% |
| R&D investments as % of operating revenues | 0.88% | 0.82% | 0.06% |
| Capitalized R&D investments (CNY) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% | 0.00% |
Reason for any significant change in the composition of R&D personnel and the impact? Applicable ? N/A
Reason for any significant YoY change in the percentage of the R&D investments in the operatingrevenues? Applicable ? N/A
Reason for any sharp variation in the percentage of the capitalized R&D investments and rationale? Applicable ? N/A
4.5. Cash flows
Unit: CNY
| Item | 2023 | 2022 | YoY Change |
| Subtotal of cash inflows from operating activities | 32,865,186,758.61 | 26,877,272,861.82 | 22.28% |
| Subtotal of cash outflows from operating activities | 22,216,821,823.15 | 18,614,624,592.10 | 19.35% |
| Net cash flows from operating activities | 10,648,364,935.46 | 8,262,648,269.72 | 28.87% |
| Subtotal of cash inflows from investing activities | 1,933,604,489.48 | 2,243,596,415.18 | -13.82% |
| Subtotal of cash outflows from investing | 3,201,722,342.48 | 4,117,450,731.91 | -22.24% |
| activities | |||
| Net cash flows from investing activities | -1,268,117,853.00 | -1,873,854,316.73 | |
| Subtotal of cash inflows from financing activities | 6,860,373,039.14 | 5,372,133,945.09 | 27.70% |
| Subtotal of cash outflows from financing activities | 8,078,799,107.43 | 7,450,522,397.49 | 8.43% |
| Net cash flows from financing activities | -1,218,426,068.29 | -2,078,388,452.40 | |
| Net increase in cash and cash equivalents | 8,164,022,685.99 | 4,326,477,650.04 | 88.70% |
Explanation of why the data above varied significantly? Applicable ? N/ANet cash flows from investing activities increased by CNY 605,736,463.73 year-on-year, mainly dueto the decreased purchase of wealth management products (collective asset management plans)from securities firms in the current period.Net cash flows from financing activities increased by CNY 859,962,384.11 year-on-year, mainly dueto the receipt of bank loan in the current period.Net increase in cash and cash equivalents increased by CNY 3,837,545,035.95 year-on-year,indicating an increase of 88.70%. It was mainly due to the increased net cash flows from operating,investing and financing activities in the current period.
Explanation of main reasons leading to the material difference between net cash flows from operatingactivities during the reporting period and net profit for the year? Applicable ? N/A
5. Analysis of non-core business
? Applicable ? N/A
6. Assets and liabilities
6.1. Significant change of asset items
Unit: CNY
| At the end of 2023 | At the beginning of 2023 | Change in percentage | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Cash and cash equivalents | 25,952,025,091.28 | 41.00% | 17,757,528,211.25 | 34.56% | 6.44% | |
| Accounts receivable | 17,461,378.98 | 0.03% | 5,939,420.78 | 0.01% | 0.02% | |
| Inventories | 11,622,043,947.46 | 18.36% | 9,840,742,374.85 | 19.15% | -0.79% | |
| Investment property | 37,785,416.77 | 0.06% | 39,149,454.22 | 0.08% | -0.02% | |
| Long-term equity investments | 2,708,254,833.50 | 4.28% | 2,667,500,553.17 | 5.19% | -0.91% | |
| Fixed assets | 8,613,223,465.46 | 13.61% | 8,856,258,598.78 | 17.23% | -3.62% | |
| Construction in progress | 1,718,468,880.53 | 2.72% | 808,919,047.21 | 1.57% | 1.15% | |
| Right-of-use assets | 23,260,955.23 | 0.04% | 39,952,525.63 | 0.08% | -0.04% | |
| Contract liabilities | 2,672,977,090.30 | 4.22% | 2,566,374,718.76 | 4.99% | -0.77% | |
| Long-term loans | 10,000,300,000.00 | 15.80%1 | 3,179,600,000.00 | 6.19% | 9.61% | Mainly due to the receipt of bank loan in the current period |
| Lease liabilities | 22,356,404.47 | 0.04% | 29,096,969.66 | 0.06% | -0.02% |
Note 1: The Company is currently in a period of business expansion. According to the actualoperation situation, the Company utilises low-cost borrowings and its own funds to carry out importantproject construction, and carries out reasonable cash management in accordance with the progressof the projects. Under the premise of controllable risks, the Company has moderately increased itsfinancial leverage and optimised its capital structure, which can help increase the return on capitaland the Company's earnings.
Whether overseas assets account for a larger proportion in total assets? Applicable ? N/A
6.2. Assets and liabilities measured at fair value
? Applicable □ N/A
Unit: CNY
| Item | Opening balance | Changes in fair value through profit or loss | Changes in cumulative fair value recorded into equity | Provision for impairment | Amount of purchase | Amount of sale | Other changes | Closing balance |
| Financial asset | ||||||||
| 1.Held-for-trading financial assets (exclusive of derivative financial assets) | 1,073,466,780.37 | 62,998,156.40 | 1,700,000,000.00 | 1,409,472,837.94 | 1,426,992,098.83 | |||
| 4.Investments in other equity instruments | 1,136,736,978.11 | 146,614,564.52 | 391,086,685.52 | 402,893,468.80 | ||||
| 6. Accounts receivables financing | 4,583,352,503.37 | 1,354,818,504.56 | 5,938,171,007.93 | |||||
| Subtotal of financial assets | 6,793,556,261.85 | 62,998,156.40 | 146,614,564.52 | 1,700,000,000.00 | 1,800,559,523.46 | 1,354,818,504.56 | 7,768,056,575.56 | |
| Total | 6,793,556,261.85 | 62,998,156.40 | 146,614,564.52 | 1,700,000,000.00 | 1,800,559,523.46 | 1,354,818,504.56 | 7,768,056,575.56 | |
| Financial liability | 0.00 | 9,694.10 | 69.77 | 9,763.87 |
Whether measurement attribution of main assets changes significantly in this year?Yes ? No
6.3. Restricted asset rights as of the end of this reporting period
| Item | Closing balance | Reason |
| Other cash and cash equivalents (CNY) | 10,000,000.00 | Restricted bank guarantees |
| Bank deposits (CNY) | 48,222,882.52 | Accrued interest on term deposits |
| Other cash and cash equivalents (CNY) | 772,930.90 | Restricted security deposits at e-commerce platforms |
| Total | 58,995,813.42 |
7. Investment
7.1. Total investment
? Applicable ? N/A
| Investment made in the reporting period (CNY) | Investment made in the prior year (CNY) | YoY change |
| 3,415,581,665.59 | 4,633,852,571.05 | -26.29% |
7.2. Significant equity investment made in the reporting period
? Applicable ? N/A
7.3. Significant ongoing non-equity investment in the reporting period? Applicable □ N/A
Unit: CNY
| Item | Investment form | Whether it is a fixed asset investment | Industry of the investment project | Amount of input in the reporting period | Accumulated actual input amount by the end of the reporting period | Capital source | Project progress | Projected income | Accumulated actual income by the end of the reporting period | Reasons for not meeting the schedule and projected income | Date of disclosure (if any) | Disclosure index (if any) |
| Luzhou Laojiao Technical Upgrade Project of Intelligent Brewing (Phase I) | Self-built | Yes | Baijiu | 205,555,761.14 | 788,856,006.81 | Self-financing | 15.00% | 0.00 | 0.00 | N/A | 13 July 2022 | Announcement No. 2022-24 on the Implementation of Luzhou Laojiao Technical Upgrade Project of Intelligent Brewing (Phase I) by Subsidiary on http://www.cninfo.com.cn/ |
| Total | -- | -- | -- | 205,555,761.14 | 788,856,006.81 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
7.4. Financial assets investment
7.4.1. Securities investment
? Applicable □ N/A
Unit: CNY
| Category of securities | Stock code | Abbreviation of securities | Initial investment cost | Accounting measurement model | Beginning book balance | Changes in fair value recognized in profit or loss | Changes in the cumulative fair value recorded into equity | Amount of purchase | Amount of sale | Profit and loss during the reporting period | Closing book balance | Accounting item | Capital source |
| Domestic and foreign stock | 601211 | GTJA | 12,719,156.76 | Fair value measurement | 160,049,389.21 | 162,522,558.58 | 6,241,808.41 | 175,241,715.34 | Investments in other equity instruments | Own fund | |||
| Domestic and foreign stock | 002246 | SNC | 1,030,000.00 | Fair value measurement | 14,931,950.24 | 11,775,515.44 | 78,177.75 | 12,805,515.44 | Investments in other equity instruments | Own fund | |||
| Domestic and foreign stock | 01983 | LZBANK | 51,120,000.00 | Fair value measurement | 120,158,392.72 | 45,613,837.69 | 3,471,360.00 | 96,733,837.69 | Investments in other equity instruments | Own fund | |||
| Domestic and foreign stock | 01880 | CTG Duty-Free | 542,285,380.80 | Fair value measurement | 807,139,120.07 | -66,344,205.60 | 391,086,685.52 | 977,280.23 | 84,854,489.68 | Investments in other equity instruments | Own fund | ||
| Total | 607,154,537.56 | -- | 1,102,278,852.24 | 0.00 | 153,567,706.11 | 0.00 | 391,086,685.52 | 10,768,626.39 | 369,635,558.15 | -- | -- | ||
7.4.2. Derivative investment
? Applicable □ N/A
A. Derivatives investments for hedging purposes in the reporting period
? Applicable □ N/A
Unit: CNY 10,000
| Type of derivative | Initial investment amount | Opening amount | Gain or loss on change in fair value during the current period | Cumulative fair value change recorded in equity | Purchased in the current period | Sold in the current period | Closing amount | Closing amount as % of the Company’s closing equity |
| Forward forex sale and settlement contract | 0 | 0 | -9.72 | 0 | 0 | 0 | 0 | 0.00% |
| Total | 0 | 0 | -9.72 | 0 | 0 | 0 | 0 | 0.00% |
| Explanation of significant changes in accounting policies and specific financial accounting principles in respect of the Company's hedges for the reporting period as compared to the prior period | In accordance with the relevant provisions and guidelines of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and the Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments issued by the Ministry of Finance, the Company took the relevant accounting measures for its business of derivative transactions to reflect the relevant items in the balance sheet and the income statement. The Company did not meet the applicable conditions of the Accounting Standards for Business Enterprises No. 24 - Hedge Accounting and did not yet apply hedge accounting. The hedging business during this Reporting Period was a newly added business and was not carried out in the previous reporting period. | |||||||
| Actual gain/loss in the reporting period | In accordance with the Accounting Standard for Business Enterprises No. 37 - Presentation of Financial Instruments, changes in fair value were included in the profit and loss for the current period, and a loss of CNY 97.2 thousand was valued at fair value during the holding period. | |||||||
| Results of hedges | The forward foreign exchange settlement and sales business engaged in by the Company was based on specific business operations and the Company's production and operation, hedging product price and exchange fluctuation risks, achieving expected risk management goals, and playing a positive role in stabilizing production and operation. | |||||||
| Source of derivatives investment funds | Own fund | |||||||
| Risk analysis of positions held in derivatives during the reporting period and explanation | The financial derivatives business conducted both domestically and internationally had a real business background. The Company will strictly control the types and sizes of financial derivatives business, choose foreign exchange hedging products with simple structures as much as possible, and do not engage in complex financial derivatives business beyond the actual needs of operation. The purpose is only to lock in risk exposure, and match with actual foreign exchange receipts and disbursements. The Company will not engage in any form or substance of speculative transactions. The term of the purchased foreign exchange hedging products should be as close to or equal to the term of the Company's foreign exchange risk exposure as possible, and should not exceed the term of the foreign exchange risk exposure. The Company will only engage in foreign exchange hedging transactions with financial institutions with corresponding business qualifications approved by the State Administration of Foreign Exchange (SAFE) and the People's Bank of China. The Company will strictly | |||||||
| of control measures (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | control the size of foreign exchange forward contracts. In order to meet the needs of normal production and operation, it is expected that the cumulative foreign exchange hedging business carried out by the Company and its holding subsidiaries will not exceed the equivalent of CNY 500 million. The above limit can be used in a rolling and circular manner. The Company will pay close attention to changes in the international and domestic market condition, strengthen its research and analysis of exchange rates, regularly review and adjust foreign exchange hedging plans in response to market and business changes, and avoid exchange losses to the greatest extent possible. If there is a partial deviation between the actual business amount and term and the expected income and expenditure plan due to changes in the business of transaction enterprises, it will not pose a substantial delivery risk to the hedging transaction. Transaction enterprises will strengthen the management of accounts receivable, closely track customer payments, actively collect payments, reduce risks of customer default and contract breaching, and control the risks that the Company may face within an acceptable range. The Company has formulated the Foreign Exchange Hedging Business Management System, which clearly stipulates the management organisation, approval authority, operation procedures, risk control, information disclosure, information confidentiality of the Company's foreign exchange hedging business, effectively regulating and controlling the behaviour and risks of foreign exchange hedging business. Transaction enterprises will regularly organise professional training for personnel involved in financial derivatives business, enable them to fully understand the characteristics and risks of financial derivatives trading, continuously strengthen the professional ethics education and professional literacy of relevant personnel, and improve their business level. |
| Changes in market prices or fair value of derivative products during the reporting period, specific methods used and relevant assumption and parameter settings shall be disclosed for analysis of fair value of derivatives | Forward foreign exchange settlement and sales products are featured by high market transparency and active transactions, and transaction prices and settlement prices of that day can fully reflect the fair value of derivatives; the losses from changes in fair value during the Reporting Period was CNY 97.2 thousand, determined based on the market price of the exchange at the end of the period. |
| Litigation involved (if applicable) | N/A |
| Disclosure date of the announcement about the board’s consent for the derivative investment (if any) | 13 June 2023 |
| Special opinions expressed by non- | The Company's foreign exchange hedging business was carried out to meet the normal production and operation needs, with the aim of avoiding foreign exchange market risks, preventing adverse effects caused by significant fluctuations in exchange rates, controlling the Company's financial expenses, and reducing exchange rate risks in foreign operations. At the same time, the Company has formulated the Foreign Exchange Hedging Business Management System and improved relevant internal |
| executive directors concerning the Company's derivatives investment and risk control | control procedures. The targeted risk control measures taken by the Company were feasible and effective. The decision-making procedures for the Company's foreign exchange hedging business complied with relevant national laws, regulations, and the Company's Articles of Association, without prejudice to the interests of the Company and shareholders as a whole, especially those of minority shareholders. Therefore, the independent directors agreed that the Company and its holding subsidiaries should carry out foreign exchange hedging business with a cumulative amount not exceeding CNY 500 million (in a rolling and circular manner) within 12 months from the date of approval by the Company's Board of Directors. |
B. Derivatives investments for speculative purposes in the reporting period
□Applicable ? N/A
No such cases in the reporting period
7.5. Use of funds raised
? Applicable ? N/A
7.5.1. General use of funds raised
? Applicable □ N/A
Unit: CNY 10,000
| Year | Method | Total amount of funds raised | Net proceeds | Total amount of raised funds used in the reporting period | Accumulated amount of raised funds used | Total amount of re-purposed funds raised in the reporting period | Total amount of accumulated re-purposed funds raised | Accumulated re-purposed funds raised as % of total funds raised | Total amount of unused funds raised | Purpose and direction of unused funds raised | Amount of funds raised idle for more than two years |
| 2020 | Public offering of corporate bond | 150,000 | 149,400 | 24,931.32 | 111,035.54 | 0 | 0 | 0.00% | 46,504.12 | Deposited in special account for raised funds | 0 |
| 2022 | Public offering of corporate bond | 150,000 | 149,880 | 0 | 149,880 | 0 | 0 | 0.00% | 0 | N/A | 0 |
| Total | -- | 300,000 | 299,280 | 24,931.32 | 260,915.54 | 0 | 0 | 0.00% | 46,504.12 | -- | 0 |
| Notes for general use of funds raised | |||||||||||
| 1. The total amount of unused funds raised of the corporate bond “20 Laojiao 01” includes interest on some funds raised. | |||||||||||
2. The funds raised of the corporate bond “22 Lujiao 01” are all used for committed purposes, and the interest income of CNY 41,633.34 fromthe said funds raised is used to replenish the working capital.
7.5.2. Fund raised for committed projects
? Applicable □ N/A
Unit: CNY 10,000
| Committed investment projects and direction of over-raised funds | Whether the project has been changed (including partial change) | Total amount of funds raised for committed investment | (1) | Investment amount in the reporting period | Accumulated input by the end of the reporting period (2) | Investment progress by the end of reporting period (3)＝(2)/(1) | Date of the projects reach the working condition for their intended use | Realized benefits during the reporting period | Whether the expected benefits have been achieved | Whether the feasibility of the project has changed significantly |
| Committed investment projects | ||||||||||
| Technical Renovation Project of Brewing (Phase II) | No | 398,400 | 398,400 | 15,569.24 | 329,497.86 | 91.39% | 30 June 2021 | N/A | Yes | No |
| Project of Intelligent Upgrading and Building of the Information Management System | No | 9,362.08 | 17,595.97 | N/A | N/A | No | No | |||
| Project of Acquiring Sealing Equipment for the Cellar of Huangyi Brewing Base | No | 0 | 12,043.3 | 30 June 2021 | N/A | Yes | No | |||
| Project of Acquiring Accessory Equipment for Leaven Making for | No | 0 | 4,980.25 | 30 June 2021 | N/A | Yes | No | |||
| Huangyi Brewing Base | ||||||||||
| Subtotal of committed investment projects | -- | 398,4001 | 398,400 | 24,931.32 | 364,117.38 | -- | -- | N/A | -- | -- |
| Use of over-raised funds | ||||||||||
| None | ||||||||||
| Total | -- | 398,400 | 398,400 | 24,931.32 | 364,117.38 | -- | -- | N/A | -- | -- |
| Explain project by project the situation and reason for not reaching plan progress or expected benefits (including reason for inputting “N/A” for “Whether the expected benefits have been achieved”) | N/A | |||||||||
| Significant changes of project feasibility | N/A | |||||||||
| Amount, purpose and progress of over-raised funds | N/A | |||||||||
| Change of implementation site | N/A | |||||||||
| of investment projects | |
| Adjustment of the implementation mode of raised funds investment projects | N/A |
| Situation of advance investment and replacement | Applicable |
| On 14 May 2019, the Company held the First Extraordinary General Meeting of Shareholders of 2019, which considered and approved the Proposal on Requesting the Company’s General Meeting of Shareholders to Fully Authorize Chairman of the Board or Other Personnel Authorized by the Board to Go Through Procedures for the Public Offering of Corporate Bond. According to the Proposal, in the event of inconsistency between the payment of the raised funds and the progress of the project implementation, the Company may make advance investments using other funds (including self-owned funds, bank project loans, etc.) according to the actual situation, and replace fund investment other than capital funds when the raised funds are in place. As of 31 December 2023, the Company had replaced advance investments of self-pooled funds of CNY 653,444,758.68 using the raised funds. | |
| Idle raised funds used for temporary supplementary liquidity | N/A |
| Amount and reason for surplus of funds raised | N/A |
| Purpose and whereabouts of unused funds raised | The idle raised funds are deposited in the special account No. 9550880046723000135 for raised funds in the Chengdu Branch of China Guangfa Bank Co., Ltd., the special account No. 517517460013000000860 for raised funds in the Luzhou Branch of Bank of Communications Co., Ltd., and the special account No. 631395395 for raised funds in the Chengdu Branch of China Minsheng Banking Corp., Ltd. |
| Problems and other situation when raised funds are used and disclosed | N/A |
Note 1: The subtotal of funds raised for committed projects was CNY 3,984 million, which was thecombined amount of CNY 4,000 million (CNY 2,500 million of corporate bonds issued in August 2019plus CNY 1,500 million of corporate bonds issued in March 2020) minus the total issuance costs ofCNY 16 million.
Note 2: Because there are uncertainties in the approval and issue time for bond, in order to ensuresmooth progress of the projects and protect the interests of the Company’s shareholders, theinvestment sequence and specific amounts of the corresponding raised funds should be determinedby the Chairman of the Board as authorized by the general meeting of shareholders or other personsas authorized by the Board of Directors within the scope of the four raised funds investment projectsaccording to the actual needs, provided that the capital funds for each project is no less than 20% ofthe total investment.
Note 3: As of 31 December 2023, the Project of Intelligent Upgrading and Building of the InformationManagement System was in the process.
Note 4: These raised funds investment projects have helped further expand the Company’sproduction and sales, and increase its comprehensive competitiveness. The economic benefits ofthese projects cannot be measured separately.
7.5.3. Re-purposed funds raised
? Applicable ? N/ANo such cases in the reporting period
8. Sale of major assets and equity interests
8.1. Sale of major assets
? Applicable ? N/ANo such cases in the reporting period.
8.2. Sale of major equity interests
? Applicable ? N/A
9. Analysis of major subsidiaries
? Applicable ? N/A
Main subsidiaries and joint companies with an over 10% influence on the Company’s net profit
Unit: CNY
| Company name | Company type | Business scope | Registered capital | Total assets | Net assets | Operating Revenue | Operating profit | Net profit |
| Luzhou Laojiao Sales Co., Ltd. | Subsidiary | Sales of baijiu series such as “National Cellar 1573” and “Luzhou Laojiao” | 100,000,000.00 | 8,677,934,513.38 | 2,486,013,024.18 | 29,064,196,996.65 | 13,367,298,229.61 | 10,013,699,095.81 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable ? N/A
Notes for major holding companies and joint stock companiesThere were no major holding companies or joint stock companies during the reporting period of whichinformation shall be disclosed.
10. Structured entities controlled by the Company? Applicable ? N/A
11. Outlook for the future development of the Company
11.1. Industry landscape and trends
A. According to the data released by the China Alcoholic Drinks Association, in 2023, the nationalbaijiu sector produced 6.29 million kilolitres, experiencing a decline of 5.1% compared to the previousyear; however, it generated sales revenue of CNY 756.3 billion, up by 9.7%, and realised a total profitof CNY 232.8 billion, an increase of 7.5%. The output of baijiu continued to decline, and the industrybecame more and more concentrated in well-known production areas, famous brands, excellentculture, and high quality. The competition in baijiu sector became increasingly fierce.B. In recent years, more and more baijiu enterprises have increased their investment in technologicalinnovation, made significant progress in platform building, technology research and development, thetransformation of industry, university and research institutions, and software and device improvement,and formed their own advantages and characteristics. In the face of increasingly fierce technologicalcompetition, the technological strength of leading industries will truly become the corecompetitiveness that supports the development of enterprises.C. Enterprises accelerate the deep integration of their operations with the increasingly perfect bigdata, Internet of Things and artificial intelligence technology, and Chinese baijiu is stepping into the
era of digital and intelligent development at a faster speed. Strengthening the concept of digitalintelligence, building a digital and intelligent system and cultivating digital and intelligent talents willbecome the key work of baijiu enterprises in the future.D. In the era of traffic, the baijiu industry is showing a trend of younger people-oriented, low-alcoholic,fashionable and healthy development. The "people, goods, and venues" and "online and offline" aregradually integrated, and new sales methods, new technologies and new models emerge in endlessly.
11.2. The Company’s development strategy
11.2.1. Development opportunities in the future
A. In recent years, supporting and encouraging the development of baijiu industry has become animportant part of governments at all levels and relevant competent departments to develop newproductivity and promote high-quality development. The State Council, the Ministry of Industry andInformation Technology, the Ministry of Culture and Tourism and local governments havesuccessively issued policies and measures to support the development of baijiu industry. As the mainrepresentative and local pillar enterprise of Sichuan baijiu, Luzhou Laojiao has embraced a valuableopportunity for high-quality development.B. The baijiu industry has entered a structural adjustment cycle. The number of baijiu enterprisesabove designated size and baijiu production capacity have continued to decline, and sales revenueand total profits have increased year by year. Chinese baijiu industry is moving from an extensiveproduction capacity expansion stage to a profit-driven stage where high-quality production capacitydominates. In the next few years, Chinese baijiu is still in the accelerated concentration period of theindustry. In such industry environment, Luzhou Laojiao, with well-known production areas, famousbrands, excellent culture, and excellent quality, will strive to stand out.C. Over the past over 40 years of reform and opening up, with the rapid economic growth, culturalprosperity and revival, and the rising international status, an increasing number of Chinese peopleshow their recognition of national culture, support for national industries, and recognition of nationalbrands, which has brought a golden opportunity for high-quality development of Chinese baijiu, anexcellent national brand. As the pioneer of strong aromatic baijiu, Luzhou Laojiao has the opportunityto rise inevitably in market competition and seize new heights in industry development.
11.2.2. Possible challenges and risks in the future
A. Macroeconomic risk: The global economic growth momentum is insufficient, regional flashpointsare frequent, and the complexity, severity, and uncertainty of the external environment are increasing.The foundation for China's sustained economic recovery is not yet stable, with insufficient effectivedemand, overcapacity in some industries, and gloomy social expectations. There are still many risksand hidden dangers, bottlenecks in the domestic circulation and interference in the internationalcirculation, bringing more uncertainty to the domestic consumption environment.B. Market competition risk: The baijiu industry has entered a new round of structural adjustment cycle,and the industry development trend of "competition, differentiation and concentration" hasaccelerated its evolution, requiring enterprises to constantly achieve innovation, improve brand value,optimise product structure, strengthen channel management, improve operational efficiency, andimprove competitiveness through digital transformation and other means. At the same time, they alsoneed to pay attention to industry trends and flexibly adjust strategies to adapt to the changing marketenvironment.
11.2.3. The Company's "14th five-year" development strategy
No change occurred to the Company’s "14th five-year" development strategy. For details, see the2021 Annual Report.
11.3. Completion of the business plan in 2023
For the reporting period, operating revenue amounted to CNY 30.233 billion, up 20.34% year on year;and the net profit attributable to the shareholders of the listed company reached CNY 13.246 billion,up 27.79% year on year. The Company has successfully completed its business target “to achieve ayear-on-year increase in operating revenue by at least 15%" as set by the Board of Directors at thebeginning of the year.
11.4. Business plan in 2024
In production and operation, the Company will implement the development theme of "proceeding withconfidence, overcoming challenges, innovating, and collaborating", adhere to the principle of pursuinginnovation while maintaining integrity, and comprehensively overcoming challenges, and strive for acomprehensive victory in the key battle of the 14th Five-Year Plan, with a focus on the overall workingidea of "aiming at one objective, focusing on three cores, and promoting six improvements".
11.4.1. Annual objective
The Company will strive to achieve a year-on-year increase in operating revenue by at least 15% (Theannual objective for 2024 is formulated by the Company according to the 14th five-year strategic planand based on its business capabilities. It does not represent the Company's profit forecast for 2024,and is not a commitment by the Company. Whether it can be achieved depends on many factors suchas changes in market conditions and efforts of the operation team. There are great uncertainties.Investors are kindly reminded to pay special attention).
11.4.2. Focusing on three cores
The Company will focus on digital and intelligent transformation, accelerate the coverage anddrive of digitalisation in various systems, and fully leverage the effectiveness of digitalisation.Meanwhile, it will focus on brand upgrading. Under the theme of "Chinese Strong Aromatic Baijiu for700 years", the National Cellar brand will continue to enhance its brand reputation and height, while theLuzhou Laojiao brand will continue to enhance its brand image and value. Also, it will focus oncollaboration, the Company will focus on collaboration, adhere to a systematic concept, fully integrateinternal and external resources, and emphasise overall design and collaborative cooperation.
11.4.3. Promoting six improvements
A. Upgrading marketing model and resolutely overcoming all challenges comprehensivelyThe Company will accelerate the upgrade of digital marketing models, fully promote the effectiveimplementation of key strategies, complete key task indicators with high quality, and ensure theachievement of annual sales targets.B. Accelerating breakthroughs in digital and intelligent innovation and building leadingadvantages in this respect
The Company will promote high-quality digital building of marketing, production, supply chain, andmanagement systems, rapidly increase the coverage percentage of digital technology, and achievedigitally and intelligently driven business and management.C. Focusing on the main theme of "Chinese Strong Aromatic Baijiu for 700 years" andcontinuously improving brand imageFocusing on the main theme of "Chinese Strong Aromatic Baijiu for 700 years", the Company willclassify and integrate the two brand promotion of National Cellar and Luzhou Laojiao, and makemultidimensional efforts to promote cultural stories and strengthen the recognition of the Chinesehonourable brands.D. Strengthening production management and upholding quality advantagesThe Company will strictly adhere to the lifeline of quality, firmly uphold the concept of quality first,continuously and comprehensively promote the quality-oriented production strategy, andcomprehensively build a quality and safety management system for the entire industry chain, fulltraceability, and full lifecycle, to firmly ensure that the Company's product quality is leading.E. Strengthening the transformation of technological research achievements and enhancing thetechnological image of the enterpriseThe Company will strengthen the output of technological achievements, accelerate the transformationof technological research achievements, and strengthen the empowerment of technological researchfor the development of the Company. The Company will fully tap into its technology promotionresources, and enhance the Company's powerful technological support and technological promotion forproduction, quality, brand, and sales.F. Adhering to the systematic concept and strengthening collaborative cooperationThe Company will deepen the overall design and coordination of internal decision-making mechanisms,business systems, and internal control management systems to enhance management efficiency; it willstrengthen the cooperation with upstream and downstream partners in the industrial chain, and makefull efforts throughout the entire chain; it will actively fulfil its social responsibility as a state-ownedenterprise, supporting local economic and social development, and exerting its positive social effects.
12. Visits paid to the Company for purposes of research,communication, interview, etc. in the reporting period? Applicable ? N/A
| Date of visit | Place of visit | Way of visit | Type of visitor | Visitor | Main inquiry information and materials provided | Index to main inquiry information |
| 14 February 2023 | Company Headquarters | Field survey | Institution | Institutional investor | Company performance | http://www.cninfo.com.cn/ |
| 17 February 2023 | Company Headquarters | Field survey | Institution | Institutional investor | Company performance | http://www.cninfo.com.cn/ |
| 12 May 2023 | Company Headquarters | Communication through an online platform | Other | All investors | Industry trends and company performance | http://www.cninfo.com.cn/ |
| 29 June 2023 | Company Headquarters | Field survey | Other | Institutional and individual investors and media | Industry trends and company performance | http://www.cninfo.com.cn/ |
| 12 December 2023 | Company Headquarters | Communication through an online platform | Institution | Institutional investor | Industry trends and company performance | http://www.cninfo.com.cn/ |
13. Implementation of the action plan for "Dual Enhancement ofDevelopment Quality and Shareholder Returns"Indicate whether the Company has disclosed its action plan for "Dual Enhancement of DevelopmentQuality and Shareholder Returns".? Yes □ NoIn accordance with the guiding ideology of "further invigorating the capital market and boosting investorconfidence" proposed at the Political Bureau meeting of the CPC Central Committee and "vigorouslyimproving the quality and investment value of listed companies, taking more powerful and effectivemeasures, and focusing on stabilizing the market and confidence" proposed at the State CouncilExecutive Meeting, in order to safeguard the interests of all shareholders, boost investor confidence,and promote the long-term healthy and sustainable development of the Company, Luzhou Laojiao Co.,Ltd. (hereinafter referred to as "the Company") has formulated its action plan for "Dual Enhancement ofDevelopment Quality and Shareholder Returns" in combination with the Company's developmentstrategy, business picture, and financial condition. The specific measures are as follows:
A. Strengthening confidence in strategic planning and aiming at the Company's developmentgoalsThe Company has formulated the "136" strategic plan for the 14th Five-Year Plan based on thedevelopment idea of "giving play to advantages, tackling areas of weaknesses, improving quality,building strength, and seeking rejuvenation". Specifically, "1" refers to one development goal, namely,firmly insisting on the goal of regaining the "Top 3" ranking among the Chinese baijiu industry; "3" refersto three major development principles, namely, insisting on brand leadership and fully enhancing thevalue of Chinese famous baijiu brands, insisting on taking quality as foundation and sparing no effortsto build a core production area of world famous baijiu, and insisting on take culture as the foundationand striving to build a pilgrimage site for Chinese baijiu culture; "6" refers to "Six-in-One" LuzhouLaojiao, namely, building a strong-brand Luzhou Laojiao, a quality Luzhou Laojiao, a cultural LuzhouLaojiao, an innovative Luzhou Laojiao, a digital and intelligent Luzhou Laojiao, and a harmoniousLuzhou Laojiao. Since the 14th Five-Year Plan period, the Company has firmly implemented the "136"development strategy, won key battles such as expanding production capacity, upgrading brands, andstrengthening teams, and has entered a stage of high-quality development. The National Cellar 1573brand achieved comprehensive coverage in the domestic market and was fully expanding in overseasmarkets; the Luzhou Laojiao brand built a strong basis in the granary market, and has gained a stable
and penetrating presence in the opportunity market, with much good news of the revival of famousbaijiu; the breakthrough project of expanding key sales areas has been deeply promoted, marketconsumption has been further activated, and market share has been further increased. In terms ofdigital marketing and brand building, channel development and public relations empowerment, onlineexpansion and offline integration, and overseas layout and domestic boosting, a more clear andeffective path has been created with the characteristics of Luzhou Laojiao, which has madecontributions to the healthy and rapid development of the Company. During the 14th Five-Year Planperiod, the compound growth rate of the Company's net profit attributable to the parent companyreached 30.17%, and in 2023, operating revenue amounted to CNY 30.233 billion, up 20.34% year onyear; the net profit attributable to the parent company reached CNY 13.246 billion, up 27.79% year onyear; and various performance indicators reached a new historical high. In the future, the Company willcontinue to steadfastly implement the principle of "growing as fast as possible on the basis of healthydevelopment", and resolutely "compete" for better performance while benchmarking againstoutstanding enterprises in the industry and main competitors, and move towards the established goalsprudently and meticulously.
B. Deeply promoting technological innovation and strengthening the transformation of scientificresearch achievementsIn recent years, the Company has attached great importance to the development mode of innovationleading progress, integrated innovation forces, gathered innovation resources, tackled the frontier andcommon key technologies of the baijiu industry, and promoted the transfer and transformation ofachievements and industry sharing, thus promoting the transformation of the baijiu industry fromexperience oriented to technological oriented. This has made important contributions to thetechnological innovation, transformation and upgrading of the baijiu industry in China. First, theCompany has successfully established multiple major national-level technological innovation platforms,including the National Engineering Research Centre of Solid-State Brewing, the National IndustrialDesign Centre, and the National Postdoctoral Workstation. The Company has formed a comprehensivetechnological innovation platform system with the National Engineering Research Centre of Solid-StateBrewing as the R&D core, covering basic R&D, talent cultivation, and engineering transformation inmultiple fields, and has built a highland for technological innovation in the entire industry. Second, theCompany has continuously increased investment in technological innovation, research anddevelopment, and continuously enhanced its independent innovation capabilities. In the past five years,the total R&D investment reached CNY 842.1 million, and the compound annual growth rate ofinnovation R&D investment reached 25.67%. Third, the Company has actively carried out collaborativeinnovation between the Company, universities and research institutions, establishing cooperativerelationships with more than 30 universities and institutions such as Tsinghua University and ShanghaiJiao Tong University. Through various forms including joint laboratory building, joint undertaking ofmajor projects, joint training of talents, and establishment of open projects, the Company has carriedout extensive technical exchange and cooperation, forming a good pattern of diversified cooperation,innovative development, and mutual benefit between universities and the Company. Fourth, theCompany has attached great importance to the creation and protection of intellectual property rights,and regarded intellectual property building as an important development strategy for the Company. Thenumber of applications and authorisations for invention and utility model patents has maintained a rapidgrowth. Up to now, the Company has been granted 527 patents, including 188 invention patents and
339 utility models, both of which are at the forefront of the industry. In the future, the Company willcontinue to leverage its advantages in scientific research platforms, talent, and publicity tocomprehensively consolidate Luzhou Laojiao's leading position in scientific research.
C. Highly valuing standardised operations and improving corporate governance levelThe Company has continuously consolidated the foundation of corporate governance, improved thecorporate governance structure, actively studied laws and regulations and the latest regulatory policies,and standardised the Company's management system. The Company has also clearly defined theresponsibilities and authorities of the Board of Directors, the Board of Supervisors, general meetings ofshareholders and the management in decision-making, execution, and supervision, and regulated therights and obligations of the Company and shareholders. The Company has vigorously promoted thesystematisation, standardisation, and digitalisation of corporate governance, synchronously enhancedthe information-based level in the Board of Directors, the Board of Supervisors and general meetings ofshareholders, and incorporated the building of the integrated securities business platform into the"digital and intelligent Luzhou Laojiao" system, to continuously improve the level of corporategovernance. In order to further improve the Company's risk management system and ensure that thedirectors, supervisors, and senior management of the Company fully perform their duties within theirscope of responsibilities, the Company has actively promoted the purchase of liability insurances fordirectors, supervisors, and senior management. Meanwhile, the Company has become the first listedcompany in the industry to sign a liability insurance agreement for directors, supervisors, and seniormanagement which has been approved by a general meeting of shareholders. In the future, theCompany will continue to promote information technology building to empower corporate governance,continuously improve operational efficiency and scientific decision-making level.
D. Fulfilling the information disclosure obligation compliantly and strictly guarding the defenceline of insider tradingThe Company takes standardised information disclosure as the bottom line, conducts informationdisclosure with high standards, and effectively respects and safeguards the legitimate rights andinterests of investors. First, the Company has established and improved a management system centredon major information internal reporting system, temporary and periodic report preparation procedure,insider information management system, and other policy documents, and continuously promoted thestandardised and procedural business work, to ensure accurate and rigorous information disclosure.Second, the Company has adhered to investor demand orientation, actively promoted voluntaryinformation disclosure, attached importance to the pertinence, readability, and effectiveness ofdisclosure content, and continuously improved the transparency of information disclosure of theCompany. The Company has been awarded the highest A grade in the information disclosureassessment of listed companies on the Shenzhen Stock Exchange for several consecutive years. In thefuture, the Company will continuously improve the transparency of information disclosure andcontinuously display information on the Company's operations at multiple levels, angles, anddimensions.
E. Efficiently carrying out investor relations activities and conveying the Company's investmentvalueThe Company has actively adapted to the needs of investor research and carried out investor
relationship management through a combination of "inviting in" and "going out" models. It has activelycommunicated with investors on industry hot topics, the Company's business picture, and developmentstrategies through the Shenzhen Stock Exchange investor interaction platform, establishment ofinvestor hotlines, improvement of investor relationship websites, hosting online collective receptiondays, and on-site investor surveys. In doing so, the Company has conveyed its investment value andsafeguarded investors' right to know. At the same time, the Company has adhered to investor demandorientation. Based on the continuous growth of overseas shareholders in recent years, the Companyhas innovatively used overseas accounts such as Facebook, X, and IG to simultaneously publish theCompany's performance promotion, shortened the disclosure time interval between Chinese andEnglish versions, and conducted overseas roadshows, to ensure the timeliness of informationacquisition for overseas investors. In the future, the Company will continue to build a two-waycommunication mechanism for a deep understanding and positive interaction with the capital market totransmit the Company's value. (The Company's investor relations website has been fully updated.Investors are welcome to visit https://000568.ir-online.cn/).
F. Improving shareholder returns and safeguarding the legitimate rights and interests ofshareholdersThe Company adheres to the implementation of an active profit distribution policy, attaches importanceto reasonable returns to investors while considering the sustainable development of the Company, andmaintains the continuity and stability of profit distribution. The Company clearly stipulates in its Articlesof Association that the Company may distribute dividend in cash or stocks and the dividend should notbe less than 50% of the distributable profit realised for that year, and the profit to be distributed in cashshould not be less than 30% of the distributable profit realised for that year. Since its listing, theCompany has paid out a cumulative cash dividend amount of CNY 35.353 billion, with a dividendpayout ratio of 61.14%, ranking among the top among more than 5,000 listed companies in theShanghai and Shenzhen stock markets. This has allowed all shareholders to fully share the Company'sdevelopment achievements and effectively maintained the Company's good image in the capitalmarket. In the future, the Company will formulate reasonable profit distribution policies while ensuringnormal operation and long-term development, and effectively allow investors to share the fruits of theCompany's growth and development.
G. Encouraging the controlling shareholder to actively increase its shareholdings to maintainthe stability of the capital marketBased on its recognition of the Company's long-term value and its firm belief in the Company'sdevelopment prospects, the controlling shareholder of the Company, Luzhou Laojiao Group Co., Ltd.,planned to increase its holdings in the Company through call auction trading within six months from 15December 2023, with a proposed increase amount of no less than CNY 200 million, effectivelymaintaining the stability of the capital market and boosting investor confidence. As at 15 March 2024,Luzhou Laojiao Group Co., Ltd. has accumulatively increased its holdings of 607,800 shares in theCompany through bidding trading, accounting for 0.04% of the total share capital of the Company, withan increase of CNY 101.9956 million. The plan for this increase in holdings has not been fullyimplemented yet. Luzhou Laojiao Group Co., Ltd. will continue to implement the holding increaseaccording to the plan, and the Company will fulfil its information disclosure obligations in a timelymanner in accordance with relevant regulations.
In the future, the Company will focus on the development theme of "proceeding with confidence,overcoming challenges, innovating, and collaborating", actively take responsibility, keep diligent, andmake solid progress while striving for high-quality development. The Company will also firmly establisha sense of return to shareholders, effectively implement the "dual enhancement of development qualityand shareholder returns" action plan, significantly enhance investors' satisfaction, and activelycontribute to stabilizing the capital market and investor confidence.
Section IV Corporate Governance
1. Basic situation of corporate governance
Since it was listed, in accordance with the Corporate Law, the Securities Law, The Listed CompanyGovernance Standards and other laws, administrative regulations and departmental rules andnormative documents, the Company has constantly perfected corporate governance structure,standardized its operation, established the rules and system on the basis of the Company's articles ofassociation whose main framework is the rules of procedure of the shareholders' general meeting,rules of procedure of the board of directors and rules of procedure of the board of supervisors, whichis formed the management system whose main structure is the shareholders meeting, board ofdirectors, board of supervisors and management. During the reporting period, the Company won anumber of honors and awards, including “The 25
thGolden Bull Awards—Best Investment ValueAward”, “The 14
thTianma Awards—Best Investor Relations Award”, “100 ESG Pioneers of ChineseListed Companies”, and “China Association for Public Companies—Excellent Board Practice”.
Any incompliance with the applicable laws and administrative regulations, as well as regulationsrelated to the governance of listed companies issued by the CSRC? Yes ? NoThere is no incompliance with the applicable laws and administrative regulations, as well asregulations related to the governance of listed companies issued by the CSRC.
2. Independency of assets, personnel, finance, organizations andbusinesses which are separated from the controlling shareholder andthe actual controllerThe Company has an independent and complete production and operation system and independentdecision-making ability. There is no horizontal competition between the Company and the controllingshareholders and its subsidiaries. The Company has daily affiliated transactions with the controllingshareholders and its subsidiaries. Such daily affiliated transactions belong to the need of rationalallocation of resources and do not affect the independence of the Company. For affiliatedtransactions, the Company has strictly fulfilled the relevant decision-making procedures andinformation disclosure obligations, and implemented the system of Non-executive directors' priorexamination and avoidance system of related directors (shareholders).
2.1 In the aspect of assets
Asset integrity. There are clear ownership and independency of the Company's assets invested bycontrolling shareholders. The Company has an independent and complete production, supply, salessystem and auxiliary production system and supporting facilities. The industrial property rights,trademarks and non-patented technology and other intangible assets are owned by the Company.There is no situation that the controlling shareholders occupy and transfer the assets of the company.
2.2. In the aspect of business
Business apart. The Company is totally independent in the operation, production and sales of baijiuseries of “Luzhou Laojiao” and “National Cellar 1573”. It has the ability to operate independently in themarket. The board of directors and the management can independently make production andoperation decisions within the corresponding authority.
2.3 In the aspect of personnel
The Company has built independent labor management, personnel management and salarymanagement. The Company has established a relatively complete labor management system andpost responsibility system. Meanwhile, the Company's senior management personnel all receivesalary in the Company, but not at the controlling shareholders.
2.4 In the aspect of organization
Organization independence. The Company has independent production management organizationand system, independent office and production management place, and independent managementorganization, functional organization and branch.
2.5 In the aspect of finance
Financial independence. The Company has completed and independent financial department.Independent accounting system and financial management are established. The Company separatelysets bank accountants, conducts external settlement and pays taxes according to law.
3. Horizontal competition
?Applicable ? N/A
4. Annual meeting of shareholders and special meetings ofshareholders convened during the reporting period
4.1. Meetings of shareholders convened during the reporting period
| Meeting | Type | Investor participation ratio | Convened date | Disclosure date | Resolutions |
| 2022 Annual General Meeting of Shareholders | General Meeting of Shareholders | 63.51% | 29 June 2023 | 30 June 2023 | Announcement on Resolutions of The 2022 Annual General Meeting of Shareholders Announcement No: 2023-19 (http://www.cninfo.com.cn/) |
4.2. Special meetings of shareholders convened at the request of preferredshareholders with resumed voting rights
?Applicable ? N/A
5. Directors, supervisors, and senior management
5.1 General information
| Name | Gender | Age | Title | Incumbent/ Former | Period of service | Shares held by the beginning of the reporting period (share) | Shares increased during the reporting period (share) | Shares decreased during the reporting period (share) | Other increase/ decrease (share) | Shares held by the end of the reporting period (share) | Reason for share changes |
| Liu Miao | Male | 54 | Chairman of the board | Incumbent | 2015.6.30-2024.6.29 | 288,087 | 288,087 | ||||
| Lin Feng | Male | 50 | Director, General manager | Incumbent | 2015.6.30-2024.6.29 | 95,900 | 95,900 | ||||
| Xiong Pingting | Female | 48 | Director, Deputy general manager | Incumbent | 2021.6.29-2024.6.29 | 62,800 | 62,800 | ||||
| Liu Junhai | Male | 54 | Non-executive director | Incumbent | 2018.6.27-2024.6.29 | 0 | 0 | ||||
| Chen You’an | Male | 66 | Non-executive director | Incumbent | 2021.6.29-2024.6.29 | 0 | 0 | ||||
| Lyu Xianpei | Male | 60 | Non-executive director | Incumbent | 2021.6.29-2024.6.29 | 0 | 0 | ||||
| Li Guowang | Male | 60 | Non-executive director | Incumbent | 2022.6.29-2024.6.29 | 0 | 0 | ||||
| Qian Xu | Male | 60 | External director | Incumbent | 2015.6.30-2024.6.29 | 0 | 0 | ||||
| Ying Hanjie | Male | 54 | External director | Incumbent | 2016.9.13-2024.6.29 | 0 | 0 | ||||
| Gong Zhengying | Female | 54 | External director | Incumbent | 2022.6.29-2024.6.29 | 0 | 0 | ||||
| Yang Ping | Male | 47 | Chairman of the Board of Supervisors | Incumbent | 2021.6.29-2024.6.29 | 0 | 0 | ||||
| Li | Male | 54 | Supervisor | Incumbent | 2018.6.27- | 0 | 0 |
| Guangjie | 2024.6.29 | ||||||||||
| Li Lunyu | Female | 37 | Supervisor | Incumbent | 2021.6.29-2024.6.29 | 0 | 0 | ||||
| Tang Shijun | Male | 47 | Supervisor | Incumbent | 2022.6.29-2024.6.29 | 0 | 0 | ||||
| Ou Fei | Male | 38 | Supervisor | Incumbent | 2022.6.29-2024.6.29 | 0 | 0 | ||||
| Shen Caihong | Male | 58 | Deputy general manager | Incumbent | 2002.6.30-2024.6.29 | 195,575 | 15,094 | 180,481 | Shareholding reduction on the open market | ||
| Xie Hong | Female | 54 | CFO | Incumbent | 2015.3.6-2024.6.29 | 76,700 | 76,700 | ||||
| He Cheng | Male | 57 | Deputy general manager | Incumbent | 2015.6.30-2024.6.29 | 76,700 | 76,700 | ||||
| Zhang Suyi | Male | 52 | Deputy general manager | Incumbent | 2015.12.29-2024.6.29 | 76,700 | 76,700 | ||||
| Li Yong | Male | 47 | Deputy general manager, Secretary of the board | Incumbent | 2021.9.20-2024.6.29 | 62,800 | 62,800 | ||||
| Wang Hongbo | Male | 60 | Director, Deputy general manager | Former1 | 2015.3.6-2024.2.2 | 76,700 | 76,700 | ||||
| Total | -- | -- | -- | -- | -- | 1,011,962 | 0 | 15,094 | 0 | 996,868 | -- |
Note 1: Due to reaching the statutory retirement age, Mr. Wang Hongbo has applied for resignation asa director and member of the special committee of the Board of Directors and deputy generalmanager of the Company on 2 February 2024, and will not hold any position in the Company or theCompany's majority-owned subsidiaries after his resignation. For details, please refer to the''Announcement on Resignation of Director and Deputy General Manager'' (Announcement No. 2024-
7).
Whether any director, supervisor or senior management resigned before the expiry of their periods ofservice during the reporting period
□ Yes ? No
Changes in directors, supervisors, and senior management? Applicable □ N/A
| Name | Title | Type | Date | Reason |
| Li Yong | Secretary of the board | Appointed | 10 March 2023 | Appointed |
| Wang Hongbo | Secretary of the | Resignation | 3 March 2023 | Voluntary resignation |
board
5.2 Employment information
Professional background, work experience and major duties of current directors, supervisors andsenior management.Mr. Liu Miao, male, born in 1969, MBA of Wright State University in the USA, Master of ChineseBrewing, senior marketing specialist. He used to serve as planning minister, general manager ofSales Company, general manager assistant, and deputy general manager of the Company. Atpresent, he is secretary of the party committee and chairman of the board in Laojiao Group, secretaryof the party committee and chairman of the board in the Company, as well as chairman of the boardin Luzhou Sanrenxuan Liquor Industry Co., Ltd.
Mr. Lin Feng, male, born in 1973, Master degree, professorate senior economist, senior marketingspecialist. He was deputy general manager and general manager of Sales Company, director ofmarketing, director of human resources, chief dispatcher, deputy general manager of the Company.At present, he is deputy secretary of the party committee, director, and general manager of theCompany.
Ms. Xiong Pingting, female, born in 1975, holds a master's degree and the titles of Human ResourceManagement Professional (grade one), Economist, and Political Mentor. Positions previously held byher include Deputy Director and Director of the Office of Luzhou Laojiao Sales Co., Ltd., DeputyDirector of the Office of Jiangyang District People's Government of Luzhou (temporary), DeputyDirector of the Human Resources Department and Corporate Management Department of LuzhouLaojiao Co., Ltd., General Manager of the Brand Operation Department, Director of the Office(concurrently), Secretary of the general Party branch, and Deputy General Manager of LuzhouLaojiao Sales Co., Ltd. At present, she is member of the Party Committee, Director, Deputy Secretaryof the Discipline Inspection Committee, Deputy General Manager, and Chairman of the Labor Unionof the Company.
Mr. Liu Junhai, male, born in 1969, holds a Ph.D. degree in law and is a doctoral supervisor.Positions previously held by him include Assistant to the Director and Researcher at the Institute ofLaw of the Chinese Academy of Social Sciences ("CASS"), Professor at CASS, Vice Chairman ofChina Consumers Association, and Deputy Director Researcher at the Planning Committee under theChina Securities Regulatory Commission ("CSRC"). Currently, he serves as Professor at the LawSchool of Renmin University of China, Director at the Institute of Commercial Law of RenminUniversity of China, Arbitrator at China International Economic and Trade Arbitration Commission andBeijing Arbitration Commission (Beijing International Arbitration Center) (concurrently). He has servedas a non-executive director of the Company since June 2018.
Mr. Chen You'an, male, born in 1958, holds an Eng.D. degree in management science andengineering and is a Senior Engineer. Currently, he is Independent Director of Nomura Orient
International Securities Co., Ltd., and Hexie Health Insurance Co., Ltd. He has served as a non-executive director of the Company since June 2021.
Mr. Lyu Xianpei, male, born in 1964, holds a Ph.D. degree in accounting. Positions previously held byhim include Vice Dean at the School of Accounting and Director at the Auditing Department ofSouthwestern University of Finance and Economics. Currently, he serves as Professor and DoctoralSupervisor at Southwestern University of Finance and Economics, Chairman of Sichuan EducationalAudit Society, as well as Independent Director of Sichuan Teway Food Group Co., Ltd., and NorthChemical Industries Co., Ltd. He has served as a non-executive director of the Company since June2021.
Mr. Li Guowang, male, born in 1963, holds a postgraduate degree and is a senior economist. Heonce served as the Deputy Director of the Information Center of the Ministry of Commerce, DeputyGeneral Manager of Futures Brokerage Co., Ltd. under China Banking and Insurance InformationTechnology Management Co., Ltd., General Manager of the Shanghai Securities BusinessDepartment of China Banking and Insurance Information Technology Management Co., Ltd., Directorof the Strategic Development Department of the R&D Center of China Galaxy Securities Co., Ltd.,General Manager of the R&D Center of Shanghai Securities Co., Ltd., Marketing Director of GalaxyAsset Management Co., Ltd., Director of the Research Institute of Hwa Bao Securities Co., Ltd., ChiefEconomist and Director of the Research Institute of Zhongshan Securities Co., Ltd., and ChiefEconomist of Shanghai Dalu Futures Co., Ltd. At present, he is the Deputy Director of the GreenFinance Committee of the Jiangsu Financial Association, member of the Association of ZhejiangTalent in Shanghai, and Director of Shanghai Jiayan Supply Chain Management Co., Ltd. He hasserved as a non-executive director of the Company since June 2022.
Mr. Qian Xu, Male, born in 1963, PhD. He was general manager and chairman of the board of BeijingEnterprises Real-Estate Group Co., Ltd., chairman of the board and general manager of BeijingEnterprises Urban Development Group Co., Ltd., chairman of the board of Beijing Properties(Holdings) Limited (listed on the Hong Kong Stock Exchange), and non-executive director of CAQHoldings Limited (listed on the Australian Stock Exchange). He has served as a director of theCompany since June 2015.
Mr. Ying Hanjie, Male, born in 1969, Doctor of Biochemistry, professor, and academician of theChinese Academy of Engineering. He was deputy director of Pharmacy and Life Sciences School ofNanjing University of Technology. At present, he is director of National Biochemical EngineeringTechnology Research Center of Nanjing Tech University, chairman of the board of NanjingBiotogether Co., Ltd., director of Nanjing High Tech University Biological Technology ResearchInstitute Co., Ltd., and director of Jiangsu Institute of Industrial Biotechnology. He has served as adirector of the Company since September 2016.
Ms. Gong Zhengying, female, born in 1969, holds a postgraduate degree and is a senior economist.She once served as the Deputy Head of the Open Development and Social System Section ofLuzhou Economic System Reform Commission, Deputy Head and Head of the Enterprise Property
Rights Supervision Section of Luzhou State-owned Assets Supervision and AdministrationCommission, Party Secretary and Chairman of Luzhou Xinglu Asset Management Co., Ltd.,Chairman of Luzhou Parking Lot Infrastructure Investment Co., Ltd., and Executive Director (legalrepresentative) of Luzhou Qihang Parking Lot Construction Investment Co., Ltd. and Luzhou XingluLantian Market Management Co., Ltd. At present, she is a full-time external director of LuzhouLaojiao Group Co., Ltd., Luzhou Aviation Development Investment Group Co., Ltd., SichuanLutianhua Co., Ltd., Luzhou Industrial Development Investment Group Co., Ltd., LuzhouDevelopment Holding Group Co., Ltd., Luzhou Baijiu Industry Development Investment Group Co.,Ltd., and Luzhou Airport (Group) Co., Ltd. She has served as a director of the Company since June2022.
Mr. Yang Ping, male, born in 1976, Professor of Engineering, holds a doctoral degree. Positionspreviously held by him include Deputy Director and Director at the National Cellar Workshop Section,Director at the Production and Technology Department, and Deputy General Manager of LuzhouLaojiao Brewing Co., Ltd. Currently, he is Chairman of the Board of Supervisors and member of theDiscipline Inspection Committee of the Company, as well as Secretary of the Party Committee andGeneral Manager of Luzhou Laojiao Brewing Co., Ltd.
Mr. Li Guangjie, male, born in 1969, Master degree, economist. He was manager of PlanningDepartment of the Company, deputy director of Sales Company, manager of Import and Exportcompany, general manager assistant of Sales Company. At present, he is supervisor and deputygeneral manager of Sales Company.
Ms. Li Lunyu, female, born in 1986, holds a university degree as well as is Assistant Political Mentorand Assistant Engineer. Positions previously held by her include Publicity Officer at the Office of theCPC Luzhou Laojiao Committee, Deputy Head and Manager of Tianjin Division of the BusinessDepartment for Luzhou Laojiao Tequ 60 and 80, Secretary of the CPC National Cellar Section Branchof Luzhou Laojiao Brewing Co., Ltd., Director of the Office of the CPC Luzhou Laojiao BrewingCommittee, and Director of the Discipline Inspection Department and Vice Chairman of the LaborUnion of Luzhou Laojiao Brewing Co., Ltd. Currently, she is Supervisor, Vice Chairman of the LaborUnion, and Director of the Office of the Labor Union of the Company.
Mr. Tang Shijun, male, born in 1976, holds a bachelor's degree and is a senior accountant. He onceserved as the Head of the Finance Department and Director of the Business Finance Center ofLuzhou Laojiao Lundao Liquor Sales Co., Ltd., Chief Controller of Shanghai Pharmaceutical (Luzhou)Co., Ltd., Chief Accountant and Director of Luzhou Naxi District State-owned Assets ManagementCo., Ltd., and Director of the Financing Department of Luzhou Huixing Investment Group Co., Ltd. Atpresent, he is a full-time external director assistant of Luzhou state-owned enterprises, as well asManager of the Finance and Asset Management Department of Luzhou State Owned CapitalOperation Management Co., Ltd., and General Manager of Luzhou Development InvestmentCompany (Sichuan Trust and Investment Company Luzhou Office). He has served as a supervisor ofthe Company since June 2022.
Mr. Ou Fei, male, born in 1985, holds a bachelor's degree. He once worked in Guizhou RenhuaiFengzhiji Liquor Co., Ltd., Sichuan Dashan Law Firm and Jiangyang District People's Procuratorate,Luzhou City. At present, he is a full-time external supervisor of Sichuan Lutianhua Co., Ltd., LuzhouIndustrial Development Investment Group Co., Ltd., Luzhou Development Holding Group Co., Ltd.,Sichuan Xinhuoju Chemical Co., Ltd. and Luzhou State Owned Capital Operation Management Co.,Ltd. He has served as a supervisor of the Company since June 2022.
Mr. Shen Caihong, Male, born in 1966, Master degree, professor-level senior engineer, one of thefirst batch of representative inheritors of national intangible cultural heritage, one of the first batch of“Master of Chinese Brewing”, and one of the first batch of "Sichuan craftsmen". He was manager ofthe Company’s leaven-making branch, manager of base baijiu company, general manager assistantand director of production department. At present, he is deputy general manager, chief engineer,director of national solid brewing engineering technology research center and chairman of the boardof Luzhou Pinchuang Technology Co., Ltd.
Ms. Xie Hong, female, born in 1969, Master degree, senior accountant, and senior economist. Shewas section chief of Treasury Section of the Finance Bureau, section chief of Non-tax RevenueCollection Management Section, director of Luzhou Municipal Finance Treasury Payment Center,chief accountant of Luzhou Finance Bureau. At present, she is a member of the party committee andCFO of the Company.
Mr. He Cheng, male, born in 1966, Master of Management Economics of Nanyang TechnologicalUniversity, senior engineer, expert who receives special allowances from the State Council, Master ofChinese Baijiu, and Master of Chinese Brewing. He was chief dispatcher of the Company, generalmanager of Brewing Company, as well as director of the business administration department, directorof the human resources department, director of the quality department, and director of the dispatchingcenter of the Company. At present, he is a member of the party committee, deputy general manager,chief quality officer and director of food safety of the Company.
Mr. Zhang Suyi, male, born in 1971, PhD, professorate senior engineer, representative inheritor ofSichuan Intangible Cultural Heritage. He was a worker, production team leader and assistantsuperintendent at Brewing Workshop No. 6, vice director and director of Gouchu Center, and deputychief engineer of the Company, as well as deputy general manager, and director of the Baijiu BodyDesign Centre of Brewing Company. At present, he is deputy general manager, and director of safetyand environmental protection of the Company.
Mr. Li Yong, male, born in 1977, holds a postgraduate degree and is a brewing engineer. He onceworked in the education sector at the Party and government organizations at the township level aswell as departments at the county and municipal levels. Also, he used to be Director of the GroupOffice of Luzhou Laojiao Group, Director of the General Manager’s Office of the Company, as well asDeputy Secretary of the Party Committee, Secretary of the Party Committee, and Deputy GeneralManager of Sales Company. Currently, he is Deputy General Manager, Secretary of the Board, andmember of the Discipline Inspection Committee of the Company, as well as Chairman of the Board of
Luzhou Laojiao Technology Innovation Co., Ltd.
Position in shareholder-holding companies? Applicable ? N/A
| Name | Name of shareholder-holding companies | Position in shareholder-holding companies | Beginning date of term | Ending date of term | Any remunerations received from shareholder-holding companies |
| Liu Miao | Laojiao Group | Secretary of the party committee, Chairman of the board | 11 March 2022 | No | |
| Gong Zhengying | Laojiao Group | Director | 15 February 2022 | No |
Position in other companies? Applicable ? N/A
| Name | Name of other companies | Position in other companies | Beginning date of term | Ending date of term | Any remunerations received from other companies |
| Liu Junhai | Institute of Commercial Law of Renmin University of China | Director | |||
| Liu Junhai | China International Economic and Trade Arbitration Commission, and Beijing Arbitration Commission (Beijing International Arbitration Center) | Arbitrator | |||
| Chen You’an | Nomura Oriental International Securities Co., Ltd., and Hexie Health Insurance Co., Ltd. | Non-executive director | |||
| Lyu Xianpei | Sichuan Education and Audit Society | Chairman | |||
| Lyu Xianpei | Sichuan Teway Food Group Co., Ltd., and North Chemical | Non-executive director |
| Industries Co., Ltd. | |||||
| Li Guowang | Green Finance Committee of the Jiangsu Financial Association | Vice chairman | |||
| Li Guowang | Association of Zhejiang Talent in Shanghai | Director | |||
| Li Guowang | Shanghai Jiayan Supply Chain Management Co., Ltd. | Director | |||
| Ying Hanjie | National Biochemical Engineering Technology Research Center of Nanjing University of Technology | Director | |||
| Ying Hanjie | Nanjing Biotogether Co., Ltd. | Chairman of the board | |||
| Ying Hanjie | Nanjing High Tech University Biological Technology Research Institute Co., Ltd., and Jiangsu Institute of Industrial Biotechnology | Director | |||
| Gong Zhengying | Luzhou Aviation Development Investment Group Co., Ltd., Sichuan Lutianhua Co., Ltd., Luzhou Industrial Development Investment Group Co., Ltd., Luzhou Development Holding Group Co., Ltd., Luzhou Baijiu Industry Development Investment Group Co., Ltd., and Luzhou Airport (Group) Co., Ltd. | Director |
| Tang Shijun | Finance and Asset Management Department of Luzhou State Owned Capital Operation Management Co., Ltd. | Manager | |||
| Tang Shijun | Luzhou Development Investment Company (Sichuan Trust and Investment Company Luzhou Office) | General Manager | |||
| Ou Fei | Sichuan Lutianhua Co., Ltd., Luzhou Industrial Investment Group Co., Ltd., Luzhou Development Holding Group Co., Ltd., Sichuan Xinhuoju Chemical Co., Ltd., Luzhou State Owned Capital Operation Management Co., Ltd. | Supervisor |
Punishments imposed in the recent three years by the securities regulators on the incumbentdirectors, supervisors and senior management as well as those who left in the reporting period? Applicable ? N/A
5.3 Remuneration of directors, supervisors and senior management
The following describes the decision-making procedures, grounds on which decisions are made andactual remuneration payment of directors, supervisors and senior management.
Decision-making procedures for directors, supervisors and senior management: The remuneration ofnon-executive directors, external directors and external supervisors shall be determined by thegeneral meeting of shareholders, and the remuneration of directors, supervisors and seniormanagement who hold positions within the Company shall be determined by relevant rules of SASACof Luzhou and relevant rules of the Company.
Grounds on which decisions are made of directors, supervisors and senior management: Calculateaccording to the appraisal methods formulated at the beginning of the year.
Actual remuneration payment of directors, supervisors and senior management: Details refer to“Remuneration of directors, supervisors and senior management during the reporting period”.
Remuneration of directors, supervisors and senior management during the reporting period
Unit: CNY 10,000
| Name | Gender | Age | Title | Incumbent/ Former | Total before-tax remuneration from the Company | Remuneration from related parties of the Company |
| Liu Miao | Male | 54 | Chairman of the board | Incumbent | 166.2 | No |
| Lin Feng | Male | 50 | Director, General manager | Incumbent | 164.3 | No |
| Xiong Pingting | Female | 48 | Director, Deputy general manager | Incumbent | 95.2 | No |
| Liu Junhai | Male | 54 | Non-executive director | Incumbent | 9.52 | No |
| Chen You’an | Male | 66 | Non-executive director | Incumbent | 9.52 | No |
| Lyu Xianpei | Male | 60 | Non-executive director | Incumbent | 9.52 | No |
| Li Guowang | Male | 60 | Non-executive director | Incumbent | 9.52 | No |
| Qian Xu | Male | 60 | External director | Incumbent | 9.52 | No |
| Ying Hanjie | Male | 54 | External director | Incumbent | 9.52 | No |
| Gong Zhengying | Female | 54 | External director | Incumbent | 0 | No |
| Yang Ping | Male | 47 | Chairman of the Board of Supervisors | Incumbent | 120.7 | No |
| Li Guangjie | Male | 54 | Supervisor | Incumbent | 106.51 | No |
| Li Lunyu | Female | 37 | Supervisor | Incumbent | 67.32 | No |
| Tang Shijun | Male | 47 | Supervisor | Incumbent | 0 | No |
| Ou Fei | Male | 38 | Supervisor | Incumbent | 0 | No |
| Shen Caihong | Male | 58 | Deputy general manager | Incumbent | 114.1 | No |
| Xie Hong | Female | 54 | CFO | Incumbent | 129.9 | No |
| He Cheng | Male | 57 | Deputy general manager | Incumbent | 111.3 | No |
| Zhang Suyi | Male | 52 | Deputy general manager | Incumbent | 108.3 | No |
| Li Yong | Male | 47 | Deputy general manager, Secretary of the board | Incumbent | 95.2 | No |
| Wang Hongbo | Male | 60 | Director, Deputy general manager | Former | 131.7 | No |
| Total | -- | -- | -- | -- | 1,467.85 | -- |
Other information? Applicable ? N/A
6. Performance of directors during the reporting period
6.1. Board meetings convened during the reporting period
| Meeting | Convened date | Disclosure date | Resolutions |
| The 27th Meeting of the 10th Board of Directors | 9 March 2023 | 10 March 2023 | Announcement on Resolutions of the 27th Meeting of the 10th Board of Directors (Announcement No. 2023-5) (http://www.cninfo.com.cn/) |
| The 28th Meeting of the 10th Board of Directors | 6 April 2023 | 7 April 2023 | Announcement on Resolutions of the 28th Meeting of the 10th Board of Directors (Announcement No. 2023-7) (http://www.cninfo.com.cn/) |
| The 29th Meeting of the 10th Board of Directors | 28 April 2023 | 29 April 2023 | Announcement on Resolutions of the 29th Meeting of the 10th Board of Directors (Announcement No. 2023-10) (http://www.cninfo.com.cn/) |
| The 30th Meeting of the 10th Board of Directors | 13 June 2023 | 14 June 2023 | Announcement on Resolutions of the 30th Meeting of the 10th Board of Directors (Announcement No. 2023-17) (http://www.cninfo.com.cn/) |
| The 31st Meeting of the 10th Board of Directors | 11 July 2023 | 12 July 2023 | Announcement on Resolutions of the 31st Meeting of the 10th Board of Directors (Announcement No. 2023-20) (http://www.cninfo.com.cn/) |
| The 32nd Meeting of the 10th Board of Directors | 28 August 2023 | 29 August 2023 | Announcement on Resolutions of the 32nd Meeting of the 10th Board of Directors (Announcement No. 2023-23) (http://www.cninfo.com.cn/) |
| The 33rd Meeting of the 10th Board of Directors | 25 September 2023 | 26 September 2023 | Announcement on Resolutions of the 33rd Meeting of the 10th Board of Directors (Announcement No. 2023-27) (http://www.cninfo.com.cn/) |
| The 34th Meeting of the 10th Board of Directors | 30 October 2023 | 31 October 2023 | Announcement on Resolutions of the 34th Meeting of the 10th Board of Directors (Announcement No. 2023-32) (http://www.cninfo.com.cn/) |
| The 35th Meeting of the 10th Board of Directors | 15 November 2023 | 16 November 2023 | Announcement on Resolutions of the 35th Meeting of the 10th Board of Directors (Announcement No. 2023-36) (http://www.cninfo.com.cn/) |
| The 36th Meeting of the 10th Board of Directors | 22 December 2023 | 23 December 2023 | Announcement on Resolutions of the 36th Meeting of the 10th Board of Directors (Announcement No. 2023-41) (http://www.cninfo.com.cn/) |
| The 37th Meeting of the | 27 December 2023 | 28 December 2023 | Announcement on Resolutions of the |
| 10th Board of Directors | 37th Meeting of the 10th Board of Directors (Announcement No. 2023-42) (http://www.cninfo.com.cn/) |
6.2. Attendance of directors in board meeting and general meeting of shareholders
| Attendance of director in board meeting and general meeting of shareholders | |||||||
| Director | Attendance due in the reporting period (times) | Attendance on site (times) | Attendance by telecommunication (times) | Attendance through a proxy (times) | Absence (times) | Absence for two consecutive times | Attendance at general meeting of shareholders (times) |
| Liu Miao | 11 | 7 | 3 | 1 | 0 | No | 1 |
| Lin Feng | 11 | 6 | 3 | 2 | 0 | No | 1 |
| Wang Hongbo | 11 | 5 | 3 | 3 | 0 | No | 0 |
| Xiong Pingting | 11 | 6 | 3 | 2 | 0 | No | 1 |
| Liu Junhai | 11 | 6 | 3 | 2 | 0 | No | 0 |
| Chen You’an | 11 | 8 | 3 | 0 | 0 | No | 1 |
| Lyu Xianpei | 11 | 7 | 3 | 1 | 0 | No | 0 |
| Li Guowang | 11 | 8 | 3 | 0 | 0 | No | 1 |
| Qian Xu | 11 | 6 | 3 | 2 | 0 | No | 0 |
| Ying Hanjie | 11 | 4 | 3 | 4 | 0 | No | 0 |
| Gong Zhengying | 11 | 8 | 3 | 0 | 0 | No | 0 |
6.3. Objections from directors in related issues of the Company
Were there any objections on related issues of the Company from director? Yes ? NoDirectors have no objection on related issues of the Company during the reporting period.
6.4. Other details about the performance of duties by directors
Was there any advice from directors adopted by the Company?? Yes ? NoExplanation about advice of directors is adopted or not adopted by the Company or notThe Company adopted the advice of non-executive directors in respect of safe production, systemimprovement, and internal control construction.
7. Activities of special committees under the Board of Directors duringthe reporting period
| Committee | Members | Number of meetings convened | Convened date | Topics | Substantial opinion and recommendations | Other information | Details of objections (if any) |
| The Strategy Committee | Liu Miao, Lin Feng, and Wang Hongbo | 3 | 8 June 2023 | Review of the following proposals: 1. The Proposal on the Implementation of the Project on the Cultural Conservation and Restoration, the Creation of Baijiu Culture Scenarios and the Improvement of the Surrounding Environment of the Baijiu Cave of Luzhou Laojiao's Brewing Workshop in Xiaoshi Area; 2. The Proposal on Conducting Forex Hedges; and 3. The Proposal on the Investment and Wealth Management with Own Funds | Approved, to be submitted to the Board of Directors for further review | ||
| The Strategy Committee | 7 July 2023 | Review of the following proposal: The Proposal on the Implementation of the Sichuan Luzhou Baijiu Industrial Park (Huangyi) Cogeneration Expansion Project (Phase I) Project | |||||
| The Strategy Committee | 17 August 2023 | Review of the following proposal: The Proposal on the De-registration of Luzhou Laojiao Custom Liquor Co., Ltd. | |||||
| The Audit Committee | Lyu Xianpei, Chen You’an and Qian Xu | 4 | 17 April 2023 | Review of the following proposals: 1. The 2022 Annual Financial Report; 2. The 2022 Internal Control Self-assessment Report; 3. The Summary Report of the 2022 Annual Audit; 4. The Work Plan for the 2023 Internal Audit; 5. The Q1 2023 Report; and 6. The Proposal on the Re-appointment of CPA Firm | Approved, to be submitted to the Board of Directors for further review | ||
| The Audit Committee | 17 August 2023 | Review of the following proposals: 1. The Proposal on the 2023 Interim Financial Report; and 2. The 2023 Interim Audit Work Report | |||||
| The Audit Committee | 23 October 2023 | Review of the following proposals: 1. The Audit Work Report for Q1-Q3 |
| 2023; and 2. The Q3 2023 Report | |||||||
| The Audit Committee | 15 December 2023 | Review of the following proposal: The Proposal on the Formulation of the Internal Audit Charter (Trial) of Luzhou Laojiao Co., Ltd. | |||||
| The Remuneration and Appraisal Committee | Chen You’an, Li Guowang, and Ying Hanjie | 1 | 11 November 2023 | Review of the following proposals: 1. The Proposal on the Remunerations of the Management for 2022; and 2. The Proposal on the Incentive Income of the Management for 2020-2022 | Approved, to be submitted to the Board of Directors for further review |
8. Performance of duties by the board of supervisors
Were there any risks to the Company identified by the board of supervisors when performing its dutiesduring the reporting period? Yes ? NoThe board of supervisors has no objection during the reporting period.
9. Staff in the Company
9.1. Number, functions and educational backgrounds of the staff
| Number of in-service staff of the parent company at the end of the reporting period | 1,288 |
| Number of in-service staff of main subsidiaries at the end of the reporting period | 2,482 |
| Total number of in-service staff at the end of the reporting period | 3,770 |
| Total number of staff with remuneration in the period | 3,770 |
| Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension | 916 |
| Functions | |
| Function by category | Number of staff |
| Production staff | 1,387 |
| Sales staff | 963 |
| R&D staff | 759 |
| Financial staff | 100 |
| Administrative staff | 561 |
| Total | 3,770 |
| Educational backgrounds | |
| Educational background by category | Number of staff |
| Senior high school and below | 450 |
| Junior college | 854 |
| Bachelor | 1,969 |
| Master | 485 |
| Doctor | 12 |
| Total | 3,770 |
9.2. Staff remuneration policy
In 2023, the Company implemented the distribution policy of "sharing benefits, paying for losses,classification and setting, and long-term policy effects", continuously strengthened the digitalassessment, linked individual performance with organizational performance, and highlighted thedistribution according to performance. The Company implemented the post rating wage system andstrengthened the performance management of all employees. According to the following principles:
Link individual performance with organizational performance: The increase of wages is linked to theincrease of the Company's operating performance and profit growth; Under the same caliber, theproportion of increase in salaries shall not exceed the proportion of increase in performance and profitgrowth.
Salary and its changes based on position, ability and performance: The salary of employee shall bedetermined by position and the depth of their expertise. The salary shall be adjusted accordinglywhen the position, ability and performance change.
Performance orientation, bonus and forfeit: Performance assessment is conducted according to theactual contributions of employees, and the salary distribution is inclined to the employees withexcellent performance.
The principle of equal wage negotiation: Abide by the principles that both sides of labor and capitalagrees in collective negotiation, so as to realize the unity of benefit and fairness.
9.3. Staff training plans
In 2023, based on the staff career development system and job qualification standards, the Companyfully optimized and upgraded the targeted training system comprising different levels to meetdemands for staff ability improvement for different positions and different levels. At the same time,targeted at different professional lines, the Company horizontally designed "Elite Programme" training,and strove to create a large number of elite employees who would be rooted in various fields.
Sail Programme: The "Sail Programme" training was conducted for new employees hired throughcampus and social recruitment and for other grassroots employees. The implemented traininginvolved four aspects: General ability training, marketing practical training, business capabilityenhancement training, and career planning. The purpose was to enhance new employees'understanding and recognition of the Company's core values, familiarise them with the Company'sproduction and operation statuses and their work procedures, and allow them to accumulate
professional knowledge and skills and improve their ability to work independently.
Dive Program: The “Dive Program” training was conducted for general employees on specializedlines. The purpose was to strengthen their specialty knowledge and ability to solve specialty problems,enhance their basic management skills, improve their competency and raise their performance. Thetraining was conducted in the form of sub-programs, such as “Happy Learning Sub-program” and“Excellent Frontline Manager Sub-program” to provide specialty knowledge and skills of differentsystems.
Voyage Program: The “Voyage Program” training was conducted for key personnel with a systematicdesign of three-year development plans and a focus on three themes, including “self-management”,“work management” and “interpersonal management”. The purpose was to enrich employees’knowledge on corporate business management, improve their knowledge structure, and enhancetheir strategic understanding and abilities of work and team management.
Steering Program: The “Steering Program” training was conducted for middle management personneland department experts in the form of online and offline combined, “coming in” and “going out”combined and ability enhancement and work style building combined. Through the learning ofadvanced management concepts and practices, the training aimed to drive employees to broadentheir mind, expand their vision, strengthen their leadership skills and enhance their level of corporatemanagement.
Elite Programme: Targeting employees from different professional lines of the Company, theCompany piloted and created training programmes for digital, human resources, and otherprofessional lines. Model learning, external training, and introduction of teaching staff were employedto improve the professional level of employees.
In addition, in terms of professional talents training, in combination with the strategic needs of talentdevelopment and relevant policies of provinces and cities, the Company strengthens study on skilledworker development policies, actively carries out the work of staff title appraisal, skill rating,recommendation and assessment and so on. Based on its actual condition, the Company researchedand developed top-level design documents for professional talent cultivation, such as theImplementation Plan for "Luzhou Laojiao Skilled Worker Action", to systematically guide the buildingof professional talent teams.
9.4. Labor outsourcing
? Applicable ? N/A
10. Profit distribution and converting capital reserves into share capital
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, in
the reporting period.? Applicable ? N/A
According to the plan for profit distribution for 2022 deliberated and approved by 2022 annual meetingof shareholders, based on its total of 1,471,987,769 shares, the Company distributed a cash dividendof CNY 42.25 (tax inclusive) per 10 shares to all shareholders. The distribution plan was implementedon 28 August 2023.
| A special statement of the policy of cash dividends | |
| Whether it meets the requirements of the articles of corporation or the resolution of shareholders' meeting: | Yes |
| Whether the standard and proportion of dividends are clear: | Yes |
| Whether the relevant decision-making process and systems are complete: | Yes |
| Whether non-executive directors perform their duties and play their due role: | Yes |
| If the Company has no dividend plan, it should disclose the specific reasons and the next steps it intends to take to enhance investor returns | N/A |
| Whether the minority shareholders have the opportunity to fully express their opinions and appeals and whether their legitimate rights and interests have been adequately protected: | Yes |
| Whether the conditions and procedures are compliant and transparent and whether the cash dividend policy is adjusted or changed: | N/A |
The Company made a profit in the reporting period and the profit distributable to shareholders of theCompany was positive, but it did not put forward a preliminary plan for cash dividend distribution toshareholders.? Applicable ? N/A
Preliminary plan for profit distribution and converting capital reserves into share capital for thereporting period? Applicable ? N/A
| Bonus shares for every 10 shares (share) | 0 |
| Dividends for every 10 shares (CNY) (tax included) | 54.00 |
| Total shares as the basis for the preliminary plan for profit distribution (share) | 1,471,987,769 |
| Total cash dividends (CNY) (tax included) | 7,948,733,952.60 |
| Cash dividends in other forms (e.g. repurchase share) | 0.00 |
| Total cash dividends (CNY) (including other forms) | 7,948,733,952.60 |
| Distributable profit (CNY) | 33,815,566,574.75 |
| Percentage of cash dividends in the total distributed profit (including other forms) | 100% |
| Information of the cash dividends | |
| The development stage of the Company is mature and the Company has no major fund expenditure arrangement. When the profit distribution is carried out, the proportion of cash dividends in this profit distribution should at least reach 80%. | |
| Details of preliminary plan for profit distribution and converting capital reserves into share capital | |
11. Implementation of any equity incentive plan, employee stockownership plan or other incentive measures for employees? Applicable ? N/A
11.1. Equity incentives
A. On 26 September 2021, relevant proposals such as the Proposal on the 2021 Restricted ShareIncentive Plan (Draft) and Summary of Luzhou Laojiao Co., Ltd. were approved at the Seventh Meetingof the 10th Board of Directors and the Third Meeting of the 10th Board of Supervisors of the Company,respectively.
B. On 2 December 2021, the Company received the Approval of Luzhou State-owned AssetsSupervision and Administration Commission on the Implementation of the Second Phase of the EquityIncentive Plan for Listed Companies by Luzhou Laojiao Co., Ltd. (L.G.Z.K.P. [2021] No. 62) from theLuzhou State-owned Assets Supervision and Administration Commission, which approved in principleto the implementation of the Restricted Share Incentive Plan by the Company.
C. On 24 December 2021, the Board of Supervisors of the Company issued the review opinion, i.e.,Explanation on the Review and Announcement of the List of Awardees of the 2021 Restricted ShareIncentive Plan.
D. On 29 December 2021, the relevant proposals such as the Proposal on the 2021 Restricted ShareIncentive Plan (Draft) and Summary of Luzhou Laojiao Co., Ltd. were approved at the FirstExtraordinary General Meeting of Shareholders of 2021. Meanwhile, a self-inspection on the trading ofthe Company's shares by insiders of the Incentive Plan and the proposed awardees was conducted,and the Self-Inspection Report on the Trading of the Company's Shares by Insiders and Awardees inthe 2021 Restricted Share Incentive Plan was disclosed.
E. On 29 December 2021, the Company held the 12th Meeting of the 10th Board of Directors and theSixth Meeting of the 10th Board of Supervisors and reviewed and approved the Proposal on the Grantof Restricted Shares to Awardees respectively. The independent directors consented to the relevantmatters.
F. On 21 February 2022, the Company disclosed the Announcement on the Completion of Registration
of Restricted Share Grant, completed the registration of the first grant of restricted shares. Upon theregistration of the grant, 6,862,600 restricted shares were granted to 437 objects, the grant price wasCNY 92.71 per share and the listing date was 22 February 2022.
G. On 25 July 2022, the Company held the 18th Meeting of the 10th Board of Directors and the NinthMeeting of the 10th Board of Supervisors and reviewed and approved the Proposal on the Grant ofReserved Restricted Shares to Awardees respectively. The independent directors consented to thismatter.
H. On 5 August 2022, the Board of Supervisors of the Company issued the review opinion, i.e.,Explanation on the Review and Announcement of the List of Awardees for the Reserved RestrictedShares of the 2021 Restricted Share Incentive Plan.
I. On 2 September 2022, the Company held the 22nd Meeting of the 10th Board of Directors and the13th Meeting of the 10th Board of Supervisors, at which the Proposal on the Repurchase andRetirement of Certain Restricted Shares and the Adjustment of Repurchase Price and the Proposal onthe Adjustment of the Granted Price of Reserved Restricted Shares of 2021 Restricted Share IncentivePlan were reviewed and approved respectively. In accordance with the relevant provisions of theincentive plan of the Company and the authorization of the First Extraordinary General Meeting ofShareholders of 2021, the Board of Directors of the Company agreed to adjust the grant price andrepurchase price of the reserved restricted shares under the incentive plan from CNY 92.71 per shareto CNY 89.466 per share in view of the implementation of the Company's profit distribution plan for2021. The independent directors consented to this matter.
J. On 3 September 2022, the Company disclosed the Announcement on the Repurchase andCancellation of Some Restricted Shares to Reduce Registered Capital and Notice to Creditors. By theexpiration of the declaring period, the Company had not received any declaration from the relevantcreditors for early payout of debts or provision of guarantee.
K. On 26 September 2022, the Company disclosed the Announcement on the Completion of theRegistration of the Grant of the Reserved Restricted Shares under the 2021 Restricted Share IncentivePlan. Upon the registration of the grant of the reserved restricted shares, 342,334 restricted shareswere granted to 46 objects, the grant price was CNY 89.466 per share and the listing date was 28September 2022.
L. On 29 November 2022, the Company disclosed the Announcement on the Completion of theRepurchase and Cancellation of Some Restricted Shares. The Company proposed to repurchase andcancel a total of 62,310 restricted shares granted but not lifted from restricted sales. As at 29 November2022, the Company completed the aforesaid repurchase and cancellation of restricted shares.
M. On 29 December 2022, the Company held the 26th Meeting of the 10th Board of Directors and the15th Meeting of the 10th Board of Supervisors and reviewed and approved the Proposal on the Grant ofReserved Restricted Shares to Awardees respectively. The independent directors consented to thismatter.
N. On 13 January 2023, the Board of Supervisors of the Company issued the review opinion, i.e.,Explanation on the Review and Announcement of the List of Awardees for the Reserved RestrictedShares of the 2021 Restricted Share Incentive Plan.
O. On 16 February 2023, the Company disclosed the Announcement on the Completion of theRegistration of the Grant of the Reserved Restricted Shares under the 2021 Restricted Share IncentivePlan. Upon the registration of the grant of the reserved restricted shares, 92,669 restricted shares weregranted to 17 objects, the grant price was CNY 89.466 per share and the listing date was 17 February2023.
P. On 23 January 2024, the Company held the 38th Meeting of the 10th Board of Directors and the 20thMeeting of the 10th Board of Supervisors, at which the Proposal on the Repurchase and Retirement ofCertain Restricted Shares and the Adjustment of Repurchase Price and the Proposal on theSatisfaction of Unlocking Conditions for the First Unlocking Period of the 2021 Restricted ShareIncentive Plan were reviewed and approved respectively. In accordance with the relevant provisions ofthe incentive plan of the Company and the authorization of the First Extraordinary General Meeting ofShareholders of 2021, the Board of Directors of the Company agreed to adjust the grant price andrepurchase price of the reserved restricted shares under the incentive plan from CNY 89.466 per shareto CNY 85.241 per share in view of the implementation of the Company's profit distribution plan for2022. Meanwhile, as the unlocking conditions had been satisfied for the first unlocking period of the2021 Restricted Share Incentive Plan, a total of 2,734,640 restricted shares held by 435 eligibleawardees were unlocked for public trading on 22 February 2024.
Equity incentives for directors and senior management? Applicable ? N/A
Unit: share
| Name | Office title | Stock options held at the beginning of the reporting period | Stock options granted in the reporting period | Exercisable share options for the reporting period | Exercised share options in the reporting period | Exercise price for exercised share options in the reporting period (CNY / share) | Stock options held at the end of the reporting period | Market price at the end of the reporting period (CNY / share) | Restricted shares held at the beginning of the reporting period | Unlocked shares in the reporting period | Restricted shares granted in the reporting period | Grant price of the restricted shares (CNY/ share) | Restricted shares held at the end of the reporting period |
| Liu Miao | Chairman of the board | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 95,900 | 0 | 0 | 92.71 | 95,900 |
| Lin Feng | Director, General manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 95,900 | 0 | 0 | 92.71 | 95,900 |
| Wang Hongbo | Director, Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 0 | 0 | 92.71 | 76,700 |
| Shen Caihong | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 0 | 0 | 92.71 | 76,700 |
| Xie Hong | CFO | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 0 | 0 | 92.71 | 76,700 |
| He Cheng | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 0 | 0 | 92.71 | 76,700 |
| Zhang Suyi | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 76,700 | 0 | 0 | 92.71 | 76,700 |
| Xiong Pingting | Deputy general manager | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 62,800 | 0 | 0 | 92.71 | 62,800 |
| Li Yong | Deputy general manager, Secretary of the board | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 62,800 | 0 | 0 | 92.71 | 62,800 |
| Total | -- | 0 | 0 | 0 | 0 | -- | 0 | -- | 700,900 | 0 | 0 | -- | 700,900 |
| Notes (if any) | The first grant date for the 2021 Restricted Share Incentive Plan was 29 December 2021 and the registration date of the grant was 21 February 2022. | ||||||||||||
Appraisal mechanism and incentives for senior managementFor details, please refer to the 2021 Restricted Share Incentive Plan (Draft) and Summary of LuzhouLaojiao Co., Ltd., the Performance Appraisal Methods for the 2021 Restricted Share Incentive Plan ofLuzhou Laojiao Co., Ltd., and the Management Methods for the 2021 Restricted Share Incentive Planof Luzhou Laojiao Co., Ltd., which have been disclosed by the Company on www.cninfo.com.cn on 26September 2021.
11.2. Implementation of employee stock ownership plans
? Applicable ? N/A
11.3. Other incentive measures for employees
? Applicable ? N/A
12. Establishment and implementation of the internal control systemduring the reporting period
12.1. Establishment and implementation of the internal control systemDuring the reporting period, in accordance with the Basic Rules for Internal Control of Enterprises, theGuidelines of the Shenzhen Stock Exchange for the Internal Control of Listed Companies, relevant laws,administrative regulations, normative documents, and other regulatory requirements concerning internalcontrol, as well as the reality of the Company, the Company consistently improved and optimized itsinternal control systems and established a well-developed system that covered the corporategovernance, administrative management, operations management, financial management, humanresources, production guarantee, and safety and environmental protection. Additionally, it strengthenedthe implementation, supervision, inspection, feedback, and improvement of the internal control systemsin the operations management to ensure that each internal control system is reasonable, complete, andeffective, thereby promoting the sound, sustainable development of the Company.
12.2. Material internal control deficiencies found in the reporting period
□ Yes ? No
13. The Company’s management and control of subsidiaries during thereporting period
| Company name | Consolidation plan | Consolidation progress | Problems arising in consolidation | Solutions taken | Solution implementation progress | Subsequent solutions |
| N/A | ||||||
14. Internal control assessment report and auditor report
14.1. Internal control assessment report
| Disclosure date of the internal control assessment report | 27 April 2024 | |
| Disclosure index of the internal control assessment report | 2023 Internal Control Assessment Report (http://www.cninfo.com.cn/) | |
| Ratio of the total assets of the appraised entitles to the consolidated total assets | 90.00% | |
| Ratio of the operating revenues of the appraised entitles to the consolidated operating revenue | 90.00% | |
| Deficiencies identification standard | ||
| Type | Financial report | Non-financial report |
| Qualitative standard | Material deficiencies：（1）Correction of material errors in financial reports that have been announced (except retroactive adjustment of previous years due to changes in policies or other objective factors)；（2）Material misstatement of current financial report which was unrecognized but found by the auditor；（3） Corrupt transaction of senior management；（4）Audit committee and internal audit department are not effective to the internal control supervision . | Material deficiencies：（1）violate national regulations and laws；（2）The Company’s decision-making procedures are unscientific；if there is a decision-making misplay, it will result in significant deal failure; （3）The substantial loss of managerial or technical staff；（4）Important business lacks system control or system failure, important economic business has internal control system guidance, but with no effective operation；（5）material deficiencies of internal control cannot be rectified in time. |
| Quantitative standard | 1. Material deficiencies：Misstatement ≥ 5% of total profits；Misstatement ≥ 1% of total assets；Misstatement ≥ 5% of total operating revenue；Misstatement ≥5% of owner's equity 2. Significant deficiencies：3% of gross profits≤Misstatement<5% of gross profits；0.5% of total assets≤Misstatement<1% of total assets；3% of total operating revenue≤Misstatement<5% of total operating revenue；3% of owner's equity≤Misstatement<5% of owner's equity. 3. General deficiencies：Misstatement<3% of gross profits；Misstatement<0.5% of total assets；Misstatement<3% of total operating revenue；Misstatement<3% of owner's equity. | 1. Material deficiencies：loss≥5% of net profits. 2. Significant deficiencies：3% of net profits≤ loss＜5% of net profits. 3. General deficiencies：loss＜3% of net profits |
| Number of financial-report material deficiencies | 0 | |
| Number of non-financial-report material deficiencies | 0 | |
| Number of significant financial-report related deficiencies | 0 | |
| Number of significant Non-financial-report related deficiencies | 0 | |
14.2. Internal control auditor report
? Applicable ? N/A
| Deliberation opinion section in the internal control audit report | |
| The Company maintained, in all material respects, effective internal control over financial reporting as of 31 December 2023, based on the Basic Rules on Enterprise Internal Control and other applicable regulations. | |
| Disclosure of internal control audit report | Disclosed |
| Disclosure date of the internal control audit report | 27 April 2024 |
| Disclosure index of the internal control audit report | 2023 Internal Control Auditor Report (http://www.cninfo.com.cn/) |
| Type of the audit’s opinion | Standard unqualified opinion |
| Significant deficiencies found in the non-financial report | No |
The accounting firm issued the internal control audit report of non-standard opinions? Yes ? No
Whether the internal control audit report issued by the accounting firm is consistent with the self-assessment report issued by the board of directors.? Yes ? No
15. Remediation of Problems Identified by Self-inspection in the SpecialCampaign on Listed Company GovernanceNone.
Section V Environmental and Social Responsibility
1. Information about environment protection
Whether the listed company and its subsidiaries belong to heavy polluting industries prescribed bythe environmental protection department? Yes □ No
Policies and industry standards on environmental protectionIn the process of production and operation, the Company strictly follow the laws, regulations andindustry standards related to environmental protection, such as the Environmental Protection Law ofthe People's Republic of China, Law of the People's Republic of China on Environmental ImpactAssessment, Law of the People's Republic of China on Atmospheric Pollution Prevention and Control,Law of the People's Republic of China on Water Pollution Prevention and Control, AdministrativeMeasures for the Legal Disclosure of Enterprise Environmental Information, Regulations on theAdministration of Environmental Protection of Construction Projects of the People's Republic of China,Regulations on Administration of Pollutant Discharge Permits, Policies and Industry Standards onEnvironmental Protection, Standard for Pollution Control on Hazardous Waste Storage, Standards forthe Emission of Water Pollutants in the Fermented Alcohol and Baijiu Industry, Regulations on thePrevention and Control of Environmental Pollution by Solid Waste in Sichuan Province, andRegulations on Environmental Protection of Sichuan Province.
Environmental protection administrative permissionIn 2023, the Company obtained six ecological and environmental administrative permits, including atotal of three permits for change and renewal of discharge permits and three approvals ofenvironmental impact assessment reports.
| Name of permit | Administrative permit No. | Review and issuance authority | Acquiring time | Valid term | Permitted matter | Remark |
| Discharge Permit for Luzhou Laojiao Co., Ltd. (Xiaoshi Brewery Base) | 91510500204706718H002V | Luzhou Municipal Ecology and Environment Bureau | 17 April 2023 | 5 years | Concentration limit on fugitive emission of air pollutants: 2.0 mg/Nm3 for non-methane hydrocarbon (NMHC) and 20 dimensionless for odor concentration. | Change |
| Discharge Permit for Luzhou Laojiao Co., Ltd. (Huangyi Brewery Eco- | 91510500204706718H004Q | Luzhou Municipal Ecology and Environment Bureau | 6 June 2023 | 5 years | Permitted annual discharge limits for wastewater: 440.18t/a for chemical oxygen demand (COD), 33.01t/a for ammonia nitrogen, 55.02t/a for total | Re-application |
| Park) | nitrogen (TN), and 3.3t/a for total phosphorus (TP). | |||||
| Luzhou Laojiao Brewing Co., Ltd. (Energy Center of Sichuan Luzhou Baijiu Industrial Park) | 91510500204755181G002V | Luzhou Municipal Ecology and Environment Bureau | 30 March 2023 | 5 years | Permitted annual organized emission limits for air pollutants: 8.64t/a for particulate matters, 18.88t/a for sulfur dioxide, and 136.08t/a for nitrogen oxides. | Change |
| Reply to the Report of Luzhou Laojiao on the Environmental Impact of Phase I Construction Project of Flexible Intelligent Filling Pilot Line | L.SH.H.J.H. [2023] No. 21 | Luzhou Municipal Ecology and Environment Bureau | 1 March 2023 | Permanent | In the 19# and 20# workshops in the south area of Sichuan Luzhou Baijiu Industrial Park, three 7,000-bottle/h manual filling production lines were utilized and supported with new equipment such as code-scanning devices for the production of small-scale and customized baijiu products, and one 24,000-bottle/h filling line was newly added for the production of a wide range of small-volume products. After the project is completed and put into production, a baijiu filling capacity of 27,000 tons/year will be developed. | Newly acquired |
Reply to the
Report ofLuzhou Laojiao
on theEnvironmental
Impact of
Phase IIConstruction
Project of
FlexibleIntelligent Filling
Pilot Line
| L.SH.H.J.H. [2023] No. 19 | Luzhou Municipal Ecology and Environment Bureau | 1 March 2023 | Permanent | A 5,000-bottle/h filling line was constructed in 18# workshop in the south area of Sichuan Luzhou Baijiu Industrial Park for the automated production of small-scale and customized gift-boxed products. After the project is completed and put into production, a baijiu filling capacity of 9,600 tons/year will be developed. | Newly acquired | |
| Reply to the Report of Luzhou Laojiao Custom Liquor Co., Ltd. on the Environmental Impact of No. 21 Production Workshop Renovation Project in the South Area of Huangyi Brewery Eco-Park | L.SH.H.J.H. [2023] No. 20 | Luzhou Municipal Ecology and Environment Bureau | 1 March 2023 | Permanent | An 8,000-bottle/h of conventional production and packaging line for custom products, a 3,000-bottle/h of production and packaging line for shaped-bottle custom products, and a box packaging line for small single personalized custom products were constructed in 21# workshop in the south area of Sichuan Luzhou Baijiu Industrial Park. After the project is completed and put into production, a baijiu filling | Newly acquired |
Industry discharge standards and pollutants in producing and operating activities
| Company name | Type of main pollutant and particular pollutant | Name of main pollutant and particular pollutant | Discharge type | Number of discharge outlet | Distribution of discharge outlet | Emission concentration/intensity | Pollution discharge standard | Total emission | Approved total emission | Excessive discharge |
| Luzhou Laojiao Co., Ltd. | Water pollutant | COD | Direct discharge | 1 | Luohan Brewery Eco-Park | 20.84mg/L | 50mg/L | 7.9696t | 23.183t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | Ammonia nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.19mg/L | 5mg/L | 0.0569t | 2.017t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | Total nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 6.14mg/L | 15mg/L | 2.3424t | 5.796t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | Total phosphorus | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.06mg/L | 0.5mg/L | 0.0223t | 0.232t/a | No |
| Luzhou Laojiao Co., Ltd. | Air pollutant | PM | Organized discharge | 3 | Luohan Brewery Eco-Park | 0.69mg/m3 | 20mg/m3 | 0.1635t | 3.900t/a | No |
| Luzhou Laojiao Co., Ltd. | Air pollutant | Sulfur dioxide | Organized discharge | 3 | Luohan Brewery Eco-Park | 0.20mg/m3 | 50mg/m3 | 0.1907t | 11.500t/a | No |
| Luzhou Laojiao Co., Ltd. | Air pollutant | Oxynitride | Organized discharge | 3 | Luohan Brewery Eco-Park | 30.08mg/m3 | 150mg/m3 | 3.9348t | 45.400t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | COD | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 30.68mg/L | 400mg/L | 18.0878t | 440.180t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | Ammonia nitrogen | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 0.42mg/L | 30mg/L | 0.2310t | 33.010t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | Total nitrogen | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 18.38mg/L | 50mg/L | 10.8063t | 55.020t/a | No |
| Luzhou Laojiao Co., Ltd. | Water pollutant | Total phosphorus | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 0.84mg/L | 3.0mg/L | 0.4989t | 3.300t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | Air pollutant | Dust | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.902mg/m3 | 5mg/m3 | 0.6875t | 8.640t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | Air pollutant | PM | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 1.752mg/m3 | 20mg/m3 | 0.0295t | No | |
| Luzhou Laojiao Brewing Co., Ltd. | Air pollutant | Sulfur dioxide | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.307mg/m3 | 35mg/m3 | 0.2785t | 18.880t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | Air pollutant | Sulfur dioxide | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.233mg/m3 | 50mg/m3 | 0.0081t | No | |
| Luzhou Laojiao Brewing Co., Ltd. | Air pollutant | Oxynitride | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 34.65mg/m3 | 100mg/m3 | 24.7201t | 136.080t/a | No |
capacity of 7,000 tons/yearwill be developed.
| Luzhou Laojiao Brewing Co., Ltd. | Air pollutant | Oxynitride | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 38.66mg/m3 | 150mg/m3 | 0.6057t | No |
Treatments of pollutantsA. Waste water: Areas of the Company that produce wastewater are National Cellar, ZaojiaoxiangBrewery Base, Xiaoshi Brewery Base, Anning Technology Park, Luohan Brewery Eco-Park, andHuangyi Brewery Eco-Park. In National Cellar, Zaojiaoxiang Brewery Base, Xiaoshi Brewery Base, andAnning Technology Park, the high-concentration brewing wastewater is temporarily collected in pools(or tanks), and is later transferred to the wastewater treatment station of Huangyi Brewery Eco-Park bytruck for treatment. The wastewater treatment stations of Luohan Brewery Eco-Park and HuangyiBrewery Eco-Park are equipped with online monitors to automatically monitor COD, ammonia nitrogen,total phosphorus, total nitrogen, pH value and flows, and transmit the monitoring data to the supervisionplatform of the higher authority. The Company's facilities for prevention and control of wastewaterpollution are under normal operations, ensuring up-to-standard discharge through general dischargingoutlets. Compared with last year, suspended matter discharge was reduced by 48.45%, and CODdischarge by 8.85%.
B. Waste gas: Areas of the Company that produce exhaust gas are National Cellar, ZaojiaoxiangBrewery Base, Xiaoshi Brewery Base, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. InNational Cellar Brewery Base, natural gas boilers are used, while in Xiaoshi Brewery Base andZaojiaoxiang Brewery Base, direct-fired bottom boilers are used. The natural gas boilers of LuohanBrewery Eco-Park (20t/h, 30t/h) and the natural gas boilers of Huangyi Brewery Eco-Park (20t/h, 75t/h,75t/h) are equipped with online monitors to automatically monitor exhaust gas, and transmit themonitoring data to the supervision platform of the higher authority. Low NOx combustion technology isadopted for the natural gas boilers. The Company's facilities for prevention and control of exhaust gaspollution are under normal operations, ensuring up-to-standard emission of exhaust gas through outlets.Compared with last year, PM discharge was reduced by 13.04%, and Oxynitride discharge by 9.51%.
Emergency plan for environmental emergenciesIn 2023, the Company organized the revision and issuance of the Contingency Plan forEnvironmental Emergencies in Jiangyang District of Luzhou Laojiao Co., Ltd. (2023), the ContingencyPlan for Environmental Emergencies in Longmatan District of Luzhou Laojiao Co., Ltd. (2023), andcompleted the corresponding Report on Environmental Emergency Resource Investigation,Environmental Risk Assessment Report, Special Contingency Plan and On-site Disposal Plan.
Environmental self-monitoring plan
| Monitoring site | Monitoring indicator | Implementation standard | Emission limit | Monitoring frequency | Monitoring form | Monitoring compliance rate in H1 2023 |
| Unorganized monitoring points 1#-4# for the exhaust | Odor concentration | Emission Standards for Odor Pollutants | 20 (dimensionless) | 1 time/half-year | Manual | 100% |
| gas emission outlets of Luohan Brewery Eco-Park | Hydrogen sulfide | (GB14554- 93) | 0.06 mg/m3 | |||
| Ammonia | 1.5 mg/m3 | |||||
| NMHC | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 2 mg/m3 | ||||
| Particulate matters | Integrated Emission Standards for Air Pollutants (GB16297-1996) | 1 mg/m3 | ||||
| Exhaust gas emission outlets DA022, DA021 (unused) and DA020 of Luohan Brewery Eco-Park | Ringelman emittance | Emission Standards for Air Pollutants for Boiler (GB13271-2014) | ≤ 1 | 1 time/quarter | Manual | 100% |
| Nitrogen oxide | 150 mg/m3 | Automatic | ||||
| Particulate matters | 20 mg/m3 | |||||
| Sulfur dioxide: | 50 mg/m3 | |||||
| Exhaust gas emission outlet DA019 of Luohan Brewery Eco-Park | Hydrogen sulfide | Emission Standards for Odor Pollutants (GB14554- 93) | 15,000 / | 1 time/half-year | Manual | 100% |
| Ammonia | / 1.8 kg/h | |||||
| Odor concentration | / 27 kg/h | |||||
| Exhaust gas emission outlet DA018 of Luohan Brewery Eco-Park | Sulfur dioxide: | Integrated Emission Standards for Air Pollutants (GB16297-1996) | 240 mg/m3 0.77 kg/h | 1 time/quarter | Manual | 100% |
| Particulate matters | 3.5 kg/h | |||||
| Nitrogen oxide | 550 mg/m3 2.6 kg/h | |||||
| Volatile organic compounds | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 60 mg/m3 3.4 kg/h | ||||
| Exhaust gas emission outlet DA017 of Luohan Brewery Eco-Park | NMHC | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 60 mg/m3 3.4 kg/h | 1 time/quarter | Manual | 100% |
| Exhaust gas emission outlets DA001-DA016 of Luohan Brewery Eco-Park | Particulate matters | Integrated Emission Standards for Air Pollutants (GB16297-1996) | 120 mg/m3 | 1 time/half-year | Manual | 100% |
| Main outlet DW001 of the wastewater treatment station of Luohan Brewery Eco-Park | Flow | Standards for the Emission of Water Pollutants in the Fermented Alcohol and Baijiu Industry (GB27931-2011) | / | 1 time/quarter | Automatic | 100% |
| PH value | 6-9 | |||||
| COD | 50 mg/L | |||||
| Ammonia nitrogen | 5 mg/L | |||||
| TP | 0.5 mg/L | |||||
| TN | 15 mg/L | |||||
| Suspended solids | 20 mg/L | 1 time/month | Manual | |||
| Five-day BOD | 20mg/L | |||||
| Chroma | 20 | |||||
| Rainwater outlets DW002-DW006 of Luohan Brewery Eco-Park | Suspended solids | Standards for the Emission of Water Pollutants in the Fermented Alcohol and Baijiu Industry (GB2731-2011) | 20 mg/L | 1 time/month (1 time/quarter in case of no abnormalities monitored) | Manual | 100% |
| COD | 50 mg/L | |||||
| Noise monitoring points 1-4# at the boundary of Luohan Brewery Eco-Park | Boundary noise | Emission Standard for Noise of Industrial Enterprises at Boundary (GB12348-2008) | Daytime: 60 dB (A); nighttime: 50 dB (A) | 1 time/quarter | Manual | 100% |
| Circulating cooling water outlet DW002 of the Energy Center of Sichuan Luzhou Baijiu Industrial Park | PH value, COD, TP | / | / | 1 time/quarter | Manual | 100% |
| Wastewater outlet DW001 of the Energy Center of Sichuan Luzhou Baijiu Industrial Park | PH value | Integrated Wastewater Discharge Standard (GB8978-1996) | 6-9 | 1 time/quarter | Manual | 100% |
| Total dissolved solids (TDS) | / | |||||
| Suspended solids | 140 mg/L |
| Five-day BOD | 80 mg/L | |||||
| COD | 400 mg/L | |||||
| TN | 50 mg/L | |||||
| Ammonia nitrogen | 30 mg/L | |||||
| TP | 3 mg/L | |||||
| Boiler exhaust gas vents DA001-DA002 of the Energy Center of Sichuan Luzhou Baijiu Industrial Park | Ringelman emittance | Emission Standard of Air Pollutants for Thermal Power Plants (GB13223-2011) | ≤ 1 | 1 time/quarter | Manual | 100% |
| Nitrogen oxide | 100 mg/m3 | Automatic | ||||
| Soot | 5 mg/m3 | |||||
| Sulfur dioxide: | 35 mg/m3 | |||||
| Boiler exhaust gas vent DA003 of the Energy Center of Sichuan Luzhou Baijiu Industrial Park | Ringelman emittance | Emission Standards for Air Pollutants for Boiler (GB13271-2014) | ≤ 1 | 1 time/quarter | Manual | 100% |
| Nitrogen oxide | 150 mg/m3 | Automatic | ||||
| Particulate matters | 20 mg/m3 | |||||
| Sulfur dioxide: | 50 mg/m3 | |||||
| Rainwater outlets DW004-DW010 of Huangyi Brewery Eco-Park | Suspended solids | Standards for the Emission of Water Pollutants in the Fermented Alcohol and Baijiu Industry (GB2731-2011) | 50 mg/L | 1 time/month (1 time/quarter in case of no abnormalities monitored) | Manual | 100% |
| COD | 100 mg/L | |||||
| Unorganized monitoring points 1#-4# at the boundary of Huangyi Brewery Eco-Park | Odor concentration | Emission Standards for Odor Pollutants (GB14554-93) | 20 (dimensionless) | 1 time/quarter | Manual | 100% |
| Hydrogen sulfide | 0.06 mg/m3 | |||||
| Ammonia | 1.5 mg/m3 | |||||
| NMHC | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 2 mg/m3 | ||||
| Particulate matters | Integrated Emission Standards for Air Pollutants (GB16297-1996) | 1 mg/m3 | ||||
| DA041 and DA042 of Huangyi Brewery Eco-Park | Odor concentration | Emission Standards for Odor Pollutants (GB14554- 93) | 2,000 (dimensionless) | 1 time/half-year | Manual | 100% |
| Ammonia | 4.9 kg/h | |||||
| Hydrogen sulfide | 0.33 kg/h | |||||
| DA096-DA097 of Huangyi Brewery Eco-Park | NMHC | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 60 mg/m3 4.76 kg/h | 1 time/quarter | Manual | 100% |
| DA034-DA040, DA043-DA070, DA076-DA086, DA088-DA095, DA098, and DA099 of Huangyi Brewery Eco-Park | Particulate matters | Integrated Emission Standards for Air Pollutants (GB16297-1996) | 120 mg/m3 | 1 time/half-year | Manual | 100% |
| Main outlet of the wastewater treatment station of Huangyi Brewery Eco-Park | Flow | Standards for the Emission of Water Pollutants in the Fermented Alcohol and Baijiu Industry (GB2731-2011) | / | 1 time/quarter | Automatic | 100% |
| PH value | 6-9 | |||||
| COD | 400 mg/L | |||||
| Ammonia nitrogen | 30 mg/L | |||||
| TP | 3 mg/L | |||||
| TN | 50 mg/L | |||||
| Suspended solids | 140 mg/L | 1 time/month | Manual | |||
| Five-day BOD | 80 mg/L | |||||
| Chroma | 80 | |||||
| Noise monitoring points 1-4# at the boundary of Huangyi Brewery Eco-Park | Boundary noise | Emission Standard for Noise of Industrial Enterprises at Boundary (GB12348-2008) | Daytime: 65 dB (A); nighttime: 55 dB (A) | 1 time/quarter | Manual | 100% |
| Unorganized monitoring points 1#-7# at Xiaoshi Brewery Base | Odor concentration | Emission Standards for Odor Pollutants (GB14554- 93) | 20 | 1 time/half-year | Manual | 100% |
| NMHC | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 2.0 mg/m3 | ||||
| Boiler exhaust gas vents DA001-DA010 of Xiaoshi Brewery Base | Ringelman emittance | Emission Standards for Air Pollutants for Boiler (GB13271-2014) | ≤ 1 | 1 time/year | Manual | 100% |
| Soot | 20 mg/m3 | |||||
| Sulfur dioxide: | 50 mg/m3 | |||||
| Nitrogen oxide | 150 mg/m3 | 1 time/month |
| Noise monitoring points at the boundary of Xiaoshi Brewery Base | Boundary noise | Emission Standard for Noise of Industrial Enterprises at Boundary (GB12348-2008) | Daytime: 60 dB (A) | 1 time/quarter | Manual | 100% |
| Unorganized monitoring points 1#-4# at National Cellar and 1#-3# Zaojiaoxiang Brewery Bases | Odor concentration | Emission Standards for Odor Pollutants (GB14554- 93) | 20 | 1 time/half-year | Manual | 100% |
| NMHC | Sichuan Emission Control Standard for Volatile Organic Compounds (DB51/2377-2017) | 2.0 mg/m3 | ||||
| Boiler exhaust gas vents DA001-DA003 of National Cellar and Zaojiaoxiang Brewery Bases | Ringelman emittance | Emission Standards for Air Pollutants for Boiler (GB13271-2014) | ≤ 1 | 1 time/year | Manual | 100% |
| Soot | 20 mg/m3 | |||||
| Sulfur dioxide: | 50 mg/m3 | |||||
| Nitrogen oxide | 150 mg/m3 | 1 time/month | ||||
| Noise monitoring points at the boundary of National Cellar and Zaojiaoxiang Brewery Bases | Boundary noise | Emission Standard for Noise of Industrial Enterprises at Boundary (Class 4 for street frontage) | Daytime: 60 dB (A) | 1 time/quarter | Manual | 100% |
| Rainwater outlet DW003 of National Cellar Brewery Bases | Suspended solids | Standards for the Emission of Water Pollutants in the Fermented Alcohol and Baijiu Industry (GB2731-2011) | 20mg/L | 1 time/month (1 time/quarter in case of no abnormalities monitored) | Manual | 100% |
Input in environmental management and protection and the payment of environmental protection-related taxesDuring the Reporting Period, more than CNY 44.29 million was input in environmental governanceand protection, and CNY 185.3 thousand was paid in environmental protection tax as required.
| Taxable pollutant | Amount of tax payable (CNY 10,000) | Actual amount paid (CNY 10,000) | Tax deduction (CNY 10,000) |
| Water pollutant and air pollutant | 18.53 | 18.53 | 0.00 |
Measures taken to reduce carbon emissions during the reporting period and the results? Applicable ? N/AThe Company reduced CO2 emissions through resource recycling. Through the pressure recoveryand utilisation of waste heat steam, during the Reporting Period, the energy-saving system savedsteam of approximately 14,100 tons and reduced carbon dioxide of approximately 3,380 tons. TheCompany recycled the marsh gas generated from the wastewater treatment process as boiler fuel,with more than 3.35 million cubic meters of marsh gas recycled during the Reporting Period, andmore than 49,260 tons of carbon dioxide emissions were reduced. The Company reduced carbondioxide emissions by purchasing green power.During the Reporting Period, over 30.9 million kilowatt-hours of green power were purchased andcarbon emissions were reduced by over 17,630 tons.
Administrative penalties received in the reporting period due to environmental issues
| The Company or subsidiary | Reason for penalties | Regulation violated | Penalties | Impact on the Company | Rectification |
| N/A | |||||
Other information about environmental protection that should be disclosedN/A
Other information about environment protectionN/A
2. Social responsibility
See the 2023 Social Responsibility Report disclosed on the same day with this Annual Report.
3. Efforts in poverty alleviation and rural revitalization
3.1. Work plan for rural revitalization in 2023
In 2023, the Company will strictly implement the arrangement of the central, provincial and municipalParty committees regarding effectively connecting consolidation and expansion of poverty alleviationachievements with rural revitalization, coordinate various resources and strengths to improve areas ofweakness, consolidate the achievements, lay the foundation and promote the revitalization, takemultiple measures to resolutely fulfill the paired assistance responsibility, and comprehensively promotenew progress in rural revitalization and new levels in agricultural and rural modernization in assistedvillages.A. Enhance the leadership of party building and consolidate the rural governance. The party branchesof the Company will continue to collaborate with the party branches of the assisted villages, and partyworkers will be selected to guide the standard implementation of policies such as the "three meetingsand one lecture" and organizational life meetings. The Company will help villages establish and improvea rural governance system that combines autonomy, rule of law and moral governance under theleadership of party organizations, promote grassroots party organizations in rural areas to publicize theParty's ideas, implement the Party's decisions, lead grassroots governance and unite and mobilize themasses, regulate the management of village affairs and support rural revitalization.B. Enhance the building of the assistance team to boost rural revitalization. The Company will strive toconsolidate the responsibilities of the assistance team stationed in the village, continuously improve thecomprehensive ability of the assistance cadres, and build a high-quality and responsible force for ruralrevitalization with excellent work style. In addition, it will strongly cooperate with the "two committees" ofthe village to consolidate and expand the results of poverty eradication, complete rural revitalizationtasks such as rural industrial development and spiritual civilization construction, and contribute to thecomprehensive rural revitalization from industry, talent, culture and ecology.C. Enhance consumption assistance and stimulate industrial development momentum. Relying on theresource and platform advantages, the Company will continue to integrate resources and coordinatethe integrated development of "livestock, production, promotion and sales" around special industriessuch as Maiwa yak, continuously enhance product promotion and development, promote the upgradingof industrial supporting facilities and the improvement of chains, and facilitate the effectivetransformation of the "geographical card" into a "treasure for wealth". It will continue to carry out
"purchase instead of donation" campaign, and adopt market-oriented means to sign annual targetedpurchase agreements with the assisted counties for agricultural and sideline products, and bring high-quality agricultural products onto e-commerce platforms.D. Deepen employment assistance and enhance blood-creation momentum. In assisted villages, theCompany will establish a ledger of employment assistance for poverty-alleviation and low-incomefamilies, actively help them compete for public service jobs, and organize training on employment skillssuch as e-commerce and farming techniques to extensively cultivate training groups of wealthy leaders.Fully relying on the assistance projects, the Company will support unstable households in povertyalleviation and marginal households prone to poverty to develop yard economy and work to increaseincome according to local conditions. Additionally, the Company will identify, intervene and assistfarmers who are at risk of returning to poverty as early as possible to firmly guard the bottom line ofpreventing large-scale return to poverty.E. Advocate the transformation of outmoded habits and customs and promote a new style of civilization.The Company will enhance the promotion of the socialist core values and guide party members andcadres in assisted villages to update their ideology and form a diligent, civilized and healthy lifestyle. Inaddition, the Company will cooperate with the assisted villages to continue to carry out activities rich inrural culture, such as the Guozhuang Dance and equestrian to enrich the spiritual and cultural life of thevillagers and promote the transformation into a harmonious, aggressive and good society.
3.2. The achievements of paired assistance in 2023
The Company always upholds the important principle of "I do practical things for the public" to guide theassistance initiative, and actively implements seven categories of assistance projects includinginfrastructure construction, industrial support, self-belief and education support, and health assistance.A total of CNY 2,922,700 has been invested to carry out paired assistance in Guntang Village,Hongyuan County, and Xiangtian Village, Gulin County, as well as fundamental assistance inHongyuan County. Additionally, four Party Committee meetings were held to examine paired assistanceand fundamental assistance. Six special seminars were held and four full-time assistance cadres withoutstanding abilities were dispatched to the villages. Members of the Company's leadership teamvisited the villages eight times, and the guidance group spent three days in field investigation. Two jointmeetings on paired assistance were organised. First, the standard of Party organisations wasenhanced. For six consecutive years, the Company has been engaging in paired cooperation activitieswith the Maiwa Township Party Committee and its affiliated Party branches. A total of CNY 30,000 wasallocated to reward and express care for outstanding and disadvantaged Party members in 2023,aiming to standardise and regulate Party organisations at the township and village levels, and providestrong organisational guarantees for rural revitalisation. Second, infrastructures were improved. Inline with the actual situation of the assisted villages and the needs of the masses, a total of CNY300,000 was invested in the construction of sanitary toilets, maintenance of public bathhouses,improvement of road surface hardening, optimisation of drinking water quality, in order to renovate andimprove the living environment, address the urgent needs of the masses, and lay a solid foundation forrural revitalisation. Third, full efforts were made to promote local specialties. By virtue of thecounty's resource endowment and the Company's operational advantages, industrial support activitieswere launched and CNY 1,057,000 was spent to assist Hongyuan County in establishing the "YakGrassland Enterprise Store" on Douyin platform. By creating a multi-dimensional sales assistancesystem, the Company helped promote specialty products through online e-commerce platforms and
offline exhibitions, thereby boosting the visibility and sales volume of the Maiwa Yak series products.Aggregate sales of Hongyuan Maiwa yaks amounted to nearly CNY 1 million. Additionally, through the"purchase instead of donation" activity, CNY 1,011,200 was spent to purchase agricultural and sidelineproducts from the assisted areas and additional CNY 100,000 was donated to the village collectiveeconomy. Furthermore, over CNY 40,000 was contributed to the purchase of baby chicks for farmers inXiangtian Village, thereby consolidating the industrial foundation and stimulating the "engine" for ruralrevitalisation. Fourth, education on gratitude and hard work was launched. The "Bridge Project"education assistance action has been implemented for six years. In 2023, 27 graduates from GuntangVillage and Xiangtian Village were awarded a total of CNY 135,000 in scholarships to helpimpoverished students realise their dream of attending university, thus injecting "endogenous power"into rural revitalisation. Fifth, the building of rural cultural civilisation was promoted. The Companyhas supported rural cultural festival activities for six years, investing CNY 30,000 annually to conductthe 2023 Maiwa Township Cultural Festival to promote rural cultural characteristics, and enhance thespiritual outlook of villagers. In addition, CNY 46,000 was devoted to moral evaluation activities,contributing to the substantive development of rural revitalisation. Sixth, the difficulties of the masseswere strictly monitored. Dynamic monitoring was carried out thoroughly to prevent returning topoverty. Members of the Company's leadership team and the rural revitalisation working groupmeasured the actual conditions with their footsteps, paying regular visits to express care to householdsat risk of returning to poverty, households on the edge of poverty, and severely disadvantagedhouseholds. An investment of CNY 143,500 was allocated for the household visits in 2023, coveringnearly 200 people, to enhance the foundation for rural revitalisation. Seventh, external trainingopportunities were created. With an input of CNY 30,000, village cadres and forgoers in getting richwere organised to visit and study in advanced rural revitalisation areas with similar geographicalenvironments. They learned from advanced experiences in animal husbandry, planting, and creatingliveable habitats, to gain insights and explore ways for rural revitalisation.
3.3. Highlights of paired assistance in 2023
A. External support-based and self-motivation-based industrial support accelerated the "speed" of ruralrevitalisation. To promote the rapid development and transformation of featured industries in GuntangVillage, and to effectively increase residents' income, the Company adopts a comprehensive industrialsupport approach combining external support and self-motivation. It gradually explores and forms asustainable support model transitioning from "external support" to "self-motivation". The Companysigned a tripartite assistance agreement with a local agricultural product processing company and thegovernment of Guntang Village to build an integrated production and sales chain characterised byproduction by farmers in Guntang Village - processing by the agricultural product company - sales byLuzhou Laojiao. This aims to create a collective economic income model with "guaranteed income +profit sharing". The "purchase instead of donation" programme generated over CNY 8.76 million inrevenue for local residents, effectively solving the "last mile" problem of product sales in povertyalleviation. In addition, the Company invested funds and created conditions to establish sales platformslocally, while also cultivating local sales and operational talent. This effort not only assists in promotingproduct branding and sales but also creates more job opportunities and provides an ample talent poolfor the local area, thereby providing the "original driving force" for rural revitalisation.B.The "integrated" and "penetrating" ideological and ethical standards forged the "soul" of ruralrevitalisation. To firmly consolidate the achievements of changing customs and promoting etiquette, and
to establish a scientific, civilised, and healthy rural lifestyle, outdated practices have been furthereliminated in support of civilised norms. The Company solidly promotes the ideological and ethicalstandards among villagers and cultivates a civilised rural atmosphere. An investment of CNY 300,000was made to improve public facilities, including the construction of sanitary toilets and publicbathhouses, aiming to enhance the sanitation conditions for the villagers, advocate for a civilised andhealthy lifestyle, and elevate the awareness of hygiene and happiness index among the villagers. TheCompany spent CNY 30,000 to support the cultural festival in Guntang Village, featuring over tenvibrant traditional cultural activities such as Maiwa Guozhuang Dance, sandbag lifting and equestrianperformance. The Village Cultural Festival has become an annual event that the locals look forward to.Since the cultural square of Guntang Village was put into use, it has hosted more than ten activities todisseminate intangible cultural heritage such as Maiwa Tibetan Opera and Baiwang Playing andSinging, successfully making it a popular destination for the locals and a must-visit spot for tourists.Throughout the year, over ten sessions of training and lectures were organised on grassland fireprevention, hygiene awareness, and safeguarding against online scams. Party members, cadres, andthe general public participated in five special Party lectures, including "Themed teach-ins on the 20thNational Congress of the Communist Party of China", "Celebrating the 70th Anniversary of theEstablishment of the Prefecture", and "Branch Secretaries Lecturing on Party Classes". The Companypersistently conducted household visits to promote filial piety, respect for the elderly, and civilisedcustoms, in efforts to change customs and promote etiquette and foster a culture of civility to supportrural revitalisation.
3.4. Work plan for assistance in 2024
A. Enhance industrial assistance and stimulate the development momentum. By virtue of the resourceendowment of the assisted areas and the operational advantages of the Company, the Company willfocus on incorporating agricultural and animal husbandry industries into modernised industrial parks.Our goal is to promote the transformation and high-quality development of modern animal husbandry,tap into and utilise the unique advantages of resources in the assisted villages. It plans to broaden thesales channels of characteristic agricultural and sideline products through e-commerce platforms, bulkpurchases, and "purchase for sales" initiatives, aiming to accelerate the conversion of resourceadvantages into industrial strengths.B. Improve the infrastructure and enhance the living environment. To effectively improve the rural livingenvironment and enhance the happiness index of the people, one of the Company's objectives is tobuild ecologically beautiful and liveable villages. In 2024, the plan is to renovate the architectural styleof the houses in the assisted villages and construct access roads, further improve the hygiene of thevillage environment and beautify the village appearance, so as to continuously promote the creation ofliveable rural areas with beautiful environment, villages, and courtyards.C. Strengthen the talent support and enhance the vitality of development. Focusing on the requirementsof the new era and based on the new stage of development, the Company will continue to stimulateendogenous vitality and cultivate local talents as an effective path to increase the talent pool andenhance the quality of rural revitalisation. It will continue to carry out activities such as the "BridgeProject" - education on gratitude and hard work, and support for village cadres and residents toparticipate in training in advanced areas, aiming to build a team of talents who are rooted in the ruralareas and will not easily leave.D. Increase cultural support and enrich the cultural knowledge. To further solidify the ideological and
ethical standards and build up moral power for rural revitalisation, the company will continue to focus onlocal cultural characteristics and the spiritual needs of the masses. It will strongly support the promotionof traditional culture such as Tibetan opera, and actively organise themed events for InternationalWomen's Day, and other activities to enrich the cultural life of the masses. These efforts aim to broadenthe villagers' horizons, uplift their spirits, and foster a subjective willingness to alleviate poverty.E. Enhance the building of the assistance team to boost rural revitalisation. Considering the next stepsin the assistance plan, the Company, guided by the principle of sending people who are needed andsuitable for the task, will select a group of individuals with strong execution abilities, high professionalqualities, and broad expertise to form an assistance team. The Company will ensure that the assistanceinitiative is effectively implemented on the front line, and the role of assistance is well played on thefront line, so as to contribute to the comprehensive revitalisation of rural industries, talents, culture,ecosystem, and other aspects.In 2024, the Company will continue to strengthen communication and collaboration with leaders at alllevels of the county and township, and will promote various assistance projects with more practicalmeasures and better methods, injecting new vitality to the comprehensive revitalisation anddevelopment of Guntang Village and Xiangtian Village.
Section VI Significant Events
1. Performance of undertakings
1.1. Undertakings of the Company's actual controller, shareholders, related partiesand acquirer, as well as the Company and other commitment makers fulfilled inthe reporting period or ongoing by the end of this reporting period? Applicable ? N/A
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Other commitments | Laojiao Group | Other commitments | Not to reduce shares of Luzhou Laojiao Co., Ltd. held by the Company in any way within 12 months from 25 August 2023 | 25 August 2023 | 12 months | Ongoing |
| Executed on time or not | Yes | |||||
1.2. Where any earnings forecast was made for any of the Company's assets orprojects and the reporting period is still within the forecast period, the Companyshall explain whether the performance of the asset or project reaches the earningsforecast and reasons? Applicable ? N/A
2. Occupation of the Company's fund by the controlling shareholder orits related parties for non-operating purposes? Applicable ? N/ANo such cases in the reporting period.
3. Irregularities in the provision of guarantees
? Applicable ? N/ANo such cases in the reporting period.
4. Explanation of the board of directors regarding the latest "non-standard audit opinion"
? Applicable ? N/A
5. Explanation of the board of directors, the board of supervisors andnon-executive directors (if any) regarding the "non-standard auditopinion" for the reporting period? Applicable ? N/A
6. Reason for changes in accounting policies and accounting estimates,as well as correction of major accounting errors compared to thefinancial report for the prior year? Applicable □ N/A
Unit：CNY
| Content and reason for changes in accounting policies | Name of statement item materially affected | Amount affected |
| On 30 November 2022, the Ministry of Finance issued the Interpretations of Accounting Standards for Business Enterprises No. 16 (C.K. [2022] No. 31), providing that the requirement of "accounting processing under initial recognition and exemption is not applicable to deferred income taxes related to assets and liabilities incurred from a single transaction" will enter into force as of 1 January 2023. | Deferred income tax assets Deferred income tax liabilities |
For this new requirement of "accounting processing under initial recognition and exemption is notapplicable to deferred income taxes related to assets and liabilities incurred from a single transaction",Interpretation No. 16 stipulates that single transactions that are not business combinations, that affectneither accounting profit nor taxable income (or deductible losses) at the time the transaction occurs,and where the initial recognition of assets and liabilities results in taxable temporary differences anddeductible temporary differences of equal amounts shall not be governed by the provisions forexemption from initial recognition of deferred tax liabilities and deferred tax assets in AccountingStandards for Business Enterprises No. 18 - Income Taxes. At the time of the transaction, theenterprise shall recognise the corresponding deferred income tax liabilities and deferred income taxassets for taxable temporary differences and deductible temporary differences arising from the initialrecognition of assets and liabilities in such transaction.The Company has adopted the provisions of Interpretation No. 16, "Accounting processing under initialrecognition and exemption is not applicable to deferred income taxes related to assets and liabilitiesincurred from a single transaction" as of 1 January 2023. The implementation of this interpretation hasnot had a significant impact on the Company's financial position and operating results.
Apart from the aforementioned changes, there have been no other significant accounting policychanges during the reporting period.
7. Reason for changes in scope of the consolidated financial statementscompared to the financial report for the prior year? Applicable □ N/ATwo subsidiaries were liquidated and cancelled during the current period: Luzhou BaonuoBiotechnology Co., Ltd. was liquidated and cancelled in October 2023; Luzhou Laojiao Custom LiquorCo., Ltd. was liquidated and cancelled in December 2023. Since the cancellation of these twocompanies, they are no longer included in the scope of the consolidated financial statements.
8. Engagement and disengagement of CPA firm
CPA firm at present
| Name of the domestic CPA firm | Sichuan Huaxin (Group) CPA Firm |
| The Company’s payment for the domestic CPA firm (CNY 10,000) | 103 |
| Consecutive years of the audit service provided by the domestic CPA firm | 25 |
| Names of the certified public accountants from the domestic CPA firm | Li Wulin, Tang Fangmo, Fan Bo |
| Consecutive years of the audit service provided by the certified public accountants | Li Wulin 4 years, Tang Fangmo 5 years, Fan Bo 2 years |
Whether the CPAs firm was changed in the current period? Yes ? No
Engagement of any CPAs firm for internal control audit, financial advisor or sponsor? Applicable ? N/AThe Company appointed Sichuan Huaxin (Group) CPA Firm as the internal control auditor for thisyear. The remuneration of audit in total paid by the Company was CNY 520 thousand.
9. Possibility of delisting after disclosure of this annual report? Applicable ? N/A
10. Bankruptcy and reorganization
? Applicable ? N/ANo such cases in the reporting period.
11. Material litigation and arbitration
? Applicable ? N/A
| Profile of litigation (arbitration) | Amount involved in the case (CNY 10,000) | Whether it forms an estimate liability | Progress in litigation (arbitration) | Trial results and impacts of litigation (arbitration) | Execution of judgment of litigation (arbitration) | Date of disclosure | Disclosure index |
| The Company filed a lawsuit with ABC Changsha Yingxin Branch over a deposit dispute, and the case has been completed in the first instance of Hunan Province Higher People's Court and the final trial of the Supreme People's Court. The case is now at the stage of enforcement. | 14,942.5 | No | The second trial has been concluded, and the case is now at the stage of enforcement. | For the losses that the Company cannot recover through criminal execution procedures, 40% shall be borne by ABC Changsha Yingxin Branch, 20% shall be borne by ABC Changsha Hongxin Branch and the rest shall be borne by the Company itself. | The Company applied to Hunan Province Higher People's Court for enforcement of the verdict. Hunan Province Higher People's Court ruled that Hunan Changsha Intermediate People’s Court should see to the execution of the verdict. Upon the enforcement, the banks have paid part of the compensations. | 15 October 2014 | See Section VI “Other significant events” |
| The Company filed a lawsuit with ICBC Nanyang Zhongzhou Branch over a deposit dispute, and the case has been completed in the first instance of Henan Province Higher People's Court and the final trial of the Supreme People's Court. The case is now at the stage of enforcement. | 15,000 | No | The second trial has been concluded, and the case is now at the stage of enforcement. | ICBC Nanyang Zhongzhou Branch, ICBC Nanyang Branch, and Sanya Rural Commercial Bank Hongsha Branch shall pay compensations of CNY 75 million, CNY 7.5 million and CNY 6.105 million respectively with the relevant interest to the Company, and the rest of the loss shall be borne by the Company itself. | The banks have paid part of the compensations. As there was a dispute over the verdict, the Company applied to Henan Province Higher People's Court for enforcement of the verdict. Henan Province Higher People's Court ruled that Nanyang Intermediate People’s Court should see to the execution of the verdict. The case is now at the stage of enforcement by Nanyang Intermediate People’s Court. | 10 January 2015 | See Section VI “Other significant events” |
12. Punishments and rectifications
? Applicable ? N/ANo such cases in the reporting period.
13. Credit conditions of the Company as well as its controllingshareholder and actual controller? Applicable ? N/A
14. Significant related party transactions
14.1. Related party transactions arising from routine operation? Applicable ? N/ANo such cases in the reporting period.
14.2. Related party transactions regarding purchase or sales of assets or equityinterests? Applicable ? N/ANo such cases in the reporting period.
14.3. Related party transitions arising from joint investments in external parties
? Applicable ? N/ANo such cases in the reporting period.
14.4. Credits and liabilities with related parties
? Applicable ? N/ANo such cases in the reporting period.
14.5. Transactions with related finance companies
? Applicable ? N/AThe Company did not make deposits in, receive loans or credit from and was not involved in anyother finance business with any related finance company or any of its related parties.
14.6. Transactions between finance companies controlled by the Company andrelated parties
? Applicable ? N/ANo related parties made deposits in, received loans or credit from or was involved in any otherfinance business with any finance company controlled by the Company.
14.7. Other significant related party transactions
? Applicable ? N/ANo such cases in the reporting period.
15. Significant contracts and their execution
15.1. Trusteeship, contracting and leasing
15.1.1. Trusteeship
? Applicable ? N/ANo such cases in the reporting period.
15.1.2. Contracting
? Applicable ? N/ANo such cases in the reporting period.
15.1.3. Leasing
? Applicable ? N/ANo such cases in the reporting period.
15.2. Major guarantees
? Applicable ? N/ANo such cases in the reporting period.
15.3. Entrusted cash asset management
15.3.1. Entrusted assets management
? Applicable ? N/A
Entrusted assets management during the reporting period
Unit: CNY 10,000
| Type | Fund source for entrusted assets management | Amount of entrusted assets management | Undue balance | Overdue outstanding amount | Impairment allowances for the overdue outstanding amount |
| Wealth management product of securities firm | Own funds | 120,000 | 120,000 | 0 | 0 |
| Others | Own funds | 20,000 | 20,000 | 0 | 0 |
| Total | 140,000 | 140,000 | 0 | 0 | |
Particulars of high risk wealth management products with a significant single amount or low securityor poor liquidity? Applicable ? N/A
Expected inability to recover the principal of entrusted assets management or other circumstancesthat may result in impairment? Applicable ? N/A
15.3.2 Entrust loans
? Applicable ? N/ANo such cases in the reporting period.
15.4. Other significant contracts
? Applicable ? N/ANo such cases in the reporting period.
16. Other significant events
? Applicable ? N/AThe Company disclosed in October 2014 and January 2015 respectively the contract disputesinvolving three savings deposits of CNY 500 million in total with banks including ABC ChangshaYingxin Branch and ICBC Nanyang Zhongzhou Branch. Upon criminal booty recovery, criminal andcivil enforcement, as of 31 December 2023, the Company had recovered a total amount of CNY 372million for the three disputes.
See details in the Company’s announcements:
| Date of announcement | No. | Catalogue | Official website |
| 15 October 2014 | 2014-35 | Announcement of significant litigation | http://www.cninfo.com.cn/ |
| 12 November 2014 | 2014-41 | Announcement of significant litigation progress |
| 6 December 2014 | 2014-43 | Announcement of significant litigation progress part II |
| 10 January 2015 | 2015-1 | Announcement of significant events |
| 4 February 2015 | 2015-4 | Announcement of significant events progress |
| 25 March 2015 | 2015-11 | Announcement of significant litigation progress part III |
| 18 April 2015 | 2015-20 | Announcement of significant litigation progress part IV |
| 22 April 2015 | 2015-21 | Announcement of significant events progress part II |
| 24 April 2015 | 2015-25 | Announcement of significant litigation progress part V |
| 15 July 2015 | 2015-44 | Announcement of significant litigation progress part VI |
| 22 July 2015 | 2015-45 | Announcement of significant litigation progress part VII |
| 6 June 2018 | 2018-17 | Announcement of significant litigation progress part VIII |
| 7 May 2019 | 2019-11 | Announcement of significant litigation progress part IX |
| 17 May 2019 | 2019-13 | Announcement of significant litigation progress part X |
| 24 March 2020 | 2020-6 | Announcement of significant litigation progress part XI |
| 6 May 2020 | 2020-14 | Announcement of significant litigation progress part XII |
| 7 November 2020 | 2020-34 | Announcement of significant litigation progress part XIII |
| 6 July 2021 | 2021-30 | Announcement of significant litigation progress part XIV |
| 15 December 2021 | 2021-57 | Announcement of significant litigation progress part XV |
| 30 December 2021 | 2021-64 | Announcement of significant litigation progress part XVI |
17. Significant events of subsidiaries
? Applicable □ N/AThe Company invested in the technical upgrade program of intelligent brewing (Phase I) with thewholly-owned subsidiary, Brewing Company, as the implementer. The total investment amountapproximated CNY 4,782.5090 million. For further information, see Announcement No. 2022-24 onthe Implementation of Luzhou Laojiao’s Technical Upgrade Program of Intelligent Brewing (Phase I)by Subsidiary. The program is currently under construction.
Section VII Changes in Shares and Information about
Shareholders
1. Changes in shares
1.1 Changes in shares
Unit：Share
| Before | Changes in this year (＋，－) | After | |||||||
| Number | Proportion | Issuance of new shares | Bonus shares | Capitalization of capital reserves | Other | Subtotal | Number | Proportion | |
| I. Restricted shares | 7,390,545 | 0.50% | 92,669 | -14,625 | 78,044 | 7,468,589 | 0.51% | ||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned corporations | |||||||||
| 3. Shares held by other domestic investors | 7,390,545 | 0.50% | 92,669 | -14,625 | 78,044 | 7,468,589 | 0.51% | ||
| Of which: shares held by domestic corporations | |||||||||
| Shares held by domestic individuals | 7,390,545 | 0.50% | 92,669 | -14,625 | 78,044 | 7,468,589 | 0.51% | ||
| 4. Shares held by foreign corporations | |||||||||
| Of which: shares held by foreign corporations | |||||||||
| Shares held by foreign individuals | |||||||||
| II. Non-restricted shares | 1,464,504,555 | 99.50% | 14,625 | 14,625 | 1,464,519,180 | 99.49% | |||
| 1.CNY common shares | 1,464,504,555 | 99.50% | 14,625 | 14,625 | 1,464,519,180 | 99.49% | |||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| III. Total shares | 1,471,895,100 | 100.00% | 92,669 | 0 | 92,669 | 1,471,987,769 | 99.49% |
Reasons for the change in shares?Applicable □ N/AA. On 29 December 2022, the Proposal on the Grant of Reserved Restricted Shares to Awardees wasdeliberated and approved at the 26th Meeting of the 10th Board of Directors and the 15th Meeting ofthe 10th Board of Supervisors, respectively. As such, it was decided to grant the restricted shares toeligible awardees and the grant was completed and registered on 16 February 2023. A total of 92,669restricted shares were granted to 17 awardees as registered, which were listed on 17 February 2023.B. 14,625 locked-up shares of senior management of Mr. Shen Caihong were lifted from restrictedsales on 2 January 2023.
Approval of share changes?Applicable □ N/AOn 29 December 2022, the Proposal on the Grant of Reserved Restricted Shares to Awardees wasdeliberated and approved at the 26th Meeting of the 10th Board of Directors and the 15th Meeting ofthe 10th Board of Supervisors, respectively. As such, it was decided to grant the restricted shares toeligible awardees and the grant was completed and registered on 16 February 2023. A total of 92,669restricted shares were granted to 17 awardees as registered, which were listed on 17 February 2023.Upon the completion of this grant registration, the total share capital of the Company increased to1,471,987,769 shares from 1,471,895,100.
Transfer of share ownership? Applicable ? N/A
Effects of changes in shares on the basic EPS, diluted EPS, net assets per share attributable tocommon shareholders of the Company and other financial indexes over the last year and the lastreporting period? Applicable ? N/A
Other contents that the Company considers it necessary or required by the securities regulatoryauthorities to disclose? Applicable ? N/A
1.2 Changes in restricted shares
? Applicable □ N/A
Unit：Share
| Name of shareholder | Number of restricted shares held at | Increase in restricted shares during | Decrease in restricted shares during | Number of restricted shares held at | Reason for restriction | Date of unlocking |
| the beginning of the reporting period | the reporting period | the reporting period | the end of the reporting period | |||
| 2021 Restricted Share Incentive Plan | 7,142,624 | 92,669 | 7,235,293 | Restricted shares for equity incentive | In accordance with the relevant provisions governing lifting the restriction of the Company’s 2021 Restricted Share Incentive Plan | |
| Shen Caihong | 103,781 | 14,625 | 89,156 | Locked-up shares of senior management | Locked-up shares of senior management were lifted from restricted sales on 2 January 2023. | |
| Total | 7,246,405 | 92,669 | 14,625 | 7,324,449 | -- | -- |
2. Issuance and listing of securities
2.1 Securities (excluding preferred shares) issued in the reporting period?Applicable □ N/A
| Name of stock and derivative securities | Date of offering | Offering price (or interest rate) | Number offered | Date of listing | Number approved for public trading | Date of termination of trading | Index to disclosed information | Date of disclosure |
| Stocks | ||||||||
| Grant of reserved restricted shares for 2021 Restricted Share Incentive Plan | 17 February 2023 | CNY 89.466/share | 92,669 | 17 February 2023 | 92,669 | Announcement No. 2023-3 on the Completion of the Grant of Reserved Restricted Shares for 2021 Restricted Share Incentive Plan disclosed | 16 February 2023 | |
| on www.cninfo.com.cn | ||
| Convertible corporate bonds, convertible corporate bonds with warrants, or corporate debt | ||
| Other derivative securities | ||
Notes to the offering of securities during the reporting periodOn 29 December 2022, the Proposal on the Grant of Reserved Restricted Shares to Awardees wasdeliberated and approved at the 26th Meeting of the 10th Board of Directors and the 15th Meeting ofthe 10th Board of Supervisors, respectively. As such, it was decided to grant the restricted shares toeligible awardees and the grant was completed and registered. A total of 92,669 restricted shares weregranted to 17 awardees as registered, which were listed on 17 February 2023. For details, see theAnnouncement No. 2023-3 on the Completion of the Grant of Reserved Restricted Shares for 2021Restricted Share Incentive Plan disclosed on www.cninfo.com.cn
2.2 Changes in total shares of the Company and the shareholder structure, as wellas the asset and liability structure?Applicable □ N/ADuring the Reporting Period, the total shares of the Company increased by 92,669 shares due to theimplementation of the 2021 Restricted Share Incentive Plan, and the shares granted were listed on 17February 2023.
2.3 Existing staff-held shares
□Applicable ? N/A
3. Shareholders and actual controller
3.1 Total number of shareholders and their shareholdings
Unit：Share
| Total number of common shareholders at the end of the reporting period | 124,164 | Total number of common shareholders at the prior month-end before the disclosure date of the | 118,425 | Total number of preferred shareholders with resumed voting rights by the end of the | 0 | Total number of preferred shareholders with resumed voting rights by the end of the reporting period (if any)(see Note 8) | 0 |
| annual report | reporting period (if any)(see Note 8) | |||||||
| Shareholdings of shareholders with a shareholding percentage over 5% or the top 10 shareholders (exclusive of shares lent in refinancing) | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held by the end of the reporting period | Increase/decrease during the reporting period | Number of holding restricted shares | Number of holding non-restricted shares | Pledged, marked or frozen shares | |
| Status of shares | Number of shares | |||||||
| Luzhou Laojiao Group Co., Ltd. | State-owned corporation | 25.89% | 381,088,389 | 0 | 0 | 381,088,389 | N/A | 0 |
| Luzhou XingLu Investment Group Co., Ltd. | State-owned corporation | 24.86% | 365,971,142 | 0 | 0 | 365,971,142 | N/A | 0 |
| Hong Kong Securities Clearing Company Limited | Outbound corporation | 3.23% | 47,491,261 | 1,878,605 | 0 | 47,491,261 | N/A | 0 |
| Bank of China Co., Ltd. – Baijiu index classification securities investment fund by China Merchants Fund | Other | 2.92% | 43,016,979 | -3,059,247 | 0 | 43,016,979 | N/A | 0 |
| China Securities Finance Corporation Limited | Other | 2.30% | 33,842,059 | 0 | 0 | 33,842,059 | N/A | 0 |
| Bank of China Co., Ltd.－Blue chip selected hybrid securities investment fund by E Fund | Other | 1.46% | 21,470,000 | -1,460,000 | 0 | 21,470,000 | N/A | 0 |
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | Other | 0.92% | 13,598,087 | -4,075,690 | 0 | 13,598,087 | N/A | 0 |
| Central Huijin Asset Management Co., Ltd. | State-owned corporation | 0.92% | 13,539,862 | 0 | 0 | 13,539,862 | N/A | 0 |
| China Life Insurance Company Limited-Tradition-common | Other | 0.65% | 9,530,312 | 936,298 | 0 | 9,530,312 | N/A | 0 |
| insurance product-005L－CT001 Hu | ||||||||
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E Fund | Other | 0.64% | 9,432,832 | -1,140,461 | 0 | 9,432,832 | N/A | 0 |
| Strategic investors or general corporations become the top-ten shareholders due to placing of new shares（if any）（see note 3） | N/A | |||||||
| Related parties or acting-in-concert | 2. In addition, whether there is an association between the remaining shareholders or they belong to persons acting in concert is unknown. | |||||||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | N/A | |||||||
| Special account for repurchased shares among the top 10 shareholders (if any) (see note 10) | N/A | |||||||
| Shareholdings of the top 10 non-restricted shareholders | ||||||||
| Name of shareholder | Number of non-restricted shares held in by the end of the reporting period | Type of shares | ||||||
| Type | Number | |||||||
| Luzhou Laojiao Group Co., Ltd. | 381,088,389 | CNY common shares | 381,088,389 | |||||
| Luzhou XingLu Investment Group Co., Ltd. | 365,971,142 | CNY common shares | 365,971,142 | |||||
| Hong Kong Securities Clearing Company Limited | 47,491,261 | CNY common shares | 47,491,261 | |||||
| Bank of China Co., Ltd. – Baijiu index classification securities investment fund by China Merchants Fund | 43,016,979 | CNY common shares | 43,016,979 | |||||
| China Securities Finance Corporation Limited | 33,842,059 | CNY common shares | 33,842,059 | |||||
| Bank of China Co., Ltd.－Blue chip selected hybrid securities investment fund by E Fund | 21,470,000 | CNY common shares | 21,470,000 | |||||
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | 13,598,087 | CNY common shares | 13,598,087 | |||||
| Central Huijin Asset Management Co., Ltd. | 13,539,862 | CNY common shares | 13,539,862 | |||||
| China Life Insurance Company Limited-Tradition-common insurance product-005L－CT001 Hu | 9,530,312 | CNY common shares | 9,530,312 |
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E Fund | 9,432,832 | CNY common shares | 9,432,832 |
| The statement of association or acting-in-concert between the top 10 shareholders of unrestricted shares and between the top 10 shareholders of unrestricted shares and top 10 shareholders | See the table above | ||
| Top 10 common shareholders participating in securities margin trading (if any) (see note 4) | N/A | ||
Top 10 shareholders involved in refinancing shares lending:
?Applicable □ N/A
Unit：Share
| Top 10 shareholders involved in refinancing shares lending | ||||||||
| Full name of shareholder | Shares in the common account and credit account at the period-begin | Shares lent in refinancing and not yet returned at the period-begin | Shares in the common account and credit account at the period-end | Shares lent in refinancing and not yet returned at the period-end | ||||
| Total shares | As % of total share capital | Total shares | As % of total share capital | Total shares | As % of total share capital | Total shares | As % of total share capital | |
| Bank of China Co., Ltd. – Baijiu index classification securities investment fund by China Merchants Fund | 46,076,226 | 3.13% | 0 | 0.00% | 43,016,979 | 2.92% | 55,000 | 0.00% |
Changes in top 10 shareholders compared with the prior period:
□Applicable ? N/A
Did any of the top 10 common shareholders or the top non-restricted common shareholders of theCompany conduct any promissory repurchase during the reporting period.
□Yes ? No
The top 10 non-restricted common shareholders, the top10 common shareholders did not conduct anypromissory repurchase during the reporting period.
3.2 Controlling shareholder
Nature of controlling shareholder：Local state-ownedType of controlling shareholder：Corporation
| Name of controlling shareholder | Legal representative/Company principal | Date of establishment | Credibility code | Main business scope |
| Luzhou Laojiao Group Co., Ltd. | Liu Miao | 21 December 2000 | 91510500723203346U | General project: Social economy consulting services; business management consulting; financial consulting; business headquarters management; import and export agency; trade brokerage; crops planting services; trees planting operation; elder care services; tourism development project planning and consulting; technical agency services; engineering and technological research and experimental development; display device manufacturing; supply chain management services; technical services, technical development, technical consulting, technical communication, technical transfer, and technical promotion; domestic freight transport agency; equity fund-invested asset management services; passenger ticket agent; and business agency service. It shall also include licensed projects (business activities can be carried out legally and independently with business license in addition to projects that must be approved by law): Agency bookkeeping; career intermediary activities; |
| food production; food sales; and medical services. (business activities that require approval in accordance with laws can be carried out upon approval of relevant authorities, and the specific business projects shall be subject to the approval document or license of relevant departments) | ||
| Shareholdings of the controlling shareholder in other controlled or non-controlled listed companies at home or abroad during the reporting period | 1. As of 30 June 2023, Laojiao Group holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 8.19% of the total issued shares. 2. As of 30 September 2023, Laojiao Group holds 212,954,666 shares of Hongli Zhihui Group Co., Ltd. (300219.SZ) through its wholly-owned subsidiary, Sichuan Jinduo investment Co., Ltd., accounting for 30.08% of the total issued shares. 3. As of 30 September 2023, Laojiao Group holds 475,940,143 shares of Huaxi Securities Co., Ltd. (002926.SZ), accounting for 18.13% of the total issued shares. 4. As of 30 June 2023, Laojiao Group holds 390,528,000 shares of Luzhou Bank (01983.HK), accounting for 14.37% of the total issued shares. | |
Change of the controlling shareholder during the reporting period
□Applicable ? N/A
No such cases in the reporting period
3.3 Actual controller and its persons acting in concert
Nature of actual controller：Local State-owned Assets Supervision and Administration CommissionType of actual controller：Corporation
| Name of actual controller | Legal representative/Company principal | Date of establishment | Credibility code | Main business scope |
| SASAC of Luzhou | Du Lei | 1 March 2005 | 11510400771686813T | State-owned assets supervision and administration department |
| Share holdings of the controlling shareholder in other controlled or non-controlled listed companies at home or abroad during the reporting period. | 1. As of 30 June 2023, XingLu Group, a controlled subsidiary of SASAC of Luzhou, holds 511,654,127 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 59.51% of the total issued shares. Luzhou Infrastructure Construction Investment Co., Ltd., a holding subsidiary of XingLu Group, holds 62,709,563 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), and accounting for 7.29% of the total issued shares. Laojiao Group, a controlled subsidiary under SASAC of Luzhou, holds 70,406,310 shares of Luzhou Xinglu Water (Group) Co., Ltd. (02281.HK), accounting for 8.19% of the total issued shares. 2. As of 30 September 2023, Laojiao Group holds 212,954,666 shares of Hongli Zhihui Group Co., Ltd. (300219.SZ) through its controlled subsidiary, Sichuan Jinduo investment Co., Ltd., accounting for 30.08% of the total shares issued. 3. As of 30 September 2023, Luzhou Industrial Investment Group Co., Ltd., a holding Company under the jurisdiction of SASAC of Luzhou, holds 193,464,610 shares of Sichuan Lutianhua Company Limited (000912.SZ), accounting for 12.34% of the total shares issued. Lutianhua Group Company Limited, a wholly-owned subsidiary of Luzhou Industrial Investment Group Co., Ltd., holds 221,458,993 shares of Sichuan Lutianhua Company Limited (000912.SZ), and accounting for 13.49% of the total issued shares. 4. As of 30 September 2023, Laojiao Group, a controlled subsidiary under SASAC of Luzhou, holds 475,940,143 shares of Huaxi Securities Co., Ltd. (002926.SZ), accounting for 18.13% of the total issued shares. 5. As of 30 June 2023, Laojiao Group, a controlled subsidiary under SASAC of Luzhou, holds 325,440,000 shares of Luzhou Bank (01983.HK), accounting for 14.37% of the total issued shares. XingLu Group, a controlled subsidiary under SASAC of Luzhou, holds 48,659,355 shares of Luzhou Bank (01983.HK), accounting for 1.79% of the total issued shares. | |||
Change of the actual controller during the reporting period
□Applicable ? N/A
The actual controller of the Company has not changed during the reporting period.
Ownership and control relations between the actual controller and the Company
The actual controller control the company through a trust or other ways of assets management
□Applicable ? N/A
3.4 Number of accumulative pledged shares held by the company’s controllingshareholder or the largest shareholder as well as its acting-in-concert partiesaccounts for 80% of all shares of the company held by them
□Applicable ? N/A
3.5 Other corporate shareholders with a shareholding proportion over 10%?Applicable □ N/A
| Name of corporate shareholder | Legal representative/Company principal | Date of establishment | Registered capital (CNY) | Main business scope |
| Luzhou XingLu Investment Group Co., Ltd. | Dai Zhiwei | 28 January 2003 | 4,934,049,244 | Investment and asset management; project management services; self-finance real estate business |
activities; investmentadvisory servicesand financialadvisory services(excluding suchfinancial activities asillegal capital raisingand collecting publicfunds) (businessactivities that requireapproval inaccordance with lawscan be carried outupon approval ofrelevant authorities)
3.6 Limits on reduction of the Company’s shares held by its controlling shareholder,actual controller, restructuring party and other commitment entities.
□Applicable ? N/A
4. Specific implementation of share repurchase during the reportingperiodImplementation progress of shares repurchases
□Applicable ? N/A
Implementation progress of share buyback reduction through centralized bidding
□Applicable ? N/A
Section VIII Preferred Shares
□Applicable ? N/A
No preferred stock in the Company during the reporting period.
Section IX Information about Bond? Applicable ? N/A
1. Enterprise bonds
? Applicable ? N/ANo such cases in the reporting period.
2. Corporate bonds
? Applicable ? N/A
2.1. Basic information about the corporate bond
Unit：CNY 10,000
| Name | Abbr. | Code | Issue date | Value date | Due date | Bond balance | Interest rate | Way of redemption | Place of trading |
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 20 Lao Jiao 01 | 149062.SZ | 16 March 2020 | 17 March 2020 | 17 March 2025 | 150,000 | 3.50% | In terms of the bonds of this phase, interests will be paid by year and the principal will be repaid in lump sum at maturity. The interests will be paid once every year and the interests for the last installment will be paid together with the | Shenzhen Stock Exchange |
| principal. | |||||||||
| 2022 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Professional Investors (Phase I) | 22 Lao Jiao 01 | 148133.SZ | 2 December 2022 | 2 December 2022 | 4 December 2023 | 0 | 2.85% | In terms of the bonds of this phase, interests will be paid by year and the principal will be repaid in lump sum at maturity. The interests will be paid once every year and the interests for the last installment will be paid together with the principal. All has been paid on 4 December 2023. | Shenzhen Stock Exchange |
| Appropriate arrangement of the investors (if any) | The bonds are applicable to eligible investors who have qualified securities accounts with Shenzhen Branch of China Securities Depository and Clearing Co., Ltd., are permitted to engage in the subscription and transfer of corporate bonds in accordance with the Management Measures for the Issue and Transaction Management of Corporate Bonds, Management Measures for the Suitability of Securities and Futures Investors, Management Measures of Shenzhen Stock Exchange for the Suitability of Securities Market Investors, and relevant laws and regulations, and have the corresponding risk identification and bearing capacity (excluding those prohibited by laws and regulations) | ||||||||
| Trading systems applicable | Tradable by way of bidding, offering, inquiry and agreement | ||||||||
| Risk of termination of listing and trading (if any) and countermeasures | N/A | ||||||||
Overdue bonds
□Applicable ? N/A
2.2. Triggering and execution of issuer or investor option clauses and investorprotection clauses
□Applicable ? N/A
2.3. Information about the intermediaries
| Bond | Intermediary | Office address | Signature accountant | Contact person of intermediary | Contact number |
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I)/ 2022 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Professional Investors (Phase I) | China International Capital Corporation Limited. | 33rd Floor, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | N/A | Qi Qin | (010)65051166 |
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) / 2022 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Professional Investors (Phase I) | China Chengxin International Credit Rating Co., Ltd. | Building 6, Galaxy SOHO, No.2 Nanzhugan hutong, Chaoyangmennei Avenue, Dongcheng District, Beijing | N/A | Sun Shu | (010)66428877 |
Indicate by tick mark whether above intermediaries changed in the reporting period
□Yes ? No
2.4. List of the usage of the raised funds
Unit：CNY 10,000
| Bonds | Total amount | Amount spent | Unused amount | Operation of special account for raised funds (if any) | Rectification of raised funds for violation operation (if any) | Whether is consistent with the usage, using plan and other agreements stipulated in the raising specification |
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., | 150,000 | 111,035.54 | 46,504.121 | The company has set up a special account to deposit the funds raised | N/A | Yes |
| Ltd. for Qualified Investors (Phase I) | and has signed a fund account supervision agreement to clarify it. The special account for fund raising was operating normally during the Reporting Period. (1) Account name: Luzhou Laojiao Co., Ltd.; Opening bank: Guangfa Bank Co., Ltd., Chengdu Branch; Bank account: 9550880046723000135. (2) Account name: Luzhou Laojiao Co., Ltd.; Opening bank: Bank of Communications Co., Ltd., Luzhou Branch; Bank account: 517517460013000000860. (3) Account name: Luzhou Laojiao Co., Ltd.; Opening bank: China Minsheng Bank Co., Ltd., Chengdu Branch; Bank account: 631395395. | |||||
| 2022 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Professional Investors (Phase I) | 150,000 | 149,8802 | 0 | Luzhou Laojiao Co., Ltd.; Opening bank: China Merchants Bank Co., Ltd., Chengdu Fucheng Avenue Sub-branch; Bank account: 028900140410888. | N/A | Yes |
Note: 1. Total Unused Raised Funds include a portion of the interest on the funds raised.
2. The net amount of funds raised by the Company this time is CNY 1,498,800,000.00. As at 31December 2023, all of it has been used for the committed purposes of the fund raising. The interestincome generated from the raised funds, amounting to CNY 41,633.34, has been utilised tosupplement working capital.
The raised funds were used for project construction?Applicable □ N/AThe Company raised a fund of CNY 4.0 billion through the issue of corporate bonds respectively on 27August 2019 and 16 March 2020. After deduction of the issue fees, the balance amount was set to usein the technical renovation project of brewing (Phase II), Project of Intelligent Upgrading and Building ofthe Information Management System, Project of Acquiring Sealing Equipment for the Cellar of HuangyiBrewing Base and Project of Acquiring Accessory Equipment for Leaven Making for Huangyi BrewingBase. As of 31 December 2023, CNY 3,641,173,800 of the fund-raising through the issue of corporatebonds had been used.
The Company changed the usage of above funds raised from bonds during the reporting period.
□Applicable ? N/A
2.5. Changes in credit ratings in the reporting period
□Applicable ? N/A
2.6. Execution and changes with respect to guarantees, repayment plans and otherrepayment-ensuring measures in the reporting period, as well as the impact on theinterests of bond holders
□Applicable ? N/A
3. Debt instruments as a non-financial enterprise
□Applicable ? N/A
No such cases in the reporting period.
4. Convertible corporate bonds
□Applicable ? N/A
No such cases in the reporting period.
5. Consolidated loss of the reporting period over 10% of net assets as atthe end of last year
□Applicable ? N/A
6. Matured interest-bearing debt excluding bonds up the period-end
□Applicable ? N/A
7. Whether there was any violation of rules and regulations during thereporting period
□Yes ? No
8. The major accounting data and the financial indicators of the recent2 years of the company as of the end of the reporting period
Unit：CNY 10,000
| Item | 31 December 2023 | 31 December 2022 | Change |
| Current ratio | 4.50 | 3.15 | 42.86% |
| Debt/asset ratio | 34.38% | 33.19% | 1.19% |
| Quick ratio | 3.31 | 2.20 | 50.45% |
| 2023 | 2022 | Change | |
| Net profits before non-recurring gains and losses | 1,315,039.28 | 1,032,148.12 | 27.41% |
| EBITDA/debt ratio | 163.53% | 235.37% | -71.84% |
| Interest cover (times) | 37.49 | 61.28 | -38.82% |
| EBITDA-to-interest cover (times) | 38.87 | 64.08 | -39.34% |
Section X Financial Report
1. Auditor’s report
| Type of audit report | Standard without reserved opinion |
| Signing date of auditor’s report | 25 April 2024 |
| Name of Audit | Sichuan Huaxin (Group) CPA Firm |
| No. of auditor’s report | Chuan Huaxin Audit [2024] No. 0035 |
| Names of auditors | Li Wulin, Tang Fangmo, Fan Bo |
Auditor’s ReportTo the shareholders of Luzhou Laojiao Co., Ltd.:
OpinionWe have audited the financial statements of Luzhou Laojiao Co., Ltd. (hereinafter referred to as the“Company”), which comprise the consolidated balance sheet and balance sheet as at 31 December2023, consolidated income statement and income statement, consolidated cash flow statement andcash flow statement, consolidated statement of changes in owners' equity and statement of changes inowners' equity for the year then ended; and notes to the financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, in accordancewith Accounting Standards for Business Enterprises and present fairly the financial position of thecompany as at 31
December 2023 and its operating results and cash flow for the year then ended.
Basis for opinionWe conducted our audit in accordance with China Standards on Auditing (“CSAs”) for Certified PublicAccountants. Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of professional ethics for Certified Public Accountants inChina (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance inour audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole and, informing our opinion thereon, and we do not provide a separate opinion on these matters. Key auditmatters identified in our audit are summarized as follows:
| 1. Key audit matters-Recognition of domestic baijiu sales revenue | |
| Key audit matters | How our audit addressed the Key Audit Matter |
| As shown in Note 7.38 in the Financial Statements, the domestic baijiu sales revenue of the Company in 2023 is CNY 29,900,173,500, accounting for 98.90% of the operating revenue of CNY 30,233,301,400. It is the main source of the Company's operating profit. For the operating revenue is one of the key results indicators and the inherent risk of its misstatement is relatively high, therefore, we identified the recognition of domestic baijiu sales revenue as a key audit matter. | Our procedures in relation to recognition of domestic baijiu sales revenue included: 1. Understood, evaluated and tested the reasonableness and effectiveness of the internal control design related to the Company's revenue. Particular attention was paid to the appropriateness of specific conditions for recognition of revenue. 2. Compared the key indicators such as sales volume, unit price of sales and gross profit rate of the Company in the current period with those in the previous period, so as to identify the rationality of changes in key indicators and reasons for changes. 3. The income of the top five customers accounted for 62.28% of the total business income. For main customers, we carried out the following audit procedures to verify the occurrence, completeness and accuracy of the revenue recognized by the management: (1) Obtained the sales contract signed by the Company and the customer, carefully read the key terms of the contract, and understand the implementation of the contract; (2) Performed the confirmation procedure. We sent confirmation letters to verify the amount of sales revenue in the reporting period and the closing balance of accounts receivables or contract liabilities during the reporting period. For local customers in Luzhou, we went to their office to carry out confirmation procedure and obtained the situation of purchase, sales and storage of Luzhou Laojiao brand baijiu during the reporting period, so as to analyze and judge whether there are abnormal fluctuations in its inventory and its rationality; For customers outside Luzhou, we mailed confirmation letters and controlled the whole process of reply letter by ourselves. (3) Inquired the customer's business information and key personnel information, and checked whether they are related party of the Company. 4. For the top 5 customers of the year and other customers, checked sales contracts, customers' purchase orders, shipping documents, transport documents, accounting vouchers, payment receipts, customer signature records and other materials to verify the occurrence, completeness and accuracy of the revenue recognized by the management. 5. Selected the confirmation voucher of large amount of sales before and after the balance sheet date, paid attention to the date of sales invoice and customer receipt, and paid attention to whether there is a large amount of return after the period, so as to verify whether the corresponding revenue is included in the appropriate accounting period. The evidence obtained from the above audit procedures can support the Company's management's |
| recognition of domestic baijiu sales revenue. | |
| 2. Key audit matters-Existence of bank deposits | |
| Key audit matters | How our audit addressed the Key Audit Matter |
| As shown in Note 7.1 in the Financial Statements, as of 31 December 2023, the bank balance of the Company is CNY 25,916,630,900, accounting for 40.95% of the total assets. Bank deposits are high-risk assets. Therefore, we identified the existence of bank deposits as a key audit matter. | Our procedures in relation to existence of bank deposits included: 1. Understood and tested the design and implementation of key internal controls related to the funds management cycle to confirm the effectiveness of relevant internal controls. 2. Accompanied by relevant personnel of the Company, auditors went to the bank by themselves where the Company opens a basic bank account to print the account opening list of the Company and check the account opening information individually. 3. Checked the carrying amount of all bank accounts with the original amount of bank statements and certificates of deposit, and obtained all copies. 4. Based on the results of checking the amount of bank statements, obtained the balance reconciliation of all bank accounts compiled by the Company, and check all the outstanding items, whether there are any important overdue items that are not booked in time. 5. Implemented the confirmation procedure for the Company's bank deposits, the confirmation letters were sent out by mailing after auditors checked the address and the receiver through telephone, network and other public information, and we controlled the whole reply letter process by ourselves. 6. Obtained and reviewed time deposits or structured deposit agreements, identified the types of relevant bank deposits, analyzed the principal and interest recovery risks, and judged the adequacy of the disclosure. 7. Inquired the management and relevant personnel about the purpose of all bank accounts on the Company's books and analyzed whether there are abnormal use or bank accounts opened for unknown reasons. The evidence obtained from the above audit procedures can support the Company's management's assertion of the existence of bank deposits. |
Other informationThe directors of the Company are responsible for the other information. The other informationcomprises the information included in the annual report, but does not include the financial statementsand our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express anyform 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 thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of directors and those charged with governance for the financial statementsThe directors of the Company are responsible for the preparation of the financial statements that give atrue and fair view in accordance with the disclosure requirements of Accounting Standards for BusinessEnterprises, and designing, implementing and maintaining internal control that is necessary to ensurethe financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s abilityto continue as a going concern, disclosing, as applicable, matters related to going concern and usingthe going concern basis of accounting unless the directors either intend to liquidate the Company or tocease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reportingprocess.
Auditor's responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit 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 theaggregate, they could reasonably be expected to influence the economic decisions of users taken onthe basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the directors.
(4) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. Ifwe conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the financial statements or, if such disclosures are inadequate, to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Company to cease to continue as a goingconcern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solelyresponsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.
From the matters communicated with the governance, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are thereforethe key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat 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.
Sichuan Huaxin (Group) CPA Firm Chinese CPA: Li Wulin(Engagement Partner)Chengdu·China Chinese CPA: Tang FangmoChinese CPA: Fan Bo
25 April 2024
2. Financial statements
Monetary unit for the financial statements and the notes thereto: CNYPrepared by: Luzhou Laojiao Co., Ltd.
Consolidated balance sheet
As at 31 December 2023
Unit：CNY
| Item | Balance as at 31 December 2023 | Balance as at 1 January 2023 |
| Current assets: | ||
| Cash and cash equivalents | 25,952,025,091.28 | 17,757,528,211.25 |
| Settlement reserves | ||
| Lending funds | ||
| Held-for-trading financial assets | 1,426,992,098.83 | 1,073,466,780.37 |
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 17,461,378.98 | 5,939,420.78 |
| Accounts receivables financing | 5,938,171,007.93 | 4,583,352,503.37 |
| Prepayment | 202,309,186.70 | 114,257,506.26 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve | ||
| Other receivables | 22,716,893.12 | 23,396,533.98 |
| Including：Interests receivable | ||
| Dividends receivable | ||
| Buying back the sale of financial assets | ||
| Inventories | 11,622,043,947.46 | 9,840,742,374.85 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 176,684,731.97 | 153,035,946.94 |
| Total current assets | 45,358,404,336.27 | 33,551,719,277.80 |
| Non-current assets: | ||
| Disbursement of loans and advances | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 2,708,254,833.50 | 2,667,500,553.17 |
| Investments in other equity instruments | 402,893,468.80 | 1,136,736,978.11 |
| Other non-current financial assets | ||
| Investment property | 37,785,416.77 | 39,149,454.22 |
| Fixed assets | 8,613,223,465.46 | 8,856,258,598.78 |
| Construction in progress | 1,718,468,880.53 | 808,919,047.21 |
| Productive biological assets | ||
| Oil and gas assets |
| Use right assets | 23,260,955.23 | 39,952,525.63 |
| Intangible assets | 3,397,873,791.08 | 3,083,271,852.79 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 960,005.91 | 710,010.92 |
| Deferred tax assets | 674,429,617.92 | 1,005,167,353.80 |
| Other non-current assets | 358,900,430.13 | 196,095,702.09 |
| Total non-current assets | 17,936,050,865.33 | 17,833,762,076.72 |
| Total assets | 63,294,455,201.60 | 51,385,481,354.52 |
| Current liabilities: | ||
| Short-term loans | ||
| Borrowings from the central bank | ||
| Loans from other banks | ||
| Held-for-trading financial liabilities | 9,763.87 | |
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 2,357,223,733.21 | 2,311,665,585.04 |
| Advance from customer | ||
| Contract liabilities | 2,672,977,090.30 | 2,566,374,718.76 |
| Financial assets sold for repurchase | ||
| Deposits from customers and inter-bank | ||
| Customer brokerage deposits | ||
| Securities underwriting brokerage deposits | ||
| Employee benefits payable | 523,866,711.41 | 675,034,885.31 |
| Taxes payable | 2,939,627,533.00 | 3,481,150,728.98 |
| Other payable | 1,150,721,162.53 | 1,202,409,278.49 |
| Including：Interests payable | ||
| Dividends payable | 29,684,819.82 | 16,594,850.58 |
| Handling charges and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 78,918,152.41 | 81,879,466.63 |
| Other current liabilities | 347,485,071.57 | 333,627,225.47 |
| Total current liabilities | 10,070,829,218.30 | 10,652,141,888.68 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term loans | 10,000,300,000.00 | 3,179,600,000.00 |
| Bonds payable | 1,498,716,737.02 | 2,996,099,571.86 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 22,356,404.47 | 29,096,969.66 |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities |
| Deferred income | 27,772,083.74 | 33,704,323.80 |
| Deferred tax liabilities | 142,773,028.22 | 166,043,663.88 |
| Other non-current liabilities | ||
| Total non-current liabilities | 11,691,918,253.45 | 6,404,544,529.20 |
| Total liabilities | 21,762,747,471.75 | 17,056,686,417.88 |
| Owners' equity | ||
| Share capital | 1,471,987,769.00 | 1,471,895,100.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 5,185,481,523.22 | 4,800,154,468.99 |
| Less: treasury stock | 616,743,610.59 | 639,021,998.78 |
| Other comprehensive income | 63,130,469.51 | 330,751,245.84 |
| Special reserves | ||
| Surplus reserves | 1,471,987,769.00 | 1,471,895,100.00 |
| General risk reserve | ||
| Undistributed profits | 33,815,566,574.75 | 26,772,197,213.98 |
| Total equity attributable to owners of the parent company | 41,391,410,494.89 | 34,207,871,130.03 |
| Non-controlling interests | 140,297,234.96 | 120,923,806.61 |
| Total owners' equity | 41,531,707,729.85 | 34,328,794,936.64 |
| Total liabilities and owners' equity | 63,294,455,201.60 | 51,385,481,354.52 |
Legal representative：Liu MiaoPerson in charge of accounting affairs：Xie HongPerson in charge of accounting department：Song Ying
Balance sheet of parent company
As at 31 December 2022
Unit：CNY
| Item | Balance as at 31 December 2023 | Balance as at 1 January 2023 |
| Current assets: | ||
| Cash and cash equivalents | 24,271,855,815.25 | 17,009,231,873.64 |
| Held-for-trading financial assets | 1,426,992,098.83 | 974,505,894.18 |
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 47,500.00 | |
| Accounts receivables financing | ||
| Prepayment | 6,360,210.40 | 2,141,256.01 |
| Other receivables | 14,844,650,322.98 | 12,042,401,844.84 |
| Including：Interests receivable | ||
| Dividends receivable | ||
| Inventories | 1,051,717.53 | 2,499,333.08 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year |
| Other current assets | 108,073,731.77 | 34,163.66 |
| Total current assets | 40,658,983,896.76 | 30,030,861,865.41 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 6,494,866,955.20 | 6,278,966,093.87 |
| Investments in other equity instruments | 402,589,547.17 | 1,136,433,056.48 |
| Other non-current financial assets | ||
| Investment property | 37,785,416.77 | 39,149,454.22 |
| Fixed assets | 950,099,737.28 | 1,021,509,077.72 |
| Construction in progress | 57,369,565.37 | 49,136,390.14 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 316,259.61 | 600,190.05 |
| Intangible assets | 781,194,544.01 | 617,211,243.56 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 820,758.81 | 548,507.41 |
| Deferred tax assets | 154,645,014.28 | 147,351,049.81 |
| Other non-current assets | 200,783,195.94 | 14,808,459.12 |
| Total non-current assets | 9,080,470,994.44 | 9,305,713,522.38 |
| Total assets | 49,739,454,891.20 | 39,336,575,387.79 |
| Current liabilities: | ||
| Short-term loans | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 19,666,554.15 | 51,174,790.68 |
| Advance from customer | ||
| Contract liabilities | 2,230,734.50 | 1,510,508.26 |
| Employee benefits payable | 163,823,844.30 | 241,471,148.70 |
| Taxes payable | 204,018,131.83 | 381,259,266.93 |
| Other payables | 1,960,371,090.55 | 1,730,335,596.91 |
| Including：Interests payable | ||
| Dividends payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 74,018,942.63 | 67,673,936.27 |
| Other current liabilities | 289,995.48 | 196,366.07 |
| Total current liabilities | 2,424,419,293.44 | 2,473,621,613.82 |
| Non-current liabilities: | ||
| Long-term loans | 10,000,300,000.00 | 3,179,600,000.00 |
| Bonds payable | 1,498,716,737.02 | 2,996,099,571.86 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 203,920.20 |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | ||
| Deferred tax liabilities | 72,592,887.99 | 132,565,131.74 |
| Other non-current liabilities | ||
| Total non-current liabilities | 11,571,609,625.01 | 6,308,468,623.80 |
| Total liabilities | 13,996,028,918.45 | 8,782,090,237.62 |
| Owners' equity | ||
| Share capital | 1,471,987,769.00 | 1,471,895,100.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 5,179,307,881.60 | 4,789,603,151.65 |
| Less: treasury stock | 616,743,610.59 | 639,021,998.78 |
| Other comprehensive income | 60,513,567.32 | 328,542,995.36 |
| Special reserves | ||
| Surplus reserves | 1,471,987,769.00 | 1,471,895,100.00 |
| Undistributed profits | 28,176,372,596.42 | 23,131,570,801.94 |
| Total owners' equity | 35,743,425,972.75 | 30,554,485,150.17 |
| Total liabilities and owners' equity | 49,739,454,891.20 | 39,336,575,387.79 |
Consolidated income statement
Unit：CNY
| Item | Year 2023 | Year 2022 |
| 1. Total operating revenue | 30,233,301,388.26 | 25,123,563,271.62 |
| Including: Operating revenue | 30,233,301,388.26 | 25,123,563,271.62 |
| Interest income | ||
| Earned premium | ||
| Fee and commission income | ||
| 2. Total operating costs | 12,638,987,548.90 | 11,424,541,543.84 |
| Including: Cost of sales | 3,537,151,403.15 | 3,369,528,394.02 |
| Interest expense | ||
| Handling charges and commission expenses | ||
| Refunded premiums | ||
| Net payments for insurance claims | ||
| Net provision for insurance contracts | ||
| Bond insurance expense | ||
| Reinsurance Expenses | ||
| Taxes and surcharges | 4,133,126,350.68 | 3,523,948,287.48 |
| Selling and distribution expenses | 3,974,425,526.92 | 3,448,771,046.02 |
| General and administrative expenses | 1,139,480,677.23 | 1,162,422,257.23 |
| Research and Development expenses | 225,955,797.33 | 206,248,486.57 |
| Financial expenses | -371,152,206.41 | -286,376,927.48 |
| Including：Interest expenses | 488,003,010.93 | 229,673,136.36 |
| Interest income | 864,006,165.58 | 505,746,664.32 |
| Plus: Other income | 54,179,605.39 | 36,524,317.09 |
| Investment income ("-" for losses) | 84,724,581.98 | 104,715,915.31 |
| Including: income from investment in associates and joint ventures | 66,927,156.69 | 84,626,608.53 |
| Income from the derecognition of financial assets measured at amortized cost (“-” for losses) | ||
| Foreign exchange gains ("-" for losses) | ||
| Net gain on exposure hedges (“-” for losses) | ||
| Gains from the changes in fair values(“-“ for losses) | 62,988,462.30 | -12,023,622.50 |
| Credit impairment losses (“-” for losses) | 932,241.70 | -1,165,718.34 |
| Impairment losses(“-“ for losses) | ||
| Gains from disposal of assets("-" for losses) | 44,694,238.37 | 19,805,093.70 |
| 3. Operating profits ("-" for losses) | 17,841,832,969.10 | 13,846,877,713.04 |
| Plus: non-operating income | 36,203,863.17 | 27,833,420.31 |
| Less: non-operating expenses | 72,079,275.83 | 19,959,493.06 |
| 4. Total profits before tax ("-" for total losses) | 17,805,957,556.44 | 13,854,751,640.29 |
| Less: income tax expenses | 4,517,297,533.23 | 3,444,162,535.86 |
| 5. Net profit ("-" for net loss) | 13,288,660,023.21 | 10,410,589,104.43 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operation ("-" for losses) | 13,288,660,023.21 | 10,410,589,104.43 |
| 5.1.2 Net profit from discontinued operation ("-" for losses) | ||
| 5.2 By ownership | ||
| 1) Attributable to shareholders of the parent company | 13,246,394,700.59 | 10,365,383,281.80 |
| 2) Attributable to non-controlling interests | 42,265,322.62 | 45,205,822.63 |
| 6. Net of tax from other comprehensive income | -267,285,844.76 | 165,065,173.42 |
| Net of tax from other comprehensive income to the owner of the parent company | -267,620,776.33 | 163,224,093.52 |
| 6.1 Other comprehensive income cannot reclassified into the profit and | -270,029,977.35 | 173,373,357.69 |
| loss: | ||
| 1) Remeasure the variation of net indebtedness or net asset of defined benefit plans | ||
| 2) Share in other comprehensive income that cannot be classified into profit and loss under equity method | 106,537.86 | |
| 3) Changes in fair value of investments in other equity instruments | -270,136,515.21 | 173,373,357.69 |
| 4) Changes in fair value of the company’s credit risks | ||
| 5) Other | ||
| 6.2 Other comprehensive income that will be reclassified into the profit and loss | 2,409,201.02 | -10,149,264.17 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | 2,000,549.31 | -12,402,376.19 |
| 2) Changes in fair value of investments in other debt obligations | ||
| 3) Other comprehensive income arising from the reclassification of financial assets | ||
| 4) Allowance for credit impairments in investments in other debt obligations | ||
| 5) Reserve for cash-flow hedge | ||
| 6) Balance arising from the translation of foreign currency financial statements | 408,651.71 | 2,253,112.02 |
| 7) Others | ||
| Net of tax from other comprehensive income to non-controlling interests | 334,931.57 | 1,841,079.90 |
| 7. Total comprehensive income | 13,021,374,178.45 | 10,575,654,277.85 |
| Total comprehensive income attributable to owners of the parent company | 12,978,773,924.26 | 10,528,607,375.32 |
| Total comprehensive income attributable to non-controlling interests | 42,600,254.19 | 47,046,902.53 |
| 8. Earnings per share | ||
| (1) Basic earnings per share | 9.02 | 7.06 |
| (2) Diluted earnings per share | 9.02 | 7.06 |
Legal representative：Liu MiaoPerson in charge of accounting affairs：Xie HongPerson in charge of accounting department：Song Ying
Income statement of parent company
Unit：CNY
| Item | Year 2023 | Year 2022 |
| 1. Operating revenue | 9,145,460,581.25 | 8,410,433,537.26 |
| Less: Cost of sales | 6,915,061,972.96 | 6,178,065,196.37 |
| Taxes and surcharges | 69,667,975.44 | 65,990,094.21 |
| Selling and distribution expenses | ||
| General and administrative expenses | 955,055,338.48 | 963,400,839.26 |
| Research and Development expenses | 93,610,992.94 | 90,299,057.13 |
| Financial expenses | -523,148,275.90 | -465,296,222.32 |
| Including：Interest expenses | 344,865,497.27 | 145,296,657.64 |
| Interest income | 872,919,941.62 | 613,452,430.61 |
| Plus: Other income | 20,117,651.96 | 18,824,179.28 |
| Investment income ("-" for losses) | 9,964,009,506.49 | 7,842,231,445.15 |
| Including: income from investment in associates and joint ventures | 43,134,582.17 | 45,123,842.50 |
| Income from the derecognition of financial assets at amortized cost (“-” for losses) | ||
| Net gain on exposure hedges (“-” for losses) | ||
| Gains from the changes in fair values(“-“ for losses) | 60,959,140.61 | -10,984,508.69 |
| Credit impairment losses (“-” for losses) | 630,355.40 | -610,527.84 |
| Asset impairment losses (“-” for losses) | ||
| Gains from disposal of assets("-" for losses) | 44,029,637.89 | 19,786,813.38 |
| 2. Operating profits ("-" for losses) | 11,724,958,869.68 | 9,447,221,973.89 |
| Plus: non-operating income | 26,553,752.25 | 18,588,745.48 |
| Less: non-operating expenses | 24,214,208.31 | 17,852,225.18 |
| 3. Total profits before tax ("-" for total losses) | 11,727,298,413.62 | 9,447,958,494.19 |
| Less: income tax expenses | 479,471,279.32 | 408,118,536.71 |
| 4. Net profit ("-" for net loss) | 11,247,827,134.30 | 9,039,839,957.48 |
| 4.1 Net profit from continuing operation ("-" for losses) | 11,247,827,134.30 | 9,039,839,957.48 |
| 4.2 Net profit from discontinued operation ("-" for losses) | ||
| 5. Net of tax from other comprehensive income | -268,029,428.04 | 160,970,981.50 |
| 5.1 Other comprehensive income cannot reclassified into the profit and loss: | -270,029,977.35 | 173,373,357.69 |
| 1) Remeasure the variation of net indebtedness or net asset of defined benefit plans | ||
| 2) Share in other comprehensive income that cannot be classified into profit and loss under equity method | 106,537.86 | |
| 3) Changes in fair value of investments in other equity | -270,136,515.21 | 173,373,357.69 |
| instruments | ||
| 4) Changes in fair value of the company’s credit risks | ||
| 5) Other | ||
| 5.2 Other comprehensive income that will be reclassified into the profit and loss | 2,000,549.31 | -12,402,376.19 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | 2,000,549.31 | -12,402,376.19 |
| 2) Changes in fair value of investments in other debt obligations | ||
| 3) Other comprehensive income arising from the reclassification of financial assets | ||
| 4) Allowance for credit impairments in investments in other debt obligations | ||
| 5) Reserve for cash-flow hedge | ||
| 6) Balance arising from the translation of foreign currency financial statements | ||
| 7) Others | ||
| 6. Total comprehensive income | 10,979,797,706.26 | 9,200,810,938.98 |
| 7. Earnings per share | ||
| (1) Basic earnings per share | ||
| (2) Diluted earnings per share |
Consolidated statement of cash flows
Unit：CNY
| Item | Year 2023 | Year 2022 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 31,589,430,458.52 | 25,912,851,214.24 |
| Net increase in customer bank deposits and placement from banks and other financial institutions | ||
| Net increase in loans from central bank | ||
| Net increase in loans from other financial institutions | ||
| Premiums received from original insurance contracts | ||
| Net cash received from reinsurance business | ||
| Net increase in deposits and investments from policyholders | ||
| Cash received from interest, handling charges and commissions | ||
| Net increase in placements from other financial institutions |
| Net capital increase in repurchase business | ||
| Net cash received from customer brokerage deposits | ||
| Refunds of taxes and surcharges | 4,311,439.27 | 96,229,396.25 |
| Cash received from other operating activities | 1,271,444,860.82 | 868,192,251.33 |
| Subtotal of cash inflows from operating activities | 32,865,186,758.61 | 26,877,272,861.82 |
| Cash paid for goods purchased and services received | 6,584,743,337.24 | 5,224,385,672.55 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in central bank and other banks and financial institutions | ||
| Cash paid for original insurance contract claims | ||
| Net increase in lending funds | ||
| Cash paid for interests, handling charges and commissions | ||
| Cash paid for policy dividends | ||
| Cash paid to and on behalf of employees | 1,291,700,762.53 | 1,159,257,102.51 |
| Cash paid for taxes and surcharges | 11,873,473,704.94 | 9,242,016,336.48 |
| Cash paid for other operating activities | 2,466,904,018.44 | 2,988,965,480.56 |
| Subtotal of cash outflows from operating activities | 22,216,821,823.15 | 18,614,624,592.10 |
| Net cash flows from operating activities | 10,648,364,935.46 | 8,262,648,269.72 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | 1,806,849,496.56 | 2,130,340,931.54 |
| Cash received from returns on investments | 57,070,473.44 | 47,015,525.79 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 69,684,519.48 | 66,239,957.85 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 1,933,604,489.48 | 2,243,596,415.18 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 1,501,625,135.45 | 1,035,165,351.11 |
| Cash paid for investments | 1,700,000,000.00 | 3,082,285,380.80 |
| Net increase in pledge loans | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | 97,207.03 |
| Subtotal of cash outflows from investing activities | 3,201,722,342.48 | 4,117,450,731.91 |
| Net cash flows from investing activities | -1,268,117,853.00 | -1,873,854,316.73 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 10,373,039.14 | 670,224,927.99 |
| Including: cash received by subsidiaries from investments by minority shareholders | 2,082,314.40 | 3,366,028.35 |
| Cash received from borrowings | 6,850,000,000.00 | 4,700,000,000.00 |
| Cash received from other financing activities | 1,909,017.10 | |
| Subtotal of cash inflows from financing activities | 6,860,373,039.14 | 5,372,133,945.09 |
| Cash paid for debt repayments | 1,524,700,000.00 | 2,500,000,000.00 |
| Cash paid for distribution of dividends and profits or payment of interest | 6,546,495,859.54 | 4,928,927,484.50 |
| Including: dividends and profits paid to minority shareholders by subsidiaries | 16,594,850.59 | 14,784,831.00 |
| Cash paid for other financing activities | 7,603,247.89 | 21,594,912.99 |
| Subtotal of cash outflows from financing activities | 8,078,799,107.43 | 7,450,522,397.49 |
| Net cash flows from financing activities | -1,218,426,068.29 | -2,078,388,452.40 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | 2,201,671.82 | 16,072,149.45 |
| 5. Net increase in cash and cash equivalents | 8,164,022,685.99 | 4,326,477,650.04 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 17,729,006,591.87 | 13,402,528,941.83 |
| 6. Balance of cash and cash equivalents at the end of the period | 25,893,029,277.86 | 17,729,006,591.87 |
Cash flow statements of parent company
Unit：CNY
| Item | Year 2023 | Year 2022 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 9,465,106,131.52 | 7,836,045,120.10 |
| Refunds of taxes and surcharges | ||
| Cash received from other operating activities | 883,796,732.00 | 633,774,675.70 |
| Subtotal of cash inflows from operating activities | 10,348,902,863.52 | 8,469,819,795.80 |
| Cash paid for goods purchased and services received | 7,055,302,497.34 | 5,463,276,771.05 |
| Cash paid to and on behalf of | 459,785,090.92 | 994,821,318.51 |
| employees | ||
| Cash paid for taxes and surcharges | 1,081,990,787.32 | 700,305,299.72 |
| Cash paid for other operating activities | 344,059,510.02 | 232,654,650.21 |
| Subtotal of cash outflows from operating activities | 8,941,137,885.60 | 7,391,058,039.49 |
| Net cash flows from operating activities | 1,407,764,977.92 | 1,078,761,756.31 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | 1,725,428,067.29 | 2,141,935,199.60 |
| Cash received from returns on investments | 9,960,472,292.73 | 7,816,398,926.76 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 57,611,113.20 | 50,809,694.44 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 11,743,511,473.22 | 10,009,143,820.80 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 440,672,744.69 | 92,415,078.78 |
| Cash paid for investments | 1,720,000,000.00 | 2,982,285,380.80 |
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 2,160,672,744.69 | 3,074,700,459.58 |
| Net cash flows from investing activities | 9,582,838,728.53 | 6,934,443,361.22 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 8,290,724.74 | 666,858,899.64 |
| Cash received from loans | 6,850,000,000.00 | 4,700,000,000.00 |
| Cash received from other financing activities | 28,533,781.29 | 110,999,028.72 |
| Subtotal of cash inflows from financing activities | 6,886,824,506.03 | 5,477,857,928.36 |
| Cash paid for debt repayments | 1,524,700,000.00 | 2,500,000,000.00 |
| Cash paid for distribution of dividends and profits or payment of interest | 6,542,888,426.79 | 4,930,586,734.79 |
| Cash paid for other financing activities | 2,576,358,468.60 | 2,008,038,082.56 |
| Subtotal of cash outflows from financing activities | 10,643,946,895.39 | 9,438,624,817.35 |
| Net cash flows from financing activities | -3,757,122,389.36 | -3,960,766,888.99 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | 102,691.83 | 469,950.14 |
| 5. Net increase in cash and cash equivalents | 7,233,584,008.92 | 4,052,908,178.68 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 16,991,891,937.50 | 12,938,983,758.82 |
| 6. Balance of cash and cash equivalents at the end of the period | 24,225,475,946.42 | 16,991,891,937.50 |
Consolidated statement of changes in owners' equity
For the year ended 31 December 2023
Unit：CNY
| Item | Year 2023 | ||||||||||||||
| Equity attributable to owners of the parent company | Non-controlling interests | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| 1. Balance as at 31 December of last year | 1,471,895,100.00 | 4,800,154,468.99 | 639,021,998.78 | 330,751,245.84 | 1,471,895,100.00 | 26,772,197,213.98 | 34,207,871,130.03 | 120,923,806.61 | 34,328,794,936.64 | ||||||
| Plus: adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of accounting errors in prior year | |||||||||||||||
| Others | |||||||||||||||
| 2. Balance as at 1 January of the | 1,471,895,100.00 | 4,800,154,468.99 | 639,021,998.78 | 330,751,245.84 | 1,471,895,100.00 | 26,772,197,213.98 | 34,207,871,130.03 | 120,923,806.61 | 34,328,794,936.64 | ||||||
| current year | |||||||||||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 92,669.00 | 385,327,054.23 | -22,278,388.19 | -267,620,776.33 | 92,669.00 | 7,043,369,360.77 | 7,183,539,364.86 | 19,373,428.35 | 7,202,912,793.21 | ||||||
| (1) Total comprehensive income | -251,405,123.12 | 13,246,394,700.59 | 12,994,989,577.47 | 42,600,254.19 | 13,037,589,831.66 | ||||||||||
| (2) Capital contributed or reduced by owners | 92,669.00 | 385,099,228.22 | -22,278,388.19 | 407,470,285.41 | 6,457,993.99 | 413,928,279.40 | |||||||||
| Capital contributions by owners | 92,669.00 | 8,198,055.74 | 8,290,724.74 | 2,082,314.40 | 2,082,314.40 | ||||||||||
| Capital contributions by other equity instruments holders | |||||||||||||||
| Amounts of share-based payments recognized in owners' equity | 376,901,172.48 | -30,569,112.93 | 407,470,285.41 | 4,375,679.59 | 411,845,965.00 | ||||||||||
| Others | |||||||||||||||
| (3) Profit distri | 92,669.00 | -6,219 | -6,219 | -29,68 | -6,248 |
| bution | ,240,993.03 | ,148,324.03 | 4,819.83 | ,833,143.86 | |||||||||||
| Withdrawal of surplus reserves | 92,669.00 | -92,669.00 | |||||||||||||
| Withdrawal of general risk reserve | |||||||||||||||
| Profit distributed to owners (or shareholders) | -6,219,148,324.03 | -6,219,148,324.03 | -29,684,819.83 | -6,248,833,143.86 | |||||||||||
| Others | |||||||||||||||
| (4) Internal carry-forward of owners' equity | -16,215,653.21 | 16,215,653.21 | |||||||||||||
| Conversion of capital reserves into paid-in capital | |||||||||||||||
| Conversion of surplus reserves into paid-in capital | |||||||||||||||
| Surplus reserves offsetting losses | |||||||||||||||
| Carry-forward of |
| retained earnings from changes in defined benefit plans | |||||||||||||||
| Carry-forward of retained earnings from other comprehensive income | -16,215,653.21 | 16,215,653.21 | |||||||||||||
| Others | |||||||||||||||
| (5) Special reserves | |||||||||||||||
| Withdrawal for the period | |||||||||||||||
| Use for the period | |||||||||||||||
| (6) Others | 227,826.01 | 227,826.01 | 227,826.01 | ||||||||||||
| 4. Balance as at 31 December of the current year | 1,471,987,769.00 | 5,185,481,523.22 | 616,743,610.59 | 63,130,469.51 | 1,471,987,769.00 | 33,815,566,574.75 | 41,391,410,494.89 | 140,297,234.96 | 41,531,707,729.85 |
For the year ended 31 December 2022
Unit：CNY
| Item | Year 2022 | ||||||||||||||
| Equity attributable to owners of the parent company | Non-controlling interests | Total owners' equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Inco | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| me | |||||||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,755,354,665.73 | 167,527,152.32 | 1,464,752,476.00 | 21,187,860,235.89 | 28,040,247,005.94 | 97,014,116.89 | 28,137,261,122.83 | |||||||
| Plus: adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of accounting errors in prior year | |||||||||||||||
| Others | |||||||||||||||
| 2. Balance as at 1 January of the current year | 1,464,752,476.00 | 3,755,354,665.73 | 167,527,152.32 | 1,464,752,476.00 | 21,187,860,235.89 | 28,040,247,005.94 | 97,014,116.89 | 28,137,261,122.83 | |||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 7,142,624.00 | 1,044,799,803.26 | 639,021,998.78 | 163,224,093.52 | 7,142,624.00 | 5,584,336,978.09 | 6,167,624,124.09 | 23,909,689.72 | 6,191,533,813.81 | ||||||
| (1) Total comprehensive income | 163,224,093.52 | 10,365,383,281.80 | 10,528,607,375.32 | 47,046,902.53 | 10,575,654,277.85 | ||||||||||
| (2) Capital contri | 7,142,624.00 | 1,044,799,803.2 | 639,021,998.78 | 412,920,428.48 | 8,242,468.77 | 421,162,897.25 |
| buted or reduced by owners | 6 | ||||||||||||||
| Capital contributions by owners | 7,142,624.00 | 654,141,649.18 | 661,284,273.18 | 3,366,028.35 | 3,366,028.35 | ||||||||||
| Capital contributions by other equity instruments holders | |||||||||||||||
| Amounts of share-based payments recognized in owners' equity | 390,658,154.08 | -22,262,274.40 | 412,920,428.48 | 4,876,440.42 | 417,796,868.90 | ||||||||||
| Others | |||||||||||||||
| (3) Profit distribution | 7,142,624.00 | -4,781,061,930.55 | -4,773,919,306.55 | -31,379,681.58 | -4,805,298,988.13 | ||||||||||
| Withdrawal of surplus reserves | 7,142,624.00 | -7,142,624.00 | |||||||||||||
| Withdrawal of general risk reserve | |||||||||||||||
| Profit distributed to owners (or shareholders) | -4,773,919,306.55 | -4,773,919,306.55 | -31,379,681.58 | -4,805,298,988.13 | |||||||||||
| Other |
| s | |||||||||||||||
| (4) Internal carry-forward of owners' equity | |||||||||||||||
| Conversion of capital reserves into paid-in capital | |||||||||||||||
| Conversion of surplus reserves into paid-in capital | |||||||||||||||
| Surplus reserves offsetting losses | |||||||||||||||
| Carry-forward of retained earnings from changes in defined benefit plans | |||||||||||||||
| Carry-forward of retained earnings from other comprehensive income | |||||||||||||||
| Others |
| (5) Special reserves | |||||||||||||||
| Withdrawal for the period | |||||||||||||||
| Use for the period | |||||||||||||||
| (6) Others | 15,626.84 | 15,626.84 | 15,626.84 | ||||||||||||
| 4. Balance as at 31 December of the current year | 1,471,895,100.00 | 4,800,154,468.99 | 639,021,998.78 | 330,751,245.84 | 1,471,895,100.00 | 26,772,197,213.98 | 34,207,871,130.03 | 120,923,806.61 | 34,328,794,936.64 |
Statement of changes in owners' equity of parent company
For the year ended 31 December 2023
Unit：CNY
| Item | Year 2023 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equity | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| 1. Balance as at 31 December of last year | 1,471,895,100.00 | 4,789,603,151.65 | 639,021,998.78 | 328,542,995.36 | 1,471,895,100.00 | 23,131,570,801.94 | 30,554,485,150.17 | |||||
| Plus: adjustments for changes in accounting policies | ||||||||||||
| Adjustments for correction of accounting | ||||||||||||
| errors in prior year | ||||||||||||
| Others | ||||||||||||
| 2. Balance as at January 1 of the current year | 1,471,895,100.00 | 4,789,603,151.65 | 639,021,998.78 | 328,542,995.36 | 1,471,895,100.00 | 23,131,570,801.94 | 30,554,485,150.17 | |||||
| 3.Increases/decreases in the current period (“-” for decreases) | 92,669.00 | 389,704,729.95 | -22,278,388.19 | -268,029,428.04 | 92,669.00 | 5,044,801,794.48 | 5,188,940,822.58 | |||||
| (1) Other comprehensive income | -251,813,774.83 | 11,247,827,134.30 | 10,996,013,359.47 | |||||||||
| (2) Capital contributed or reduced by owners | 92,669.00 | 389,476,903.94 | -22,278,388.19 | 411,847,961.13 | ||||||||
| Capital contributions by owners | 92,669.00 | 8,198,055.74 | 8,290,724.74 | |||||||||
| Capital contributions by other equity instruments holders | ||||||||||||
| Amounts of share-based payments recognized in owners' equity | 381,278,848.20 | -30,569,112.93 | 411,847,961.13 | |||||||||
| Others | ||||||||||||
| (3) Profit distribution | 92,669.00 | -6,219,240,993.03 | -6,219,148,324.03 | |||||||||
| Withdrawal of surplus reserves | 92,669.00 | -92,669.00 | ||||||||||
| Profit distributed to owners (or | -6,219,148,324.03 | -6,219,148,324.03 |
| shareholders) | ||||||||||||
| Others | ||||||||||||
| (4) Internal carry-forward of owners' equity | -16,215,653.21 | 16,215,653.21 | ||||||||||
| Conversion of capital reserves into paid-in capital | ||||||||||||
| Conversion of surplus reserves into paid-in capital | ||||||||||||
| Surplus reserves offsetting losses | ||||||||||||
| Carry-forward of retained earnings from changes in defined benefit plans | ||||||||||||
| Carry-forward of retained earnings from other comprehensive income | -16,215,653.21 | 16,215,653.21 | ||||||||||
| Others | ||||||||||||
| (5) Special reserves | ||||||||||||
| Withdrawal for the period | ||||||||||||
| Use for the period | ||||||||||||
| (6) Others | 227,826.01 | 227,826.01 | ||||||||||
| 4. Balance as at 31 December of the | 1,471,987,769.00 | 5,179,307,881.60 | 616,743,610.59 | 60,513,567.32 | 1,471,987,769.00 | 28,176,372,596.42 | 35,743,425,972.75 |
currentyear
For the year ended 31 December 2022
Unit：CNY
| Item | Year 2022 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less：Treasury stock | Other Comprehensive Income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equity | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| 1. Balance as at 31 December of last year | 1,464,752,476.00 | 3,739,666,108.27 | 167,572,013.86 | 1,464,752,476.00 | 18,872,792,775.01 | 25,709,535,849.14 | ||||||
| Plus: adjustments for changes in accounting policies | ||||||||||||
| Adjustments for correction of accounting errors in prior year | ||||||||||||
| Others | ||||||||||||
| 2. Balance as at January 1 of the current year | 1,464,752,476.00 | 3,739,666,108.27 | 167,572,013.86 | 1,464,752,476.00 | 18,872,792,775.01 | 25,709,535,849.14 | ||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 7,142,624.00 | 1,049,937,043.38 | 639,021,998.78 | 160,970,981.50 | 7,142,624.00 | 4,258,778,026.93 | 4,844,949,301.03 | |||||
| (1) Other comprehensive income | 160,970,981.50 | 9,039,839,957.48 | 9,200,810,938.98 | |||||||||
| (2) Capital contributed or reduced by owners | 7,142,624.00 | 1,049,937,043.38 | 639,021,998.78 | 418,057,668.60 | ||||||||
| Capital contrib | 7,142,6 | 654,14 | 661,28 | |||||||||
| utions by owners | 24.00 | 1,649.18 | 4,273.18 | |||||||||
| Capital contributions by other equity instruments holders | ||||||||||||
| Amounts of share-based payments recognized in owners' equity | 395,795,394.20 | -22,262,274.40 | 418,057,668.60 | |||||||||
| Others | ||||||||||||
| (3) Profit distribution | 7,142,624.00 | -4,781,061,930.55 | -4,773,919,306.55 | |||||||||
| Withdrawal of surplus reserves | 7,142,624.00 | -7,142,624.00 | ||||||||||
| Profit distributed to owners (or shareholders) | -4,773,919,306.55 | -4,773,919,306.55 | ||||||||||
| Others | ||||||||||||
| (4) Internal carry-forward of owners' equity | ||||||||||||
| Conversion of capital reserves into paid-in capital | ||||||||||||
| Conversion of surplus reserves into paid-in capital | ||||||||||||
| Surplus reserves offsetting losses | ||||||||||||
| Carry-forward of retained earning |
| s from changes in defined benefit plans | ||||||||||||
| Carry-forward of retained earnings from other comprehensive income | ||||||||||||
| Others | ||||||||||||
| (5) Special reserves | ||||||||||||
| Withdrawal for the period | ||||||||||||
| Use for the period | ||||||||||||
| (6) Others | ||||||||||||
| 4. Balance as at 31 December of the current year | 1,471,895,100.00 | 4,789,603,151.65 | 639,021,998.78 | 328,542,995.36 | 1,471,895,100.00 | 23,131,570,801.94 | 30,554,485,150.17 |
3. Company Profile
3.1 Company Overview
Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Company" or "the Company"), formerly known asLuzhou City Qu Liquor Factory and Luzhou Laojiao Distillery in Sichuan Province. It was established inMarch 1950 on the basis of 36 brewing workshops from the Ming and Qing dynasties. On 20September 1993, Luzhou Laojiao brewery established a joint-stock limited company with fund-raisingexclusively from its operational assets. On 25 October 1993, the public offering of shares was approvedby Sichuan Provincial People's Government and CSRC with two documents of ChuanFuHan (1993)No.673 and FaShenZi (1993) No.108. After the offering, the total share capital was 86,880,000 shares,which were listed and traded in Shenzhen stock exchange on 9 May 1994.
As the end of 31 December 2004, the Company's total share capital reached 841,399,673 shares aftermultiple rights issues, among which the controlling shareholder, State Assets Management Bureau ofLuzhou (later renamed as State-owned Assets Supervision and Administration Commission of Luzhou,hereinafter referred to as "SASAC of Luzhou") held 585,280,800 shares of the Company, with ashareholding ratio of 69.56%.
On 27 October 2005, the Company implemented the non-tradable share reform. After the
implementation, the total share capital remained unchanged, and the shareholding ratio of SASAC ofLuzhou decreased from 69.56% to 60.43%.
In November 2006, the Company implemented private placement, and the total share capital increasedfrom 841,399,673 shares to 871,399,673 shares. The shareholding ratio of SASAC of Luzhoudecreased from 60.43% to 58.35%.
As the end of 27 February 2007, SASAC of Luzhou sold 42,069,983 shares of the Company, and afterthe sale, it still held 466,375,156 shares of the Company, with its shareholding ratio reduced to 53.52%.
On 19 May 2008, the Company increased 522,839,803 shares of capital stock resulting from capitalreserve and undistributed profits transferred to increase capital stock. After the implementation, the totalshare capital reached 1,394,239,476 shares, among which, SASAC of Luzhou held 746,200,250 sharesof the Company, and the shareholding ratio was still 53.52%.
On 3 September 2009, the 300,000,000 shares and the 280,000,000 shares held by SASAC of Luzhouwere separately transferred to Luzhou Laojiao Group Co., Ltd. (hereinafter referred to as the "LaojiaoGroup") and Luzhou XingLu Investment Group Co., Ltd. (hereinafter referred to as the "Xinglu Group").After the transfer, Laojiao Group, Xinglu Group, and SASAC of Luzhou respectively held 300,000,000shares, 280,000,000 shares and 166,200,250 shares. So far, Laojiao Group became the first majorityshareholder and SASAC of Luzhou was the actual controller.
From 6 June 2012 to 20 November 2013, the first and second phases of the Company's equityincentive plan were exercised. After the exercise, the total share capital of the Company was changedto 1,402,252,476 shares.
On 10 April 2014 and 18 July 2016, SASAC of Luzhou transferred 81,088,320 shares and 84,000,000shares to Laojiao Group and Xinglu Group respectively. In addition, Laojiao Group has increased itsequity stake through the secondary market of 13,137,100 shares. So far, Laojiao Group, Xinglu Groupand SASAC of Luzhou held 394,225,489 shares, 365,971,142 shares and 1,111,930 sharesrespectively, with the shareholding ratios of 28.11%, 26.10% and 0.08% respectively.
On 23 August 2017, the Company issued CNY 62,500,000 ordinary shares (A shares) privately, raisinga total capital of CNY 3,000,000,000. After the additional issuance, the total capital stock of theCompany was changed to 1,464,752,476 shares. In addition, from 2017 to 2018, Laojiao Groupdecreased 13,137,100 shares that were increased through the secondary market from April 2014 toDecember 2015. After share reduction, Laojiao Group, Xinglu Group and SASAC of Luzhou held381,088,389 shares, 365,971,142 shares and 1,111,930 shares respectively, with the shareholdingratios of 26.02%, 24.99% and 0.08% respectively. Laojiao Group still was the first majority shareholderand SASAC of Luzhou still was the actual controller.
In February 2022, the registration of 6,862,600 shares of the Restricted Share Incentive Plan grantedby the Company for the first time were completed; in September 2022, the Company granted 342,334shares of the Restricted Share Incentive Plan for the second time; in September 2022, with seven
awardees no longer eligible, the Company decided to repurchase and retire the 62,310 restrictedshares of them which had been granted but not lifted from restricted sales; in December 2022, theCompany granted 92,669 shares of the Restricted Share Incentive Plan for the third time; so far, theabove grant and repurchase of the Restricted Share Incentive Plan had all been registered and the totalshares of the Company changed to 1,471,987,769 shares. The grant and repurchase of the RestrictedShare Incentive Plan caused no changes in the controlling shareholders and the actual controller of theCompany.
3.2 Registered address of the Company, company type, and headquarter addressRegistered address and headquarter address of the Company are located in Sichuan Luzhou LaojiaoSquare and company type is other incorporated company (Listed).
3.3 Business nature of the Company and main business activityIndustry of the Company is the baijiu subdivision industry of the liquor and wine, beverage and refinedtea production industry.The main activity are research and development, production and sales of “National Cellar1573”,”Luzhou Laojiao” and other baijiu series.The main products are: “National Cellar 1573 Series”, ”Century-old Luzhou Laojiao JiaolingSeries” , ”Luzhou Laojiao Tequ”, ”Touqu”, ”Hey Guys” and other baijiu series.
3.4 The name of the controlling shareholder and the ultimate substantive controller
The controlling shareholder is Luzhou Laojiao Group Co., Ltd.; the ultimate substantive control isSASAC of Luzhou.
3.5 Approval and submission of the financial report and its dateThe financial report is approved and submitted by the board of directors of the Company on 25 April2024.
4. Basis of preparation of financial statements
4.1. Basis of preparation of financial statements
The Company has prepared its financial statements on a going concern basis, and the preparation isbased on actual transactions and events in compliance with Accounting Standards for BusinessEnterprises and relevant guidance and explanation (the following called the ASBE) issued by Ministry ofFinance, and Rules on Company Information Disclosure and Preparation of Publicly Issued SecuritiesNo.15- General Rules on Financial Reporting Rules (2023 Revision) issued by CSRC.
4.2. Going concern
The Company’s business activities have adequate financial support. Based on the current information
obtained by the Company, comprehensively considering factors such as macro-policy risk, marketoperation risk, current or long-term profitability, debt repayment ability of the Company, as well as itsresource of financial support, the Company believes that it is reasonable to prepare the financialstatements on a going concern basis and there are no events or situations resulting in significantdoubts over going concern for at least 12 months.
5. Significant accounting policies and accounting estimatesThe Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
5.1 The declaration about compliance with ASBE
The financial statements of the Company have been prepared in accordance with ASBE, and presenttruly and completely, the financial position and the Company’s and results of operations, changes inshareholders’ equity and cash flows. In addition, in all material respects, the financial statements of theCompany comply with disclosure requirements of the financial statements and their notes inaccordance with Rules on Company Information Disclosure and Preparation of Publicly IssuedSecurities No.15- General Rules on Financial Reporting Rules revised by CSRC in 2023.
5.2 Accounting period
The Company adopts the calendar year as its accounting year, i.e. from 1st January to 31st December.
5.3 Business Cycle
The Company’s business cycle is 12 months.
5.4 Functional currency
The Company has adopted China Yuan (CNY) as functional currency.
5.5 Methods for determining materiality standards and selection criteria?Applicable □ N/A
| Item | Materiality standard |
| Material receivables withdrawal of bad debt provision separately accrued Material bad debt provision recovered or reversed in accounts receivables Significant write-off of accounts receivables Significant prepayments aging over one year, accounts payable, contract liabilities and other payables | The carrying balance at the end of the Reporting Period ≥ CNY 5 million |
| Material construction in progress | Single project under construction with a budget exceeding CNY 150 million and a total amount accounted for the current period exceeding CNY 50 million |
| Material overseas operating entity | The overseas operating entities' external revenue accounts for ≥ 3% of the consolidated operating revenue, and the total profit accounts for ≥ 0.5% of the consolidated total profit |
| Material non-wholly-owned subsidiary | The revenue of non-wholly-owned subsidiaries accounts for ≥ 3% of the consolidated operating revenue, and the total profit accounts for ≥ 0.5% of the consolidated total profit |
| Significant associated enterprise | The book value of long-term equity investments in associated enterprises accounts for ≥ 3% of the total assets in the consolidated financial statements |
5.6 The accounting treatment of business combinations involving enterprises undercommon control and business combinations not involving enterprises undercommon control
(1) Business combination under common control
Assets and liabilities obtained by the Company from the combine through business combination undercommon control shall be measured at the book value as stated in the consolidated financial statementsof ultimate controlling party at the combination date. The share of the book value of the merged party’sowner’s equity in the consolidated financial statements is taken as the initial investment cost of long-term equity investments in individual financial statements. The capital reserve (stock premium or capitalpremium) is adjusted according to the difference between the book value of net asset acquired throughcombination and the book value of consideration paid for the combination (or total par value of sharesissued). If the capital reserve (stock premium or capital premium) is insufficient to offset, the retainedearnings shall be adjusted.
(2) Business combination not under common control
Assets paid, liabilities incurred or assumed and the equity securities issued as consideration forcombination shall be measured based on fair value on the acquisition date, the difference between fairvalue and its book value shall be included in current profit and loss. The Company shall recognize thedifference of the combination costs in excess of the fair value of the net identifiable asset acquired fromthe acquiree through combination as goodwill. After the review, if the combination costs are still in shortof the fair value of the net identifiable asset acquired from the acquiree through combination, includethe difference in the current profit and loss.Fees, commissions, and other transaction expenses paid on issuance of equity securities ascombination consideration in the business combination shall be included in the initial measurementamount of equity securities.
5.7 Criteria for judging control and preparation of consolidated financial statements
(1) Consolidated Financial Statement Scope
The scope of the Company’s consolidated financial statements is based on control, and all subsidiariescontrolled are included in the consolidation scope of the consolidated financial statements.
(2) Consolidation procedures
The consolidated financial statements are based on the financial statements of the Company and itssubsidiaries, and are prepared by the parent company with other relevant information. When preparingconsolidated financial statement, the Company considers the Group as an accounting entity, adoptsunified accounting policies, and applies the requirements of ASBE related to recognition, measurementand presentation to reflect the Group’s financial position, operating results and cash flows.
All the subsidiaries within the consolidation scope of consolidated financial statements shall adopt thesame accounting policies and accounting periods as those of the Company. If the accounting policies oraccounting periods of a subsidiary are different from those of the Company, the financial statements ofthe subsidiary, upon preparation of consolidated financial statements, shall be made necessaryadjustment based on its own accounting policies and accounting periods of the Company. Forsubsidiaries acquired from the business combination not under common control, the financialstatements shall be adjusted on the basis of the fair value of identifiable net assets on the date ofpurchase. For the subsidiary acquired from the business combination under common control, its assetsand liabilities (including the goodwill formed by the acquisition of the subsidiary by the ultimatecontrolling party) shall be adjusted on the basis of the book value in the consolidated statements of theultimate controlling party.
The portion of a subsidiary’s equity, the current net profit and loss of subsidiaries, and the currentcomprehensive income attributable to non-controlling interests shall be separately presented as non-controlling interests in consolidated balance sheet within owners' equity, below the net profit line itemand below the total comprehensive income line item in the consolidated income statement respectively.When the amount of current loss attributable to non-controlling shareholders of a subsidiary exceedsthe balance of the non-controlling shareholders’ portion in the opening balance of owner's equity of thesubsidiary, the excess shall be allocated against the non-controlling interests.
Acquisition of subsidiaries or businessDuring the reporting period, if the Company acquires subsidiaries from the business combination undercommon control, the opening balance in the consolidated balance sheet shall be adjusted. The income,expenses and profits of the newly acquired subsidiaries from the beginning to the end of the reportingperiod shall be included in the consolidated income statement. The cash flows of the newly acquired
subsidiaries from the beginning to the end of the reporting period shall be included in the consolidatedstatement of cash flows. At the same time, the relevant items of the comparative information shall beadjusted as the combined entity existed since the control point of the ultimate controlling party.
If the Company can control the investee from the business combination under common control due toadditional investment or other reasons, the parties involved in the combine shall be deemed to adjust inthe current state when the ultimate controlling party starts to control them. For the equity investmentbefore obtaining control of the investee, the recognized relevant profit or loss and other comprehensiveincome and other changes in net assets between the later of acquisition date of previous equity and thedate on which both the investor and the investee are under common control and the combination dateshall respectively write-down the beginning retained earnings or current profits and losses during theperiod of comparative information.
During the reporting period, if the Company acquires subsidiaries from the business combination notunder common control, the opening balance in the consolidated balance sheet shall not be adjusted.The income, expenses and profits of the newly acquired subsidiaries from the acquisition date to theend of the reporting period shall be included in the consolidated income statement. The cash flows ofthe newly acquired subsidiaries from the acquisition date to the end of the reporting period shall beincluded in the consolidated statement of cash flows.
When the Company becomes capable of exercising control over an investee not under common controldue to additional investment or other reasons, the Company shall re-measure the previously held equityinterests to its fair value on the acquisition date, and the difference shall be recognized as investmentincome. When the previously held equity investment is accounted for under equity method, any othercomprehensive income previously recognized and other equity changes (excluding othercomprehensive, net profit and loss and profit distribution ) in relation to the acquiree’s equity changesshall be transferred to profit and loss for the current period when acquisition took place, except for othercomprehensive income resulting from changes in net liabilities or net assets due to re-measurement ofdefined benefit plan by investee.
Disposal of subsidiaries and businessGeneral treatmentsDuring the reporting period, if the Company disposes subsidiaries, the income, expenses and profits ofthe newly disposed subsidiaries from the beginning to the disposal date shall be included in theconsolidated income statement. The cash flows from the beginning to the disposal date shall beincluded in the consolidated statement of cash flows.
In case of loss of control over the investee due to partial disposal of the equity investment or otherreasons, the Company shall re-measure the remaining equity investment at its fair value at the date ofloss of control. The amount of the consideration obtained from the disposal of the equity and the fairvalue of the remaining equity, minus the net asset shares calculated continuously from the acquisitiondate based on the previous shareholding proportion and the goodwill, the difference shall be included inthe investment income of the period when the control is lost. Other comprehensive income related tothe former subsidiary’s equity investment of or other changes in owners' equity excluding net profit andloss, other comprehensive income and profit distribution shall be transferred to investment income forthe current period when control is lost. Other comprehensive income resulting from changes in netliabilities or net assets due to re-measurement of defined benefit plan by investee is excluded.
Disposal of subsidiaries by stepIf the Company loses control of a subsidiary is through multiple transactions by steps, the terms,conditions and economic impact of the disposal transaction shall be considered. When one or more ofthe following conditions may indicate that multiple transactions should be treated as a package oftransactions for accounting treatment:
a.These arrangements were entered into at the same time or in contemplation of each other;b.These arrangements work together to achieve an overall commercial effect;c.The occurrence of one arrangement depends on the occurrence of at least one other arrangement;d.One arrangement alone is not economically justified, but it is economically justified when consideredtogether with other arrangements
If the transactions of the disposal of the equity investment of the subsidiary until the loss of controlbelong to a package transaction, the Company shall account for as a transaction; However, thedifference between each disposal consideration received and the corresponding proportion of thesubsidiary’s net assets before the loss of control shall be recognized as other comprehensive income inthe consolidated financial statements and transferred into the profit and loss of the current period whenthe control is lost.
If the transactions from the disposal of the equity investment of the subsidiary to the loss of control arenot considered as a package transactions, the accounting treatment shall be conducted according tothe relevant policies on the partial disposal of the equity investment of the subsidiary where control isretained before the loss of control. When the control is lost, the disposal shall be accounted foraccording to the general treatment.
Purchase of non-controlling interestsThe difference between the increase in the cost of long-term equity investment result from acquisition of
non-controlling shareholders and the share of net assets of the subsidiary calculated continuously fromthe acquisition date or combination date based on newly shareholding proportion shall be adjusted toequity (share) premium of capital reserves in the consolidated balance sheet. If the capital reserve isinsufficient, any excess shall be adjusted against retained earnings.
Partial disposals of equity investment in subsidiaries without loss of controlWhen the Company disposes of a portion of a long-term equity investment in a subsidiary without lossof control, the difference between disposal consideration and net assets of the subsidiary calculatedcontinuously since the acquisition date or the combination date related to the disposal of long-termequity investment shall be adjusted to equity (share) premium of capital reserves in the consolidatedbalance sheet. If the capital reserve is insufficient, any excess shall be adjusted against retainedearnings.
5.8 Classification of joint venture arrangements and the accounting treatmentmethod of common operation
(1) Classification of joint venture arrangements
A joint arrangement is classified as either a joint operation or a joint venture according to the structure,legal form, agreed terms and other facts and conditions of a joint arrangement. A joint arrangement thatis structured through a separate vehicle is usually classified as a joint venture. However, when a jointarrangement provides clear evidence that it meets any of the following requirements and complies withapplicable laws and regulations as a joint operation:
a. The legal form of the joint arrangement indicates that the parties that have joint control have rights tothe assets, and obligations for the liabilities, relating to the arrangement.b. The terms of the joint arrangement specify that the parties that have joint control have the rights tothe assets, and the obligations for the liabilities, relating to the arrangement.c. Other facts and circumstances indicate that the parties that have joint control have rights to theassets, and the obligations for the liabilities, relating to the arrangement.The parties that have joint control have rights to substantially all of the output of the arrangement, andthe arrangement depends on the parties that have joint control on a continuous basis for settling theliabilities of the arrangement.
(2) Accounting by parties of a joint operator
A joint operator shall recognize the following items in relation to its interest in a joint operation, andaccount for them in accordance with relevant accounting standards:
a. Its solely-held assets, and its share of any assets held jointly;b. Its solely-assumed liabilities, and its share of any liabilities incurred jointly;c. Its revenue from the sale of its share of the output arising from the joint operation;
d. Its share of the revenue from sale of the output by the joint operation; ande. Its solely-incurred expenses and its share of any expenses incurred jointly.
The Company shall only recognize the portion of the profit and loss attributable to other participants inthe joint venture, resulting from investment or sale of assets to the joint venture by the Company(excluding those assets constituting the business), prior to the sale of such assets to a third party. TheCompany shall fully recognize impairment loss when there is any impairment loss of invested or soldassets occurring in accordance with the ASBE No.8-Asset Impairment. The Company shall onlyrecognize the part of the profit and loss attributable to other participants in the joint venture beforeselling the assets and other assets purchased from the joint venture (excluding those assetsconstituting the business) to a third party. When the impairment loss of the purchased assets is inaccordance with the ASBE No.8-Asset Impairment, the Company shall recognize such lossesaccording to its share. When the Company does not have common control over the joint venture, if theCompany enjoys the assets related to the joint venture and assumes the liabilities related to the jointventure, the accounting treatment shall be conducted according to the above principles. Otherwise, theaccounting treatment shall be conducted in accordance with the relevant accounting standards.
5.9 Cash and cash equivalents
When preparing the cash flow statement, the Company recognizes cash on hand and deposits that canbe readily withdrawn on demand as cash. Cash equivalents are the Company’s short-term (due within 3months from purchase date), highly liquid investments that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of changes in value. Restricted bank deposits are notrecognized as cash and cash equivalents in the cash flow statement.
5.10 Foreign currency transactions and translation of foreign currency statements
(1) Foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in theforeign currency shall be translated into the amount in CNY currency at the spot exchange rate of thetransaction date. For the monetary items of foreign currencies, the translation is done according to spotrate of the balance sheet date. The exchange difference generated from the difference of spot rate ofthe current balance sheet date and the time of initial recognition of a foreign currency or the previousbalance sheet date is charged to the profit or loss of the current period except that the exchangedifference generated from foreign currency borrowings relating to assets of which the acquisition orproduction satisfies the capitalization conditions is capitalized.Non-monetary items measured at fair value that is reflected in foreign currency at the end of the period,the Company shall firstly translate the foreign currency into the amount in functional currency at thespot exchange rate on the date when the fair value is determined, and then compare it with the originalfunctional currency amount. Difference between the translated functional currency amount and the
original functional currency amount is treated as profit or loss from changes in fair value (includingchanges in exchange rate) and is recognized in current profit and loss. If there is a non-monetary itemof available-for-sale financial assets, the differences are recorded into other comprehensive income.
(2) Translation of foreign currency statements
Assets and liabilities in the balance sheets shall be translated at the spot exchange rates on balancesheet date. Shareholders’ equity items, except for the item of "undistributed profits", are translated atthe spot exchange rates on the dates when the transactions occur. Revenue and expense items in theincome statement are translated at the spot exchange rates on the dates when the transactions occuror at the exchange rate determined in a systematical and reasonable method and similar to the spotexchange rate on the day when the transactions occur. Differences arising from the above translationsof foreign currency financial statements are separately listed under other comprehensive income in theconsolidated balance sheet. If the overseas business is partly disposed of, the foreign currencyfinancial statements exchange difference shall be calculated in proportion to the percentage of disposaland transferred to gain or loss on disposal for the current period.Foreign currency cash flow and cash flow of foreign subsidiaries shall be translated at approximateexchange rate of spot rate on the date of cash flow.
5.11 Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financialliability or equity instrument of another entity. When the Company becomes a party to a financialinstrument contract, the related financial asset or financial liability should be recognized.
(1) Classification, recognition and measurement of financial assets
Based on the business model of financial asset management and the contract cash flow characteristicsof financial assets, the Company classifies financial assets into: financial assets measured at amortizedcost; financial assets measured at fair value with their changes included into other comprehensiveincome; and financial assets measured at fair value with their changes included into currentprofits/losses.
At the initial recognition, financial assets are measured at fair value. For financial assets measured atfair value with their changes included into current profits/losses, the expenses involved in thetransaction are directly recorded into current profits/losses; for other financial liabilities, the expensesinvolved in the transaction are recorded into the initially recognized amount.
1) Financial assets measured at amortized cost
The business model in which the Company manages financial assets measured at amortized cost aims
to receive contract cash flow. Furthermore, the characteristics of the contract cash flow of such financialassets are consistent with basic borrowing and lending arrangements, which means that cash flowgenerated on a specific date serves only as payment for principal and interests based on the amount ofunpaid principal. The Company adopts the effective interest method for such financial interests,performs subsequent measurement of them at amortized cost, and includes the gains or losses fromderecognition, changes or impairment of them into current profits/losses.
2) Financial assets measured at fair value with their changes included into other comprehensive incomeThe business model in which the Company manages such financial assets both aims to receivecontract cash flow and for the purpose of sale. Furthermore, the characteristics of the contract cashflow of such financial assets are consistent with basic borrowing and lending arrangements. TheCompany measure such financial assets at fair value and include their changes into othercomprehensive income, but record impairment losses or gains, exchange gains or losses and interestincome calculated in the effective interest method into current profits/losses.
At the initial recognition, the Company may specify non-trading equity instrument investment as afinancial asset measured at fair value with its changes included into other comprehensive income andshould recognize the dividend income according to regulations; the specification is irrevocable oncemade. When the financial asset is derecognized, the cumulative gains or losses previously included intoother comprehensive income should be transferred into retained earnings.
3) Financial assets measured at fair value with their changes included into current profits/lossesFor financial assets other than the above financial assets measured at amortized cost and financialassets measured at fair value with their changes included into other comprehensive income, theCompany classifies them as financial assets measured at fair value with their changes included intocurrent profits/losses. In addition, at the initial recognition, the Company specifies partial financialassets as financial assets measured at fair value with their changes included into current profits/losses,in order to eliminate or substantially reduce accounting mismatch. For such financial assets, theCompany performs subsequent measurement using fair value and records changes in the fair valueinto current profits/losses.
(2) Classification, recognition and measurement of financial liabilities
At their initial recognition, financial liabilities are divided into financial liabilities measured at fair valuewith their changes included into current profits/losses and other financial liabilities. For financialliabilities measured at fair value with their changes included into current profits/losses, the expensesinvolved in the transaction are directly recorded into the current profits/losses. For other financialliabilities, the expenses involved in the transaction are recorded into the initially recognized value.
1) Financial liabilities measured at fair value with their changes included into current profits/lossesFinancial liabilities measured at fair value with their changes included into current profits/losses includetrading financial liabilities (including derivatives classified as financial liabilities) and the financialliabilities specified to be measured at fair value with their changes included into current profits/losses atthe initial recognition.
Trading financial liabilities (including derivatives classified as financial liabilities) are subsequentlymeasured at fair value, with changes in fair value recorded into current profits/losses, except for thoserelated to hedge accounting.
For those specified as financial liabilities measured at fair value with their changes included into currentprofits/losses, changes in the fair value of such liabilities caused by changes in the Company’s owncredit risk should be included into other comprehensive income. In derecognition of such liabilities,cumulative changes in their value caused by the Company’s own credit risk that have been recordedinto other comprehensive income should be transferred into retained earnings. Other changes in theirfair value should be recorded into current profits/losses. If treatment of the impact of the Company’sown credit risk changes of such financial liabilities in the above manner causes or expands accountingmismatch in profits/losses, the Company will include all gains or losses of such financial liabilities(including the amount of the impact of the Company’s own credit risk changes) into currentprofits/losses.
2) Other financial liabilities
Financial liabilities other than those formed from the transfer of financial assets not meetingderecognition conditions or continuous involvement into transferred financial assets and those outsidefinancial guarantee contracts are classified as financial liabilities measured at amortized cost. Suchfinancial liabilities should be subsequently measured at amortized cost and the gains or losses fromderecognition or amortization should be included into current profits/losses.
(3) Recognition basis and measurement method of transfer of financial assetsIf a financial asset meets any of the following conditions, it shall be derecognized: 1)The contractualright for collecting the cash flow of the financial asset has been terminated; 2)The financial asset hasbeen transferred and almost all the risks and remunerations in respect of the ownership of the financialasset has been transferred to the transferee; 3)The financial asset has been transferred, and althoughthe enterprise neither transfers nor retains almost all the risks and remunerations in respect of theownership of the financial asset, it has abandoned its control over the asset.
If the enterprise neither transfers nor retains almost all the risks and remunerations in respect of theownership of the financial asset and does not abandon its control over the asset, the involved financialasset shall be recognized according to the level of continuous involvement of the transferred financialasset and the relevant liabilities shall be recognized accordingly. The level of continuous involvement ofthe transferred financial asset refers to the level of risk faced by the enterprise due to changes in thevalue of the financial asset.
If the overall transfer of the financial asset meets the recognition conditions, the difference between thecarrying value of the transferred financial asset as well as the consideration received from the transferand the cumulative amount of fair value changes originally-recorded into other comprehensive incomesshall be recorded into the current profits/losses.
If partial transfer of the financial asset meets the recognition conditions, the carrying value of thetransferred financial asset shall be apportioned at the relative fair value between the derecognition andunderecognition part. The difference between the summation of the consideration received from thetransfer and the cumulative amount of fair value changes originally-recorded into other comprehensiveincomes that should be apportioned to the derecognition part and the apportioned aforementionedcarrying value shall be recorded into the current profits/losses.
For a financial asset sold with the right of recourse or with the transfer of the financial assetendorsement, the Company shall decide whether almost all the risks and remunerations in respect ofthe ownership of the financial asset should be transferred. If they are transferred, the financial assetshall be derecognized; if they are retained, the financial asset shall not be derecognized; if they areneither transferred nor retained, the Company will continue to decide whether the enterprise shouldretain control over the asset and perform the accounting treatment according to the principles stated inprevious paragraphs.
(4) Derecognition of financial liabilities
When the current obligation of a financial liability (or a part of it) is relieved, the Company willderecognize the financial liability (or the part of it). When the Company (borrower) signs an agreementwith a lender to replace an original financial liability in the form of bearing a new financial liability andthe contract terms for the new financial liability differ from those for the original in substance, theoriginal financial liability should be derecognized and the new one should be recognized. When theCompany makes substantial changes to the contract terms of an original financial liability (or a part of it),the original financial liability should be derecognized and a new financial liability should be recognizedaccording to the amended contract terms.
When a financial liability (or a part of it) is derecognized, the Company will include the differencebetween its carrying value and the consideration paid (including non-cash assets or liabilities borne thatare transferred out) into current profits/losses.
(5) Offsetting of financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial liabilities andmay execute the legal right currently and simultaneously, the Company plans to settle orsimultaneously encash the financial assets in net amounts and pay off the financial liabilities, thefinancial assets and the financial liabilities which are presented in the net amount after the mutual offsetin the balance sheet. Other than that, they shall be presented separately in the balance sheet withoutthe mutual offset.
(6) Method of determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant can receive for selling an asset or transferring aliability in an orderly transaction on the measurement date. For an existing financial instrument in anactive market, the Company adopts the quotations in the active market to determine its fair value.Quotations in the active market refer to prices that can be easily obtained from exchanges, brokers,industrial associations and pricing service institutions and represent the actual prices in the markettransactions happening in a fair trade. For a non-existing financial instrument in an active market, theCompany adopts the valuation technique to determine its fair value. The valuation technique includesreferences to familiar situations and the prices used by the parties voluntarily participating in the recentmarket transactions, as well as references to the present fair value of other financial instruments of thesame nature, discounted cash flow method and options pricing model. In the valuation, the Companyuses a valuation technique that is applicable in the current situation with sufficient data available andother information support, chooses input values that are consistent with the asset or liabilitycharacteristics considered by market players in related asset or liability transactions, and makemaximum effort to use related observable input values on a preferential basis. When it is unable orunfeasible to obtain related observable input values, unobservable will be used.
(7) Equity instruments
Equity instruments refer to the contracts that can prove the Company’s residual equity of assets afterthe deduction of all liabilities. The Company’s issuance (including refinancing), repurchase, sale orcancellation of equity instruments serve as the change treatment of equity. Transaction expensesrelated to the equity transactions are deducted from the equity. The Company does not recognizechanges in the fair value of equity instruments.
Dividends from the Company’s equity instruments distributed during the validity (including the “interests”
from instruments classified as equity instruments) are treated as profit distribution.
(8) Impairment of financial instruments
Based on the expected credit loss, the Company treats financial assets measured at amortized costand debt instrument investment measured at fair value with its changes included into othercomprehensive income by impairment and recognizes the provision for loss.
Credit loss means the difference between all contract cash flow discounted at the original effectiveinterest rate to be received according to contracts and all contract cash flow expected to be received,namely, the present value of all cash shortage. For a financial asset with credit impairment purchasedby or originated from the Company, it should be discounted by the effective interest rate after creditadjustment to the financial asset.
For accounts receivable that do not contain significant financing components, the Company adoptssimplified measurement to measure loss provisions according to the amount equivalent to the expectedcredit loss for the entire duration.
For a financial asset other than those using the above simplified measurement, the Company assesseson each balance sheet date whether its credit risk has substantially increased since the initialrecognition. If it has not and is in the first stage, the Company will measure the loss provision at theamount equivalent to the expected credit loss for the next 12 months and calculate the interest incomeaccording to the book balance and the effective interest rate; if it has substantially increased since theinitial recognition without credit impairment and is in the second stage, the Company will measure theloss provision at the amount equivalent to the expected credit loss for the entire duration and calculatethe interest income according to the book balance and the effective interest rate; if credit impairmenthas occurred since the initial recognition and is in the third stage, the Company will measure the lossprovision by the amount equivalent to the expected credit loss for the entire duration and calculate theinterest income according to the amortization cost and the effective interest rate. For financialinstruments with low credit risks on balance sheet dates, the Company assumes that their credit riskshave not substantially increased since the initial recognition.
The Company assesses expected credit losses of financial instruments based on individual and groupassessment. The Company considers the credit risk characteristics of different customers andassesses the expected credit losses of accounts receivable and other receivables based on accountage portfolio. When assessing expected credit losses, the Company considers reasonable and well-founded information on past matters, present conditions and forecast of future economic conditions.
When it no longer reasonably expects to recover all or part of the contract cash flow of financial assets,the Company will directly write down the book balance of such financial assets.
5.12 Notes receivable
The types of portfolios for which bad debt provisions are made according to the portfolios of credit riskcharacteristics and the basis for determining them:
Divide notes receivables into various portfolios according to common risk characteristics based on thecredit risk characteristics of acceptors and determine the accounting estimate policies of expectedcredit loss：
| Portfolio name | Provision method |
| Bank acceptance bill portfolio | The management evaluates that this type has low credit risk and its fixed bad debt provision ratio is 0%. |
| Trade acceptance portfolio | The provision for impairment is made according to the expected loss rate with the same portfolio classification of accounts receivables |
5.13 Accounts receivables
The types of portfolios for which bad debt provisions are made according to the portfolios of credit riskcharacteristics and the basis for determining them:
As for accounts receivables, regardless of whether there is a significant financing component, theCompany always measures the provision for loss based on the amount equivalent to the expectedcredit loss over the entire life, and the resulting increase or reversal of provision for loss shall beincluded in the current profit or loss as gains or losses on impairment. The accrual method is as follows:
(1) When there is objective evidence showing that an account receivable has incurred credit impairment,the Company shall make bad debt provision for the account receivable and recognize the expectedcredit loss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluatedat a reasonable cost, the Company shall divide the accounts receivables portfolio according to creditrisk characteristics and measure the expected credit loss based on portfolios:
| Portfolio name | Provision method |
| Risk portfolio | Expected credit loss |
| Other portfolio | No bad debt provision |
Other portfolio refers to the normal intercourse funds among the Company and businesses under thesame control, the recovery of which are controllable with no risks. Thus, no bad debt provision wasmade.The aging calculation method of credit risk characteristic portfolio based on aging:
The Company combines the accounts receivables classified as risk portfolio in accordance with similarcredit risk characteristics (aging), and calculates the expected credit loss through the exposure atdefault and expected credit loss rate over the entire life based on the current situation and prediction of
future economic situation consulting historical credit loss experience. The comparative table of thecredit loss rate is as follows:
| Aging | Expected loss provision rate % |
| Within 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
| 3-4 years | 40 |
| 4-5 years | 80 |
| Over 5 years | 100 |
The ageing of accounts receivable is calculated from the month in which the amounts are actuallyincurred.
5.14 Accounts receivables financing
The accounts receivables financing of the Company refer to the notes receivables measured at fairvalue through other comprehensive income on the balance sheet date. For more details, see Note 5.11Financial instruments.
5.15 Other receivables
The types of portfolios for which bad debt provisions are made according to the portfolios of credit riskcharacteristics and the basis for determining them:
As for other receivables, regardless of whether there is a significant financing component, the Companyalways calculates the expected credit loss through the exposure at default and expected credit loss ratein the next 12 months or over the entire life based on the current situation and prediction of futureeconomic situation consulting historical credit loss experience, and the resulting increase or reversal ofprovision for loss shall be included in the current profit or loss as gains or losses on impairment. Theaccrual method is as follows:
(1) When there is objective evidence showing that the other receivable has incurred credit impairment,the Company shall make bad debt provision for the other receivable and recognize the expected creditloss.
(2) When the information about the expected credit loss of a single financial asset cannot be evaluatedat a reasonable cost, the Company shall divide the other receivables portfolio according to credit riskcharacteristics and measure the expected credit loss based on portfolios.
| Portfolio name | Provision method |
| Risk portfolio | Expected credit loss |
| Other portfolio | No bad debt provision |
Other portfolio refers to the normal intercourse funds among the Company and businesses under thesame control, the recovery of which are controllable with no risks. Thus, no bad debt provision wasmade.
The aging calculation method of credit risk characteristic portfolio based on aging:
The Company combines the other receivables classified as risk portfolio in accordance with similarcredit risk characteristics (aging), and calculates the expected credit loss through the exposure atdefault and expected credit loss rate in the next 12 months or over the entire life based on the currentsituation and prediction of future economic situation consulting historical credit loss experience. Thecomparative table of the credit loss rate is as follows:
| Aging | Expected loss provision rate % |
| Within 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
| 3-4 years | 40 |
| 4-5 years | 80 |
| Over 5 years | 100 |
The ageing of other receivables is calculated from the month in which the amounts are actuallyincurred.
5.16 Contract assets
The Company presents contract assets or contract liabilities on the balance sheet according to therelationship between the fulfillment of its contract performance obligations and its customers’ payment.
Considerations that the Company has the right to collect for commodities transferred or servicesprovided to customers (and such right depends on other factors than time lapses) are presented ascontract assets. The Company presents the right possessed to collect consideration from customersunconditionally (only depending on the passing of time) as accounts receivable. Refer to “The methodof determining the expected credit loss of accounts receivables and accounting treatment method” forthe detail on the Company’s method of determining the expected credit loss of contract assets andaccounting treatment method.
5.17 Inventory
(1) Classification of inventory
Inventories are classified as: raw materials, goods in progress (including semi-finished goods), stockcommodities, and dispatched inventories.
(2) Measurement method of acquiring and dispatching inventories
The standard cost is used for daily accounting of raw materials, and the difference of material costshould be carried forward on a monthly basis to adjust the standard cost into the actual cost; The goodsin progress (including semi-finished goods) shall be accounted according to the actual cost, and the
weighted average method shall be used when they are received and delivered. The actual cost of theinventory at the end of the month above shall be taken as the standard cost, and the delivery shall bepriced according to the standard cost. At the end of the month, the standard cost of the inventory at theend of the month shall be adjusted into the actual cost through the cost-sharing difference.
(3) Determining criteria and method of provision for stock obsolescence
At the end of the period, inventory is measured according to the lower of cost and net realizable value.The difference between inventory cost and net realizable value is higher than the provision for stockobsolescence, which is recorded into current profit and loss. For inventories that are related to productranges produced and sold in the same district or used for the same or similar ultimate purpose and aredifficult to be measured separately from other inventories, the Company provides for stockobsolescence as a whole. For inventories that have large quantities but low value, the Companyprovides for stock obsolescence on a category basis.
The materials held for production shall be measured at cost if the net realizable value of the finishedproducts is higher than the cost. If a decline in the value of materials shows that the net realizable valueof the finished products is lower than the cost, the materials shall be measured at the net realizablevalue.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization method of packing materials and low-cost consumables
It is amortized in full at once.
5.18 Assets held for sale
(1) Determining criteria for non-current assets held for sale or disposal groupsThe Company shall classify the non-current assets or disposal group meeting the following conditionsinto the held-for-sale category: The assets (or disposal group) must be available for immediate sale inits present condition subject only to terms that are usual and customary for sales of such assets (ordisposal groups); Its sale must be highly probable.; The Company has already made a decision todispose the component and has a commitment from the purchaser, the transfer will be completed withinone year.
The non-current assets or disposal group acquired by the Company for resale shall be divided into theheld-for-sale category on the acquisition date if it meets the condition that "the sale is expected to be
completed within one year" and if it is likely to meet other conditions for the held-for-sale category withina short period (usually three months).
Due to one of the following reasons that the Company is unable to control, leading to the transactionsuncompleted with non-related party within one year, and the Company still commits to sale non-currentassets or disposal groups, it can continue to account for non-current assets or disposal groups as held-for-sale: the buyer or any other party accidentally set sale extension condition. The Company has totake action in time according to these conditions and the extension problem is expected to be solvedwithin one year; In rare cases, the Company has taken the necessary steps and re-satisfy the hold forsale category condition within the first year for the new circumstances which caused it unable tocomplete the sale of the non-current assets or disposal group within one year.
(2) Accounting treatment of non-current assets or disposal groups held for salea. Initial measurement and subsequent measurementWhen the Company measure a non-current asset or disposal group held for sale initially or re-measureat balance sheet date subsequently, the impairment loss should be recognized if the book value ishigher than fair value less costs to sell at the amount of the difference of these two in profit and loss,the provision for assets held for sale need to be recognized at the same time.
For the non-current assets or disposal groups divided into held-for-sale category on the acquisition date,they shall be measured as the lower of the initial measurement amount and the net amount afterdeducting the selling expenses from the fair value under the assumption that it is not divided into held-for-sale categories at the initial measurement. Except for the non-current assets or the disposal groupsobtained in the enterprise merger, the difference caused by the non-current assets or the disposalgroups taking the net amount after the fair value minus the selling expenses as the initial measurementamount shall be recorded into the current profit and loss.
For the impairment of disposal group, it should write off goodwill if existing, and then write down therelated assets proportionally.
Depreciation or amortization should cease for the non-current asset held for sale. Interest and othercharges on liabilities in the disposal groups held for sale continue to be recognized.
b. Accounting treatment of reversal of impairment lossIf the net amount of the non-current assets held for sale on the subsequent balance sheet dateincreases after the fair value minus the selling expenses, the amount previously written down shall bereversed, and the amount of the impairment loss recognized after being classified as the held-for-sale
shall be reversed, and the reversed amount shall be included in the current profit and loss. Theimpairment loss recognized before the classification of the held-for-sale shall not be reversed.
If the net amount of the disposal groups held for sale on the subsequent balance sheet date increasesafter the fair value deducting the selling expenses, the amount previously written down shall bereversed, and the amount of the impairment loss recognized as non-current assets after beingclassified as the held-for-sale shall be reversed, and the reversed amount shall be included in thecurrent profit and loss. The book value of the goodwill that has been written down and the impairmentlosses recognized before the classification of the held-for-sale shall not be reversed.
The subsequent reversed amount of the impairment loss recognized by the disposal groups held forsale shall be increased in proportion to the book value of non-current assets except goodwill in thedisposal groups.
c. Recognition criteria and presentation of discontinued operationsNon-current assets or disposal groups that are no longer divided into held-for-sale category or non-current assets are removed from disposal groups held for sale because of no longer meeting thecondition of classification of held-for-sale, they are measured at lower of the following two: book valuebefore being classified as the held-for-sale considering depreciation, amortization or impairment thatshould have been recognized under the assumption that it is not divided into held-for-sale categories;and recoverable amount.
When terminating the recognition of the non-current assets held for sale or the disposal groups, theunrecognized gains or losses shall be recorded into the current profit and loss.
5.19. Investments in debt obligations
N/A
5.20 Investments in other debt obligations
N/A
5.21 Long-term receivables
For more details, see Note 5.11 Financial instruments.
5.22 Long-term equity investment
(1) Judgment criteria of common control and significant influence
Common control on an agreement with other participants refers to the Company share control withother participants on an arrangement according to relevant conventions, which exists only whendecisions about the relevant activities require the unanimous consent of the parties sharing control.This arrangement belongs to joint venture. Where the joint venture arrangement is made by a separateentity and the Company is judged to have rights to the net assets of such a separate entity according tothe relevant conventions. Such a separate entity shall be regarded as a joint venture and accounted bythe equity method. If the Company is judged to be not entitled to the net assets of the separate entityaccording to relevant conventions, the separate entity shall be regarded as a joint venture and theCompany shall recognize the items related to the shares of the joint venture and perform accountingtreatment in accordance with relevant accounting standards.The term ‘significant influence’ refers to the power to participate in decision-making on the financial andoperating policies of the investee, but with no control or joint control over the formulation of thesepolicies. The Company judges that it has a significant impact on the invested entity through one or moreof the following situations and taking all the facts and circumstances into consideration:
a. Dispatch representatives to the board of directors or similar authorities of the investee.b. To participate in the financial and business policy making process of the investee.c. Significant transactions with the investee.d. Dispatch management personnel to the investee.e. To provide key technical data to the investee.
(2) Determination of the initial investment cost
a. Long-term equity investment resulting from combinationBusiness combination under common control：
For the long-term equity investments obtained by cash paid, non-monetary assets paid or assumedliabilities and the equity securities issued by the acquirer, on the merger date, the initial investment costof long-term equity investment shall be taken as the share of the owner's equity of the investee in thebook value of the final control party's consolidated financial statements. If the investee under businesscombination under common control can be controlled due to additional investment or other reasons, theinitial investment cost of long-term equity investment shall be determined on the merger date accordingto the share of the net assets of the investee in the book value of the final control party's consolidatedfinancial statements. The difference between the initial investment cost of the long-term equityinvestment on the merger date and sum of the book value of the long-term equity investment before themerger and the new consideration of acquiring shares on the merger date shall be recorded to adjustthe equity premium. If the equity premium is insufficient to be written down, the retained earnings shallbe written down.
Business combination not under common control：The Company takes the initial investment cost of
long-term equity investment as the merger cost determined on the purchase date. If the investee can becontrolled under business combination not under common control due to additional investment or otherreasons, the previous book value of the equity investment held plus the sum of the newly addedinvestment cost shall be taken as the initial investment cost calculated according to the cost method.
b. Long-term equity investment obtained by other meansFor the long-term equity investments obtained by cash paid, the Company recognizes their fair value asthe initial investment costs.
For the long-term equity investments acquired by the issue of equity securities, the initial investmentcost shall be the fair value of the equity securities issued.
For long-term equity investments obtained by non-monetary assets exchange, under the condition thatan exchange of non-monetary assets is of commerce nature and the fair value of assets exchangedcan be reliably measured, non-monetary assets traded in is initially stated at the fair value of the assetstraded out, unless there is conclusive evidence indicating that the fair value of the assets traded in ismore reliable; if the above conditions are not satisfied, initial investment costs of long-term equityinvestments traded in shall be recognized at the book value of the assets traded out and the relevanttaxes and surcharges payable.
For long-term equity investments obtained by debt restructuring, the Company recognizes the fair valueof shares of debt-for-equity swap as the initial investment costs.
(3) Subsequent measurement and recognition of profit and loss
a. Long-term equity investments measured under the cost methodLong-term equity investments that can control the investee are measured under the cost method. Forlong-term equity investments accounted at the cost method, except cash dividends or profits declaredbut not yet distributed which are included in the actual payments or the consideration actually paid forthe investment, the cash dividends or profits declared by the investee shall be recognized as theinvestment income irrespective of net profits realized by the investee before investment or afterinvestment.
b. Long-term equity investments measured under the equity methodFor the long-term equity investment which has joint control or significant influence over the investee, theequity method is adopted for accounting. For long-term equity investments measured at the equitymethod, if the initial investment costs are higher than the investor’s attributable share of the fair value ofthe investee’s identifiable net assets, no adjustment will be made to the initial costs of the long-term
equity investments; if the initial investment costs are lower than the investor’s attributable share of thefair value of the investee’s identifiable net assets, the difference shall be recognized in current profit andloss.
The Company shall, according to the shares of net profits and other comprehensive income realized bythe investee that shall be enjoyed or borne by the Company, recognize the profit and loss on theinvestments and adjust the book value of the long-term equity investments. When recognizing the netprofits and losses and other comprehensive income of the investee that the Company shall enjoy orbear, the Company shall make a recognition and calculation based on the net book profits and losses ofthe investee after appropriate adjustments. However, where the Company is unable to obtain therelevant information due to failure to reasonably determine the fair value of the investee’s identifiableassets, minor difference between the investee’s identifiable assets and the book value thereof or otherreasons, the profits or losses on the investments shall be directly calculated and recognized based onthe net book profits and losses of the investee. The Company shall calculate the part distributed fromcash dividends or profits declared by the investee and correspondingly reduce the book value of thelong-term equity investments. When recognizing the income from investments in associates and jointventures, the Company shall write off the part of incomes from internal unrealized transactions betweenthe Company and associates and joint ventures which are attributable to the Company and recognizethe profit and loss on investments on such basis. Where the losses on internal transactions betweenthe Company and the investee are impairment of related assets, full amounts of such losses shall berecognized. Profit and loss from internal unrealized transactions between the Company’s subsidiariesincluded into the combination scope and associates and joint ventures shall be written off according tothe above principles and the profit and loss on investments thereafter shall be recognized on such basis.
When the share of net loss of the investee attributable to the Company is recognized, it is treated in thefollowing sequence: Firstly, write off the book value of the long-term equity investments; where the bookvalue of the long-term equity investments is insufficient to cover the loss, investment losses arerecognized to the extent that book value of long-term equity which form net investment in the investeein other substances and the book value of long-term receivables shall be written off; after all the abovetreatments, if the Company still assumes additional obligation according to investment contracts oragreements, the obligation expected to be assumed should be recognized as provision and includedinto the investment loss in the current period. If the investee is profitable in subsequent accountingperiods, the Company shall treat the loss in reverse order against that described above after deductingunrecognized share of loss: i.e. write down the book value of the recognized provision, then restore thebook value of long-term interests which substantially form net investments in the investee, then restorethe book value of long-term investments, and recognize investment income at the same time.
5.23 Investment property
Measurement model of investment propertyCost modelMethod of depreciation or amortizationInvestment property is the property that is held to earn rent or capital appreciation or both and can bemeasured and sold separately. The Company’s investment property includes land use right already rent,land use right held for appreciation and then sold, and buildings already rent.
(1) Initial Recognition
When the Company can obtain the rental income or value-added income related to the investmentproperty and the cost of the investment property that can be measured reliably, the Company willinitially measure it according to the actual expenditure of purchase or construction:
The cost of the purchased investment property includes the purchase price and related taxes directlyattributable to the asset;The cost of self-built investment property consists of the necessary expenses incurred before the assetreaches the intended use condition;The cost of the investment property obtained by other means shall be recognized in accordance withrelevant accounting standards.
(2) Subsequent measurement
In general, the Company adopts the cost model to measure the follow-up expenditure of investmentproperty. The depreciation or amortization of investment property shall be carried out in accordancewith the accounting policies for the Company's fixed assets or intangible assets.
If there is solid evidence suggests that the investment property acquired can be measured at fair valuecontinuously and reliably, the Company can use fair value model for subsequent measurement. For theinvestment property measured at fair value model, the Company does not provide depreciation oramortization and adjusts its book value based on the fair value of investment property at the balancesheet date. The difference between the fair value and book value is recorded into current profit or loss.
(3) When the Company changes the use of investment property, the relevant investment property willbe transferred to other assets.
5.24. Fixed assets
(1) Recognition of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, providingservices, renting or business management with useful life exceeding one accounting year. Fixedassets are recognized when the following criteria are satisfied simultaneously: It is probable that theeconomic benefits relating to the fixed assets will flow into the Company; the cost of the fixed assetscan be measured reliably.
(2) Depreciation of fixed assets
| Category | Depreciation method | Estimated useful life (Year) | Estimated residual value rate (%) | Annual depreciation rate (%) |
| Buildings and Constructions | Straight-line method | 10－45 | 5% | 9.50－2.11 |
| Special equipment | Straight-line method | 5－35 | 5% | 19.00－2.71 |
| Universal equipment | Straight-line method | 4－25 | 5% | 23.75－3.80 |
| Transportation equipment | Straight-line method | 6 | 5% | 15.83 |
| Other equipment | Straight-line method | 4－16 | 5% | 23.75－5.94 |
Except for fixed assets still in use after full depreciation, the Company depreciates all fixed assets andcalculates the depreciation in the straight-line depreciation method.Based on the nature and use of fixed assets, the Company determines their service life andestimated net salvage value and reviews their service life, estimated net salvage value anddepreciation method at the end of the year. Changes in the service life, estimated net salvage valueand depreciation method of the same type of assets are treated as changes in accounting estimation.
(3) Impairment test method and impairment provision accrued method of fixed assetsAt the end of the period, the fixed assets shall be measured at the lower of the book value and therecoverable amount. If the recoverable amount of fixed assets is lower than the book value due to acontinuous decline in the market value, or technological obsolescence, damage, or long-term idleness,a provision for impairment of the fixed assets shall be made for the difference between the recoverableamount and the book value of individual fixed assets. If the recoverable amount of the individual assetis difficult to estimate, the Company will determine the recoverable amount of the asset group based on
the asset group to which the asset belongs. The impairment losses on fixed assets must not bereversed in subsequent accounting periods once recognized.
For fixed assets for which depreciation provision has been made, the depreciation rate and depreciationamount shall be remeasured according to the book value of the fixed assets (the original price of fixedassets minus accumulated depreciation and provision for impairment), and the remaining service life.
On the balance sheet date, the fixed assets shall be measured at the lower of the book value and therecoverable amount.
5. 25. Construction in progress
(1) Construction in progress refers to various construction and installation works carried out for theconstruction or repair of fixed assets, including the actual expenditure incurred in new construction,reconstruction and expansion, and the net value of fixed assets transferred from the reconstruction andexpansion projects.
(2) Construction in progress is accounted on an individual project basis with actual cost valuationmethod. The borrowing costs incurred before the projects reach the intended use condition shall beincluded in the project cost. The fixed assets shall be carried forward in the month when the project isqualified for acceptance and delivery for use. For those that have reached the intended use conditionbut have not yet completed the final account, from the date of reaching the intended use condition,according to the project budget, construction cost or the actual cost of the project, the cost transferredto the fixed assets shall be determined according to the estimated value, and the depreciation shall berecognized; After the completion of the final account, the original provisional value shall be adjustedaccording to the actual cost, but the amount of depreciation accrued shall not be adjusted.
(3) The loan interest and related expenses incurred during the construction period shall be capitalizedinto the cost of the construction in Progress.
(4) On the balance sheet date, the construction in progress is recognized at the lower of book value andrecoverable amount.
5. 26. Borrowing costs
(1) Scope of borrowing costs and its capitalization conditions
The Company’s borrowing costs capitalized during period of capitalization are relevant loan expensesdirectly attributable to the assets eligible for capitalization, including interest thereon, amortization ofdiscounts or premiums, ancillary expenses and exchange differences incurred from foreign currencyloan, etc.Borrowing costs are capitalized when the following three conditions are met simultaneously: ① theasset expenditure has occurred, ② the borrowing costs have occurred, ③ the purchase and
construction activities necessary to make the assets reach the intended use condition have started.
(2) Recognition of capitalized amounts
The capitalized amount of borrowing expenses is calculated as follows: As for special loan borrowed foracquiring and constructing or producing assets eligible for capitalization, borrowing costs of special loanactually incurred in the current period less the interest income of the loans unused and deposited inbank or return on temporary investment should be recognized as the capitalization amount of borrowingcosts. As for general loans used for acquiring and constructing or producing assets eligible forcapitalization, the interest of general loans to be capitalized should be calculated by multiplying theweighted average of asset disbursements of the part of accumulated asset disbursements in excess ofspecial loans by the capitalization rate of used general loans. During the period of capitalization, thecapitalized amount of interest of each accounting period shall not exceed the current actual interest ofthe relevant loans. Where there are discounts or premiums on loans, the amounts of interest for eachaccounting period should be adjusted taking account of amortizable discount or premium amounts forthe period by effective interest method. Auxiliary expenses incurred from special loans before theacquired or constructed assets eligible for capitalization reach the working condition for their intendeduse or sale should be capitalized when they incur and charged to the costs of assets eligible forcapitalization; those incurred after the acquired or constructed assets eligible for capitalization reach theworking condition for their intended use or sale should be recognized as costs according to theamounts incurred when they incur and charged to the current profit or loss.
(3) Recognition of capitalization rate
For a special loan for the purchase and construction of fixed assets, the capitalization rate is theinterest rate of the loan;For more than one special loan for the acquisition and construction of fixed assets, the capitalizationrate is a weighted average interest rate of these loans.
(4) Capitalization suspension of borrowing costs
If the acquisition and construction or production activities of assets eligible for capitalization areinterrupted abnormally and this condition lasts for more than three months, the capitalization ofborrowing costs should be suspended. The borrowing costs incurred during interruption are charged toprofit or loss for the current period, and the capitalization of borrowing costs continues when theacquisition and construction or production activities of the asset resume.
(5) Capitalization cessation of borrowing costs
Capitalization of borrowing costs should cease when the acquired and constructed or produced assetseligible for capitalization have reached the working condition for their intended use or sale. Borrowing
costs incurred after the assets eligible for capitalization have reached the working condition for theirintended use or sale should be recognized as the current profit and loss when they incur. If parts of theacquired and constructed or produced assets are completed separately but the assets cannot be usedor sold externally until overall completion, the capitalization of borrowing costs should cease at the timeof overall completion of the said assets.
5.27. Biological assets
N/A
5.28. Oil and gas assets
N/A
5. 29. Intangible assets
(1) Useful life and the basis for its determination, estimation, amortization methodology orreview proceduresIntangible assets refer to identifiable non-monetary assets that are owned or controlled by the Companywithout a physical form.Measurement methoda. Costs of intangible assets purchased include purchase price, related tax and expenses and otherexpenditure that can be distributed to the asset directly to reach its expected use.b. Intangible assets invested by investors shall be valued at the value agreed upon in the investmentcontract or agreement;c. Expenses on the research phase of internally researched and developed intangible assets shall beincluded in the current profit and loss when they incur; The expenditures incurred in the developmentstage of the internal research and development projects shall be recognized as intangible assets whenthe following conditions are met; otherwise, they shall be recorded into the current profit and loss whenthey incur.i. It is technically feasible to finish intangible assets for use or sale;ii. It is intended to finish and use or sell the intangible assets;iii. The usefulness of methods for intangible assets to generate economic benefits shall be proved,including being able to prove that there is a potential market for the products manufactured byapplying the intangible assets or there is a potential market for the intangible assets themselves orthe intangible assets will be used internally;iv. It is able to finish the development of the intangible assets, and able to use or sell the intangibleassets, with the support of sufficient technologies, financial resources and other resources.
v. The expenditure attributable to the intangible asset during its development phase can bemeasured reliably.d. If payment of the purchase price of intangible assets can be deferred and exceeds normal creditconditions, the purchase has the nature of finance in fact and cost of the intangible asset shall bedetermined on the basis of present value of the purchase price. The difference between the amountactually paid and the present value of the purchase price should be recorded into current profit or lossother than those should be capitalized during the credit period.
Useful life and the basis for its determination, estimation, amortization methodology or reviewproceduresFor intangible assets with limited useful life, amortization shall be carried out according to the straight-line method within the period that brings economic benefits to the enterprise. At the end of each period,the useful life and amortization method of intangible assets with limited service life shall be reviewed. Ifthere are differences with the original estimates, corresponding adjustments shall be made.Intangible assets whose useful life is uncertain shall be regarded as intangible assets if it is impossibleto foresee the term in which intangible assets bring economic benefits to the enterprise. Intangibleassets with uncertain useful life shall not be amortized during the holding period, and the life ofintangible assets shall be reviewed at the end of each period. If it is still uncertain after the review at theend of the period, the impairment test shall continue during each accounting period. At the end of eachperiod, the useful life of intangible assets with uncertain service life shall be reviewed.
Impairment testOn the balance sheet date, intangible assets are valued at the lower of book value and recoverableamount.
(2) The scope of research and development expenditure collection and the related accountingtreatmentThe R&D expenditure of the Company mainly include the materials consumed in the implementation ofR&D activities, salaries of R&D department employees, depreciation and amortisation of assets such asequipment and software used in research and development, R&D testing, R&D technical service fees,and licensing fees.The expenditures incurred in the development stage of the research and development projects shall berecognized as intangible assets when the following conditions are met; otherwise, they shall berecorded into the current profit and loss when they occur.a. It is technically feasible to finish intangible assets for use or sale;b. It is intended to finish and use or sell the intangible assets;
c. The usefulness of methods for intangible assets to generate economic benefits shall be proved,including being able to prove that there is a potential market for the products manufactured by applyingthe intangible assets or there is a potential market for the intangible assets themselves or the intangibleassets will be used internally;d. It is able to finish the development of the intangible assets, and able to use or sell the intangibleassets, with the support of sufficient technologies, financial resources and other resources.e. The expenditure attributable to the intangible asset during its development phase can be measuredreliably.Development expenditures that have been recorded into profit and loss in previous periods are notrecognized as assets in subsequent periods. The capitalized expenditure in the development stage islisted as development expenditure in the balance sheet, and it will be recorded into intangible assetsfrom the date when the project reaches its intended purpose.
5. 30. Long-term assets impairment
On the balance sheet date, the Company makes a judgment on whether there are signs of possibleimpairment of long-term assets. If there are impairment indicators of non-current assets, the Companyestimates the recoverable amount based on individual asset. If recoverable amount of individual assetis difficult to be estimated, the Company should recognize the recoverable amount of the asset groupwhich the individual asset belongs to.The recoverable amount is the higher of fair values less costs of disposal and the present values of thefuture cash flows expected to be derived from the asset.If the measurement result of recoverable amount shows that recoverable amount of the non-currentassets is less than its book value, the book value shall be written down to the recoverable amount, andthe amount written down shall be recognized as the impairment loss of assets, recorded into the currentprofit and loss, and the corresponding impairment provision of assets shall be made at the same time.Once impairment loss stated above is recognized, reversal is not allowed in the subsequent accountingperiods.After the recognition of the impairment loss, the depreciation or amortization expense of the impairmentasset shall be adjusted accordingly in the future period so as to systematically apportion the adjustedbook value of the asset (deducting the expected net salvage value) within the remaining service life ofthe asset.The Company should perform impairment test for goodwill and intangible assets with indefinite life atleast at each year end, no matter whether there is impairment indicator.Goodwill shall be combined with its related asset group or asset group portfolio so as to perform animpairment test. When the Company performs an impairment test on relevant asset group or assetgroup portfolio including goodwill, if there are signs of impairment, the Company shall firstly perform animpairment test on asset group or asset group portfolio excluding goodwill and calculate the
recoverable amount, and compare with the related book value, recognize the corresponding impairmentloss. Then, the Company performs an impairment test on relevant asset group or asset group portfolioincluding goodwill, and compares the book value of the relevant asset groups or asset group portfolio(including proportional book value of goodwill) with its recoverable amount. If the recoverable amount ofrelevant asset group or asset group portfolio is less than its book value, the Company shall recognizeimpairment loss of goodwill.
5. 31. Long-term deferred expenses
Long-term deferred expenses shall be initially measured according to the actual costs incurred. It isamortized using the straight-line method over the beneficial period. If it cannot benefit the followingaccounting period, the amortized value of the item that has not been amortized will be transferred to thecurrent profit and loss.
5. 32. Contract liabilities
The recognition method of contract liabilities: The Company presents contract assets or contractliabilities on the balance sheet according to the relationship between the fulfillment of its contractperformance obligations and its customers’ payment. Obligations to be fulfilled by the Company oftransferring commodities or providing services to customers, as the Company has received or shouldreceive customers’ considerations, are presented as contract liabilities.
5. 33. Employee benefits
(1) Accounting treatment method of short-term benefits
Short-term benefits are the benefits that the Company expects to pay in full within 12 months after thereporting period in which the employee provided relevant services, excluding the compensation foremployment termination. Accrued short term benefits will be recognized as liability during theaccounting period in which the employee is providing the relevant service to the Company. The liabilitywill be included in the current profit and loss or the relevant assets cost.
(2) Accounting treatment method of post-employment benefits
a. Defined contribution planThe defined contribution plan of the Company includes payments of basic pension and unemploymentinsurance calculated according to the local payment base and proportion. The amount shall be includedinto the profit and loss or the relevant assets cost for the accounting period in which the employeeprovides the service to the Company.b. Defined benefit planAccording to the formula determined by the expected accumulative projected unit credit method, the
Company will record the benefit obligation generated by the defined benefit plan belonging to the periodduring in which the employee provides the service into the current profit and loss or the relevant assetscost.The deficit or surplus resulting from the present value minus the fair value of the assets of a definedbenefit plan is recognized as a net liability or net asset of a defined benefit plan. If there is surplus in thedefined benefit plan, the net assets of the defined benefit plan shall be measured at the lower of thesurplus and the upper limit of assets of the defined benefit plan.All defined benefit plan obligations, including those expected to be paid within the twelve monthsfollowing the end of the annual reporting period in which the employee provides the service, arediscounted based on the market yield and high quality corporate bonds in an active market that matchthe duration and currency of defined benefit plan obligations on the balance sheet date.The service costs generated by the defined benefit plan and the net interest on net liabilities or netassets of the defined benefit plan are included in the current profit and loss or relevant assets cost;Changes in net liabilities or net assets generated by the re-measurement of the defined benefit plan areincluded in other comprehensive income and are not reversed to profit and loss in subsequentaccounting periods.At the time of settlement of the defined benefit plan, the settlement gains or losses shall be recognizedaccording to the difference between the present value of the obligations of the defined benefit plan andthe settlement price determined on the settlement date.
(3) Accounting treatment method of termination benefits
Employee benefits liabilities shall be recognized and included into profit or loss for the current period onthe earlier date of the two following circumstances:
a. When the Company is not able to withdraw the benefits from termination of employment orresignation persuasion unilaterally;b. When the Company recognizes costs and fees relevant to reforming the termination benefitspayment.As for the termination benefits that cannot be fully paid within 12 months after the end of the annualreport period, the Company shall choose an appropriate discount rate and record it into current profitand loss based on it.
(4) Accounting treatment method of other long-term employee benefits
Other long-term employee benefits are all employee benefits other than short-term benefits, post-employment benefits and termination benefits.Other long-term employee benefits provided by the Company to the employee that meet the conditionsof the defined contribution plan shall be treated in accordance with the same principles of the definedcontribution plan; If the conditions for defined benefits are met, net liabilities or net assets of other long-
term employee benefits shall be recognized and measured in accordance with the relevant principles ofthe defined benefits plan.
5. 34. Estimated liabilities
(1) Recognition criteria of estimated liabilities
If the contingent obligations meet the following conditions simultaneously, the Company shall recognizeit as an estimated liability:
This obligation is the Company's current obligation; the performance of this obligation is highly likely toresult in an outflow of economic benefits from the Company; The amount of the obligation can bemeasured reliably.
(2) Measurement method of estimated liabilities
The Company's estimated liabilities are initially measured in terms of the best estimate of theexpenditure of fulfilling the relevant current obligations.For determining the best estimate, the Company takes various factors into account such as the risk,uncertainty and time value of money related to contingencies. If the time value of money has asignificant impact, the best estimate is determined by discounting the relevant future cash outflows.The best estimate is processed as follows:
Where there is a continuous range (or range) of required expenditures and the probability of theoccurrence of various results within the range is same, the best estimate is determined according to themean of the middle value of the range, namely the mean value of the upper and lower limits.Where there is no continuous range (or range) of required expenditures, or where there is a continuousrange but the possibility of various outcomes within the range is different, if the contingencies involve asingle item, the best estimate is determined according to the most likely amount; If the contingenciesinvolve more than one item, the best estimate is calculated and determined according to variouspossible results and relevant probabilities.Where all or part of the expenses required for the liquidation of the estimated liabilities of the Companyare expected to be compensated by a third party, the amount of compensation shall be recognized asan asset when it is basically confirmed that it can be received, and the confirmed amount ofcompensation shall not exceed the book value of the estimated liabilities.
5. 35. Share-based payment
(1) The type of share-based payment
Share-based payment is classified as equity-settled share-based payment and cash-settled share-based payment.
(2) The method of determining the fair value of equity instruments
For equity-settled share-based payment related with employees, the equity instrument is measured atfair value. The cash-settled share-based payment shall be measured according to the fair value of theliabilities calculated and determined on the basis of shares or other equity instruments undertaken bythe Company.For the fair value of the stock option granted, the fair value is determined by using the stock optionpricing model, and the following factors are taken into account: the current price of the underlyingshares, the exercise price of the option, the risk-free interest rate within the period of the option, theoption life, and the expected volatility of the stock price.
(3) Recognition of the best estimate basis of instrument that can be exercisedFor the equity-settled share-based payment settled immediately after the grant, the fair value of theequity instrument shall be included in the relevant costs or expenses on the grant date, and the capitalreserve shall be increased accordingly. Grant date means the date on which the share-paymentagreement is approved.For the equity-settled share-based payment, in which the services during waiting period are completedand the performance conditions are met, in return for services of employees, on each balance sheetdate during waiting period, the current obtained service shall be included in the relevant costs orexpenses and the capital reserves in accordance with the fair value of the equity instruments on thegrant date, based on best estimate of the number of vested equity instruments, and the subsequentchanges in fair value shall not be recognized. On each balance sheet date during waiting period, theCompany makes the best estimate based on the latest available employee number change and othersubsequent information, and modifies the number of equity instruments for the estimated vesting. Onthe vesting date, the final expected number of vesting instruments is the same as the actual number ofvesting instruments.
(4) Relevant accounting treatment of implement, modification and termination of share-based paymentplanFor equity-settled share-based payment, no adjustments will be made to the recognized costs and totalowners' equity after the vesting date. On the vesting date, the Company shall recognize the sharecapital and the equity premium according to the exercise situation, and carry forward the capital reserverecognized in the waiting period.No matter how it modifies the terms and conditions of the granted equity instruments or it cancels thegranted equity instruments or its settlement, the equity instruments granted by the Company shall berecognized at fair value on the grant date and it measures obtained the corresponding services, unlessit cannot be vested because it cannot meet the vesting conditions of equity instruments (except marketconditions).
5.36. Other financial instruments such as preferred shares and perpetual bonds
N/A
5. 37. Revenue
Accounting policies for recognition and measurement of revenue disclosed by type ofbusiness
(1) Basic principles of revenue identification
The Company recognizes revenue when it has fulfilled the performance obligations under the contract,that is, when the customers obtain the control of relevant goods or services, at the transaction priceallocated to the performance obligations.Performance obligations refer to the Company's promise that it will transfer clearly distinguishablegoods or services to customers under the contract.Obtaining control of related goods refers to that customers can control the use of the goods and obtainalmost all the economic benefits from the goods.The Company will evaluate the contract on the contract start date, identify each individual performanceobligation contained in the contract, and judge whether each individual performance obligation will beperformed within a certain period of time or at a certain point in time. If one of the following conditions ismet, and the performance obligation is performed within a certain period of time, the Company willidentify revenue within a period of time according to the performance progress: a. The customers obtainand consume the economic profits while the Company performs the contract. b. The customers cancontrol the products under construction during the performance of the Company; c. The productsproduced during the performance of the Company cannot be replaced, and the Company has the rightto collect payment for the completed performance accumulated during the entire contract period.Otherwise, the Company will identify revenue when the customers obtain control rights of the relevantgoods or services.For the performance obligations performed within a certain period of time, the Company will apply theinput-output method to identify the appropriate performance progress based on the nature of the goodsand services. The input-output method is to identify the performance progress based on the value of thegoods that have been transferred to the customers to the customers. When the performance progresscannot be reasonably identified and the Company's incurred costs are expected to be compensated,the Company will identify the revenue according to the amount of the incurred costs until theperformance progress can be reasonably identified.
(2) The methods of revenue identification
The Company primarily sells baijiu, which involve performance obligations fulfilled at a certain point intime. For the recognition of the revenue of domestic products, the following conditions must be met:
The Company has delivered the products to the customer as per the contract, and the customer hasaccepted the goods; payment has been received or a receipt voucher has been obtained, and the
relevant economic benefits are likely to flow in; and control of the goods has transferred to the customer.The following requirements must be met to recognise the revenue of export products: The Companyhas declared the products according to the contract, obtained the bill of lading, received the payment orobtained the receipt voucher, and relevant economic benefits are likely to flow in, and control of thegoods has transferred to the customer. The following requirements must be met to recognise therevenue of sales through third-party platforms or company-owned websites: The sales platform isresponsible for delivering the goods to the customer, or the Company entrusts a logistics company todeliver the goods to the customer, and revenue is recognised upon receipt of the platform settlementstatement or upon delivery of the goods.
Different business models for the same type of business involve different revenue recognition andmeasurement methodsN/A
5.38 Contract costs
Contract costs comprise incremental costs incurred as the Company obtains a contract, and costs forcontract performance. Incremental costs incurred as the Company obtains a contract refer to thosecosts which will not incur without entering into a contract (such as sales commission). If it is expectedthat the costs are recoverable, the Company will recognize the costs incurred to obtain a contract asone form of assets. In case that the term of asset amortization is shorter than one year or one normaloperating cycle, the costs will be recognized as profit and loss of the current period after occurrence.
If the costs incurred from contract performance fall outside the inventory or the scope of otherenterprise accounting standards and satisfy all of the following conditions, the Company will recognizethe costs for contract performance as assets: a) The costs are directly related to one existing contractor contract that is expected to be obtained; b) The costs enrich the Company's resources for futurecontract performance (including continual fulfillment); c) The costs are estimated to be recovered.
Assets recognized from costs incurred to obtain a contract and costs for contract performance(hereinafter referred to as "assets related to contract costs") will be amortized based on the basis thesame with the income from commodities or services related to the assets, and will be recognized asprofit and loss of the current period. In case that the book value of assets related to contract costs ishigher than the difference of the two items below, the Company will set aside provisions for assetsimpairment to deal with the extra part, and recognize that part as impairment losses: a) Estimatedresidual consideration to be obtained from transfer of commodities or services related to the assets; b)Estimated costs incurred from transfer of the relevant commodities or services.
5. 39. Government grants
Government grants are monetary assets and non-monetary assets acquired free of charge by theCompany from the government like fiscal subsidies.
(1) Judgment basis and accounting treatment method of government grants related to assetsGovernment grants related to assets are government grants that are acquired by the Company andused for forming long-term assets through purchasing and constructing or other ways. If thegovernment documents do not clearly specify the target of the subsidy, the Company shall separatelyexplain judgment basis of classifying the government grants into the government grants related toassets or income.Accounting method: it shall be recognized as deferred income allocated evenly over the useful lives(the period of depreciation and amortization) of the relevant assets from the month of commence ofdepreciation or amortization when the relevant assets reaching the intended use condition, andincluded in the current profit or loss. However, government grants measured at the nominal amountshall be directly included in current profit and loss.
(2) Judgment basis and accounting treatment method of government grants related to incomeGovernment grants related to income are government grants other than government grants related toassets;Accounting method:
a. If it is used to compensate the Company’s relevant expenses or losses in future periods, it should berecognized as deferred income and included into the current profit and loss or written off of the relatedcosts when the relevant expenses, losses are recognized.b. If it is used to compensate the Company’s relevant expenses or losses incurred, it is directly includedinto the current profit and loss on acquisition or written off of the related costs.c. Recognition time-point of government grantsGovernment grants are recognized when the Company can meet the attached conditions for thegovernment grants and the Company can receive the grants.d. Measurement of government grantsIf a government grant is a monetary asset, it shall be measured in the light of the received or receivableamount. If a government grant is a non-monetary asset, it shall be measured at its fair value; and if itsfair value cannot be obtained in a reliable way, it shall be measured at a nominal amount.
5. 40. Deferred tax assets or deferred tax liabilities
The Company adopts the balance sheet liability method to account for income tax.The Company recognizes deferred tax assets when the following conditions are met simultaneously:
i. Temporary differences are highly likely to be reversed in the foreseeable future;ii. Taxable income that may be used to offset the deductible temporary difference is likely to beobtained in the future and is limited to the amount of taxable income that is likely to be obtained.On each balance sheet date, the current income tax liabilities (or assets) incurred in the current periodor prior periods shall be measured by the Company in light of the expected payable (refundable)amount of income taxes according to the tax law; The deferred income tax assets and deferred incometax liabilities shall be measured at the tax rate applicable to the period during which the assets areexpected to be recovered or the liabilities are expected to be settled.The Company shall review the carrying amount of deferred income tax assets on each balance sheetdate. The current income tax and deferred income tax shall be recorded into the current profit and lossas income tax expense or income, except for the income tax generated from the enterprise merger,transactions or events directly recognized in the owner's equity.
Basis for deferred income tax assets and deferred income tax liabilities presented as a net amount afteroffset:
When the following conditions are simultaneously met, deferred income tax assets and deferred incometax liabilities are presented as a net amount after offset:
i. The enterprise has the legal right to settle the current income tax assets and current income taxliabilities on a net basis;ii. Deferred income tax assets and deferred income tax liabilities were related to the income taxlevied by the same tax administration department on the same taxpayer or different taxpayers, butduring the period when each significant deferred income tax assets and liabilities would bereversed in the future, the involved taxpayer intended to settle the current income tax assets andliabilities on a net basis or to acquire assets and settle liabilities at the same time.
5. 41. Lease
(1) Accounting treatment with the Company as lessee
①Judgment criteria and accounting treatment for short-term leases and leases of low-value assets as alessee for simplified treatmentOn the beginning date of the lease term, the Company will recognise the lease with a lease term notexceeding 12 months and exclude the purchase option as a short-term lease. Leases with a valuebelow CNY 40,000 when a single leased asset is a brand-new asset are identified as low-value assetleases. If the Company sublets or expects to sublet the leased assets, the original lease shall not bedeemed as a low-value asset lease.The Company records the payments of short-term and low-value asset leases incurred during eachperiod of the lease term in the relevant asset costs or the profit or loss for the current period by thestraight-line method.
The Company will recognise right-of-use assets and lease liabilities on the inception date of the leaseterm, excluding the above short-term and low-value asset leases.
②Right-of-use assets
Right-of-use assets are initially measured at costs, including: A. The initial measurement amount oflease liabilities; B. If there is a lease incentive for the lease payment paid on or before the start date ofthe lease term, the relevant amount of the lease incentive already enjoyed shall be deducted; C. Initialdirect expenses incurred by the Company; D. The expected cost to be borne by the Company in orderto dismantle and remove the assets leased, restore original state of the place where the assets leasedare in, or restore the assets leased to the state stipulated in the lease terms.
③Lease liabilities
The Company initially measures the lease obligation at the present value of the lease paymentsoutstanding at the commencement date of the lease term. When calculating the present value of leasepayments, the Company uses the interest rate implicit in lease as the rate of discount. If the interestrate implicit in lease cannot be determined, the Company’s incremental lending rate is used as the rateof discount.After the commencement of the lease term, the Company uses the cost model for subsequentmeasurement of right-of-use assets, depreciates right-of-use assets on a straight-line basis, calculatesthe interest expense on the lease liability within the lease term and includes it in the current profit orloss, unless such interest charge is stipulated to be included in the underlying asset cost. Variable leasepayments that are not included in the measurement of the lease obligation should be included in thecurrent profit or loss when they are actually incurred, unless such payments are stipulated to beincluded in the underlying asset cost.After the commencement of the lease term, the Company remeasures the lease liability and adjusts thecorresponding right-of-use asset, and if the carrying value of the right-of-use asset has been reduced tozero but the lease liability is subject to further reduction, the difference is recorded in current profit orloss: (1) When there is a change in the valuation of the purchase option, renewal option or terminationoption, or actual exercise, the Company remeasures the lease liabilities at the present value of thelease payments after the change and the revised discount rate; (2) When there is a change in theactual fixed payment, the estimated payable of the residual value of the guarantee, the index or rateused to confirm the lease payment, the Company calculated the present value based on the changedlease payment amount and the original discount rate to remeasure the lease liabilities. However, wherechanges in lease payments arise from changes in floating interest rates, a revised discount rate wasused to calculate the present value.
(2) Accounting treatment with the Company as lessor
① Lease classification
The Company classifies leases into finance leases and operating leases at the inception of leases. Afinance lease refers to a lease where almost all the risks and rewards, related to the ownership of theleased asset, are substantially transferred, regardless of whether the ownership is eventuallytransferred or not. All leases other than finance leases are classified as operating leases.
② Operating leases
The Company recognizes the lease payments receivable of the operating lease as rental earnings ineach period within the lease term on a straight-line basis or according to other systematic andreasonable methods. The initial direct costs related to the operating lease are capitalized, amortizedwithin the lease term on the same basis as the recognition of rental earnings, and included in profit orloss for the current period. The received variable lease payments related to the operating lease that arenot included in the lease payments receivable are included in profit or loss for the current period whenthey are actually incurred.
③ Finance leases
On the commencement date of the lease term, the Company recognizes the finance lease receivablesfor the finance lease and derecognizes the leased asset of the finance lease. In the initial measurementof finance lease receivables, the sum of the unsecured residual value and the present value of thelease payments receivable not yet received on the commencement date of the lease term discounted atthe interest rate implicit in lease is the entry value of the finance lease receivables. The Companycalculates and recognizes the interest income in each period within the lease term at a fixed interestrate implicit in the lease. The received variable lease payments that are not included in themeasurement of the net investment in the lease are included in profit or loss for the current period whenthey are actually incurred.
5.42. Income tax expenses
The Company adopts the balance sheet liability method to account for income tax.The Company recognizes deferred tax assets when the following conditions are met simultaneously:
1. Temporary differences are highly likely to be reversed in the foreseeable future;
2. Taxable income that may be used to offset the deductible temporary difference is likely to be obtainedin the future and is limited to the amount of taxable income that is likely to be obtained.
On each balance sheet date, the current income tax liabilities (or assets) incurred in the current periodor prior periods shall be measured by the Company in light of the expected payable (refundable)amount of income taxes according to the tax law; The deferred income tax assets and deferred incometax liabilities shall be measured at the tax rate applicable to the period during which the assets areexpected to be recovered or the liabilities are expected to be settled.The Company shall review the carrying amount of deferred income tax assets on each balance sheet
date. The current income tax and deferred income tax shall be recorded into the current profit and lossas income tax expense or income, except for the income tax generated from the enterprise merger,transactions or events directly recognized in the owner's equity.
5. 43 Other significant accounting policies and accounting estimatesN/A
5. 44 Changes in significant accounting policies and accounting estimates
5.44.1. Changes in significant accounting policies
?Applicable □ N/A
Unit：CNY
| Content and reason of changes | Name of statement item materially affected | Amount affected |
| On 30 November 2022, the Ministry of Finance issued the Interpretations of Accounting Standards for Business Enterprises No. 16 (C.K. [2022] No. 31), providing that the requirement of "accounting processing under initial recognition and exemption is not applicable to deferred income taxes related to assets and liabilities incurred from a single transaction" will enter into force as of 1 January 2023. | Deferred income tax assets Deferred income tax liabilities |
For this new requirement of "accounting processing under initial recognition and exemption is notapplicable to deferred income taxes related to assets and liabilities incurred from a single transaction",Interpretation No. 16 stipulates that single transactions that are not business combinations, that affectneither accounting profit nor taxable income (or deductible losses) at the time the transaction occurs,and where the initial recognition of assets and liabilities results in taxable temporary differences anddeductible temporary differences of equal amounts shall not be governed by the provisions forexemption from initial recognition of deferred tax liabilities and deferred tax assets in AccountingStandards for Business Enterprises No. 18 - Income Taxes. At the time of the transaction, theenterprise shall recognise the corresponding deferred income tax liabilities and deferred income taxassets for taxable temporary differences and deductible temporary differences arising from the initialrecognition of assets and liabilities in such transaction.The Company has adopted the provisions of Interpretation No. 16, "Accounting processing under initialrecognition and exemption is not applicable to deferred income taxes related to assets and liabilitiesincurred from a single transaction" as of 1 January 2023. The implementation of this interpretation hasnot had a significant impact on the Company's financial position and operating results.
Apart from the aforementioned changes, there have been no other significant accounting policychanges during the Reporting Period.
5.44.2. Changes in significant accounting estimates
□Applicable ? N/A
5.44.3. Adjustments to Financial Statement Items at the Beginning of the Year of the FirstImplementation of the New Accounting Standards Implemented since 2023
□Applicable ? N/A
6. Taxes
6.1. Major tax types and rates
| Tax type | Tax base | Tax rate |
| Value-added tax | Taxable sales income | 13 %, 9%, 6% |
| Urban maintenance and construction tax | Taxable turnover tax | 7% |
| Corporate income tax | Taxable income | 25%, 15%, 16.5%, 9%, 0% |
| Consumption tax (based on price) | Baijiu tax price or ex-factory price | 20% |
| Consumption tax (based on quantity) | Quantity of baijiu | CNY 1.00/kg |
| Education surcharge | Taxable turnover tax | 3% |
| Local education surcharge | Taxable turnover tax | 2% |
| Property tax | Original value of the property*70%; house rent | 1.2%, 12% |
| Land use tax | Land area | CNY 5-18.00/m2 |
| Others | According to national regulation |
Tax payment subject using different corporate income tax rates, the corporate income tax rates are asfollows:
| Company name | Corporate income tax rate |
| Luzhou Pinchuang Technology Co., Ltd. | 15% |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | 16.5% |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | 21%-40% |
| Mingjiang Co., Ltd. | 21%-40% |
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Exempted from corporate income tax |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | 9% |
| Luzhou Laojiao International Trade (Hainan) Co., Ltd. | 15% |
6.2. Tax preferences
(1) According to Announcement of the Ministry of Finance, State Taxation Administration andNational Development and Reform Commission on Continuing the Corporate Income Tax PoliciesConcerning the Western Development Strategy (No. 23 in 2020, Ministry of Finance), from 1 January2021 to 31 December 2030, companies are located in the western region whose primary business islisted in the Catalogue of Encouraged Industries in the Western Region, and the primary businessincome accounting for over 60% of the total enterprise income. These companies shall be subject tothe corporate income tax at a reduced rate of 15%. The Company's holding subsidiary, LuzhouPinchuang Technology Co., Ltd., whose primary business income meet the requirements of scope
and standard of the Catalogue of Encouraged Industries in the Western Region, is paid at the rate of15% for corporate income tax.
(2) According to Article 27 of the Corporate Income Tax Law of the People's Republic of China andArticle 86, Item 1 of the Implementation Regulations of the Corporate Income Tax Law, companies areexempted from enterprise income tax when they engage in agricultural, forestry, animal husbandry andfishery industries. The holding subsidiary of the Company, Luzhou Red Sorghum Modern AgriculturalDevelopment Co., Ltd., is engaged in the cultivation and sale of organic sorghum and enjoys thereduction of corporate income tax preferences.
(3) According to the Article 15, Item 1 of the Provisional Regulations on Value-Added Tax, agriculturalproducers sell self-produced agricultural products exempt from value-added tax. The holding subsidiaryof the Company, Luzhou Red Sorghum Modern Agricultural Development Co., Ltd., is engaged in thecultivation and sale of organic sorghum and enjoys the value-added tax exemption.
(4) According to the Article 3, Item 7 of the Notice on Revise of Interim Measures of Accelerating theDevelopment in Headquarters Economy of China-Malaysia Qinzhou Industrial Park, till 31 December2025, the enterprises in the Qinzhou Industrial Park that enjoy 15% of tax rate of WesternDevelopment with the half reduction in the tax period of preferential policies shall enjoy the localshare of corporate income tax exemption (namely 40% of corporate income tax was exempted, andthe proportion adjusted by the state shall be executed according to new proportion); Guangxi LuzhouLaojiao Imported Liquor Industry Co., Ltd., the wholly-owned subsidiary of the Company, payscorporate income tax at the rate of 9% according to the tax preference policies.
(5) According to Announcement on Preferential Corporate Income Tax Policies in Hainan Free TradePort (Cai Shui [2020] No. 31), the Company's wholly-owned subsidiary, Luzhou Laojiao InternationalTrade (Hainan) Co., Ltd., whose primary business income meet the requirements of scope andstandard of the Catalogue of Encouraged Industries in Hainan Free Trade Port, is paid at the rate of15% for corporate income tax.
7. Notes to the main items of the consolidated financial statements (Allcurrency unit is CNY, except other statements)
7.1. Cash and cash equivalents
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Cash | 24,059.24 | 28,711.93 |
| Bank deposit | 25,916,630,894.83 | 17,729,643,050.90 |
| Other cash and cash equivalents | 35,370,137.21 | 27,856,448.42 |
| Total | 25,952,025,091.28 | 17,757,528,211.25 |
| Including: Total deposit outbound | 93,987,202.68 | 68,948,954.39 |
Other statements:
Note 1: The deposit outbound is the balance of cash and cash equivalents of the foreign holding
subsidiary of the Company.Note 2: The closing balance of other monetary funds mainly consists of the remaining funds insecurities accounts of the Company in the amount of CNY 946,249.11, bank guarantee deposits ofCNY 10,000,000.00 for the subsidiary, Luzhou Laojiao Sales Co., Ltd., and the closing balance offunds in self-owned accounts on third-party platforms for subsidiaries such as Luzhou LaojiaoElectronic Commerce Co., Ltd. and Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd., in theamount of CNY 24,423,888.10.Note 3: There is no special benefit arrangement such as establishing a fund co-management accountwith related parties in the current period.
Liquor and wine manufacturing companies shall disclose in detail whether there are special interestarrangements such as establishing co-management accounts with related parties.
□Applicable ? N/A
7.2. Held-for-trading financial assets
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Financial assets measured at fair value with their changes included into current profits/losses | 1,426,992,098.83 | 1,073,466,780.37 |
| Including: | ||
| Wealth management products | 1,426,992,098.83 | 1,073,466,780.37 |
| Including: | ||
| Total | 1,426,992,098.83 | 1,073,466,780.37 |
Other statements:
Note 1: The closing balance is the Company’s wealth management products of the collective assetmanagement plan purchased from securities-type companies which are measured at fair value basedon the amount calculated on the basis of the net value of relevant asset units published on the officialwebsite of the asset manager.
7.3. Accounts receivable
7.3.1. Disclosure by aging
Unit：CNY
| Aging | Closing book balance | Opening book balance |
| Within 1 year (including 1 year) | 18,489,106.271 | 6,002,381.01 |
| 1-2 years | 263,509.80 | |
| 2-3 years | 263,509.80 | |
| Total | 18,752,616.07 | 6,265,890.81 |
Note: 1 The closing book balance increased by CNY 12,486,725.26, up 199.28% compared with theopening book balance, which was mainly due to the impact of credit sales in overseas baijiu sales.2 There are no accounts receivable with significant single amount exceeding three years in age at theend of the period.
7.3.2. Disclosure by withdrawal methods for bad debts
Unit：CNY
| Type | Closing Balance | Opening Balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
| Accounts receivable tested for impairment individually | 372,217.14 | 1.98% | 372,217.14 | 100.00% | ||||||
| Including: | ||||||||||
| Accounts receivable that are not individually material but for which a separate provision for bad debts has been made | 372,217.14 | 1.98% | 372,217.14 | 100.00% | ||||||
| Accounts receivable tested for impairment by the portfolio | 18,380,398.93 | 98.02% | 919,019.95 | 5.00% | 17,461,378.98 | 6,265,890.81 | 100.00% | 326,470.03 | 5.21% | 5,939,420.78 |
| Including: | ||||||||||
| Accounts receivable tested for impairment on the portfolio with charact | 18,380,398.93 | 98.02% | 919,019.95 | 5.00% | 17,461,378.98 | 6,265,890.81 | 100.00% | 326,470.03 | 5.21% | 5,939,420.78 |
| eristics of credit risk | ||||||||||
| Total | 18,752,616.07 | 100.00% | 1,291,237.09 | 6.89% | 17,461,378.98 | 6,265,890.81 | 100.00% | 326,470.03 | 5.21% | 5,939,420.78 |
Accounts receivable tested for impairment individually: CNY 372,217.14
Unit：CNY
| Name | Opening Balance | Closing Balance | ||||
| Book balance | Provision for bad debt | Book balance | Provision for bad debt | Proportion | Reason | |
| Beijing Secoo Trading Limited | 372,217.14 | 372,217.14 | 100.00% | The amount is not expected to be recovered | ||
| Total | 372,217.14 | 372,217.14 | ||||
Accounts receivable tested for impairment by the portfolio: CNY 919,019.95
Unit：CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 18,380,398.93 | 919,019.95 | 5.00% |
| Including: within 1 year | 18,380,398.93 | 919,019.95 | 5.00% |
| Other portfolio | |||
| Total | 18,380,398.93 | 919,019.95 | |
Notes to the determination basis for the portfolio:
Accounts receivable of the same age have similar credit risk characteristics.
If adopting the general mode of expected credit loss to withdraw provision for bad debt of accountsreceivable
□Applicable ? N/A
7.3.3. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Unit：CNY
| Type | Opening Balance | Changes in current period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Provision allowance by individual item | 372,217.14 | 372,217.14 | ||||
| Provision allowance by risk portfolio | 326,470.03 | 592,549.92 | 919,019.95 | |||
| Total | 326,470.03 | 964,767.06 | 1,291,237.091 | |||
Note: There is no significant provision in accounts receivable reversed or recovered in the reportingperiod.
7.3.4. Top five entities with the largest balances of accounts receivable and contract assets
Unit：CNY
| Company name | Closing balance of accounts receivable | Closing balance of contract assets | Closing balance of accounts receivable and contract assets | Proportion to total closing balance of accounts receivable and contract assets | Closing balance of provision for bad debt provision of accounts receivable and impairment allowance of contract assets |
| China Duty Free International LTD | 16,952,591.49 | 16,952,591.49 | 90.40% | 847,629.57 | |
| BAIWAN WINES INC. | 795,108.57 | 795,108.57 | 4.24% | 39,755.43 | |
| Beijing Secoo Trading Limited | 372,217.14 | 372,217.14 | 1.98% | 372,217.14 | |
| TAI FUNG CASTELMOR LIMITED | 353,820.01 | 353,820.01 | 1.89% | 17,691.00 | |
| Park Street Imports, LLC | 197,941.00 | 197,941.00 | 1.06% | 9,897.05 | |
| Total | 18,671,678.21 | 18,671,678.21 | 99.57% | 1,287,190.19 |
7.4. Accounts receivable financing
7.4.1. Accounts receivable financing listed by category
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 5,938,171,007.93 | 4,583,352,503.37 |
| Total | 5,938,171,007.93 | 4,583,352,503.37 |
7.4.2. Disclosure by withdrawal methods for bad debts
Unit：CNY
| Type | Closing Balance | Opening Balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
| Including: | ||||||||||
| Provision allowance by portfolio | 5,938,171,007.93 | 100.00% | 5,938,171,007.931 | 4,583,352,503.37 | 100.00% | 4,583,352,503.37 | ||||
| Including: | ||||||||||
| Bank accepta | 5,938,171,007. | 100.00% | 5,938,171,007. | 4,583,352,503. | 100.00% | 4,583,352,503. | ||||
| nce bill | 93 | 93 | 37 | 37 | ||||||
| Total | 5,938,171,007.93 | 100.00% | 5,938,171,007.93 | 4,583,352,503.37 | 100.00% | 4,583,352,503.37 |
Note: 1. The notes receivable under accounts receivable financing comprise bank acceptance, andthe Company believes that the bank acceptance it holds does not pose significant credit risks. It doesnot anticipate significant losses due to defaults by banks or other drawers, therefore, no provision forcredit impairment losses has been recognised.
Provision allowance by portfolio: CNY 0
Unit：CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 5,938,171,007.93 | ||
| Other portfolio | |||
| Total | 5,938,171,007.93 | ||
Notes to the determination basis for the portfolio:
As bank acceptance has low credit risks, no bad debt provision is made.
7.4.3. Accounts receivable financing that have been endorsed to other parties or discountedby the Company but have not expired at the end of the period
Unit：CNY
| Item | Derecognition at period-end | Not derecognition at period-end |
| Bank acceptance bill | 7,153,627,657.961 | |
| Total | 7,153,627,657.96 |
Note: 1. Due to the fact that the acceptor of bank acceptance is a commercial bank, which is of highcredit level, the likelihood of default at the maturity of bank acceptance is low. Therefore, theCompany derecognises bank acceptance that has been endorsed or discounted.
7.4.4. Changes in accounts receivable financing in the reporting period and fair value
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Notes receivable | 4,583,352,503.37 | 24,829,288,029.75 | 23,474,469,525.19 | 5,938,171,007.93 |
| Total | 4,583,352,503.37 | 24,829,288,029.75 | 23,474,469,525.19 | 5,938,171,007.93 |
Note: Accounts receivable financing represents bank acceptance, with a short remaining maturity.The book value closely aligns with the fair value; hence, the book value is used as its fair value.
7.4.5. Other statements
①There was no accounts receivable financing pledge at the end of the period.
②There are no accounts receivable financing actually written off during the reporting period.
③There are no accounts receivable financing transferred to accounts receivable due to the non-performance of the agreements by the issuers.
7.5. Other receivables
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Other receivables | 22,716,893.121 | 23,396,533.98 |
| Total | 22,716,893.12 | 23,396,533.98 |
Note: 1. Other receivables above-mentioned refer to other receivables after deducted interestreceivable and dividend receivable.
7.5.1. Other receivables
7.5.1.1. Other receivables disclosed by nature
Unit：CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds | 17,537,144.37 | 18,516,591.35 |
| Petty cash | 214,206.23 | 326,785.39 |
| Saving deposits involving contract disputes | 127,564,873.50 | 129,049,496.98 |
| Total | 145,316,224.10 | 147,892,873.72 |
Note 1: The saving deposits involving contract disputes are three deposits amounting to CNY500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of China and NanyangZhongzhou Sub-branch of Industrial and Commercial Bank of China disclosed by the Company in the2014 Annual Report. The deposits have lost the nature of monetary fund due to their involvement incontract disputes and have thus been transferred into “other receivables”. The closing balance of thisaccount as at the date of the statement was CNY 127,564,873.50.
7.5.1.2. Disclosure by aging
Unit：CNY
| Aging | Closing book balance | Opening book balance |
| Within 1 year (including 1 year) | 15,696,066.07 | 11,192,350.26 |
| 1-2 years | 38,347.61 | 636,514.08 |
| 2-3 years | 293,480.00 | 3,542,500.00 |
| Over 3 years | 129,288,330.421 | 132,521,509.38 |
| 3-4 years | 11,500.00 | 122,800.00 |
| 4-5 years | 22,800.00 | 1,168,807.90 |
| Over 5 years | 129,254,030.42 | 131,229,901.48 |
| Total | 145,316,224.10 | 147,892,873.72 |
Note: 1 Other receivables with significant single amount exceeding three years in age relates tosavings deposit of CNY 127,564,873.50, which are yet to be recovered due to contractual disputes.
7.5.1.3. Disclosure by withdrawal methods for bad debts
?Applicable □ N/A
Unit：CNY
| Type | Closing balance | Opening Balance | ||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |
| Amount | Proportion | Amount | Proportion | Amount | Proportion | Amount | Proportion | |||
| Other receivables tested for impairment individually | 127,614,873.50 | 87.82% | 120,050,000.00 | 94.07% | 7,564,873.50 | 129,049,496.98 | 87.26% | 120,000,000.00 | 92.99% | 9,049,496.98 |
| Including: | ||||||||||
| Other receivables that are individually material and for which a separate provision for bad debts has been made | 127,564,873.50 | 87.78% | 120,000,000.00 | 94.07% | 7,564,873.50 | 129,049,496.98 | 87.26% | 120,000,000.00 | 92.99% | 9,049,496.98 |
| Other receivables that are not individually material but for which a separate provision for bad debts has been made | 50,000.00 | 0.03% | 50,000.00 | 100.00% | ||||||
| Other receivables tested for impairm | 17,701,350.60 | 12.18% | 2,549,330.98 | 14.40% | 15,152,019.62 | 18,843,376.74 | 12.74% | 4,496,339.74 | 23.86% | 14,347,037.00 |
| ent by the portfolio | ||||||||||
| Including: | ||||||||||
| Other receivables tested for impairment on the portfolio with characteristics of credit risk | 17,701,350.60 | 12.18% | 2,549,330.98 | 14.40% | 15,152,019.62 | 18,843,376.74 | 12.74% | 4,496,339.74 | 23.86% | 14,347,037.00 |
| Total | 145,316,224.10 | 100.00% | 122,599,330.98 | 84.37% | 22,716,893.12 | 147,892,873.72 | 100.00% | 124,496,339.74 | 84.18% | 23,396,533.98 |
Other receivables tested for impairment individually: CNY 120,050,000.00
Unit：CNY
| Name | Opening Balance | Closing Balance | ||||
| Book balance | Provision for bad debt | Book balance | Provision for bad debt | Proportion | Reason | |
| Saving deposits involving contract disputes | 129,049,496.98 | 120,000,000.00 | 127,564,873.50 | 120,000,000.00 | 94.07% | Provision based on legal opinion |
| Beijing Secoo Trading Limited | 50,000.00 | 50,000.00 | 100.00% | The amount is not expected to be recovered | ||
| Total | 129,049,496.98 | 120,000,000.00 | 127,614,873.50 | 120,050,000.00 | ||
Other receivables tested for impairment by the portfolio: CNY 2,549,330.98
Unit：CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 17,701,350.60 | 2,549,330.98 | 14.40% |
| Including: within 1 year | 15,696,066.07 | 784,803.30 | 5.00% |
| 1-2 years | 38,347.61 | 3,834.76 | 10.00% |
| 2-3 years | 243,480.00 | 48,696.00 | 20.00% |
| 3-4 years | 11,500.00 | 4,600.00 | 40.00% |
| 4-5 years | 22,800.00 | 18,240.00 | 80.00% |
| Over 5 years | 1,689,156.92 | 1,689,156.92 | 100.00% |
| Other portfolio | |||
| Total | 17,701,350.60 | 2,549,330.98 | |
Notes to the determination basis for the portfolio:
Accounts receivable of the same age have similar credit risk characteristics.
Allowance of provision for bad debt adopting the general mode of expected credit loss:
Unit：CNY
| Provision for bad debt | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2023 | 4,496,339.74 | 120,000,000.00 | 124,496,339.74 | |
| Balance of 1 January 2023 in the current period | ||||
| ——Transferred to the third stage | -5,000.00 | 5,000.00 | ||
| Allowance of the current period | -1,942,008.76 | 45,000.00 | -1,897,008.76 | |
| Balance of 31 December 2023 | 2,549,330.98 | 120,050,000.00 | 122,599,330.98 |
The basis for the division of each stage and the withdrawal proportion of bad debt provisionThe basis for division is that other receivables with single bad debt provision represent creditimpairment losses incurred since initial recognition (Stage 3), while the remaining portion iscategorised based on aging portfolio. Withdrawal proportions of bad debt provision are14.40% forStage 1 and 94.07% for Stage 3, totaling 84.37%.
Changes of book balance with significant amount changed of loss provision in the current period
□Applicable ? N/A
7.5.1.4. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Unit：CNY
| Type | Opening Balance | Changes in current period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off or verification | Other | |||
| Other receivables tested for impairment individually | 120,000,000.00 | 45,000.00 | 5,000.00 | 120,050,000.00 | ||
| Other receivables tested for impairment by the portfolio | 4,496,339.74 | -1,942,008.76 | -5,000.00 | 2,549,330.98 | ||
| Total | 124,496,339.74 | -1,897,008.76 | 122,599,330.98 | |||
7.5.1.5. Top five entities with the largest balances of the other receivables
Unit：CNY
| Company Name | Nature | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
Agricultural Bankof ChinaChangshaYingxin Sub-branch, Industrialand CommercialBank of ChinaNanyangZhongzhou Sub-branch andanother bank
| Saving deposits involving contract disputes | 127,564,873.50 | Over 5 years | 87.78% | 120,000,000.00 | |
| Beijing Jingdong Century Trading Co., Ltd. | Security deposit | 1,000,000.00 | 1-5 years | 0.69% | 345,000.00 |
| Luzhou Aopulan Beer Co., Ltd. | Security deposit | 300,000.00 | Over 5 years | 0.21% | 300,000.00 |
| Chen Weirong | Petty cash | 214,206.23 | Within 1 year | 0.15% | 10,710.31 |
| Luzhou Qianheng Labor Service Co., Ltd. | Intercourse funds | 74,150.56 | Within 1 year | 0.05% | 3,707.53 |
| Total | 129,153,230.29 | 88.88% | 120,659,417.84 |
7.6. Prepayment
7.6.1. Aging analysis
Unit：CNY
| Aging | Closing Balance | Opening Balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 196,801,356.07 | 97.28% | 108,917,843.70 | 95.33% |
| 1-2 years | 1,685,909.93 | 0.83% | 3,541,174.81 | 3.10% |
| 2-3 years | 2,987,977.50 | 1.48% | 1,633,422.20 | 1.43% |
| Over 3 years | 833,943.20 | 0.41% | 165,065.55 | 0.14% |
| Total | 202,309,186.701 | 114,257,506.26 | ||
Note: 1. At the end of the period, there was an increase of CNY 88,051,680.44 compared to thebeginning of the period, representing a growth of 77.06%, which was mainly due to intensifiedpromotional activities for company products, leading to a corresponding increase in prepaid amountsto suppliers.
Reasons for significant prepayments whose aging is longer than 1 year without timely settlement:
There is no significant prepayment whose aging is longer than 1 year.
7.6.2. Top five entities with the largest balances of prepayment
| Company Name | Closing Balance | Proportion to the total closing balance of prepayment |
| Shanghai Merlot Advertising Co., Ltd. | 78,949,725.75 | 39.02% |
| Sports Equipment Center of General Administration of Sport of China | 26,775,956.27 | 13.24% |
| China Railway Chengdu Group Co., Ltd. | 13,108,333.34 | 6.48% |
| Luzhou Western Gas Co., Ltd. | 12,183,456.63 | 6.02% |
| Luzhou Power Supply Company of State Grid Sichuan Electric Power Company | 8,176,600.90 | 4.04% |
| Total | 139,194,072.89 | 68.80% |
7.7. Inventories
Whether the Company needs to comply with the disclosure requirements of real estate industryNo
7.7.1. Categories of Inventories
Unit：CNY
| Category | Closing Balance | Opening Balance | ||||
| Book Balance | Provision for stock obsolescence or impairment provision of contract performance costs | Book Value | Book Balance | Provision for stock obsolescence or impairment provision of contract performance costs | Book Value | |
| Raw materials | 112,835,009.77 | 112,835,009.77 | 128,252,608.95 | 128,252,608.95 | ||
| Goods in progress | 9,169,963,972.73 | 9,169,963,972.73 | 7,305,642,685.28 | 7,305,642,685.28 | ||
| Finished goods | 2,316,583,144.62 | 2,316,583,144.62 | 2,382,939,263.97 | 2,382,939,263.97 | ||
| Goods in transit | 22,661,820.34 | 22,661,820.34 | 23,907,816.65 | 23,907,816.65 | ||
| Total | 11,622,043,947.46 | 11,622,043,947.46 | 9,840,742,374.85 | 9,840,742,374.85 | ||
The Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
7.7.2. Notes to the closing balance of inventories including capitalized borrowing expenseThere was no capitalized borrowing expense in the closing balance of inventories.
7.8. Other current assets
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 164,220,376.30 | 139,165,221.10 |
| Corporate income tax | 8,733,293.33 | 9,447,204.77 |
| Other taxes | 3,731,062.34 | 4,423,521.07 |
| Total | 176,684,731.97 | 153,035,946.94 |
Other statements:
The value-added tax expected to be deducted in the next fiscal year and corporate income tax andother taxes are disclosed in other current assets.
7.9. Other equity instrument investment
Unit：CNY
| Item | Closing Balance | Opening Balance | Gains recorded in other | Losses recorded in other | Accumulative gains recorded | Accumulative losses recorded | Dividend income recognize | Reason for assigning |
| comprehensive income in the current period | comprehensive income in the current period | in other comprehensive income in the current period | in other comprehensive income in the current period | d in current year | to measure in fair value of which changes included other comprehensive income | |||
| Financial assets assigned to measure in fair value of which changes included other comprehensive income: | ||||||||
| Including: | ||||||||
| China Tourism Group Duty Free Corporation Limited | 84,854,489.681 | 807,139,120.07 | 331,197,944.87 | 66,344,205.60 | 977,280.23 | According to the mode of managing assets by management layer | ||
| Guotai Junan Securities Co., Ltd. | 175,241,715.34 | 160,049,389.21 | 15,192,326.13 | 162,522,558.58 | 6,241,808.41 | According to the mode of managing assets by management layer | ||
| Luzhou Bank Co., Ltd. | 96,733,837.69 | 120,158,392.72 | 23,424,555.03 | 45,613,837.69 | 3,471,360.00 | According to the mode of managing assets by management layer | ||
| Guotai Junan Investment Management Co., Ltd. | 22,611,834.24 | 22,611,834.24 | According to the mode of managing assets by management layer | |||||
| North Chemical Industries Co., Ltd. | 12,805,515.44 | 14,931,950.24 | 2,126,434.80 | 11,775,515.44 | 78,177.75 | According to the mode of managing assets by |
| management layer | ||||||||
| Guojiu Big Data Co., Ltd. | 8,799,784.78 | 10,000,000.00 | 1,200,215.22 | 1,200,215.22 | According to the mode of managing assets by management layer | |||
| Sichuan China Baijiu Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 1,846,291.63 | 1,846,291.63 | 5,752,926.37 | 500,000.00 | According to the mode of managing assets by management layer | |||
| Total | 402,893,468.80 | 1,136,736,978.11 | 15,192,326.13 | 357,949,149.92 | 219,911,911.71 | 73,297,347.19 | 11,268,626.39 |
Note: 1. The closing balance decreased by CNY 733,843,509.31, down 64.56% compared with theopening balance, which was mainly due to the disposal of partial investment in China Tourism GroupDuty Free Corporation Limited in the current period.
Categories of non-trading equity instrument investment in the current period:
Unit：CNY
| Item | Recognized dividends income | Accumulative gains | Accumulative losses | Amount of other comprehensive income transferred to retained earnings | Reason for assigning to measure at fair value and changes recorded into other comprehensive income | Reason of other comprehensive income transferred to retained earnings |
| China Tourism Group Duty Free Corporation Limited | 977,280.23 | 66,344,205.60 | 16,215,653.21 | According to the mode of managing assets by management layer | Partial disposal | |
| Guotai Junan Securities Co., Ltd. | 6,241,808.41 | 162,522,558.58 | According to the mode of managing assets by management layer | |||
| Luzhou Bank Co., Ltd. | 3,471,360.00 | 45,613,837.69 | According to the mode of managing assets by |
| management layer | ||||||
| Guotai Junan Investment Management Co., Ltd. | According to the mode of managing assets by management layer | |||||
| North Chemical Industries Co., Ltd. | 78,177.75 | 11,775,515.44 | According to the mode of managing assets by management layer | |||
| Guojiu Big Data Co., Ltd. | 1,200,215.22 | According to the mode of managing assets by management layer | ||||
| Sichuan China Baijiu Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 500,000.00 | 5,752,926.37 | According to the mode of managing assets by management layer |
7.10. Long-term equity investments
Unit：CNY
| Investee | Opening Balance (book value) | Opening Balance of provision for impairment | Changes in current period | Closing Balance (book value) | Closing Balance of provision for impairment | |||||||
| Increase | Decrease | Gain or loss recognized under equity method | Adjustments of other comprehensive income | Other changes in equity | Cash divided or profit declared | Provision for impairment | Other | |||||
| 1. Joint Ventures | ||||||||||||
| 2. Associate | ||||||||||||
| Huaxi Securities Co., Ltd. | 2,497,540,592.05 | 2,567,098.80 | 44,167,627.40 | 2,107,087.17 | 8,184,934.32 | 2,535,630,372.30 | 2,567,098.80 | |||||
| Luzhou Laojiao Postdoctoral | 40,185,894.77 | -1,846,843.26 | 38,339,051.51 | |||||||||
| Workstation Technology Innovation Co., Ltd. | ||||||||||||
| Sichuan Development Liquor Investment Co., Ltd. | 5,889,654.24 | 8,326.61 | 5,897,980.85 | |||||||||
| Sichuan Tongniang Baijiu Industry Technology Research Institute Co., Ltd. Note | 8,086,855.91 | 253,536.99 | 8,340,392.90 | |||||||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 115,797,556.20 | 4,021,653.73 | 227,826.01 | 120,047,035.94 | ||||||||
| Subtotal | 2,667,500,553.17 | 2,567,098.80 | 46,604,301.47 | 2,107,087.17 | 227,826.01 | 8,184,934.32 | 2,708,254,833.50 | 2,567,098.80 | ||||
| Total | 2,667,500,553.17 | 2,567,098.80 | 46,604,301.47 | 2,107,087.17 | 227,826.01 | 8,184,934.32 | 2,708,254,833.50 | 2,567,098.80 |
The recoverable amount is determined based on the net amount of the fair value minus disposalcosts
□Applicable ? N/A
The recoverable amount is determined by the present value of the forecasted future cash flow
□Applicable ? N/A
7.11. Investment property
7.11.1. Investment property with cost measurement model
?Applicable □ N/A
Unit：CNY
| Item | Buildings and constructions | Land use right | Construction in progress | Total |
| I. Original cost: | ||||
| 1.Opening balance | 47,321,613.93 | 9,566,480.21 | 56,888,094.14 | |
| 2.Increase in current period | ||||
| (1) External purchase | ||||
| (2) Transfer from inventories/fixed assets/construction in progress | ||||
| (3) Increase from business combination | ||||
| 3.Decrease in current period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4.Closing Balance | 47,321,613.93 | 9,566,480.21 | 56,888,094.14 | |
| II. Accumulated depreciation and amortization | ||||
| 1.Opening Balance | 15,125,126.70 | 2,613,513.22 | 17,738,639.92 | |
| 2.Increase in current period | 662,897.92 | 701,139.53 | 1,364,037.45 | |
| (1) Provision or amortization | 662,897.92 | 701,139.53 | 1,364,037.45 | |
| 3.Decrease in current period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4.Closing Balance | 15,788,024.62 | 3,314,652.75 | 19,102,677.37 | |
| III. Provision for impairment | ||||
| 1.Opening Balance | ||||
| 2.Increase in current period | ||||
| (1) Provision | ||||
| 3.Decrease in current period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4.Closing Balance | ||||
| IV. Book Value | ||||
| 1.Closing Book Value | 31,533,589.31 | 6,251,827.46 | 37,785,416.77 |
| 2.Opening Book Value | 32,196,487.23 | 6,952,966.99 | 39,149,454.22 |
The recoverable amount is determined based on the net amount of the fair value minus disposalcosts
□Applicable ? N/A
The recoverable amount is determined by the present value of the forecasted future cash flow
□Applicable ? N/A
7.11.2. Investment property without certification of right
Unit：CNY
| Item | Book value | Reason for not having the certification of right |
| Buildings of the Company | 31,478,347.81 | In procedure |
7.12. Fixed assets
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Fixed assets | 8,613,187,271.671 | 8,853,348,204.83 |
| Disposal of fixed assets | 36,193.79 | 2,910,393.95 |
| Total | 8,613,223,465.46 | 8,856,258,598.78 |
Note 1: The fixed assets listed above refer to the fixed assets deducted those disposed.
7.12.1. Details of fixed assets
Unit：CNY
| Item | Buildings and constructions | Specialized equipment | General equipment | Transportation equipment | Other equipment | Total |
| I. Original cost: | ||||||
| 1.Opening balance | 7,584,141,471.95 | 1,174,111,092.25 | 1,093,021,145.63 | 46,364,595.04 | 1,604,593,254.93 | 11,502,231,559.80 |
| 2.Increase in current period | 92,376,864.95 | 79,761,327.61 | 157,751,986.14 | 402,797.91 | 59,347,158.47 | 389,640,135.08 |
| (1) External purchase | 1,606,417.51 | 34,463,316.82 | 128,300.89 | 3,752,348.42 | 39,950,383.64 | |
| (2) Transfer from construction in progress | 110,898,978.54 | 65,212,322.19 | 113,657,757.18 | 348,050.25 | 57,568,977.72 | 347,686,085.88 |
| (3) Increase from business combination | ||||||
| (4) Changes of exchange rates | 7,468.20 | 7,468.20 | ||||
| (5) Adjustment for completion settlement | -18,522,113.59 | 12,942,587.91 | 9,623,443.94 | -73,553.23 | -1,974,167.67 | 1,996,197.36 |
| 3.Decrease in current period | 74,973,465.86 | 3,875,093.08 | 26,848,117.81 | 11,252,352.46 | 116,949,029.21 | |
| (1) Disposal or retirement | 63,512,058.18 | 3,875,093.08 | 22,402,534.58 | 11,252,352.46 | 101,042,038.30 |
| (2) Transfer to intangible assets/construction in progress | 11,461,407.68 | 4,445,583.23 | 15,906,990.91 | |||
| 4.Closing Balance | 7,601,544,871.04 | 1,249,997,326.78 | 1,223,925,013.96 | 46,767,392.95 | 1,652,688,060.94 | 11,774,922,665.67 |
| II. Accumulated depreciation | ||||||
| 1.Opening Balance | 956,719,104.18 | 470,768,377.65 | 426,894,845.37 | 32,266,009.80 | 761,612,077.90 | 2,648,260,414.90 |
| 2.Increase in current period | 249,022,880.35 | 138,689,344.85 | 128,014,893.92 | 2,941,188.55 | 67,404,370.54 | 586,072,678.21 |
| (1) Provision | 249,022,880.35 | 138,689,344.85 | 128,010,633.86 | 2,941,188.55 | 67,404,370.54 | 586,068,418.15 |
| (2) Changes of exchange rates | 4,260.06 | 4,260.06 | ||||
| 3.Decrease in current period | 48,454,776.64 | 2,840,340.40 | 13,585,429.48 | 8,340,092.66 | 73,220,639.18 | |
| (1) Disposal or retirement | 48,454,776.64 | 2,840,340.40 | 13,585,429.48 | 8,340,092.66 | 73,220,639.18 | |
| 4.Closing Balance | 1,157,287,207.89 | 606,617,382.10 | 541,324,309.81 | 35,207,198.35 | 820,676,355.78 | 3,161,112,453.93 |
| III. Provision for impairment | ||||||
| 1.Opening Balance | 622,940.07 | 622,940.07 | ||||
| 2.Increase in current period | ||||||
| (1) Provision | ||||||
| 3.Decrease in current period | ||||||
| (1) Disposal or retirement | ||||||
| 4.Closing Balance | 622,940.07 | 622,940.07 | ||||
| IV. Book Value | ||||||
| 1.Closing Book Value | 6,443,634,723.08 | 643,379,944.68 | 682,600,704.15 | 11,560,194.60 | 832,011,705.16 | 8,613,187,271.67 |
| 2.Opening Book Value | 6,626,799,427.70 | 703,342,714.60 | 666,126,300.26 | 14,098,585.24 | 842,981,177.03 | 8,853,348,204.83 |
7.12.2. Fixed assets leased out through operating lease
Unit：CNY
| Item | Closing book value |
| Buildings and constructions | 22,460,128.25 |
| Total | 22,460,128.25 |
7.12.3. Fixed assets without certification of right
Unit：CNY
| Item | Book value | Reason for not having the certification of right |
| Buildings of the Company | 22,410,444.43 | The property ownership certificate has not been processed yet for the historical reasons, and it plans to be |
| processed after gradually improving procedures. | ||
| Buildings of the Company | 227,087,401.40 | In procedure |
| Buildings of the subsidiary-brewing company | 4,368,821,210.29 | In procedure |
| Total | 4,618,319,056.12 |
7.12.4. Disposal of fixed assets
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Disposal and retirement of assets | 36,193.79 | 2,910,393.95 |
| Total | 36,193.79 | 2,910,393.95 |
7.13. Construction in progress
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Construction in progress | 1,718,468,880.531 | 808,919,047.21 |
| Total | 1,718,468,880.53 | 808,919,047.21 |
Note: 1. The term "construction in progress" in the above table refers to construction in progressminus construction materials.
7.13.1. Details of the construction in progress
Unit：CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 1,132,704,191.02 | 1,132,704,191.02 | 638,798,849.16 | 638,798,849.16 | ||
| Technical renovation project of Luzhou Laojiao intelligent brewing (I) | 217,839,823.49 | 217,839,823.49 | 12,284,062.35 | 12,284,062.35 | ||
| Technical renovation of Luzhou Laojiao Intelligent packaging center (II) | 141,773,898.97 | 141,773,898.97 | 122,641.51 | 122,641.51 | ||
| Project of Luzhou Laojiao's | 92,773,969.99 | 92,773,969.99 | 17,305,831.68 | 17,305,831.68 | ||
| Flexible Intelligent Filling Pilot Line | ||||||
| Construction Project of Luzhou Laojiao's Strong Aroma Baijiu Experience Marketing Centre | 1,194,002.45 | 1,194,002.45 | ||||
| Technical Reform Project of Luzhou Laojiao's Brewing Base | 574,755.15 | 574,755.15 | 14,512,482.57 | 14,512,482.57 | ||
| Other projects | 131,608,239.46 | 131,608,239.46 | 125,895,179.94 | 125,895,179.94 | ||
| Total | 1,718,468,880.531 | 1,718,468,880.53 | 808,919,047.21 | 808,919,047.21 |
Note: 1. The closing balance increased by CNY 909,549,833.32, up 112.44% compared with theopening balance, which was mainly due to the increase in input in the technical renovation ofIntelligent packaging center and technical renovation project of intelligent brewing in the currentperiod.
7.13.2. Significant changes in construction in progress
Unit：CNY
| Item | Budget | Opening Balance | Increase in current period | Transfer into fixed assets | Other decreases | Closing Balance | Proportion of accumulative project input in budget | Progress (%) | Accumulative capitalized interest | Including: Capitalized interest for the period | Capitalization rate for the period (%) | Source of funds |
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 1,886,176,000.00 | 638,798,849.16 | 778,790,031.23 | 96,856,474.40 | 188,028,214.97 | 1,132,704,191.02 | 81.92% | 80.00% | 185,876.75 | 35,107.46 | 3.59% | Other |
| Technical renovation project of Luzhou Laojiao intelligent brewing (I) | 4,782,509,000.00 | 12,284,062.35 | 205,555,761.14 | 217,839,823.49 | 16.62% | 15.00% | Other | |||||
| Technical renovation of Luzhou Laojiao Intelligent packaging center (II) | 250,000,000.00 | 122,641.51 | 141,651,257.46 | 141,773,898.97 | 64.08% | 70.00% | Other | |||||
| Project of Luzhou Laojiao's Flexible Intelligent Filling Pilot Line | 174,300,000.00 | 17,305,831.68 | 75,468,138.31 | 92,773,969.99 | 70.95% | 70.00% | Other | |||||
| Construction Project of Luzhou Laojiao's Strong Aroma Baijiu Experience | 2,604,356,700.00 | 181,301,301.34 | 180,107,298.89 | 1,194,002.45 | 6.96% | 5.00% | Other |
| Marketing Centre | ||||||||||||
| Technical Reform Project of Luzhou Laojiao's Brewing Base | 189,732,300.00 | 14,512,482.57 | 119,547,091.81 | 131,421,421.07 | 2,063,398.16 | 574,755.15 | 94.08% | 90.00% | Other | |||
| Total | 9,887,074,000.00 | 683,023,867.27 | 1,502,313,581.29 | 228,277,895.47 | 370,198,912.021 | 1,586,860,641.07 | 185,876.75 | 35,107.46 | 3.59% |
Note: 1. Other decreases refer to land use rights, software and low priced and easily worn articlestransferred to intangible assets.
7.13.3. Impairment test of construction in progress
□Applicable ? N/A
7.14. Right-of-use assets
7.14.1. Details of right-of-use assets
Unit：CNY
| Item | Land use right | Buildings and constructions | Total |
| I. Original cost | |||
| 1. Opening Balance | 32,680,786.33 | 24,896,637.03 | 57,577,423.36 |
| 2. Increase in current period | 519,991.71 | 519,991.71 | |
| (1) Increase in leases | 319,714.42 | 319,714.42 | |
| (2) Changes of exchange rates | 200,277.29 | 200,277.29 | |
| 3. Decrease in current period | 1,892,463.92 | 15,040,946.90 | 16,933,410.82 |
| (1) Lease expiration | 773,499.69 | 773,499.69 | |
| (2) Adjustment for change of lease term | 1,892,463.92 | 14,267,447.21 | 16,159,911.13 |
| 4. Closing Balance | 30,788,322.41 | 10,375,681.84 | 41,164,004.25 |
| II. Accumulated amortization | |||
| 1. Opening Balance | 7,269,825.40 | 10,355,072.33 | 17,624,897.73 |
| 2. Increase in current period | 3,634,912.69 | 6,357,470.87 | 9,992,383.56 |
| (1) Provision | 3,634,912.69 | 6,216,889.84 | 9,851,802.53 |
| (2) Changes of exchange | 140,581.03 | 140,581.03 |
| rates | |||
| 3. Decrease in current period | 630,821.31 | 9,083,410.96 | 9,714,232.27 |
| (1) Disposal | |||
| (2) Lease expiration | 754,238.91 | 754,238.91 | |
| (3) Adjustment for change of lease term | 630,821.31 | 8,329,172.05 | 8,959,993.36 |
| 4. Closing Balance | 10,273,916.78 | 7,629,132.24 | 17,903,049.02 |
| III. Provision for impairment | |||
| 1. Opening Balance | |||
| 2. Increase in current period | |||
| (1) Provision | |||
| 3. Decrease in current period | |||
| (1) Disposal | |||
| 4. Closing Balance | |||
| IV. Book Value | |||
| 1. Closing Book Value | 20,514,405.63 | 2,746,549.60 | 23,260,955.23 |
| 2. Opening Book Value | 25,410,960.93 | 14,541,564.70 | 39,952,525.63 |
7.14.2. Impairment test of right-of-use assets
□Applicable ? N/A
7.15. Intangible assets
7.15.1. Details of intangible assets
Unit：CNY
| Item | Land use right | Patent right | No-patent right technology | Computer software | Trademark right | Total |
| I. Original cost | ||||||
| 1. Opening Balance | 3,288,142,671.29 | 1,700,050.44 | 63,336,227.72 | 2,114,914.82 | 3,355,293,864.27 | |
| 2. Increase in current period | 368,803,115.55 | 26,364,659.69 | 3,801.27 | 395,171,576.51 | ||
| (1) Acquired | 5,882,033.16 | 5,882,033.16 | ||||
| (2) Internal developed | ||||||
| (3) Business combination | ||||||
| (4) Transferred from construction in progress/fixed assets | 368,803,115.55 | 22,401,522.03 | 391,204,637.58 | |||
| (5) Changes of exchange rates | 3,801.27 | 3,801.27 | ||||
| (6) Adjustment for completion settlement | -1,918,895.50 | -1,918,895.50 |
| 3. Decrease in current period | 1,984,960.84 | 1,984,960.84 | ||||
| (1) Disposal | 1,984,960.84 | 1,984,960.84 | ||||
| 4. Closing Balance | 3,654,960,826.00 | 1,700,050.44 | 89,700,887.41 | 2,118,716.09 | 3,748,480,479.94 | |
| II. Accumulated amortization | ||||||
| 1. Opening Balance | 236,908,207.71 | 830,609.09 | 32,408,087.27 | 1,875,107.41 | 272,022,011.48 | |
| 2. Increase in current period | 73,369,622.06 | 130,005.04 | 6,173,764.38 | 20,647.04 | 79,694,038.52 | |
| (1) Provision | 73,369,622.06 | 130,005.04 | 6,173,764.38 | 20,647.04 | 79,694,038.52 | |
| 3. Decrease in current period | 1,109,361.14 | 1,109,361.14 | ||||
| (1) Disposal | 1,109,361.14 | 1,109,361.14 | ||||
| 4. Closing Balance | 309,168,468.63 | 960,614.13 | 38,581,851.65 | 1,895,754.45 | 350,606,688.86 | |
| III. Provision for impairment | ||||||
| 1. Opening Balance | ||||||
| 2. Increase in current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in current period | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | ||||||
| IV. Book Value | ||||||
| 1. Closing Book Value | 3,345,792,357.37 | 739,436.31 | 51,119,035.76 | 222,961.64 | 3,397,873,791.08 | |
| 2. Opening Book Value | 3,051,234,463.58 | 869,441.35 | 30,928,140.45 | 239,807.41 | 3,083,271,852.79 |
There is no proportion of intangible assets formed by internal development to the balance ofintangible assets at the period-end.
7.15.2. Land use right without certification of right
There was no land use right without certification of right at the period-end.
7.16. Long-term deferred expense
Unit：CNY
| Item | Opening Balance | Increase | Amortization | Other decrease | Closing Balance |
| Improvement expense of rented fixed assets | 710,010.92 | 747,153.53 | 498,487.93 | -1,329.39 | 960,005.91 |
| Total | 710,010.92 | 747,153.53 | 498,487.93 | -1,329.391 | 960,005.91 |
Note: 1 Other decrease was generated from changes of exchange rates.
7.17. Deferred tax assets/ deferred tax liabilities
7.17.1. Deferred tax assets before offset
Unit：CNY
| Item | Closing Balance | Opening Balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairment | 127,079,101.68 | 31,572,482.83 | 128,012,783.36 | 31,895,371.12 |
| Unrealized profits from internal transactions | 1,533,438,058.70 | 383,359,514.67 | 2,839,779,249.07 | 709,944,812.27 |
| Deductible losses | 9,551,262.70 | 2,312,572.68 | ||
| Impact from salary | 466,715,045.27 | 115,258,381.83 | 630,936,117.63 | 155,191,186.34 |
| Impact from deferred earnings | 27,772,083.74 | 6,943,020.94 | 33,704,323.80 | 8,426,080.95 |
| Impact from fixed assets depreciation | 889,943.60 | 233,853.09 | 227,859.62 | 37,596.84 |
| Recognition costs of restricted shares for equity incentive in the vesting period | 460,239,659.251 | 112,958,934.99 | 367,875,588.32 | 89,288,197.09 |
| Impact from fair value changes of other equity instrument investment | 90,722,543.67 | 22,680,635.92 | 5,752,926.37 | 1,438,231.59 |
| Impact of income tax from fair value changes of held-for-trading financial assets | 26,533,219.63 | 6,633,304.92 | ||
| Impact of income tax from initial recognition of lease liabilities | 8,994,376.39 | 1,422,793.65 | ||
| Total | 2,715,850,812.30 | 674,429,617.92 | 4,042,373,330.50 | 1,005,167,353.80 |
Note: 1. Deductible temporary differences of CNY 460,239,659.25 of costs and expenses recognizedduring the vesting period of restricted shares for share incentives represent the estimated future pre-tax deductible amounts based on the Company's share price less the grant price at the end of theperiod.
7.17.2. Deferred tax liabilities before offset
Unit：CNY
| Item | Closing Balance | Opening Balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Fair value changes of other equity instrument investment | 219,911,911.71 | 54,977,977.92 | 495,124,314.68 | 123,781,078.67 |
| Fair value changes | 26,992,098.76 | 6,748,024.69 | ||
| of held-for-trading financial assets | ||||
| Impact from the policy of one-time pre-tax deduction of fixed assets | 330,643,563.72 | 80,965,673.53 | 172,516,000.07 | 42,262,585.21 |
| Impact of income tax from initial recognition of right-of-use assets | 345,267.49 | 81,352.08 | ||
| Total | 577,892,841.68 | 142,773,028.22 | 667,640,314.75 | 166,043,663.88 |
7.17.3. Details of unrecognized deferred tax assets
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Deductible losses | 253,464,624.61 | 72,503,754.75 |
| Credit impairment losses and asset impairment provision | 1,505.26 | 65.28 |
| Impact from employee benefits payable | 13,557,753.92 | 2,369,328.86 |
| Total | 267,023,883.79 | 74,873,148.89 |
7.17.4. Deductible losses from unrecognized deferred tax assets will due on the followingyears
Unit：CNY
| Year | Closing Amount | Opening Amount | Notes |
| The 1st year | 14,491,365.44 | 6,496,423.50 | |
| The 2nd year | 15,884,395.00 | 14,491,365.44 | |
| The 3rd year | 8,417,566.87 | 21,651,366.58 | |
| The 4th year | 33,125,772.28 | 11,572,224.60 | |
| The 5th year | 181,545,525.02 | 18,292,374.63 | |
| Total | 253,464,624.61 | 72,503,754.75 |
7.18. Other non-current assets
Unit：CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Prepayment for long-term assets such as engineering equipment and land | 358,900,430.13 | 358,900,430.131 | 196,095,702.09 | 196,095,702.09 | ||
| Total | 358,900,430.13 | 358,900,430.13 | 196,095,702.09 | 196,095,702.09 | ||
Note: 1. At the end of the period, there was an increase of CNY 162,804,728.04 compared to the
beginning of the period, representing a growth of 83.02%, which was mainly due to the ongoingconstruction projects of the subsidiary brewing companies, leading to a corresponding increase inadvance payments for construction equipment.
7.19. Assets with restricted ownership or use rights
Unit：CNY
| Item | Period-end | Period-beginning | ||||||
| Book balance | Book value | Type of restriction | Status of restriction | Book balance | Book value | Type of restriction | Status of restriction | |
| Cash and cash equivalents | 48,222,882.52 | 48,222,882.52 | Fixed deposit interest | Provision for fixed deposit interest on an accrual basis | 17,339,936.14 | 17,339,936.14 | Fixed deposit interest | Provision for fixed deposit interest on an accrual basis |
| Cash and cash equivalents | 10,772,930.90 | 10,772,930.90 | Margin | Bank cash deposits for L/G and E-commerce platform margin | 10,000,000.00 | 10,000,000.00 | Margin | Bank cash deposits for L/G |
| Cash and cash equivalents | Litigation freeze | Frozen fund by the court | 1,181,683.24 | 1,181,683.24 | Litigation freeze | Frozen fund by the court | ||
| Total | 58,995,813.42 | 58,995,813.42 | 28,521,619.38 | 28,521,619.38 | ||||
7.20. Held-for-trading financial liabilities
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Held-for-trading financial liabilities | 9,763.87 | |
| Including: | ||
| Foreign exchange forward transaction | 9,763.87 | |
| Including: | ||
| Total | 9,763.87 |
7.21. Accounts payable
7.21.1. Presentation of accounts payable
Unit：CNY
| Category | Closing Balance | Opening Balance |
| Materials and service expense | 862,772,419.35 | 1,042,394,395.05 |
| Engineering equipment expense | 1,494,451,313.86 | 1,269,271,189.99 |
| Total | 2,357,223,733.21 | 2,311,665,585.04 |
7.21.2. Significant accounts payable whose aging is longer than 1 year
Unit：CNY
| Category | Closing Balance | Reason for not payment or carrying forward |
| China Construction First Group Corporation Limited | 428,806,448.79 | Project payment within the contract settlement period |
| Luzhou Branch of Zhongqi Construction Group Huamao Co., Ltd. | 24,762,560.05 | Project payment within the contract settlement period |
| Total | 453,569,008.84 |
7.22. Other payables
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Dividend payable | 29,684,819.82 | 16,594,850.58 |
| Other payables | 1,121,036,342.711 | 1,185,814,427.91 |
| Total | 1,150,721,162.53 | 1,202,409,278.49 |
Note: 1. Other payables listed in the above table are other payables minus interest payable anddividend payable.
7.22.1. Dividend payable
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Ordinary share dividends | 29,684,819.821 | 16,594,850.58 |
| Total | 29,684,819.82 | 16,594,850.58 |
Note: 1. The closing balance refer to the dividends distributed but not yet paid to minorityshareholders of the Company’s subsidiary Boda Marketing Company.
7.22.2. Other payables
7.22.2.1. Categories by nature
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Security deposit | 471,170,274.78 | 527,881,969.37 |
| Intercourse funds | 26,994,900.06 | 10,226,769.10 |
| Repurchase obligations of restricted shares | 616,743,610.59 | 639,021,998.78 |
| Others | 6,127,557.28 | 8,683,690.66 |
| Total | 1,121,036,342.71 | 1,185,814,427.91 |
7.22.2.2. Significant other payables whose aging are longer than 1 year
Unit：CNY
| Item | Closing Balance | Reason for not payment or carrying |
| forward | ||
| Security deposits from suppliers | 50,159,749.00 | Within the contract performance period |
| Security deposits from dealers | 5,300,000.00 | Within the contract performance period |
| Total | 55,459,749.001 |
Note: 1. Significant other payables whose aging are longer than 1 year are mainly security depositscollected from dealers and suppliers.
7.23. Contract liabilities
Unit：CNY
| Category | Closing Balance | Opening Balance |
| Within 1 year | 2,648,369,042.14 | 2,540,635,630.98 |
| 1-2 years | 11,257,914.75 | 10,654,577.66 |
| 2-3 years | 1,537,289.68 | 1,199,843.23 |
| Over 3 years | 11,812,843.73 | 13,884,666.89 |
| Total | 2,672,977,090.30 | 2,566,374,718.76 |
Significant contract liabilities whose aging are longer than 1 year
Unit：CNY
| Item | Closing Balance | Reason for not payment or carrying forward |
| Advances from customers for goods | 8,698,271.48 | Within the contract settlement period |
| Total | 8,698,271.48 |
The Company shall comply with the disclosure requirements for companies engaging in food & liquorand wine production of the Guidelines No. 3 of the Shenzhen Stock Exchange on Self-regulation ofListed Companies—Industry-specific Information Disclosure.
The total amount of the top five companies in contract liabilities was CNY 909,316,825.12, accountingfor 34.02%.
7.24. Employee benefits payable
7.24.1. Employee benefits payable shown as follows
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Short-term benefits | 655,612,131.74 | 986,098,412.18 | 1,146,571,761.71 | 495,138,782.21 |
| 2. Post-employment benefits- defined contribution plans | 19,413,782.04 | 152,464,396.28 | 143,159,220.65 | 28,718,957.67 |
| 3. Termination benefits | 8,971.53 | 201,782.75 | 201,782.75 | 8,971.53 |
| Total | 675,034,885.31 | 1,138,764,591.21 | 1,289,932,765.11 | 523,866,711.41 |
7.24.2. Short-term employee benefits payable shown as follows
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Wages, bonuses, allowances and grants | 611,845,393.45 | 782,949,224.85 | 953,572,824.59 | 441,221,793.71 |
| 2. Employees’ welfare | 21,197,780.03 | 21,197,780.03 | ||
| 3. Social insurance premiums | 2,037,299.47 | 83,042,051.17 | 74,756,274.36 | 10,323,076.28 |
| Work-related injury insurance | 510,250.71 | 3,322,425.00 | 2,457,156.99 | 1,375,518.72 |
| Medical and maternity insurance premium | 1,527,048.76 | 79,719,626.17 | 72,299,117.37 | 8,947,557.56 |
| 4. Housing funds | 2,088,245.59 | 69,651,313.89 | 66,166,907.53 | 5,572,651.95 |
| 5. Labor union expenditures and employee education funds | 39,641,193.23 | 29,258,042.24 | 30,877,975.20 | 38,021,260.27 |
| Total | 655,612,131.74 | 986,098,412.18 | 1,146,571,761.71 | 495,138,782.21 |
7.24.3. Defined contribution plan shown as follows
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Basic endowment insurance premium | 18,361,778.96 | 93,441,846.25 | 89,839,533.73 | 21,964,091.48 |
| 2. Unemployment insurance premium | 326,819.86 | 3,566,554.41 | 3,561,574.51 | 331,799.76 |
| 3. Enterprise annuity | 725,183.22 | 55,455,995.62 | 49,758,112.41 | 6,423,066.43 |
| Total | 19,413,782.04 | 152,464,396.28 | 143,159,220.65 | 28,718,957.67 |
7.25. Taxes payable
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 462,528,000.24 | 502,641,326.22 |
| Consumption tax | 1,255,405,887.03 | 1,386,271,621.60 |
| Enterprise income tax | 998,666,442.52 | 1,345,243,541.07 |
| Individual income tax | 7,810,885.88 | 10,295,445.63 |
| Urban maintenance and construction tax | 119,493,139.70 | 131,841,222.44 |
| Education surcharge | 51,286,192.79 | 56,445,651.96 |
| Local education surcharge | 34,299,228.87 | 37,733,654.17 |
| Stamp duty | 9,347,536.01 | 9,937,931.91 |
| Land use tax | 437,618.74 | 437,618.74 |
| Others | 352,601.22 | 302,715.24 |
| Total | 2,939,627,533.00 | 3,481,150,728.98 |
7.26. Non-current liabilities due within one year
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Long-term loans due within one year | 25,000,000.00 | 20,400,000.00 |
| Lease liabilities due within one year | 5,114,015.89 | 14,530,370.36 |
| Interest of long-term loans due within one year | 7,379,478.99 | 1,984,027.78 |
| Interest of bonds payable due within one year | 41,424,657.53 | 44,965,068.49 |
| Total | 78,918,152.41 | 81,879,466.63 |
7.27. Other current liabilities
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Output VAT to be transferred | 347,485,071.57 | 333,627,225.47 |
| Total | 347,485,071.57 | 333,627,225.47 |
7.28. Long-term loans
7.28.1. Long-term loans
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Credit loans | 10,025,300,000.00 | 3,200,000,000.00 |
| Less: Long-term loans due within one year | -25,000,000.00 | -20,400,000.00 |
| Total | 10,000,300,000.00 | 3,179,600,000.00 |
Other statements, including interest rate range:
Loan prime rate (LPR) - corresponding basic points (BP) for 1-year/5-year and above loan terms.
7.29. Bonds payable
7.29.1. Bonds payable
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Corporate bonds in 2020 (Phase I) | 1,498,716,737.02 | 1,497,461,348.61 |
| Corporate bonds in 2022 (Phase I) | 1,498,638,223.25 | |
| Total | 1,498,716,737.02 | 2,996,099,571.86 |
7.29.2. Increase/decrease of bonds payable (excluding other financial instrument classified asfinancial liabilities such as preferred shares and perpetual bonds)
Unit：CNY
| Bond name | Par value | Coupon rate | Issuing date | Duration | Issuing amount | Opening Balance | Issued in the curre | Withdrawal of intere | Amortization of premi | Repayment in the | Closing Balan | Default or not |
| nt period | st by par value | um and depreciation | reporting period | ce | |||||||||
| Corporate bonds in 2020 (Phase I) | 1,500,000,000.00 | 3.50% | 16 March 2020 | 5 years | 1,494,000,000.00 | 1,497,461,348.61 | 52,500,000.00 | 1,255,388.41 | 1,498,716,737.02 | Not | |||
| Corporate bonds in 2022 (Phase I)1 | 1,500,000,000.00 | 2.85% | 2 December 2022 | 3 years | 1,498,800,000.00 | 1,498,638,223.25 | 42,750,000.00 | 1,361,776.75 | 1,500,000,000.00 | Not | |||
| Total | —— | 2,992,800,000.00 | 2,996,099,571.86 | 95,250,000.00 | 2,617,165.16 | 1,500,000,000.00 | 1,498,716,737.02 | —— | |||||
Note: 1. In October 2023, the Company made a suggestive announcement. In accordance with theprovisions of the Prospectus for Luzhou Laojiao Co., Ltd.'s Corporate Bonds Publicly Offered in 2022to Professional Investors (Tranche 1) (hereinafter referred to as the "Prospectus"), the Company, asthe issuer of the 2022 corporate bond (Tranche 1) "22 Lujiao 01" (bond code: 148133), has the rightto adjust the coupon rate for the first and second interest payment years of this bond issuance at theend of the first year of the bond's duration. According to the current market situation, the Companydecided to reduce the coupon rate for the first and second interest payment years of this bondissuance by 158 basis points. Therefore, the coupon rate for the first and second interest paymentyears of the "22 Lujiao 01" bond issuance was adjusted from 2.85% to 1.00%. According to theinvestor resale option set forth in the Prospectus, investors have the right to register during theinvestor resale registration period to sell all or part of the current bonds held to the issuer at facevalue, or choose to continue holding the current bonds; the resale price is CNY 100 per bond(excluding interest); according to data provided by the Shenzhen Branch of China SecuritiesDepository and Clearing Corporation Limited, "22 Lujiao 01" had a valid resale declaration of15,000,000 bonds during the two resale registration periods, with a resale amount of CNY1,500,000,000, and the remaining unsold bonds quantity was 0. The Company has fully transferredthe principal and interest payment for the resale portion of "22 Lujiao 01" to the designated bankaccount of the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.The date of receipt of funds from the resale was 4 December 2023. This resale is for the full amount,and after its completion, "22 Lujiao 01" will be delisted from the Shenzhen Stock Exchange, with thedelisting date set for 4 December 2023.
7.30. Lease liabilities
Unit：CNY
| Item | Closing Balance | Opening Balance |
| Lease payment | 32,472,149.33 | 48,776,000.46 |
| Less: unrecognized financing cost | -5,001,728.97 | -5,148,660.44 |
| Lease liabilities due within one year | -5,114,015.89 | -14,530,370.36 |
| Total | 22,356,404.47 | 29,096,969.66 |
7.31. Deferred income
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Reason |
| Government grants | 33,704,323.80 | 3,364,559.08 | 9,296,799.14 | 27,772,083.74 | Reception of financial allocation |
| Total | 33,704,323.80 | 3,364,559.08 | 9,296,799.14 | 27,772,083.74 | -- |
Other statements:
Details:
| Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Cost reduction in current period | Other decrease | Closing Balance | Related to assets/ income |
| New mode application project of digital workshop for solid state baijiu production | 4,684,300.00 | 364,559.08 | 1,553,495.14 | 3,495,363.94 | Related to assets | |||
| Construction project of liquor room of Luzhou Laojiao brewing technical renovation | 4,550,000.00 | 3,000,000.00 | 1,507,142.80 | 6,042,857.20 | Related to assets | |||
| Luzhou Laojiao automatic baijiu production line technical renovation project | 1,135,238.10 | 349,304.04 | 785,934.06 | Related to assets | ||||
| Boiler reconstruction project of Luohan Brewing Base of Luzhou Laojiao | 6,321,428.56 | 1,264,285.70 | 5,057,142.86 | Related to assets | ||||
| Brewing wastewater | 11,142,857.1 | 3,428,571.4 | 7,714,285.68 | Related to |
| Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Cost reduction in current period | Other decrease | Closing Balance | Related to assets/ income |
| treatment project | 4 | 6 | assets | |||||
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 5,870,500.00 | 1,194,000.00 | 4,676,500.00 | Related to assets | ||||
| Total | 33,704,323.80 | 3,364,559.08 | 9,296,799.14 | 27,772,083.74 |
7.32. Share capital
Unit：CNY
| Opening Balance | Increases/decreases in the current period (+, -) | Closing Balance | |||||
| Issuance of new shares | Bonds share | Conversion of reserves funds into shares | Others | Subtotal | |||
| Total number of shares | 1,471,895,100.00 | 92,669.00 | 92,669.001 | 1,471,987,769.00 | |||
Note: 1. The Company's third grant of the restricted share incentive scheme in December 2022,consisted of 92,669 shares. On 15 January 2023, the Company received subscription payments inmonetary assets for these restricted shares from 17 incentive recipients. These shares were listed on17 February 2023. Thus, the total number of company shares increased from 1,471,895,100 sharesto 1,471,987,769 shares.
7.33. Capital reserves
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Share premium (capital premium) | 4,197,109,156.66 | 8,198,055.74 | 4,205,307,212.40 | |
| Other capital reserves | 603,045,312.33 | 377,128,998.49 | 980,174,310.82 | |
| Total | 4,800,154,468.99 | 385,327,054.23 | 5,185,481,523.22 |
Other statements, including increase/decrease and reasons thereof:
Note 1: The increase of capital premium during the current period was attributed to the share premiumpayment received from the third grant of restricted shares.
Note 2: For the increased amount in other capital reserve for the current period, CNY 376,901,172.48represents the costs and expenses attributable to the parent company to be recognised in the currentperiod for the issuance of restricted shares, and the income tax impact of the excess of the amountdeductible before tax over the costs and expenses recognised in future periods. Additionally, CNY227,826.01 is due to the impact of other equity changes in investees accounted for using the equitymethod.
7.34. Treasury shares
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Perform the repurchase obligations under the equity incentive | 639,021,998.78 | 8,290,724.74 | 30,569,112.93 | 616,743,610.59 |
| Total | 639,021,998.78 | 8,290,724.74 | 30,569,112.93 | 616,743,610.59 |
Other statements, including notes to increase and decrease during the reporting period and thereasons for changes:
Note: The Company recognized restricted shares repurchase obligations in the current period, raisingthe treasury stock by CNY 8,290,724.74; and the treasury stock was down by CNY 30,569,112.93due to the expected cash dividend of unlockable restricted shares.
7.35. Other comprehensive income
Unit：CNY
| Item | Opening Balance | Current Period | Closing Balance | |||||
| Amount in current period before income tax | Less: Previously recognized in other comprehensive income transferred to profit and loss | Less: Previously recognized in other comprehensive income transferred to retained earnings | Less: Income tax | Amount attribute to parent company after tax | Amount attribute to non-controlling shareholders after tax | |||
| I. Other comprehensive income that will not be reclassified into profit and loss | 366,978,541.23 | -253,814,324.14 | 16,215,653.21 | -270,029,977.35 | 96,948,563.88 | |||
| Other comprehensive income that will not be | 106,537.86 | 106,537.86 | 106,537.86 | |||||
| reclassified into profit and loss under equity method | ||||||||
| Fair value changes of other equity instrument investment | 366,978,541.23 | -253,920,862.00 | 16,215,653.21 | -270,136,515.21 | 96,842,026.02 | |||
| II. Other comprehensive income that will be reclassified into profit and loss | -36,227,295.39 | 2,744,132.59 | 2,409,201.02 | 334,931.57 | -33,818,094.37 | |||
| Including: Other comprehensive income that will be reclassified into profit and loss under equity method | -38,784,740.65 | 2,000,549.31 | 2,000,549.31 | -36,784,191.34 | ||||
| Difference from conversion of financial statements in foreign currency | 2,557,445.26 | 743,583.28 | 408,651.71 | 334,931.57 | 2,966,096.97 | |||
| Total | 330,751,245.84 | -251,070,191.55 | 16,215,653.21 | -267,620,776.33 | 334,931.57 | 63,130,469.51 |
7.36. Surplus reserves
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Statutory surplus reserves | 1,471,895,100.00 | 92,669.00 | 1,471,987,769.00 | |
| Total | 1,471,895,100.00 | 92,669.00 | 1,471,987,769.00 |
7.37. Undistributed profits
Unit：CNY
| Item | Current Period | Previous Period |
| Undistributed profit before adjustment at the end of the last year | 26,772,197,213.98 | 21,187,860,235.89 |
| Undistributed profit after adjustment at the beginning of year | 26,772,197,213.98 | 21,187,860,235.89 |
| Plus: Net profit attributable to owners of the parent company for the current period | 13,246,394,700.59 | 10,365,383,281.80 |
| Less: Provision of statutory surplus reserves | 92,669.00 | 7,142,624.00 |
| Ordinary share dividends payable | 6,219,148,324.03 | 4,773,919,306.55 |
| Plus: Other transfer in | 16,215,653.211 | 15,626.84 |
| Undistributed profits at the end of the period | 33,815,566,574.75 | 26,772,197,213.98 |
Note: 1 Other transfers represent the Company's disposal of certain other equity instrumentinvestments in the current period, which was due to the impact of transfer of fair value changespreviously recognised in other comprehensive income to retained earnings.
7.38. Operating revenue and cost of sales
Unit：CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 29,832,432,932.59 | 3,354,136,725.57 | 24,766,121,998.49 | 3,214,253,716.91 |
| Other business | 400,868,455.67 | 183,014,677.58 | 357,441,273.13 | 155,274,677.11 |
| Total | 30,233,301,388.26 | 3,537,151,403.15 | 25,123,563,271.62 | 3,369,528,394.02 |
Whether the lower of the net profit before and after deduction of non-recurring gains and losses throughaudit is negative
□Yes ? No
Details:
Unit：CNY
| Contract category | Baijiu sales | Total | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Commodity type | ||||
| Including: | ||||
| Medium and high grade baijiu | 26,841,342,073.14 | 2,076,149,454.34 | 26,841,342,073.14 | 2,076,149,454.34 |
| Other baijiu | 3,235,936,786.44 | 1,408,395,265.76 | 3,235,936,786.44 | 1,408,395,265.76 |
| By operating segment | ||||
| Including: | ||||
| Domestic | 29,900,173,530.22 | 3,458,773,542.05 | 29,900,173,530.22 | 3,458,773,542.05 |
| Outbound | 177,105,329.36 | 25,771,178.05 | 177,105,329.36 | 25,771,178.05 |
| Market or customer type | ||||
| Including: | ||||
| Contract type | ||||
| Including: | ||||
| Commodity sales contract | 30,077,278,859.58 | 3,484,544,720.10 | 30,077,278,859.58 | 3,484,544,720.10 |
| By commodity transfer time | ||||
| Including: | ||||
| By contract term | ||||
| Including: | ||||
| By sales channel | ||||
| Including: | ||||
| Total | 30,077,278,859.58 | 3,484,544,720.10 | 30,077,278,859.58 | 3,484,544,720.10 |
Other statementsThe Company's main business is the production and sale of baijiu. Revenue is recognised at the pointwhen the Company transfers control of the relevant goods to the customer and fulfils its performanceobligations.
Information in relation to the transaction price apportioned to the residual contract performanceobligation:
The amount of revenue corresponding to performance obligations of contracts signed but notperformed or not fully performed yet was CNY 2,664,278,818.82 at the period-end, among whichCNY 2,664,278,818.82 was expected to be recognized in 2024.
7.39. Business taxes and surcharges
Unit：CNY
| Item | Current Period | Previous Period |
| Consumption tax | 3,240,865,419.12 | 2,753,367,764.57 |
| Urban maintenance and construction tax | 441,952,895.02 | 370,928,389.23 |
| Educational surcharge | 189,596,044.62 | 158,966,546.28 |
| Property tax | 72,159,092.39 | 75,661,405.90 |
| Land use tax | 34,404,828.33 | 35,777,691.90 |
| Stamp duty | 27,591,982.98 | 23,111,385.94 |
| Local education surcharge | 126,397,571.29 | 105,978,159.07 |
| Others | 158,516.93 | 156,944.59 |
| Total | 4,133,126,350.68 | 3,523,948,287.48 |
7.40. General and administrative expenses
Unit：CNY
| Item | Current Period | Previous Period |
| Employee compensation | 438,391,560.79 | 467,979,805.98 |
| Depreciation and amortization | 119,690,409.04 | 132,084,757.27 |
| Management fee and service expense | 146,708,293.63 | 115,361,022.69 |
| Others | 434,690,413.77 | 446,996,671.29 |
| Total | 1,139,480,677.23 | 1,162,422,257.23 |
7.41. Selling and distribution expenses
Unit：CNY
| Item | Current Period | Previous Period |
| Advertising promotion expense | 1,614,086,963.33 | 1,880,179,769.91 |
| Promotion expense | 1,479,620,839.26 | 712,641,702.96 |
| Employee compensation | 297,757,314.24 | 355,699,286.88 |
| Storage and logistics costs | 198,741,925.26 | 138,589,417.94 |
| Others | 384,218,484.83 | 361,660,868.33 |
| Total | 3,974,425,526.92 | 3,448,771,046.02 |
7.42. Research and development expenses
Unit：CNY
| Item | Current Period | Previous Period |
| Comprehensive research and development expenses | 225,955,797.33 | 206,248,486.57 |
| Total | 225,955,797.33 | 206,248,486.57 |
7.43. Financial expenses
Unit：CNY
| Item | Current Period | Previous Period |
| Interest expenses | 488,003,010.93 | 229,673,136.36 |
| Less: Interest income | -864,006,165.58 | -505,746,664.32 |
| Losses from currency exchange | -2,201,671.82 | -16,072,149.45 |
| Handling charges | 6,292,845.93 | 4,070,627.61 |
| Amortization of unrecognized financing costs | 759,774.13 | 1,698,122.32 |
| Total | -371,152,206.41 | -286,376,927.48 |
7.44. Other income
Unit：CNY
| Item | Current Period | Previous Period |
| Government grants | 51,950,003.11 | 34,931,161.52 |
| Other refund | 2,229,602.28 | 1,593,155.57 |
| Total | 54,179,605.39 | 36,524,317.09 |
7.45. Gain on changes in fair value
Unit：CNY
| Item | Current Period | Previous Period |
| Held-for-trading financial assets | 62,998,156.40 | -12,023,622.50 |
| Held-for-trading financial liabilities | -9,694.10 | |
| Total | 62,988,462.30 | -12,023,622.50 |
7.46. Investment income
Unit：CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under the equity method | 66,927,156.69 | 84,626,608.53 |
| Investment income gained during the period of holding held-for-trading financial assets | 2,391,009.80 | 6,813,617.83 |
| Investment income from disposal of held-for-trading financial assets | 5,290,247.46 | 9,438,465.78 |
| Dividend income gained during the period of holding other equity instrument investment | 11,268,626.39 | 8,078,717.93 |
| Investment income from early redemption of bonds | -1,055,251.33 | -4,241,494.76 |
| Investment losses from foreign exchange forward transaction | -97,207.03 | |
| Total | 84,724,581.98 | 104,715,915.31 |
Other statements:
Note: There is no major restriction on the repatriation of the Company's investment income.
Including: investment income from long-term equity investments under the equity method:
| Item | Current Period | Previous Period |
| Huaxi Securities Co., Ltd. | 44,167,627.40 | 43,897,917.31 |
| Luzhou Laojiao Postdoctoral Workstation Technology Innovation Co., Ltd. | -1,846,843.26 | 185,894.77 |
| Sichuan Development Liquor Investment Co., Ltd. | 8,326.61 | 162,805.88 |
| Sichuan Tongniang Baijiu Industry Technology Research Institute Co., Ltd. | 253,536.99 | 199,394.39 |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 24,344,508.95 | 40,180,596.18 |
| Total | 66,927,156.69 | 84,626,608.53 |
Including: dividend income gained during the period of holding other equity instrument investment:
| Item | Current Period | Previous Period |
| North Chemical Industries Co., Ltd. | 78,177.75 | 70,359.97 |
| Guotai Junan Securities Co., Ltd. | 6,241,808.41 | 8,008,357.96 |
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 500,000.00 | |
| Luzhou Bank Co., Ltd. | 3,471,360.00 | |
| China Tourism Group Duty Free Corporation Limited | 977,280.23 |
| Total | 11,268,626.39 | 8,078,717.93 |
7.47. Credit impairment loss
Unit：CNY
| Item | Current Period | Previous Period |
| Bad debt loss of accounts receivable | -964,767.06 | -240,771.03 |
| Bad debt loss of other receivables | 1,897,008.76 | -924,947.31 |
| Total | 932,241.70 | -1,165,718.34 |
7.48. Gains from disposal of assets
Unit：CNY
| Item | Current Period | Previous Period |
| Gains from disposal of non-current assets | 44,694,238.37 | 19,805,093.70 |
| Including: Gains from disposal of fixed assets | 35,447,138.00 | 24,600.37 |
| Gains from disposal of intangible assets | 8,980,400.30 | 19,786,813.38 |
| Gains from disposal of use right assets | 266,700.07 | -6,320.05 |
| Total | 44,694,238.37 | 19,805,093.70 |
7.49. Non-operating income
Unit：CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Compensation for default | 29,859,330.01 | 19,506,788.74 | 29,859,330.01 |
| Gains from damage retirement of non-current assets | 3,920,498.91 | 3,920,498.91 | |
| Others | 2,424,034.25 | 8,326,631.57 | 2,424,034.25 |
| Total | 36,203,863.17 | 27,833,420.31 | 36,203,863.17 |
7.50. Non-operating costs
Unit：CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Donation | 21,381,120.00 | 8,710,000.00 | 21,381,120.00 |
| Losses from damage retirement of non-current assets | 2,570,236.31 | 10,778,148.07 | 2,570,236.31 |
| Others | 48,127,919.52 | 471,344.99 | 48,127,919.52 |
| Total | 72,079,275.83 | 19,959,493.06 | 72,079,275.83 |
7.51. Income tax expense
7.51.1. Statement of income tax expense
Unit：CNY
| Item | Current Period | Previous Period |
| Current period income tax | 4,119,788,148.40 | 3,422,712,211.76 |
| Deferred income tax | 397,509,384.83 | 21,450,324.10 |
| Total | 4,517,297,533.23 | 3,444,162,535.86 |
7.51.2. Adjustment for accounting profit and income tax expense
Unit：CNY
| Item | Current Period |
| Total profit | 17,805,957,556.44 |
| Income tax expenses determined by statutory/applicable tax rate | 4,451,489,389.11 |
| Impact from subsidiaries’ different tax rates | -8,637,270.57 |
| Impact from adjust for impact from income tax expense in previous period | -14,432,781.58 |
| Impact from non-taxable income | -14,161,986.04 |
| Impact from non-deductible costs, expenses and losses | 1,143,355.57 |
| Impact from deductible loss of unrecognized deferred income tax assets in prior period | -2,031,822.20 |
| Impact from deductible temporary difference or losses due to unrecognized deferred tax asset in current period | 44,740,360.47 |
| Income tax impact of expected pre-tax deductible amounts of restricted shares in future periods that are less than the recognized cost and expenses | 69,490,160.71 |
| Deduction impact of research and development costs | -16,556,031.98 |
| Impact from reversal of deductible losses of deferred income tax assets recognized in prior period | 6,254,159.74 |
| Income tax expense | 4,517,297,533.23 |
Other statements:
Note 1: The increase compared to the previous period was CNY 1,073,134,997.37, representing agrowth of 31.16%. This increase was mainly attributed to the growth in profit for the current period,resulting in a corresponding increase in enterprise income tax.Note 2: The income tax rate details are provided in Note 6. Taxes.
7.52. Other comprehensive income
Details in Note 7.35. Other comprehensive income.
7.53. Notes to the statement of cash flow
7.53.1. Cash related to operating activities
Cash received from other operating activities
Unit：CNY
| Item | Current Period | Previous Period |
| Recovery of saving deposits involving contract disputes | 1,484,623.48 | 3,327,415.45 |
| Government grants | 46,017,763.05 | 40,104,471.04 |
| Interest income from bank deposit | 831,459,358.12 | 582,623,274.18 |
| Others | 392,483,116.17 | 242,137,090.66 |
| Total | 1,271,444,860.82 | 868,192,251.33 |
Cash paid for other operating activities
Unit：CNY
| Item | Current Period | Previous Period |
| Cash paid for expenses | 2,466,131,087.54 | 2,987,783,797.32 |
| Restricted court frozen funds paid | 1,181,683.24 | |
| Cash paid to E-commerce platform as security deposit | 772,930.90 | |
| Total | 2,466,904,018.44 | 2,988,965,480.56 |
7.53.2. Cash related to investing activities
Cash received from significant investing activities
Unit：CNY
| Item | Current Period | Previous Period |
| Recovering the principal invested in held-for-trading financial assets | 1,400,000,000.00 | 2,100,000,000.00 |
| Total | 1,400,000,000.00 | 2,100,000,000.00 |
Cash paid for other investing activities
Unit：CNY
| Item | Current Period | Previous Period |
| Loss on forward exchange settlement | 97,207.03 | |
| Total | 97,207.03 |
Cash paid for significant investing activities
Unit：CNY
| Item | Current Period | Previous Period |
| Cash paid for purchasing long-term assets | 1,501,625,135.45 | 1,035,165,351.11 |
| Cash paid for purchasing held-for-trading financial assets | 1,700,000,000.00 | 2,500,000,000.00 |
| Total | 3,201,625,135.45 | 3,535,165,351.11 |
7.53.3. Cash related to financing activities
Cash received from other financing activities
Unit：CNY
| Item | Current Period | Previous Period |
| Cash deposits received for L/G | 509,017.10 | |
| Cash deposits received for travel | 1,400,000.00 | |
| Total | 1,909,017.10 |
Cash paid for other financing activities
Unit：CNY
| Item | Current Period | Previous Period |
| Cash paid for reducing registered capital | 5,574,626.46 | |
| Rating and registration fee for issuing bonds | 1,394,339.62 | |
| Net losses from put-back of bonds | 1,055,251.33 | 117,924.53 |
| Cash paid for rent of right-of-use assets | 6,547,996.56 | 14,508,022.38 |
| Total | 7,603,247.89 | 21,594,912.99 |
Changes in liabilities arising from financing activities?Applicable □ N/A
Unit：CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | ||
| Cash change | Non-cash change | Cash change | Non-cash change | |||
| Long-term loans (including long-term loans due within one year) | 3,201,984,027.78 | 6,850,000,000.00 | 7,379,478.99 | 24,700,000.00 | 1,984,027.78 | 10,032,679,478.99 |
| Bonds payble (including bonds payable due within one year) | 3,041,064,640.35 | 1,500,000,000.00 | 923,245.80 | 1,540,141,394.55 | ||
| Lease liabilities (including lease liabilities due within one year) | 43,627,340.02 | 224,568.66 | 6,547,996.56 | 9,833,491.76 | 27,470,420.36 | |
| Other payables (Repurchase obligations of restricted shares) | 639,021,998.78 | 8,290,724.74 | 30,569,112.93 | 616,743,610.59 | ||
| Total | 6,925,698,006.93 | 6,858,290,724.74 | 7,604,047.65 | 1,531,247,996.56 | 43,309,878.27 | 12,217,034,904.49 |
7.54. Supplementary information to statement of cash flow
7.54.1. Supplementary information to statement of cash flow
Unit：CNY
| Item | Current Period | Previous Period |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 13,288,660,023.21 | 10,410,589,104.43 |
| Plus: Provision for asset impairment | -932,241.70 | 1,165,718.34 |
| Depreciation of fixed asset, oil and gas assets and productive biological assets | 587,432,455.60 | 547,618,213.97 |
| Depreciation of right-of-use assets | 9,851,802.53 | 14,638,577.02 |
| Amortization of intangible assets | 79,694,038.52 | 80,604,041.96 |
| Amortization of long-term deferred expense | 498,487.93 | 872,334.97 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (Gains use “-”) | -44,694,238.37 | -19,805,093.70 |
| Losses from retirement of fixed assets (Gains use “-”) | -1,350,262.60 | 10,778,148.07 |
| Losses from change in fair value (Gains use “-”) | -62,988,462.30 | 12,023,622.50 |
| Financial expenses (Gains use “-”) | 323,773,618.88 | 114,617,073.40 |
| Losses on investments (Gains use “-”) | -84,724,581.98 | -104,715,915.31 |
| Decrease in deferred income tax assets (Increase uses “-”) | 351,976,919.74 | -19,224,200.66 |
| Increase in deferred income tax liabilities (Decrease uses “-”) | 45,532,465.09 | 40,674,524.76 |
| Decrease in inventories (Increase use “-”) | -1,781,301,572.61 | -2,563,169,208.05 |
| Decrease in operating receivables (Increase use “-”) | -1,506,903,239.71 | 279,234,000.55 |
| Increase in operating payables (Decrease use “-”) | -556,160,276.77 | -543,252,672.53 |
| Others | ||
| Net cash flows from operating activities | 10,648,364,935.46 | 8,262,648,269.72 |
| 2. Significant investing and financing activities not involving cash: | ||
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under financing lease | ||
| 3.Net change in cash and cash equivalents: | ||
| Closing balance of cash | 25,893,029,277.861 | 17,729,006,591.87 |
| Less: Opening balance of cash | 17,729,006,591.87 | 13,402,528,941.83 |
| Plus: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net change in cash and cash equivalents | 8,164,022,685.99 | 4,326,477,650.04 |
Note: 1. The amount of direct payment for goods and long-term assets (not involving cash flows) by theendorsement of bank acceptances receivable in the current and previous periods was CNY799,668,426.34 and CNY 1,074,632,849.98, respectively, which were not included in "cash receivedfrom sales of goods or rendering of services", "cash paid for goods and services" and "cash paid for thepurchase of fixed assets, intangible assets and other long-term assets" of the cash flow budget.
7.54.2. Composition of cash and cash equivalent
Unit：CNY
| Item | Opening Balance | Closing Balance |
| 1. Cash | 25,893,029,277.86 | 17,729,006,591.87 |
| Including: Cash on hand | 24,059.24 | 28,711.93 |
| Unrestricted bank deposit | 25,868,408,012.31 | 17,711,121,431.52 |
| Other unrestricted cash and cash equivalents | 24,597,206.31 | 17,856,448.42 |
| 3. Closing balance of cash and cash equivalents | 25,893,029,277.86 | 17,729,006,591.87 |
7.54.3. Monetary funds not classified as cash and cash equivalents
Unit：CNY
| Item | Current Period | Previous Period | Reason |
| Other monetary funds | 10,000,000.00 | 10,000,000.00 | Bank cash deposits for L/G |
| Bank deposit | 48,222,882.52 | 17,339,936.14 | Provision for fixed deposit interest on an accrual basis |
| Bank deposit | 1,181,683.24 | Frozen fund by the court | |
| Other monetary funds | 772,930.90 | Restricted cash deposit in E-commerce platforms | |
| Total | 58,995,813.42 | 28,521,619.38 |
7.55. Notes to items of the statements of changes in owners' equityNotes to the name of “Other” of closing balance at the end of the previous year adjusted and theamount adjusted:
N/A
7.56. Foreign currency transactions
7.56.1. Foreign currency transactions
Unit：CNY
| Item | Closing Balance in Foreign Currency | Exchange Rate | Closing Balance in CNY |
| Cash at Bank and on Hand | 87,009,233.85 | ||
| Including: USD | 12,063,932.87 | 7.0827 | 85,445,217.34 |
| EUR | 327.95 | 7.8592 | 2,577.42 |
| HKD | 1,720,811.80 | 0.90622 | 1,559,434.07 |
| GBP | 39.91 | 9.0411 | 360.83 |
| AUD | 339.12 | 4.8484 | 1,644.19 |
| Accounts Receivable | 6,763,202.06 | ||
| Including: USD | 27,947.11 | 7.0827 | 197,941.00 |
| EUR | |||
| HKD | 7,244,665.82 | 0.90622 | 6,565,261.06 |
| Long-term Loans | |||
| Including: USD | |||
| EUR |
| HKD | |||
| Other Receivables | 2,185,243.73 | ||
| Including: HKD | 2,411,383.25 | 0.90622 | 2,185,243.73 |
| Accounts Payable | 1,052,816.48 | ||
| Including: USD | 78,287.39 | 7.0827 | 554,486.10 |
| HKD | 549,900.00 | 0.90622 | 498,330.38 |
| Other Payables | 22,462,946.79 | ||
| Including: USD | 13,520.88 | 7.0827 | 95,764.34 |
| HKD | 24,681,845.97 | 0.90622 | 22,367,182.45 |
| Non-current liabilities due within one year | 1,148,459.41 | ||
| Including: USD | 68,957.37 | 7.0827 | 488,404.36 |
| HKD | 728,360.72 | 0.90622 | 660,055.05 |
| Lease liabilities | 990,456.88 | ||
| Including: USD | 139,841.71 | 7.0827 | 990,456.88 |
7.56.2. Description of the foreign business entity, including the important foreign businessentity, shall disclose its main foreign business place, bookkeeping standard currency andselection basis, and shall also disclose the reason for the change of the bookkeepingstandard currency? Applicable □ N/A
| Company | Operation site | Bookkeeping currency | Choosing Reason |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | Hong Kong, China | HKD | Currency in the registration place |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | USA | USD | Currency in the registration place |
| Mingjiang Co., Ltd. | USA | USD | Currency in the registration place |
7.57. Lease
7.57.1. The Company as lessee
?Applicable □ N/AVariable lease payments that are not covered in the measurement of the lease liabilities
□Applicable ? N/A
Simplified short-term lease or lease expense for low-value assets?Applicable □ N/AThe Company uses a simplified approach for short-term leases, where the right-of-use assets andlease liabilities are not recognised. Short-term leases accounted for as expenses in the current periodare listed below:
| Item | 2023 | 2022 |
| Short-term lease expenses recognised as current profit or loss in the current period using the simplified approach | 9,494,225.98 | 8,551,460.53 |
| Total cash outflows related to leases | 16,042,222.54 | 23,059,482.91 |
Note: The leased assets of the Company include the buildings and constructions and the land useright involved in operation. The leasing period of land use right is normally 15-30 years and the leasecontract of land use right generally includes the renewal option clause.
Circumstances involving sale and leaseback transactionsN/A
7.57.2. The Company as lessor
Operating leases with the Company as lessor? Applicable □ N/A
Unit：CNY
| Item | Rental income | Of which: income related to variable lease payments not included in lease receipts |
| Income from rental of buildings, equipment, etc. | 9,076,179.71 | |
| Total | 9,076,179.71 |
Finance leases with the Company as lessor
□Applicable ? N/A
Undiscounted lease receipts for each of the next five years
□Applicable ? N/A
7.57.3. Recognition of gain or loss on sales under finance leases with the company as amanufacturer or dealer
□Applicable ? N/A
7.58. Others
N/A
8. Research and Development Expenditure
Unit：CNY
| Item | Current Period | Previous Period |
| Material consumption | 45,375,170.08 | 50,065,987.39 |
| Research and development and technical services | 69,745,731.02 | 58,008,882.88 |
| Share payment expense | 25,097,365.62 | 16,478,234.13 |
| Other indirect costs | 85,737,530.61 | 81,695,382.17 |
| Total | 225,955,797.33 | 206,248,486.57 |
| Of which: Expensed research and development expenditure | 225,955,797.33 | 206,248,486.57 |
9. Changes in consolidated scope
9.1. Business combination not under common control
9.1.1. Business combination not under common control during current periodThere is no business combination not under common control during current period.
9.2. Business combination under common control
9.2.1. Business combination under common control during current periodThere is no business combination under common control during current period.
9.3. Reverse purchase
The basic information of the transaction, the basis of the transaction constitutes the reverse purchase,whether the assets and liabilities retained by the listed company constitute the business and its basis,the determination of the merger cost, and the adjustment of the equity amount and its calculationaccording to the equity transaction:
There is no reverse purchase during current period.
9.4. Disposing subsidiaries
Whether there is a situation of losing control after disposing the investment in the subsidiary onlyonce
□ Yes ?No
Whether there is a situation of disposing the investment in the subsidiary through several transactionsstep by step and losing control during the period
□ Yes ?No
9.5. Consolidated scope changes due to other reasons
Explain other reasons for changing consolidated scope (such as establishing a new subsidiary,liquidating a subsidiary) and its related situation:
Two subsidiaries were liquidated and cancelled during the current period: Luzhou BaonuoBiotechnology Co., Ltd. was liquidated and cancelled in October 2023; Luzhou Laojiao Custom LiquorCo., Ltd. was liquidated and cancelled in December 2023. Since the cancellation of these twocompanies, they are no longer included in the scope of the consolidated financial statements.
9.6. Other
No
10. Interests in other entities
10.1. Interests in subsidiaries
10.1.1. Group composition
Unit：CNY
| Name of Subsidiaries | Registered capital | Major business location | Place of registration | Nature of business | Shareholding Proportion | Acquisition method | |
| Direct | Indirect | ||||||
| Luzhou Laojiao Brewing Co., Ltd. | 310,500,000.00 | Luzhou | Luzhou | Baijiu manufacture and sales | 100.00% | Investment | |
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | 10,000,000.00 | Luzhou | Luzhou | Agricultural product planting and sales | 60.00% | Business combination under common control | |
| Luzhou Laojiao Sales Co., Ltd. | 100,000,000.00 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | 5,000,000.00 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao Custom Liquor Co., Ltd. 1 | 5,000,000.00 | Luzhou | Luzhou | Baijiu sales | 15.00% | Investment | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | 10,000,000.00 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | 10,000,000.00 | Qinzhou | Qinzhou | Red wine production and sales | 100.00% | Investment | |
| Luzhou Dingli Liquor Industry Co., Ltd. | 5,000,000.00 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao Qiankun Cheteau Custom | 5,000,000.00 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Liquor Sales Co., Ltd.2 | |||||||
| Luzhou Laojiao New Liquor Industry Co., Ltd. | 5,000,000.00 | Luzhou | Luzhou | Baijiu sales | 100.00% | Investment | |
| Luzhou Laojiao I & E Co., Ltd. | 3,000,000.00 | Luzhou | Luzhou | Liquor import and export trade | 100.00% | Investment | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 120,000,000.00 | Luzhou | Luzhou | Baijiu sales | 75.00% | Investment | |
| Luzhou Laojiao Fruit Wine Industry Co., Ltd. | 50,000,000.00 | Luzhou | Luzhou | Fruit wine sales | 41.00% | Investment | |
| Mingjiang Co., Ltd. (USD) | 6,000,000.00 | America | America | Baijiu sales | 54.00% | Investment | |
| Luzhou Laojiao International Trade (Hainan) Co., Ltd. | 20,000,000.00 | Hainan | Hainan | Food import and export | 100.00% | Investment | |
| Luzhou Pinchuang Technology Co., Ltd. | 50,000,000.00 | Luzhou | Luzhou | Technology development and service | 100.00% | Investment | |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. (HKD) | 10,000.00 | Hong Kong | Hong Kong | Liquor sales | 55.00% | Investment | |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. (USD) | 500,000.00 | America | America | Business development | 100.00% | Investment | |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | 60,000,000.00 | Luzhou | Luzhou | Liquor sales | 90.00% | Investment | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. | 10,000,000.00 | Luzhou | Luzhou | Liquor sales | 35.00% | Investment |
| Luzhou Baonuo Biotechnology Co., Ltd.3 | 20,000,000.00 | Luzhou | Luzhou | Fermented product manufacture | 100.00% | Investment | |
| Luzhou Laojiao Health Liquor Industry Co., Ltd. | 10,000,000.00 | Luzhou | Luzhou | Health care liquor manufacture and sales | 100.00% | Business combination under common control | |
| Luzhou Laojiao Health Sales Co., Ltd. | 5,000,000.00 | Luzhou | Luzhou | Health care liquor sales | 100.00% | Business combination under common control | |
| Luzhou Laojiao New Retail Co., Ltd. | 50,000,000.00 | Luzhou | Luzhou | Baijiu sales | 40.00% | 100.00% | Investment |
| Luzhou Laojiao Technology Innovation Co., Ltd. | 500,000,000.00 | Chengdu | Chengdu | Technology development and service | 40.00% | 60.00% | Investment |
Note: 1. Luzhou Laojiao Custom Liquor Co., Ltd. was liquidated and cancelled on December 2023.
2. Luzhou Dingyi Liquor Sales Co., Ltd. changed its name to Luzhou Laojiao Qiankun Cheteau CustomLiquor Sales Co., Ltd.3 Luzhou BaoNuo Biotechnology Co., Ltd. was liquidated and cancelled in October 2023.
Statement for that the proportion of share-holding is different from the proportion of voting rights:
Although the Company holds less than 51% of the equity in Luzhou Laojiao Custom Liquor Co., Ltd.,Luzhou Laojiao Fruit Wine Industry Co., Ltd., and Luzhou Laojiao Whitail Liquor Industry Co., Ltd., ofthe five members of the board of directors of each of these companies, three members are appointedby the Company, which represents a majority, and the Company exercises substantive control overthese companies. Therefore, they are included in the scope of consolidation.
10.1.2. Important non-wholly-owned subsidiaries
Unit：CNY
| Name of subsidiary | Proportion of share holdings of non-Controlling shareholders | Gains and losses attributable to non-Controlling shareholders during current period | Dividends paid to non-controlling shareholders during current period | Closing balance of non-controlling shareholders interest |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 25.00% | 29,684,819.82 | 29,684,819.82 | 61,843,872.29 |
10.1.3. Major financial information of important non-wholly-owned subsidiaries
Unit：CNY
| Name of subsidiary | Closing Balance | Opening Balance | ||||||||||
| Current assets | Non-current | Total assets | Current liabiliti | Non-current | Total liabilities | Current assets | Non-current | Total assets | Current liabiliti | Non-current | Total liabilities | |
| assets | es | liabilities | assets | es | liabilities | |||||||
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 569,377,544.62 | 569,377,544.62 | 322,002,055.47 | 322,002,055.47 | 275,419,421.12 | 275,419,421.12 | 28,043,931.97 | 28,043,931.97 |
Unit：CNY
| Name of subsidiary | Current Period | Previous Period | ||||||
| Operating revenue | Net profit | Total comprehensive income | Operating cash flow | Operating revenue | Net profit | Total comprehensive income | Operating cash flow | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 1,012,725,794.94 | 118,739,279.29 | 118,739,279.29 | -54,348,215.68 | 64,698,451.93 | 71,134,557.89 | 71,134,557.89 | 99,816,980.78 |
10.1.4. Significant restrictions on using the assets and liquidating the liabilities of theCompanyN/A
10.1.5. Financial support or other supports provided to structural entities incorporated into thescope of consolidated financial statementsN/A
10.2. The transaction of the company with its owner's equity share changing butthe company still controls the subsidiary
10.2.1. Note to the owner's equity share changed in subsidiary
N/A
10.2.2. The transaction’s influence on the equity of non-controlling interests and the owner'sequity attributable to the company as the parentN/A
10.3. Interests in joint ventures and associates
10.3.1. Important joint ventures and associates
| Name of joint venture/associates | Major business location | Place of registration | Business nature | Shareholding proportion | Accounting Method | |
| Direct | Indirect | |||||
| Important joint ventures: none | ||||||
| Important associates: | ||||||
| Huaxi Securities Co., Ltd. | Chengdu, Sichuan | Chengdu, Sichuan | Securities | 10.39% | Equity method | |
Basis of holding less than 20% of the voting rights but has a significant impact or holding 20% ormore voting rights but does not have a significant impact:
The Company has the substantive decision-making power, so the Company still has significantinfluence on Huaxi Securities.
10.3.2. Major financial information of important associates
Unit：CNY
| Closing Balance/Amount in current period | Opening Balance/Amount in previous period | |
| Current assets | 80,257,215,749.71 | 89,547,378,203.44 |
| Non-current assets | 8,633,260,818.24 | 8,199,779,781.47 |
| Total assets | 88,890,476,567.95 | 97,747,157,984.91 |
| Current liabilities | 47,013,859,718.97 | 54,767,331,978.36 |
| Non-current liabilities | 19,074,441,893.35 | 20,539,402,724.68 |
| Total liabilities | 66,088,301,612.32 | 75,306,734,703.04 |
| Non-controlling shareholder interest | 17,277,841.64 | 22,000,726.84 |
| Shareholder interest attributable to parent company | 22,784,897,113.99 | 22,418,422,555.03 |
| Share of net assets calculated based on shareholding proportion | 2,363,882,349.03 | 2,330,073,856.15 |
| Adjusted | ||
| --Goodwill | ||
| --Unrealized profits of internal transactions | ||
| --Others | 167,466,735.90 | 167,466,735.90 |
| Book value of equity investments in associate companies | 2,535,630,372.30 | 2,497,540,592.05 |
| Fair value of equity investments in associate companies that have public quote | 2,117,169,677.44 | 2,054,418,514.32 |
| Operating revenue | 3,180,917,154.72 | 3,375,583,530.03 |
| Net profit | 424,951,566.18 | 422,356,594.84 |
| Net profit from discontinued operation | ||
| Other comprehensive income | 20,272,992.78 | -119,327,423.67 |
| Total comprehensive income | 445,224,558.96 | 303,029,171.17 |
| Dividends from associate companies this year | 8,184,934.32 | 27,283,114.40 |
10.3.3. Financial information summarized of unimportant joint ventures and associatecompanies
Unit：CNY
| Closing Balance/Amount in current period | Opening Balance/Amount in previous period | |
| Joint ventures: | ||
| Total following items calculated on the basis of shareholding proportion | ||
| Associate companies: | ||
| Total book value of investments | 172,624,461.20 | 169,959,961.12 |
| Total following items calculated on the basis of shareholding proportion | ||
| --Net profit | 2,436,674.07 | -3,456,109.80 |
| -- Total comprehensive income | 2,436,674.07 | -3,456,109.80 |
Other statements:
Unimportant associate companies refer to Luzhou Laojiao Postdoctoral Workstation TechnologyInnovation Co., Ltd., Sichuan Development Liquor Investment Co., Ltd., Sichuan Tongniang BaijiuIndustry Technology Research Institute Co., Ltd. and CTS Luzhou Laojiao Cultural TourismDevelopment Co., Ltd.
10.3.4. Notes to the significant restrictions on the ability of joint ventures or associatecompanies to transfer funds to the CompanyNone
10.3.5. The excess loss of joint ventures or associate companies
None
10.3.6. The unrecognized commitment related to investment to joint venturesNone
10.3.7. Contingent liabilities related to investment to joint ventures or associate companiesNone
11. Government grants
11.1. Government grants recognized at the end of the reporting period at theamount receivable
□Applicable ? N/A
Reasons for failing to receive government grants in the estimated amount at the estimated point intime
□Applicable ? N/A
11.2. Liability items involving government grants
?Applicable □ N/A
Unit：CNY
| Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Other changes | Closing Balance | Related to assets/ income |
| Deferred income | 33,704,323.80 | 3,364,559.08 | 9,296,799.14 | 27,772,083.74 | Related to assets | ||
| Total | 33,704,323.80 | 3,364,559.08 | 9,296,799.14 | 27,772,083.74 |
11.3. Government grants recognized as current profit or loss?Applicable □ N/A
Unit：CNY
| Item | Amount in current period | Amount in previous period |
| Other income | 51,950,003.11 | 34,931,161.52 |
| Non-operating revenue | ||
| Total | 51,950,003.11 | 34,931,161.52 |
Other statements:
The detailed list of liability items related to government grants can be found in Note 7.31.2.The specific details of government grants included in current profit or loss are provided in Note 7.44.
12. Risks related to financial instruments
12.1. Various types of risks arising from financial instrumentsThe Company's primary financial instruments include monetary capital, trading financial assets,accounts receivable, receivables financing, receivables other than tax refundable, other equityinstruments, held-for-trading financial liabilities, bills payable, accounts payable, other payables, leaseliabilities, some other current liabilities and loans. A detailed description of each financial instrument isset out in Note V and notes to the Consolidated Financial Statement.Risks related to these financial instruments, and risk management policies the Company has adoptedto reduce these risks are described as follows. The Company management manages and monitors therisk exposure to ensure the above risks are controlled in a limited scope.The Company adopts sensitivity analysis technology to analyze the possible impact of reasonable andpossible changes of risk variables on current profits/losses or shareholders' equity. As any risk variablerarely changes in isolation, and the correlation between variables will have a significant effect on thefinal impact amount of the change of a risk variable, the following content is based on the assumptionthat the change of each variable is independent.Risk management objective: The Company strikes an appropriate balance between risk and return, andstrives to minimize the negative impact of risk on the Company's operating performance and maximizethe interests of shareholders and other equity investors.Risk management policy: The Board of Directors shall be responsible for planning and establishing arisk management framework, formulating risk management policies and related guidelines, andsupervising the implementation of risk management measures. The Risk Management Committee shallcarry out risk management through close collaboration (including the identification, evaluation andavoidance of relevant risks) with other business units of the Company in accordance with the policiesapproved by the Board of Directors. The internal audit department shall conduct regular audits on riskmanagement controls and procedures and report the results to the Audit Committee.The Company has formulated risk management policies to identify and analyze the risks it faces,clarifying specific risks and covering many aspects such as credit risk, liquidity risk and market riskmanagement. On a regular basis, the Company evaluates the specific marketing environment andvarious changes in the Company's business operations to determine whether any risk managementpolicy and system should be updated. The Company diversifies the risks to financial instrumentsthrough appropriately diversified investments and business portfolios, and reduces the risk ofconcentration in any single industry, specific geographic area or specific counterparty by formulatingappropriate risk management policies.
12.1.1. Credit risk
Credit risk refers to the risk that one party to a financial instrument cannot perform its obligations,causing financial losses to the other party. The Company only trades with recognized, reputable, and
large third parties. In accordance with the Company's policy, the terms of sale with customers arebased on transactions of payment before delivery, with only a small amount of credit transactions, andcredit review for all customers who require credit to trade. In addition, the Company continuouslymonitors and controls the balance of the receivables to ensure that the Company does not facesignificant bad debt risks. In addition, the Company makes full provision for expected credit losses ateach balance sheet date based on the collection of receivables. Therefore, the Company'smanagement believes that the Company's credit risk has been greatly reduced.The Company's working capital is deposited in banks with high credit rating, so the credit risk of workingcapital is low.The Company's risk exposures are spread across multiple contract parties and customers in multiplegeographies, with customers in the commerce industry in addition to the alcohol distribution industry(the main industry). No systemic risk has been identified in the relevant industries. Therefore, theCompany has no significant credit concentration risk. As at 31 December 2023, the balance of the topfive customers of the Company's accounts receivable amounted to CNY 18,671,700, accounting for
99.57% of the balance of the Company's accounts receivable.
12.1.2. Liquidity risk
Liquidity risk refers to the risk unable to obtain sufficient funds in time to meet business developmentneeds or to repay debts due and other payment obligations. The Company has sufficient workingcapital. The liquidity risk is extremely small. The Company's objective is to use a variety of financinginstruments such as bank clearing, bank loans and issuing corporate bonds to maintain a balancebetween financing sustainability and flexibility. As at 31 December 2023, the Company has been able tomeet its own continuing operation requirements through the use of cash flow from operations.The analysis of the financial liabilities held by the Company based on the maturity period of theundiscounted remaining contractual obligations is as follows:
| Item | Closing Balance | |||||
| Book value | Contract amount not discounted | Within 1 year | 1-2 years | 2-3 years | Over 3 years | |
| Held-for-trading financial liabilities | 9,763.87 | 9,763.87 | 9,763.87 | |||
| Accounts payable | 2,357,223,733.21 | 2,357,223,733.21 | 2,357,223,733.21 | |||
| Other payable | 1,121,036,342.71 | 1,121,036,342.71 | 1,121,036,342.71 | |||
| Non-current liabilities due within one year | 78,918,152.41 | 78,918,152.41 | 78,918,152.41 | |||
| Long-term | 10,000,300,000.0 | 10,000,300,000.0 | 5,959,200,000.0 | 4,041,100,000.0 | ||
| loans | 0 | 0 | 0 | 0 | ||
| Bonds payable | 1,498,716,737.02 | 1,500,000,000.00 | 1,500,000,000.00 | |||
| Lease liabilities | 22,356,404.47 | 31,673,437.10 | 6,529,735.36 | 6,477,818.27 | 18,665,883.47 | |
| Total | 15,078,561,133.69 | 15,089,161,429.30 | 3,557,187,992.20 | 7,465,729,735.36 | 4,047,577,818.27 | 18,665,883.47 |
12.1.3. Market risk
① Foreign exchange risk
The foreign exchange risk refers to the risk of loss due to exchange rate changes. Apart from the threesubsidiaries of the Company which make purchases and sales in USD and HKD, the other majorbusiness activities are denominated and settled in CNY. The Company closely monitors the impact ofexchange rate fluctuations on its foreign exchange risk, and actively tracks the scale of foreign currencytransactions, as well as foreign currency assets and liabilities, to minimise exposure to exchange raterisks. In order to hedge risks in the foreign exchange market, prevent adverse effects from significantfluctuations in exchange rates, control financial expenses and reduce exchange rate risks in overseasoperations, the Company's subsidiary, Hong Kong Company, has engaged in forward foreign exchangecontract transactions. As at 31 December 2023, the Company's assets and liabilities are mainly in CNYbalance. At present, the Company's management considers the impact of changes in foreign exchangerisk on the Company's financial statements to be less.
② Rate risk
The Company's interest rate risk mainly arises from the long-term loans from banks. Financial liabilitiesbased on the floating interest rate will cause the cash flow interest rate risk to the Company, andfinancial liabilities based on the fixed interest rate the fair value interest rate risk. The Company willdetermine the corresponding proportion between the contracts with fixed inte